Time Warner Cable 2014 Annual Report Download - page 109

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2013
Fair Value Measurements
Fair Value Level 1 Level 2 Level 3
Cash ............................................. $ 1 $ 1 $ — $ —
Common stocks:
Domestic(a) ...................................... 1,272 1,272 — —
International(a) .................................... 491 491 — —
Commingled equity funds(b) ........................... 338 — 338 —
Mutual funds(a) ..................................... 73 73 — —
Other equity securities(c) .............................. 7 7 — —
Corporate debt securities(d) ............................ 343 — 343 —
Commingled bond funds(b) ............................ 233 — 233 —
U.S. Treasury debt securities(a) ......................... 133 133 — —
Collective trust funds(e) ............................... 63 — 63 —
U.S. government agency asset-backed debt securities(f) ..... 28 — 28 —
Corporate asset-backed debt securities(g) ................. 11 — 11 —
Other fixed-income securities(h) ........................ 110 — 110 —
Other investments(i) ................................. 10 — — 10
Total investments assets .............................. 3,113 $ 1,977 $ 1,126 $ 10
Accrued investment income and other receivables(j) ........ 67
Accrued liabilities(j) ................................. (56)
Fair value of plan assets .............................. $ 3,124
(a) Common stocks, mutual funds and U.S. Treasury debt securities are valued at the closing price reported on the active market on which the
individual securities are traded. No single industry comprised a significant portion of common stock held by the qualified pension plan as of
December 31, 2014 and 2013.
(b) Commingled equity funds and commingled bond funds are valued using the net asset value provided by the administrator of the fund. The net asset
value is based on the value of the underlying assets owned by the fund, less liabilities, and then divided by the number of units outstanding.
(c) Other equity securities consist of preferred stocks, which are valued at the closing price reported on the active market on which the individual
securities are traded.
(d) Corporate debt securities are valued based on observable prices from the new issue market, benchmark quotes, secondary trading and dealer quotes.
An option adjusted spread model is incorporated to adjust spreads of issues that have early redemption features and final spreads are added to the
U.S. Treasury curve.
(e) Collective trust funds primarily consist of short-term investment strategies comprised of instruments issued or fully guaranteed by the U.S.
government and/or its agencies and are valued using the net asset value provided by the administrator of the fund. The net asset value is based on the
value of the underlying assets owned by the fund, less liabilities, and then divided by the number of units outstanding.
(f) U.S. government agency asset-backed debt securities consist of pass-through mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association valued using available trade information, dealer quotes, market indices and
research reports, spreads, bids and offers.
(g) Corporate asset-backed debt securities primarily consist of pass-through mortgage-backed securities issued by U.S. and foreign corporations valued
using available trade information, dealer quotes, market indices and research reports, spreads, bids and offers.
(h) Other fixed-income securities consist of foreign government debt securities, municipal bonds and U.S. government agency debt securities, which are
valued based on observable prices from the new issue market, benchmark quotes, secondary trading and dealer quotes. An option adjusted spread
model is incorporated to adjust spreads of issues that have early redemption features and final spreads are added to the U.S. Treasury curve.
(i) Other investments primarily consist of private equity investments, such as those in limited partnerships that invest in operating companies that are
not publicly traded on a stock exchange, and hedge funds. Private equity investments are valued using inputs such as trading multiples of
comparable public securities, merger and acquisition activity and pricing data from the most recent equity financing taking into consideration
illiquidity. Hedge funds are valued using the net asset value provided by the administrator of the fund, which is based on the value of the underlying
assets owned by the fund, less liabilities, and then divided by the number of units outstanding.
(j) Accrued investment income and other receivables includes amounts receivable under foreign exchange contracts of $67 million and $54 million as
of December 31, 2014 and 2013, respectively. Accrued liabilities includes amounts accrued under foreign exchange contracts of $67 million and
$54 million as of December, 2014 and 2013, respectively. The fair value of the assets and liabilities associated with these foreign exchange contracts
are presented on a gross basis and are valued using the exchange rates in effect for the applicable currencies as of the valuation date (a Level 1 fair
value measurement).
101