Time Magazine 2012 Annual Report Download - page 110

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The discount rates were determined by matching the plan’s liability cash flows to rates derived from high-
quality corporate bonds available at the measurement date.
In developing the expected long-term rate of return on plan assets, the Company considered long-term
historical rates of return, the Company’s plan asset allocations as well as the opinions and outlooks of investment
professionals and consulting firms.
Fair Value of Plan Assets
The following table sets forth by level, within the fair value hierarchy described in Note 5, the assets and
liabilities held by the Company’s defined benefit pension plans, including those assets related to The CW sub-
plan, as of December 31, 2012 and December 31, 2011 (millions):
December 31, 2012 December 31, 2011
Asset Category Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Cash and cash equivalents ........ $ 113 $ —$—$ 113$113$ —$—$ 113
Insurance contracts ............. — 16 — 16 — 43 — 43
Equity securities:
Domestic equities ............ 176 — — 176 270 — — 270
International equities .......... 45 — — 45 162 — — 162
Fixed income securities:
U.S. government and agency
securities ................. 286 16 — 302 239 18 — 257
Municipal bonds ............. — 27 — 27 — 39 — 39
Investment grade corporate
bonds(a) .................. — 1,212 — 1,212 — 1,117 — 1,117
Non-investment grade corporate
bonds(a) .................. — 25 — 25 — 34 — 34
Other investments:
Pooled investments(b) .......... — 1,042 — 1,042 — 907 — 907
Commingled trust funds(c) ...... — 307 — 307 — 53 — 53
Hedge funds ................. — — 63 63 — — 77 77
Other (d) .................... 41 2 41 84 37 2 36 75
Total(e) ....................... $ 661 $ 2,647 $ 104 $ 3,412 $ 821 $ 2,213 $ 113 $ 3,147
(a) Investment grade corporate bonds have an S&P rating of BBB- or higher and non-investment grade corporate bonds have an S&P rating
of BB+ or below.
(b) Pooled investments primarily consist of interests in unitized investment pools of which underlying securities primarily consist of equity
and fixed income securities.
(c) Commingled trust funds include $19 million and $24 million, respectively, as of December 31, 2012 and December 31, 2011 of collateral
for securities on loan.
(d) Other investments primarily include limited partnerships, 103-12 investments, derivative contracts, exchange-traded funds and mutual
funds.
(e) At December 31, 2012 and December 31, 2011, total assets include $19 million and $26 million, respectively, of securities on loan.
94