DERIVATIVE INSTRUMENTS (Notes)

12 Months Ended

Dec. 31, 2016

Notes To Financial Statements [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

The following disclosures summarize the fair value of derivative instruments not designated as hedging instruments in the consolidated balance sheets and the effect of changes in fair value related to those derivative instruments not designated as hedging instruments on the consolidated statements of operations (in millions):

Derivative Instruments Not Designated As Hedging Instruments		Fair Value as of December 31,
	Balance Sheet Location	2016		2015
Asset Derivatives:
Foreign currency hedges	Prepaid expenses and other current assets	$	—	$	6

		Amount of Gain (Loss) Recognized In Income on Derivatives
Effect on Income of Derivative Instruments Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivatives	For the Years Ended December 31,
		2016			2015		2014
Foreign currency hedge	Other expense, net	$	(2	)	$	6	$	—
Note hedge	Non-cash convertible debt related expense	—			—		5
Cash conversion option	Non-cash convertible debt related expense	—			—		(5		)
Effect on income of derivative instruments not designated as hedging instruments		$	(2	)	$	6	$	—

Foreign Currency Hedge

In order to hedge the risk of adverse foreign currency exchange rate fluctuations impacting the expected sale proceeds from our equity transfer agreement in China (See Note 4.Dispositions, Assets Held for Sale and Discontinued Operations), we entered into a foreign currency exchange collar with two financial institutions covering approximately $100 million of notional to protect against further rate fluctuations pending the sale of our ownership interest to CITIC, which was completed during September 2016. The foreign currency hedge is accounted for as a derivative instrument and, as such, was recorded at fair value quarterly with any change in fair value recognized in our consolidated statements of operations as other expense, net. During the twelve months ended December 31, 2016, cash provided by foreign currency exchange settlements totaled $5 million and was included in net cash used in investing activities on our condensed consolidated statement of cash flows.

As of December 31, 2016, we received $105 million of gross sale proceeds relating to the aforementioned sale of our ownership interests to CITIC and therefore, settled or canceled remaining foreign currency exchange derivatives related to this hedged transaction, resulting in a current asset balance of zero. As of December 31, 2015, the fair value of the foreign currency exchange derivatives of $6 million, pre-tax, was recorded as a current asset.

We have also entered into foreign currency forwards to manage foreign currency exchange rate fluctuations associated with a series of fixed payments to be made by an international subsidiary through the end of 2017. This foreign currency forward is accounted for as a derivative instrument at fair value in our consolidated balance sheet with any changes in fair value recognized in our consolidated statements of operations as "Other expense, net." This derivative instrument was not material to our consolidated statement of operations nor was it material to our condensed consolidated balance sheet as of December 31, 2016.

Cash Conversion Option, Note Hedge and Contingent Interest features related to the 3.25% Cash Convertible Senior Notes

The cash conversion option was a derivative instrument which was recorded at fair value quarterly with any change in fair value being recognized in our consolidated statements of operations as non-cash convertible debt related expense. The note hedge was accounted for as a derivative instrument and, as such, was recorded at fair value quarterly with any change in fair value being recognized in our consolidated statements of operations as non-cash convertible debt related expense.

The 3.25% Notes matured on June 1, 2014. Upon maturity, we were required to pay $83 million to satisfy the obligation under the cash conversion option in addition to the principal amount of the 3.25% Notes. The note hedge settled for $83 million and effectively offset our exposure to the cash payments in excess of the principal amount made under the cash conversion option. The income recognized as a result of changes in the credit valuation adjustment related to the note hedge was not material.

Energy Price Risk

Following the expiration of certain long-term energy sales contracts, we may have exposure to market risk, and therefore revenue fluctuations, in energy markets. We have entered into contractual arrangements that will mitigate our exposure to short-term volatility through a variety of hedging techniques, and will continue to do so in the future. Our efforts in this regard will involve only mitigation of price volatility for the energy we produce, and will not involve taking positions (either long or short) on energy prices in excess of our physical generation. The amount of energy generation for which we have hedged under agreements with various financial institutions is indicated in the following table (in millions):

Calendar Year	Hedged MWh
2017	2.4
2018	1.0
Total	3.4

As of December 31, 2016, the net fair value of the energy derivatives of $2 million, pre-tax, was recorded as a $3 million current asset and a $1 million noncurrent liability and as a component of AOCI. As of December 31, 2016, the amount of hedge ineffectiveness was not material. The net fair value energy derivative balance of $2 million includes a natural gas hedge transaction of 1.3 million British Thermal Units to mitigate exposure to short-term volatility in certain contracted steam prices during the 2017 calendar year. As of December 31, 2015, the fair value of the energy derivatives of $21 million, pre-tax, was recorded as a current asset and as a component of AOCI. The change in fair value was recorded as a component of comprehensive income.

During the twelve months ended December 31, 2016, cash provided by and used in energy derivative settlements of $32 million and zero, respectively, was included in net cash provided by operating activities on our consolidated statement of cash flows. During the twelve months ended December 31, 2015, cash provided by and used in energy derivative settlements of $17 million and $7 million, respectively, was included in the change in net cash provided by operating activities on our consolidated statement of cash flows.

Interest Rate Swaps

In order to hedge the risk of adverse variable interest rate fluctuations associated with the Dublin senior term loan, we have entered into floating to fixed rate swap agreements with various financial institutions maturing between 2017 and 2021, denominated in Euros, for the full €250 million loan amount. This interest rate swap is designated as a cash flow hedge which is recorded at fair value with changes in fair value recorded as a component of AOCI. As of December 31, 2016, the fair value of the interest rate swap derivative of $20 million, pre-tax, was recorded as a $2 million and $18 million current and noncurrent liability, respectively. There was an immaterial amount of ineffectiveness recorded during the quarter recognized in our consolidated statements of operations as interest expense. As of December 31, 2015, the fair value of the interest rate swap derivative of $14 million, pre-tax, was recorded as a noncurrent liability.