Fair Value Measurement

6 Months Ended

Jun. 30, 2011


9.	FAIR VALUE MEASUREMENT

The following table presents, for each of the fair-value hierarchy levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis:


	June 30, 2011
	Quoted
	prices in
	active markets
	for		Significant other		Significant other
	identical assets		observable inputs		unobservable inputs
	Level 1		Level 2		Level 3		Total
	(millions)

Assets at fair value:
Cash and cash equivalents	$	317	$	—	$	—	$	317
Fiduciary funds—restricted (included within Fiduciary assets)		1,957		—		—		1,957
Derivative financial instruments		—		50		—		50

Total assets	$	2,274	$	50	$	—	$	2,324

Liabilities at fair value:
Derivative financial instruments	$	—	$	14	$	—	$	14
Changes in fair value of hedged debt⁽ⁱ⁾		—		16		—		16

Total liabilities	$	—	$	30	$	—	$	30


⁽ⁱ⁾		Changes in the fair value of the underlying hedged debt instrument since inception of the hedging relationship are included in long-term debt.


	December 31, 2010
	Level 1		Level 2		Level 3		Total
	(millions)

Assets at fair value:
Cash and cash equivalents	$	316	$	—	$	—	$	316
Fiduciary funds—restricted (included within Fiduciary assets)		1,764		—		—		1,764
Derivative financial instruments		—		47		—		47

Total assets	$	2,080	$	47	$	—	$	2,127

Liabilities at fair value:
Derivative financial instruments	$	—	$	12	$	—	$	12
Changes in fair value of hedged debt⁽ⁱ⁾		—		12		—		12

Total liabilities	$	—	$	24	$	—	$	24


⁽ⁱ⁾		Changes in the fair value of the underlying hedged debt instrument since inception of the hedging relationship are included in long-term debt.

The estimated fair value of the Company’s financial instruments held or issued to finance the Company’s operations is summarized below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition nor do they indicate the Company’s intent or ability to dispose of the financial instrument.


	June 30, 2011				December 31, 2010
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	(millions)

Assets:
Cash and cash equivalents	$	317	$	317	$	316	$	316
Fiduciary funds—restricted (included within Fiduciary assets)		1,957		1,957		1,764		1,764
Derivative financial instruments		50		50		47		47
Liabilities:
Short-term debt	$	114	$	114	$	110	$	110
Long-term debt		2,307		2,436		2,157		2,450
Derivative financial instruments		14		14		12		12

The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments:

Cash and cash equivalents — The estimated fair value of these financial instruments approximates their carrying values due to their short maturities.

Fiduciary funds-restricted — Fair values are based on quoted market values.

Long-term debt excluding the fair value hedge — Fair values are based on quoted market values.

Derivative financial instruments — Market values have been used to determine the fair value of interest rate swaps and forward foreign exchange contracts based on estimated amounts the Company would receive or have to pay to terminate the agreements, taking into account the current interest rate environment or current foreign currency forward rates.

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), 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); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

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