Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE (Tables)

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2016

The fair values of financial instruments were as follows (dollars in millions):

	September 30, 2016						December 31, 2015
	Carrying Value			Estimated Fair Value			Carrying Value			Estimated Fair Value
Non-qualified employee benefit plan investments	$	25		$	25		$	26		$	26
Investments in equity securities		21			21			18			18
Cross-currency interest rate contracts		21			21			28			28
Interest rate contracts		(3	)		(3	)		(4	)		(4	)
Long-term debt (including current portion)		(4,556	)		(4,704	)		(4,795	)		(4,647	)

Assets and liabilities are measured at fair value on a recurring basis

The following assets and liabilities are measured at fair value on a recurring basis (dollars in millions):

				Fair Value Amounts Using
Description	September 30, 2016			Quoted prices in active markets for identical assets (Level 1)(4)		Significant other observable inputs (Level 2)(4)			Significant unobservable inputs (Level 3)
Assets:
Available-for sale equity securities:
Equity mutual funds	$	25		$	25	$	—		$	—
Investments in equity securities(1)		21			21		—			—
Derivatives:
Cross-currency interest rate contracts(2)		21			—		—			21

Total assets	$	67		$	46	$	—		$	21


Liabilities:
Derivatives:
Interest rate contracts(3)	$	(3	)	$	—	$	(3	)	$	—

				Fair Value Amounts Using
Description	December 31, 2015			Quoted prices in active markets for identical assets (Level 1)(4)		Significant other observable inputs (Level 2)(4)			Significant unobservable inputs (Level 3)
Assets:
Available-for sale equity securities:
Equity mutual funds	$	26		$	26	$	—		$	—
Investments in equity securities(1)		18			18		—			—
Derivatives:
Cross-currency interest rate contracts(2)		28			—		—			28

Total assets	$	72		$	44	$	—		$	28


Liabilities:
Derivatives:
Interest rate contracts(3)	$	(4	)	$	—	$	(4	)	$	—


(1)	As of April 1, 2015, we no longer exercise significant influence in our investment in Nippon Aqua Co., Ltd., for which we previously accounted using the equity method. Consequently, we now account for this investment at fair value as an available-for-sale equity security.
(2)	The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates, exchange rates, and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period. In November 2014, we entered into two five year cross-currency interest rate contracts and one eight year cross-currency interest rate contract. These instruments have been categorized by us as Level 3 within the fair value hierarchy due to unobservable inputs associated with the credit valuation adjustment, which we deemed to be significant inputs to the overall measurement of fair value at inception.
(3)	The income approach is used to calculate the fair value of these instruments. Fair value represents the present value of estimated future cash flows, calculated using relevant interest rates and yield curves at stated intervals. There were no material changes to the valuation methods or assumptions used to determine the fair value during the current period.
(4)	There were no transfers between Levels 1 and 2 within the fair value hierarchy for the nine months ended September 30, 2016 and the year ended December 31, 2015.

Reconciliation of beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table shows a reconciliation of beginning and ending balances for the three and nine months ended September 30, 2016 and 2015 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).

	Three months ended September 30, 2016			Nine months ended September 30, 2016
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Cross-Currency Interest Rate Contracts			Cross-Currency Interest Rate Contracts
Beginning balance	$	26		$	28
Transfers into Level 3		—			—
Transfers out of Level 3		—			—
Total (losses) gains:
Included in earnings		—			—
Included in other comprehensive income (loss)		(5	)		(7	)
Purchases, sales, issuances and settlements		—			—

Ending balance, September 30, 2016	$	21		$	21


The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30, 2016	$	—		$	—

	Three months ended September 30, 2015		Nine months ended September 30, 2015
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)	Cross-Currency Interest Rate Contracts		Cross-Currency Interest Rate Contracts
Beginning balance	$	25	$	5
Transfers into Level 3		—		—
Transfers out of Level 3		—		—
Total gains:
Included in earnings		—		—
Included in other comprehensive income (loss)		3		23
Purchases, sales, issuances and settlements		—		—

Ending balance, September 30, 2015	$	28	$	28


The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30, 2015	$	—	$	—

Schedule of gains and losses (realized and unrealized) included in earnings reported in interest expense and other comprehensive income (loss)

Gains and losses (realized and unrealized) included in earnings for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are reported in interest expense and other comprehensive income (loss) as follows (dollars in millions):

	Three months ended September 30, 2016					Nine months ended September 30, 2016
	Interest expense		Other comprehensive income (loss)			Interest expense		Other comprehensive income (loss)
Total net gains included in earnings	$	—	$	—		$	—	$	—
Changes in unrealized losses relating to assets still held at September 30, 2016		—		(5	)		—		(7	)

	Three months ended September 30, 2015				Nine months ended September 30, 2015
	Interest expense		Other comprehensive income (loss)		Interest expense		Other comprehensive income (loss)
Total net gains included in earnings	$	—	$	—	$	—	$	—
Changes in unrealized gains relating to assets still held at September 30, 2015		—		3		—		23