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

Hedging Activities – As of June 30, 2014, the notional amount of foreign currency hedge positions was approximately $1.8 billion, while commodity hedge contracts totaled $198 million representing 70 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, 2014 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in other deductions, net reflect hedges of balance sheet exposures that do not receive deferral accounting. The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2014 and 2013 (in millions):



		Into Earnings									Into OCI
		3rd Quarter					Nine Months				3rd Quarter			Nine Months
Gains (Losses)	Location	2013			2014		2013		2014		2013		2014	2013		2014
Commodity	Cost of sales	$	(6	)	(5	)	(10	)	(10	)	(18	)	9	(34	)	(7	)
Foreign currency	Sales, cost of sales	8			3		19		6		(23	)	13	(8	)	15
Foreign currency	Other deductions, net	(8		)	5		(8	)	(5	)
Total		$	(6	)	3		1		(9	)	(41	)	22	(42	)	8

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 and no amounts were excluded from the assessment of hedge effectiveness. Hedge ineffectiveness was immaterial for the three and nine months ended June 30, 2014 and 2013.

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, 2014, the fair values of commodity contracts and foreign currency contracts were reported in other current assets and accrued expenses. There was no collateral posted with counterparties as of June 30, 2014. As of June 30, 2014, the fair value of long-term debt was $4,524 million which exceeded the carrying value by $437 million. Valuations of derivative contract positions are summarized below (in millions):



	September 30, 2013			June 30, 2014
	Assets		Liabilities	Assets	Liabilities
Foreign Currency	$	18	17	20	10
Commodity	$	2	8	3	4