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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 30, 2013
Fair Value of Financial Assets and Liabilities

The following tables detail the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis, as well as non-recurring fair value measurements, at September 30, 2013 and December 31, 2012, respectively (in millions):

 

 

 

 

 

Fair Value at Measurement Date Using

 

 

Balance at
September 30,
2013

 

 

Quoted Prices
in Active
Markets for
Identical Assets

(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Fair Value Measurements on a Recurring Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivatives (a)             

$

  3

 

 

$

––

 

 

$

  3

 

 

$

––

 

Forward currency sale contracts (a)             

 

  3

 

 

 

––

 

 

 

  3

 

 

 

––

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivatives (a)             

 

(4

)

 

 

––

 

 

 

(4

)

 

 

––

 

Forward currency sale contracts (a)             

 

(3

)

 

 

––

 

 

 

(3

)

 

 

––

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value at Measurement Date Using

 

 

Balance at
 December 31,
2012

 

 

Quoted Prices
in Active
Markets for
Identical Assets

(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements on a Recurring Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivatives (a)             

$

  7

 

 

$

––

 

 

$

  7

 

 

$

––

 

Forward currency sale contract (a)             

 

  5

 

 

 

––

 

 

 

  5

 

 

 

––

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivatives (a)             

 

(6

)

 

 

––

 

 

 

(6

)

 

 

––

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements on a Non-recurring Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impaired hotel properties held and used (b)              

 

  34

 

 

 

––

 

 

 

––

 

 

 

  34

 

 

 

 

 

(a)              These derivative contracts have been designated as hedging instruments.

(b)              The fair value measurements are as of the measurement date of the impairment and may not reflect subsequent book values.

Interest Rate Swap Derivatives Designated as Cash Flow Hedges

The following table summarizes our interest rate swap derivatives designated as cash flow hedges (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value

 

Transaction
Date

 

Total
Notional
Amount

 

Maturity
Date

 

Swapped
Index

 

All-in Rate

 

 

Gain (Loss)
Quarter ended

 

 

Gain (Loss)
Year-to-date ended

 

  

  

  

  

 

September 30,
2013

 

 

September 7,
2012

 

 

September 30,
2013

 

 

September 7,
2012

 

November 2011 (1)             

  

A$

  62

  

November 2016

  

Reuters BBSY

  

 

  6.7

%

 

$

––

  

  

$

––

  

  

$

  1

  

  

$

––

  

February 2011 (2)             

  

NZ$

  79

  

February 2016

  

NZ$ Bank Bill

  

 

  7.15

%

 

$

––

  

  

$

––

  

  

$

  1

  

  

$

(2

)  

 

 

 

 

 

 

(1)              The swap was entered into in connection with the A$82 million ($85 million) mortgage loan on the Hilton Melbourne South Wharf.

(2)              The swap was entered into in connection with the NZ$105 million ($87 million) mortgage loan on seven properties in New Zealand.

Foreign Currency Sale Contracts

The following table summarizes our foreign currency sale contracts (in millions):

 

Currently Outstanding

 

Change in Fair Value – All Contracts

 

Transaction
Date Range

 

Total
Transaction
Amount in
Foreign
Currency

 

 

Total
Transaction
Amount
in Dollars

 

 

Forward
Purchase
Date Range

 

Gain (Loss)
Quarter ended

 

 

Gain (Loss)
Year-to-date ended

 

September 30,
2013

 

 

September 7,
2012

 

 

September 30,
2013

 

 

September 7,
2012

 

May 2008-January 2013             

  

€

  120

  

  

$

  163

  

  

May 2014 - January 2016

  

$

(6

)

  

$

(2

)  

  

$

(2

)

  

$

  1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Draws on Credit Facility that are Designated as Net Investments in International Operations

The following table summarizes the draws on our credit facility that are designated as hedges of net investments in international operations (in millions):

 

 

Currency

 

Balance
Outstanding
US$

 

 

Balance
Outstanding in
Foreign Currency

 

 

Gain (Loss)
Quarter ended

 

 

Gain (Loss)
Year-to-date ended

 

 

September 30,
2013

 

 

September 7,
2012

 

 

September 30,
2013

 

 

September 7,
2012

 

 

Canadian dollars (1)             

  

$

  30

  

  

C$

  31

  

  

$

(1

)  

  

$

––

  

  

$

  1

  

  

$

––

  

 

Australian dollars             

  

$

  6

  

  

A$

  7

  

  

$

––

  

  

$

––

  

  

$

  1

  

  

$

––

  

 

Euros             

  

$

  100

  

  

€  

  74

  

  

$

(3

)  

  

$

(1

)  

  

$

(3

)  

  

$

(1

)  

 

 

 

 

(1)              We have an additional $74 million outstanding on the credit facility in Canadian dollars that has not been designated as a hedging instrument.

Fair Values of Certain Financial Liabilities and Other Financial Instruments

The fair value of certain financial liabilities are shown below (in millions):

 

 

September 30,
2013

 

 

December 31,
2012

 

 

Carrying
Amount

 

 

Fair
Value

 

 

Carrying
Amount

 

 

Fair
Value

 

Financial liabilities

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Senior notes (Level 1)             

$

  2,647

  

  

$

  2,758

  

  

$

  3,038

  

  

$

  3,296

  

Exchangeable Senior Debentures (Level 1)             

 

  367

  

  

 

  562

  

  

 

  531

  

  

 

  725

  

Credit facility (Level 2)             

 

  729

  

  

 

  729

  

  

 

  763

  

  

 

  763

  

Mortgage debt and other, net of capital leases (Level 2)             

 

  816

  

  

 

  831

  

  

 

  1,078

  

  

 

  1,094