Freeport-McMoRan 2013 Annual Report Download - page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
100 | FREEPORT-McMoRan
A summary of the fair value hierarchy for pension plan assets
associated with the FCX plans follows:
Fair Value at December 31, 2013
Total Level 1 Level 2 Level 3
Commingled/collective funds:
Global equity $ 623 $ — $ 623 $ —
U.S. small-cap equity 65 — 65 —
Real estate property 47 — — 47
U.S. real estate securities 40 — 40 —
Fixed income debt securities 30 — 30 —
Short-term investments 5 — 5 —
Open-ended mutual funds:
Government bonds 43 43 — —
Emerging markets equity 41 41 — —
Corporate bonds 33 33 — —
Mutual funds:
Foreign bonds 51 51 — —
Emerging markets equity 26 26 — —
Emerging markets bond 20 20 — —
Fixed income:
Government bonds 198 — 198 —
Corporate bonds 52 — 52 —
Private equity investments 43 — — 43
Other investments 29 1 28 —
Total investments 1,346 $ 215 $ 1,041 $ 90
Cash and receivables 18
Payables (14)
Total pension plan net assets $ 1,350
Fair Value at December 31, 2012
Total Level 1 Level 2 Level 3
Commingled/collective funds:
Global equity $ 481 $ — $ 481 $ —
U.S. real estate securities 61 — 61 —
U.S. small-cap equity 52 — 52 —
Real estate property 41 — — 41
Short-term investments 40 — 40 —
Open-ended mutual funds:
Government bonds 48 48 — —
Emerging markets equity 41 41 — —
Corporate bonds 23 23 — —
Mutual funds:
Foreign bonds 54 54 — —
Emerging markets bond 37 37 — —
Emerging markets equity 28 28 — —
Fixed income:
Government bonds 241 — 241 —
Corporate bonds 82 — 82 —
Private equity investments 45 — — 45
Other investments 33 1 32 —
Total investments 1,307 $ 232 $ 989 $ 86
Cash and receivables 5
Payables (12)
Total pension plan net assets $ 1,300
The weighted-average assumptions used to determine net periodic
benefit cost and the components of net periodic benefit cost for
PT-FI’s pension plan for the years ended December 31 follow:
2013 2012 2011
Weighted-average assumptions:
Discount rate 6.25% 7.00% 8.50%
Expected return on plan assets 7.50% 9.25% 9.25%
Rate of compensation increase 8.00% 8.00% 8.00%
Service cost $ 20 $ 17 $ 13
Interest cost 14 14 11
Expected return on plan assets (10) (9) (9)
Amortization of prior service cost — 1 1
Amortization of net actuarial loss 8 7 3
Net periodic benefit cost $ 32 $ 30 $ 19
Included in accumulated other comprehensive loss are the
following amounts that have not been recognized in net periodic
pension cost as of December 31:
2013 2012
After Taxes and After Taxes and
Before Noncontrolling Before Noncontrolling
Taxes Interests Taxes Interests
Prior service costs (credits) $ 32 $ 17 $ (2) $ (1)
Net actuarial loss 542 326 705 429
$ 574 $ 343 $ 703 $ 428
Actuarial losses in excess of 10 percent of the greater of the
projected benefit obligation or market-related value of plan assets
are amortized over the expected average remaining future service
period of the current active participants. The amount expected to
be recognized in 2014 net periodic pension cost for actuarial
losses is $25 million ($15 million net of tax and noncontrolling
interests) and $3 million ($2 million net of tax and noncontrolling
interests) for prior service costs.
FCX does not expect to have any plan assets returned to it in
2014. Plan assets are classified within a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1), then to significant observable inputs (Level 2) and the
lowest priority to significant unobservable inputs (Level 3).
For further discussion of the different levels of the fair value
hierarchy, refer to Note 15.