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Benefit Plans (Tables)
12 Months Ended
Dec. 31, 2016
Pension Plans  
Projected Benefit Obligations, Plan Assets and Funded Status of Pension Plans

The projected benefit obligations, plan assets and funded status of our pension plans were:

 

                                                                           
     U.S. Plans      Non-U.S. Plans  
     2016      2015      2016      2015  
            (in millions)         

Benefit obligation at January 1

   $ 1,566       $ 1,606       $ 9,547       $ 10,854   

Service cost

     57         64         147         188   

Interest cost

     61         67         229         307   

Benefits paid

     (32      (35      (425      (435

Settlements paid

     (91      (88              1   

Actuarial (gains) / losses

     52         (49      1,284         (262

Deconsolidation of JDE coffee business

                             (261

Divestiture

                     (5        

Currency

                     (979      (766

Other

     1         1         16         (79
  

 

 

    

 

 

    

 

 

    

 

 

 

Benefit obligation at December 31

     1,614         1,566         9,814         9,547   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fair value of plan assets at January 1

     1,247         1,216         7,721         8,362   

Actual return on plan assets

     118         (71      1,079         192   

Contributions

     378         225         419         318   

Benefits paid

     (32      (35      (425      (435

Settlements paid

     (91      (88                

Deconsolidation of JDE coffee business

                             (130

Divestiture

                     (4        

Currency

                     (863      (579

Other

                     (1      (7
  

 

 

    

 

 

    

 

 

    

 

 

 

Fair value of plan assets at December 31

     1,620         1,247         7,926         7,721   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net pension assets (liability) at December 31

   $ 6       $ (319    $ (1,888    $ (1,826
  

 

 

    

 

 

    

 

 

    

 

 

 
Pension Plans Resulted in Net Pension Liability

The combined U.S. and non-U.S. pension plans resulted in a net pension liability of $1,882 million at December 31, 2016 and $2,145 million at December 31, 2015. We recognized these amounts in our consolidated balance sheets as follows:

 

                                     
     As of December 31,  
     2016      2015  
     (in millions)  

Prepaid pension assets

   $ 159       $ 69   

Other accrued liabilities

     (27      (31

Accrued pension costs

     (2,014      (2,183
  

 

 

    

 

 

 
   $ (1,882    $ (2,145
  

 

 

    

 

 

 
Projected Benefit Obligations, Accumulated Benefit Obligations and Fair Value of Plan Assets

For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were:

 

                                                                           
     U.S. Plans      Non-U.S. Plans  
     As of December 31,      As of December 31,  
     2016      2015      2016      2015  
     (in millions)  

Projected benefit obligation

   $ 96       $ 1,566       $ 8,386       $ 8,139   

Accumulated benefit obligation

     88         1,463         8,168         7,920   

Fair value of plan assets

     2         1,247         6,451         6,252   
Components of Net Costs

Net periodic pension cost consisted of the following:

 

                                                                                                                 
     U.S. Plans     Non-U.S. Plans  
     For the Years Ended December 31,     For the Years Ended December 31,  
     2016     2015     2014     2016     2015     2014  
     (in millions)  

Service cost

   $ 57      $ 64      $ 57      $ 147      $ 188      $ 184   

Interest cost

     61        67        67        229        307        388   

Expected return on plan assets

     (97     (93     (81     (418     (478     (485

Amortization:

            

Net loss from experience
differences

     42        43        29        120        141        106   

Prior service cost (1)

     2        2        2        (3     15          

Settlement losses and
other expenses (2)

     30        19        28        6        2        14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic pension cost

   $ 95      $ 102      $ 102      $ 81      $ 175      $ 207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (1) For the year ended December 31, 2015, amortization of prior service cost includes $17 million of pension curtailment losses related to employees who transitioned to JDE upon the contribution of our global coffee business. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
  (2) Settlement losses include $15 million for the year ended December 31, 2016 and $9 million for the year ended December 31, 2015 of pension settlement losses for employees who elected lump-sum payments in connection with our 2014-2018 Restructuring Program. Retired employees who elected lump-sum payments resulted in net settlement losses in 2016 of $15 million for our U.S. plans and $6 million for our non-U.S. plans and in 2015 of $10 million for our U.S. plans and $2 million for our non-U.S. plans. Employees who elected lump-sum payments in connection with our 2012-2014 Restructuring Program and cost saving initiatives and retired employees who elected lump-sum payments resulted in net settlement losses for our U.S. plans of $28 million in 2014. In addition, we incurred special termination benefit costs of $2 million in 2014 in the non-U.S. plans related to the 2012-2014 Restructuring Program. See Note 6, Restructuring Programs, for more information. We recorded an additional $90 million of pension settlement losses related to the coffee business transactions within the gain on the coffee business transactions. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
Fair Values of Pension Plan Assets

The fair value of pension plan assets was determined using the following fair value measurements:

 

                                                                           
     As of December 31, 2016  
            Quoted Prices      Significant         

Asset Category

   Total Fair
Value
     in Active Markets
for Identical
Assets
(Level 1)
     Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 
     (in millions)  

U.S. equity securities

   $ 1       $ 1       $       $   

Non-U.S. equity securities

     427         427                   

Pooled funds - equity securities

     1,524         286         1,235         3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     1,952         714         1,235         3   

Government bonds

     3,009         37         2,972           

Pooled funds - fixed-income securities

     756         103         618         35   

Corporate bonds and other
fixed-income securities

     852         357         (43      538   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fixed-income securities

     4,617         497         3,547         573   

Real estate

     170         98         50         22   

Hedge funds

                               

Private equity

     2                         2   

Cash

     73         72         1           

Other

     3         1                 2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in the fair value hierarchy

   $ 6,817       $ 1,382       $ 4,833       $ 602   
  

 

 

    

 

 

    

 

 

    

 

 

 

Investments measured at net asset value

     2,667            
  

 

 

          

Total Investments at fair value

   $ 9,484            
  

 

 

          

 

                                                                           
     As of December 31, 2015  
            Quoted Prices      Significant         

Asset Category

   Total Fair
Value
     in Active Markets
for Identical
Assets
(Level 1)
     Other
Observable
Inputs

(Level 2)
     Significant
Unobservable
Inputs

(Level 3)
 
     (in millions)  

U.S. equity securities

   $ 2       $ 2       $       $   

Non-U.S. equity securities

     498         412         86           

Pooled funds - equity securities

     1,468         275         1,193           
  

 

 

    

 

 

    

 

 

    

 

 

 

Total equity securities

     1,968         689         1,279           

Government bonds

     1,770         35         1,735           

Pooled funds - fixed-income securities

     575         118         431         26   

Corporate bonds and other
fixed-income securities

     1,686         320         701         665   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fixed-income securities

     4,031         473         2,867         691   

Real estate

     339         109                 230   

Hedge funds

                               

Private equity

     2                         2   

Cash

     138         138                   

Other

     2         1                 1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in the fair value hierarchy

   $ 6,480       $ 1,410       $ 4,146       $ 924   
  

 

 

    

 

 

    

 

 

    

 

 

 

Investments measured at net asset value

     2,422            
  

 

 

          

Total investments at fair value

   $ 8,902            
  

 

 

          

 

The percentage of fair value of pension plan assets was:

 

                                                                           
     U.S. Plans      Non-U.S. Plans  
     As of December 31,      As of December 31,  

Asset Category

   2016      2015      2016      2015  

Equity securities

     33%         32%         29%         32%   

Fixed-income securities

     63%         65%         57%         50%   

Real estate

     4%         3%         5%         6%   

Hedge funds

                     6%         7%   

Private equity

                     2%         3%   

Cash

                     1%         1%   

Other

                             1%   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     100%         100%         100%         100%   
  

 

 

    

 

 

    

 

 

    

 

 

 
Schedule of Changes in Level 3 Plan Assets

Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings / (losses), included:

 

                                                                                                                 

Asset Category

   January 1,
2016
Balance
     Net Realized
and Unrealized
Gains/
(Losses)
     Net Purchases,
Issuances and
Settlements
     Net Transfers
Into/(Out of)
Level 3
     Currency
Impact
     December 31,
2016
Balance
 
     (in millions)  

Non-U.S. equity

   $       $       $       $ 3       $         3   

Pooled funds-
fixed-income securities

     26         6         15         (7      (5      35   

Corporate bond and other
fixed-income securities

     665         21         (41              (107      538   

Real estate

     230                 (184      (3      (21      22   

Hedge funds

                                               

Private equity

     3                         1                 4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Level 3 investments

   $ 924       $ 27       $ (210    $ (6    $ (133    $ 602   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Asset Category

   January 1,
2015
Balance
     Net Realized
and Unrealized
Gains/
(Losses)
     Net Purchases,
Issuances and
Settlements
     Net Transfers
Into/(Out of)
Level 3
     Currency
Impact
     December 31,
2015
Balance
 
     (in millions)  

Pooled funds-
fixed-income securities

   $ 97       $ (1    $ 25       $ (89    $ (6    $ 26   

Corporate bond and other
fixed-income securities

     749         4         (50              (38      665   

Real estate

     292         19         61         (125      (17      230   

Hedge funds

     829         13         (312      (499      (31        

Private equity

     240         17         (36      (206      (12      3   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Level 3 investments

   $ 2,207       $ 52       $ (312    $ (919    $ (104    $ 924   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Estimated Future Benefit Payments

The estimated future benefit payments from our pension plans at December 31, 2016 were (in millions):

 

                                                                                                                 

Year ending:

   2017      2018      2019      2020      2021      2022-2026  
U.S. Plans    $ 89       $ 97       $ 103       $ 107       $ 108       $ 568   
Non-U.S. Plans      357         356         363         378         400         2,138   
Schedule of Individually Significant Multiemployer Pension Plan

The only individually significant multiemployer plan we participate in as of December 31, 2016 is the Bakery and Confectionery Union and Industry International Pension Fund (the “Fund”).  

                                                                                              
                        Expiration Date  
          Pension   FIP / RP         of Collective-  
    EIN / Pension     Protection Act   Status Pending /     Surcharge   Bargaining  

Pension Fund

  Plan Number     Zone Status   Implemented     Imposed   Agreements  
Bakery and Confectionery Union and
Industry International Pension Fund
    526118572      Red     Implemented      Yes     2/29/2016   
Defined Benefit Pension Plan Benefit Obligation  
Weighted Average Assumptions

We used the following weighted-average assumptions to determine our benefit obligations under the pension plans:

 

                                                                           
     U.S. Plans      Non-U.S. Plans  
     As of December 31,      As of December 31,  
     2016      2015      2016      2015  

Discount rate

        4.19%             4.50%            2.31%         3.11%   

Expected rate of return on plan assets

     6.25%         6.75%         5.14%         5.87%   

Rate of compensation increase

     4.00%         4.00%         3.29%         3.18%   
Postretirement Benefit Plans  
Weighted Average Assumptions

We used the following weighted-average assumptions to determine our net periodic pension cost:

 

                                                                                                                 
     U.S. Plans      Non-U.S. Plans  
     For the Years Ended December 31,      For the Years Ended December 31,  
     2016      2015      2014      2016      2015      2014  
Discount rate      4.50%         4.20%         5.10%         3.11%         2.99%         4.03%   

Expected rate of return on
plan assets

     6.75%         7.25%         7.75%         5.87%         5.96%         6.17%   
Rate of compensation increase      4.00%         4.00%         4.00%         3.18%         3.26%         3.63%   
Components of Net Costs

Net periodic postretirement health care costs consisted of the following:

 

                                                        
     For the Years Ended December 31,  
     2016      2015      2014  
     (in millions)  

Service cost

   $ 12       $ 15       $ 13   

Interest cost

     20         22         22   

Amortization:

        

Net loss from experience differences

     10         13         5   

Prior service credit (1)

     (20      (7      (10
  

 

 

    

 

 

    

 

 

 

Net periodic postretirement health care costs

   $ 22       $ 43       $ 30   
  

 

 

    

 

 

    

 

 

 

 

  (1) For the year ended December 31, 2016, amortization of prior service credit includes $9 million of curtailment gain related to a change in the eligibility requirement.
Estimated Future Benefit Payments

Our estimated future benefit payments for our postretirement health care plans at December 31, 2016 were (in millions):

 

                                                                                                                 

Year ending:

   2017    2018    2019    2020    2021    2022-2026

U.S. Plans

   $8    $10    $11    $12    $13    $80

Non-U.S. Plans

     5        5        5        6        6      34
Changes in Accumulated Postemployment Benefit Obligations

Our postretirement health care plans are not funded. The changes in and the amount of the accrued benefit obligation were:

 

                                     
     As of December 31,  
     2016      2015  
     (in millions)  

Accrued benefit obligation at January 1

   $ 511       $ 538   

Service cost

     12         15   

Interest cost

     20         22   

Benefits paid

     (14      (10

Plan amendments (1)

     (149        

Currency

     3         (22

Assumption changes

     34         (30

Actuarial (gains) / losses

     (23      (2
  

 

 

    

 

 

 

Accrued benefit obligation at December 31

   $ 394       $ 511   
  

 

 

    

 

 

 

 

  (1) Plan amendments included a change in eligibility requirements related to medical and life insurance benefits and a change in benefits for Medicare-eligible participants.
Weighted-Average Assumptions to Determine Benefit Obligations

We used the following weighted-average assumptions to determine our postretirement benefit obligations:

 

                                                                           
     U.S. Plans      Non-U.S. Plans  
     As of December 31,      As of December 31,  
     2016      2015      2016      2015  

Discount rate

     4.14%         4.60%         4.55%         4.77%   

Health care cost trend rate
assumed for next year

     6.50%         6.50%         5.50%         5.37%   

Ultimate trend rate

     5.00%         5.00%         5.68%         5.55%   

Year that the rate reaches the
ultimate trend rate

     2020         2020         2018         2018   
Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates

A one-percentage-point change in assumed health care cost trend rates would have the following effects:

 

                                                        
           As of December 31, 2016  
           One-Percentage-Point  
           Increase      Decrease  
           (in millions)  

Effect on postretirement benefit obligation

     $ 41       $ (33

Effect on annual service and interest cost

       3         (2
Defined Benefit Pension Net Periodic Pension Cost  
Weighted Average Assumptions

We used the following weighted-average assumptions to determine our net periodic postretirement health care cost:

 

                                                                                                                 
     U.S. Plans    Non-U.S. Plans
     For the Years Ended December 31,    For the Years Ended December 31,
     2016    2015    2014    2016    2015    2014

Discount rate

   4.60%    4.20%    5.10%    4.77%    4.52%    5.17%

Health care cost trend rate

   6.50%    6.50%    7.00%    5.50%    5.18%    5.11%
Postemployment Benefit Plans  
Components of Net Costs

Net periodic postemployment costs consisted of the following:

 

                                                        
     For the Years Ended December 31,  
     2016      2015      2014  
     (in millions)  

Service cost

   $ 7       $ 7       $ 9   

Interest cost

     6         5         6   

Amortization of net gains

     (1                
  

 

 

    

 

 

    

 

 

 

Net periodic postemployment costs

   $ 12       $ 12       $ 15   
  

 

 

    

 

 

    

 

 

 
Changes in Accumulated Postemployment Benefit Obligations

Our postemployment plans are primarily not funded. The changes in and the amount of the accrued benefit obligation at December 31, 2016 and 2015 were:

 

                                     
     2016      2015  
     (in millions)  

Accrued benefit obligation at January 1

   $ 95       $ 94   

Service cost

     7         7   

Interest cost

     6         5   

Benefits paid

     (9      (7

Assumption changes

     (21      (3

Actuarial gains

     (7      (1
  

 

 

    

 

 

 

Accrued benefit obligation at December 31

   $ 71       $ 95