| Assets and Liabilities Measured at Fair Value |
(3) 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. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 2 or Level 3.
The Company’s assets and (liabilities) measured at fair value are as follows:
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September 30, 2016
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December 31, 2015
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Quoted prices
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Significant
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Quoted prices
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Significant
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in active
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other
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in active
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other
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markets for
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observable
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markets for
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observable
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identical assets
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inputs
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identical assets
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inputs
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Description
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Total
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(Level 1)
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(Level 2)
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Total
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(Level 1)
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(Level 2)
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(amounts in thousands)
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Cash equivalents
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$
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251,225
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251,225
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—
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639,956
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639,956
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—
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Short-term marketable securities
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$
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—
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—
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—
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9,014
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9,014
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—
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Available-for-sale securities
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$
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—
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—
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—
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439,560
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439,560
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—
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Other Financial Instruments
Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued other current liabilities, current portion of debt and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our condensed consolidated balance sheets. The carrying value of our long-term debt bears interest at a variable rate and therefore is also considered to approximate fair value.
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:
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Three months ended
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Nine months ended
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September 30,
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September 30,
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2016
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2015
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2016
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2015
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(amounts in thousands)
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Time Warner Cable investment and financial instruments (1)(2)(3)
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$
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—
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(23,116)
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92,990
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(12,091)
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$
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—
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(23,116)
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92,990
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(12,091)
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(1)
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During the period ended September 30, 2015 the Company had an outstanding written call option on 625,000 Time Warner Cable shares which was cash settled during June 2015 for $48.3 million. Also during the period ended September 30, 2015 the Company had an additional outstanding written call option on 625,000 Time Warner Cable shares which was cash settled during April 2015 for $36.7 million. No written call options on Time Warner Cable shares were outstanding as of September 30, 2016 or December 31, 2015. The unrealized gain during the nine months ended September 30, 2016 is due to an increase in the Time Warner Cable stock price during the period.
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(2)
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On March 27, 2015, Liberty Broadband entered into a cashless collar agreement with a financial institution on 1.7 million Time Warner Cable shares held by the Company. The collar was originally scheduled to expire during March 2017. The Company unwound the agreement during July 2015 for $67.1 million cash paid to the counterparty. In connection with this collar agreement, the Company also entered into a revolving loan agreement with an availability of $234 million, which was terminated upon unwinding of the collar agreement during July 2015 (note 7).
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(3)
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As discussed in note 5, Time Warner Cable merged with Charter on May 18, 2016. Therefore the Company no longer has an investment in Time Warner Cable as of May 18, 2016, and the unrealized gain (loss) related to our investment in Time Warner Cable is recorded through this date. In connection with the merger, the Company exchanged, in a tax-free transaction, its shares of Time Warner Cable for shares of New Charter (as defined in note 5) Class A common stock.
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