Time Magazine 2015 Annual Report Download - page 117

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The table below sets forth a summary of changes in the fair value of the defined benefit pension plans’ Level 3 assets
for the years ended December 31, 2015 and December 31, 2014 (millions):
December 31,
2015 2014
Balance at beginning of period .................................................. $ 32 $ —
Actual return on plan assets and liabilities:
Relating to securities still held at end of period .................................... (6) 26
Relating to securities disposed of during the period ................................ (5) —
Purchases ................................................................... — —
Sales ....................................................................... — —
Settlements .................................................................. (53) (2)
Transfers in and/or out of Level 3 ................................................ 32 8
Balance at end of period ........................................................ $ — $ 32
The Company primarily utilizes the market approach for determining recurring fair value measurements.
The Company’s defined benefit pension plans’ investment policy is to minimize the volatility of the plans’ funded
status and to achieve and maintain fully funded status in order to pay current and future participant benefits from plan assets.
The Company periodically reviews asset allocation policies consistent with its investment policy. In addition, the Company
continuously monitors the performance of its pension assets, the performance of its investment advisers, sub-advisers and
asset managers thereof, and makes adjustments and changes as required. The Company does not manage any pension assets
internally. The investment guidelines set by the Company for the investment advisers, sub-advisers and asset managers
permit the use of index funds, derivative contracts and other hedging strategies as components of portfolio management
strategies.
Under the Company’s investment policy, the asset allocation target for the domestic defined benefit pension plans is
approximately 35% equity investments and 65% fixed income investments. As and when funded status and market
conditions permit, the Company intends to transition this asset allocation target toward a target of approximately 20% equity
investments and 80% fixed income investments to further minimize funded status volatility. Target asset allocations for the
international defined benefit pension plans as of December 31, 2015 are approximately 45% equity investments, 20% fixed
income investments and 35% other investments.
At both December 31, 2015 and December 31, 2014, the defined benefit pension plans’ assets did not include any
securities issued by Time Warner.
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. The Company made discretionary cash contributions totaling approximately $20 million to its funded
defined benefit pension plans during the year ended December 31, 2015. 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):
2016 2017 2018 2019 2020 2021-2025
Expected benefit payments . . . $ 177 $ 172 $ 177 $ 178 $ 195 $ 1,014
103