SEC Filings

10-Q
TIME WARNER INC. filed this Form 10-Q on 08/02/2017
Entire Document
 


Table of Contents

TIME WARNER INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

The following table reconciles the beginning and ending balances of net derivative assets and liabilities classified as Level 3 and identifies the total gains (losses) the Company recognized during the six months ended June 30, 2017 and 2016 on such assets and liabilities that were included in the Consolidated Balance Sheet as of June 30, 2017 and 2016 (millions):

 

                                                                                
          June 30, 2017   June 30, 2016

Balance as of the beginning of the period

      $ 161     $ 173  

Total gains (losses), net:

       

Included in operating income

              2  

Included in other income (loss), net

        145       (62

Included in other comprehensive income (loss)

               

Purchases

               

Settlements

        (1     5  

Issuances

        (1      
     

 

 

 

 

 

 

 

Balance as of the end of the period

      $         304     $         118  
     

 

 

 

 

 

 

 

Net gain (loss) for the period included in net income related to assets and liabilities
still held as of the end of the period

      $ 145     $ (62
     

 

 

 

 

 

 

 

Other Financial Instruments

The Company’s other financial instruments, including debt, are not required to be carried at fair value. Based on the interest rates prevailing at June 30, 2017, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.619 billion and, based on interest rates prevailing at December 31, 2016, the fair value of Time Warner’s public debt exceeded its carrying value by approximately $2.238 billion. The fair value of Time Warner’s public debt is considered a Level 2 measurement as it is based on observable market inputs such as current interest rates and, where available, actual sales transactions. Unrealized gains or losses on debt do not result in the realization or expenditure of cash and generally are not recognized in the consolidated financial statements unless the debt is retired prior to its maturity.

Information as of June 30, 2017 about the Company’s investments in CME that are not required to be carried at fair value on a recurring basis is as follows (millions):

 

                                                                                
     Carrying Value    Fair Value    Fair Value
Hierarchy

Class A common stock (a)

   $ —       $          290          Level 1   

Series B convertible redeemable preferred shares

   $             —       $         429       Level 2

 

(a)

Includes 1 share of Series A convertible preferred stock.

The fair values of the Company’s investments in CME’s Class A common stock (including Series A convertible preferred stock) and Series B convertible redeemable preferred shares are primarily determined by reference to the June 30, 2017 closing price of CME’s common stock.

The carrying value for the majority of the Company’s other financial instruments approximates fair value due to the short-term nature of the financial instruments or because the financial instruments are of a longer-term nature and are recorded on a discounted basis.

Non-Financial Instruments

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be carried at fair value on a recurring basis. However, if certain triggering events occur (or at least annually for goodwill and indefinite-lived intangible assets), a non-financial instrument is required to be evaluated for impairment. If the Company determines that the non-financial instrument is impaired, the Company would be required to write down the non-financial instrument to its fair value.

 

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