Charter 2015 Annual Report Download - page 122

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014 AND 2013
(dollars in millions, except share or per share data or where indicated)
F- 25
instruments were de-designated in 2013 and the balance that remains in accumulated other comprehensive loss for these interest
rate derivative instruments is being amortized over the respective lives of the contracts and recorded as a loss within gain (loss)
on derivative instruments, net in the Company's consolidated statements of operations. The estimated net amount of existing
losses that are reported in accumulated other comprehensive loss as of December 31, 2015 that is expected to be reclassified into
earnings within the next twelve months is approximately $8 million.
The effects of derivative instruments on the Company’s consolidated statements of operations is presented in the table below.
Year Ended December 31,
2015 2014 2013
Gain (loss) on derivative instruments, net:
Change in fair value of interest rate derivative instruments not
designated as cash flow hedges $5$12$38
Loss reclassified from accumulated other comprehensive loss into
earnings as a result of cash flow hedge discontinuance (9)(19)(27)
$(4)$ (7)$ 11
As of December 31, 2015 and 2014, the Company had $1.1 billion and $1.4 billion, respectively, in notional amounts of interest
rate derivative instruments outstanding. In December 2016, $250 million of currently effective swaps expire and therefore the
notional amount of currently effective interest rate swaps will decrease. The notional amounts of interest rate instruments do not
represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged were
determined by reference to the notional amount and the other terms of the contracts.
12. Fair Value Measurements
The accounting guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency
of inputs to the valuation of an asset or liability as of the measurement date, as follows:
• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active
markets.
• Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,
and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the
financial instrument.
• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Financial Assets and Liabilities
The Company has estimated the fair value of its financial instruments as of December 31, 2015 and 2014 using available market
information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market
data to develop the estimates of fair value. Accordingly, the estimates presented in the accompanying consolidated financial
statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.
The carrying amounts of cash and cash equivalents, receivables, payables and other current assets and liabilities approximate fair
value because of the short maturity of those instruments.
The Company's restricted cash and cash equivalents are primarily invested in money market funds and 90-day or less commercial
paper. The money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange
and commercial paper is valued at cost plus the accretion of the discount on a yield to maturity basis, which approximated fair
value. The money market funds and commercial paper potentially subject us to concentration of credit risk. The amount invested
within any one financial instrument did not exceed $1.5 billion and $550 million during the years ended December 31, 2015 and
2014, respectively. As of December 31, 2015 and 2014, there were no significant concentrations of financial instruments in a
single investee, industry or geographic location.