XML 72 R45.htm IDEA: XBRL DOCUMENT v3.8.0.1
Employee Retirement Plans and Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2017
Compensation and Retirement Disclosure [Abstract]  
Schedule of Net Benefit Costs
Net Periodic Pension and OPEB Cost (Benefit)
During the fourth quarter of 2017, we changed our method of calculating the market-related value of pension plan assets used to determine net periodic pension cost. Specifically, our historical accounting treatment, the calculated value approach, smoothed asset returns and deferred gains and losses into the calculation of expected return on plan assets and gains and losses subject to amortization over five years. Effective December 31, 2017, we changed our accounting treatment to the fair value approach, which includes measuring the market-related value of plan assets at fair value for purposes of determining the expected return on plan assets and amount of gain or loss subject to amortization instead of using a five-year smoothing approach. We consider the fair value approach to be preferable as it results in a current reflection of changes in the value of plan assets in the measurement of net periodic pension cost. Additionally, given the plan assets of our major pension plans employ a liability-driven investment strategy, this approach more closely aligns our expected return on plan assets with how we value our funded status (plan assets and projected benefit obligation) and how much of our accumulated gain or loss is subject to amortization. We have retrospectively applied this change to all periods presented. See Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" for further details surrounding this accounting policy change.
 
For the years ended
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
Pension
 
OPEB
 
Consolidated
 
Pension
 
OPEB
 
Consolidated
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Components of net periodic pension and OPEB cost (benefit):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
7.7

 
$
10.9

 
$
18.6

 
$
7.6

 
$
4.1

 
$
11.7

 
$
9.5

 
$
1.8

 
$
11.3

Interest cost
205.6

 
30.6

 
236.2

 
146.4

 
10.9

 
157.3

 
137.5

 
6.0

 
143.5

Expected return on plan assets, net of expenses
(287.9
)
 
0.4

 
(287.5
)
 
(194.1
)
 
—

 
(194.1
)
 
(196.0
)
 
—

 
(196.0
)
Amortization of prior service cost (benefit)
0.5

 
—

 
0.5

 
0.7

 
(0.1
)
 
0.6

 
0.6

 
(0.3
)
 
0.3

Amortization of net actuarial loss (gain)
12.2

 
—

 
12.2

 
17.8

 
—

 
17.8

 
21.7

 
(0.3
)
 
21.4

Curtailment and settlement loss (gain)
(5.4
)
 
(2.9
)
 
(8.3
)
 
10.5

 
—

 
10.5

 
(1.0
)
 
—

 
(1.0
)
Less: expected participant contributions
(0.5
)
 
—

 
(0.5
)
 
(0.5
)
 
—

 
(0.5
)
 
(2.4
)
 
—

 
(2.4
)
Net periodic pension and OPEB cost (benefit)
$
(67.8
)
 
$
39.0

 
$
(28.8
)
 
$
(11.6
)
 
$
14.9

 
$
3.3

 
$
(30.1
)
 
$
7.2

 
$
(22.9
)
Schedule of Changes in Projected Benefit Obligation Plan, Assets and Funded Status of Pension Plans
 
For the year ended December 31, 2017
 
For the year ended December 31, 2016
 
Pension
 
OPEB
 
Consolidated
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Change in benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
Prior year benefit obligation
$
6,177.5

 
$
835.0

 
$
7,012.5

 
$
3,500.0

 
$
136.1

 
$
3,636.1

Pension and postretirement benefit obligations assumed in Acquisition
—

 
—

 
—

 
3,045.8

 
734.4

 
3,780.2

Service cost, net of expected employee contributions
7.2

 
10.9

 
18.1

 
7.1

 
4.1

 
11.2

Interest cost
205.6

 
30.6

 
236.2

 
146.4

 
10.9

 
157.3

Actual employee contributions
0.7

 
—

 
0.7

 
0.5

 
—

 
0.5

Actuarial loss (gain)
179.4

 
(34.9
)
 
144.5

 
139.2

 
(38.7
)
 
100.5

Amendments
—

 
(4.4
)
 
(4.4
)
 
—

 
—

 
—

Benefits paid
(327.5
)
 
(43.3
)
 
(370.8
)
 
(220.1
)
 
(15.5
)
 
(235.6
)
Settlement
(947.6
)
 
—

 
(947.6
)
 
(67.8
)
 
—

 
(67.8
)
Foreign currency exchange rate change
289.1

 
9.7

 
298.8

 
(373.6
)
 
3.7

 
(369.9
)
Benefit obligation at end of year
$
5,584.4

 
$
803.6

 
$
6,388.0

 
$
6,177.5

 
$
835.0

 
$
7,012.5

Change in plan assets:
 
 
 
 
 
 
 
 
 
 
 
Prior year fair value of assets
$
5,945.5

 
$
—

 
$
5,945.5

 
$
3,523.2

 
$
—

 
$
3,523.2

Plan assets assumed in Acquisition
—

 
—

 
—

 
2,723.6

 
—

 
2,723.6

Actual return on plan assets
608.9

 
—

 
608.9

 
366.2

 
—

 
366.2

Employer contributions
310.0

 
43.3

 
353.3

 
12.1

 
15.5

 
27.6

Actual employee contributions
0.7

 
—

 
0.7

 
0.5

 
—

 
0.5

Settlement
(947.6
)
 
—

 
(947.6
)
 
(67.8
)
 
—

 
(67.8
)
Benefits and plan expenses paid
(327.5
)
 
(43.3
)
 
(370.8
)
 
(227.6
)
 
(15.5
)
 
(243.1
)
Foreign currency exchange rate change
307.7

 
—

 
307.7

 
(384.7
)
 
—

 
(384.7
)
Fair value of plan assets at end of year
$
5,897.7

 
$
—

 
$
5,897.7

 
$
5,945.5

 
$
—

 
$
5,945.5

Funded status:
$
313.3

 
$
(803.6
)
 
$
(490.3
)
 
$
(232.0
)
 
$
(835.0
)
 
$
(1,067.0
)
Amounts recognized in the Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$
412.0

 
$
—

 
$
412.0

 
$
184.6

 
$
—

 
$
184.6

Accounts payable and other current liabilities
(4.9
)
 
(48.9
)
 
(53.8
)
 
(4.2
)
 
(51.4
)
 
(55.6
)
Pension and postretirement benefits
(93.8
)
 
(754.7
)
 
(848.5
)
 
(412.4
)
 
(783.6
)
 
(1,196.0
)
Net amounts recognized
$
313.3

 
$
(803.6
)
 
$
(490.3
)
 
$
(232.0
)
 
$
(835.0
)
 
$
(1,067.0
)
The accumulated benefit obligation for our defined benefit pension plans was approximately $5.6 billion and $6.2 billion at December 31, 2017, and December 31, 2016, respectively. The $576.7 million decrease in the net underfunded status of our aggregate pension and OPEB plans from December 31, 2016, to December 31, 2017, was primarily driven by employer contributions including the $200 million discretionary contribution to the U.S. pension plan made in the third quarter of 2017 as well as increased asset returns. Additionally, the U.S. pension plan purchased an annuity contract for a portion of the plan resulting in a decrease to our projected benefit obligation and a corresponding reduction to our plan assets.
As of December 31, 2017, our defined benefit plan in the U.K. and certain defined benefit plans in the U.S. and Canada were overfunded as a result of our ongoing de-risking strategy. Information for our defined benefit and OPEB plans that had aggregate accumulated benefit obligations and projected benefit obligations in excess of plan assets as of December 31, 2017, is as follows:
 
As of December 31, 2017
 
As of December 31, 2016
 
Pension
 
OPEB
 
Consolidated
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Accumulated benefit obligation
$
864.0

 
$
659.9

 
$
1,523.9

 
$
3,406.6

 
$
697.4

 
$
4,104.0

Projected benefit obligation
$
864.3

 
$
803.6

 
$
1,667.9

 
$
3,422.2

 
$
835.0

 
$
4,257.2

Fair value of plan assets
$
765.6

 
$
—

 
$
765.6

 
$
3,005.6

 
$
—

 
$
3,005.6
Schedule of Net Periodic Benefit Cost Not yet Recognized
Amounts recognized in AOCI not yet recognized as components of net periodic pension and OPEB cost, pretax, were as follows (retrospectively adjusted for the change to the fair value approach as described above):
 
As of December 31, 2017
 
As of December 31, 2016
 
Pension
 
OPEB
 
Consolidated
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Net actuarial loss (gain)
$
645.4

 
$
(83.3
)
 
$
562.1

 
$
798.4

 
$
(47.7
)
 
$
750.7

Net prior service cost
1.5

 
(1.6
)
 
(0.1
)
 
2.3

 
(0.1
)
 
2.2

Total not yet recognized
$
646.9

 
$
(84.9
)
 
$
562.0

 
$
800.7

 
$
(47.8
)
 
$
752.9
Schedule of Amounts Recognized in Other Comprehensive Income (Loss)
Changes in plan assets and benefit obligations recognized in OCI, pretax, were as follows (retrospectively adjusted for the change to the fair value approach as described above):
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Accumulated other comprehensive loss (income) as of December 31, 2015
$
849.3

 
$
(10.4
)
 
$
838.9

Amortization of prior service (costs) benefit
(0.7
)
 
0.1

 
(0.6
)
Amortization of net actuarial (loss) gain
(17.8
)
 
—

 
(17.8
)
Settlement
(10.5
)
 
—

 
(10.5
)
Current year actuarial loss (gain)
(25.8
)
 
(38.6
)
 
(64.4
)
Foreign currency exchange rate change
6.2

 
1.1

 
7.3

Accumulated other comprehensive loss (income) as of December 31, 2016
$
800.7

 
$
(47.8
)
 
$
752.9

Amortization of prior service (costs) benefit
(0.5
)
 
—

 
(0.5
)
Amortization of net actuarial (loss) gain
(12.2
)
 
—

 
(12.2
)
Net prior service cost
—

 
(1.6
)
 
(1.6
)
Settlement
5.4

 
2.9

 
8.3

Current year actuarial loss (gain)
(141.5
)
 
(38.7
)
 
(180.2
)
Foreign currency exchange rate change
(5.0
)
 
0.3

 
(4.7
)
Accumulated other comprehensive loss (income) as of December 31, 2017
$
646.9

 
$
(84.9
)
 
$
562.0
Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year
Amortization of AOCI expected to be recognized in net periodic pension and OPEB cost during fiscal year 2018 pretax is as follows:
 
Pension
 
OPEB
 
Consolidated
 
(In millions)
Amortization of net prior service cost (gain)
$
0.7

 
$
(0.1
)
 
$
0.6

Amortization of actuarial net loss (gain)
$
7.8

 
$
(1.7
)
 
$
6.1
Schedule of Assumptions Used
Periodic pension and OPEB cost is actuarially calculated annually for each individual plan based on data available at the beginning of each year. Assumptions used in the calculation include the settlement discount rate selected and disclosed at the end of the previous year as well as other assumptions detailed in the table below. The weighted-average rates used in determining the periodic pension and OPEB cost for the fiscal years 2017, 2016 and 2015 were as follows:
 
For the years ended
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
Pension
 
OPEB
 
Pension
 
OPEB
 
Pension
 
OPEB
Weighted-average assumptions:
 
 
 
 
 
 
 
 
 
 
 
Settlement discount rate
3.36%
 
3.76%
 
3.72%
 
3.59%
 
3.70%
 
4.15%
Rate of compensation increase
2.00%
 
N/A
 
2.00%
 
N/A
 
2.50%
 
N/A
Expected return on plan assets(1)
4.83%
 
N/A
 
5.15%
 
N/A
 
5.46%
 
N/A
Health care cost trend rate
N/A
 
Ranging ratably from 7.0% in 2017 to 4.5% in 2037
 
N/A
 
Ranging ratably from 7.7% in 2016 to 4.5% in 2028
 
N/A
 
Ranging ratably from 7.7% in 2015 to 4.5% in 2028

(1)
We develop our EROA assumptions annually with input from independent investment specialists including our actuaries, investment consultants, plan trustee and other specialists. Each EROA assumption is based on historical data, including historical returns, historical market rates and is calculated for each plan's individual asset class. The calculation includes inputs for interest, inflation, credit, and risk premium (active investment management) rates and fees paid to service providers. We consider our EROA to be a significant management estimate. Any material changes in the inputs to our methodology used in calculating our EROA could have a significant impact on our reported defined benefit pension plans' expense.
Benefit obligations are actuarially calculated annually at the end of each year based on the assumptions detailed in the table below. Obligations under the OPEB plans are determined by the application of the terms of medical, dental, vision and life insurance plans, together with relevant actuarial assumptions and heath care cost trend rates. The weighted-average rates used in determining the projected benefit obligation for defined pension plans and the accumulated postretirement benefit obligation for OPEB plans, as of December 31, 2017, and December 31, 2016, were as follows:
 
As of December 31, 2017
 
As of December 31, 2016
 
Pension
 
OPEB
 
Pension
 
OPEB
Weighted-average assumptions:
 
 
 
 
 
 
 
Settlement discount rate
3.01%
 
3.34%
 
3.36%
 
3.76%
Rate of compensation increase
2.00%
 
N/A
 
2.00%
 
N/A
Health care cost trend rate
N/A
 
Ranging ratably from 6.75% in 2018 to 4.5% in 2037
 
N/A
 
Ranging ratably from 7.0% in 2017 to 4.5% in 2037

The change to the weighted-average discount rates used for our defined benefit pension plans and postretirement plans at December 31, 2017, from December 31, 2016, largely resulted from increased demand for corporate bonds resulting in lower yields through 2017.
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates
Assumed health care cost trend rates have a significant effect on the amounts reported for OPEB health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects on related OPEB plans:
 
1% point
increase
(unfavorable)
 
1% point
decrease
favorable
 
(In millions)
Effect on total of service and interest cost components
$
(3.2
)
 
$
2.8

Effect on postretirement benefit obligations
$
(60.2
)
 
$
51.9
Schedule of Defined Benefit Plan, Assets Target and Actual Allocations
The following compares target asset allocation percentages with actual asset allocations on a weighted-average asset basis at December 31, 2017:
 
Target
allocations
 
Actual
allocations
Equities
19.7%
 
21.3%
Fixed income
65.9%
 
64.1%
Hedge funds
2.1%
 
2.1%
Real estate
2.6%
 
2.5%
Annuities
3.0%
 
3.0%
Other
6.7%
 
7.0%
Schedule of Fair Value of Plan Assets by Measurement
The following presents our fair value hierarchy for our defined benefit pension plan assets excluding investments using the NAV per share practical expedient (in millions):
 
 
 
Fair value measurements as of December 31, 2017
 
Total at
December 31, 2017
 
Quoted prices
in active
markets
(Level 1)
 
Significant
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Cash and cash equivalents
 
 
 
 
 
 
 
Cash
$
299.1

 
$
299.1

 
$
—

 
$
—

Trades awaiting settlement
26.4

 
26.4

 
—

 
—

Bank deposits, short-term bills and notes
41.2

 
—

 
41.2

 
—

Debt


 
 
 
 
 
 
Government securities
1,873.6

 
—

 
1,873.6

 
—

Corporate debt securities
1,515.3

 
—

 
1,515.3

 
—

Interest and inflation linked assets
1,248.3

 
—

 
1,193.7

 
54.6

Collateralized debt securities
10.6

 
—

 
—

 
10.6

Equities


 
 
 
 
 
 
Common stock
697.1

 
695.9

 
1.2

 
—

Investment funds
 
 
 
 
 
 
 
Private equity
24.2

 
—

 
—

 
24.2

Annuities


 
 
 
 
 
 
Buy-in annuities
178.9

 
—

 
—

 
178.9

Other


 
 
 
 
 
 
Repurchase agreements
(1,835.5
)
 
(1,835.5
)
 
—

 
—

Recoverable taxes
0.5

 
0.5

 
—

 
—

Venture capital
0.3

 
—

 
—

 
0.3

Private Equity
200.4

 
—

 
—

 
200.4

Total fair value of investments excluding NAV per share practical expedient
$
4,280.4


$
(813.6
)

$
4,625.0


$
469.0


The following presents our total fair value of plan assets including the NAV per share practical expedient for our defined benefit pension plan assets:
 
Total at
December 31, 2017
 
(In millions)
Fair value of investments excluding NAV per share practical expedient
$
4,280.4

Fair value of investments using NAV per share practical expedient
 
Debt funds
913.3

Equity funds
554.9

Real estate funds
50.0

Private equity funds
99.1

Total fair value of plan assets
$
5,897.7

The following presents our fair value hierarchy for our defined benefit pension plan assets excluding investments using the NAV per share practical expedient (in millions):
 
 
 
Fair value measurements as of December 31, 2016
 
Total at
December 31, 2016
 
Quoted prices
in active
markets
(Level 1)
 
Significant
observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Cash and cash equivalents
 
 
 
 
 
 
 
Cash
$
237.0

 
$
237.0

 
$
—

 
$
—

Trades awaiting settlement
7.0

 
7.0

 
—

 
—

Bank deposits, short-term bills and notes
76.9

 
—

 
76.9

 
—

Debt


 
 
 
 
 
 
Government securities
2,242.8

 
—

 
2,242.8

 
—

Corporate debt securities
997.9

 
—

 
997.8

 
0.1

Interest and inflation linked assets
1,011.7

 
—

 
963.3

 
48.4

Collateralized debt securities
21.2

 
—

 
—

 
21.2

Equities


 
 
 
 
 
 
Common stock
697.2

 
695.5

 
1.7

 
—

Other


 
 
 
 
 
 
Repurchase agreements
(1,693.1
)
 
(1,693.1
)
 
—

 
—

Recoverable taxes
0.5

 
0.5

 
—

 
—

Venture capital
0.3

 
—

 
—

 
0.3

Private equity
267.4

 
—

 
—

 
267.4

Total fair value of investments excluding NAV per share practical expedient
$
3,866.8


$
(753.1
)

$
4,282.5


$
337.4





The following presents our fair value hierarchy including the NAV per share practical expedient for our defined benefit pension plan assets:
 
Total at
December 31, 2016
 
(In millions)
Fair value of investments excluding NAV per share practical expedient
$
3,866.8

Fair value of investments using NAV per share practical expedient
 
Debt funds
1,166.2

Equity funds
778.3

Real estate funds
45.3

Hedge funds of funds
3.4

Private equity
85.5

Total fair value of plan assets
$
5,945.5
Schedule of Effect of Significant Unobservable Inputs Changes in Defined Benefit Pension Plan Assets
The following presents our Level 3 Rollforward for our defined pension plan assets excluding investments using the NAV per share practical expedient:
 
Amount
 
(In millions)
Balance at December 31, 2015
$
247.2

Balance assumed in Acquisition
45.8

Total gain or loss (realized/unrealized):
 
Realized gain (loss)
0.2

Unrealized gain (loss) included in AOCI
22.3

Purchases, issuances, settlements
51.7

Transfers in/(out) of Level 3
16.6

Foreign exchange translation (loss)/gain
(46.4
)
Balance at December 31, 2016
$
337.4

Total gain or loss (realized/unrealized):
 
Realized gain (loss)
0.6

Unrealized gain (loss) included in AOCI
10.2

Purchases, issuances, settlements
94.9

Transfers in/(out) of Level 3
—

Foreign exchange translation (loss)/gain
25.9

Balance at December 31, 2017
$
469.0
Schedule of Expected Benefit Payments
Expected future benefit payments for defined benefit pension and OPEB plans, based on foreign exchange rates at December 31, 2017, are as follows:
Expected benefit payments
 
Pension
 
OPEB
 
 
(In millions)
2018
 
$
302.4

 
$
49.0

2019
 
$
287.3

 
$
49.5

2020
 
$
289.9

 
$
49.9

2021
 
$
291.5

 
$
49.8

2022
 
$
292.7

 
$
49.5

2023-2027
 
$
1,527.9

 
$
247.2
Schedule of Fair Value Measurement of Corporate Invested Plan Assets
.