Freeport-McMoRan 2011 Annual Report Download - page 88

86 | FREEPORT-McMoRan COPPER & GOLD INC.
Included in accumulated other comprehensive income (loss) are
the following amounts that have not been recognized in net
periodic pension cost: unrecognized prior service credits of $2 million
($1 million net of tax and noncontrolling interests) and
unrecognized actuarial losses of $642 million ($390 million net of
tax and noncontrolling interests) at December31,2011; and
unrecognized prior service credits of $2 million ($1 million net of
tax and noncontrolling interests) and unrecognized actuarial
losses of $440 million ($267 million net of tax and noncontrolling
interests) at December31,2010. e amounts expected to be
recognized in net periodic pension cost for 2012 are less than
$1 million for prior service credits and $40 million ($25 million net
of tax and noncontrolling interests) for actuarial losses.
FCX does not expect to have any plan assets returned to it in 2012.
Plan assets are classied within a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair
value. e hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1), then to signicant observable inputs (Level 2) and the
lowest priority to signicant unobservable inputs (Level 3). For
further discussion of the dierent levels of the fair value hierarchy,
refer to Note 16.
A summary of the fair value hierarchy for pension plan assets
associated with the FCX plans follows:
Fair Value at December 31, 2011
Total Level 1 Level 2 Level 3
Commingled/collective funds:
Global equity $ 408 $ — $ 408 $ —
U.S. real estate securities 52 — 52 —
U.S. small-cap equity 45 — 45 —
Real estate property 35 — — 35
Short-term investments 22 — 22 —
Open-ended mutual funds:
Government bonds 50 50 — —
Emerging markets equity 36 36 — —
Corporate bonds 22 22 — —
Mutual funds:
Foreign bonds 43 43 — —
Emerging markets bond 32 32 — —
Emerging markets equity 24 24 — —
Fixed income:
Government bonds 233 — 233 —
Corporate bonds 73 — 73 —
Private equity investments 50 — — 50
Other investments 23 — 23 —
Total investments 1,148 $ 207 $ 856 $ 85
Cash and receivables 6
Payables (13)
Total pension plan net assets $ 1,141
Fair Value at December 31, 2010
Total Level 1 Level 2 Level 3
Commingled/collective funds:
U.S. large-cap equity $ 134 $ — $ 134 $ —
U.S. small-cap equity
a
101 — 101 —
International equity 71 — 71 —
U.S. real estate securities
a
47 — 47 —
Real estate property 28 — — 28
Short-term investments
a
19 — 19 —
Open-ended mutual funds:
Emerging markets equity 46 46 — —
Government bonds 38 38 — —
Corporate bonds 30 30 — —
Mutual funds:
Foreign bonds 38 38 — —
Emerging markets bond 30 30 — —
Emerging markets equity 29 29 — —
Equity securities:
U.S. large-cap equity 161 161 — —
International equity 57 57 — —
Fixed income:
Government bonds 147 — 147 —
Corporate bonds 74 — 74 —
Private equity investments 46 — — 46
Other investments 28 1 27 —
Total investments 1,124 $ 430 $ 620 $ 74
Cash and receivables 81
Payables (93)
Total pension plan net assets $ 1,112
a. At the end of 2011, FCX reevaluated its level determinations, including those reported at
December 31, 2010. While the majority of the underlying investments consists of publicly
traded securities with actively quoted market values, the reported fair value of the
investment vehicle containing these securities is based on net asset values that are not
published publicly; therefore, FCX concluded these investments are more appropriately
classified within Level 2 of the fair value hierarchy.
Following is a description of the pension plan asset categories and
the valuation techniques used to measure fair value. ere have
been no changes in the techniques used at December 31, 2011.
Commingled/collective funds are managed by several fund
managers and are valued at the net asset value per unit of the fund.
For most of these funds, the majority of the underlying assets are
actively traded equity securities; however, the unit level is
considered to be at the fund level and, as such, are classied within
Level 2 (except the real estate property funds) of the fair value
hierarchy. ese funds require less than a month’s notice for
redemptions. Real estate property funds are valued at net realizable
value using information from independent appraisal rms, who
have knowledge and expertise about the current market values of
real property in the same vicinity as the investments and, as such,
are classied within Level 3 of the fair value hierarchy.
Redemptions of the real estate property funds are allowed once per
quarter, subject to available cash.
Open-ended mutual funds are managed by registered
investment companies and are valued at the daily published net
asset value of shares/units held. Because redemptions and
purchases of shares/units occur at the net asset value without any
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS