and, if so, the type of hedge transaction. Gains or losses on derivative instruments reported in accumulated other compre- hensive loss are reclassified to earnings in the period the hedged item affects earnings. If the underlying hedged transaction ceases to exist, any associated amounts reported in accumulated other comprehensive loss are reclassified to earnings at that time. Any ineffectiveness is recognized in earnings in the current period. 

We use derivatives to manage our exposure to changes in commodity prices. We do not perform the assessments required to achieve hedge accounting for commodity derivative positions. Accordingly, the changes in the values of these derivatives are recorded currently in cost of sales in our Consolidated State- ments of Earnings. 

Although we do not meet the criteria for cash flow hedge accounting, we nonetheless believe that these instruments are effective in achieving our objective of providing certainty in the future price of commodities purchased for use in our supply chain. Accordingly, for purposes of measuring segment operating performance these gains and losses are reported in unallocated corporate items outside of segment operating results until such time that the exposure we are managing affects earnings. At that time we reclassify the gain or loss from unallocated corporate items to segment operating profit, allowing our operating seg- ments to realize the economic effects of the derivative without experiencing any resulting mark-to-market volatility, which remains in unallocated corporate items. 

Stock-based Compensation We generally recognize compensa- tion expense for grants of restricted stock units using the value of a share of our stock on the date of grant.We estimate the value of stock option grants using the Black-Scholes valuation model. Stock compensation is recognized straight line over the vesting period. All of our stock compensation expense is recorded in SG&A in the Consolidated Statement of Earnings and in unallo- cated corporate items in our segment results. 

Certain equity-based compensation plans contain provisions that accelerate vesting of awards upon retirement, disability, or death of eligible employees and directors. We consider a stock- based award to be vested when the employee’s retention of the award is no longer contingent on providing subsequent service. Accordingly, the related compensation cost is recognized imme- diately for awards granted to retirement-eligible individuals or 

over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period. 

We report the benefits of tax deductions in excess of recog- nized compensation cost as a financing cash flow, thereby reduc- ing net operating cash flows and increasing net financing cash flows. 

Defined Benefit Pension, Other Postretirement, and Postemployment Benefit Plans We sponsor several domestic and foreign defined benefit plans to provide pension, health care, and other welfare benefits to retired employees. Under certain circumstances, we also provide accruable benefits to former or inactive employees in the United States and Canada and members of our Board of Directors, including severance and certain other benefits payable upon death. We recognize an obligation for any of these benefits that vest or accumulate with service. Postemployment benefits that do not vest or accumulate with service (such as severance based solely on annual pay rather than years of service) are charged to expense when incurred. Our postemployment benefit plans are unfunded. 

We recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability and recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive loss. 

Use of Estimates Preparing our Consolidated Financial State- ments in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These esti- mates include our accounting for promotional expenditures, val- uation of long-lived assets, intangible assets, stock-based com- pensation, income taxes, and defined benefit pension, post-retire- ment and post-employment benefits. Actual results could differ from our estimates. 

Other New Accounting Standards In fiscal 2010, we adopted new accounting guidance on employer’s disclosures for post-retire- ment benefit plan assets. The guidance requires an employer to disclose information on the investment policies and strategies 

