Following is a discussion regarding the Company’s use of financial instruments:

Hedging Activities – As of March 31, 2012, the notional amount of foreign currency hedge positions was approximately $1.6 billion, while commodity hedge contracts totaled approximately 80 million pounds of copper and aluminum. All derivatives receiving deferral accounting are cash flow hedges. The majority of hedging gains and losses deferred as of March 31, 2012 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. The following amounts are included in earnings and Other Comprehensive Income for the three and six months ended March 31, 2012 and 2011 (in millions):



		Gain (Loss) to Earnings							Gain (Loss) to OCI
		2nd Quarter				Six Months			2nd Quarter			Six Months
		2011		2012		2011	2012		2011		2012	2011	2012
Deferred	Location
Foreign currency	Sales	$	4	1		6	2		2		2	6	6
Foreign currency	Cost of sales	5		3		10	2		3		28	10	35
Commodity	Cost of sales	18		(11	)	29	(22	)	(3	)	29	29	50

Not Deferred
Foreign currency	Other deductions, net	—		8		6	15
		$	27	1		51	(3	)	2		59	45	91

Regardless of whether derivatives receive deferral accounting, the Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving deferral accounting are highly effective, no amounts were excluded from the assessment of hedge effectiveness, and hedge ineffectiveness was immaterial for the three and six months ended March 31, 2012 and 2011.

Fair Value Measurements – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. At March 31, 2012, commodity contracts and foreign currency contracts were reported in current assets and accrued expenses. Collateral of $7 million was posted with counterparties as of March 31, 2012. The maximum collateral that could have been required was $13 million. As of March 31, 2012, the fair value of long-term debt was $4,987 million, which exceeded the carrying value by $631 million. Valuations of derivative contract positions are summarized below (in millions):



	September 30, 2011				March 31, 2012
	Assets		Liabilities		Assets	Liabilities
Foreign Currency	$	17	(48	)	23	(12	)
Commodity	$	—	(83	)	6	(16	)