SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
Entire Document
 

The reconciliation of Level 3 assets was as follows:
 
 
Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)
In millions
 
Insurance
 
Real Estate
 
Private Equity
 
Total
Balance at December 31, 2016
 
$
439

 
$
57

 
$
117

 
$
613

Actual return on plan assets
 
 
 
 
 
 
 
 
Unrealized gains on assets still held at the reporting date
 
38

 
10

 
28

 
76

Purchases, sales and settlements, net
 

 
(8
)
 
(10
)
 
(18
)
Balance at December 31, 2017
 
477

 
59

 
135

 
671

Actual return on plan assets
 
 
 
 
 
 
 
 
Unrealized (losses) gains on assets still held at the reporting date
 
(35
)
 
(2
)
 
21

 
(16
)
Purchases, sales and settlements, net
 

 

 
31

 
31

Balance at December 31, 2018
 
$
442

 
$
57

 
$
187

 
$
686


Level 3 Assets
The investments in an insurance contract, venture capital, private equity, opportunistic credit and real estate funds, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by quarterly financial statements of the funds. These financial statements are audited at least annually. In conjunction with our investment consultant, we monitor the fair value of the insurance contract as periodically reported by our insurer and their counterparty risk. The fair value of all real estate properties, held in the partnerships, are valued at least once per year by an independent professional real estate valuation firm. Fair value generally represents the fund's proportionate share of the net assets of the investment partnerships as reported by the general partners of the underlying partnerships. Some securities with no readily available market are initially valued at cost, utilizing independent professional valuation firms as well as market comparisons with subsequent adjustments to values which reflect either the basis of meaningful third-party transactions in the private market or the fair value deemed appropriate by the general partners of the underlying investment partnerships. In such instances, consideration is also given to the financial condition and operating results of the issuer, the amount that the investment partnerships can reasonably expect to realize upon the sale of the securities and any other factors deemed relevant. The estimated fair values are subject to uncertainty and therefore may differ from the values that would have been used had a ready market for such investments existed and such differences could be material.
Estimated Future Contributions and Benefit Payments
We plan to contribute approximately $123 million to our defined benefit pension plans in 2019. The table below presents expected future benefit payments under our pension plans:
 
 
Qualified and Non-Qualified Pension Plans
In millions
 
2019
 
2020
 
2021
 
2022
 
2023
 
2024 - 2028
Expected benefit payments
 
$
244

 
$
246

 
$
250

 
$
257

 
$
259

 
$
1,342


Other Pension Plans
We also sponsor defined contribution plans for certain hourly and salaried employees. Our contributions to these plans were $104 million, $84 million and $68 million for the years ended December 31, 2018, 2017 and 2016.
Other Postretirement Benefits
Our other postretirement benefit (OPEB) plans provide various health care and life insurance benefits to eligible employees, who retire and satisfy certain age and service requirements, and their dependents. The plans are contributory and contain cost-sharing features such as caps, deductibles, coinsurance and spousal contributions. Employer contributions are limited by formulas in each plan. Retiree contributions for health care benefits are adjusted annually, and we reserve the right to change benefits covered under these plans. There were no plan assets for OPEB plans as our policy is to fund benefits and expenses for these plans as claims and premiums are incurred.

99