XML 72 R17.htm IDEA: XBRL DOCUMENT v2.4.1.9
Retirement Plans and Other Retiree Benefits
 12 Months Ended
Dec. 31, 2014
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 changed the way it provides retirement benefits to substantially all of its U.S.-based employees participating in its defined benefit retirement plan. For these employees, the Company now provides all future retirement benefits through the Company’s defined contribution plan. As a result, no future service is considered for these employees for future accruals in the U.S. defined benefit retirement plans. 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 on their vested balances as of December 31, 2013. 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. These changes resulted in a curtailment charge of $91 as all of the previously unamortized prior service costs recorded in Accumulated other comprehensive income (loss) was recognized in 2013. 

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 are as follows:

  
 
United States
 
International
Asset Category
 

 

Equity securities
 
27
%
 
39
%
Fixed income securities
 
53

 
47

Real estate and other investments
 
20

 
14

Total
 
100
%
 
100
%

At December 31, 2014 the allocation of the Company’s plan assets and the level of valuation input for each major asset category was as follows:

  
 
Level of Valuation
Input
 
Pension Plans
 
 
  
 
 
United States
 
International
 
Other Retiree
Benefit Plans
Investments:
 
  
 
 
 
 
 
 
Cash & cash equivalents
 
Level 1
 
$
48

 
$
10

 
$
1

U.S. common stocks
 
Level 1
 
130

 
3

 
3

International common stocks
 
Level 1
 
—

 
2

 
—

Fixed income securities(a)
 
Level 2
 
625

 
—

 
13

Common/collective trust funds(b):
 
Level 2
 
 
 
 
 
 
Developed market equity index funds
 
  
 
352

 
193

 
9

Emerging market equity index funds
 
  
 
32

 
8

 
1

Other common stock funds
 
  
 
118

 
27

 
3

Fixed income funds: U.S. or foreign government and agency securities
 
  
 
115

 
107

 
3

Fixed income funds: investment grade corporate bonds
 
  
 
168

 
75

 
4

Fixed income funds: high yield corporate bonds and other
 
  
 
136

 
54

 
3

Guaranteed investment contracts(c)
 
Level 2
 
1

 
54

 
—

Real estate funds(d)
 
Level 3
 
46

 
19

 
1

Total Investments at fair value
 
  
 
$
1,771

 
$
552

 
$
41


At December 31, 2013 the allocation of the Company’s plan assets and the level of valuation input for each major asset category was as follows:
 
 
Level of Valuation
Input
 
Pension Plans
 
 
  
 
 
United States
 
International
 
Other Retiree
Benefit Plans
Investments:
 
  
 
 
 
 
 
 
Cash & cash equivalents
 
Level 1
 
$
97

 
$
23

 
$
3

U.S. common stocks
 
Level 1
 
127

 
—

 
3

International common stocks
 
Level 1
 
51

 
—

 
1

Fixed income securities(a)
 
Level 2
 
433

 
—

 
8

Common/collective trust funds(b):
 
Level 2
 
 
 
 
 
 
Developed market equity index funds
 
  
 
359

 
229

 
9

Emerging market equity index funds
 
  
 
33

 
9

 
1

Other common stock funds
 
  
 
123

 
41

 
3

Fixed income funds: U.S. or foreign government and agency securities
 
  
 
149

 
73

 
3

Fixed income funds: investment grade corporate bonds
 
  
 
203

 
71

 
5

Fixed income funds: high yield corporate bonds and other
 
  
 
119

 
35

 
4

Guaranteed investment contracts(c)
 
Level 2
 
2

 
56

 
—

Real estate funds(d)
 
Level 3
 
40

 
21

 
1

Total Investments at fair value
 
  
 
$
1,736

 
$
558

 
$
41

_______
(a) 
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, 2014 and 2013, approximately 50% of the fixed income portfolio was invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.
(b) 
Interests in common/collective trust funds are valued using the net asset value (“NAV”) per unit in each fund. The NAV is based on the value of the underlying investments owned by each trust, minus its liabilities, divided by the number of shares outstanding.
(c) 
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.
(d) 
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. Since the appraisals include unobservable inputs, these investments are classified as Level 3. These unobservable inputs may include items such as annual gross rents, projected vacancy rates, collection losses and recovery rates, yield rates, growth assumptions and risk adjusted discount rates.

The following table presents a reconciliation of Level 3 plan assets measured at fair value for the year ended December 31:
 
 
2014
 
2013
 
 
United States Real Estate Fund
 
International Real Estate Fund
 
United States Real Estate Fund
 
International Real Estate Fund
Beginning balance as of January 1
 
$
41

 
$
21

 
$
72

 
$
20

Earned income, net of management expenses
 
2

 
—

 
2

 
—

Unrealized gain (loss) on investment
 
4

 
(1
)
 
9

 
—

Purchases, sales, issuances and settlements, net
 
—

 
(1
)
 
(42
)
 
1

Ending balance as of December 31
 
$
47

 
$
19

 
$
41

 
$
21



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, 2014 and 6% of U.S. plan assets at December 31, 2013. No shares of the Company’s common stock were purchased or sold by the U.S. plans in 2014. In 2013, the U.S. plans sold 1,540,215 shares of the Company’s common stock to the Company. The plans received dividends on the Company’s common stock of $2 in 2014 and $3 in 2013.

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 are as follows:
  
 
Pension Plans
 
Other Retiree Benefit Plans
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
  
 
United States
 
International
 
 
 
 
Change in Benefit Obligations
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligations at beginning of year
 
$
2,102

 
$
2,227

 
$
894

 
$
888

 
$
792

 
$
875

Service cost
 
1

 
24

 
17

 
19

 
10

 
11

Interest cost
 
102

 
90

 
35


34

 
42


38

Participants’ contributions
 
—

 
1

 
4

 
3

 
—

 
—

Acquisitions/plan amendments
 
—

 
40

 
—

 
2

 
—

 
—

Actuarial loss (gain)
 
362

 
(148
)
 
123

 
(1
)
 
203

 
(101
)
Foreign exchange impact
 
—

 
—

 
(88
)
 
12

 
(3
)
 
(5
)
Termination benefits (1)
 
5

 
11

 
—

 
—

 
—

 
6

Curtailments and settlements
 
—

 
(12
)
 
(28
)
 
(21
)
 
—

 
—

Benefit payments
 
(154
)
 
(131
)
 
(40
)
 
(41
)
 
(33
)
 
(32
)
Other
 
(12
)
 
—

 
(1
)
 
(1
)
 
—

 
—

Benefit obligations at end of year
 
$
2,406

 
$
2,102

 
$
916

 
$
894

 
$
1,011

 
$
792

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 

 
 

Fair value of plan assets at beginning of year
 
$
1,736

 
$
1,597

 
$
558

 
$
486

 
$
41

 
$
37

Actual return on plan assets
 
178

 
148

 
65

 
59

 
4

 
4

Company contributions
 
23

 
121

 
36

 
61

 
29

 
32

Participants’ contributions
 
—

 
1

 
4

 
3

 
—

 
—

Foreign exchange impact
 
—

 
—

 
(43
)
 
2

 
—

 
—

Settlements
 
—

 
—

 
(27
)
 
(11
)
 
—

 
—

Benefit payments
 
(154
)
 
(131
)
 
(40
)
 
(41
)
 
(33
)
 
(32
)
Other
 
(12
)
 
—

 
(1
)
 
(1
)
 
—

 
—

Fair value of plan assets at end of year
 
$
1,771

 
$
1,736

 
$
552

 
$
558

 
$
41

 
$
41

Funded Status
 
 
 
 
 
 
 
 
 
 

 
 

Benefit obligations at end of year
 
$
2,406

 
$
2,102

 
$
916

 
$
894

 
$
1,011

 
$
792

Fair value of plan assets at end of year
 
1,771

 
1,736

 
552

 
558

 
41

 
41

Net amount recognized
 
$
(635
)
 
$
(366
)
 
$
(364
)
 
$
(336
)
 
$
(970
)
 
$
(751
)
Amounts Recognized in Balance Sheet
 
 
 
 
 
 

 
 

 
 

 
 

Noncurrent assets
 
$
—

 
$
16

 
$
6

 
$
12

 
$
—

 
$
—

Current liabilities
 
(20
)
 
(19
)
 
(28
)
 
(36
)
 
(41
)
 
(39
)
Noncurrent liabilities
 
(615
)
 
(363
)
 
(342
)
 
(312
)
 
(929
)
 
(712
)
Net amount recognized
 
$
(635
)
 
$
(366
)
 
$
(364
)
 
$
(336
)
 
$
(970
)
 
$
(751
)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 

 
 

 
 

 
 

Actuarial loss
 
$
933

 
$
674

 
$
259

 
$
181

 
$
481

 
$
296

Transition/prior service cost
 
2

 
3

 
19

 
23

 
(3
)
 
1

  
 
$
935

 
$
677

 
$
278

 
$
204

 
$
478

 
$
297

Accumulated benefit obligation
 
$
2,283

 
$
1,995

 
$
817

 
$
802

 
$
—

 
$
—


  
 
Pension Plans
 
Other Retiree Benefit Plans
  
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
  
 
United States
 
International
 
 
 
 
Weighted-Average Assumptions Used to Determine Benefit Obligations
 
 
 
 
 
 
 
 
 
 

 
 
Discount rate
 
4.24
%
 
4.96
%
 
3.06
%
 
3.99
%
 
4.36
%
 
5.24
%
Long-term rate of return on plan assets
 
6.80
%
 
6.80
%
 
5.05
%
 
5.50
%
 
6.80
%
 
6.80
%
Long-term rate of compensation increase
 
3.50
%
 
3.50
%
 
2.83
%
 
3.02
%
 
—
%
 
—
%
ESOP growth rate
 
—
%
 
—
%
 
—
%
 
—
%
 
10.00
%
 
10.00
%
Medical cost trend rate of increase
 
—
%
 
—
%
 
—
%
 
—
%
 
7.00
%
 
7.00
%

_________
(1) 
Represents pension and other retiree benefit enhancements incurred in 2014 and 2013 pursuant to the 2012 Restructuring Program.

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, 2014 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 11%, 10%, 7%, 5%, and 8%, respectively.  Similar assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s 2014 weighted-average rate of return of 5.05%.

The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease from 7.0% in 2015 to 5.0% by 2021, remaining at 5.0% 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
 
$
150

 
$
(119
)
Total of service and interest cost components
 
11

 
(9
)


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, 2014 in order to reflect the Society of Actuaries’ Retirement Plan Experience Committee’s updated mortality tables and mortality improvement scale published in October 2014. This resulted in an increase of 6% and 9% 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 consist of the following:
  
 
Years Ended December 31,
  
 
2014
 
2013
Benefit Obligation Exceeds Fair Value of Plan Assets
 
 
 
 
Projected benefit obligation
 
$
2,958

 
$
1,130

Fair value of plan assets
 
1,955

 
402

 
 
 
 
 
Accumulated benefit obligation
 
2,725

 
700

Fair value of plan assets
 
1,922

 
66




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
  
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
  
 
United States
 
International
 
 
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
1

 
$
24

 
$
24

 
$
17

 
$
19

 
$
12

 
$
11

 
$
13

 
$
11

Interest cost
 
102

 
90

 
97

 
35

 
34

 
35

 
42

 
38

 
40

Annual ESOP allocation
 
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
(2
)
 
(2
)
Expected return on plan assets
 
(112
)
 
(118
)
 
(112
)
 
(29
)
 
(26
)
 
(26
)
 
(3
)
 
(3
)
 
(3
)
Amortization of transition & prior service costs (credits)
 
1

 
9

 
9

 
4

 
2

 
2

 
3

 
1

 
3

Amortization of actuarial loss
 
37

 
68

 
62

 
6

 
10

 
9

 
16

 
21

 
18

Net periodic benefit cost
 
$
29

 
$
73

 
$
80

 
$
33

 
$
39

 
$
32

 
$
68

 
$
68

 
$
67

Other postretirement charges
 
5

 
102

 
—

 
(8
)
 
3

 
9

 
—

 
6

 
1

Total pension cost
 
$
34

 
$
175

 
$
80

 
$
25

 
$
42

 
$
41

 
$
68

 
$
74

 
$
68

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Discount rate
 
4.96
%
 
4.14
%
 
4.90
%

3.99
%
 
3.57
%
 
4.59
%
 
5.24
%
 
4.32
%
 
5.26
%
Long-term rate of return on plan assets
 
6.80
%
 
7.30
%
 
7.75
%
 
5.50
%
 
5.39
%
 
5.91
%
 
6.80
%
 
7.30
%
 
7.75
%
Long-term rate of compensation increase
 
3.50
%
 
3.50
%
 
4.00
%
 
3.02
%
 
2.80
%
 
2.87
%
 
—
%
 
—
%
 
—
%
ESOP growth rate
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
10.00
%
 
10.00
%
 
10.00
%
Medical cost trend rate of increase
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
7.00
%
 
7.50
%
 
8.00
%


Other postretirement charges in 2014 include pension and other benefit enhancements amounting to $5 incurred pursuant to the 2012 Restructuring Program.

Other postretirement charges in 2013 primarily relate to a curtailment charge of $91 resulting from changes to the Company’s defined benefit retirement plans in the U.S. and certain other one-time pension and other retiree benefit enhancements incurred pursuant to the 2012 Restructuring Program.

Other postretirement charges in 2012 primarily relate to the sale of land in Mexico.

The Company made voluntary contributions of $2, $101 and $101 in 2014, 2013 and 2012, 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
 
$
48

 
$
27

Net transition & prior service cost
 
11

 
3



Expected Contributions & Benefit Payments

Management does not expect to make a voluntary contribution to U.S. pension plans for the year ending December 31, 2015. 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, 2015 from the Company’s assets are estimated to be approximately $69. 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
2015
 
$
139

 
$
63

 
$
42

 
$
244

2016
 
139

 
45

 
43

 
227

2017
 
139

 
55

 
44

 
238

2018
 
139

 
54

 
45

 
238

2019
 
140

 
64

 
46

 
250

2020-2024
 
721

 
646

 
247

 
1,614