ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes our assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):


	December 31, 2012
	Fair Value			Fair Value Measurements Using
	Fair Value			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investments of insurance subsidiaries:
Debt securities:
States and municipalities	$	418		$	—		$	418	$	—
Auction rate securities		68			—			—		68
Asset-backed securities		14			—			14		—
Money market funds		67			67			—		—

		567			67			432		68
Equity securities		3			1			—		2

Investments of insurance subsidiaries		570			68			432		70
Less amounts classified as current assets		(55	)		(55	)		—		—

	$	515		$	13		$	432	$	70

Liabilities:
Cross currency swap (Income taxes and other liabilities)	$	13		$	—		$	13	$	—
Interest rate swaps (Income taxes and other liabilities)		429			—			429		—

Derivative Financial Instruments (continued)


	December 31, 2011
				Fair Value Measurements Using
	Fair Value			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Investments of insurance subsidiaries:
Debt securities:
States and municipalities	$	417		$	—		$	417		$	—
Auction rate securities		131			—			—			131
Asset-backed securities		20			—			20			—
Money market funds		53			53			—			—

		621			53			437			131
Equity securities		7			1			5			1

Investments of insurance subsidiaries		628			54			442			132
Less amounts classified as current assets		(80	)		(54	)		(26	)		—

	$	548		$	—		$	416		$	132

Liabilities:
Cross currency swap (Income taxes and other liabilities)	$	16		$	—		$	16		$	—
Interest rate swaps (Income taxes and other liabilities)		399			—			399			—

The following table summarizes the activity related to the auction rate and equity securities investments of our insurance subsidiaries which have fair value measurements based on significant unobservable inputs (Level 3) during the year ended December 31, 2012 (dollars in millions):


Asset balances at December 31, 2011	$	132
Unrealized gains included in other comprehensive income		3
Settlements		(65	)

Asset balances at December 31, 2012	$	70

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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