Equifax 2009 Annual Report Download - page 71

(3) Fair value is reported by the fund manager based on observable market (2) Private equity investments are initially valued at cost. Fund managers peri-
prices for actively traded assets within the funds, as well as financial odically review the valuations utilizing subsequent company-specific transac-
models, comparable financial transactions or other factors relevant to tions or deterioration in the company’s financial performance to determine if
the specific asset for assets with no observable market. fair value adjustments are necessary. Private equity investments are typically
(4) For the portion of this asset class categorized as Level 3, fair value is viewed as long term, less liquid investments with return of capital coming
reported by the fund manager based on a combination of the following via cash distributions from the sale of underlying fund assets. The Plan
valuation approaches: current replacement cost less deterioration and obso- intends to hold these investments through each fund’s normal life cycle and
lescence, a discounted cash flow model of income streams and compara- wind down period.
ble market sales. (3) Fair value is reported by the fund manager based on observable market
prices for actively traded assets within the funds, as well as financial
models, comparable financial transactions or other factors relevant to
The following table shows a reconciliation of the beginning and end- the specific asset for assets with no observable market.
ing balances for assets valued using significant unobservable inputs: (4) For the portion of this asset class categorized as Level 3, fair value is
reported by the fund manager based on a combination of the following
(In millions) Private Equity Hedge Funds Real Assets valuation approaches: current replacement cost less deterioration and obso-
lescence, a discounted cash flow model of income streams and compara-
Balance at December 31, 2008 $ 28.5 $ 66.2 $ 5.8 ble market sales.
Return on plan assets:
Unrealized (1.9) 9.7 0.1 Gross realized and unrealized gains and losses, purchases and
Realized (2.9) (2.6) (2.0) sales for Level 3 postretirement assets were not material for the
Purchases 2.5 6.6 — twelve months ended December 31, 2009.
Sales (0.6) (14.9) (0.2)
Balance at December 31, 2009 $ 25.6 $ 65.0 $ 3.7 USRIP and EIPP, or the Plans, Investment and Asset Allocation
Strategies. The primary goal of the asset allocation strategy of the
Plans is to produce a total investment return which will satisfy future
The fair value of the postretirement assets at December 31, 2009, is annual cash benefit payments to participants and minimize future
as follows: contributions from the Company. Additionally, this strategy will diver-
sify the plan assets to minimize nonsystemic risk and provide rea-
Fair Value Measurements at Reporting
sonable assurance that no single security or class of security will
Date Using:
have a disproportionate impact on the Plans. Investment managers
Quoted are required to abide by the provisions of ERISA. Standards of per-
Prices
in Active Significant formance for each manager include an expected return versus an
Markets for Other Significant assigned benchmark, a measure of volatility, and a time period of
Fair Value at Identical Observable Unobservable evaluation.
December 31, Assets Inputs Inputs
Description 2009 (Level 1) (Level 2) (Level 3)
The asset allocation strategy is determined by our external advisor
(In millions) forecasting investment returns by asset class and providing alloca-
Large-Cap Equity(1) $ 2.5 $ 2.5 $ — $ — tion guidelines to maximize returns while minimizing the volatility and
Small and Mid-Cap Equity(1) 0.9 0.9 — — correlation of those returns. Investment recommendations are made
International Equity(1) 2.7 2.7 — — by our external advisor, working in conjunction with our in-house
Fixed Income(1) 4.8 4.8 — — Investment Officer. The asset allocation and ranges are approved by
Private Equity(2) 1.0 — — 1.0 in-house Plan Administrators, who are Named Fiduciaries under
Hedge Funds(3) 2.5 — — 2.5 ERISA.
Real Assets(1)(4) 1.0 0.9 — 0.1
Cash and Cash
Equivalents(1) 1.9 1.9 — —
Total $ 17.3 $ 13.7 $ — $ 3.6
(1) Fair value is based on observable market prices for the assets.
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