XML 48 R29.htm IDEA: XBRL DOCUMENT v2.4.0.8
Employee Benefits (Tables)
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and post-retirement plans
A summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and postretirement plans as of December 31, is as follows (benefits paid in the table below include only those amounts contributed directly to or paid directly from plan assets): 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2013
 
2012
 
2013
 
2012
Net benefit obligation at beginning of year
$
2,171

 
$
1,834

 
$
129

 
$
129

Service cost
10

 
24

 
2

 
3

Interest cost
91

 
93

 
5

 
5

Plan participants’ contributions
—

 
1

 
4

 
5

Actuarial (gain) loss
(178
)
 
287

 
(13
)
 
3

Gross benefits paid
(77
)
 
(71
)
 
(13
)
 
(17
)
Foreign currency effect
8

 
11

 
—

 
—

Curtailment 1
(26
)
 
—

 
(11
)
 
—

Other adjustments
5

 
(8
)
 
—

 
1

Net benefit obligation at end of year
2,004

 
2,171

 
103

 
129

Fair value of plan assets at beginning of year
1,851

 
1,505

 
—

 
—

Actual return on plan assets
281

 
212

 
—

 
—

Employer contributions
27

 
193

 
9

 
12

Plan participants’ contributions
—

 
1

 
4

 
5

Gross benefits paid
(77
)
 
(71
)
 
(13
)
 
(17
)
Foreign currency effect
6

 
11

 
—

 
—

Fair value of plan assets at end of year
2,088

 
1,851

 
—

 
—

Funded status
$
84

 
$
(320
)
 
$
(103
)
 
$
(129
)
Amounts recognized in consolidated balance sheets:
 
 
 
 
 
 
 
Non-current assets
$
261

 
$
98

 
$
—

 
$
—

Current liabilities
(7
)
 
(7
)
 
(9
)
 
(11
)
Non-current liabilities
(170
)
 
(411
)
 
(94
)
 
(118
)

$
84

 
$
(320
)
 
$
(103
)
 
$
(129
)
Accumulated benefit obligation
$
2,004

 
$
2,093

 
 
 
 
Plans with accumulated benefit obligation in excess of the fair value of plan assets:
 
 
 
 
 
 
 
Projected benefit obligation
$
176

 
$
1,773

 
 
 
 
Accumulated benefit obligation
$
158

 
$
1,756

 
 
 
 
Fair value of plan assets
$
—

 
$
1,356

 
 
 
 
Amounts recognized in accumulated other comprehensive loss, net of tax:
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
227

 
$
455

 
$
(11
)
 
$
(3
)
Prior service credit
1

 
(4
)
 
(1
)
 
(1
)
Total recognized
$
228

 
$
451

 
$
(12
)
 
$
(4
)

1 
The curtailment gain for our retirement plans relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans relates to the sale of MHE on March 22, 2013.

Components of net periodic cost for defined benefit plans and post-retirement healthcare and other benefits plan
A summary of net periodic benefit cost for our retirement and postretirement plans for the years ended December 31, is as follows: 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost
$
10

 
$
24

 
$
67

 
$
2

 
$
3

 
$
3

Interest cost
91

 
93

 
99

 
5

 
5

 
6

Expected return on assets
(129
)
 
(124
)
 
(127
)
 
—

 
—

 
—

Amortization of:

 

 

 

 

 

Actuarial loss
26

 
32

 
31

 
—

 
—

 
—

Prior service credit
5

 
(1
)
 
—

 
(1
)
 
(1
)
 
(1
)
Curtailment 1
(8
)
 
—

 
—

 
(12
)
 
—

 
—

Net periodic benefit cost
$
(5
)
 
$
24

 
$
70

 
$
(6
)
 
$
7

 
$
8


1 
The curtailment gain for our retirement plans relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans relates to the sale of MHE on March 22, 2013.
Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax
Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax for the years ended December 31, are as follows: 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Net actuarial (gain) loss
$
(213
)
 
$
116

 
$
65

 
$
(8
)
 
$
2

 
$
(12
)
Recognized actuarial gain
(15
)
 
(20
)
 
(18
)
 
—

 
—

 
—

Prior service credit
5

 
2

 
—

 
—

 
1

 
1

Total recognized
$
(223
)
 
$
98

 
$
47

 
$
(8
)
 
$
3

 
$
(11
)
Assumptions
Assumptions
 
Retirement Plans
 
Postretirement Plans
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Benefit obligation: 1
 
 
 
 
 
 
 
 
 
 
 
Discount rate
5.0
%
 
4.1
%
 
5.1
%
 
4.20
%
 
3.45
%
 
4.45
%
Compensation increase factor
N/A

 
N/A

 
4.5
%
 
 
 
 
 
 
Net periodic cost:
 
 
 
 
 
 
 
 
 
 
 
Weighted-average healthcare cost rate 2
 
 
 
 
 
 
7.0
%
 
7.5
%
 
8.0
%
Discount rate - U.S. plan 3
4.1
%
 
5.1
%
 
5.4
%
 
3.45
%
 
4.45
%
 
4.65
%
Discount rate - U.K. plan 3
4.8
%
 
5.1
%
 
5.5
%
 
 
 
 
 
 
Compensation increase factor - U.S. plan
N/A

 
4.5
%
 
4.5
%
 
 
 
 
 
 
Compensation increase factor - U.K. plan
5.75
%
 
5.85
%
 
6.25
%
 
 
 
 
 
 
Return on assets 4
7.25
%
 
7.75
%
 
8.0
%
 
 
 
 
 
 
1 
These assumptions for the retirement plans relate to our U.S. ERP and a compensation increase factor is no longer applicable because there are no further salary increases as the U.S. ERP was frozen in April 2012.
2 
The assumed weighted-average healthcare cost trend rate will decrease ratably from 7% in 2013 to 5% in 2020 and remain at that level thereafter. Assumed healthcare cost trends have an effect on the amounts reported for the healthcare plans. A one percentage point change in assumed healthcare cost trend creates the following effects:
(in millions)
1% point
increase
 
1% point
decrease
Effect on postretirement obligation
$
4

 
$
(4
)

3 
Effective January 1, 2014, we changed our discount rate assumption on our U.S. retirement plans to 5.0% from 4.1% in 2013 and changed our discount rate assumption on our U.K. plan to 4.5% from 4.8% in 2013.
4 
The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term. Effective January 1, 2014, we changed our return on assets assumption to 7.125% from 7.25% for the U.S. plan in 2013 and to 6.75% from 7.25% for the U.K. plan in 2013.
Effects created by one percentage point change in assumed healthcare cost trend
A one percentage point change in assumed healthcare cost trend creates the following effects:
(in millions)
1% point
increase
 
1% point
decrease
Effect on postretirement obligation
$
4

 
$
(4
)
Information about the expected cash flows for retirement and post-retirement plans and impact of the Medicare subsidy
Information about the expected cash flows for our retirement and postretirement plans and the impact of the Medicare subsidy is as follows: 
(in millions)
 
 
Postretirement Plans 2
 
Retirement 1
Plans
 
Gross
payments
 
Retiree
contributions
 
Medicare
subsidy
 
Net
payments
2014
$
76

 
$
14

 
$
(5
)
 
$
(1
)
 
$
8

2015
79

 
14

 
(5
)
 
(1
)
 
8

2016
84

 
15

 
(6
)
 
(1
)
 
8

2017
88

 
15

 
(6
)
 
(1
)
 
8

2018
92

 
15

 
(7
)
 
(1
)
 
7

2019-2023
512

 
79

 
(44
)
 
(3
)
 
32

1 
Reflects the total benefits expected to be paid from the plans or from our assets including both our share of the benefit cost and the participants’ share of the cost.
2 
Reflects the total benefits expected to be paid from our assets.
Fair value of defined benefit plans assets by asset class
The fair value of our defined benefit plans assets as of December 31, 2013 and 2012, by asset class is as follows:
(in millions)
December 31, 2013
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash and short-term investments, and other
$
68

 
$
20

 
$
48

 
$
—

Equity securities:

 

 

 

U.S. indexes 1
514

 
145

 
369

 
—

U.S. growth and value
373

 
325

 
48

 
—

U.K.
183

 
101

 
82

 
—

International, excluding U.K.
227

 
131

 
96

 
—

Fixed income securities:

 

 

 

Long duration strategy 2
517

 
—

 
517

 
—

Intermediate duration securities
11

 
—

 
11

 
—

Agency mortgage backed securities
7

 
—

 
7

 
—

Asset backed securities
16

 
—

 
16

 
—

Non-agency mortgage backed securities 3
45

 
—

 
45

 
—

U.K. 4
66

 
—

 
66

 
—

International, excluding U.K.
61

 
—

 
61

 
—

Total
$
2,088

 
$
722

 
$
1,366

 
$
—

(in millions)
December 31, 2012
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash and short-term investments, and other
$
180

 
$
2

 
$
178

 
$
—

Equity securities:

 

 

 

U.S. indexes 1
399

 
119

 
280

 
—

U.S. growth and value
344

 
307

 
37

 
—

U.K.
154

 
85

 
69

 
—

International, excluding U.K.
225

 
137

 
87

 
1

Fixed income securities:

 

 

 

Long duration strategy 2
370

 
—

 
370

 
—

Intermediate duration securities
3

 
—

 
3

 
—

Agency mortgage backed securities
13

 
—

 
13

 
—

Asset backed securities
10

 
—

 
10

 
—

Non-agency mortgage backed securities 3
52

 
—

 
52

 
—

U.K. 4
41

 
—

 
41

 
—

International, excluding U.K.
43

 
—

 
43

 
—

Real estate:

 

 

 

U.K. 5
17

 
—

 
—

 
17

Total
$
1,851

 
$
650

 
$
1,183

 
$
18

1 
Includes securities that are tracked in the following indexes: S&P 500, S&P MidCap 400, S&P MidCap 400 Growth and S&P Smallcap 600.
2 
Includes securities that are investment grade obligations of issuers in the U.S.
3 
Includes U.S. mortgage-backed securities that are not backed by the U.S. government.
4 
Includes securities originated by the government of and other issuers from the U.K.
5 
Includes a fund which holds real estate properties in the U.K.
Information of plan assets using significant unobservable inputs
The following tables details further information our plan assets where we have used significant unobservable inputs (Level 3): 
(in millions)
 
Beginning balance as of December 31, 2012
$
18

Capital distributions
(18
)
Ending balance as of December 31, 2013
$
—