Texas Instruments 2014 Annual Report Download - page 59

 53
FORM 10-K
Fair Value
December 31,
2013 Level 1 Level 2 Level 3
Assets of U.S. defined benefit plan
Fixed income securities and cash equivalents . . . . . . . . . . . . . . . . . . $ 607 $ — $ 607 $ —
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 — 297 —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 — — 37
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 941 $ — $ 904 $ 37
Assets of U.S. retiree health care plan
Fixed income securities and cash equivalents . . . . . . . . . . . . . . . . . . $ 238 $ 193 $ 45 $ —
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 — 247 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 485 $ 193 $ 292 $ —
Assets of non-U.S. defined benefit plans
Fixed income securities and cash equivalents . . . . . . . . . . . . . . . . . . $ 1,521 $ 397 $ 1,124 $ —
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 6 644 —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 — — 8
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,179 $ 403 $ 1,768 $ 8
The investments in our major benefit plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration
within market sectors. Our investment policy is designed to better match 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 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 for the periods presented are private equity limited partnerships in our U.S.
pension plan, which were sold in 2014, and a diversified property fund 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, 2014 and 2013:
Level 3 Plan Assets
U.S. Defined
Benefit
Non-U.S.
Defined Benefit
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37 $ 19
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (10)
Unrealized loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1)
Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 8
Redemptions and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (45) (2)
Unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (1)
Balance, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 5