Time Magazine 2015 Annual Report Download - page 100

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. INVENTORIES AND THEATRICAL FILM AND TELEVISION PRODUCTION COSTS
Inventories and theatrical film and television production costs consist of (millions):
December 31,
2015 2014
Inventories:
Programming costs, less amortization .......................................... $ 3,067 $ 3,251
Other inventory, primarily DVDs and Blu-ray Discs .............................. 263 228
Total inventories .......................................................... 3,330 3,479
Less: current portion of inventory ............................................. (1,753) (1,700)
Total noncurrent inventories ................................................. 1,577 1,779
Theatrical film production costs:(a)
Released, less amortization .................................................. 570 641
Completed and not released .................................................. 374 379
In production ............................................................. 1,612 1,266
Development and pre-production ............................................. 123 105
Television production costs:(a)
Released, less amortization .................................................. 1,301 1,251
Completed and not released .................................................. 872 521
In production ............................................................. 1,158 889
Development and pre-production ............................................. 13 10
Total theatrical film and television production costs ............................... 6,023 5,062
Total noncurrent inventories and theatrical film and television production costs ......... $ 7,600 $ 6,841
(a) Does not include $656 million and $797 million of acquired film library intangible assets as of December 31, 2015 and December 31, 2014,
respectively, which are included in Intangible assets subject to amortization, net in the Consolidated Balance Sheet.
Approximately 90% of unamortized film costs for released theatrical and television content are expected to be
amortized within three years from December 31, 2015. In addition, approximately $2.2 billion or 71% of the film costs of
released and completed and not released theatrical and television product are expected to be amortized during the twelve-
month period ending December 31, 2016.
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Time Warner uses derivative instruments, primarily forward contracts, to manage the risk associated with the volatility
of future cash flows denominated in foreign currencies and changes in fair value resulting from changes in foreign currency
exchange rates. The principal currencies being hedged include the British Pound, Euro, Australian Dollar and Canadian
Dollar. Time Warner uses foreign exchange contracts that generally have maturities of three to 18 months to hedge various
foreign exchange exposures, including the following: (i) variability in foreign-currency-denominated cash flows, such as the
hedges of unremitted or forecasted royalty and license fees owed to Time Warner’s domestic companies for the sale or
anticipated sale of U.S. copyrighted products abroad or cash flows for certain film production costs denominated in a foreign
currency (i.e., cash flow hedges), and (ii) currency risk associated with foreign-currency-denominated operating assets and
liabilities (i.e., fair value hedges).
The Company also enters into derivative contracts that economically hedge certain of its foreign currency risks, even
though hedge accounting does not apply or the Company elects not to apply hedge accounting. These economic hedges are
used primarily to offset the change in certain foreign currency denominated long-term receivables and certain foreign-
currency-denominated debt due to changes in the underlying foreign exchange rates.
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