FINANCIAL INSTRUMENTS AND FAIR VALUE MEASURES

9 Months Ended

Sep. 30, 2017

Financial Instruments And Fair Value Measures [Abstract]

Financial Instruments and Fair Value Measures

Note 8. Financial Instruments and Fair Value Measures

Our credit, market, foreign currency and interest rate risk management policies are described in Note 14, Financial Instruments and Fair Value Measures, of Notes to Consolidated Financial Statements in our 2016 Annual Report on Form 10-K.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:

		September 30,		December 31,
		2017		2016
Assets:
Foreign currency exchange contracts	$	29	$	152
Available for sale investments		2,943		1,670
Interest rate swap agreements		58		69
Liabilities:
Foreign currency exchange contracts	$	73	$	2
Interest rate swap agreements		43		48

The foreign currency exchange contracts and interest rate swap agreements are valued using broker quotations or market transactions in either the listed or over-the-counter markets. These derivative instruments are classified within level 2. The Companyholds investments incertificates of deposits, time deposits and commercial paper that are designated as available for sale and are valued using published prices based on observable market data. These investments are classified within level 2.The Company also holds available for sale investments in U.S. government and corporate debt securities valued utilizing published prices based onquoted market pricing, which are classified within level 1.

The carrying value of cash and cash equivalents, accounts receivable, payables, commercial paper and short-term borrowings contained in the Consolidated Balance Sheet approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:

	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets
Long-term receivables	$	271	$	260	$	280	$	273
Liabilities
Long-term debt and related current maturities	$	12,851	$	13,661	$	12,409	$	13,008

The Company determined the fair value of the long-term receivables by discounting based upon the terms of the receivable and counterparty details including credit quality. As such, the fair value of these receivables is considered level 2. The Company determined the fair value of the long-term debt and related current maturities utilizing transactions in the listed markets for identical or similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered level 2 as well.

Interest rate swap agreements are designated as hedge relationships with gains or losses on the derivative recognized in Interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. For the three and nine months endedSeptember 30, 2017,werecognized $4 millionand $6 million of losses inearnings on interest rate swap agreements. For the three and nine months endedSeptember 30, 2016, we recognized $14 million of losses and $23 million of gains in earnings on interest rate swap agreements. Gains and losses are fully offset by losses and gains on the underlying debt being hedged.

We also economically hedge our exposure to changes in foreign exchange rates primarily with forward contracts. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. We recognized $76 million and $194 million of expense in Other (income) expense for the three and nine months endedSeptember 30, 2017. We recognized $24 million and $114 million of income in Other (income) expense for the three and nine months endedSeptember 30, 2016.