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)

3 Months Ended

Mar. 31, 2017

Schedule of fair values of financial instruments

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


	March 31, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Non-qualified employee benefit plan investments	$	28	$	28	$	27	$	27
Investments in equity securities		18		18		18		18
Cross-currency interest rate contracts		29		29		29		29
Interest rate contracts		(1)		(1)		(2)		(2)
Long-term debt (including current portion)		(4,222)		(4,411)		(4,195)		(4,368)

Schedule of 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
			Quoted prices		Significant other		Significant
			in active markets		observable		unobservable
	March 31,		for identical		inputs		inputs
Description	2017		assets (Level 1)(3)		(Level 2)(3)		(Level 3)
Assets:
Available-for sale equity securities:
Non-qualified employee benefit plan investments	$	28	$	28	$	—	$	—
Investments in equity securities		18		18		—		—
Derivatives:
Cross-currency interest rate contracts(1)		29		—		—		29
Total assets	$	75	$	46	$	—	$	29

Liabilities:
Derivatives:
Interest rate contracts(2)	$	(1)	$	—	$	(1)	$	—


			Fair Value Amounts Using
			Quoted prices		Significant other		Significant
			in active markets		observable		unobservable
	December 31,		for identical		inputs		inputs
Description	2016		assets (Level 1)(3)		(Level 2)(3)		(Level 3)
Assets:
Available-for sale equity securities:
Non-qualified employee benefit plan investments	$	27	$	27	$	—	$	—
Investments in equity securities		18		18		—		—
Derivatives:
Cross-currency interest rate contracts(1)		29		—		—		29
Total assets	$	74	$	45	$	—	$	29

Liabilities:
Derivatives:
Interest rate contracts(2)	$	(2)	$	—	$	(2)	$	—

(1)

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.

(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 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.

(3)

There were no transfers between Levels 1 and 2 within the fair value hierarchy during the three months ended March 31, 2017 and the year ended December 31, 2016.

Schedule of reconciliation of beginning and ending balances for instruments 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 months ended March 31, 2017 and 2016 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).


	Cross-Currency Interest
	Rate Contracts
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning balance, January 1, 2017	$	29
Transfers into Level 3		—
Transfers out of Level 3		—
Total (losses) gains:
Included in earnings		—
Included in other comprehensive income (loss)		—
Purchases, sales, issuances and settlements		—
Ending balance, March 31, 2017	$	29
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 March 31, 2017	$	—


	Cross-Currency Interest
	Rate Contracts
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning balance, January 1, 2016	$	28
Transfers into Level 3		—
Transfers out of Level 3		—
Total (losses) gains:
Included in earnings		—
Included in other comprehensive income (loss)		(8)
Purchases, sales, issuances and settlements		—
Ending balance, March 31, 2016	$	20
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 March 31, 2016	$	—

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):


			Other
	Interest		comprehensive
2017	expense		income (loss)
Total net gains included in earnings	$	—	$	—
Changes in unrealized losses relating to assets still held at March 31, 2017		—		—


			Other
	Interest		comprehensive
2016	expense		income (loss)
Total net gains included in earnings	$	—	$	—
Changes in unrealized losses relating to assets still held at March 31, 2016		—		(8)