Nonpension Postretirement and Postemployment Benefits

12 Months Ended

Dec. 28, 2019

Nonpension Postretirement And Postemployment Benefits [Abstract]

Nonpension Postretirement And Postemployment Benefits [Text Block]

NONPENSION POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

Postretirement

The Company sponsors a number of plans to provide health care and other welfare benefits to retired employees in the United States and Canada, who have met certain age and service requirements. The majority of these plans are funded or unfunded defined benefit plans, although the Company does participate in a limited number of multiemployer or other defined contribution plans for certain employee groups. The Company contributes to voluntary employee benefit association (VEBA) trusts to fund certain U.S. retiree health and welfare benefit obligations. The Company uses a December 31 measurement date for these plans and, when necessary, adjusts for plan contributions and significant events between December 31 and its fiscal year-end.

Obligations and funded status

The aggregate change in accumulated postretirement benefit obligation, plan assets, and funded status is presented in the following tables.

(millions)	2019			2018
Change in accumulated benefit obligation
Beginning of year	$	1,069		$	1,190
Service cost	15			18
Interest cost	37			36
Actuarial (gain) loss	59			(105		)
Benefits paid	(60		)	(67		)
Curtailments	(6		)	—
Amendments	—			—
Foreign currency adjustments	2			(3		)
End of year	$	1,116		$	1,069
Change in plan assets
Fair value beginning of year	$	1,140		$	1,292
Actual return on plan assets	282			(91		)
Employer contributions	18			17
Benefits paid	(76		)	(78		)
Fair value end of year	$	1,364		$	1,140
Funded status	$	248		$	71
Amounts recognized in the Consolidated Balance Sheet consist of
Other non-current assets	$	283		$	107
Other current liabilities	(2		)	(2		)
Other liabilities	(33		)	(34		)
Net amount recognized	$	248		$	71
Amounts recognized in accumulated other comprehensive income consist of
Prior service credit	(59		)	(68		)
Net amount recognized	$	(59	)	$	(68	)

Expense

Components of postretirement benefit expense (income) were:

(millions)	2019			2018			2017
Service cost	$	15		$	18		$	18
Interest cost	37			36			37
Expected return on plan assets	(86		)	(94		)	(98		)
Amortization of unrecognized prior service credit	(9		)	(9		)	(9		)
Recognized net (gain) loss	(137		)	81			(90		)
Net periodic benefit cost	(180		)	32			(142		)
Curtailment	(6		)	—			3
Postretirement benefit expense:
Defined benefit plans	(186		)	32			(139		)
Defined contribution plans	11			11			16
Total	$	(175	)	$	43		$	(123	)

The estimated prior service credit that will be amortized from accumulated other comprehensive income into nonpension postretirement benefit expense over the next fiscal year is expected to be approximately $9 million.

Assumptions

The weighted-average actuarial assumptions used to determine benefit obligations were:

	2019		2018		2017
Discount rate	3.3	%	4.3	%	3.6	%

The weighted-average actuarial assumptions used to determine annual net periodic benefit cost were:

	2019		2018		2017
Discount rate	4.0	%	3.6	%	4.0	%
Long-term rate of return on plan assets	7.3	%	7.5	%	8.5	%

The Company determines the overall discount rate and expected long-term rate of return on VEBA trust obligations and assets in the same manner as that described for pension trusts in Note 10.

The assumed U.S. health care cost trend rate is 5.25% for 2020, decreasing 0.25% annually to 4.5% by the year 2023 and remaining at that level thereafter. These trend rates reflect the Company’s historical experience and management’s expectations regarding future trends. A one percentage point change in assumed health care cost trend rates would have the following effects:

(millions)	One percentage point increase		One percentage point decrease
Effect on total of service and interest cost components	$	3	$	(2	)
Effect on postretirement benefit obligation	77		(66		)

Plan assets

The fair value of Plan assets as of December 28, 2019 summarized by level within fair value hierarchy described in Note 10, are as follows:

(millions)	Total Level 1		Total Level 2		Total Level 3		Total NAV (practical expedient)(a)		Total
Cash and cash equivalents	$	8	$	1	$	—	$	—	$	9
Corporate stock, common:
Domestic	242		—		—		—		242
International	11		—		—		—		11
Mutual funds:
Domestic equity	—		35		—		—		35
International equity	—		—		—		—		—
Domestic debt	—		53		—		—		53
Collective trusts:
Domestic equity	—		—		—		286		286
International equity	—		—		—		293		293
Limited partnerships	—		—		—		124		124
Bonds, corporate	—		136		—		—		136
Bonds, government	—		77		—		—		77
Bonds, other	—		9		—		—		9
Real estate	—		—		—		88		88
Other	—		1		—		—		1
Total	$	261	$	312	$	—	$	791	$	1,364

(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The fair value of Plan assets at December 29, 2018 are summarized as follows:

(millions)	Total Level 1		Total Level 2		Total Level 3		Total NAV (practical expedient)(a)		Total
Cash and cash equivalents	$	2	$	1	$	—	$	—	$	3
Corporate stock, common:
Domestic	108		—		—		—		108
International	5		1		—		—		6
Mutual funds:
Domestic equity	—		37		—		—		37
International equity	—		—		—		—		—
Domestic debt	—		42		—		—		42
Collective trusts:
Domestic equity	—		—		—		281		281
International equity	—		—		—		228		228
Limited partnerships	—		—		—		199		199
Bonds, corporate	—		95		—		—		95
Bonds, government	—		50		—		—		50
Bonds, other	—		7		—		83		90
Other	—		1		—		—		1
Total	$	115	$	234	$	—	$	791	$	1,140

(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The Company’s asset investment strategy for its VEBA trusts is consistent with that described for its pension trusts in Note 10. The current target asset allocation is 67% equity securities, 24% debt securities, and 9% real estate. The Company currently expects to contribute approximately $19 million to its VEBA trusts during 2020.

There were no Level 3 assets during 2019 and 2018.

Postemployment

Under certain conditions, the Company provides benefits to former or inactive employees, including salary continuance, severance, and long-term disability, in the United States and several foreign locations. The Company’s postemployment benefit plans are unfunded. Actuarial assumptions used are generally consistent with those presented for pension benefits in Note 10. During 2019, the Company updated its incidence rate assumption based on a review of historical experience, resulting in an actuarial loss of approximately $7 million.

The aggregate change in accumulated postemployment benefit obligation and the net amount recognized were:

(millions)	2019			2018
Change in accumulated benefit obligation
Beginning of year	$	42		$	43
Service cost	3			3
Interest cost	2			1
Actuarial (gain)loss	8			3
Benefits paid	(7		)	(8		)
Amendments	—			—
Foreign currency adjustments	—			—
End of year	$	48		$	42
Funded status	$	(48	)	$	(42	)
Amounts recognized in the Consolidated Balance Sheet consist of
Other current liabilities	$	(7	)	$	(5	)
Other liabilities	(41		)	(37		)
Net amount recognized	$	(48	)	$	(42	)
Amounts recognized in accumulated other comprehensive income consist of
Net prior service cost	$	3		$	4
Net experience gain	(22		)	(38		)
Net amount recognized	$	(19	)	$	(34	)

Components of postemployment benefit expense were:

(millions)	2019			2018			2017
Service cost	$	3		$	3		$	6
Interest cost	2			1			3
Amortization of unrecognized prior service cost	1			1			1
Recognized net loss	(5		)	(5		)	—
Net periodic benefit cost	$	1		$	—		$	10
Settlement cost	(3		)	—			—
Postemployment benefit expense	$	(2	)	$	—		$	10

The estimated net experience gain and net prior service cost that will be amortized from accumulated other comprehensive income into postemployment benefit expense over the next fiscal year is $3 million and $1 million, respectively.

Benefit payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

(millions)	Postretirement		Postemployment
2020	$	66	$	8
2021	67		6
2022	67		5
2023	68		5
2024	68		5
2025-2029	337		20