XML 47 R22.htm IDEA: XBRL DOCUMENT v3.3.1.900
Benefit Obligations
 12 Months Ended
Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]  
Benefit Obligations
Benefit Obligations
Pension Obligations 
The Company sponsors defined benefit pension plans in North America, Europe and Asia. Independent trusts or insurance companies administer the majority of these plans. Pension obligations are established for benefits payable in the form of retirement, disability and surviving dependent pensions. The commitments result from participation in defined contribution and defined benefit plans, primarily in the US. Benefits are dependent on years of service and the employee's compensation. Supplemental retirement benefits provided to certain employees are nonqualified for US tax purposes. Separate nonqualified trusts have been established for certain US nonqualified plan obligations. Pension costs under the Company's retirement plans are actuarially determined.
In October 2014, the Company offered a limited-time, voluntary program to certain participants of the Company's US qualified defined benefit pension plan with a vested benefit who terminated from the Company on or before May 31, 2014. The limited-time opportunity ended in November 2014 and included an offer of a single lump sum payment in December 2014 or to begin monthly annuity payments, regardless of age, or to continue to defer benefits until retirement age. If an election was not made by the eligible participant, the participant will begin receiving payments when otherwise eligible under the terms of the US qualified defined benefit pension plan. The Company made lump sum payments under this program of $143 million in December 2014 using trust assets of the US qualified defined benefit pension plan. These actions resulted in the recognition of a settlement gain of $78 million in the consolidated statements of operations for the year ended December 31, 2014.
Effective June 2014, the Company's US qualified defined benefit plan was amended and benefits offered to all current union participants of the Cash Balance Plan (hired on or after January 1, 2001) at the Company's Narrows, Virginia facility have been frozen and the US qualified defined benefit plan was closed to future union participants at the facility. Accumulated benefits earned and service rendered through May 2014 under the Plan provisions for the Cash Balance Plan Participants will continue to be considered for purposes of determining retirement benefits. Effective May 2014, the Company's US qualified defined benefit plan was amended and benefits offered to all current union participants of the Flat Rate Plan at the Company's Narrows, Virginia facility have been frozen and the US qualified defined benefit plan was closed to future union participants at the facility. Accumulated benefits earned and service rendered through December 2014 under the Plan provisions for the Flat Rate Plan Participants will continue to be considered for purposes of determining retirement benefits and eligibility for early retirement. These actions did not result in a curtailment gain or loss as the projected benefit obligation does not rely on salary assumptions.
During the three months ended December 31, 2013, the Company settled certain of its defined benefit pension plan obligations in the United Kingdom and Canada, which resulted in the recognition of settlement losses of $9 million in the consolidated statement of operations.
Effective December 2013, benefits offered to all US non-union eligible employees in the Company's US qualified defined benefit pension plan have been frozen and the US qualified defined benefit pension plan was closed to new participants. Accumulated benefits earned and service rendered through December 31, 2013 under the US qualified defined benefit pension plan provisions will continue to be considered for purposes of determining retirement benefits and eligibility for early retirement. These actions resulted in the recognition of a curtailment gain of $61 million in the consolidated statements of operations for the three months ended December 31, 2013.
The Company participates in a multiemployer defined benefit plan and a multiemployer defined contribution plan in Germany covering certain employees. The Company's contributions to the multiemployer defined benefit plan are based on specified percentages of employee contributions as outlined in a works council agreement, covering all German entity employees hired prior to January 1, 2012. As of January 1, 2012, the multiemployer defined benefit pension plan described above was closed to new employees. Qualifying employees hired in Germany after December 31, 2011 are covered by a multiemployer defined contribution plan. The Company's contributions to the multiemployer defined contribution plan are based on specified percentages of employee contributions, similar to the multiemployer defined benefit plan, but at a lower rate.
Statutory regulations and the works council agreement require the contributions to fully fund the multiemployer plans. The risks of participating in the multiemployer plans are different from single-employer plans in the following aspects:
•
Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•
If a participating employer stops contributing to the plan, any underfunding may be borne by the remaining participants, especially since regulations strictly enforce funding requirements.
•
If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as the withdrawal liability.
Based on the 2015 unaudited and 2014 audited multiemployer defined benefit plan's financial statements, the plan is 100% funded in 2015, 2014 and 2013. The number of employees covered by the Company's multiemployer defined benefit plan remained relatively stable year over year from 2013 to 2015, resulting in minimal changes to employer contributions. Participation in the German multiemployer defined benefit plan is not considered individually significant to the Company.
Contributions made by the Company to the German multiemployer plan are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(In $ millions)
Multiemployer defined benefit plan
6

 
8

 
8


Other Postretirement Obligations
Certain retired employees receive postretirement health care and life insurance benefits under plans sponsored by the Company, which has the right to modify or terminate these plans at any time. The cost for coverage is shared between the Company and the retiree. The cost of providing retiree health care and life insurance benefits is actuarially determined and accrued over the service period of the active employee group. The Company's policy is to fund benefits as claims and premiums are paid. The US postretirement health care plan was closed to new participants effective January 1, 2006.
In November 2013, the Company announced it would amend its primary US postretirement health care plan to (a) eliminate eligibility for all current and future US non-union employees; (b) terminate its US postretirement health care plan on December 31, 2014 for all US participants; and (c) offer certain eligible US participants a lump-sum buyout payment if they irrevocably waive all future benefits under the US postretirement health care plan and end their participation before December 31, 2014. These actions generated a prior service credit of $92 million, which was amortized ratably into the consolidated statements of operations from November 1, 2013 through December 31, 2014.
Effective March 2014, the Company eliminated eligibility in its US postretirement health care plan for all current and future employees represented by the bargaining unit at the Company's Narrows, Virginia facility. These actions generated a prior service credit of $5 million, which was amortized ratably into the consolidated statements of operations from April 1, 2014 through December 31, 2014.
The Company recognized $84 million and $13 million of prior service credit amortization and made $40 million and $23 million in lump-sum buyout payments as of December 31, 2014 and 2013, respectively.
Postemployment Obligations
The Company provides benefits to certain employees after employment but prior to retirement, including severance and disability-related benefits offered pursuant to ongoing benefit arrangements. The cost of providing postemployment benefits is actuarially determined and recorded when the obligation is probable of occurring and can be reasonably estimated.
Postemployment obligations are as follows:
 
As of December 31,
 
2015
 
2014
 
(In $ millions)
Postemployment benefits
11

 
12


Defined Contribution Plans
The Company sponsors various defined contribution plans in North America, Europe and Asia covering certain employees. Employees may contribute to these plans and the Company will match these contributions in varying amounts. The Company's matching contribution to the defined contribution plans are based on specified percentages of employee contributions.
Beginning in 2014, the Company took the following actions as it relates to the US defined contribution plan:
•
Increased its employer match for those employees participating in the US defined contribution plan;
•
Added an annual retirement contribution for US employees who are employed as of December 31st each year (or have died during that year), regardless of whether the employee contributes to the US defined contribution plan; and
•
For certain eligible US employees, provides an incremental retirement contribution through 2017, based on years of service and specified percentages of eligible compensation.
The amount of costs recognized for the Company's defined contribution plans are as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(In $ millions)
Defined contribution plans
44

 
40

 
19


Summarized information on the Company's pension and postretirement benefit plans is as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2015
 
2014
 
2015
 
2014
 
(In $ millions)
Change in Projected Benefit Obligation
 
 
 
 
 
 
 
Projected benefit obligation as of beginning of period
3,915

 
3,799

 
85

 
136

Service cost
12

 
11

 
1

 
1

Interest cost
139

 
168

 
3

 
4

Participant contributions
—

 
—

 
1

 
5

Plan amendments
—

 
(1
)
 
(6
)
 
(5
)
Net actuarial (gain) loss(1)
(141
)
 
458

 
(8
)
 
11

Settlements
—

 
(221
)
 
—

 
—

Benefits paid
(234
)
 
(232
)
 
(5
)
 
(61
)
Federal subsidy on Medicare Part D
—

 
—

 
—

 
(2
)
Curtailments
(1
)
 
—

 
—

 
—

Special termination benefits
2

 
—

 
—

 
—

Exchange rate changes
(65
)
 
(68
)
 
(5
)
 
(4
)
Other
8

 
1

 
—

 
—

Projected benefit obligation as of end of period
3,635

 
3,915

 
66

 
85

Change in Plan Assets
 
 
 
 
 
 
 
Fair value of plan assets as of beginning of period
2,789

 
2,709

 
—

 
—

Actual return on plan assets
(67
)
 
327

 
—

 
—

Employer contributions
59

 
165

 
4

 
56

Participant contributions
—

 
—

 
1

 
5

Settlements
—

 
(143
)
 
—

 
—

Benefits paid(2)
(234
)
 
(232
)
 
(5
)
 
(61
)
Exchange rate changes
(39
)
 
(37
)
 
—

 
—

Fair value of plan assets as of end of period
2,508

 
2,789

 
—

 
—

Funded status as of end of period
(1,127
)
 
(1,126
)
 
(66
)
 
(85
)
Amounts Recognized in the Consolidated Balance Sheets Consist of:
 
 
 
 
 
 
 
Noncurrent Other assets
16

 
16

 
—

 
—

Current Other liabilities
(25
)
 
(23
)
 
(4
)
 
(5
)
Benefit obligations
(1,118
)
 
(1,119
)
 
(62
)
 
(80
)
Net amount recognized
(1,127
)
 
(1,126
)
 
(66
)
 
(85
)
Amounts Recognized in Accumulated Other Comprehensive Income Consist of:
 
 
 
 
 
 
 
Net actuarial (gain) loss(3)
16

 
16

 
—

 
—

Prior service (benefit) cost
(1
)
 
(4
)
 
(4
)
 
3

Net amount recognized(4)
15

 
12

 
(4
)
 
3

______________________________
(1) 
Primarily relates to change in discount rates.
(2) 
Includes benefit payments to nonqualified pension plans of $22 million and $22 million as of December 31, 2015 and 2014, respectively.
(3) 
Relates to the pension plans of the Company's equity method investments.
(4) 
Amount shown net of an income tax benefit of $3 million and $4 million as of December 31, 2015 and 2014, respectively, in the consolidated statements of equity (Note 17).
The percentage of US and international projected benefit obligation at the end of the period is as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2015
 
2014
 
2015
 
2014
 
(In percentages)
US plans
86
 
85
 
61
 
59
International plans
14
 
15
 
39
 
41
 Total
100
 
100
 
100
 
100

The percentage of US and international fair value of plan assets at the end of the period is as follows:
 
Pension Benefits
As of December 31,
 
2015
 
2014
 
(In percentages)
US plans
87
 
88
International plans
13
 
12
Total
100
 
100

Pension plans with projected benefit obligations in excess of plan assets are as follows:
 
As of December 31,
 
2015
 
2014
 
(In $ millions)
Projected benefit obligation
3,588

 
3,866

Fair value of plan assets
2,445

 
2,724


Included in the above table are pension plans with accumulated benefit obligations in excess of plan assets as follows:
 
As of December 31,
 
2015
 
2014
 
(In $ millions)
Accumulated benefit obligation
3,570

 
3,833

Fair value of plan assets
2,442

 
2,713


The accumulated benefit obligation for all defined benefit pension plans is as follows:
 
As of December 31,
 
2015
 
2014
 
(In $ millions)
Accumulated benefit obligation
3,619

 
3,892


The components of net periodic benefit cost are as follows:
 
Pension Benefits
Year Ended December 31,
 
Postretirement Benefits
Year Ended December 31,
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
 
(In $ millions)
Service cost
12

 
11

 
34

 
1

 
1

 
2

Interest cost
139

 
168

 
154

 
3

 
4

 
9

Expected return on plan assets
(209
)
 
(214
)
 
(223
)
 
—

 
—

 
—

Amortization of prior service cost / (credit)
—

 
—

 
1

 
—

 
(83
)
 
(12
)
Recognized actuarial (gain) loss
134

(1) 
339

(2) 
(67
)
 
(7
)
 
11

 
(37
)
Curtailment (gain) loss
(3
)
 
—

 
(61
)
 
—

 
—

 
—

Settlement (gain) loss
—

 
(78
)
 
9

 
—

 
—

 
—

Special termination benefit
2

 
—

 
—

 
—

 
—

 
—

Total
75

 
226

 
(153
)
 
(3
)
 
(67
)
 
(38
)
______________________________
(1) 
Includes a gain of $62 million reflecting the incorporation of the RP-2015 mortality tables into the actuarial assumptions for the US pension plans.
(2) 
Includes a loss of $53 million reflecting the incorporation of the RP-2014 mortality tables into the actuarial assumptions for the US pension plans.
Amortization of Accumulated other comprehensive income (loss), net into net periodic benefit cost in 2016 is expected to be as follows:
 
Pension
Benefits
 
Postretirement
Benefits
 
(In $ millions)
Prior service cost
—

 
(3
)

The Company maintains nonqualified pension plans funded with nonqualified trusts for certain US employees as follows:
 
As of December 31,
 
2015
 
2014
 
(In $ millions)
Nonqualified Trust Assets
 
 
 
Marketable securities, at fair value
30

 
32

Noncurrent Other assets, consisting of insurance contracts
55

 
56

Nonqualified Pension Obligations
 
 
 
Current Other liabilities
22

 
22

Benefit obligations
246

 
268


Expense relating to the nonqualified pension plans included in net periodic benefit cost, excluding returns on the assets held by the nonqualified trusts, is as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
 
(In $ millions)
Total
—

(1) 
43

 
6

______________________________
(1) 
Actuarial gain offset interest cost.
Valuation
The principal weighted average assumptions used to determine benefit obligation are as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2015
 
2014
 
2015
 
2014
 
(In percentages)
Discount Rate Obligations
 
 
 
 
 
 
 
US plans
4.2
 
3.9
 
4.0
 
3.7
International plans
2.6
 
2.4
 
3.6
 
3.5
Combined
4.0
 
3.7
 
3.7
 
3.6
Rate of Compensation Increase
 
 
 
 
 
 
 
US plans
N/A
 
N/A
 
 
 
 
International plans
2.7
 
2.8
 
 
 
 
Combined
2.7
 
2.8
 
 
 
 
The principal weighted average assumptions used to determine net periodic benefit cost are as follows:
 
Pension Benefits
Year Ended December 31,
 
Postretirement Benefits
Year Ended December 31,
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
 
(In percentages)
Discount Rate Obligations
 
 
 
 
 
 
 
 
 
 
 
US plans
3.9
 
4.7
 
3.8
 
3.7
 
4.3
 
3.4
International plans
2.4
 
3.7
 
3.6
 
3.5
 
4.5
 
3.8
Combined
3.7
 
4.6
 
3.8
 
3.6
 
4.4
 
3.5
Expected Return on Plan Assets
 
 
 
 
 
 
 
 
 
 
 
US plans
8.0
 
8.5
 
8.5
 
 
 
 
 
 
International plans
6.0
 
6.2
 
5.8
 
 
 
 
 
 
Combined
7.8
 
8.2
 
8.0
 
 
 
 
 
 
Rate of Compensation Increase
 
 
 
 
 
 
 
 
 
 
 
US plans
N/A
 
3.0
 
4.0
 
 
 
 
 
 
International plans
2.8
 
2.8
 
2.9
 
 
 
 
 
 
Combined
2.8
 
3.0
 
3.8
 
 
 
 
 
 

The Company's health care cost trend assumptions for US postretirement medical plan's net periodic benefit cost are as follows:
 
As of December 31,
 
2015
 
2014
 
2013
 
(In percentages, except year)
Health care cost trend rate assumed for next year
10.0
 
7.0
 
7.5
Health care cost trend ultimate rate
5.0
 
5.0
 
5.0
Health care cost trend ultimate rate year
2026
 
2020
 
2017

Assumed health care cost trend rates for US postretirement medical plans have a significant effect on the amounts reported for the health care plans.
The impact of a one percentage point change in the assumed health care cost trend is as follows:
 
Trend Rate Change
 
Decreases 1%
 
Increases 1%
 
(In $ millions)
Postretirement obligations
2

 
2

Service and interest cost
—

 
—


Plan Assets
The weighted average target asset allocations for the Company's pension plans in 2015 are as follows:
 
US
Plans
 
International
Plans
 
(In percentages)
Bonds - domestic to plans
54
 
71
Equities - domestic to plans
26
 
19
Equities - international to plans
20
 
3
Other
—
 
7
Total
100
 
100

On average, the actual return on the US qualified defined pension plans' assets over the long-term (20 years) has exceeded the expected long-term rate of asset return assumption. The US qualified defined benefit plans' actual return on assets for the year ended December 31, 2015 was 2.5% loss versus an expected long-term rate of asset return assumption of 8.0%. The expected long-term rate of asset return assumption used to determine 2016 net periodic benefit cost is 7.5% for the US qualified defined benefit plans primarily due to an increase in Pension Benefit Guaranty Corporation premiums.
The Company's defined benefit plan assets are measured at fair value on a recurring basis (Note 2) as follows:
Cash and Cash Equivalents: Foreign and domestic currencies as well as short term securities are valued at cost plus accrued interest, which approximates fair value.
Equity securities, treasuries and corporate debt: Valued at the closing price reported on the active market in which the individual securities are traded. Automated quotes are provided by multiple pricing services and validated by the plan custodian. These securities are traded on exchanges as well as in the over the counter market.
Registered Investment Companies: Composed of various mutual funds and other investment companies whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short term investments. Investments are valued at the net asset value of units held by the plan at year-end.
Common/Collective Trusts: Composed of various funds whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short term investments. Investments are valued at the net asset value of units held by the plan at year-end.
Derivatives: Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 fair value measurement inputs such as interest rates and foreign currency exchange rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps, foreign currency forwards and swaps, and options are observable in the active markets and are classified as Level 2 in the fair value measurement hierarchy.
Mortgage backed securities: Fair value is estimated based on valuations obtained from third-party pricing services for identical or comparable assets. Mortgage Backed Securities are traded in the over the counter broker/dealer market.
Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses, which approximates fair value.
Short-term investment funds: Composed of various funds whose portfolio is comprised of foreign and domestic currencies as well as short-term securities. Investments are valued at the net asset value of units held by the plan at year-end.
Other: Composed of real estate investment trust common stock valued at closing price as reported on the active market in which the individual securities are traded.
 
Fair Value Measurement
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Total
 
As of December 31,
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
(In $ millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
4

 
6

 
—

 
—

 
4

 
6

Derivatives
 
 
 
 
 
 
 
 
 
 
 
Swaps
—

 
—

 
25

 
275

 
25

 
275

Other
—

 
—

 
—

 
2

 
—

 
2

Equity securities
 
 
 
 
 
 
 
 
 
 
 
US companies
241

 
249

 
—

 
—

 
241

 
249

International companies
327

 
383

 
—

 
—

 
327

 
383

Fixed income
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
—

 
—

 
692

 
639

 
692

 
639

Treasuries, other debt
25

 
49

 
742

 
708

 
767

 
757

Mortgage backed securities
—

 
—

 
5

 
31

 
5

 
31

Securities lending collateral
—

 
6

 
—

 
—

 
—

 
6

Insurance contracts
—

 
—

 
32

 
34

 
32

 
34

Other
18

 
16

 
—

 
2

 
18

 
18

Total investments, at fair value(1)
615

 
709

 
1,496

 
1,691

 
2,111

 
2,400

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
Swaps
—

 
—

 
25

 
270

 
25

 
270

Other
—

 
—

 
—

 
2

 
—

 
2

Obligations under securities lending
—

 
6

 
—

 
—

 
—

 
6

Total liabilities
—

 
6

 
25

 
272

 
25

 
278

Total net assets(2)
615

 
703

 
1,471

 
1,419

 
2,086

 
2,122

______________________________
(1) 
In accordance with ASU 2015-07 (Note 2), certain investments that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy. Total investments, at fair value, for the year ended December 31, 2015 excludes investments in common/collective trusts, registered investment companies and short-term investment funds with fair values of $251 million, $117 million and $43 million, respectively. Total investments, at fair value, for the year ended December 31, 2014 excludes investments in common/collective trusts, registered investment companies and short-term investment funds with fair values of $278 million, $133 million and $263 million, respectively.
(2) 
Total net assets excludes non-financial plan receivables and payables of $25 million and $14 million, respectively, as of December 31, 2015 and $19 million and $26 million, respectively, as of December 31, 2014. Non-financial items include due to/from broker, interest receivables and accrued expenses.
Benefit obligation funding is as follows:
 
Total
Expected
2016
 
(In $ millions)
Cash contributions to defined benefit pension plans
23

Benefit payments to nonqualified pension plans
22

Benefit payments to other postretirement benefit plans
5


The Company's estimates of its US defined benefit pension plan contributions reflect the provisions of the Pension Protection Act of 2006.
Pension benefits and postretirement benefit cost expected to be paid are as follows:
 
Pension
Benefit
Payments(1)
 
Company Portion
of Postretirement
Benefit Cost(2)
 
(In $ millions)
2016
231

 
5

2017
230

 
5

2018
229

 
5

2019
228

 
4

2020
227

 
4

2021-2025
1,111

 
21

______________________________
(1) 
Payments are expected to be made primarily from plan assets.
(2) 
Payments are expected to be made primarily from Company assets.