Quarterly report pursuant to Section 13 or 15(d)

Assets And Liabilities Measured At Fair Value

v2.4.1.9
Assets And Liabilities Measured At Fair Value
3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]  
Assets And Liabilities Measured At Fair Value

(4)   Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.  Liberty does not have any assets or liabilities required to be measured at fair value considered to be Level 3.

Liberty's assets and liabilities measured at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

Fair Value Measurements at

 

 

 

March 31, 2015

 

December 31, 2014

 

 

    

 

 

    

Quoted

    

 

    

 

    

Quoted

    

 

  

 

 

 

 

 

prices

 

 

 

 

 

prices

 

 

 

 

 

 

 

 

in active

 

Significant

 

 

 

in active

 

Significant

 

 

 

 

 

 

markets

 

other

 

 

 

markets

 

other

 

 

 

 

 

 

for identical

 

observable

 

 

 

for identical

 

observable

 

 

 

 

 

 

assets

 

inputs

 

 

 

assets

 

inputs

 

Description

 

Total

 

(Level 1)

 

(Level 2)

 

Total

 

(Level 1)

 

(Level 2)

 

 

 

amounts in millions

 

Cash equivalents

 

$

665 

 

665 

 

 —

 

507 

 

507 

 

 —

 

Short term marketable securities

 

$

73 

 

 —

 

73 

 

199 

 

 —

 

199 

 

Available-for-sale securities

 

$

624 

 

576 

 

48 

 

769 

 

691 

 

78 

 

Financial instrument assets

 

$

323 

 

106 

 

217 

 

305 

 

96 

 

209 

 

Debt

 

$

990 

 

 —

 

990 

 

990 

 

 —

 

990 

 

 

The majority of Liberty's Level 2 financial assets and debt are primarily investments in debt related instruments and certain derivative instruments. The Company notes that these assets and liabilities are not always traded publicly or not considered to be traded on "active markets," as defined in GAAP.  The fair values for such instruments are derived from a typical model using observable market data as the significant inputs or a trading price of a similar asset or liability is utilized.  Accordingly, those available-for-sale securities, financial instruments and debt or debt related instruments are reported in the foregoing table as Level 2 fair value. The financial instrument assets included in the table above are included in the Other assets, at cost, net of accumulated amortization line item in the condensed consolidated balance sheets.

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2015

    

2014

 

 

 

amounts in millions

 

Fair Value Option Securities

 

$

(31)

 

(15)

 

Cash convertible notes (a)

 

 

 —

 

59 

 

Change in fair value of bond hedges (a)

 

 

 

(92)

 

Other derivatives (b)(c)

 

 

(5)

 

(17)

 

 

 

$

(28)

 

(65)

 


(a)

Liberty issued $1 billion of cash convertible notes in October 2013 which are accounted for at fair value (Level 2), as elected by Liberty at the issuance of the notes. Contemporaneously with the issuance of the convertible notes, Liberty entered into privately negotiated cash convertible note hedges, which are expected to offset potential cash payments Liberty would be required to make in excess of the principal amount of the convertible notes, upon conversion of the notes. The bond hedges are marked to market based on the trading price of underlying securities and other observable market data as the significant inputs (Level 2). See note 8 for additional discussion of the convertible notes and the bond hedges. 

(b)

Derivatives, including warrants to purchase shares of Charter common stock which were exercised in 2014, are marked to market based on the trading price of underlying securities and other observable market data as the significant inputs (Level 2).

(c)

During September 2014, Liberty entered into a forward contract to acquire up to 15.9 million shares of Live Nation common stock. The counterparty has acquired 11 million shares of Live Nation common stock through March 31, 2015 at a volume weighted average share price of $23.69 per share. Prior to the contract’s original expiration during March 2015, the Company extended the contract through September 2015. Upon expiration of the contract, Liberty has the option to cash settle the contract.