Comcast 2014 Annual Report Download - page 103

Table of Contents
Comcast Corporation
Investment Income (Loss), Net
Fair Value Method
We classify publicly traded investments that are not accounted for under the equity method as available-for-sale (“AFS”)
or trading
securities and record them at fair value. For AFS securities, we record unrealized gains or losses resulting from changes in fair
value between measurement dates as a component of other comprehensive income (loss), except when we consider declines in
value to be other than temporary. For trading securities, we record unrealized gains or losses resulting from changes in fair value
between measurement dates as a component of investment income (loss), net. We recognize realized gains and losses associated
with our fair value method investments using the specific identification method. We classify the cash flows related to purchases of
and proceeds from the sale of trading securities based on the nature of the securities and the purpose for which they were
acquired.
As of December 31, 2014 and 2013, the majority of our fair value method investments were equity securities that we account for as
trading securities and were held as collateral related to our obligations under prepaid forward sale agreements.
Prepaid Forward Sale Agreements
During 2014, we settled $3.2 billion of obligations under certain of our prepaid forward sale agreements by delivering equity
securities. As of December 31, 2014 and 2013, the carrying value of our remaining prepaid forward sale obligations approximated
their fair value. The estimated fair values are based on Level 2 inputs that use pricing models whose inputs are derived primarily
from or corroborated by observable market data through correlation or other means for substantially the full term of the financial
instrument. The remaining obligations related to these investments matured in February 2015 and were settled by delivering equity
securities.
The derivative component of the prepaid forward sale agreements are equity derivative financial instruments embedded in the
related contracts, which we use to manage our exposure to and benefits from price fluctuations in the common stock of the related
investments. For these derivative financial instruments, we separate the derivative component from the host contract and record the
change in its value each period to investment income (loss), net.
Year ended December 31 (in millions)
2014
2013
2012
Gains on sales and exchanges of investments, net
$
192
$
484
$
30
Investment impairment losses
(50
)
(29
)
(24
)
Unrealized gains on securities underlying prepaid forward sale agreements
66
1,601
1,159
Mark to market adjustments on derivative component of prepaid forward sale agreements and
indexed debt instruments
(56
)
(1,604
)
(1,071
)
Interest and dividend income
116
111
119
Other, net
28
13
6
Investment income (loss), net
$
296
$
576
$
219
December 31 (in millions)
2014
2013
Assets:
Fair value equity securities held as collateral
$
523
$
3,959
Liabilities:
Obligations under prepaid forward sale agreements
$
119
$
811
Derivative component of prepaid forward sale agreements
356
2,800
Total liabilities
$
475
$
3,611
Comcast 2014 Annual Report on Form 10
-
K
98