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NEWELL RUBBERMAID 2011 Annual Report 69
2011 Financial Statements and Related Information
A reconciliation of the change in the fair value measurement of the defined benefit plans’ consolidated assets using significant
unobservable inputs (Level 3) for 2011 and 2010 is as follows (in millions):
Venture
Capital and Real
Partnerships Estate Other Total
Fair value as of January 1, 2010 $34.9 $25.2 $ 6.1 $66.2
Realized gains (losses) — — (1.1) (1.1)
Unrealized gains (losses) 6.1 0.2 (2.8) 3.5
Purchases, sales and settlements, net 6.4 (0.2) (1.7) 4.5
Fair value as of December 31, 2010 $47.4 $25.2 $ 0.5 $73.1
Realized gains (losses) — — (3.7) (3.7)
Unrealized gains (losses) 3.2 (0.5) 3.7 6.4
Purchases 3.5 3.6 — 7.1
Sales (7.8) — (0.5) (8.3)
Fair value as of December 31, 2011 $46.3 $28.3 $ — $74.6
Investment Strategy
The Company has established formal investment policies for the assets associated with its pension plans. The objectives of the investment
strategies generally include maximizing long-term return at acceptable risk levels, diversifying among asset classes, if appropriate, as well
as establishing relevant risk parameters within each asset class. Investment policies reflect the unique circumstances of the respective
plans, and risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition.
Asset allocation targets are based on periodic asset liability and/or risk budgeting study results, which help determine the appropriate
investment strategies for acceptable risk levels. The investment policies permit variances from the targets within certain parameters.
The target asset allocations for the Company’s U.S. pension plan and primary international pension plans are as follows as of
December 31, 2011:
Target
Asset Category U.S. International
Equity 45% 23%
Fixed income 40 14
Insurance contracts 5 24
Cash and equivalents — 21
Other investments (1) 10 18
Total 100% 100%
(1) Other investments include private equity funds, hedge funds and real estate funds.
Expected Long-term Rate of Return on Plan Assets
The Company employs a building-block approach in determining the long-term rate of return for plan assets. Historical markets are
studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted
capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as
inflation and interest rates, are evaluated before long-term capital market assumptions are determined. The long-term portfolio return
is established giving consideration to investment diversification and rebalancing. Peer data and historical returns are reviewed to
assess for reasonableness and appropriateness. The weighted-average expected long-term rates of return are based on reviews of the
target investment allocation and the historical and expected rates of return of the asset classes included in the pension plans’ target
asset allocations.