Northrop Grumman 2013 Annual Report Download - page 83

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NORTHROP GRUMMAN CORPORATION
-73-
The table below provides the fair values of the company’s pension and VEBA trust plan assets at December 31,
2013, and 2012, by asset category. The table also identifies the level of inputs used to determine the fair value of
assets in each category (see Note 1 for definition of levels). The significant amount of Level 2 investments in the
table results from including in this category investments in pooled funds that contain investments with values based
on quoted market prices, but for which the funds are not valued on a quoted market basis, and fixed income
securities valued using model-based pricing services.
Level 1 Level 2 Level 3 Total
$ in millions 2013 2012 2013 2012 2013 2012 2013 2012
Asset category
Cash and cash equivalents(1) $ 32 $ 92 $ 1,467 $ 1,748 $ 1,499 $ 1,840
Domestic equities 4,163 3,657 287 318 2$ 2 4,452 3,977
International equities 2,473 1,700 1,741 2,319 4,214 4,019
Fixed income securities
U.S. Treasuries 1,602 1,780 1,602 1,780
U.S. Government Agency 974 968 974 968
Non-U.S. Government 422 401 422 401
Corporate debt 4,744 4,123 4,744 4,123
Asset backed 545 528 44549 532
High yield debt 922 1,139 128 923 1,167
Bank loans 185 223 185 223
Alternative Investments
Hedge funds 821 758 821 758
Private equities 2,075 1,980 2,075 1,980
Real estate 2,767 2,256 2,767 2,256
Other 26 (5) 20 5 46 —
Fair value of plan assets at
the end of the year $6,694 $5,444 $12,909 $13,552 $5,670 $5,028 $25,273 $24,024
(1) Cash and cash equivalents are predominantly held in money market funds.
The changes in the fair value of the pension and VEBA plan trust assets measured using Level 3 significant
unobservable inputs during 2013 and 2012, are as follows:
$ in millions Hedge funds and
High-yield debt Private
equities Real
Estate Other Total
Balance as of December 31, 2011 $1,446 $2,098 $1,788 $6 $5,338
Actual return on plan assets:
Unrealized gains (losses), net 23 (122) 68 5 (26)
Realized gains (losses), net 47 — — (5) 42
Purchases — 259 846 — 1,105
Sales (730) (255)(446) — (1,431)
Balance as of December 31, 2012 $ 786 $1,980 $2,256 $6 $5,028
Actual return on plan assets:
Unrealized gains (losses), net (16) 112 262 — 358
Realized gains (losses), net 43———43
Purchases 200 666 763 — 1,629
Sales (191) (683)(514) — (1,388)
Balance as of December 31, 2013 $ 822 $2,075 $2,767 $6 $5,670
Generally, investments are valued based on information in financial publications of general circulation, statistical
and valuation services, records of security exchanges, appraisal by qualified persons, transactions and bona fide
offers. Domestic and international equities consist primarily of common stocks and institutional common trust