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Marketable securities and other investments are valued at quoted market prices.
The fair values of long-term borrowings were determined by reference to quoted market prices or by obtaining quotes from dealers.
The fair values for the remaining financial instruments in the above table are based on dealer quotes and reflect the estimated amounts the Company would pay or receive to terminate the contracts.
The carrying values of cash and cash equivalents, receivables, short-term borrowings and payables approximate their fair values.
The Company, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices, and interest rates which may adversely affect its results of operations and financial position.
The Company manages such exposures, in part, with derivative financial instruments.
Foreign currency forward contracts are used to hedge existing foreign currency denominated assets and liabilities, especially those of the Company’s International Treasury Center, as well as forecasted foreign currency denominated intercompany sales. Silver forward contracts are used to mitigate the Company’s risk to fluctuating silver prices. The Company’s exposure to changes in interest rates results from its investing and borrowing activities used to meet its liquidity needs.
Long-term debt is generally used to finance long-term investments, while short-term debt is used to meet working capital requirements.
Derivative instruments are not presently used to adjust the Company’s interest rate risk profile. The Company does not utilize financial instruments for trading or other speculative purposes.
The Company’s financial instrument counterparties are high- quality investment or commercial banks with significant experience with such instruments.
The Company manages exposure to counterparty credit risk by requiring specific minimum credit standards and diversification of counterparties.
The Company has procedures to monitor the credit exposure amounts. The maximum credit exposure at December 31, 2000 was not significant to the Company.
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