E-Z-GO 2013 Annual Report Download - page 83

70Textron Inc. Annual Report • 2013
For U.S. plan assets, which represent the majority of our plan assets, asset allocation target ranges are established consistent with
our investment objectives, and the assets are rebalanced periodically. For foreign plan assets, allocations are based on expected
cash flow needs and assessments of the local practices and markets. Our target allocation ranges are as follows:
U.S. Plan Assets
Domestic equity securities 26% to 40%
International equity securities 11% to 22%
Debt securities 25% to 35%
Private equity partnerships 5% to 11%
Real estate 7% to 13%
Hedge funds 0% to 5%
Foreign Plan Assets
Equity securities 38% to 65%
Debt securities 29% to 38%
Real estate 3% to 14%
The fair value of total pension plan assets by major category and level in the fair value hierarchy as defined in Note 8 is as follows:
December 28, 2013 December 29, 2012
(In millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Cash and equivalents $ 17 $ 144 $ — $ 16 $ 157 $ —
Equity securities:
Domestic 1,179 866 — 1,149 560 —
International 1,140 258
Debt securities:
National, state and local governments 506 411 — 594 318 —
Corporate debt — 638 — 13 647 —
Asset-backed securities — 153 — 1 91 —
Private equity partnerships — — 305 — — 308
Real estate — — 553 — — 508
Hedge funds — — 175 — — 104
Total $ 2,842 $ 2,470 $ 1,033 $ 2,754 $ 2,041 $ 920
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 based on 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.