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

Hedging Activities – As of June 30, 2012, the notional amount of foreign currency hedge positions was approximately $2.0 billion, while commodity hedge contracts totaled approximately 79 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 June 30, 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 (OCI) for the three and nine months ended June 30, 2012 and 2011 (in millions):



		Gain (Loss) to Earnings							Gain (Loss) to OCI
		3rd Quarter				Nine Months			3rd Quarter				Nine Months
		2011		2012		2011	2012		2011		2012		2011	2012
Deferred	Location
Foreign currency	Sales	$	2	(1	)	8	1		—		—		6	6
Foreign currency	Cost of sales	6		—		16	2		5		(13	)	15	22
Commodity	Cost of sales	19		(9	)	48	(31	)	(2	)	(21	)	27	29

Not Deferred
Foreign currency	Other deductions, net	7		17		13	32
		$	34	7		85	4		3		(34	)	48	57

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 nine months ended June 30, 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 June 30, 2012, the fair value of commodity contracts and foreign currency contracts were reported in accrued expenses and other current assets, respectively. Collateral of $22 million was posted with counterparties as of June 30, 2012. The maximum collateral that could have been required was $23 million. As of June 30, 2012, the fair value of long-term debt was $5,079 million, which exceeded the carrying value by $730 million. Valuations of derivative contract positions are summarized below (in millions):



	September 30, 2011				June 30, 2012
	Assets		Liabilities		Assets	Liabilities
Foreign Currency	$	17	(48	)	33	(21	)
Commodity	$	—	(83	)	2	(25	)