XML 60 R28.htm IDEA: XBRL DOCUMENT v3.22.0.1
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Defined Contribution Savings Plans
We sponsor several defined contribution savings plans in the United States and certain foreign subsidiaries that provide certain of our eligible employees an opportunity to accumulate funds for retirement. We match portions of the contributions of participating employees on the basis specified by the plans. Our contributions to these plans were $22 million, $23 million and $32 million during 2021, 2020 and 2019, respectively.
Defined Benefit Pension Plans
We sponsor 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,
202120202019
Service cost (a)
$6 $5 $5 
Interest cost (b)
12 17 21 
Expected return on plan assets (b)
(35)(31)(30)
Amortization of unrecognized amounts (b)
9 9 7 
Net periodic (benefit) cost$(8)$— $3 
__________ 
(a)For the year ended December 31, 2021, $4 million and $2 million were included in operating expenses and selling, general and administrative expenses, respectively. For the year ended December 31, 2020 and 2019, $4 million and $1 million were included in operating expenses and selling, general and administrative expenses, in each period.
(b)Included in selling, general and administrative expenses.
We use a measurement date of December 31 for our pension plans. The funded status of the pension plans were as follows:
As of December 31,
Change in Benefit Obligation20212020
Benefit obligation at end of prior year$926 $821 
Service cost6 5 
Interest cost12 17 
Actuarial (gain) loss(17)84 
Plan amendments(3)— 
Currency translation adjustment
(12)26 
Net benefits paid(31)(27)
Benefit obligation at end of current year$881 $926 
Change in Plan Assets
Fair value of assets at end of prior year$722 $649 
Actual return on plan assets71 71 
Employer contributions16 14 
Currency translation adjustment
(5)14 
Net benefits paid(32)(26)
Fair value of assets at end of current year$772 $722 
Amounts recognized in the statement of financial position consist of the following:
As of December 31,
Funded Status20212020
Classification of net balance sheet assets (liabilities):
Non-current assets
$50 $7 
Current liabilities
(5)(4)
Non-current liabilities
(154)(207)
Net funded status
$(109)$(204)
The following assumptions were used to determine pension obligations and pension costs for the principal plans in which our employees participated:
For the Year Ended December 31,
U.S. Pension Benefit Plans202120202019
Discount rate:
Net periodic benefit cost2.25 %3.10 %4.15 %
Benefit obligation2.67 %2.25 %3.10 %
Long-term rate of return on plan assets6.75 %7.00 %7.00 %
Non-U.S. Pension Benefit Plans
Discount rate:
Net periodic benefit cost1.40 %1.95 %2.75 %
Benefit obligation1.83 %1.40 %1.95 %
Long-term rate of return on plan assets3.71 %3.80 %4.50 %
To select discount rates for our defined benefit pension plans, we use 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. We use the average yields of the hypothetical portfolios as a discount rate benchmark.
Our expected rate of return on plan assets of 6.75% and 3.71% 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, 2021 and 2020, plans with projected benefit obligations in excess of plan assets had projected benefit obligations of $453 million and $518 million, respectively, and plan assets of $297 million and $307 million, respectively. As of December 31, 2021 and 2020, plans with accumulated benefit obligations in excess of plan assets had accumulated benefit obligations of $453 million and $509 million, respectively, and plan assets of $303 million and $307 million, respectively. The accumulated benefit obligation for all plans was $872 million and $916 million as of December 31, 2021 and 2020, respectively. We expect to contribute approximately $1 million to the U.S. plans and $4 million to the non-U.S. plans in 2022.
Our 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 our financial statements.
The defined benefit pension plans’ investment goals and objectives are managed by us or Company-appointed and member-appointed trustees with consultation from independent investment advisors. While the objectives may vary slightly by country and jurisdiction, collectively we seek to produce returns on pension plan investments, which are based on levels of liquidity and investment risk that we believe 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. We believe 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, we allocate 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 35%-55% 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 35%-55% of the plans’ assets.
The purpose of the alternative investment component is to provide diversification and risk reduction through less correlated investment strategies with the goal of enhanced returns and downside protection. Alternative strategies will not be used if they are designed solely to enhance return and/or employ significant leverage. Diversification of asset categories, investment styles and managers is central to managing investment risk. The alternative investment component is expected to approximate 5%-15% of the plans’ assets.
The following table presents the defined benefit pension plans’ assets measured at fair value:
As of December 31, 2021
Asset ClassLevel 1Level 2Level 3Total
Cash equivalents and short-term investments$14 $48 $— $62 
U.S. equities115 45 — 160 
Non-U.S. equities56 89 — 145 
Government bonds6 11 — 17 
Corporate bonds134 51 — 185 
Other assets5 152 46 203 
Total assets$330 $396 $46 $772 
__________
During 2021, we purchased and classified $46 million of investments as Level 3.
As of December 31, 2020
Asset ClassLevel 1Level 2Total
Cash equivalents and short-term investments$19 $50 $69 
U.S. equities113 56 169 
Non-U.S. equities64 103 167 
Government bonds5 1 6 
Corporate bonds105 32 137 
Other assets1 173 174 
Total assets$307 $415 $722 
We estimate that future benefit payments from plan assets will be $31 million, $31 million, $32 million, $33 million, $35 million and $188 million for 2022, 2023, 2024, 2025, 2026 and 2027 to 2031, respectively.
Multiemployer Plans
We contribute to a number of multiemployer plans under the terms of collective-bargaining agreements that cover a portion of our 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 we elect to stop participating in a multiemployer plan, we may be required to contribute to such plan an amount based on the under-funded status of the plan; and (iv) we have no involvement in the management of the multiemployer plans’ investments. For the years ended December 31, 2021 and 2020, we contributed a total of $7 million in each of the periods and for the year ended December 31, 2019 we contributed a total of $9 million to multiemployer plans.