content_image/140069.jpg content_image/140066.jpg
December 31, 2011, 2010 and 2009 (currencies in millions) 

The following table presents the balance sheet locations and fair value of derivative financial instruments: 

<img src='content_image/140069.jpg'>

Fair Value Hedges:  Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings together with the changes in fair value of the hedged item attributable to the risk being hedged. The (income) or expense recognized in earnings related to fair value hedges was included in Interest and other borrowing expenses in the Financial Services segment as follows: 

<img src='content_image/140066.jpg'>

Cash Flow Hedges:  Substantially all of the Company’s interest-rate contracts and some foreign-exchange contracts have been designated as cash flow hedges. Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income to the extent such hedges are considered effective. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows is 6.5 years. 

Amounts in accumulated other comprehensive income are reclassified into net income in the same period in which the hedged transaction affects earnings. Net realized gains and losses from interest-rate contracts are recognized as an adjustment to interest expense. Net realized gains and losses from foreign-exchange contracts are recognized as an adjustment to cost of sales or to financial services interest expense, consistent with the hedged transaction. For the periods ended December 31, 2011 and 2010, the Company recognized gains on the ineffective portion of $.8 and $2.3, respectively. 

