Note 15 – Fair Value Measurements
Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following (in millions):
| December 31, 2013 | December 31, 2012 | |||||||||||||||||||||||
| Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||||||
|
Assets |
||||||||||||||||||||||||
|
Equity securities |
$ | 77 | $ | 77 | $ | — | $ | 75 | $ | 75 | $ | — | ||||||||||||
|
Mutual funds |
613 | 613 | — | 418 | 418 | — | ||||||||||||||||||
|
U.S. Government securities |
238 | — | 238 | 213 | — | 213 | ||||||||||||||||||
|
Other securities |
131 | — | 131 | 141 | — | 141 | ||||||||||||||||||
|
Derivative assets |
28 | — | 28 | 39 | — | 39 | ||||||||||||||||||
|
Liabilities |
||||||||||||||||||||||||
|
Derivative liabilities |
23 | — | 23 | 25 | — | 25 | ||||||||||||||||||
Substantially all assets measured at fair value, other than derivatives, represent investments classified as trading securities held in a separate trust to fund certain of our non-qualified deferred compensation plans and are recorded in other noncurrent assets on our Balance Sheets. The fair values of equity securities and mutual funds are determined by reference to the quoted market price per unit in active markets multiplied by the number of units held without consideration of transaction costs. The fair values of U.S. Government and other securities are determined using model-derived valuations in which all significant inputs are observable in active markets. The fair values of derivative instruments, which consist of foreign currency exchange forward and interest rate swap contracts, primarily are determined based on the present value of future cash flows using model-derived valuations that use observable inputs such as interest rates, credit spreads, and foreign currency exchange rates. We did not have any transfers of assets or liabilities between levels of the fair value hierarchy during 2013.
In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and debt. The carrying amounts for cash and cash equivalents, accounts receivable, and accounts payable approximated their fair values. The estimated fair value of our outstanding debt was $7.4 billion and $8.2 billion at December 31, 2013 and 2012, and the outstanding principal amount was $7.0 billion and $7.2 billion at December 31, 2013 and 2012, excluding unamortized discounts of $882 million and $892 million. The estimated fair values of our outstanding debt were determined based on quoted prices for similar instruments in active markets (Level 2).
In the fourth quarter of 2013, we recorded a non-cash goodwill impairment charge of $195 million, net of state tax benefits, in connection with our annual goodwill impairment test. The fair value determination of goodwill was determined using a combination of a DCF analysis and market-based valuation methodologies and is classified as a Level 3 fair value measurement due to the significance of the unobservable inputs used. See Note 1 for further information on this non-cash goodwill impairment charge and our valuation methodologies.