E-Z-GO 2011 Annual Report Download - page 88

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The fair value of total pension plan assets by major category and level in the fair value hierarchy as defined in Note 9 is as follows:
December 31, 2011
January 1, 2011
(In millions)
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Cash and equivalents
$ 14
$ 183
$ —
$ 3
$ 178
$ —
Equity securities:
Domestic
1,017
482
—
1,052
469
—
International
777
233
—
688
251
—
Debt securities:
National, state and local governments
630
254
—
39
570
—
Corporate debt
34
494
—
10
432
—
Asset-backed securities
3
74
—
2
103
—
Private equity partnerships
—
―
314
—
—
324
Real estate
—
―
407
—
—
337
Hedge funds
—
—
97
—
—
101
Total
$ 2,475
$ 1,720
$ 818
$ 1,794
$ 2,003
$ 762
Cash equivalents and equity and debt securities include comingled funds, which represent investments in funds offered to
institutional investors that are similar to mutual funds in that they provide diversification by holding various equity and debt
securities. Since these comingled funds are not quoted on any active market, they are priced based on the relative value of the
underlying equity and debt investments and their individual prices at any given time; accordingly, 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.
Hedge funds represent an investment in a diversified fund of hedge funds of which we are the sole investor. The fund invests in
portfolio funds that are not publicly traded and are managed by various portfolio managers. Investments in portfolio funds are
typically valued on the basis of the most recent price or valuation provided by the relevant fund’s administrator. The administrator
for the fund aggregates these valuations with the other assets and liabilities to calculate the net asset value of the fund.
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:
(In millions)
Hedge Funds
Private Equity
Partnerships
Real Estate
Balance at beginning of year
$ 101
$ 324
$ 337
Actual return on plan assets:
Related to assets still held at reporting date
(4)
7
32
Related to assets sold during the period
―
31
2
Purchases, sales and settlements, net
―
(48)
36
Balance at end of year
$ 97
$ 314
$ 407
77
Textron Inc. Annual Report • 2011 77