Financial Instruments

6 Months Ended

Jun. 30, 2011

Financial Instruments

Financial Instruments

14.    Financial Instruments

The estimated fair value of the Company's significant financial instruments is provided below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company's intent or need to dispose of the financial instrument.

	June 30, 2011				December 31, 2010
(In millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents		$1,659		$1,659		$1,894		$1,894
Long-term investments		$     58		$     58		$     68		$     64
Short-term debt		$   260		$   267		$       8		$       8
Long-term debt		$2,773		$3,020		$3,026		$3,234

Cash and Cash Equivalents: The estimated fair value of the Company's cash and cash equivalents approximates their carrying value.

Long-term Investments: Long-term investments include available for sale securities recorded at quoted market prices, certain investments carried at cost and unrealized gains related to available for sale investments held in a fiduciary capacity as discussed below.

The Company has long-term investments of $35 million and $39 million at June 30, 2011 and December 31, 2010, carried on the cost basis for which there are no readily available market prices. These investments are included in Other assets in the consolidated balance sheets. The Company monitors these investments for impairment and makes appropriate reductions in carrying values when necessary.

The Company had available for sale securities with an aggregate fair value of $20 million and $23 million at June 30, 2011 and December 31, 2010, respectively, which are carried at market value under ASC Topic No. 320. The Company had gross unrealized gains (pre-tax) on these securities of $7 million and $8 million included in accumulated other comprehensive income at June 30, 2011 and December 31, 2010, respectively. The Company recorded the following change in unrealized gains and losses for the three and six-month periods ended June 30, 2011 and 2010.

(In millions of dollars)	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Unrealized gains (pre-tax)		$ —		$   1		$ —		$   1
Unrealized losses (pre-tax)		$ —		$ —		$(1)		$ —

A portion of the Company's fiduciary funds described in Note 3 are invested in high quality debt securities and are classified as available for sale. Gross unrealized gains (pre-tax) on these securities that are included in other assets and accumulated other comprehensive income in the consolidated balance sheets were $3 million and $7 million at June 30, 2011 and December 31, 2010, respectively. In each of the six months ended June 30, 2011 and 2010, the Company recorded gross unrealized losses (pre-tax) of $4 million and $6 million related to these investments. These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of equity.

Proceeds from the sale of available for sale investments were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions of dollars)	2011		2010		2011		2010
Proceeds from the sale of available for sale securities		$  2		$ —		$  3		$14

The cost of equity securities sold is determined using the average cost method.

The Company also holds investments in certain private equity fund partnerships which are accounted for using the equity method and other investments that are held at cost. The Company recorded the following gains (losses) related to these investments:

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions of dollars)	2011		2010		2011	2010
Equity method gains (losses)		$ (4)		$ 18	$ 14		$ 17
Gains (losses) on cost method investments		(3)		—	(2)		1
Gains (losses) from equity and cost method investments		(7)		18	12		18
Realized gains on available for sale securities		1		—	1		8
Investment income (loss)		$ (6)		$ 18	$   13		$ 26

Short-term and Long-term Debt: The fair value of the Company's short-term debt, which consists primarily of term debt maturing within the next year, approximates its carrying value. The estimated fair value of a primary portion of the Company's long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities. The fair value of the first $250 million of Senior Notes maturing in 2014 is estimated to be the carrying value of those notes adjusted by the fair value of the interest rate swap derivative, discussed above.