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ANNUAL
REPORT
TEXAS INSTRUMENTS28 • 2012 ANNUAL REPORT
Fair Value
December 31, 2011 Level 1 Level 2 Level 3
Assets of U.S. defined benefit plan
Money market collective trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23 $ — $ 23 $ —
U.S. Government agency and Treasury securities . . . . . . . . . . . . . . . . . . 266 244 22 —
U.S. bond funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 — 309 —
U.S. equity funds and option collars . . . . . . . . . . . . . . . . . . . . . . . . . 229 — 229 —
International equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 — 52 —
Limited partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 — — 35
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 914 $244 $ 635 $ 35
Assets of U.S. retiree health care plan
Money market collective trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 $ — $ 50 $ —
U.S. bond funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 175 — —
U.S. equity funds and option collars . . . . . . . . . . . . . . . . . . . . . . . . . 159 40 119 —
International equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 — 47 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 431 $215 $ 216 $ —
Assets of non-U.S. defined benefit plans
Cash and money market collective trusts . . . . . . . . . . . . . . . . . . . . . . . $ 50 $ 41 $ 9 $ —
Local market bond funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,129 209 920 —
International/global bond funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 3 332 —
Local market equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 13 120 —
International/global equity funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 136 385 —
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 — 25 18
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,211 $402 $1,791 $ 18
The investments in our major benefit plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration
within market sectors. In recent years, our investment policy has shifted toward a closer matching of the interest rate sensitivity of
the plan assets and liabilities. The appropriate mix of equity and bond investments is determined primarily through the use of detailed
asset-liability modeling studies that look to balance the impact of changes in the discount rate against the need to provide asset growth
to cover future service cost. Most of our plans around the world have added a greater proportion of fixed income securities with return
characteristics that are more closely aligned with changes in the liabilities caused by discount rate volatility. For the U.S. plans, we
utilize an option collar strategy to reduce the volatility of returns on investments in U.S. equity funds.
The only Level 3 assets in our worldwide benefit plans are certain private equity limited partnerships in our U.S. pension plan and
diversified hedge and property funds in a non-U.S. pension plan. These investments are valued using inputs from the fund managers
and internal models. The following table summarizes the change in the fair values for Level 3 plan assets for the years ending
December 31, 2012 and 2011:
Level 3 Plan Assets
U.S.
Defined
Benefit
Non-U.S.
Defined
Benefit
Balance, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34 $ 51
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (51)
Unrealized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 —
Assumed with National acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 18
Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 18
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) —
Unrealized gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37 $ 19