NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2011, 2010 and 2009 (currencies in millions) The following table presents the balance sheet locations and fair value of derivative financial instruments:  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:  Year Ended December 31, 2011 2010 Interest-rate swaps  $ (4.4) $ (1.0) Term notes  $ 3.7 $  .9 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.  At December 31, 2011 2010 ASSETS LIABILITIES ASSETS LIABILITIES Derivatives designated under hedge accounting: Interest-rate contracts: Financial Services:  Other assets  $ 1.4  $ 9.1 Deferred taxes and other liabilities  $ 107.6 $107.5 Foreign-exchange contracts :  Truck and Other:  Other current assets  .1 .9 Accounts payable, accrued expenses and other 2.1 1.1 Total  $ 1.5  $ 109.7 $10.0  $108.6 Economic hedges: Interest-rate contracts: Financial Services:  Other assets  $ .8 Deferred taxes and other liabilities  $ .4 $  3.5 Foreign-exchange contracts :  Truck and Other:  Other current assets  .1 $  .1 Accounts payable, accrued expenses and other .3 .3 Financial Services:  Deferred taxes and other liabilities  .1 .2 Total  $ .9 $ .8 $  .1  $  4.0