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Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2017

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
		2017				2016				2017				2016
		(in millions)
Projected benefit obligation at January 1		$	1,614			$	1,566			$	9,814			$	9,547
Service cost			46				57				156				147
Interest cost			62				61				199				229
Benefits paid			(32	)			(32	)			(471	)			(425	)
Settlements paid			(111	)			(91	)			–				–
Actuarial losses			179				52				180				1,284
Divestiture			–				–				(14	)			(5	)
Currency			–				–				976				(979	)
Other			4				1				12				16
Projected benefit obligation at December 31			1,762				1,614				10,852				9,814
Fair value of plan assets at January 1			1,620				1,247				7,926				7,721
Actual return on plan assets			217				118				592				1,079
Contributions			23				378				482				419
Benefits paid			(32	)			(32	)			(471	)			(425	)
Settlements paid			(111	)			(91	)			–				–
Divestiture			–				–				–				(4	)
Currency			–				–				798				(863	)
Other			–				–				–				(1	)
Fair value of plan assets at December 31			1,717				1,620				9,327				7,926
Net pension (liabilities)/assets at December 31		$	(45	)		$	6			$	(1,525	)		$	(1,888	)

Pension Plans Resulted in Net Pension Liability

The combined U.S. and non-U.S. pension plans resulted in a net pension liability of $1,570 million at December 31, 2017 and $1,882 million at December 31, 2016. We recognized these amounts in our consolidated balance sheets as follows:

		As of December 31,
		2017				2016
		(in millions)
Prepaid pension assets		$	158			$	159
Other current liabilities			(59	)			(27	)
Accrued pension costs			(1,669	)			(2,014	)
		$	(1,570	)		$	(1,882	)

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,
		2017				2016				2017				2016
		(in millions)
Projected benefit obligation		$	94			$	96			$	9,345			$	8,386
Accumulated benefit obligation			90				88				9,138				8,168
Fair value of plan assets			2				2				7,709				6,451

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,
		2017				2016				2017				2016
		(in millions)
Discount rate			3.68%				4.19%				2.20%				2.31%
Expected rate of return on plan assets			5.50%				6.25%				4.90%				5.14%
Rate of compensation increase			4.00%				4.00%				3.31%				3.29%

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,
		2017				2016				2015				2017				2016				2015
		(in millions)
Service cost		$	46			$	57			$	64			$	156			$	147			$	188
Interest cost			62				61				67				199				229				307
Expected return on plan assets			(101	)			(97	)			(93	)			(434	)			(418	)			(478	)
Amortization:
Net loss from experience differences			37				42				43				167				120				141
Prior service cost/(benefit) (1)			2				2				2				(3	)			(3	)			15
Settlement losses and other expenses (2)			35				30				19				6				6				2
Net periodic pension cost		$	81			$	95			$	102			$	91			$	81			$	175

(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 $11 million for the year ended December 31, 2017, $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 of $21 million for our U.S. plans and $6 million for our non-U.S. plans in 2017, $15 million for our U.S. plans and $6 million for our non-U.S. plans in 2016 and $10 million for our U.S. plans and $2 million for our non-U.S. plans in 2015. See Note 6, 2014-2018 Restructuring Program, 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, 2017
						Quoted Prices				Significant
						in Active Markets				Other				Significant
						for Identical				Observable				Unobservable
		Total Fair				Assets				Inputs				Inputs
Asset Category		Value				(Level 1)				(Level 2)				(Level 3)
		(in millions)
U.S. equity securities		$	2			$	2			$	–			$	–
Non-U.S. equity securities			5				5				–				–
Pooled funds - equity securities			2,340				848				1,492				–
Total equity securities			2,347				855				1,492				–
Government bonds			3,237				34				3,203				–
Pooled funds - fixed-income securities			602				449				153				–
Corporate bonds and other fixed-income securities			2,102				133				1,179				790
Total fixed-income securities			5,941				616				4,535				790
Real estate			156				120				13				23
Private equity			2				–				–				2
Cash			86				66				20				–
Other			2				1				–				1
Total assets in the fair value hierarchy		$	8,534			$	1,658			$	6,060			$	816
Investments measured at net asset value			2,439
Total investments at fair value		$	10,973

		As of December 31, 2016
						Quoted Prices				Significant
						in Active Markets				Other				Significant
						for Identical				Observable				Unobservable
		Total Fair				Assets				Inputs				Inputs
Asset Category		Value				(Level 1)				(Level 2)				(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
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

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		2017				2016				2017				2016
Equity securities			15%				33%				28%				29%
Fixed-income securities			85%				63%				60%				57%
Real estate			–				4%				6%				5%
Hedge funds			–				–				4%				6%
Private equity			–				–				1%				2%
Cash			–				–				1%				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, 2017 Balance				Net Realized and Unrealized Gains/ (Losses)				Net Purchases, Issuances and Settlements				Net Transfers Into/(Out of) Level 3				Currency Impact				December 31, 2017 Balance
		(in millions)
Non-U.S. equity		$	3			$	–			$	–			$	(3	)		$	–			$	–
Pooled funds- fixed-income securities			35				–				(16	)			(21	)			2				–
Corporate bond and other fixed-income securities			538				10				182				–				60				790
Real estate			22				1				–				–				–				23
Private equity and other			4				–				–				(1	)			–				3
Total Level 3 investments		$	602			$	11			$	166			$	(25	)		$	62			$	816
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
Private equity and other			3				–				–				1				–				4
Total Level 3 investments		$	924			$	27			$	(210	)		$	(6	)		$	(133	)		$	602

Estimated Future Benefit Payments

The estimated future benefit payments from our pension plans at December 31, 2017 were (in millions):

		2018				2019				2020				2021				2022				2023-2027
U.S. Plans		$	120			$	83			$	89			$	93			$	93			$	498
Non-U.S. Plans			375				375				387				409				409				2,196

Schedule of Individually Significant Multiemployer Pension Plan

The only individually significant multiemployer plan we participate in as of December 31, 2017 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 Net Periodic Pension Cost

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,
		2017				2016				2015				2017				2016				2015
Discount rate			4.19%				4.50%				4.20%				2.31%				3.11%				2.99%
Expected rate of return on plan assets			6.25%				6.75%				7.25%				5.14%				5.87%				5.96%
Rate of compensation increase			4.00%				4.00%				4.00%				3.29%				3.18%				3.26%

Postretirement Benefit Plans

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,
		2017		2016		2015		2017		2016		2015
Discount rate		4.14%		4.60%		4.20%		4.55%		4.77%		4.52%
Health care cost trend rate		6.50%		6.50%		6.50%		5.50%		5.50%		5.18%

Components of Net Costs

Net periodic postretirement health care costs consisted of the following:

		For the Years Ended December 31,
		2017				2016				2015
		(in millions)
Service cost		$	7			$	12			$	15
Interest cost			15				20				22
Amortization:
Net loss from experience differences			14				10				13
Prior service credit (1)			(40	)			(20	)			(7	)
Net periodic postretirement health care costs		$	(4	)		$	22			$	43

(1) In the fourth quarter of 2016, the prior service credit included a one-time $9 million curtailment gain related to a change in the eligibility requirement resulting in ongoing amortization of $10 million. In 2017, we continue to amortize prior service credit and recorded $40 million on a full year basis.

Estimated Future Benefit Payments

Our estimated future benefit payments for our postretirement health care plans at December 31, 2017 were (in millions):

		2018				2019				2020				2021				2022				2023-2027
U.S. Plans		$	11			$	12			$	13			$	15			$	16			$	85
Non-U.S. Plans			5				5				6				6				6				55

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,
		2017				2016
		(in millions)
Accrued benefit obligation at January 1		$	394			$	511
Service cost			7				12
Interest cost			15				20
Benefits paid			(15	)			(14	)
Plan amendments (1)			–				(149	)
Currency			8				3
Assumption changes			30				34
Actuarial losses/(gains)			(4	)			(23	)
Accrued benefit obligation at December 31		$	435			$	394

(1) Plan amendments in 2016 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,
		2017				2016				2017				2016
Discount rate			3.66%				4.14%				4.24%				4.55%
Health care cost trend rate assumed for next year			6.25%				6.50%				5.56%				5.50%
Ultimate trend rate			4.81%				5.00%				5.56%				5.68%
Year that the rate reaches the ultimate trend rate			2024				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, 2017
						One-Percentage-Point
						Increase				Decrease
						(in millions)
Effect on postretirement benefit obligation						$	49			$	(40	)
Effect on annual service and interest cost							3				(2	)

Postemployment Benefit Plans

Components of Net Costs

Net periodic postemployment costs consisted of the following:

		For the Years Ended December 31,
		2017				2016				2015
		(in millions)
Service cost		$	5			$	7			$	7
Interest cost			4				6				5
Amortization of net gains			(3	)			(1	)			–
Net periodic postemployment costs		$	6			$	12			$	12

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, 2017 and 2016 were:

		As of December 31,
		2017				2016
		(in millions)
Accrued benefit obligation at January 1		$	71			$	95
Service cost			5				7
Interest cost			4				6
Benefits paid			(6	)			(9	)
Assumption changes			–				(21	)
Actuarial losses/(gains)			2				(7	)
Accrued benefit obligation at December 31		$	76			$	71

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Tabular disclosure of accumulated benefit obligations and fair values of plan assets of pension plans and/or other employee benefit plans where the accumulated benefit obligation exceeds the fair value of plan assets.

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