Johnson and Johnson 2014 Annual Report Download - page 53

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•Insurance contracts – The instruments are issued by insurance companies. The fair value is based on negotiated value
and the underlying investments held in separate account portfolios as well as considering the credit worthiness of the
issuer. The underlying investments are government, asset-backed and fixed income securities. In general, insurance
contracts are classified as Level 3 as there are no quoted prices nor other observable inputs for pricing.
•Other assets – Other assets are represented primarily by limited partnerships and real estate investments, as well as
commercial loans and commercial mortgages that are not classified as corporate debt. Other assets that are exchange
listed and actively traded are classified as Level 1, while inactively traded assets are classified as Level 2. Most limited
partnerships represent investments in private equity and similar funds that are valued by the general partners. Certain of
these limited partnerships, as well as any other assets valued using unobservable inputs, are classified as Level 3.
The following table sets forth the Retirement Plans’ investments measured at fair value as of December 28, 2014 and
December 29, 2013:
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3) Total Assets
(Dollars in Millions) 2014 2013 2014 2013 2014 2013 2014 2013
Short-term investment funds $168 304 551 561 – – 719 865
Government and agency securities – – 1,934 1,965 – – 1,934 1,965
Debt instruments – – 1,143 1,215 1 1 1,144 1,216
Equity securities 11,204 10,526 21 23 – 4 11,225 10,553
Commingled funds – – 7,205 5,846 46 44 7,251 5,890
Insurance contracts – – – 2 24 23 24 25
Other assets 1 4 214 314 63 69 278 387
Investments at fair value $11,373 10,834 11,068 9,926 134 141 22,575 20,901
The Company’s Other Benefit Plans are unfunded except for U.S. commingled funds (Level 2) of $79 million and $76
million at December 28, 2014 and December 29, 2013, respectively, and $0 million and $11 million of U.S. short-term-
investment funds (Level 2) at December 28, 2014 and December 29, 2013, respectively.
The fair value of Johnson & Johnson Common Stock directly held in plan assets was $778 million (3.4% of total plan
assets) at December 28, 2014 and $671 million (3.2% of total plan assets) at December 29, 2013.
Level 3 Gains and Losses
The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the years ended
December 28, 2014 and December 29, 2013:
(Dollars in Millions)
Debt
Instruments
Equity
Securities
Commingled
Funds
Insurance
Contracts
Other
Assets
Total
Level 3
Balance December 30, 2012 $3 4 50 24 69 150
Realized gains (losses) – – – – (5) (5)
Unrealized gains (losses) – (1) – (1) – (2)
Purchases, sales, issuances and settlements, net (2) 1 (6) – 5 (2)
Balance December 29, 2013 1 4 44 23 69 141
Realized gains (losses) – – – – (5) (5)
Unrealized gains (losses) – – 2 – – 2
Purchases, sales, issuances and settlements, net – – (2) 3 (1) –
Transfers in/out and exchange rate changes – (4) 2 (2) – (4)
Balance December 28, 2014 $1 – 46 24 63 134
Johnson & Johnson 2014 Annual Report •43