28 Eme r s on 2013 Ann u al R e por t C O nt R a C tual O B l IG at IO n S At September 30 2013 the Companys contractual obligations including estimated payments are as follows amounts due by period less than m o r e t h a n dollars in millions total 1 year 13 years 35 years 5 years Longterm Debt i n c l u d i n g I n t e r e s t 6102 460 1157 800 3685 Operating Leases 910 270 336 138 166 Purchase Obligations 1 0 8 7 9 5 9 9 9 2 3 6 Total 8099 1689 1592 961 3857 Purchase obligations consist primarily of inventory purchases made in the normal course of business to meet operational requirements The table above does not include 23 billion of other noncurrent liabilities recorded in the balance sheet and summarized in Note 17 which consist primarily of pension and postretirement plan liabilities and deferred income taxes including unrecognized tax benefts because it is not certain when these amounts will become due See Notes 10 and 11 for estimated future beneft payments and Note 13 for additional information on deferred income taxes F I nan CI al In S t R u M ent S The Company is exposed to market risk related to changes in interest rates commodity prices and foreign currency exchange rates and selectively uses derivative fnancial instruments including forwards swaps and purchased options to manage these risks The Company does not hold derivatives for trading purposes The value of market risk sensitive derivative and other fnancial instruments is subject to change as a result of movements in market rates and prices Sensitivity analysis is one technique used to forecast the impact of these movements Based on a hypothetical 10 percent increase in interest rates a 10 percent decrease in commodity prices or a 10 percent weakening in the US dollar across all currencies the potential losses in future earnings fair value or cash fows are not material Sensitivity analysis has limitations for example a weaker US dollar would beneft future earnings through favorable translation of nonUS operating results and lower commodity prices would beneft future earnings through lower cost of sales See Notes 1 and 7 through 9 Critical a ccounting Policies Preparation of the Companys fnancial statements requires management to make judgments assumptions and estimates regarding uncertainties that could affect reported revenue expenses assets liabilities and equity Note 1 describes the signifcant accounting policies used in preparation of the consolidated fnancial statements The most signifcant areas where management judgments and estimates impact the primary fnancial statements are described below Actual results in these areas could differ materially from managements estimates under different assumptions or conditions Revenue Re COG n I t IO n The Company recognizes nearly all of its revenues through the sale of manufactured products and records the sale when products are shipped or delivered and title passes to the customer with collection reasonably assured In certain limited circumstances revenue is recognized using the percentageofcompletion method as performance occurs or in accordance with ASC 985605 related to software Sales arrangements sometimes involve delivering multiple elements including services such as installation In these instances the revenue assigned to each element is based on vendorspecifc objective evidence thirdparty evidence or a management estimate of the relative selling price Revenue is recognized individually for delivered elements only if they have value to the customer on a standalone basis and the performance of the undelivered items is probable and substantially in the Companys control or the undelivered elements are inconsequential or perfunctory and there are no unsatisfed contingencies related to payment Management believes that all relevant criteria and conditions are considered when recognizing revenue Invent ORI e S Inventories are stated at the lower of cost or market The majority of inventory values are based on standard costs which approximate average costs while the remainder are principally valued on a frstin frstout basis Cost standards are revised at the beginning of each year The annual effect of resetting standards plus any operating variances incurred de B t a S a P e RC ent OF C a PI tal and n et de B t a S a P e RC ent OF n et Ca PI tal 08 348 341 333 340 348 257 183 09 13 12 11 10 35 t O t al d e B t O F t O t al C a P I t al a t Y e a R end 2013