43 For eign Curr ency Exchange Rate Risk The Company operates in multiple countries throughout the globe; therefore, the Company is exposed to fluctuations in foreign currency exchange rate. The Company is exposed to transactional foreign currency risk, the risk when transactions not denominated in the functional currency in which the Company operates are revalued. The Company enters into foreign currency exchange contracts principally to hedge the currency fluctuations in certain transactions denominated in foreign currencies, thereby limiting the Company's risk that would otherwise result from changes in exchange rates. Principal transactions hedged during the year were firm sales and purchase commitments. The fair value of foreign currency contracts represents the amount required to enter into of fsetting contracts with similar remaining maturities based on quoted market prices. W e account for these foreign currency exchange contracts as cash flow or economic hedges. Changes in the fair value of derivatives that are designated as cash flow hedges are recorded in other comprehensive income and reclassified to the other income (expense) when the ef fects of the items being hedged are realized. Changes in the fair value of economic hedges are recognized in current period earnings in other income (expense). At December 31, 2012 and 201 1 , the net unrealized loss on foreign currency contracts was $ 0.2 million and $0.7 million , respectively . A 10% decline in the exchange rate for these currencies would result in a decrease in the fair value of $23.9 million in 2012 . In addition, to mitigate these risks, the Company believes it is appropriate to finance those operations with borrowings denominated in the local currency to the extent practicable where debt financing is desirable or necessary . Considerations which influence the amount of such borrowings include long- and short-term business plans, tax implications, and the availability of borrowings with acceptable interest rates and terms. In those countries where the local currency is the designated functional currency , this strategy mitigates the risk of reported losses or gains in the event the foreign currency strengthens or weakens against the U.S. dollar . The Company also has exposure to foreign currency exchange risk when the results of its international operating units are translated from the local currency into the U.S. dollar . At December 31, 2012 and 201 1 , the accumulated other comprehensive income (loss) account included in the total equity section of the Consolidated Balance Sheet included a cumulative translation loss of $8.6 million and $15.9 million , respectively . A 10% percent increase in the value of the US dollar relative to foreign currencies would increase the cumulative translation loss resulting in a cumulative translation loss of approximately $130.6 million in 2012 . This sensitivity analysis is inherently limited as it assumes that rates of multiple foreign currencies will always move in the same direction relative to the value of the U.S. dollar . Uncertainty in the global market conditions has resulted in, and may continue to cause, significant volatility in foreign currency exchange rates which could increase these risks, particularly in the Company’ s emer ging or developing markets within its ROW segment, which have historically been subject to considerable foreign currency exchange rate volatility , particularly in V enezuela. See the “V enezuelan Operations” discussion for further detail. Fair V alue of Designated Derivatives Unrealized gains and losses on the designated cash flow hedge financial instruments identified above are recorded in other comprehensive income (loss) until the underlying transaction occurs and is recorded in the consolidated statement of operations at which point such amounts included in other comprehensive income (loss) are recognized in earnings. This recognition generally will occur over periods of less than one year . During the years ended December 31, 2012 and 201 1 , a pre-tax loss of $ 4.4 million and a pre-tax gain of $ 14.7 million , respectively , were reclassified from accumulated other comprehensive income to the consolidated statement of operations. A pre-tax loss of $1.4 million is expected to be reclassified into earnings from other comprehensive income during 2013 . The notional amounts and fair values of these designated cash flow financial instruments at December 31, 2012 and 201 1 are shown below (in millions). The net carrying amount of the designated cash flow hedge financial instruments was a net liability of $1.3 million and $1 1.5 million at December 31, 2012 and 201 1 , respectively .   2012 2011 Notional Amount Fair V alue Notional Amount Fair V alue Cash flow hedges:         Interest rate swaps $ 15.3 $ (0.2 ) $ 32.1 $ (0.6 ) Commodity futures 22.8 (0.9 ) 216.1 (10.2 ) Foreign currency forward exchange 60.7 (0.2 ) 55.4 (0.7 )     $ (1.3 )   $ (11.5 ) T able of Contents