XML 66 R35.htm IDEA: XBRL DOCUMENT v2.4.0.8
Postretirement benefit plans (Tables)
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Schedule of expense related to defined benefit and retiree health care benefit plans
Expense related to defined benefit and retiree health care benefit plans was as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree Health Care
 
Non-U.S. Defined Benefit
 
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost
 
$
26

 
$
24

 
$
22

 
$
5

 
$
5

 
$
4

 
$
41

 
$
45

 
$
41

Interest cost
 
45

 
44

 
46

 
20

 
25

 
25

 
61

 
75

 
69

Expected return on plan assets
 
(48
)
 
(50
)
 
(45
)
 
(24
)
 
(23
)
 
(21
)
 
(67
)
 
(78
)
 
(83
)
Amortization of prior service cost (credit)
 
1

 
1

 
1

 
4

 
3

 
2

 
(3
)
 
(4
)
 
(4
)
Recognized net actuarial loss
 
21

 
16

 
23

 
11

 
13

 
13

 
31

 
41

 
40

Net periodic benefit costs
 
45

 
35

 
47

 
16

 
23

 
23

 
63

 
79

 
63

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlement losses (a) (b)
 
41

 
—

 
—

 
—

 
—

 
—

 
4

 
193

 
—

Curtailment losses (gains)
 
—

 
—

 
—

 
—

 
(1
)
 
5

 
(7
)
 
—

 
2

Special termination benefit losses (gains) (b)
 
—

 
(1
)
 
4

 
—

 
—

 
—

 
—

 
(337
)
 
—

Total, including other postretirement losses (gains)
 
$
86

 
$
34

 
$
51

 
$
16

 
$
22

 
$
28

 
$
60

 
$
(65
)
 
$
65

(a) Includes non-restructuring- and restructuring-related settlement losses.
(b) Transfer of Japan substitutional pension in 2012: In Japan, we maintain employee pension fund plans (EPFs) pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). An EPF consists of two portions: a substitutional portion based on JWPIL-determined minimum old-age pension benefits similar to Social Security benefits in the United States and a corporate portion established at the discretion of each employer. Employers and employees are exempt from contributing to the Japanese Pension Insurance (JPI) if the substitutional portion is funded by an EPF.
    
The JWPIL was amended to permit each EPF to separate the substitutional portion and transfer those obligations and related assets to the government of Japan. After such a transfer, the employer is required to contribute periodically to JPI, and the government of Japan is responsible for future benefit payments relating to the substitutional portion.

During the third quarter of 2012, our EPF received final approval for such a separation and transferred the obligations and assets of its substitutional portion to the government of Japan. On a pre-tax basis, this resulted in a net gain of $144 million recorded in Restructuring charges/other on our Consolidated statements of income and included in Other, as shown in Note 3. This net gain of $144 million consisted of two parts - a gain of $337 million, representing the difference between the fair values of the obligations settled of $533 million and the assets transferred from the pension trust to the government of Japan of $196 million, offset by a settlement loss of $193 million related to the recognition of previously unrecognized actuarial losses included in AOCI.
Schedule of changes in the benefit obligations and plan assets for the defined benefit and retiree health care benefit plans
Changes in the benefit obligations and plan assets for the defined benefit and retiree health care benefit plans were as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Change in plan benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
1,098

 
$
959

 
$
509

 
$
521

 
$
2,414

 
$
2,748

Service cost
 
26

 
24

 
5

 
5

 
41

 
45

Interest cost
 
45

 
44

 
20

 
25

 
61

 
75

Participant contributions
 
—

 
—

 
18

 
17

 
1

 
1

Benefits paid
 
(9
)
 
(45
)
 
(47
)
 
(47
)
 
(81
)
 
(83
)
Medicare subsidy
 
—

 
—

 
3

 
5

 
—

 
—

Actuarial (gain) loss
 
(27
)
 
116

 
(36
)
 
(17
)
 
96

 
222

Settlements
 
(178
)
 
—

 
—

 
—

 
(30
)
 
(533
)
Curtailments
 
—

 
1

 
—

 
(1
)
 
(28
)
 
—

Special termination benefit losses (gains)
 
—

 
(1
)
 
—

 
—

 
—

 
—

Plan amendments
 
—

 
—

 
—

 
1

 
—

 
—

Effects of exchange rate changes
 
—

 
—

 
—

 
—

 
(237
)
 
(61
)
Other
 
—

 
—

 
—

 
—

 
39

 
—

Benefit obligation at end of year (BO)
 
$
955

 
$
1,098

 
$
472

 
$
509

 
$
2,276

 
$
2,414

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in plan assets:
 
 
 
 

 
 
 
 

 
 
 
 

Fair value of plan assets at beginning of year
 
$
1,071

 
$
914

 
$
517

 
$
431

 
$
2,218

 
$
2,211

Actual return on plan assets
 
1

 
95

 
41

 
37

 
201

 
207

Employer contributions (funding of qualified plans)
 
43

 
104

 
—

 
78

 
62

 
134

Employer contributions (payments for non-qualified plans)
 
13

 
3

 
—

 
—

 
—

 
—

Participant contributions
 
—

 
—

 
18

 
17

 
1

 
1

Benefits paid
 
(9
)
 
(45
)
 
(45
)
 
(46
)
 
(81
)
 
(83
)
Settlements
 
(178
)
 
—

 
—

 
—

 
(30
)
 
(196
)
Effects of exchange rate changes
 
—

 
—

 
—

 
—

 
(232
)
 
(56
)
Other
 
—

 
—

 
(46
)
 
—

 
40

 
—

Fair value of plan assets at end of year (FVPA)
 
$
941

 
$
1,071

 
$
485

 
$
517

 
$
2,179

 
$
2,218

 
 
 
 
 
 
 
 
 
 
 
 
 
Funded status (FVPA – BO) at end of year
 
$
(14
)
 
$
(27
)
 
$
13

 
$
8

 
$
(97
)
 
$
(196
)
Schedule of amounts recognized in balance sheet

Amounts recognized on the balance sheet as of December 31, 2013, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
44

 
$
16

 
$
70

 
$
130

Accrued expenses and other liabilities
 
(7
)
 
—

 
(5
)
 
(12
)
Underfunded retirement plans
 
(51
)
 
(3
)
 
(162
)
 
(216
)
Funded status (FVPA – BO) at end of year
 
$
(14
)
 
$
13

 
$
(97
)
 
$
(98
)

Amounts recognized on the balance sheet as of December 31, 2012, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
34

 
$
12

 
$
22

 
$
68

Accrued expenses and other liabilities
 
(8
)
 
—

 
(6
)
 
(14
)
Underfunded retirement plans
 
(53
)
 
(4
)
 
(212
)
 
(269
)
Funded status (FVPA – BO) at end of year
 
$
(27
)
 
$
8

 
$
(196
)
 
$
(215
)
Schedule of amounts recognized in other comprehensive income (loss)
The amounts recorded in AOCI for the years ended December 31, 2013 and 2012, are detailed below by plan type:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
 
 
Net
Actuarial
Loss
 
Prior
Service
Cost
 
Net
Actuarial
Loss
 
Prior
Service
Cost
 
Net
Actuarial
Loss
 
Prior
Service
Cost
 
Net
Actuarial
Loss
 
Prior
Service
Cost
AOCI balance, December 31, 2012, net of taxes
 
$
176

 
$
(1
)
 
$
112

 
$
13

 
$
413

 
$
(19
)
 
$
701

 
$
(7
)
Changes in AOCI by category in 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Adjustments
 
20

 
—

 
(53
)
 
—

 
(132
)
 
4

 
(165
)
 
4

Reclassification to Net income
 
(62
)
 
(1
)
 
(11
)
 
(4
)
 
(35
)
 
10

 
(108
)
 
5

Tax expense (benefit)
 
15

 
—

 
23

 
1

 
59

 
(4
)
 
97

 
(3
)
Total change to AOCI in 2013
 
(27
)
 
(1
)
 
(41
)
 
(3
)
 
(108
)
 
10

 
(176
)
 
6

AOCI balance, December 31, 2013, net of taxes
 
$
149

 
$
(2
)
 
$
71

 
$
10

 
$
305

 
$
(9
)
 
$
525

 
$
(1
)
Schedule of allocation of plan assets
The tables below set forth the fair value of our plan assets as of December 31, 2013 and 2012, using the same three-level hierarchy of fair-value inputs described in Note 9.
 
 
Fair Value
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Money market collective trusts
 
$
27

 
$
—

 
$
27

 
$
—

U.S. Government agency and Treasury securities
 
208

 
—

 
208

 
—

U.S. bond funds
 
372

 
—

 
372

 
—

U.S. equity funds and option collars
 
217

 
—

 
217

 
—

International equity funds
 
80

 
—

 
80

 
—

Limited partnerships
 
37

 
—

 
—

 
37

Total
 
$
941

 
$
—

 
$
904

 
$
37

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 
 
 
 
 
Money market collective trusts
 
$
45

 
$
—

 
$
45

 
$
—

U.S. bond funds
 
193

 
193

 
—

 
—

U.S. equity funds and option collars
 
176

 
—

 
176

 
—

International equity funds
 
71

 
—

 
71

 
—

Total
 
$
485

 
$
193

 
$
292

 
$
—

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 
 
 
 
 
Cash and money market collective trusts
 
$
46

 
$
44

 
$
2

 
$
—

Local market bond funds
 
1,065

 
353

 
712

 
—

International/global bond funds
 
410

 
—

 
410

 
—

Local market equity funds
 
114

 
6

 
108

 
—

International/global equity funds
 
536

 
—

 
536

 
—

Other investments
 
8

 
—

 
—

 
8

Total
 
$
2,179

 
$
403

 
$
1,768

 
$
8



 
 
Fair Value
December 31, 2012
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Money market collective trusts
 
$
119

 
$
—

 
$
119

 
$
—

U.S. Government agency and Treasury securities
 
247

 
—

 
247

 
—

U.S. bond funds
 
368

 
—

 
368

 
—

U.S. equity funds and option collars
 
219

 
—

 
219

 
—

International equity funds
 
81

 
—

 
81

 
—

Limited partnerships
 
37

 
—

 
—

 
37

Total
 
$
1,071

 
$
—

 
$
1,034

 
$
37

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 

 
 

 
 

Money market collective trusts
 
$
49

 
$
—

 
$
49

 
$
—

U.S. bond funds
 
205

 
205

 
—

 
—

U.S. equity funds and option collars
 
197

 
46

 
151

 
—

International equity funds
 
66

 
—

 
66

 
—

Total
 
$
517

 
$
251

 
$
266

 
$
—

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 

 
 

 
 

Cash and money market collective trusts
 
$
133

 
$
88

 
$
45

 
$
—

Local market bond funds
 
942

 
183

 
759

 
—

International/global bond funds
 
343

 
19

 
324

 
—

Local market equity funds
 
204

 
20

 
184

 
—

International/global equity funds
 
564

 
—

 
564

 
—

Other investments
 
32

 
—

 
13

 
19

Total
 
$
2,218

 
$
310

 
$
1,889

 
$
19


Weighted average asset allocations as of December 31, are as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Asset Category
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Equity securities
 
35%
 
31%
 
51%
 
51%
 
30%
 
36%
Fixed income securities
 
62%
 
58%
 
40%
 
40%
 
68%
 
58%
Cash equivalents
 
3%
 
11%
 
9%
 
9%
 
2%
 
6%

The table below shows target allocation ranges for the plans that hold a substantial majority of the defined benefit assets.
Asset Category
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Equity securities
 
35%
 
50%
 
0% - 40%
Fixed income securities and cash equivalents
 
65%
 
50%
 
60% - 100%
Schedule of effect of significant unobservable inputs, changes in plan assets
The following table summarizes the change in the fair values for Level 3 plan assets for the years ending December 31, 2013 and 2012:
 
 
Level 3 Plan Assets
 
 
U.S. Defined
Benefit
 
Non-U.S. Defined
Benefit
Balance, December 31, 2011
 
$
35

 
$
18

Redemptions
 
(2
)
 
—

Unrealized gain
 
4

 
1

Balance, December 31, 2012
 
37

 
19

Redemptions
 
—

 
(10
)
Unrealized loss
 
—

 
(1
)
Balance, December 31, 2013
 
$
37

 
$
8

 
Schedule of assumptions used
Assumptions and investment policies
 
 
Defined Benefit
 
U.S. Retiree
Health Care
 
 
2013
 
2012
 
2013
 
2012
Weighted average assumptions used to determine benefit obligations:
 
 
 
 
 
 
 
 
U.S. discount rate
 
5.11%
 
4.16%
 
4.83%
 
3.97%
Non-U.S. discount rate
 
3.01%
 
2.80%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.50%
 
3.50%
 

 

Non-U.S. average long-term pay progression
 
3.11%
 
3.10%
 

 

 
 
 
 
 
 
 
 
 
Weighted average assumptions used to determine net periodic benefit cost:
 
 
 
 
 
 
 
 
U.S. discount rate
 
4.59%
 
4.92%
 
3.94%
 
4.86%
Non-U.S. discount rate
 
2.74%
 
2.88%
 

 

 
 
 
 
 
 
 
 
 
U.S. long-term rate of return on plan assets
 
5.25%
 
6.00%
 
4.75%
 
5.50%
Non-U.S. long-term rate of return on plan assets
 
3.34%
 
3.83%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.60%
 
3.50%
 

 

Non-U.S. average long-term pay progression
 
3.01%
 
3.17%
 

 
Schedule of expected benefit payments
The following table shows the benefits we expect to pay to participants from the plans in the next ten years. Almost all of the payments will be made from plan assets and not from company assets.
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Medicare
Subsidy
 
Non-U.S. Defined
Benefit
2014
 
$
208

 
$
36

 
$
(4
)
 
$
81

2015
 
102

 
37

 
(4
)
 
84

2016
 
105

 
39

 
(4
)
 
86

2017
 
104

 
40

 
(5
)
 
91

2018
 
101

 
41

 
(5
)
 
94

2019 - 2023
 
421

 
196

 
(13
)
 
521
Schedule of effect of one-percentage-point change in assumed health care cost trend rates

Assumed health care cost trend rates for the U.S. retiree health care plan at December 31 are as follows:
 
 
2013
 
2012
Assumed health care cost trend rate for next year
 
7.0%
 
7.0%
Ultimate trend rate
 
5.0%
 
5.0%
Year in which ultimate trend rate is reached
 
2022
 
2018