Kodak 2012 Annual Report Download - page 106

Table of Contents
Major Non-U.S. Plans
December 31, 2011
For Kodak’s major non-U.S. defined benefit pension plans, equity investments are invested broadly in local equity, developed international and
emerging markets. Fixed income investments are comprised primarily of long duration government and corporate bonds with some emerging
market debt. Real estate investments include investments in primarily office, industrial, and retail properties. Other investments include private
equity, hedge funds, and insurance contracts. Private equity investments are comprised of limited partnerships and fund-of-fund investments that
invest in distressed investments, venture capital and leveraged buyout funds.
Cash and cash equivalents are valued utilizing cost approach valuation techniques. Equity securities and debt securities are valued using a market
approach based on the closing price on the last business day of the year (if the securities are traded on an active market), or based on the
proportionate share of the estimated fair value of the underlying assets (net asset value). Other investments are valued using a combination of
market, income, and cost approaches, based on the nature of the investment. Absolute return investments are primarily valued based on net asset
value derived from observable market inputs. Real estate investments are valued primarily based on independent appraisals and discounted cash
flow models, taking into consideration discount rates and local market conditions. Private equity investments are valued primarily based on
independent appraisals, discounted cash flow models, cost, and comparable market transactions, which include inputs such as discount rates and
pricing data from the most recent equity financing. Insurance contracts are primarily valued based on contract values, which approximate fair
value.
Some of the plans’ assets, primarily absolute return, real estate, and private equity, do not have readily determinable market values due to the
nature of these investments. For these investments, fund manager or general partner estimates were used where available. The estimates for the
absolute return assets are derived from observable inputs, based on the fair value of the underlying positions, which have readily available
market prices. For investments with lagged pricing, Kodak used the available net asset values, and also considered expected return, subsequent
cash flows and material events.
For all of Kodak’s major defined benefit pension plans, investment managers are selected that are expected to provide best-in-class asset
management for their particular asset class, and expected returns greater than those expected from existing salable assets, especially if this would
maintain the aggregate volatility desired for each plan’s portfolio. Investment managers are retained for the purpose of managing specific
investment strategies within contractual investment guidelines. Certain investment managers are authorized to invest in derivatives such as
futures, swaps, and currency forward contracts. Investments in futures and swaps are used to obtain targeted exposure to a particular asset, index
or bond duration and only require a portion of the cash to gain exposure to the notional value of the underlying investment. The remaining cash
is available to be deployed and in some cases is invested in a
102
(in millions)
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Cash and cash equivalents
$
—
$
101
$
—
$
101
Equity securities
58
330
6
394
Debt securities:
Government Bonds
—
151
6
157
Inflation
-
Linked Bonds
—
356
251
607
Investment Grade Bonds
—
97
—
97
Global High Yield & Emerging Market Debt
—
223
—
223
Other:
Absolute Return
—
145
—
145
Real Estate
—
4
55
59
Private Equity
—
2
312
314
Insurance Contracts
—
339
—
339
$
58
$
1,748
$
630
$
2,436