The fair values of the assets and liabilities associated with the Company's derivative financial instruments recorded in the consolidated balance sheet as of June 30, 2011 and December 31, 2010 were as follows (in millions):

	Balance Sheet	June 30,		December 31,
	Location	2011		2010
Assets:
Derivatives designated as hedging instruments:
Interest rate swaps	Other current assets	$	2	$	—
Interest rate swaps	Other assets		221		176
Foreign currency forwards	Other current assets		—		1
Total assets		$	223	$	177

Liabilities:
Derivatives designated as hedging instruments:
Cross-currency swaps	Other liabilities	$	48	$	—

Derivatives not designated as hedging instruments:
Equity award reimbursement obligation	Other current liabilities		22		20
Total liabilities		$	70	$	20

The Company uses interest rate swaps to manage interest rate risk by effectively converting fixed-rate debt into variable-rate debt. Under such contracts, the Company is entitled to receive semi-annual interest payments at fixed rates and is required to make semi-annual interest payments at variable rates, without exchange of the underlying principal amount. Such contracts are designated as fair value hedges. As of June 30, 2011, the Company had entered into interest rate swaps on $7.850 billion principal amount of senior debt securities with maturities extending through May 2017. The Company recognizes no gain or loss related to its interest rate swaps because the changes in the fair values of such instruments are completely offset by the changes in the fair values of the hedged fixed-rate debt.

The Company uses cross-currency swaps to manage foreign exchange risk related to foreign currency denominated debt by effectively converting foreign currency denominated debt, including annual interest payments and the payment of principal at maturity, to U.S. dollar denominated debt. Such contracts are designated as cash flow hedges. As of June 30, 2011, the Company had entered into cross-currency swaps to effectively convert the entire balance of its fixed-rate British pound sterling denominated debt to fixed-rate U.S. dollar denominated debt. The cross-currency swaps have maturities extending through June 2031. As of June 30, 2011, the fair value of the cross-currency swaps was $48 million, which is recorded in other liabilities, with an offset to accumulated other comprehensive loss, net. During the three and six months ended June 30, 2011, the Company reclassified $10 million from accumulated other comprehensive loss, net, into other expense, net, to offset the $10 million re-measurement gain on the British pound sterling denominated debt. Additionally, the Company has used foreign exchange forward contracts to manage foreign exchange risk related to forecasted payments denominated in the Philippine peso made to vendors who provided customer care support services. Such contracts were designated as cash flow hedges. As of June 30, 2011, the Company had no outstanding foreign currency forwards related to forecasted payments denominated in the Philippine peso. Any ineffectiveness related to the Company's cash flow hedges has been and is expected to be immaterial.

Upon the exercise of Time Warner Inc. (“Time Warner”) stock options held by TWC employees, TWC is obligated to reimburse Time Warner for the excess of the market price of Time Warner common stock on the day of exercise over the option exercise price (the “intrinsic” value of the award). The Company records the equity award reimbursement obligation at fair value in the consolidated balance sheet, which is estimated using the Black-Scholes model. The change in the equity award reimbursement obligation fluctuates primarily with the fair value and expected volatility of Time Warner common stock and changes in fair value are recorded in other expense, net in the period of change. As of June 30, 2011, the weighted-average remaining contractual term of outstanding Time Warner stock options held by TWC employees was 1.60 years. Refer to Note 7 for the changes in the fair value of the equity award reimbursement obligation.