Cablevision 2014 Annual Report Download - page 131

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COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except share and per share amounts)
F-42
NOTE 11. FAIR VALUE MEASUREMENT
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable
or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on
market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own
market assumptions. The fair value hierarchy consists of the following three levels:
• Level I - Quoted prices for identical instruments in active markets.
• Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in
markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers
are observable.
• Level III - Instruments whose significant value drivers are unobservable.
The following table presents for each of these hierarchy levels, the Company's financial assets and financial liabilities that are
measured at fair value on a recurring basis at December 31, 2014 and December 31, 2013:
At December 31, 2014
Level I Level II Level III Total
Assets:
Money market funds........................................................................... $ 736,330 $ — $ — $ 736,330
Investment securities .......................................................................... 132 — — 132
Investment securities pledged as collateral......................................... 1,245,916 — — 1,245,916
Prepaid forward contracts................................................................... — 7,317 — 7,317
Liabilities:
Liabilities under derivative contracts:
Prepaid forward contracts................................................................. — 102,217 — 102,217
At December 31, 2013
Level I Level II Level III Total
Assets:
Money market funds........................................................................... $ 608,225 $ — $ — $ 608,225
Investment securities .......................................................................... 138 — — 138
Investment securities pledged as collateral......................................... 1,116,084 — — 1,116,084
Prepaid forward contracts................................................................... — 3,385 — 3,385
Liabilities:
Liabilities under derivative contracts:
Prepaid forward contracts................................................................. — 146,947 — 146,947
The Company's cash equivalents, investment securities and investment securities pledged as collateral are classified within Level
I of the fair value hierarchy because they are valued using quoted market prices.
The Company's prepaid forward contracts reflected as derivative contracts and liabilities under derivative contracts on the
Company's balance sheets are valued using market-based inputs to valuation models. These valuation models require a variety of
inputs, including contractual terms, market prices, yield curves, and measures of volatility. When appropriate, valuations are
adjusted for various factors such as liquidity, bid/offer spreads and credit risk considerations. Such adjustments are generally
based on available market evidence. Since model inputs can generally be verified and do not involve significant management
judgment, the Company has concluded that these instruments should be classified within Level II of the fair value hierarchy.
The Company considers the impact of credit risk when measuring the fair value of its derivative asset and/or liability positions,
as applicable.
In addition, see Note 4 for a discussion of impairment charges related to nonfinancial assets not measured at fair value on a recurring
basis.