Fair Value of Financial Investments and Liabilities

3 Months Ended

Mar. 31, 2012

Fair Value of Financial Investments and Liabilities [Abstract]

Fair Value of Financial Investments and Liabilities

E. The Company has maintained investments in available-for-sale securities and a number of private equity funds, principally as part of its tax planning strategies, as any gains enhance the utilization of any current and future tax capital losses. Financial investments included in other assets were as follows, in millions:

	March 31, 2012		December 31, 2011
Auction rate securities	$	22	$	22
Total recurring investments		22		22
Private equity funds		81		86
Other investments		4		4
Total non-recurring investments		85		90
Total	$	107	$	112

The Company’s investments in available-for-sale securities at March 31, 2012 and December 31, 2011 were as follows, in millions:

			Pre-tax
	Cost Basis		Unrealized Gains		Unrealized Losses		Recorded Basis
March 31, 2012	$	19	$	3	$	—	$	22
December 31, 2011	$	19	$	3	$	—	$	22

Recurring Fair Value Measurements. Financial assets and (liabilities) measured at fair value on a recurring basis at each reporting period and the amounts for each level within the fair value hierarchy were as follows, in millions:

		0000000000		0000000000		0000000000		0000000000
			Fair Value Measurements Using
					Significant
	Mar. 31, 2012		Quoted Market Prices (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Auction rate securities	$	22		—		—	$	22
Total	$	22	$	—	$	—	$	22

		0000000000		0000000000		0000000000		0000000000
			Fair Value Measurements Using
	Dec. 31, 2011		Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Auction rate securities	$	22	$	—	$	—	$	22
Total	$	22	$	—	$	—	$	22

The fair value of the auction rate securities held by the Company have been estimated, on a recurring basis, using a discounted cash flow model (Level 3 input). The significant inputs in the discounted cash flow model used to value the auction rate securities include: expected maturity of auction rate securities, discount rate used to determine the present value of expected cash flows and the assumptions for credit defaults, since the auction rate securities are backed by credit default swap agreements.

The following table summarizes the changes in Level 3 financial assets measured at fair value on a recurring basis for the three months ended March 31, 2012 and the year ended December 31, 2011, in millions:

	March 31, 2012 Auction Rate Securities		December 31, 2011 Auction Rate Securities
Fair value at beginning of period	$	22	$	22
Total losses included in earnings		—		—
Unrealized (losses)		—		—
Purchases		—		—
Settlements		—		—
Transfer from Level 3 to Level 2		—		—
Fair value at period end	$	22	$	22

Non-Recurring Fair Value Measurements. For the three months ended March 31, 2012 and 2011, the Company did not measure any financial investments on a non-recurring basis, as there was no other-than-temporary decline in the estimated value of private equity funds.

The Company did not have any transfers between Level 1 and Level 2 financial assets in the first quarter of 2012 or 2011.

Realized Gains. Income from financial investments, net, included in other, net, within other income (expense), net, was as follows, in millions:

	Three Months Ended March 31,
	2012		2011
Realized gains – distributions from private equity funds	$	16	$	3
Realized gains – sale of TriMas
Corporation common stock		—		14
Total income from financial investments	$	16	$	17

The fair value of the Company’s short-term and long-term fixed-rate debt instruments is based principally upon quoted market prices for the same or similar issues or the current rates available to the Company for debt with similar terms and remaining maturities. The aggregate estimated market value of short-term and long-term debt at March 31, 2012 was approximately $4.5 billion, compared with the aggregate carrying value of $4.4 billion. The aggregate estimated market value of short-term and long-term debt at December 31, 2011 was approximately $4.0 billion, compared with the aggregate carrying value of $4.0 billion.