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Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE

v2.4.0.8
FAIR VALUE
 9 Months Ended
Sep. 30, 2014
FAIR VALUE Ìý
FAIR VALUE

9. FAIR VALUE

ÌýÌýÌýÌýÌýÌýÌýÌýThe fair values of financial instruments were as follows (dollars in millions):

Ìý
 Ìý SeptemberÌý30, 2014 Ìý DecemberÌý31, 2013 Ìý
Ìý
 Ìý Carrying
Value		 Ìý Estimated
Fair Value		 Ìý Carrying
Value		 Ìý Estimated
Fair Value		 Ìý

Non-qualified employee benefit plan investments

 Ìý $ 21 Ìý $ 21 Ìý $ 21 Ìý $ 21 Ìý

Cross-currency interest rate contracts

 Ìý Ìý 30 Ìý Ìý 30 Ìý Ìý 2 Ìý Ìý 2 Ìý

Interest rate contracts

 Ìý Ìý (7 ) Ìý (7 ) Ìý (10 ) Ìý (10 )

Long-term debt (including current portion)

 Ìý Ìý (4,026 ) Ìý (4,069 ) Ìý (3,910 ) Ìý (4,010 )

ÌýÌýÌýÌýÌýÌýÌýÌýThe carrying amounts reported in our condensed consolidated balance sheets (unaudited) of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair value of non-qualified employee benefit plan investments is obtained through market observable pricing using prevailing market prices. The estimated fair values of our long-term debt are based on quoted market prices for the identical liability when traded as an asset in an active market (LevelÌý1).

ÌýÌýÌýÌýÌýÌýÌýÌýThe fair value estimates presented herein are based on pertinent information available to management as of SeptemberÌý30, 2014 and DecemberÌý31, 2013. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since SeptemberÌý30, 2014 and current estimates of fair value may differ significantly from the amounts presented herein.

ÌýÌýÌýÌýÌýÌýÌýÌýThe following assets and liabilities are measured at fair value on a recurring basis (dollars in millions):

Ìý
 Ìý Ìý
 Ìý Fair Value Amounts Using Ìý
Description
Ìý SeptemberÌý30,
2014		 Ìý Quoted prices in
active markets for
identical assets
(LevelÌý1)(3)		 Ìý Significant other
observable
inputs
(LevelÌý2)(3)		 Ìý Significant
unobservable
inputs
(LevelÌý3)(3)		 Ìý

Assets:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Available-for sale equity securities:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Equity mutual funds

 Ìý $ 21 Ìý $ 21 Ìý $ â€� Ìý $ â€� Ìý

Derivatives:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Cross-currency interest rate contracts(1)ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

 Ìý Ìý 30 Ìý Ìý â€� Ìý Ìý 30 Ìý Ìý â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �

Total assets

 Ìý $ 51 Ìý $ 21 Ìý $ 30 Ìý $ â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �
� � � � � � � � � � � � � �
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Liabilities:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Derivatives:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Interest rate contracts(2)

 Ìý $ (7 ) $ â€� Ìý $ (7 ) $ â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �
� � � � � � � � � � � � � �
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý


Ìý

Ìý
 Ìý Ìý
 Ìý Fair Value Amounts Using Ìý
Description
Ìý DecemberÌý31,
2013		 Ìý Quoted prices in
active markets for
identical assets
(LevelÌý1)(3)		 Ìý Significant other
observable
inputs
(LevelÌý2)(3)		 Ìý Significant
unobservable
inputs
(LevelÌý3)(3)		 Ìý

Assets:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Available-for sale equity securities:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Equity mutual funds

 Ìý $ 21 Ìý $ 21 Ìý $ â€� Ìý $ â€� Ìý

Derivatives:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Cross-currency interest rate contracts(1)ÌýÌýÌýÌýÌýÌýÌýÌýÌýÌý

 Ìý Ìý 2 Ìý Ìý â€� Ìý Ìý 2 Ìý Ìý â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �

Total assets

 Ìý $ 23 Ìý $ 21 Ìý $ 2 Ìý $ â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �
� � � � � � � � � � � � � �
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Liabilities:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Derivatives:

 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý

Interest rate contracts(2)

 Ìý $ (10 ) $ â€� Ìý $ (10 ) $ â€� Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
� � � � � � � � � � � � � �
� � � � � � � � � � � � � �
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
(1)
The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates, exchange rates, and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period.

(2)
The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period.

(3)
There were no transfers between LevelsÌý1 and 2 within the fair value hierarchy for the nine months ended SeptemberÌý30, 2014 and the year ended DecemberÌý31, 2013. During the nine months ended SeptemberÌý30, 2014 and 2013, there were no instruments categorized as LevelÌý3 within the fair value hierarchy.

ÌýÌýÌýÌýÌýÌýÌýÌýWe also have assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include property, plant and equipment and those associated with acquired businesses, including goodwill and intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During the nine months ended SeptemberÌý30, 2014 and 2013, we recorded charges of $26Ìýmillion and $1Ìýmillion, respectively, for the impairment of long-lived assets.