Freeport-McMoRan 2014 Annual Report Download - page 105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
103
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).
A summary of the fair value hierarchy for pension plan assets
associated with the FCX plans follows:
Fair Value at December 31, 2014
Total Level 1 Level 2 Level 3
Commingled/collective funds:
Global equity $ 487 $ — $ 487 $ —
Global fixed income securities 106 — 106 —
Fixed income securities 99 — 99 —
U.S. small-cap equity 69 — 69 —
U.S. real estate securities 54 — 54 —
Real estate property 54 — — 54
Short-term investments 8 — 8 —
Open-ended mutual funds:
Emerging markets equity 38 38 — —
Mutual funds:
Emerging markets equity 25 25 — —
Fixed income:
Government bonds 244 — 244 —
Corporate bonds 148 — 148 —
Private equity investments 39 — — 39
Other investments 35 — 35 —
Total investments 1,406 $ 63 $ 1,250 $ 93
Cash and receivables 19
Payables (9)
Total pension plan net assets $ 1,416
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
Following is a description of the pension plan asset categories
and the valuation techniques used to measure fair value. There
have been no changes to the techniques used to measure fair value.
Commingled/collective funds are managed by several fund
managers and are valued at the net asset value per unit of the
fund. For most of these funds, the majority of the underlying
assets are actively traded equity securities; however, the unit level
is considered to be at the fund level. These funds (except the real
estate property funds) require less than a month’s notice for
redemptions and, as such, are classified within Level 2 of the fair
value hierarchy. Real estate property funds are valued at net
realizable value using information from independent appraisal
firms, who have knowledge and expertise about the current
market values of real property in the same vicinity as the
investments. Redemptions of the real estate property funds are
allowed once per quarter, subject to available cash and, as such,
are classified within Level 3 of the fair value hierarchy.
Open-ended mutual funds are managed by registered
investment companies and are valued at the daily published net
asset value of shares/units held. Because redemptions and
purchases of shares/units occur at the net asset value without
any adjustments to the published net asset value that is provided
on an ongoing basis (active-market criteria are met), these
investments are classified within Level 1 of the fair value hierarchy.
Mutual funds are valued at the closing price reported on the
active market on which the individual securities are traded and, as
such, are classified within Level 1 of the fair value hierarchy.
Fixed income investments include government and corporate
bonds held directly by the Master Trust or through commingled
funds. Fixed income securities are valued using a bid evaluation
price or a mid-evaluation price and, as such, are classified
within Level 2 of the fair value hierarchy. A bid evaluation price is
an estimated price at which a dealer would pay for a security.
A mid-evaluation price is the average of the estimated price at
which a dealer would sell a security and the estimated price
at which a dealer would pay for a security. These evaluations are
based on quoted prices, if available, or models that use
observable inputs.
Private equity investments are valued at net realizable value
using information from general partners and are classified within
Level 3 of the fair value hierarchy because of the inherent
restrictions on redemptions that may affect the ability to sell the
investments at their net asset value in the near term.