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Retirement Plans and Other Retiree Benefits | 12 Months Ended
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Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract] |
Retirement Plans and Other Retiree Benefits | Retirement Plans and Other Retiree Benefits Retirement Plans The Company and certain of its U.S. and overseas subsidiaries maintain defined benefit retirement plans. Benefits under these plans are based primarily on years of service and employees’ career earnings. Effective January 1, 2014, the Company provides all future retirement benefits through the Company’s defined contribution plan. As a result, service after December 31, 2013 is not considered for participants in the Company’s U.S. defined benefit retirement plan. Participants in the Company’s U.S. defined benefit retirement plan whose retirement benefit was determined under the cash balance formula continue to earn interest credits on their vested balances as of December 31, 2013 but no longer receive pay credits. Participants whose retirement benefit was determined under the final average earnings formula continue to have their final average earnings adjusted for pay increases until termination of employment. In the Company’s principal U.S. plans and certain funded overseas plans, funds are contributed to trusts in accordance with regulatory limits to provide for current service and for any unfunded projected benefit obligation over a reasonable period. The target asset allocation for the Company’s defined benefit plans is as follows:
|  | United States |  | International
Asset Category |  |  |  |
Equity securities |  | 27 | % |  | 41 | %
Fixed income securities |  | 53 | % |  | 40 | %
Real estate and other investments |  | 20 | % |  | 19 | %
Total |  | 100 | % |  | 100 | %
At December 31, 2016 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for each major asset category were as follows:
|  | Level of Valuation Input |  | Pension Plans |  |
|  |  | United States |  | International |  | Other Retiree Benefit Plans
Cash and cash equivalents |  | Level 1 |  | $ | 27 |  |  | $ | 13 |  |  | $ | — |
U.S. common stocks |  | Level 1 |  | 127 |  |  | 3 |  |  | — |
International common stocks |  | Level 1 |  | — |  |  | 3 |  |  | — |
Pooled funds(1) |  | Level 1 |  | 134 |  |  | 84 |  |  | — |
Fixed income securities(2) |  | Level 2 |  | 767 |  |  | 22 |  |  | — |
Guaranteed investment contracts(3) |  | Level 2 |  | 1 |  |  | 49 |  |  | — |
|  |  |  | 1,056 |  |  | 174 |  |  | — |
Investments valued using NAV per share(4) |  |  |  |  |  |  |  |  |  |  |
Domestic, developed and emerging markets equity funds |  |  |  | 323 |  |  | 155 |  |  | — |
Fixed income funds(5) |  |  |  | 118 |  |  | 155 |  |  | — |
Hedge funds(6) |  |  |  | 96 |  |  | 3 |  |  | — |
Multi-Asset funds(7) |  |  |  | 52 |  |  | 3 |  |  | — |
Real estate funds(8) |  |  |  | 43 |  |  | 19 |  |  | — |
|  |  |  | 632 |  |  | 335 |  |  | — |
Other assets and liabilities, net(9) |  |  |  | (42 | ) |  | — |  |  | — |
Total Investments |  |  |  | $ | 1,646 |  |  | $ | 509 |  |  | $ | — |
At December 31, 2015 the allocation of the Company’s plan assets and the level of valuation input, as applicable, for each major asset category were as follows:
|  | Level of Valuation Input |  | Pension Plans |  |
|  |  | United States |  | International |  | Other Retiree Benefit Plans
Cash and cash equivalents |  | Level 1 |  | $ | 16 |  |  | $ | 13 |  |  | $ | — |
U.S. common stocks |  | Level 1 |  | 126 |  |  | 3 |  |  | 1 |
Pooled funds(1) |  | Level 1 |  | 112 |  |  | 76 |  |  | 1 |
Fixed income securities(2) |  | Level 2 |  | 718 |  |  | 24 |  |  | 6 |
Guaranteed investment contracts(3) |  | Level 2 |  | 1 |  |  | 52 |  |  | — |
|  |  |  | 973 |  |  | 168 |  |  | 8 |
Investments valued using NAV per share(4) |  |  |  |  |  |  |  |  |  |  |
Domestic, developed and emerging markets equity funds |  |  |  | 309 |  |  | 158 |  |  | 3 |
Fixed income funds(5) |  |  |  | 123 |  |  | 165 |  |  | 1 |
Hedge funds(6) |  |  |  | 131 |  |  | 6 |  |  | 1 |
Multi-Asset funds(7) |  |  |  | 49 |  |  | 4 |  |  | — |
Real estate funds(8) |  |  |  | 39 |  |  | 19 |  |  | 1 |
|  |  |  | 651 |  |  | 352 |  |  | 6 |
Other assets and liabilities, net(9) |  |  |  | — |  |  | — |  |  | — |
Total Investments |  |  |  | $ | 1,624 |  |  | $ | 520 |  |  | $ | 14 |
_______
(1) | Pooled funds primarily invest in U.S. and foreign equity securities, debt and money market securities.
(2) | The fixed income securities are traded over the counter and certain of these securities lack daily pricing or liquidity and as such are classified as Level 2. As of December 31, 2016 and 2015, approximately 50% of the U.S. pension plan fixed income portfolio was invested in U.S. treasury or agency securities, with the remainder invested in other government bonds and corporate bonds.
(3) | The guaranteed investment contracts (“GICs”) represent contracts with insurance companies measured at the cash surrender value of each contract. The Level 2 valuation reflects that the cash surrender value is based principally on a referenced pool of investment funds with active redemption.
(4) | In accordance with ASU 2015-07, investments that are measured at fair value using net asset value (“NAV”) per share as a practical expedient have not been classified in the fair value hierarchy. The Company has applied ASU 2015-07 retrospectively for the year ended December 31, 2016. The NAV is based on the value of the underlying investments owned, minus its liabilities, divided by the number of shares outstanding. There are no unfunded commitments related to these investments. Redemption notice period primarily ranges from 0-3 months and redemption frequency windows range from daily to quarterly.
(5) | Fixed income funds primarily invest in U.S. government and investment grade corporate bonds.
(6) | Consists of investments in underlying hedge fund strategies that are primarily implemented through the use of long and short equity and fixed income securities and derivative instruments such as futures and options.
(7) | Multi-Asset funds primarily invest across a variety of asset classes, including global stocks and bonds, as well as alternative strategies.
(8) | Real estate is valued using the NAV per unit of funds that are invested in real estate property. The investment value of the real estate property is determined quarterly using independent market appraisals as determined by the investment manager.
(9) | This category primarily includes unsettled trades for investments purchased and sold and dividend receivables.
Equity securities in the U.S. plans include investments in the Company’s common stock representing 7% of U.S. plan assets at December 31, 2016 and December 31, 2015. No shares of the Company’s common stock were purchased or sold by the U.S. plans in 2016 or 2015. The plans received dividends on the Company’s common stock of $3 in 2016 and 2015. Other Retiree Benefits The Company and certain of its subsidiaries provide health care and life insurance benefits for retired employees to the extent not provided by government-sponsored plans. The Company uses a December 31 measurement date for its defined benefit and other retiree benefit plans. Summarized information for the Company’s defined benefit and other retiree benefit plans is as follows:
|  | Pension Plans |  | Other Retiree Benefit Plans
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
|  | United States |  | International |  |  |  |
Change in Benefit Obligations |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligations at beginning of year |  | $ | 2,201 |  |  | $ | 2,406 |  |  | $ | 802 |  |  | $ | 916 |  |  | $ | 862 |  |  | $ | 1,011 |
Service cost |  | 1 |  |  | 2 |  |  | 16 |  |  | 20 |  |  | 13 |  |  | 14 |
Interest cost |  | 105 |  |  | 100 |  |  | 25 |  |  | 28 |  |  | 43 |  |  | 44 |
Participants’ contributions |  | — |  |  | — |  |  | 2 |  |  | 2 |  |  | — |  |  | — |
Acquisitions/plan amendments |  | — |  |  | — |  |  | 1 |  |  | 3 |  |  | — |  |  | — |
Actuarial loss (gain) |  | 129 |  |  | (189 | ) |  | 76 |  |  | (3 | ) |  | 39 |  |  | (154 | )
Foreign exchange impact |  | — |  |  | — |  |  | (47 | ) |  | (75 | ) |  | 1 |  |  | (14 | )
Termination benefits (1) |  | 3 |  |  | 16 |  |  | — |  |  | — |  |  | 1 |  |  | 1 |
Curtailments and settlements |  | — |  |  | — |  |  | (37 | ) |  | (16 | ) |  | — |  |  | — |
Benefit payments |  | (141 | ) |  | (134 | ) |  | (36 | ) |  | (38 | ) |  | (36 | ) |  | (40 | )
Other (2) |  | — |  |  | — |  |  | (2 | ) |  | (35 | ) |  | — |  |  | — |
Benefit obligations at end of year |  | $ | 2,298 |  |  | $ | 2,201 |  |  | $ | 800 |  |  | $ | 802 |  |  | $ | 923 |  |  | $ | 862 |
Change in Plan Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 1,624 |  |  | $ | 1,771 |  |  | $ | 520 |  |  | $ | 552 |  |  | $ | 14 |  |  | $ | 41 |
Actual return on plan assets |  | 88 |  |  | (33 | ) |  | 46 |  |  | 20 |  |  | 1 |  |  | — |
Company contributions |  | 75 |  |  | 20 |  |  | 54 |  |  | 35 |  |  | 21 |  |  | 13 |
Participants’ contributions |  | — |  |  | — |  |  | 2 |  |  | 2 |  |  | — |  |  | — |
Foreign exchange impact |  | — |  |  | — |  |  | (43 | ) |  | (35 | ) |  | — |  |  | — |
Settlements and acquisitions |  | — |  |  | — |  |  | (33 | ) |  | (14 | ) |  | — |  |  | — |
Benefit payments |  | (141 | ) |  | (134 | ) |  | (36 | ) |  | (38 | ) |  | (36 | ) |  | (40 | )
Other |  | — |  |  | — |  |  | (1 | ) |  | (2 | ) |  | — |  |  | — |
Fair value of plan assets at end of year |  | $ | 1,646 |  |  | $ | 1,624 |  |  | $ | 509 |  |  | $ | 520 |  |  | $ | — |  |  | $ | 14 |
Funded Status |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligations at end of year |  | $ | 2,298 |  |  | $ | 2,201 |  |  | $ | 800 |  |  | $ | 802 |  |  | $ | 923 |  |  | $ | 862 |
Fair value of plan assets at end of year |  | 1,646 |  |  | 1,624 |  |  | 509 |  |  | 520 |  |  | — |  |  | 14 |
Net amount recognized |  | $ | (652 | ) |  | $ | (577 | ) |  | $ | (291 | ) |  | $ | (282 | ) |  | $ | (923 | ) |  | $ | (848 | )
Amounts Recognized in Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent assets |  | $ | — |  |  | $ | — |  |  | $ | 8 |  |  | $ | 17 |  |  | $ | — |  |  | $ | — |
Current liabilities |  | (24 | ) |  | (21 | ) |  | (12 | ) |  | (12 | ) |  | (44 | ) |  | (41 | )
Noncurrent liabilities |  | (628 | ) |  | (556 | ) |  | (287 | ) |  | (287 | ) |  | (879 | ) |  | (807 | )
Net amount recognized |  | $ | (652 | ) |  | $ | (577 | ) |  | $ | (291 | ) |  | $ | (282 | ) |  | $ | (923 | ) |  | $ | (848 | )
Amounts Recognized in Accumulated Other Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Actuarial loss |  | $ | 962 |  |  | $ | 852 |  |  | $ | 254 |  |  | $ | 219 |  |  | $ | 330 |  |  | $ | 305 |
Transition/prior service cost |  | 2 |  |  | 2 |  |  | 5 |  |  | 7 |  |  | (2 | ) |  | (2 | )
|  | $ | 964 |  |  | $ | 854 |  |  | $ | 259 |  |  | $ | 226 |  |  | $ | 328 |  |  | $ | 303 |
Accumulated benefit obligation |  | $ | 2,230 |  |  | $ | 2,100 |  |  | $ | 739 |  |  | $ | 739 |  |  | $ | — |  |  | $ | — |
|  | Pension Plans |  | Other Retiree Benefit Plans
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
|  | United States |  | International |  |  |  |
Weighted-Average Assumptions Used to Determine Benefit Obligations |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.27 | % |  | 4.93 | % |  | 2.59 | % |  | 3.17 | % |  | 4.41 | % |  | 4.97 | %
Long-term rate of return on plan assets |  | 6.80 | % |  | 6.80 | % |  | 4.14 | % |  | 4.62 | % |  | 6.80 | % |  | 6.80 | %
Long-term rate of compensation increase |  | 3.50 | % |  | 3.50 | % |  | 2.58 | % |  | 2.78 | % |  | — | % |  | — | %
ESOP growth rate |  | — | % |  | — | % |  | — | % |  | — | % |  | 10.00 | % |  | 10.00 | %
Medical cost trend rate of increase |  | — | % |  | — | % |  | — | % |  | — | % |  | 6.33 | % |  | 6.67 | %
_________
(1) | Represents pension and other retiree benefit enhancements incurred in 2016 and 2015 pursuant to the 2012 Restructuring Program.
(2) | Other in International Pension Plans for 2015 includes a $33 impact related to the deconsolidation of the Company’s Venezuelan operations. See Note 14, Venezuela.
The overall investment objective of the plans is to balance risk and return so that obligations to employees are met. The Company evaluates its long-term rate of return on plan assets on an annual basis. In determining the long-term rate of return, the Company considers the nature of the plans’ investments and the historical rates of return. The assumed rate of return as of December 31, 2016 for the U.S. plans was 6.80%. Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 6%, 8%, 5%, 6%, and 8%, respectively. Similar assessments were performed in determining rates of return on international pension plan assets to arrive at the Company’s 2016 weighted-average rate of return of 4.14%. The medical cost trend rate of increase assumed in measuring the expected cost of benefits is projected to decrease from 6.33% in 2017 to 4.75% by 2022, remaining at 4.75% for the years thereafter. Changes in the assumed rate can have a significant effect on amounts reported. A 1% change in the assumed medical cost trend rate would have the following approximate effect:
|  | One percentage point
|  | Increase |  | Decrease
Accumulated postretirement benefit obligation |  | $ | 119 |  |  | $ | (96 | )
Total of service and interest cost components |  | 9 |  |  | (7 | )
Expected mortality is a key assumption in the measurement for pension and other postretirement benefit obligations. For the Company’s U.S. plans, this assumption was updated as of December 31, 2016 in order to reflect the Society of Actuaries’ updated mortality improvement scale published in October 2016. This resulted in a decrease of 1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively. This assumption was previously updated for the Company’s U.S. plans as of December 31, 2015 in order to reflect the Society of Actuaries’ mortality tables and mortality improvement scale published in October 2015 which resulted in a decrease of 1% and 2% to the benefit obligations for the Company’s U.S. pension plans and other postretirement benefits, respectively. Plans with projected benefit obligations in excess of plan assets and plans with accumulated benefit obligations in excess of plan assets as of December 31 consisted of the following:
|  | Years Ended December 31,
|  | 2016 |  | 2015
Benefit Obligation Exceeds Fair Value of Plan Assets |  |  |  |
Projected benefit obligation |  | $ | 2,973 |  |  | $ | 2,667 |
Fair value of plan assets |  | 2,024 |  |  | 1,792 |
Accumulated benefit obligation |  | 2,840 |  |  | 2,499 |
Fair value of plan assets |  | 2,003 |  |  | 1,772 |
Summarized information regarding the net periodic benefit costs for the Company’s defined benefit and other retiree benefit plans is as follows:
|  | Pension Plans |  | Other Retiree Benefit Plans
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
|  | United States |  | International |  |  |  |  |  |
Components of Net Periodic Benefit Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 1 |  |  | $ | 2 |  |  | $ | 1 |  |  | $ | 16 |  |  | $ | 20 |  |  | $ | 17 |  |  | $ | 13 |  |  | $ | 14 |  |  | $ | 11 |
Interest cost |  | 105 |  |  | 100 |  |  | 102 |  |  | 25 |  |  | 28 |  |  | 35 |  |  | 43 |  |  | 44 |  |  | 42 |
Annual ESOP allocation |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1 | )
Expected return on plan assets |  | (109 | ) |  | (117 | ) |  | (112 | ) |  | (23 | ) |  | (28 | ) |  | (29 | ) |  | (1 | ) |  | (2 | ) |  | (3 | )
Amortization of transition and prior service costs (credits) |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 2 |  |  | 4 |  |  | — |  |  | — |  |  | 3 |
Amortization of actuarial loss |  | 41 |  |  | 44 |  |  | 37 |  |  | 8 |  |  | 11 |  |  | 6 |  |  | 14 |  |  | 25 |  |  | 16 |
Net periodic benefit cost |  | $ | 38 |  |  | $ | 29 |  |  | $ | 29 |  |  | $ | 26 |  |  | $ | 33 |  |  | $ | 33 |  |  | $ | 69 |  |  | $ | 81 |  |  | $ | 68 |
Other postretirement charges |  | 3 |  |  | 16 |  |  | 5 |  |  | 11 |  |  | (1 | ) |  | (8 | ) |  | 1 |  |  | 1 |  |  | — |
Total pension cost |  | $ | 41 |  |  | $ | 45 |  |  | $ | 34 |  |  | $ | 37 |  |  | $ | 32 |  |  | $ | 25 |  |  | $ | 70 |  |  | $ | 82 |  |  | $ | 68 |
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.93 | % |  | 4.24 | % |  | 4.96 | % |  | 3.17 | % |  | 3.06 | % |  | 3.99 | % |  | 4.97 | % |  | 4.36 | % |  | 5.24 | %
Long-term rate of return on plan assets |  | 6.80 | % |  | 6.80 | % |  | 6.80 | % |  | 4.62 | % |  | 5.05 | % |  | 5.50 | % |  | 6.80 | % |  | 6.80 | % |  | 6.80 | %
Long-term rate of compensation increase |  | 3.50 | % |  | 3.50 | % |  | 3.50 | % |  | 2.78 | % |  | 2.83 | % |  | 3.02 | % |  | — | % |  | — | % |  | — | %
ESOP growth rate |  | — | % |  | — | % |  | — | % |  | — | % |  | — | % |  | — | % |  | 10.00 | % |  | 10.00 | % |  | 10.00 | %
Medical cost trend rate of increase |  | — | % |  | — | % |  | — | % |  | — | % |  | — | % |  | — | % |  | 6.67 | % |  | 7.00 | % |  | 7.00 | %
Other postretirement charges in 2016, 2015 and 2014 include pension and other benefit enhancements amounting to $4, $17 and $5 respectively, incurred pursuant to the 2012 Restructuring Program. Other postretirement charges in 2016 also includes $11 related to pension plan settlements incurred primarily pursuant to the 2012 Restructuring Program. The Company made voluntary contributions of $53, $0 and $2 in 2016, 2015 and 2014, respectively, to its U.S. retirement plans. The estimated actuarial loss and the estimated transition/prior service cost for defined benefit and other retiree benefit plans that will be amortized from Accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is as follows:
|  | Pension Plans |  | Other Retiree Benefit Plans
Net actuarial loss |  | $ | 57 |  |  | $ | 17 |
Net transition and prior service cost |  | — |  |  | — |
Expected Contributions and Benefit Payments Management’s best estimate of voluntary contributions the Company will make to U.S. pension plans for the year ending December 31, 2017 is approximately $57. Actual funding may differ from current estimates depending on the variability of the market value of the assets as compared to the obligation and other market or regulatory conditions. Total benefit payments to be paid to participants for the year ending December 31, 2017 from the Company’s assets are estimated to be approximately $81. Total benefit payments expected to be paid to participants from plan assets, or directly from the Company’s assets to participants in unfunded plans, are as follows:
|  | Pension Plans |  |  |  |
Years Ended December 31, |  | United States |  | International |  | Other Retiree Benefit Plans |  | Total
2017 |  | $ | 137 |  |  | $ | 37 |  |  | $ | 45 |  |  | $ | 219 |
2018 |  | 137 |  |  | 32 |  |  | 46 |  |  | 215 |
2019 |  | 140 |  |  | 32 |  |  | 46 |  |  | 218 |
2020 |  | 144 |  |  | 34 |  |  | 47 |  |  | 225 |
2021 |  | 150 |  |  | 36 |  |  | 48 |  |  | 234 |
2022-2026 |  | 733 |  |  | 202 |  |  | 256 |  |  | 1,191 |

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