Financial instruments and fair value disclosures

12 Months Ended

Dec. 31, 2018

Financial instruments and fair value disclosures

Financial instruments and fair value disclosures

12.  FINANCIAL INSTRUMENTS AND FAIR VALUE DISCLOSURES

Fair value is determined based on the assumptions that market participants would use in pricing the asset or liability. The Company utilizes the following fair value hierarchy in determining fair value:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The following tables present assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. These fair values are included as components of Other current liabilities, Other non-current liabilities, Prepaid and other current assets, and Other assets in the Consolidated Balance Sheets.

	Recurring Fair Value Measurements of as of December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets
Short-term investments	$	3	$	—	$	—	$	3
Derivative financial instruments
Foreign exchange forward contracts & embedded derivatives		—		5		—		5
	$	3	$	5	$	—	$	8
Liabilities
Derivative financial instruments
Foreign exchange forward contracts & embedded derivatives		—		8		—		8
Interest rate swaps		—		4		—		4
	$	—	$	12	$	—	$	12

	Recurring Fair Value Measurements of as of December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets
Short-term investments	$	1	$	—	$	—	$	1
Derivative financial instruments
Foreign exchange forward contracts & embedded derivatives		—		13		—		13
	$	1	$	13	$	—	$	14
Liabilities
Derivative financial instruments
Foreign exchange forward contracts & embedded derivatives	$	—	$	9	$	—	$	9
	$	—	$	9	$	—	$	9

The Company determines fair value of its derivative financial instruments based on internal valuation models, such as discounted cash flow analysis, using management estimates and observable market-based inputs, as applicable. Management estimates include assumptions concerning the amount and timing of estimated future cash flows and application of appropriate discount rates. Observable market-based inputs are sourced from third parties and include interest rates and yield curves, currency spot and forward rates, and credit spreads, as applicable.

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are all short-term in nature; therefore, the carrying value of these items approximates their fair value. The following tables provide additional fair value information related to the Company’s financial instruments:

	As of December 31, 2018
	Carrying value		Fair value		Fair value hierarchy
Long-term debt, excluding capital leases	$	3,034	$	2,925	Level 2
Orbital receivables	$	441	$	441	Level 2

	As of December 31, 2017
	Carrying value		Fair value		Fair value hierarchy
Long-term debt, excluding capital leases	$	2,943	$	3,176	Level 2
Orbital receivables	$	454	$	507	Level 2

There were no transfers into or out of each of the levels of the fair value hierarchy during the year ended December 31, 2017 and December 31, 2016.