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SEC Filings

10-K
INTERPUBLIC GROUP OF COMPANIES, INC. filed this Form 10-K on 02/21/2017
Entire Document
 
Notes to Consolidated Financial Statements – (continued)
(Amounts in Millions, Except Per Share Amounts)

Expected Return on Assets – Our expected rate of return is determined at the beginning of each year and considers asset class index returns over various market and economic conditions, current and expected market conditions, risk premiums associated with asset classes and long-term inflation rates. We determine both a short-term and long-term view and then select a long-term rate of return assumption that matches the duration of our liabilities.

Fair Value of Pension Plan Assets
The following table presents the fair value of our domestic and foreign pension plan assets as of December 31, 2016 and 2015, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. See Note 10 for a description of the fair value hierarchy.
 
December 31, 2016
 
December 31, 2015
Asset Class
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Investment funds
$
14.4

 
$
313.6

 
$
54.3

 
$
382.3

 
$
16.8

 
$
335.8

 
$
57.9

 
$
410.5

Limited partnerships
0.0

 
0.0

 
28.0

 
28.0

 
0.0

 
0.0

 
31.0

 
31.0

Fixed income securities
22.6

 
0.3

 
0.0

 
22.9

 
22.1

 
0.4

 
0.0

 
22.5

Insurance contracts
0.0

 
7.8

 
0.0

 
7.8

 
0.0

 
13.7

 
0.0

 
13.7

Other
20.1

 
0.0

 
0.0

 
20.1

 
23.0

 
0.0

 
0.0

 
23.0

Total
$
57.1

 
$
321.7

 
$
82.3

 
$
461.1

 
$
61.9

 
$
349.9

 
$
88.9

 
$
500.7

Investment funds include mutual funds, common/collective trusts, hedge funds and other commingled assets that are invested primarily in equity and fixed income securities. Mutual funds, which are publicly traded, are primarily valued using recently reported sales prices. All other investment funds, which are not publicly traded, are valued based on the net asset value of shares held by the plan at year end, which reflects the fair value of the underlying investments. Limited partnerships are invested primarily in equity and fixed income securities. Fixed income securities include government and investment-grade corporate bonds. Insurance contracts are valued based on the cash surrender value of the contract. Other investments primarily include cash and cash equivalents, equity securities and derivatives.
The following table presents additional information about our domestic and significant foreign pension plan assets for which we utilize Level 3 inputs to determine fair value.
 
Year ended December 31, 2016
 
Year ended December 31, 2015
 
Investment Funds
 
Limited Partnerships
 
Other
 
Total
 
Investment Funds
 
Limited Partnerships
 
Other
 
Total
Balance at beginning of period
$
57.9

 
$
31.0

 
$
0.0

 
$
88.9

 
$
40.1

 
$
32.1

 
$
0.3

 
$
72.5

Actual return on assets
(6.8
)
 
(3.0
)
 
0.0

 
(9.8
)
 
(0.7
)
 
(1.1
)
 
0.0

 
(1.8
)
Net purchases, sales and settlements
3.2

 
0.0

 
0.0

 
3.2

 
18.5

 
0.0

 
0.1

 
18.6

Transfers in/out of Level 3
0.0

 
0.0

 
0.0

 
0.0

 
0.0


0.0

 
(0.4
)

(0.4
)
Balance at end of period
$
54.3

 
$
28.0

 
$
0.0

 
$
82.3

 
$
57.9

 
$
31.0

 
$
0.0

 
$
88.9


Asset Allocation
The primary investment goal for our plans’ assets is to maximize total asset returns while ensuring the plans’ assets are available to fund the plans’ liabilities as they become due. The plans’ assets in aggregate and at the individual portfolio level are invested so that total portfolio risk exposure and risk-adjusted returns best achieve this objective. The aggregate amount of our own stock held as investment for our domestic and foreign pension funds is considered negligible relative to the total fund assets. As of December 31, 2016, the weighted-average target and actual asset allocations relating to our domestic and foreign pension plans' assets are listed below.
 
 
 
 
December 31,
Asset Class
 
2017 Target Allocation
 
2016
 
2015
Equity securities
 
24
%
 
23
%
 
22
%
Fixed income securities
 
29
%
 
26
%
 
38
%
Real estate
 
8
%
 
6
%
 
7
%
Other
 
39
%
 
45
%
 
33
%
Total
 
100
%
 
100
%
 
100
%

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