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Retirement Plans and Other Retiree Benefits
 12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Retirement Plans and Other Retiree Benefits
Retirement Plans and Other Retiree Benefits

Retirement Plans

The Company and certain of its U.S. and overseas subsidiaries maintain defined benefit retirement plans. Benefits under these plans are based primarily on years of service and employees’ career earnings.

Effective January 1, 2014, the Company provides all future retirement benefits through the Company’s defined contribution plan. As a result, service after December 31, 2013 is not considered for participants in the Company’s U.S. defined benefit retirement plan. Participants in the Company’s U.S. defined benefit retirement plan whose retirement benefit was determined under the cash balance formula continue to earn interest credits on their vested balances as of December 31, 2013 but no longer receive pay credits. Participants whose retirement benefit was determined under the final average earnings formula continue to have their final average earnings adjusted for pay increases until termination of employment.

In the Company’s principal U.S. plans and certain funded overseas plans, funds are contributed to trusts in accordance with regulatory limits to provide for current service and for any unfunded projected benefit obligation over a reasonable period. The target asset allocation for the Company’s defined benefit plans is as follows:
  
 
United States
 
International
Asset Category
 

 

Equity securities
 
27
%
 
41
%
Fixed income securities
 
53
%
 
40
%
Real estate and other investments
 
20
%
 
19
%
Total
 
100
%
 
100
%

At December 31, 2016 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for each major asset category were as follows:
 
 
Level of Valuation
Input
 
Pension Plans
 
 
  
 
 
United States
 
International
 
Other Retiree
Benefit Plans
 
 
  
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
27

 
$
13

 
$
—

U.S. common stocks
 
Level 1
 
127

 
3

 
—

International common stocks
 
Level 1
 
—

 
3

 
—

Pooled funds(1)
 
Level 1
 
134

 
84

 
—

Fixed income securities(2)
 
Level 2
 
767

 
22

 
—

Guaranteed investment contracts(3)
 
Level 2
 
1

 
49

 
—

 
 
  
 
1,056

 
174

 
—

Investments valued using NAV per share(4)
 
  
 


 


 


Domestic, developed and emerging markets equity funds
 
  
 
323

 
155

 
—

Fixed income funds(5)
 
  
 
118

 
155

 
—

Hedge funds(6)
 
  
 
96

 
3

 
—

Multi-Asset funds(7)
 
  
 
52

 
3


—

Real estate funds(8)
 
 
 
43

 
19

 
—

 
 
  
 
632

 
335

 
—

 
 
 
 
 
 
 
 
 
Other assets and liabilities, net(9)
 
 
 
(42
)
 
—

 
—

Total Investments
 
 
 
$
1,646

 
$
509

 
$
—

 
 
 
 
 
 
 
 
 

At December 31, 2015 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for each major asset category were as follows:
 
 
Level of Valuation
Input
 
Pension Plans
 
 
  
 
 
United States
 
International
 
Other Retiree
Benefit Plans
 
 
  
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
16

 
$
13

 
$
—

U.S. common stocks
 
Level 1
 
126

 
3

 
1

Pooled funds(1)
 
Level 1
 
112

 
76

 
1

Fixed income securities(2)
 
Level 2
 
718

 
24

 
6

Guaranteed investment contracts(3)
 
Level 2
 
1

 
52

 
—

 
 
  
 
973

 
168

 
8

Investments valued using NAV per share(4)
 
  
 


 


 


Domestic, developed and emerging markets equity funds
 
  
 
309

 
158

 
3

Fixed income funds(5)
 
  
 
123

 
165

 
1

Hedge funds(6)
 
  
 
131

 
6

 
1

Multi-Asset funds(7)
 
  
 
49

 
4


—

Real estate funds(8)
 
 
 
39

 
19

 
1

 
 
 
 
651

 
352

 
6

 
 
 
 
 
 
 
 
 
Other assets and liabilities, net(9)
 
 
 
—

 
—

 
—

Total Investments
 
  
 
$
1,624

 
$
520

 
$
14

_______
(1) 
Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.
(2) 
The fixed income securities are traded over the counter and certain of these securities lack daily pricing or liquidity and as such are classified as Level 2. As of December 31, 2016 and 2015, approximately 50% of the U.S. pension plan fixed income portfolio was invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.
(3) 
The guaranteed investment contracts (“GICs”) represent contracts with insurance companies measured at the cash surrender value of each contract. The Level 2 valuation reflects that the cash surrender value is based principally on a referenced pool of investment funds with active redemption.
(4) 
In accordance with ASU 2015-07, investments that are measured at fair value using net asset value (“NAV”) per share as a practical expedient have not been classified in the fair value hierarchy. The Company has applied ASU 2015-07 retrospectively for the year ended December 31, 2016. The NAV is based on the value of the underlying investments owned, minus its liabilities, divided by the number of shares outstanding. There are no unfunded commitments related to these investments. Redemption notice period primarily ranges from 0-3 months and redemption frequency windows range from daily to quarterly.
(5) 
Fixed income funds primarily invest in U.S. government and investment grade corporate bonds.
(6) 
Consists of investments in underlying hedge fund strategies that are primarily implemented through the use of long and short equity and fixed income securities and derivative instruments such as futures and options.
(7) 
Multi-Asset funds primarily invest across a variety of asset classes, including global stocks and bonds, as well as alternative strategies.
(8) 
Real estate is valued using the NAV per unit of funds that are invested in real estate property. The investment value of the real estate property is determined quarterly using independent market appraisals as determined by the investment manager.
(9) 
This category primarily includes unsettled trades for investments purchased and sold and dividend receivables.
Equity securities in the U.S. plans include investments in the Company’s common stock representing 7% of U.S. plan assets at December 31, 2016 and December 31, 2015. No shares of the Company’s common stock were purchased or sold by the U.S. plans in 2016 or 2015. The plans received dividends on the Company’s common stock of $3 in 2016 and 2015.

Other Retiree Benefits

The Company and certain of its subsidiaries provide health care and life insurance benefits for retired employees to the extent not provided by government-sponsored plans.  

The Company uses a December 31 measurement date for its defined benefit and other retiree benefit plans. Summarized information for the Company’s defined benefit and other retiree benefit plans is as follows:
  
 
Pension Plans
 
Other Retiree Benefit Plans
 
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
  
 
United States
 
International
 
 
 
 
Change in Benefit Obligations
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligations at beginning of year
 
$
2,201

 
$
2,406

 
$
802

 
$
916

 
$
862

 
$
1,011

Service cost
 
1

 
2

 
16

 
20

 
13

 
14

Interest cost
 
105

 
100

 
25


28

 
43


44

Participants’ contributions
 
—

 
—

 
2

 
2

 
—

 
—

Acquisitions/plan amendments
 
—

 
—

 
1

 
3

 
—

 
—

Actuarial loss (gain)
 
129

 
(189
)
 
76

 
(3
)
 
39

 
(154
)
Foreign exchange impact
 
—

 
—

 
(47
)
 
(75
)
 
1

 
(14
)
Termination benefits (1)
 
3

 
16

 
—

 
—

 
1

 
1

Curtailments and settlements
 
—

 
—

 
(37
)
 
(16
)
 
—

 
—

Benefit payments
 
(141
)
 
(134
)
 
(36
)
 
(38
)
 
(36
)
 
(40
)
Other (2)
 
—

 
—

 
(2
)
 
(35
)
 
—

 
—

Benefit obligations at end of year
 
$
2,298

 
$
2,201

 
$
800

 
$
802

 
$
923

 
$
862

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 

 
 

Fair value of plan assets at beginning of year
 
$
1,624

 
$
1,771

 
$
520

 
$
552

 
$
14

 
$
41

Actual return on plan assets
 
88

 
(33
)
 
46

 
20

 
1

 
—

Company contributions
 
75

 
20

 
54

 
35

 
21

 
13

Participants’ contributions
 
—

 
—

 
2

 
2

 
—

 
—

Foreign exchange impact
 
—

 
—

 
(43
)
 
(35
)
 
—

 
—

Settlements and acquisitions
 
—

 
—

 
(33
)
 
(14
)
 
—

 
—

Benefit payments
 
(141
)
 
(134
)
 
(36
)
 
(38
)
 
(36
)
 
(40
)
Other
 
—

 
—

 
(1
)
 
(2
)
 
—

 
—

Fair value of plan assets at end of year
 
$
1,646

 
$
1,624

 
$
509

 
$
520

 
$
—

 
$
14

Funded Status
 
 
 
 
 
 
 
 
 
 

 
 

Benefit obligations at end of year
 
$
2,298

 
$
2,201

 
$
800

 
$
802

 
$
923

 
$
862

Fair value of plan assets at end of year
 
1,646

 
1,624

 
509

 
520

 
—

 
14

Net amount recognized
 
$
(652
)
 
$
(577
)
 
$
(291
)
 
$
(282
)
 
$
(923
)
 
$
(848
)
Amounts Recognized in Balance Sheet
 
 
 
 
 
 

 
 

 
 

 
 

Noncurrent assets
 
$
—

 
$
—

 
$
8

 
$
17

 
$
—

 
$
—

Current liabilities
 
(24
)
 
(21
)
 
(12
)
 
(12
)
 
(44
)
 
(41
)
Noncurrent liabilities
 
(628
)
 
(556
)
 
(287
)
 
(287
)
 
(879
)
 
(807
)
Net amount recognized
 
$
(652
)
 
$
(577
)
 
$
(291
)
 
$
(282
)
 
$
(923
)
 
$
(848
)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 

 
 

 
 

 
 

Actuarial loss
 
$
962

 
$
852

 
$
254

 
$
219

 
$
330

 
$
305

Transition/prior service cost
 
2

 
2

 
5

 
7

 
(2
)
 
(2
)
  
 
$
964

 
$
854

 
$
259

 
$
226

 
$
328

 
$
303

Accumulated benefit obligation
 
$
2,230

 
$
2,100

 
$
739

 
$
739

 
$
—

 
$
—

  
 
Pension Plans
 
Other Retiree Benefit Plans
  
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
  
 
United States
 
International
 
 
 
 
Weighted-Average Assumptions Used to Determine Benefit Obligations
 
 
 
 
 
 
 
 
 
 

 
 
Discount rate
 
4.27
%
 
4.93
%
 
2.59
%
 
3.17
%
 
4.41
%
 
4.97
%
Long-term rate of return on plan assets
 
6.80
%
 
6.80
%
 
4.14
%
 
4.62
%
 
6.80
%
 
6.80
%
Long-term rate of compensation increase
 
3.50
%
 
3.50
%
 
2.58
%
 
2.78
%
 
—
%
 
—
%
ESOP growth rate
 
—
%
 
—
%
 
—
%
 
—
%
 
10.00
%
 
10.00
%
Medical cost trend rate of increase
 
—
%
 
—
%
 
—
%
 
—
%
 
6.33
%
 
6.67
%
_________
(1) 
Represents pension and other retiree benefit enhancements incurred in 2016 and 2015 pursuant to the 2012 Restructuring Program.
(2) 
Other in International Pension Plans for 2015 includes a $33 impact related to the deconsolidation of the Company’s Venezuelan operations. See Note 14, Venezuela.

The overall investment objective of the plans is to balance risk and return so that obligations to employees are met. The Company evaluates its long-term rate of return on plan assets on an annual basis. In determining the long-term rate of return, the Company considers the nature of the plans’ investments and the historical rates of return. The assumed rate of return as of December 31, 2016 for the U.S. plans was 6.80%. Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 6%, 8%, 5%, 6%, and 8%, respectively. Similar assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s 2016 weighted-average rate of return of 4.14%.

The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease from 6.33% in 2017 to 4.75% by 2022, remaining at 4.75% for the years thereafter. Changes in the assumed rate can have a significant effect on amounts reported. A 1% change in the assumed medical cost trend rate would have the following approximate effect:
  
 
One percentage point
  
 
Increase
 
Decrease
Accumulated postretirement benefit obligation
 
$
119

 
$
(96
)
Total of service and interest cost components
 
9

 
(7
)


Expected mortality is a key assumption in the measurement for pension and other postretirement benefit obligations. For the Company’s U.S. plans, this assumption was updated as of December 31, 2016 in order to reflect the Society of Actuaries’ updated mortality improvement scale published in October 2016. This resulted in a decrease of 1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively. This assumption was previously updated for the Company’s U.S. plans as of December 31, 2015 in order to reflect the Society of Actuaries’ mortality tables and mortality improvement scale published in October 2015 which resulted in a decrease of 1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively.










Plans with projected benefit obligations in excess of plan assets and plans with accumulated benefit obligations in excess of plan assets as of December 31 consisted of the following:
  
 
Years Ended December 31,
  
 
2016
 
2015
Benefit Obligation Exceeds Fair Value of Plan Assets
 
 
 
 
Projected benefit obligation
 
$
2,973

 
$
2,667

Fair value of plan assets
 
2,024

 
1,792

 
 
 
 
 
Accumulated benefit obligation
 
2,840

 
2,499

Fair value of plan assets
 
2,003

 
1,772


Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree benefit plans is as follows:
  
 
Pension Plans
 
Other Retiree Benefit Plans
  
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
  
 
United States
 
International
 
 
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
1

 
$
2

 
$
1

 
$
16

 
$
20

 
$
17

 
$
13

 
$
14

 
$
11

Interest cost
 
105

 
100

 
102

 
25

 
28

 
35

 
43

 
44

 
42

Annual ESOP allocation
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
Expected return on plan assets
 
(109
)
 
(117
)
 
(112
)
 
(23
)
 
(28
)
 
(29
)
 
(1
)
 
(2
)
 
(3
)
Amortization of transition and prior service costs (credits)
 
—

 
—

 
1

 
—

 
2

 
4

 
—

 
—

 
3

Amortization of actuarial loss
 
41

 
44

 
37

 
8

 
11

 
6

 
14

 
25

 
16

Net periodic benefit cost
 
$
38

 
$
29

 
$
29

 
$
26

 
$
33

 
$
33

 
$
69

 
$
81

 
$
68

Other postretirement charges
 
3

 
16

 
5

 
11

 
(1
)
 
(8
)
 
1

 
1

 
—

Total pension cost
 
$
41

 
$
45

 
$
34

 
$
37

 
$
32

 
$
25

 
$
70

 
$
82

 
$
68

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Discount rate
 
4.93
%
 
4.24
%
 
4.96
%

3.17
%
 
3.06
%
 
3.99
%
 
4.97
%
 
4.36
%
 
5.24
%
Long-term rate of return on plan assets
 
6.80
%
 
6.80
%
 
6.80
%
 
4.62
%
 
5.05
%
 
5.50
%
 
6.80
%
 
6.80
%
 
6.80
%
Long-term rate of compensation increase
 
3.50
%
 
3.50
%
 
3.50
%
 
2.78
%
 
2.83
%
 
3.02
%
 
—
%
 
—
%
 
—
%
ESOP growth rate
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
10.00
%
 
10.00
%
 
10.00
%
Medical cost trend rate of increase
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
6.67
%
 
7.00
%
 
7.00
%

Other postretirement charges in 2016, 2015 and 2014 include pension and other benefit enhancements amounting to $4, $17 and $5 respectively, incurred pursuant to the 2012 Restructuring Program. Other postretirement charges in 2016 also includes $11 related to pension plan settlements incurred primarily pursuant to the 2012 Restructuring Program.


The Company made voluntary contributions of $53, $0 and $2 in 2016, 2015 and 2014, respectively, to its U.S. retirement plans.

The estimated actuarial loss and the estimated transition/prior service cost for defined benefit and other retiree benefit plans that will be amortized from Accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is as follows:
  
 
Pension Plans
 
Other Retiree Benefit Plans
Net actuarial loss
 
$
57

 
$
17

Net transition and prior service cost
 
—

 
—


Expected Contributions and Benefit Payments

Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year ending December 31, 2017 is approximately $57. Actual funding may differ from current estimates depending on the variability of the market value of the assets as compared to the obligation and other market or regulatory conditions.  

Total benefit payments to be paid to participants for the year ending December 31, 2017 from the Company’s assets are estimated to be approximately $81. Total benefit payments expected to be paid to participants from plan assets, or directly from the Company’s assets to participants in unfunded plans, are as follows:
  
 
Pension Plans
 
 
 
 
Years Ended December 31,
 
United States
 
International
 
Other Retiree Benefit Plans
 
Total
2017
 
$
137

 
$
37

 
$
45

 
$
219

2018
 
137

 
32

 
46

 
215

2019
 
140

 
32

 
46

 
218

2020
 
144

 
34

 
47

 
225

2021
 
150

 
36

 
48

 
234

2022-2026
 
733

 
202

 
256

 
1,191