FAIR VALUE MEASUREMENTS

A summary of the Company's recurring and nonrecurring fair value measurements can be found in Note 12 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. If applicable, updates have been included in the respective section below.

Fair Value Measurements on a Recurring Basis

The following tables summarize the bases used to measure certain assets and liabilities at fair value on a recurring basis:



Basis of Fair Value Measurements on a Recurring Basis at June 30, 2016 In millions	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting (1)			Total
Assets at fair value:
Cash equivalents and other current assets (2)	$	—	$	1,934	$	—	$	—		$	1,934
Interests in trade accounts receivable conduits (3)	—		—		1,149		—			1,149
Equity securities (4)	593		38		—		—			631
Debt securities: (4)
Government debt (5)	—		614		—		—			614
Corporate bonds	—		664		51		—			715
Derivatives relating to: (6)
Commodities	13		5		—		(1		)	17
Foreign currency	—		163		—		(109		)	54
Total assets at fair value	$	606	$	3,418	$	1,200	$	(110	)	$	5,114
Liabilities at fair value:
Long-term debt (7)	$	—	$	23,400	$	—	$	—		$	23,400
Derivatives relating to: (6)
Interest rates	—		9		—		—			9
Commodities	2		229		—		(9		)	222
Foreign currency	—		248		—		(109		)	139
Total liabilities at fair value	$	2	$	23,886	$	—	$	(118	)	$	23,770


(1)	Cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.


(2)	Treasury Bills and money market funds included in "Cash and cash equivalents" and "Other current assets" in the consolidated balance sheets and held at amortized cost, which approximates fair value.


(3)	Included in “Accounts and notes receivable – Other” in the consolidated balance sheets. See Note 12 for additional information on transfers of financial assets.


(4)	The Company’s investments in equity and debt securities are primarily classified as available-for-sale and are included in “Other investments” in the consolidated balance sheets.


(5)	U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.


(6)	See Note 8 for the classification of derivatives in the consolidated balance sheets.


(7)	See Note 8 for information on fair value measurements of long-term debt.



Basis of Fair Value Measurements on a Recurring Basis at December 31, 2015 In millions	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counterparty and Cash Collateral Netting (1)			Total
Assets at fair value:
Cash equivalents (2)	$	—	$	5,043	$	—	$	—		$	5,043
Interests in trade accounts receivable conduits (3)	—		—		943		—			943
Equity securities (4)	564		39		—		—			603
Debt securities: (4)
Government debt (5)	—		612		—		—			612
Corporate bonds	—		651		—		—			651
Derivatives relating to: (6)
Commodities	5		2		—		(1		)	6
Foreign currency	—		161		—		(52		)	109
Total assets at fair value	$	569	$	6,508	$	943	$	(53	)	$	7,967
Liabilities at fair value:
Long-term debt (7)	$	—	$	18,000	$	—	$	—		$	18,000
Derivatives relating to: (6)
Interest rates	—		4		—		—			4
Commodities	6		256		—		(14		)	248
Foreign currency	—		84		—		(52		)	32
Total liabilities at fair value	$	6	$	18,344	$	—	$	(66	)	$	18,284


(1)	Cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.


(2)	Treasury Bills and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value.


(3)	Included in “Accounts and notes receivable – Other” in the consolidated balance sheets. See Note 12 for additional information on transfers of financial assets.


(4)	The Company’s investments in equity and debt securities are primarily classified as available-for-sale and are included in “Other investments” in the consolidated balance sheets.


(5)	U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.


(6)	See Note 8 for the classification of derivatives in the consolidated balance sheets.


(7)	See Note 8 for information on fair value measurements of long-term debt.

Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding liabilities. The Company posted cash collateral of $11 million at June 30, 2016 ($26 million at December 31, 2015).

The following table summarizes the changes in fair value measurements of interests held in trade receivable conduits using Level 3 inputs for the three and six-month periods ended June 30, 2016 and June 30, 2015:



Fair Value Measurements Using Level 3 Inputs	Three Months Ended						Six Months Ended
Interests Held in Trade Receivable Conduits (1) In millions	Jun 30, 2016			Jun 30, 2015			Jun 30, 2016			Jun 30, 2015
Balance at beginning of period	$	1,195		$	1,263		$	943		$	1,328
Loss included in earnings (2)	—			(1		)	(1		)	—
Purchases	520			222			960			441
Settlements	(566		)	(428		)	(753		)	(713		)
Balance at end of period	$	1,149		$	1,056		$	1,149		$	1,056


(1)	Included in “Accounts and notes receivable – Other” in the consolidated balance sheets.


(2)	Included in “Selling, general and administrative expenses” in the consolidated statements of income.

As part of the DCC Transaction, the Company acquired certain securities with a fair value of $51 million. The securities are valued on a recurring basis using Level 3 inputs, which primarily relate to assumptions a market participant would use to determine the effective interest rates for the securities. For the three- and six-month periods ended June 30, 2016, changes to the fair value measurements of these securities were less than $1 million.

Fair Value Measurements on a Nonrecurring Basis

The following table summarizes the basis used to measure certain assets at fair value on a nonrecurring basis in the consolidated balance sheets at June 30, 2016:



Basis of Fair Value Measurements on a Nonrecurring Basis at June 30, 2016	Significant Other Unobservable Inputs		Significant Other Unobservable Inputs		Total Losses
In millions	(Level 2)		(Level 3)		2016
Assets at fair value:
Long-lived assets, investments and other assets	$	11	$	45	$	(153	)

As part of the 2016 restructuring plan, the Company will shut down a number of manufacturing and corporate facilities. The manufacturing facilities and related assets, corporate facilities and data centers associated with this plan were written down to zero in the second quarter of 2016. The Company also rationalized its aircraft fleet. Certain aircraft, classified as a Level 3 measurement, were considered held for sale with a net carrying value of $45 million using unobservable inputs, including assumptions a market participant would use to measure the fair value of the aircraft. In addition, the Company reached a definitive agreement to sell a cost method investment. The investment, classified as a Level 2 measurement, was written down to $11 million based on the definitive agreement, less estimated costs to sell. The investment was sold on July 7, 2016. The impairment charges related to the 2016 restructuring plan, totaling $153 million, were included in "Restructuring charges" in the consolidated statements of income. See Note 3 for additional information on the Company's restructuring activities.