Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments and Fair Value Measurements

v3.10.0.1
Financial Instruments and Fair Value Measurements
 9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair value disclosures
Financial Instruments and Fair Value Measurements
For assets and liabilities required to be reported or disclosed at fair value, U.S. GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs, other than quoted market prices included within Level 1, are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
The Company's assets and liabilities measured or disclosed at fair value were as follows:

Fair value measurements at September 30, 2018 using
 
(in millions)
Total

Quoted prices
in active markets for identical assets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Current assets:




Cash equivalents
$
163

163

—

—

Interest rate swap arrangements
2

—

2

—

Debt (note 6)
4,341

216

4,125

—



Fair value measurements at December 31, 2017 using
 
(in millions)
Total

Quoted prices
in active markets for identical assets
(Level 1)

Significant other observable inputs
(Level 2)

Significant unobservable
inputs
(Level 3)

Current assets:




Cash equivalents
$
42

42

—

—

Noncurrent assets:








Interest rate swap arrangements
2

—

2

—

Debt (note 6)
5,132

—

5,132

—


The 2067 Notes (ticker: QVCD) are considered Level 1 fair value instruments as reported in the foregoing tables as they are traded on the New York Stock Exchange, which the Company considers to be an "active market," as defined by U.S. GAAP. The remainder of the Company's Level 2 financial liabilities are debt instruments with quoted market prices that are not considered to be traded on "active markets." Accordingly, these financial instruments are reported in the foregoing tables as Level 2 fair value instruments.
During the year ended December 31, 2016, QVC entered into a three-year interest rate swap arrangement with a notional amount of $125 million to mitigate the interest rate risk associated with interest payments related to its variable rate debt. The swap arrangement does not qualify as a cash flow hedge under U.S. GAAP. Accordingly, changes in the fair value of the swap are reflected in other (expense) income in the accompanying condensed consolidated statements of operations. At September 30, 2018, the fair value of the swap instrument was in a net asset position of approximately $2 million, which is included in prepaid expenses and other current assets.