E-Z-GO 2009 Annual Report Download - page 88

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Textron Inc.
The fair value of total pension plan assets by major category and level in the fair value hierarchy, as defined in Note 10, at January 2, 2010 is
as follows:
(In millions) Level 1 Level 2 Level 3
Cash and cash equivalents $ 9 $ 116 $ —
Equity securities:
Domestic 863 409 —
International 519 220 —
Debt securities:
National, state, and local governments — 473 —
Corporate debt — 428 —
Asset-backed securities — 148 —
Private equity partnerships — — 313
Real estate — — 285
Total $ 1,391 $ 1,794 $ 598
Cash equivalents and equity and debt securities include co-mingled funds, which represent investments in funds offered to institutional investors
that are similar to mutual funds in that they provide diversification by holding various debt and equity securities. Since these co-mingled funds
are not quoted on any active market and are valued based on the relative dispersion of the underlying debt and equity investments and their
individual prices at any given time, they are classified as Level 2. Debt securities are valued based on same day actual trading prices, if available.
If such prices are not available, we use a matrix pricing model with historical prices, trends and other factors.
Private equity partnerships represent investments in funds, which, in turn, invest in stocks and debt securities of companies that, in most cases,
are not publicly traded. These partnerships are valued using income and market methods that include cash flow projections and market multiples
for various comparable companies.
Real estate includes owned properties and investments in partnerships. Owned properties are valued using certified appraisals at least every three
years, which then are updated at least annually by the real estate investment manager, who considers current market trends and other available
information. These appraisals generally use the standard methods for valuing real estate, including forecasting income and identifying current
transactions for comparable real estate to arrive at a fair value. Real estate partnerships are valued similar to private equity partnerships, with the
general partner using standard real estate valuation methods to value the real estate properties and securities held within their fund portfolios. We
believe these assumptions are consistent with assumptions that market participants would use in valuing these investments.
The table below presents a reconciliation of the beginning and ending balances for fair value measurements that use significant unobservable
inputs (Level 3) by major category:
Private Equity Real
(In millions) Partnerships Estate
Balance at beginning of year $ 290 $ 394
Actual return on plan assets
Related to assets still held at reporting date 16 (117)
Related to assets sold during the period (1) (2)
Purchases, sales and settlements, net 8 10
Balance at end of year $ 313 $ 285
Estimated Future Cash Flow Impact
Defined benefits under salaried plans are based on salary and years of service. Hourly plans generally provide benefits based on stated amounts
for each year of service. Our funding policy is consistent with applicable laws and regulations. In 2010, we expect to contribute approximately
$20 million to fund our qualified pension plans and foreign plans. We do not expect to contribute to our other postretirement benefit plans. Benefit
79