Emerson 2015 Annual Report Download - page 50

48 | 2015 Annual Report
The fair values of defined benefit pension assets as of September 30, organized by asset class and by the fair value
hierarchy of ASC 820, Fair Value Measurement, follow:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL PERCENTAGE
2015
U.S. equities $ 956 460 257 1,673 34%
International equities 502 677 1,179 24%
Emerging market equities 211 211 4%
Corporate bonds 628 628 13%
Government bonds 2 674 676 14%
High-yield bonds 175 175 4%
Other 140 67 114 321 7%
Total $1,600 2,892 371 4,863 100%
2014
U.S. equities $1,097 535 184 1,816 33%
International equities 589 767 1,356 25%
Emerging market equities 279 279 5%
Corporate bonds 594 594 11%
Government bonds 2 720 722 13%
High-yield bonds 181 181 3%
Other 209 180 124 513 10%
Total $1,897 3,256 308 5,461 100%
ASSET CLASSES
U.S. equities reflect companies domiciled in the U.S., including multinational companies. International equities are
comprised of companies domiciled in developed nations outside the U.S. Emerging market equities are comprised
of companies domiciled in portions of Asia, Eastern Europe and Latin America. Corporate bonds represent
investment-grade debt of issuers primarily from the U.S. Government bonds include investment-grade instruments
issued by federal, state and local governments, primarily in the U.S. High-yield bonds include noninvestment-grade
debt from a diverse group of developed market issuers. Other includes cash, interests in mixed asset funds investing
in commodities, natural resources, agriculture, real estate and infrastructure funds, life insurance contracts (U.S.),
and shares in certain general investment funds of financial institutions or insurance arrangements (non-U.S.) that
typically ensure no market losses or provide for a small minimum return guarantee.
FAIR VALUE HIERARCHY CATEGORIES
Valuations of Level 1 assets for all classes are based on quoted closing market prices from the principal exchanges
where the individual securities are traded. Cash is valued at cost, which approximates fair value. Equity securities
categorized as Level 2 assets are primarily nonexchange-traded commingled or collective funds where the
underlying securities have observable prices available from active markets. Valuation is based on the net asset
value of fund units held as derived from the fair value of the underlying assets. Debt securities categorized as
Level 2 assets are generally valued based on independent broker/dealer bids or by comparison to other debt
securities having similar durations, yields and credit ratings. Other Level 2 assets are valued based on a net asset
value of fund units held, which is derived from either market-observed pricing for the underlying assets or broker/
dealer quotation. U.S. equity securities classified as Level 3 are fund investments in private companies. Valuation
techniques and inputs for these assets include discounted cash flow analysis, earnings multiple approaches, recent
transactions, transfer restrictions, prevailing discount rates, volatilities, credit ratings and other factors. In the
Other class, interests in mixed assets funds are Level 2, and U.S. life insurance contracts and non-U.S. general fund
investments and insurance arrangements are Level 3.
Details of the changes in value for Level 3 assets follow:
2014 2015
Level 3, beginning $250 308
Gains (Losses) on assets held (18) 18
Gains (Losses) on assets sold 21 (20)
Purchases, sales and settlements, net 55 65
Level 3, ending $308 371