Document 3p3mayEedE9GNzdkpkO6dDa0

COOPER INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) International revenues by destination, based on the location products were delivered, were as follows by segment Electrical Products Tools & Hardware 2001 $ 856 1 360 7 $ 1,216 8 International Revenues 2000 (m millions) $ 881 0 300 9 $ 1,1819 1999 $ 775 9 351 0 $ 1,126 9 NOTE 16: FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES, CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS Derivative Instruments and Hedging Activities On January 1, 2001, Cooper adopted Statement of Financial Accounting Standards No 133, Accountingfor Derivative Instruments and Hedging Activities ("SFAS No 133"), as amended SFAS No 133 requires that all derivatives be recognized as assets and liabilities and measured at fair value For derivative instruments that are not designated as hedges, the gam or loss on the denvative is recognized m earnings currently If the derivative is designated as a fan value hedge, the gam or loss on the denvative and the offsetting loss or gam on the hedged asset, liability or firm commitment is recognized m earnings For denvative instruments designated as a cash flow hedge, the effective portion of the gam or loss on the derivative instrument is reported as a component of accumulated nonowner changes in equity and reclassified mto earnings m the same penod that the hedged transaction affects earnings The ineffective portion of the gam or loss is immediately recognized m earnings The cumulative effect of adopting the new standard was not material to Cooper's 2001 consolidated results of operations, financial position or cash flows Cooper enters mto foreign currency forward exchange contracts and commodity futures contracts to reduce the risks of adverse changes m foreign exchange rates and commodity prices Cooper does not enter mto speculative denvative transactions As a result of havmg sales, purchases and certain intercompany transactions denominated m currencies other than the functional currencies used by Cooper's busmesses, Cooper is exposed to the effect of foreign exchange rate changes on its cash flows and earnings Cooper enters mto foreign currency forward exchange contracts to hedge significant foreign currency denominated transactions for periods consistent with the terms of the underlying transactions Contracts generally have maturities that do not exceed one year Foreign currency forward exchange contracts executed to hedge a recognized asset, liability or firm commitment are accounted for as fair value hedges The net gain on contracts designated as fair value hedges was not material during 2001 Foreign currency forward exchange contracts executed to hedge forecasted transactions are accounted for as cash flow hedges The net gam on contracts designated as cash flow hedges was not material m 2001 Cooper also enters mto certain foreign currency forward exchange contracts that are not designated as hedges These contracts are mtended to reduce cash flow volatility related to intercompany financing transactions Cooper enters mto commodity futures contracts to reduce the volatility of price fluctuations on a portion of its forecasted annual raw material purchases These instruments are designated as cash flow hedges The net loss on commodity futures contracts was not material m 2001 F-24