FINANCIAL INSTRUMENTS AND FAIR VALUE MEASURES

6 Months Ended

Jun. 30, 2018

Financial Instruments And Fair Value Measures [Abstract]

Financial Instruments and Fair Value Measures

Note 11. Financial Instruments and Fair Value Measures

Our credit, market, foreign currency and interest rate risk management policies are described in Note 14,Financial Instruments and Fair Value Measures of Notes to Consolidated Financial Statements in our 2017 Annual Report on Form 10-K.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:

		June 30,		December 31,
		2018		2017
Assets:
Foreign currency exchange contracts	$	4	$	17
Available for sale investments		2,054		3,916
Interest rate swap agreements		17		44
Cross currency swap agreements		10		-
Liabilities:
Foreign currency exchange contracts		30		70
Interest rate swap agreements	$	88	$	52

The foreign currency exchange contracts, interest rate swap agreements, and cross currency swap agreements are valued using broker quotations, or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within level 2. The Company also holds investments in commercial paper, certificates of deposits, and time deposits that are designated as available for sale and are valued using published prices based off observable market data. As such, these investments are classified within level 2. The Company also holds available for sale investments in U.S. government and corporate debt securities valued utilizing published prices based on quoted market pricing, which are classified within level 1.

The carrying value of cash and cash equivalents, trade accounts and notes receivables, payables, commercial paper and short-term borrowings contained in the Consolidated Balance Sheet approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:

	June 30, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets
Long-term receivables	$	354	$	339	$	296	$	289
Liabilities
Long-term debt and related current maturities	$	12,637	$	13,201	$	13,924	$	14,695

The Company determined the fair value of the long-term receivables by discounting based upon the terms of the receivable and counterparty details including credit quality. As such, the fair value of these receivables is considered level 2. The Company determined the fair value of the long-term debt and related current maturities utilizing transactions in the listed markets for identical or similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered level 2 as well.

Interest rate swap agreements are designated as hedge relationships with gains or losses on the derivative recognized in Interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. For the three and six months endedJune 30, 2018,werecognized $17 million and $63 million of losses in earnings on interest rate swap agreements. For the three and six months endedJune 30, 2017, we recognized $9 million of losses and $2 million of gains in earnings on interest rate swap agreements. Gains and losses are fully offset by losses and gains on the underlying debt being hedged.

We economically hedge our exposure to changes in foreign exchange rates primarily with forward contracts. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. We recognized $344 million and $215 million of income in Other (income) expense for the three and six months endedJune 30, 2018 on these contracts. We recognized $84 million and $118 million of income in Other (income) expense for the three and six months endedJune 30, 2017.