XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Defined Contribution Savings Plans
The Company sponsors several defined contribution savings plans in the United States and certain foreign subsidiaries that provide certain eligible employees of the Company an opportunity to accumulate funds for retirement. The Company matches portions of the contributions of participating employees on the basis specified by the plans. The Company’s contributions to these plans were $32 million, $33 million and $36 million during 2019, 2018 and 2017, respectively.
Defined Benefit Pension Plans
The Company sponsors defined benefit pension plans in the United States and in certain foreign subsidiaries with some plans offering participation in the plans at the employees’ option. Under these plans, benefits are based on an employee’s years of credited service and a percentage of final average compensation. However, the majority of the plans are closed to new employees and participants are no longer accruing benefits.
The funded status of the defined benefit pension plans is recognized on the Consolidated Balance Sheets and the gains or losses and prior service costs or credits that arise during the period, but are not recognized as components of net periodic benefit cost, are recognized as a component of accumulated other comprehensive loss, net of tax.
The components of net periodic (benefit) cost consisted of the following:
 
Year Ended December 31,
 
2019
 
2018
 
2017
Service cost (a)
$
5

 
$
6

 
$
5

Interest cost (b)
21

 
19

 
19

Expected return on plan assets (b)
(30
)
 
(33
)
 
(30
)
Amortization of unrecognized amounts (b)
7

 
7

 
8

Net periodic (benefit) cost
$
3

 
$
(1
)
 
$
2


__________ 
(a) 
For the year ended December 31, 2019, $4 million and $1 million were included in operating expenses and selling, general and administrative expenses, respectively. For the year ended December 31, 2018, $4 million and $2 million were included in operating expenses and selling, general and administrative expenses, respectively.
(b) 
Included in selling, general and administrative expenses.
The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2020 is $7 million, which consists primarily of net actuarial losses.
The Company uses a measurement date of December 31 for its pension plans. The funded status of the pension plans were as follows:
 
As of December 31,
Change in Benefit Obligation
2019
 
2018
Benefit obligation at end of prior year
$
722

 
$
779

Service cost
5

 
6

Interest cost
21

 
19

Actuarial (gain) loss
87

 
(32
)
Currency translation adjustment
13

 
(24
)
Net benefits paid
(27
)
 
(26
)
Benefit obligation at end of current year
$
821

 
$
722

 
 
 
 
Change in Plan Assets
 
 
 
Fair value of assets at end of prior year
$
549

 
$
614

Actual return on plan assets
91

 
(29
)
Employer contributions
21

 
11

Currency translation adjustment
14

 
(21
)
Net benefits paid
(26
)
 
(26
)
Fair value of assets at end of current year
$
649

 
$
549


 
As of December 31,
Funded Status
2019
 
2018
Classification of net balance sheet assets (liabilities):
 
 
 
Non-current assets
$
20

 
$
18

Current liabilities
(4
)
 
(4
)
Non-current liabilities
(188
)
 
(187
)
Net funded status
$
(172
)
 
$
(173
)

The following assumptions were used to determine pension obligations and pension costs for the principal plans in which the Company’s employees participated:
 
 
For the Year Ended December 31,
U.S. Pension Benefit Plans
2019
 
2018
 
2017
Discount rate:
 
 
 
 
 
 
Net periodic benefit cost
4.15
%
 
3.50
%
 
3.90
%
 
Benefit obligation
3.10
%
 
4.15
%
 
3.50
%
Long-term rate of return on plan assets
7.00
%
 
7.00
%
 
7.00
%
 
 
 
 
 
 
 
Non-U.S. Pension Benefit Plans
 
 
 
 
 
Discount rate:
 
 
 
 
 
 
Net periodic benefit cost
2.75
%
 
2.55
%
 
2.45
%
 
Benefit obligation
1.95
%
 
2.75
%
 
2.55
%
Long-term rate of return on plan assets
4.50
%
 
4.50
%
 
4.70
%

To select discount rates for its defined benefit pension plans, the Company uses a modeling process that involves matching the expected cash outflows of such plans, to yield curves constructed from portfolios of AA-rated fixed-income debt instruments. The Company uses the average yields of the hypothetical portfolios as a discount rate benchmark.
The Company’s expected rate of return on plan assets of 7.00% and 4.50% for the U.S. plans and non-U.S. plans, respectively, used to determine pension obligations and pension costs, are long-term rates based on historic plan asset returns in individual jurisdictions, over varying long-term periods combined with current market expectations and broad asset mix considerations.
As of December 31, 2019, plans with benefit obligations in excess of plan assets had accumulated benefit obligations of $466 million and plan assets of $276 million. As of December 31, 2018, plans with benefit obligations in excess of plan assets had accumulated benefit obligations of $423 million and plan assets of $234 million. The accumulated benefit obligation for all plans was $811 million and $713 million as of December 31, 2019 and 2018, respectively. The Company expects to contribute approximately $10 million to the U.S. plans and $1 million to the non-U.S. plans in 2020.
The Company’s defined benefit pension plans’ assets are invested primarily in mutual funds and may change in value due to various risks, such as interest rate and credit risk and overall market volatility. Due to the level of risk associated with investment securities, it is reasonably possible that changes in the values of the pension plans’ investment securities will occur in the near term and that such changes would materially affect the amounts reported in the Company’s financial statements.
The defined benefit pension plans’ investment goals and objectives are managed by the Company or Company-appointed and member-appointed trustees with consultation from independent investment advisors. While the objectives may vary slightly by country and jurisdiction, collectively the Company seeks to produce returns on pension plan investments, which are based on levels of liquidity and investment risk that the Company believes are prudent and reasonable, given prevailing capital market conditions. The pension plans’ assets are managed in the long-term interests of the participants and the beneficiaries of the plans. A suitable strategic asset allocation benchmark is determined for each plan to maintain a diversified portfolio, taking into account government requirements, if any, regarding unnecessary investment risk and protection of pension plans’ assets. The Company believes that diversification of the pension plans’ assets is an important investment strategy to provide reasonable assurance that no single security or class of securities will have a disproportionate impact on the pension plans. As such, the Company allocates assets
among traditional equity, fixed income (government issued securities, corporate bonds and short-term cash investments) and other investment strategies.
The equity component’s purpose is to provide a total return that will help preserve the purchasing power of the assets. The pension plans hold various mutual funds that invest in equity securities and are diversified among funds that invest in large cap, small cap, growth, value and international stocks as well as funds that are intended to “track” an index, such as the S&P 500. The equity investments in the portfolios will represent a greater assumption of market volatility and risk as well as provide higher anticipated total return over the long term. The equity component is expected to approximate 40%-60% of the plans’ assets.
The purpose of the fixed income component is to provide a deflation hedge, to reduce the overall volatility of the pension plans’ assets in relation to the liability and to produce current income. The pension plans hold mutual funds that invest in securities issued by governments, government agencies and corporations. The fixed income component is expected to approximate 40%-60% of the plans’ assets.
The following table presents the defined benefit pension plans’ assets measured at fair value, as of December 31:
 
2019
Asset Class
Level 1
 
Level 2
 
Total
Cash equivalents and short-term investments
$
16

 
$
54

 
$
70

U.S. equities
100

 
52

 
152

Non-U.S. equities
59

 
99

 
158

Government bonds
4

 
3

 
7

Corporate bonds
96

 
20

 
116

Other assets
2

 
144

 
146

Total assets
$
277

 
$
372

 
$
649

 
2018
Asset Class
Level 1
 
Level 2
 
Total
Cash equivalents and short-term investments
$
10

 
$
25

 
$
35

U.S. equities
82

 
42

 
124

Non-U.S. equities
49

 
80

 
129

Real estate
—

 
17

 
17

Government bonds
3

 
8

 
11

Corporate bonds
89

 
31

 
120

Other assets
2

 
111

 
113

Total assets
$
235

 
$
314

 
$
549

The Company estimates that future benefit payments from plan assets will be $28 million, $28 million, $30 million, $31 million, $31 million and $175 million for 2020, 2021, 2022, 2023, 2024 and 2025 to 2029, respectively.
Multiemployer Plans
The Company contributes to a number of multiemployer plans under the terms of collective-bargaining agreements that cover a portion of its employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects: (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; (iii) if the Company elects to stop participating in a multiemployer plan, it may be required to contribute to such plan an amount based on the under-funded status of the plan; and (iv) the Company has no involvement in the management of the multiemployer plans’ investments. For the years ended December 31, 2019, 2018 and 2017, the Company contributed a total of $9 million in each of the periods to multiemployer plans.