Amtrak 2013 Annual Report Download - page 97

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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1411-1359280 58
13. Postretirement Employee Benefits (continued)
The accounting guidance on fair value measurements specifies a fair value hierarchy based on
the ability to observe inputs used in valuation techniques (Level 1, 2 and 3 – see Note 9). The
following is a description of the valuation methodologies used for the investments measured at
fair value, including the general classification of such instruments pursuant to the valuation
hierarchy. Further, upon adoption of the provisions of the ASU 2009-12, Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent), the Company expanded
disclosures for those assets whose fair value is estimated using the net asset value (“NAV”) per
share or its equivalent for which fair value is not readily determinable. The Company does not
intend to sell any of the funds at an amount different from NAV per share at September 30, 2013,
nor does the Company have any unfunded commitments related to these funds.
Domestic Equity Securities
This investment category consists of common stock issued by U.S. corporations and American
Depository Receipt (ADR) issued by U.S. banks. Common shares and ADRs are traded actively
on exchanges and price quotes for these shares are readily available. These assets are classified
as Level 1 investments.
Fixed Income Securities
This investment category consist of U.S. Treasuries, U.S. Government bonds, corporate bonds,
agency-backed bonds, municipal bonds, asset-back securities and mortgage-backed securities.
These assets are valued based on a compilation of primary observable market information or a
broker quote in a non-active market. These assets are classified as Level 2 investments.
Money Market Funds
Money market funds generally transact subscription and redemption activity at a $1.00 stable
NAV. However, on a daily basis the fund’ s NAV is calculated using the amortized cost (not
market value) of the securities held in the fund. It is generally accepted as industry best practice
that securities valued at amortized cost are Level 2 assets; amortized cost does not meet the
criteria for an “active market.” This factor was the primary determinant used by the management
to assign a fair value hierarchy of Level 2 to money market funds. Amtrak’ s category of
investments in money market funds is comprised of JPMorgan 100% U.S. Treasury Securities
Money Market Fund. Management obtained and reviewed JP Morgan’ s Money Market Funds
Annual Report and reviewed the investment valuation for JPMorgan 100% U.S. Treasury