United Technologies 2012 Annual Report Download - page 85

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Notes to Consolidated Financial Statements 2012 ANNUAL REPORT 83
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:
(DOLLARS IN MILLIONS)
Global
Equities
Enhanced
Global
Equities
Private
Equities
Corporate
Bonds
Real
Estate Total
Balance, December 31, 2010 $ 1 $ 245 $ 1,134 $ – $ 944 $ 2,324
Realized gains (losses) – (1) 108 – (6) 101
Unrealized gains (losses) relating to instruments still held in the reporting period – (1) 17 6 137 159
Purchases, sales, and settlements, net (1) (4) (100) 104 289 288
Balance, December 31, 2011 – 239 1,159 110 1,364 2,872
Plan assets acquired – 63 – – 79 142
Realized gains – 1 174 3 6 184
Unrealized (losses) gains relating to instruments still held in the reporting period – 31 (14) 51 115 183
Purchases, sales, and settlements, net – 113 (117) 112 221 329
Balance, December 31, 2012 $ – $ 447 $ 1,202 $ 276 $ 1,785 $ 3,710
Quoted market prices are used to value investments when
available. Investments in securities traded on exchanges, including
listed futures and options, are valued at the last reported sale prices
on the last business day of the year or, if not available, the last
reported bid prices. Fixed income securities are primarily measured
using a market approach pricing methodology, where observable
prices are obtained by market transactions involving identical or
comparable securities of issuers with similar credit ratings. Mort-
gages have been valued on the basis of their future principal and
interest payments discounted at prevailing interest rates for similar
investments. Investment contracts are valued at fair value by dis-
counting the related cash flows based on current yields of similar
instruments with comparable durations. Real estate investments are
valued on a quarterly basis using discounted cash flow models
which consider long-term lease estimates, future rental receipts and
estimated residual values. Valuation estimates are supplemented by
third-party appraisals on an annual basis.
Private equity limited partnerships are valued quarterly
using discounted cash flows, earnings multiples and market multi-
ples. Valuation adjustments reflect changes in operating results,
financial condition, or prospects of the applicable portfolio com-
pany. Over-the-counter securities and government obligations are
valued at the bid prices or the average of the bid and ask prices on
the last business day of the year from published sources or, if not
available, from other sources considered reliable, generally broker
quotes. Temporary cash investments are stated at cost, which
approximates fair value.
ESTIMATED FUTURE CONTRIBUTIONS AND BENEFIT
PAYMENTS
We expect to make contributions of approximately $200 million to
our foreign defined benefit pension plans in 2013. Although we are
not required to make contributions to our domestic defined benefit
pension plans through the end of 2013, we may elect to make dis-
cretionary contributions in 2013. Contributions do not reflect bene-
fits to be paid directly from corporate assets.
Benefit payments, including amounts to be paid from corpo-
rate assets, and reflecting expected future service, as appropriate,
are expected to be paid as follows: $1,657 million in 2013, $1,654
million in 2014, $1,724 million in 2015, $1,793 million in 2016,
$1,880 million in 2017, and $10,442 million from 2018
through 2022.