v2.4.0.6
Fair Value Measurements
 6 Months Ended
Jun. 30, 2012
Fair Value Measurements [Abstract]  
Fair Value Measurements

Note 8: Fair Value Measurements

The accounting guidance related to financial assets and financial liabilities (“financial instruments”) establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). Level 1 consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market. Level 2 consists of financial instruments that are valued using models or other valuation methodologies. These models use inputs that are observable either directly or indirectly. Level 3 consists of financial instruments whose values are determined using pricing models that use significant inputs that are primarily unobservable, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. Our financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.

Recurring Fair Value Measures
 Fair Value as of
 June 30, 2012 December 31, 2011
(in millions)  Level 1 Level 2 Level 3 Total  Total
Assets           
Trading securities$ 3,381$ -$ -$ 3,381 $ 2,895
Interest rate swap agreements  -  235  -  235   246
Available-for-sale securities  92  18  21  131   131
Foreign exchange contracts  -  14  -  14   10
Equity warrants  -  -  2  2   2
Total$ 3,473$ 267$ 23$ 3,763 $ 3,284
Liabilities           
Derivative component of prepaid forward sale agreements and indexed debt instruments$ -$ 1,683$ -$ 1,683 $ 1,234
Contractual obligations  -  -  984  984   1,004
Contingent consideration  -  -  598  598   583
Cross-currency swap agreements  -  90  -  90   69
Foreign exchange contracts  -  8  -  8   8
Total$ -$ 1,781$ 1,582$ 3,363 $ 2,898

The fair values of the contractual obligations and contingent consideration in the table above are primarily based on certain expected future discounted cash flows, the determination of which involves the use of significant unobservable inputs. The most significant unobservable input we use is our estimate of the future revenue we expect to generate from certain NBCUniversal entities that is related to our contractual obligations and future payments to GE that are related to contingent consideration. The discount rates used in the measurements of fair value were between 5.6% and 13.0% and are based on the underlying risk associated with our estimate of future revenue, as well as the terms of the respective contracts, and the uncertainty in the timing of our payments to GE. Fair value adjustments to these liabilities are recorded in other income (expense), net in our condensed consolidated statement of income.

Changes in Contractual Obligations and Contingent Consideration
     
(in millions) Contractual Obligations Contingent Consideration
Balance, December 31, 2011$ 1,004$ 583
Acquisition accounting adjustments  (20)  -
Fair value adjustments  41  41
Payments  (41)  (26)
Balance, June 30, 2012$ 984$ 598