this reason, these amounts will not provide a reliable indicator of the Company’s expected future cash outflows on a stand-alone basis.

As discussed in Note 11, the Company does not have a required minimum pension contribution obligation for its U.S. plans in 2007. Thus, Company contributions to its U.S. and international pension plans are expected to be largely discretionary in 2007 and future years. Contractual capital commitments are also included in the preceding table, but these commitments represent a small part of the Company’s expected capital spending in 2007 and beyond.

FINANCIAL INSTRUMENTS

The Company enters into contractual derivative arrangements in the ordinary course of business to manage foreign currency exposure, interest rate risks and commodity price risks. A financial risk management committee, composed of senior management, provides oversight for risk management and derivative activities. This committee determines the Company’s financial risk policies and objectives, and provides guidelines for derivative instrument utilization. This committee also establishes procedures for control and valuation, risk analysis, counterparty credit approval, and ongoing monitoring and reporting.

The Company enters into foreign exchange forward contracts, options and swaps to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies and certain intercompany financing transactions. The Company manages interest rate risks using a mix of fixed and floating rate debt. To help manage borrowing costs, the Company may enter into interest rate swaps. Under these arrangements, the Company agrees to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. The Company manages commodity price risks through negotiated supply contracts, price protection agreements and forward physical contracts.

A Monte Carlo simulation technique was used to test the Company’s exposure to changes in currency and interest rates and assess the risk of loss or benefit in after-tax earnings of financial instruments, derivatives and underlying exposures outstanding at December 31, 2006. The model (third-party bank dataset) used a 95% confidence level over a 12-month time horizon. The model used analyzed seventeen currencies, interest rates related to three currencies, and five commodities, but does not purport to represent what actually will be experienced by the Company. This model does not include certain hedge transactions, because the Company believes their inclusion would not materially impact the results. The following table summarizes the possible adverse and positive impacts to after-tax earnings related to these exposures. Concerning interest rates, the larger effect on earnings at December 31, 2006 is due to the Company’s increased floating interest rate exposure. 

The global exposures related to purchased components and materials are such that a 1% price change would result in a pre-tax cost or savings of approximately $55 million per year. The global energy exposure is such that a 10% price change would