Time Magazine 2014 Annual Report Download - page 96

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Gains and losses from hedging activities recognized in the Consolidated Statement of Operations, including hedge
ineffectiveness, were not material for the years ended December 31, 2014, 2013 and 2012. In addition, such gains and losses
were largely offset by corresponding economic gains or losses from the respective transactions that were hedged.
The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial
transactions and has entered into collateral agreements with certain of these counterparties to further protect the Company in
the event of deterioration of the credit quality of such counterparties on outstanding transactions. Additionally, netting
provisions are included in agreements in situations where the Company executes multiple contracts with the same
counterparty. For such foreign exchange contracts, the Company offsets the fair values of the amounts owed to or due from
the same counterparty and classifies the net amount as a net asset or net liability within Prepaid expenses and other current
assets or Accounts payable and accrued liabilities, respectively, in the Consolidated Balance Sheet. The following is a
summary of amounts recorded in the Consolidated Balance Sheet pertaining to Time Warner’s use of foreign currency
derivatives at December 31, 2014 and December 31, 2013 (millions):
December 31,
2014(a)
December 31,
2013(b)
Prepaid expenses and other current assets .................................. $ 61 $ 10
Accounts payable and accrued liabilities ................................... (3) (17)
(a) Includes $139 million ($92 million of qualifying hedges and $47 million of economic hedges) and $81 million ($65 million of qualifying hedges and $16
million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.
(b) Includes $77 million ($64 million of qualifying hedges and $13 million of economic hedges) and $84 million ($53 million of qualifying hedges and $31
million of economic hedges) of foreign exchange derivative contracts in asset and liability positions, respectively.
At December 31, 2014 and December 31, 2013, $20 million and $28 million of gains, respectively, related to cash flow
hedges are recorded in Accumulated other comprehensive loss, net and are expected to be recognized in earnings at the same
time the hedged items affect earnings. Included in Accumulated other comprehensive loss, net at December 31, 2014 and
December 31, 2013 are net losses of $5 million and net gains $21 million, respectively, related to hedges of cash flows
associated with films that are not expected to be released within the next twelve months.
8. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
The Company’s long-term debt and other financing arrangements consist of revolving bank credit facilities, a commercial
paper program, fixed-rate public debt and other obligations. The principal amounts of long-term debt adjusted for premiums
and discounts consist of (millions):
December 31,
2014 2013
(recast)
Fixed-rate public debt .................................................. $ 21,920 $ 19,905
Other obligations ...................................................... 574 222
Subtotal ............................................................. 22,494 20,127
Debt due within one year ............................................... (1,118) (66)
Total long-term debt ................................................... $ 21,376 $ 20,061
The Company’s unused committed capacity as of December 31, 2014 was $7.637 billion, including $2.618 billion of Cash
and equivalents. At December 31, 2014, there were no borrowings outstanding under the Revolving Credit Facilities, as
defined below, and no commercial paper was outstanding under the commercial paper program. The Revolving Credit
Facilities, commercial paper program and public debt of the Company rank pari passu with the senior debt of the respective
obligors thereon. The weighted-average interest rate on Time Warner’s total debt was 5.80% and 6.11% at December 31,
2014 and 2013, respectively.
80