Annual Report - CoBank

The following table presents major categories of planassets that are measured at fair value at December 31, 2011 foreach of the fair value hierarchy levels as defined in Note 12.Fair Value MeasurementsDecember 31, 2011Level 1 Level 2 TotalAsset CategoryCash $ 486 $ - $ 486Domestic Equity:Large-cap GrowthFunds (1) 39,537 29,846 69,383Small-cap GrowthFund (1) - 9,288 9,288International Equity:International Fund (2) 13,284 - 13,284Fixed Income:Total Return Fund (3) 62,388 - 62,388Emerging Markets:Equity and FixedIncome Fund (4) - 6,704 6,704Real Assets: Gold Fund (5) 9,828 - 9,828Total $ 125,523 $ 45,838 $ 171,361(1) Funds invest primarily in diversified portfolios of common stocks of U.S.companies in various industries, including healthcare, information technology,consumer goods and services, and energy.(2) Fund invests primarily in a diversified portfolio of equities of non-U.S.companies in various industries, including financial services, consumer goods,healthcare, industrial materials, technology and telecommunications.(3) Fund invests primarily in a diversified portfolio of investment grade debtsecurities and cash instruments.(4) Fund invests in equities and corporate debt securities of companies located inemerging international markets. Industries include telecommunications,information technology and financial services. Fund also invests in thesovereign debt of countries, including Brazil, Argentina, Indonesia and Mexico.(5) Fund invests in gold bullion.Level 1 plan assets are funds with quoted daily net assetvalues that are directly observable by market participants. Thefair value of these funds is the net asset value at close ofbusiness on the reporting date. Level 2 plan assets are fundswith quoted net asset values that are not directly observable bymarket participants. A significant portion of the underlyinginvestments in these funds have individually observablemarket prices, which are utilized by the plan’s trustee todetermine a net asset value at close of business on thereporting date. There were no Level 3 plan assets atDecember 31, 2011.Investment strategy and objectives are described in thepension plans’ formal investment policy document. The basicstrategy and objectives as adopted in the investment policyare: Manage portfolio assets with a long-term timehorizon appropriate for the participant demographicsand cash flow requirements; Optimize long-term funding requirements bygenerating rates of return sufficient to fund liabilitiesand exceed the long-term rate of inflation; and Provide competitive investment returns as measuredagainst appropriate benchmarks.Expected ContributionsWe expect to contribute approximately $21.6 million toour funded, qualified defined benefit pension plans in 2012and a net $0.4 million, after reflecting collected retireepremiums, to our other postretirement benefit plans in 2012.Included in the $21.6 million of expected contributions isapproximately $17.3 million of funding made pursuant to theterms of the merger with AgBank, which had been accrued byAgBank at December 31, 2011. We also expect to contributeapproximately $4.8 million to our trust funds related to ourSERP and ERP in 2012. Our actual 2012 contributions coulddiffer from the estimates noted above.Estimated Future Benefit PaymentsWe expect to make the following benefit payments, whichreflect expected future service, as appropriate. These estimatesreflect participants as of December 31, 2011 and do notinclude participants added as a result of the January 1, 2012merger with AgBank.Estimated Benefit PaymentsYear:RetirementBenefitsOtherPostretirementBenefits2012 $ 12,093 $4932013 12,516 4752014 13,067 4852015 15,683 4822016 17,323 4532017 to 2021 85,244 2,205CoBank 2011 Annual Report91