Assets and Liabilities Measured at Fair Value (Tables)

9 Months Ended

Sep. 30, 2013

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 September 30, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):


	September 30, 2013
				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	$	393		$	—		$	393		$	—
Auction rate securities		32			—			—			32
Asset-backed securities		13			—			13			—
Money market funds		24			24			—			—

		462			24			406			32
Equity securities		3			2			—			1

Investments of insurance subsidiaries		465			26			406			33
Less amounts classified as current assets		(63	)		(24	)		(39	)		—

	$	402		$	2		$	367		$	33

Liabilities:
Cross currency swap (Income taxes and other liabilities)	$	4		$	—		$	4		$	—
Interest rate swaps (Income taxes and other liabilities)		323			—			323			—

Derivative Financial Instruments (continued)


	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		—

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 nine months ended September 30, 2013 (dollars in millions):


Asset balances at December 31, 2012	$70
Unrealized gains included in other comprehensive income		6
Settlements		(43	)

Asset balances at September 30, 2013	$	33

- 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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