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Fair Value Measurements | 12 Months Ended
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Dec. 26, 2014
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The Financial Instruments Topic in the ASC requires disclosures about fair value of financial instruments in annual reports as well as in quarterly reports. For CSX, this statement applies to certain investments, pension plan assets and long-term debt. Also, the Fair Value Measurements and Disclosures Topic in the ASC clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Various inputs are considered when determining the value of the Company's investments, pension plan assets and long-term debt. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed below.
• | Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets
• | Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)
• | Level 3 – significant unobservable inputs (including the Company’s own assumptions about the assumptions market participants would use in determining the fair value of investments)
The valuation methods described below may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Investments The Company's investment assets, valued with assistance from a third-party trustee, consist of certificates of deposits, commercial paper, corporate bonds, government securities and auction rate securities and are carried at fair value on the consolidated balance sheet per the Fair Value Measurements and Disclosures Topic in the ASC. There are several valuation methodologies used for those assets as described below.
• | Certificates of Deposit and Commercial Paper (Level 2): Valued at amortized cost, which approximates fair value.
• | Corporate Bonds and Government Securities (Level 2): Valued using broker quotes that utilize observable market inputs.
• | Auction Rate Securities (Level 3): Valued using pricing models for which the assumptions utilize management’s estimates of market participant assumptions, because there is currently no active market for trading.
NOTE 13. Fair Value Measurements, continued The Company's investment assets are carried at fair value on the consolidated balance sheets as summarized in the table below. Additionally, the amortized cost basis of these investments was $453 million and $668 million as of December 26, 2014 and December 27, 2013, respectively.
| Fiscal Years
| 2014 |  | 2013
(Dollars in Millions) | Level 1 | Level 2 | Level 3 | Total |  | Level 1 | Level 2 | Level 3 | Total
Certificates of Deposit and Commercial Paper | $ | — |  | $ | 250 |  | $ | — |  | $ | 250 |  |  | $ | — |  | $ | 472 |  | $ | — |  | $ | 472 |
Corporate Bonds | — |  | 141 |  | — |  | 141 |  |  | — |  | 132 |  | — |  | 132 |
Government Securities | — |  | 51 |  | — |  | 51 |  |  | — |  | 49 |  | — |  | 49 |
Auction Rate Securities | — |  | — |  | 11 |  | 11 |  |  | — |  | — |  | 15 |  | 15 |
Total investments at fair value | $ | — |  | $ | 442 |  | $ | 11 |  | $ | 453 |  |  | $ | — |  | $ | 653 |  | $ | 15 |  | $ | 668 |
These investments have the following maturities and are represented on the consolidated balance sheet within short-term investments for investments with maturities within one year or less, and other long-term assets for investments with maturities greater than one year:
(Dollars in Millions) | December 2014 |  | December 2013
Less than 1 year | $ | 292 |  |  | $ | 487 |
1 - 2 years | 45 |  |  | 58 |
2 - 5 years | 100 |  |  | 105 |
Greater than 5 years | 16 |  |  | 18 |
Total investments at fair value | $ | 453 |  |  | $ | 668 |
Long-term Debt Long-term debt is reported at carrying amount on the consolidated balance sheets and is the Company's only financial instrument with fair values significantly different from their carrying amounts. The majority of the Company's long-term debt is valued with assistance from a third party that utilizes closing transactions, market quotes or market values of comparable debt. For those instruments not valued by the third party, the fair value has been estimated by applying market rates of similar instruments to the scheduled contractual debt payments and maturities. These market rates are provided by the same third party. All of the inputs used to determine the fair value of the Company's long-term debt are Level 2 inputs. The fair value of outstanding debt fluctuates with changes in a number of factors. Such factors include, but are not limited to, interest rates, market conditions, values of similar financial instruments, size of the transaction, cash flow projections and comparable trades. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The fair value of a company's debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules. NOTE 13. Fair Value Measurements, continued The fair value and carrying value of the Company's long-term debt is as follows:
(Dollars in Millions) | December 2014 |  | December 2013
Long-term Debt (Including Current Maturities): |  |  |
Fair Value | $ | 11,042 |  |  | $ | 10,354 |
Carrying Value | 9,742 |  |  | 9,555 |
Pension Plan Assets Pension plan assets are reported at fair value on the consolidated balance sheet. The Investment Committee targets an allocation of pension assets to be generally 70% equity and 30% fixed income. There are several valuation methodologies used for those assets as described below.
• | Common stock (Level 1): Valued at the closing price reported on the active market on which the individual securities are traded on the last day of the year and classified in level 1 of the fair value hierarchy.
• | Mutual funds (Level 1): Valued at the net asset value of shares held at year end based on quoted market prices determined in an active market. These assets are classified in level 1 of the fair value hierarchy.
• | Common collective trust funds (Level 2): This class consists of private funds that invest in government and corporate securities and various short-term debt instruments. The net asset value of the investments is determined by reference to the fair value of the underlying securities, which are valued primarily through the use of directly or indirectly observable inputs. These assets are classified in level 2 of the fair value hierarchy.
• | Corporate bonds, derivatives, government securities, and asset-backed securities (Level 2): Valued using price evaluations reflecting the bid and/or ask sides of the market for a similar investment at year end. Asset-backed securities include commercial mortgage-backed securities and collateralized mortgage obligations. These assets are classified in level 2 of the fair value hierarchy.
• | Partnerships (Level 2): Net asset value of private equity based on the fair market values associated with the underlying investments at year end and is classified in level 2 of the fair value hierarchy.
NOTE 13. Fair Value Measurements, continued The pension plan assets at fair value by level, within the fair value hierarchy, as of calendar plan years 2014 and 2013 are shown in the table below. For additional information related to pension assets, see Note 8, Employee Benefit Plans.
| Fiscal Years
| 2014 |  | 2013
(Dollars in Millions) | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Common Stock: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Information technology | $ | 177 |  |  | $ | — |  |  | $ | — |  |  | $ | 177 |  |  | $ | 173 |  |  | $ | — |  |  | $ | — |  |  | $ | 173 |
Health care | 133 |  |  | — |  |  | — |  |  | 133 |  |  | 126 |  |  | — |  |  | — |  |  | 126 |
Consumer discretionary | 125 |  |  | — |  |  | — |  |  | 125 |  |  | 152 |  |  | — |  |  | — |  |  | 152 |
Financials | 116 |  |  | — |  |  | — |  |  | 116 |  |  | 116 |  |  | — |  |  | — |  |  | 116 |
Industrials | 90 |  |  | — |  |  | — |  |  | 90 |  |  | 108 |  |  | — |  |  | — |  |  | 108 |
Energy | 51 |  |  | — |  |  | — |  |  | 51 |  |  | 59 |  |  | — |  |  | — |  |  | 59 |
Consumer staples | 42 |  |  | — |  |  | — |  |  | 42 |  |  | 43 |  |  | — |  |  | — |  |  | 43 |
Materials | 20 |  |  | — |  |  | — |  |  | 20 |  |  | 29 |  |  | — |  |  | — |  |  | 29 |
Other | 33 |  |  | — |  |  | — |  |  | 33 |  |  | 31 |  |  | — |  |  | — |  |  | 31 |
Mutual funds | 20 |  |  | — |  |  | — |  |  | 20 |  |  | 17 |  |  | — |  |  | — |  |  | 17 |
Cash equivalents | 1 |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |
Common trust funds | — |  |  | 611 |  |  | — |  |  | 611 |  |  | — |  |  | 553 |  |  | — |  |  | 553 |
Corporate bonds | — |  |  | 539 |  |  | — |  |  | 539 |  |  | — |  |  | 568 |  |  | — |  |  | 568 |
Partnerships | — |  |  | 365 |  |  | — |  |  | 365 |  |  | — |  |  | 314 |  |  | — |  |  | 314 |
Government securities | — |  |  | 164 |  |  | — |  |  | 164 |  |  | — |  |  | 186 |  |  | — |  |  | 186 |
Asset-backed securities | — |  |  | 15 |  |  | — |  |  | 15 |  |  | — |  |  | 24 |  |  | — |  |  | 24 |
Derivatives and other | — |  |  | 2 |  |  | — |  |  | 2 |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Total investments at fair value | $ | 808 |  |  | $ | 1,696 |  |  | $ | — |  |  | $ | 2,504 |  |  | $ | 854 |  |  | $ | 1,646 |  |  | $ | — |  |  | $ | 2,500 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
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