Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Financial Assets and Liabilities Measured on Recurring Basis

The following table summarizes the valuation of the Company’s material financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:

	September 30,
(IN MILLIONS)	2017		Level 1		Level 2		Level 3
Assets:
Plan assets for deferred compensation ⁽¹⁾	$	32		32	—		—
Investment in mutual funds ⁽²⁾		2		2	—		—
Interest rate swap arrangements ⁽³⁾		7		—	7		—
Total	$	41	$	34	$	7	—
Liabilities:
Interest rate swap arrangements ⁽³⁾	$	3	—		$	3	—
Deferred compensation liabilities ⁽⁴⁾		32		32	—		—
Total	$	35	$	32	$	3	—

	December 31,
	2016		Level 1		Level 2		Level 3
Assets:
Plan assets for deferred compensation ⁽¹⁾	$	32		32	—		—
Investment in mutual funds ⁽²⁾		2		2	—		—
Interest rate swap arrangements ⁽³⁾		3		—	3
Total	$	37	$	34	3		—
Liabilities:
Interest rate swap arrangements ⁽³⁾	$	5	—		$	5	—
Deferred compensation liabilities ⁽⁴⁾		32		32	—		—
Total	$	37	$	32	$	5	—

(1)

Plan assets are comprised of investments in mutual funds, which are intended to fund liabilities arising from deferred compensation plans. These investments are carried at fair value, which is based on quoted market prices at period end in active markets. These investments are classified as trading securities with any gains or losses resulting from changes in fair value recorded in other expense, net.

(2)	Investments in mutual funds are money-market accounts held with the intention of funding certain specific retirement plans.

(3)	Derivative financial instruments include interest rate swap arrangements recorded at fair value based on externally-developed valuation models that use readily observable market parameters and the consideration of counterparty risk.

(4)

The Company offers certain employees the opportunity to participate in a deferred compensation plan. A participant’s deferrals are invested in a variety of participant directed stock and bond mutual funds and are classified as trading securities. Changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation.

Outstanding Interest Rate Swaps

As of September 30, 2017, the Company had the following outstanding interest rate swaps utilized in the management of its interest rate risk:

	Notional Amount		Maturity Date	Currency
Interest rate swaps designated as hedging instruments
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	May 2018	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	150,000,000	April 2019	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	June 2019	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	150,000,000	July 2019	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	July 2020	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	July 2020	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	October 2020	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	October 2021	US Dollar
US Dollar term loan floating-to-fixed rate swaps	$	250,000,000	July 2022	US Dollar

Schedule of Effect of Cash Flow Hedge Accounting on Condensed Consolidated Statement of Operations

The effect of cash flow hedge accounting on the condensed consolidated statement of operations for the three and nine months ended September 30, 2017 and 2016:

	Interest Expense
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(IN MILLIONS)	2017		2016		2017		2016
Interest expense- (Location in the condensed consolidated statement of operations in which the effects of cash flow hedges are recorded)	$	95	$	85	$	277	$	247
Amount of loss reclassified from accumulated other comprehensive income into income, net of tax	$	1	$	1	$	2	$	3
Amount of loss reclassified from accumulated other comprehensive income into income as a result that a forecasted transaction is no longer probable of occurring, net of tax	$	—	$	—	$	—	$	—

Fair Values of Derivative Instruments in Consolidated Balance Sheets

The fair values of the Company’s derivative instruments as of September 30, 2017 and December 31, 2016 were as follows:

September 30, 2017

December 31, 2016

Derivatives Designated as Hedging Instruments

Accounts Payable

Other

Other Non- Current

and Other Current

Other Non-Current

and Other Current

Non-Current

(IN MILLIONS)

Assets

Liabilities

Assets

Liabilities

Interest rate swaps

Derivatives in Cash Flow Hedging Relationships

The pre-tax effect of derivative instruments in cash flow hedging relationships for the three months ended September 30, 2017 and 2016 was as follows:

Amount of Loss

Amount of Gain

Reclassified from AOCI

Recognized in OCI

Location of Loss

into Income

(Effective Portion)

Reclassified from AOCI

(Effective Portion)

Derivatives in Cash Flow

Three Months Ended

into Income (Effective

Three Months Ended

Hedging Relationships

September 30,

Portion)

September 30,

(IN MILLIONS)

2017

2016

2017

2016

Interest rate swaps

Interest expense

The pre-tax effect of derivative instruments in cash flow hedging relationships for the nine months ended September 30, 2017 and 2016 was as follows:

Amount of Loss

Amount of (Gain)/Loss

Reclassified from AOCI

Recognized in OCI

Location of Loss

into Income

(Effective Portion)

Reclassified from AOCI

(Effective Portion)

Derivatives in Cash Flow

Nine months Ended

into Income (Effective

Nine months Ended

Hedging Relationships

September 30,

Portion)

September 30,

(IN MILLIONS)

2017

2016

2017

2016

Interest rate swaps

)

Interest expense