Time Magazine 2009 Annual Report Download - page 121

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The following table sets forth by level, within the fair value hierarchy, the international pension plans’ assets
required to be carried at fair value on a recurring basis as of December 31, 2009 (millions):
Asset Category Total
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Fair Value Measurements at December 31, 2009
Cash and cash equivalents ....... $ 1 $ 1 $ — $ —
Fund investments
(a)
............ 820 — 820 —
Insurance contracts ............ 47 — 47 —
Other investments ............. 2 — 2 —
Total ....................... $ 870 $ 1 $ 869 $ —
(a)
Fund investments primarily consist of interests in unitized investment pools of which underlying securities primarily consist of equity and
fixed income securities.
The Company’s investment policy for its domestic pension plans is to maximize the long-term rate of return on
plan assets within an acceptable level of risk while maintaining adequate funding levels. The Company
continuously monitors the performance of the overall pension assets portfolio, asset allocation policies, and the
performance of individual pension asset managers and makes adjustments and changes, as required. The Company
does not manage any assets internally, does not have any passive investments in index funds, and does not directly
utilize futures, options, or other derivative instruments or hedging strategies with regard to the pension plans;
however, the investment mandate of some pension asset managers allows the use of the foregoing as components of
their portfolio management strategies.
As a result of the most recent review of asset allocations, the Company will transition its asset allocation from
its current target of 75% equity investments and 25% fixed income investments toward a target of 50% equity
investments and 50% fixed income investments to better match the assets’ characteristics with those of the
Company’s pension liabilities. The changes are consistent with the Company’s investment policy and will be
implemented as market conditions permit.
The Time Warner Pension Plan’s assets included no shares of Time Warner common stock and 913,700 shares
of Time Warner common stock in the amount of $28 million (2% of total plan assets) at December 31, 2009 and
December 31, 2008, respectively.
Expected cash flows
After considering the funded status of the Company’s defined benefit pension plans, movements in the discount
rate, investment performance and related tax consequences, the Company may choose to make contributions to its
pension plans in any given year. At December 31, 2009, there were no minimum required contributions for domestic
funded plans. The Company did not make any discretionary cash contributions to its funded domestic defined
benefit pension plans during the year ended December 31, 2009. For domestic unfunded plans, contributions will
continue to be made to the extent benefits are paid. Expected benefit payments for domestic unfunded plans for
2010 are approximately $35 million. In addition, the Company currently anticipates making an additional
$20 million discretionary contribution to its international plans in the fourth quarter of 2010.
109
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)