Investor Presentaiton
FORM 10-K
December 31, 2015
Level 1
Level 2
Level 3
Other (a)
Total
$ 249
$ 415
355
$ 664
355
$ 249
$ 770
$1,019
Assets of U.S. defined benefit plan:
Fixed income securities and cash equivalents
Equity securities
-
Total
Assets of U.S. retiree health care plan:
Fixed income securities and cash equivalents
Equity securities
$ 178
Total
$ 178
Assets of non-U.S. defined benefit plans:
Fixed income securities and cash equivalents
Equity securities
Other
Total
5
-
SA
37 $ 220
221
$ 258
221
$ 441
4
6
$ 109
18
$ 1,385
608
$1,498
632
4
4
$ 10
$ 127
$ 4
$1,993
$ 2,134
(a) Consists of bond index and equity index funds, measured at net asset value per share.
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 asset in our worldwide benefit plans for the periods presented is a diversified property fund in a non-U.S. pension
plan. These investments are valued using inputs from the fund managers and internal models. Changes to the fair value of this
fund since December 31, 2014, have not been material, and are due to redemptions.
Assumptions and investment policies
U.S. Defined
Benefit
2016
2015
U.S. Retiree
Health Care
2016
2015
Non-U.S.
Defined Benefit
2016
2015
Weighted average assumptions used to determine benefit obligations:
Discount rate
Long-term pay progression
4.29% 4.62% 4.08% 4.40%
3.30% 3.30% n/a n/a
1.76% 2.41%
3.11% 3.21%
Weighted average assumptions used to determine net periodic
benefit cost:
Discount rate
Long-term rate of return on plan assets
Long-term pay progression. .
4.40% 4.33% 4.40% 4.15%
4.60% 5.10% 4.40% 4.70%
3.30% 3.30% n/a n/a
2.41% 2.34%
3.18% 3.55%
3.21% 3.27%
We utilize a variety of methods to select an appropriate discount rate depending on the depth of the corporate bond market in the
country in which the benefit plan operates. In the United States, we use a settlement approach whereby a portfolio of bonds is
selected from the universe of actively traded high-quality U.S. corporate bonds. The selected portfolio is designed to provide cash
flows sufficient to pay the plan's expected benefit payments when due. The resulting discount rate reflects the rate of return of the
selected portfolio of bonds. For our non-U.S. locations with a sufficient number of actively traded high-quality bonds, an analysis is
performed in which the projected cash flows from the defined benefit plans are discounted against a yield curve constructed with
an appropriate universe of high-quality corporate bonds available in each country. In this manner, a present value is developed.
The discount rate selected is the single equivalent rate that produces the same present value. For countries that lack a sufficient
corporate bond market, a government bond index adjusted for an appropriate risk premium is used to establish the discount rate.
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TEXAS INSTRUMENTS . 2016 FORM 10-KView entire presentation