Notes to Consolidated Financial Statements continued Health Care and Life Plans The fair values for the other postretirement benefit plans by asset category at December 31, 2017 are as follows: (dollars in millions) Asset Category Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 71 $ 1 $ 70 $ — Equity securities 294 294 — — Fixed income securities U.S. Treasuries and agencies 23 22 1 — Corporate bonds 141 141 — — International bonds 60 18 42 — Total investments at fair value 589 476 113 — Investments measured at NAV 530 Total $ 1,119 $ 476 $ 113 $ — The fair values for the other postretirement benefit plans by asset category at December 31, 2016 are as follows: (dollars in millions) Asset Category Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 131 $ 1 $ 130 $ — Equity securities 463 463 — — Fixed income securities U.S. Treasuries and agencies 23 22 1 — Corporate bonds 170 145 25 — International bonds 60 30 30 — Total investments at fair value 847 661 186 — Investments measured at NAV 516 Total $ 1,363 $ 661 $ 186 $ — The following are general descriptions of asset categories, as well as the valuation methodologies and inputs used to determine the fair value of each major category of assets. Cash and cash equivalents include short-term investment funds (less than 90 days to maturity), primarily in diversified portfolios of investment grade money market instruments and are valued using quoted market prices or other valuation methods. The carrying value of cash equivalents approximates fair value due to the short-term nature of these investments. Investments in securities traded on national and foreign securities exchanges are valued by the trustee at the last reported sale prices on the last business day of the year or, if no sales were reported on that date, at the last reported bid prices. Government obligations, corporate bonds, international bonds and asset-backed debt are valued using matrix prices with input from independent third-party valuation sources. Over-the-counter securities are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable such as multiple broker quotes. Commingled funds not traded on national exchanges are priced by the custodian or fund’s administrator at their net asset value (NAV). Commingled funds held by third-party custodians appointed by the fund managers provide the fund managers with a NAV. The fund managers have the responsibility for providing this information to the custodian of the respective plan. The investment manager of the entity values venture capital, corporate finance, and natural resource limited partnership investments. Real estate investments are valued at amounts based upon appraisal reports prepared by either independent real estate appraisers or the investment manager using discounted cash flows or market comparable data. Loans secured by mortgages are carried at the lesser of the unpaid balance or appraised value of the underlying properties. The values assigned to these investments are based upon available and current market information and do not necessarily represent amounts that might ultimately be realized. Because of the inherent uncertainty of valuation, estimated fair values might differ significantly from the values that would have been used had a ready market for the securities existed. These differences could be material. 2017 Annual Report | Verizon Communications Inc. and Subsidiaries 87
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