Kraft 2013 Annual Report Download - page 64

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62
The fair value of pension plan assets at December 29, 2012 was determined using the following fair value
measurements:
Asset Category Total Fair
Value
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(in millions)
Non-U.S. equity securities $ 707 $ 707 $ — $ —
Pooled funds equity securities 3,269 — 3,269 —
Total equity securities 3,976 707 3,269 —
Government bonds 584 543 41 —
Pooled funds fixed-income securities 429 — 429 —
Corporate bonds and other fixed-income
securities 1,301 — 1,294 7
Total fixed-income securities 2,314 543 1,764 7
Real estate 186 — — 186
Other 77 — —
Total $ 6,483 $ 1,257 $ 5,033 $ 193
We excluded plan assets of $66 million at December 29, 2012 from the above table related to certain insurance
contracts as they are reported at contract value, in accordance with authoritative guidance.
Fair value measurements:
• Level 1 – includes primarily non-U.S. equity securities and certain government bonds valued using quoted
prices in active markets.
• Level 2 – includes primarily pooled funds valued using net asset values of participation units held in
common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of
actual purchase and sale transactions. Level 2 plan assets also include corporate bonds and other fixed-
income securities, valued using independent observable market inputs, such as matrix pricing, yield curves,
and indices.
• Level 3 – includes primarily real estate valued using unobservable inputs that reflect the plans’ assumptions
that market participants would use in pricing the assets, based on the best information available. Fair value
estimates for real estate investments are calculated by the investment managers using the present value of
future cash flows expected to be received from the investments, based on valuation methodologies such as
appraisals, local market conditions, and current and projected operating performance.
Changes in our Level 3 plan assets, which are recorded in operations, for the year ended December 28, 2013
included:
Asset Category
December 30,
2012
Balance
Net Realized
and Unrealized
Gains/(Losses)
Net Purchases,
Issuances and
Settlements
Net Transfers
Into/(Out of)
Level 3
December 28,
2013
Balance
(in millions)
Corporate bonds and other fixed-
income securities $7$ — $ (2) $ (5) $ —
Real estate 186 27 1 — 214
Total Level 3 investments $ 193 $ 27 $ (1) $ (5) $ 214