Retirement Programs (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Pension and OPEB Net Periodic Benefit Costs Table

The components of net pension and postretirement benefits other than pension ("OPEB") costs for 2018, 2017 and 2016 are shown in the table below (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):



(Millions of dollars) Year Ended December 31,	Pensions									OPEB
(Millions of dollars) Year Ended December 31,	2018			2017			2016			2018			2017			2016
Amount recognized in Operating Profit
Service cost	$	74		$	46		$	45		$	2		$	3		$	2
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost	128			103			100			5			5			6
Expected return on plan assets	(219		)	(161		)	(157		)	—			—			—
Net amortization and deferral	71			68			59			(3		)	(3		)	(3		)
Curtailment gain (a)	—			—			—			—			(18		)	—
Settlement charges (b)	14			2			4			—			—			—
	$	(6	)	$	12		$	6		$	2		$	(16	)	$	3
Amount recognized in Net gain on sale of businesses
Settlement gains from divestitures (c)	(44		)	—			—			—			—			—
Net periodic benefit cost (benefit)	$	24		$	58		$	51		$	4		$	(13	)	$	5

(a) The curtailment gain recorded during the year ended December 31, 2017 resulted from the termination of an OPEB plan in South America in the first quarter.

(b) 2018 includes the impacts of a $4 million charge and a $10 million charge recorded in the third and fourth quarters, respectively. In the third quarter, a series of lump sum benefit payments made from the U.S. supplemental pension plan triggered a settlement of the related pension obligation. In the fourth quarter, a change in control provision triggered the settlement of a U.S. non-qualified plan. 2017 includes the impact of a $2 million charge related to a series of lump sum benefit payments for employees under an international pension plan. 2016 includes a charge of $4 million related primarily to the retirement of senior managers in the United States (see Note 2).

(c) In connection with Praxair merger-related divestitures, primarily the European industrial gases business, certain European pension plan obligations were settled. This resulted in the recognition of associated pension benefit obligations and deferred losses in accumulated other comprehensive income (loss) within operating profit in the "Net gain on sale of businesses" line item.

Schedule of Pension and OPEB Funded Status Table

The changes in benefit obligation and plan assets for Linde’s pension and OPEB programs, including reconciliation of the funded status of the plans to amounts recorded in the consolidated balance sheet, as of December 31, 2018 and 2017 are shown below (2018 reflects the impact of the Linde AG merger on October 31, 2018 (see Notes 1 and 3) and the divestiture of Praxair's European industrial gases business on December 3, 2018 (see Notes 1 and 4)):



(Millions of dollars) Year Ended December 31,	Pensions
	2018						2017						OPEB
	U.S.			International			U.S.			International			2018			2017
Change in Benefit Obligation ("PBO")
Benefit obligation, January 1	$	2,215		$	725		$	2,066		$	666		$	146		$	156
Merger impact (a)	415			6,920			—			—			53			—
Service cost	42			32			32			14			2			3
Interest cost	74			54			70			33			5			5
Divestitures (b)	—			(106		)	—			—			—			—
Participant contributions	—			4			—			—			9			6
Plan amendment	—			1			—			—			—			—
Actuarial loss (gain)	(100		)	7			153			8			(11		)	(6		)
Benefits paid	(138		)	(84		)	(106		)	(43		)	(19		)	(13		)
Plan curtailment	—			—			—			—			—			(6		)
Foreign currency translation and other changes	—			(20		)	—			47			(1		)	1
Benefit obligation, December 31	$	2,508		$	7,533		$	2,215		$	725		$	184		$	146
Accumulated benefit obligation ("ABO")	$	2,428		$	7,385		$	2,113		$	691
Change in Plan Assets
Fair value of plan assets, January 1	$	1,655		$	567		$	1,507		$	507		$	—		$	—
Merger impact (a)	475			5,880			—			—			—			—
Actual return on plan assets	(72		)	(88		)	243			44			—			—
Company contributions	—			75			4			15			—			—
Benefits paid from plan assets	(106		)	(69		)	(99		)	(32		)	—			—
Divestitures (b)	—			(49		)	—			—			—			—
Foreign currency translation and other changes	—			(24		)	—			33			—			—
Fair value of plan assets, December 31	$	1,952		$	6,292		$	1,655		$	567		$	—		$	—
Funded Status, End of Year	$	(556	)	$	(1,241	)	$	(560	)	$	(158	)	$	(184	)	$	(146	)
Recorded in the Balance Sheet (Note 9)
Other long-term assets	$	47		$	93		$	—		$	17		$	—		$	—
Other current liabilities	(94		)	(10		)	(13		)	(7		)	(13		)	(10		)
Other long-term liabilities	(509		)	(1,324		)	(547		)	(168		)	(171		)	(136		)
Net amount recognized, December 31	$	(556	)	$	(1,241	)	$	(560	)	$	(158	)	$	(184	)	$	(146	)
Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net actuarial loss (gain)	$	834		$	339		$	807		$	192		$	(23	)	$	(15	)
Prior service cost (credit)	—			10			—			11			(5		)	(6		)
Deferred tax benefit (Note 7)	(212		)	(87		)	(309		)	(47		)	7			9
Amount recognized in accumulated other comprehensive income (loss) (Note 9)	$	622		$	262		$	498		$	156		$	(21	)	$	(12	)

(a) Represents Linde AG plan assets and benefit obligations assumed as part of the merger. Such plan assets and benefit obligations were remeasured as of the merger date and all subsequent activity through December 31, 2018 is presented within the respective captions above.

Funded status information as of December 31, 2018 for select international pension plans is presented in the table below as the benefit obligations of these plans are considered to be significant relative to the total benefit obligation:



	United Kingdom			Germany			Other International			Total International
(Millions of dollars)	2018			2018			2018			2018
Benefit obligation, December 31	$	4,444		$	1,916		$	1,173		$	7,533
Fair value of plan assets, December 31	4,339			1,043			910			6,292
Funded Status, End of Year	$	(105	)	$	(873	)	$	(263	)	$	(1,241	)

(b) Represents plan assets and benefit obligations associated with the divestiture of the majority of the Praxair industrial gases business in Europe.

Schedule of Pension and OPEB Changes in Plan Assets and Benefit Obligations Recognized in AOCI Table

The changes in plan assets and benefit obligations recognized in other comprehensive income in 2018 and 2017 are as follows:



	Pensions						OPEB
(Millions of dollars)	2018			2017			2018			2017
Current year net actuarial losses (gains)*	$	286		$	34		$	(11	)	$	(6	)
Amortization of net actuarial gains (losses)	(70		)	(67		)	2			1
Divestitures	(12		)	—			—			—
Amortization of prior service credits (costs)	(1		)	(1		)	1			2
Pension settlements (Note 5)	(14		)	(2		)	—			—
Curtailments	—			—			—			12
Foreign currency translation and other changes	(16		)	13			1			(2		)
Total recognized in other comprehensive income	$	173		$	(23	)	$	(7	)	$	7

________________________

Pension net actuarial losses in 2018 are primarily driven by a lower actual return on plan assets, which more than offset the benefit derived from favorable liability experience. Pension net actuarial losses in 2017 are driven by lower U.S. discount rates, which more than offset favorable plan asset experience. OPEB net actuarial gains in 2018 relate to the benefits from higher U.S. discount rates and favorable actual participant experience and net actuarial gains in 2017 relate primarily to favorable liability experience.

Schedule of Pension and OPEB Amounts in AOCI to be Recognized in 2017 Table

The amounts in accumulated other comprehensive income (loss) that are expected to be recognized as components of net periodic benefit cost during 2019 are as follows:



(Millions of dollars)	Pension		OPEB
Net actuarial loss (gain)	$	54	$	(3	)
Prior service cost (credit)	2		(1		)
	$	56	$	(4	)

Schedule of Pension Plans Where the Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets Table

The following table provides information for pension plans where the accumulated benefit obligation exceeds the fair value of the plan assets:



(Millions of dollars) Year Ended December 31,	Pensions
	2018				2017
	U.S.		International		U.S.		International
Projected benefit obligation ("PBO")	$	2,139	$	6,681	$	2,215	$	391
Accumulated benefit obligation ("ABO")	$	2,060	$	6,586	$	2,113	$	383
Fair value of plan assets	$	1,482	$	5,307	$	1,655	$	215

Schedule of Pension and OPEB Plans Assumptions Used to Determine Benefit Obligations and the Net Benefit Cost Table

The assumptions used to determine benefit obligations are as of the respective balance sheet dates and the assumptions used to determine net benefit cost are as of the previous year-end, as shown below:



	Pensions
	U.S.				International				OPEB
	2018		2017		2018		2017		2018		2017
Weighted average assumptions used to determine benefit obligations at December 31,
Discount rate	4.20	%	3.61	%	2.72	%	4.46	%	4.16	%	3.58	%
Rate of increase in compensation levels	3.25	%	3.25	%	2.38	%	3.35	%	N/A		N/A
Weighted average assumptions used to determine net periodic benefit cost for years ended December 31,
Discount rate	3.73	%	4.05	%	2.73	%	5.09	%	3.81	%	4.21	%
Rate of increase in compensation levels	3.25	%	3.25	%	2.45	%	3.73	%	N/A		N/A
Expected long-term rate of return on plan assets (1)	7.62	%	8.00	%	5.13	%	7.91	%	N/A		N/A

________________________

(1)

The expected long term rate of return on the U.S. and international plan assets is estimated based on the plans' investment strategy and asset allocation, historical capital market performance and, to a lesser extent, historical plan performance. For the U.S. plans, the expected rate of return of 7.62% was derived based on the target asset allocation of 40%-60% equity securities (approximately 9.5% expected return), 30%-50% fixed income securities (approximately 5.5% expected return) and 5%-15% alternative investments (approximately 7% expected return). For the international plans, the expected rate of return was derived based on the weighted average target asset allocation of 15%-25% equity securities (approximately 10% expected return), 30%-50% fixed income securities (approximately 7.5% expected return), and 30%-40% alternative investments (approximately 7.5% expected return). For the U.S. plan assets, the actual annualized total return for the most recent 10-year period ended December 31, 2018 was approximately 8.44%. For the international plan assets, the actual annualized total return for the same period was approximately 6.26%. Changes to plan asset allocations and investment strategy over this time period limit the value of historical plan performance as factor in estimating the expected long term rate of return. For 2019, the expected long-term rate of return on plan assets will be 7.50% for the U.S. plans. Expected weighted average returns for international plans will vary.

Schedule of OPEB Plans Assumed Healthcare Cost Trend Rates Table



	OPEB
Assumed healthcare cost trend rates	2018		2017
Praxair, Inc.
Healthcare cost trend assumed	6.25	%	6.50	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2023		2023
Linde AG
Healthcare cost trend assumed	5.49	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%
Year that the rate reaches the ultimate trend rate	2038

Schedule of Effect of One-Percentage Point Change in Assumed Healthcare Cost Trend Rates Table

These healthcare cost trend rate assumptions have an impact on the amounts reported. However, cost caps limit the impact on the net OPEB benefit cost in the U.S. To illustrate the effect, a one-percentage point change in assumed healthcare cost trend rates would have the following effects:



	One-Percentage Point
(Millions of dollars)	Increase		Decrease
Effect on the total of service and interest cost components of net OPEB benefit cost	$	—	$	—
Effect on OPEB benefit obligation	$	7	$	(6	)

Schedule of Pension Plans Targeted Asset Allocation Range and Weighted-Average Asset Allocations Table

The international pension plans are managed individually based on diversified investment portfolios, with different target asset allocations that vary for each plan. Linde’s U.S. and international pension plans’ weighted-average asset allocations at December 31, 2018 and 2017, and the target asset allocation range for 2018, by major asset category, are as follows:



	U.S.						International
Asset Category	Target 2018 **	Target 2017	2018		2017		Target 2018 **	Target 2017	2018		2017
Equity securities	40%-60%	50%-70%	48	%	61	%	15%-25%	30%-50%	20	%	38	%
Fixed income securities	30%-50%	20%-40%	40	%	30	%	30%-50%	40%-60%	46	%	53	%
Other	5%-15%	2%-10%	13	%	9	%	30%-40%	0%-10%	34	%	9	%

** Target asset allocations provided above for fiscal year 2018 are calculated based on weighting the individual Praxair and Linde AG pension plan target allocations by their respective portions of the total asset portfolio.

Schedule of Pension Plans Assets Measured at Fair Value by Asset Category Table

The following table summarizes pension assets measured at fair value by asset category at December 31, 2018 and 2017. During the years presented, there has been no transfer of assets between Levels 1, 2 and 3 (see Note 13 for definition of the levels):



	Fair Value Measurements Using
	Level 1				Level 2				Level 3 **				Total
(Millions of dollars)	2018		2017		2018		2017		2018		2017		2018		2017
Cash and cash equivalents	$	348	$	7	$	—	$	—	$	—	$	—	$	348	$	7
Equity securities:
Global equities	1,131		302		—		—		—		—		1,131		302
Mutual funds	74		—		43		—		—		—		117		—
Fixed income securities:
Government bonds	—		—		1,772		246		—		—		1,772		246
Emerging market debt	—		—		522		—		—		—		522		—
Mutual funds	109		118		21		—		—		—		130		118
Corporate bonds	—		—		382		181		—		—		382		181
Bank loans	—		—		313		—		—		—		313		—
Alternative investments:
Insurance contracts	—		—		—		—		—		50		—		50
Real estate funds	—		—		—		—		298		158		298		158
Private debt	—		—		—		—		671		—		671		—
Other investments	—		—		33		—		—		—		33		—
Liquid alternative	—		—		1,192		—		—		—		1,192		—
Total plan assets at fair value, December 31,	$	1,662	$	427	$	4,278	$	427	$	969	$	208	$	6,909	$	1,062
Pooled funds *													1,335		1,160
Total fair value plan assets December 31,													$	8,244	$	2,222

* Pooled funds are measured using the net asset value ("NAV") as a practical expedient for fair value as permissible under the accounting standard for fair value measurements and have not been categorized in the fair value hierarchy.

** The following table summarizes changes in fair value of the pension plan assets classified as level 3 for the periods ended December 31, 2018 and 2017:



(Millions of dollars)	Insurance Contracts			Real Estate Funds			Private Debt		Total
Balance, December 31, 2016	$	45		$	135		$	—	$	180
Gain/(Loss) for the period	(1		)	12			—		11
Acquisitions	—			11			—		11
Foreign currency translation	6			—			—		6
Balance, December 31, 2017	50			158			—		208
Assumed in Linde AG merger	—			148			667		815
Gain/(Loss) for the period	—			9			4		13
Acquisitions	—			—			—		—
Merger-related divestitures	(49		)	—			—		(49		)
Other divestitures	—			(17		)	—		(17		)
Foreign currency translation	(1		)	—			—		(1		)
Balance, December 31, 2018	$	—		$	298		$	671	$	969

Schedule of Pension Plans Changes in Fair Value of Assets Classified as Level 3 Table

** The following table summarizes changes in fair value of the pension plan assets classified as level 3 for the periods ended December 31, 2018 and 2017:



(Millions of dollars)	Insurance Contracts			Real Estate Funds			Private Debt		Total
Balance, December 31, 2016	$	45		$	135		$	—	$	180
Gain/(Loss) for the period	(1		)	12			—		11
Acquisitions	—			11			—		11
Foreign currency translation	6			—			—		6
Balance, December 31, 2017	50			158			—		208
Assumed in Linde AG merger	—			148			667		815
Gain/(Loss) for the period	—			9			4		13
Acquisitions	—			—			—		—
Merger-related divestitures	(49		)	—			—		(49		)
Other divestitures	—			(17		)	—		(17		)
Foreign currency translation	(1		)	—			—		(1		)
Balance, December 31, 2018	$	—		$	298		$	671	$	969

Schedule of Pension and OPEB Estimated Future Benefit Payments, Net of Participant Contributions Table

The following table presents estimated future benefit payments, net of participants contributions:



(Millions of dollars)	Pensions
Year Ended December 31,	U.S.		International		OPEB
2019 (a)	$	353	$	322	$	14
2020	150		333		15
2021	146		344		15
2022	168		352		15
2023	149		364		14
2024-2028	767		1,018		59

(a) In January 2019, benefits of $91 million were paid related to the settlement of a U.S. non-qualified plan that was triggered due to a change in control provision. This resulted in a $51 million charge.