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

Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE

FAIR VALUE

9 Months Ended

Sep. 30, 2018

FAIR VALUE

FAIR VALUE

10. FAIR VALUE

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


	September 30, 2018				December 31, 2017
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Non-qualified employee benefit plan investments	$	27	$	27	$	33	$	33
Interest rate contracts		(1)		(1)		(1)		(1)
Long-term debt (including current portion)		(2,477)		(2,624)		(2,298)		(2,483)

The carrying amounts reported in our condensed consolidated balance sheets of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The fair values of non-qualified employee benefit plan investments are obtained through market observable pricing using prevailing market prices. The estimated fair values of our long-term debt are based on quoted market prices for the identical liability when traded as an asset in an active market (Level 1).

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2018 and December 31, 2017. The estimated fair value amounts have not been comprehensively revalued for purposes of these financial statements since September 30, 2018 and current estimates of fair value may differ significantly from the amounts presented herein.

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	2018		assets (Level 1)(2)		(Level 2)(2)		(Level 3)
Assets:
Equity securities:
Non-qualified employee benefit plan investments	$	27	$	27	$	—	$	—

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


			Fair Value Amounts Using
			Quoted prices		Significant other		Significant
			in active markets		observable		unobservable
	December 31,		for identical		inputs		inputs
Description	2017		assets (Level 1)(2)		(Level 2)(2)		(Level 3)
Assets:
Equity securities:
Non-qualified employee benefit plan investments	$	33	$	33	$	—	$	—

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

(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 and yield curves at stated intervals. There were no material changes to the valuation method or assumptions used to determine the fair value during the current period.

(2)

There were no transfers between Levels 1 and 2 within the fair value hierarchy during the nine months ended September 30, 2018 and the year ended December 31, 2017.

The following table shows a reconciliation of beginning and ending balances for the three and nine months ended September 30, 2017 for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (dollars in millions). During the nine months ended September 30, 2018, there were no instruments categorized as Level 3 within the fair value hierarchy.


	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 (loss) income		(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	$	—	$	—

There were no gains or losses (realized and unrealized) included in earnings for instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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