FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2019

FAIR VALUE MEASUREMENTS

A summary of TDCC's recurring and nonrecurring fair value measurements can be found in Note 22 to the Consolidated Financial Statements included in TDCC's Annual Report on Form 10-K for the year ended December 31, 2018. 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	Mar 31, 2019						Dec 31, 2018
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Total
In millions
Assets at fair value:
Cash equivalents ¹	$	—	$	345	$	345	$	—	$	566	$	566
Marketable securities	—		101		101		—		100		100
Equity securities ²	21		—		21		16		—		16
Debt securities: ²
Government debt ³	—		702		702		—		700		700
Corporate bonds	19		1,054		1,073		—		983		983
Derivatives relating to: ⁴
Foreign currency	—		189		189		—		226		226
Commodities	10		90		100		17		93		110
Total assets at fair value	$	50	$	2,481	$	2,531	$	33	$	2,668	$	2,701
Liabilities at fair value:
Long-term debt including debt due within one year ⁵	$	—	$	20,850	$	20,850	$	—	$	20,214	$	20,214
Derivatives relating to: ⁴
Interest rates	—		181		181		—		64		64
Foreign currency	—		117		117		—		149		149
Commodities	13		155		168		23		189		212
Total liabilities at fair value	$	13	$	21,303	$	21,316	$	23	$	20,616	$	20,639


1.	Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value.


2.	TDCC’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.


3.	U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.


4.	See Note 15 for the classification of derivatives in the consolidated balance sheets.


5.	See Note 15 for information on fair value measurements of long-term debt.

For equity securities calculated at net asset value per share (or its equivalent), TDCC had $121 million in private market securities and $29 million in real estate at March 31, 2019 ($120 million in private market securities and $29 million in real estate at December 31, 2018). There are no redemption restrictions and the unfunded commitments on these investments were $87 million at March 31, 2019 ($89 million at December 31, 2018).

Fair Value Measurements on a Nonrecurring Basis

As part of the Synergy Program, TDCC has or will shut down a number of manufacturing, R&D and corporate facilities around the world. In the first three months of 2019, inventory associated with this plan was written down to zero. In addition, impairments of leased, non-manufacturing facilities, which were classified as Level 3 measurements, resulted in a write-down of right-of-use assets to $80 million using unobservable inputs. The impairment charges related to the Synergy Program, totaling $100 million, were included in "Restructuring and asset related charges - net" in the consolidated statements of income. See Note 4 for additional information on TDCC's restructuring activities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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