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, 2017

Schedule of fair values of financial instruments

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


	September 30, 2017				December 31, 2016
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Non-qualified employee benefit plan investments	$	30	$	30	$	27	$	27
Investments in equity securities		3		3		18		18
Cross-currency interest rate contracts		—		—		29		29
Interest rate contracts		(1)		(1)		(2)		(2)
Long-term debt (including current portion)		(2,874)		(3,098)		(4,172)		(4,345)

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
	September 30,		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	$	30	$	30	$	—	$	—
Investments in equity securities		3		3		—		—
Derivatives:
Cross-currency interest rate contracts(1)		—		—		—		—
Total assets	$	33	$	33	$	—	$	—

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 had 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. In August 2017, we terminated these cross-currency interest rate contracts and received $7 million in payments from the counterparties.

(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 nine months ended September 30, 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 and nine months ended September 30, 2017 and 2016 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions).


	Three months		Nine months
	ended		ended
	September 30, 2017		September 30, 2017
	Cross-Currency		Cross-Currency
	Interest		Interest
	Rate Contracts		Rate Contracts
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning balance	$	16	$	29
Transfers into Level 3		—		—
Transfers out of Level 3		—		—
Total (losses) gains:
Included in earnings		—		—
Included in other comprehensive income (loss)		(9)		(22)
Purchases, sales, issuances and settlements		(7)		(7)
Ending balance, September 30, 2017	$	—	$	—
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, 2017	$	—	$	—


	Three months		Nine months
	ended		ended
	September 30, 2016		September 30, 2016
	Cross-Currency		Cross-Currency
	Interest		Interest
	Rate Contracts		Rate Contracts
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
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	$	—	$	—

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				Nine months
	ended				ended
	September 30, 2017				September 30, 2017
			Other				Other
	Interest		comprehensive		Interest		comprehensive
2017	expense		income (loss)		expense		income (loss)
Total net gains included in earnings	$	—	$	—	$	—	$	—
Changes in unrealized losses		—		(9)		—		(22)


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