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Fair Value Measurements
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
The Company holds certain fixed income securities, equity securities and derivatives, which are recognized and disclosed at fair value in the financial statements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date and is measured using the fair value hierarchy. This hierarchy prescribes valuation techniques based on whether the inputs to each measurement are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions about current market conditions. The prescribed fair value hierarchy and related valuation methodologies are as follows:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable, in active markets.
Level 3 — Valuations derived from valuation techniques, in which one or more significant inputs are unobservable.





Investments and Derivatives
The fair values of the Company’s financial assets and liabilities by level in the fair value hierarchy as of December 31, 2018 and December 31, 2017 were as follows: 
December 31, 2018
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Foreign exchange derivative contracts
$

 
$
5

 
$
5

Corporate bonds
1

 

 
1

Common stock and equivalents
19

 

 
19

Liabilities:
 
 
 
 
 
Foreign exchange derivative contracts
$

 
$
4

 
$
4

December 31, 2017
Level 1
 
Level 2
 
Total
Assets:
 
 
 
 
 
Foreign exchange derivative contracts
$

 
$
5

 
$
5

Available-for-sale securities:
 
 
 
 
 
Corporate bonds

 
2

 
2

Common stock and equivalents
13

 

 
13

Liabilities:
 
 
 
 
 
Foreign exchange derivative contracts
$

 
$
5

 
$
5


Pension and Postretirement Health Care Benefits Plan Assets
The fair values of the various pension and postretirement health care benefits plans’ assets by level in the fair value hierarchy as of December 31, 2018 and 2017 were as follows:
U.S. Pension Benefit Plans
December 31, 2018
Level 1
 
Level 2
 
Total
Equities
$
10

 
$

 
$
10

Commingled funds
2,074

 

 
2,074

Government fixed income securities
13

 
340

 
353

Corporate fixed income securities

 
964

 
964

Short-term investment funds
243

 

 
243

Total investment securities
$
2,340

 
$
1,304

 
$
3,644

Accrued income receivable
 
 
 
 
16

Cash
 
 
 
 
13

Fair value plan assets
 
 
 
 
$
3,673

December 31, 2017
Level 1
 
Level 2
 
Total
Equities
$
10

 
$

 
$
10

Commingled funds
2,198

 

 
2,198

Government fixed income securities
10

 
285

 
295

Corporate fixed income securities

 
900

 
900

Short-term investment funds
186

 

 
186

Total investment securities
$
2,404

 
$
1,185

 
$
3,589

Accrued income receivable
 
 
 
 
12

Cash
 
 
 
 
13

Fair value plan assets
 
 
 
 
$
3,614


Non-U.S. Pension Benefit Plans
December 31, 2018
Level 1
 
Level 2
 
Total
Equities
$
140

 
$

 
$
140

Commingled funds
476

 
16

 
492

Government fixed income securities
4

 
647

 
651

Short-term investment funds
60

 

 
60

Total investment securities
$
680

 
$
663

 
$
1,343

Cash
 
 
 
 
3

Accrued income receivable
 
 
 
 
42

Insurance contracts
 
 
 
 
50

Fair value plan assets
 
 
 
 
$
1,438



December 31, 2017
Level 1
 
Level 2
 
Total
Equities
$
136

 
$

 
$
136

Commingled funds
431

 
38

 
469

Government fixed income securities
3

 
779

 
782

Short-term investment funds
92

 

 
92

Total investment securities
$
662

 
$
817

 
$
1,479

Cash
 
 
 
 
3

Accrued income receivable
 
 
 
 
55

Insurance contracts
 
 
 
 
53

Fair value plan assets
 
 
 
 
$
1,590


Postretirement Health Care Benefits Plan 
December 31, 2018
Level 1
 
Level 2
 
Total
Commingled funds
$
74

 
$

 
$
74

Government fixed income securities

 
12

 
12

Corporate fixed income securities

 
34

 
34

Short-term investment funds
9

 

 
9

Total investment securities
$
83

 
$
46

 
$
129

Cash
 
 
 
 
$
4

Fair value plan assets
 
 
 
 
$
133

December 31, 2017
Level 1
 
Level 2
 
Total
Equities
$
1

 
$

 
$
1

Commingled funds
92

 

 
92

Government fixed income securities

 
12

 
12

Corporate fixed income securities

 
38

 
38

Short-term investment funds
8

 

 
8

Fair value plan assets
$
101

 
$
50

 
$
151


The following is a description of the categories of investments:
Equities A diversified portfolio of corporate common stock and preferred stock.
Commingled funds — A diversified portfolio of assets that includes corporate common stock, preferred stock, emerging market and high-yield fixed income securities among others.
Government fixed income securities Securities issued by municipal, domestic and foreign government agencies, index-linked government bonds as well as interest rate derivatives.
Corporate fixed income securities A diversified portfolio of primarily investment grade bonds issued by corporations.
Short-term investment funds Investments in money market accounts and derivatives with a liquidity of less than 90 days.
Level 1 investments include securities which are valued at the closing price reported on the active market in which the individual securities are traded. Level 2 investments consist principally of securities which are valued using independent third party pricing sources. A variety of inputs are utilized by the independent pricing sources including market based inputs, binding quotes, indicative quotes, and ongoing redemption and subscription activity. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation.
At December 31, 2018, the Company had $734 million of investments in money market prime and government funds (Level 1) classified as Cash and cash equivalents in its Consolidated Balance Sheet, compared to $633 million at December 31, 2017. The money market funds had quoted market prices that are approximately at par.
Using quoted market prices and market interest rates, the Company determined that the fair value of long-term debt at December 31, 2018 was $5.4 billion (Level 2), compared to a face value of $5.3 billion. Since considerable judgment is required in interpreting market information, the fair value of the long-term debt is not necessarily indicative of the amount which could be realized in a current market exchange.
All other financial instruments are carried at cost, which is not materially different from the instruments’ fair values.