Time Magazine 2010 Annual Report Download - page 109

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The table below sets forth a summary of changes in the fair value of the pension plan’s Level 3 assets for the
years ended December 31, 2010 and December 31, 2009 (millions):
Hedge Funds Other Total Hedge Funds Other Total
December 31, 2010 December 31, 2009
Balance at beginning of period ............ $ 100 $ 52 $ 152 $ 17 $ 31 $ 48
Actual return on plan assets:
Relating to assets still held at
end of period ..................... 7 (21) (14) 18 7 25
Relating to assets sold during
the period........................ 6 8 14 — 1 1
Purchases, sales, issuances and settlements,
net............................... 8 (27) (19) 65 13 78
Transfers in and/or out of Level 3 ......... — — — — — —
Balance at end of period ................ $ 121 $ 12 $ 133 $ 100 $ 52 $ 152
The Company primarily utilizes the market approach for determining recurring fair value measurements.
The Company’s investment policy is to achieve fully funded status in order to pay current and future participant
benefits from plan assets, and to minimize the volatility of the plan’s funded status thereafter. The Company
continuously monitors the performance of the overall pension assets portfolio, asset allocation policies, and the
performance of the investment advisers and asset managers and makes adjustments and changes, as required. The
Company does not manage any pension assets internally; however, the investment guidelines for the investment
advisers and asset managers permit the use of index funds, futures, options, or other derivative hedging strategies as
components of portfolio management strategies.
As a result of the recent plan amendments and a review of the plan asset allocations, the Company will
transition its domestic asset allocation from its current target of 50% equity investments and 50% fixed income
investments toward a target of 20% equity investments and 80% fixed income investments to more closely match
the pension plan assets’ characteristics with those of the Company’s pension liabilities to minimize funded status
volatility. The changes are consistent with the Company’s investment policy stated above and will be implemented
as market conditions permit. Target asset allocations for international plans are reviewed periodically and as of
December 31, 2010 are approximately 60% equity investments and 40% fixed income investments.
The Time Warner Pension Plan’s assets included no securities of Time Warner at both December 31, 2010 and
December 31, 2009.
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, 2010, there were no minimum required contributions for the
Company’s funded plans. The Company made discretionary cash contributions of $22 million to its funded defined
benefit pension plans during the year ended December 31, 2010. For the Company’s unfunded plans, contributions
will continue to be made to the extent benefits are paid.
Information about the expected benefit payments for the Company’s defined benefit plans is as follows
(millions):
2011 2012 2013 2014 2015 2016-2020
Expected benefit payments .................. $ 160 170 179 184 190 1,039
97
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)