The Company provides various retirement benefits to eligible employees, including contributions to defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and other benefits. Eligibility requirements and benefit levels vary depending on employee location. Various foreign benefit plans cover employees in accordance with local legal requirements.

A majority of the Company's U.S. employees are covered by a noncontributory profit-sharing plan. The plan aligns Company contributions to Company performance and includes two components, a variable annual contribution based on the Company's rate of return on invested capital and an automatic contribution equal to 3% of the eligible employee's total eligible compensation. In addition, employees covered by the plan are also able to make personal contributions. The total Company contribution will be maintained at a minimum of 8% and a maximum of 18% of total eligible compensation paid to eligible employees. The total profit-sharing plan expense was $113 million, $164 million, and $120 million for 2019, 2018 and 2017, respectively.

The Company sponsors additional defined contribution plans available to certain U.S. and foreign employees for which contributions are made by the Company and participating employees. The expense associated with these defined contribution plans totaled $19 million, $13 million, and $18 million for 2019, 2018 and 2017, respectively.

The Company has a postretirement healthcare benefits plan that provides coverage for a majority of its U.S. employees hired prior to January 1, 2013, and their dependents should they elect to maintain such coverage upon retirement. Covered employees become eligible for participation when they qualify for retirement while working for the Company.

During the third quarter of 2017, the Company implemented plan design changes effective January 1, 2018, for the post-65 age group. This plan change moved all post-65 Medicare eligible retirees to healthcare exchanges and provided them a subsidy to purchase insurance. The amount of the subsidy is based on years of service. As a result of the plan change, the plan obligation was remeasured as of August 31, 2017. The remeasurement resulted in a decrease in the postretirement benefit obligation of $76 million and a corresponding unrecognized gain recorded in Other comprehensive earnings net of tax of $29 million.

Certain amounts in the 2017 financial statements, as previously reported, have been reclassified to conform to the 2018 presentation. In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which became effective January 1, 2018.

The net periodic benefits costs were valued with a measurement date of January 1 for each year and August 31, 2017 remeasurement date and consisted of the following components (in millions of dollars):



	For the Years Ended December 31,
	2019			2018			2017
SG&A
Service cost	$	4		$	6		$	7
Other income (expense)
Interest cost	7			7			8
Expected return on assets	(12)			(13		)	(12		)
Amortization of prior service credit	(10)			(10		)	(7		)
Amortization of unrecognized gains	(4)			(3		)	(2		)
Net periodic (benefits) costs	$	(15	)	$	(13	)	$	(6	)

Reconciliations of the beginning and ending balances of the postretirement benefit obligation, which is calculated as of December 31 measurement date, the fair value of plan assets available for benefits and the funded status of the benefit obligation follow (in millions of dollars):



	2019			2018
Benefit obligation at beginning of year	$	190		$	208
Service cost	4			6
Interest cost	7			7
Plan participants' contributions	3			3
Actuarial (gains)	5			(26		)
Benefits paid	(9		)	(9		)
Prescription drug rebates	—			1
Benefit obligation at end of year	$	200		$	190

Plan assets available for benefits at beginning of year	$	176		$	189
Actual (losses) returns on plan assets	28			(8		)
Plan participants' contributions	3			3
Prescription drug rebates	—			1
Benefits paid	(9		)	(9		)
Plan assets available for benefits at end of year	198			176
Noncurrent postretirement benefit obligation	$	2		$	14



	As of December 31,
	2019			2018
Prior service credit	$	61		$	71
Unrecognized gains	44			37
Deferred tax (liability)	(26		)	(26		)
Net accumulated gains	$	79		$	82

The Company has elected to amortize the amount of net unrecognized gains over a period equal to the average remaining service period for active plan participants expected to retire and receive benefits of approximately 11.1 years for 2019.

The postretirement benefit obligation was determined by applying the terms of the plan and actuarial models. These models include various actuarial assumptions, including discount rates, long-term rates of return on plan assets, healthcare cost trend rate and cost-sharing between the Company and the retirees. The Company evaluates its actuarial assumptions on an annual basis and considers changes in these long-term factors based upon market conditions and historical experience.



	For the Years Ended December 31,
	2019		2018		2017
Discount rate	4.08	%	3.44	%	4.00	%
Long-term rate of return on plan assets, net of tax	7.13	%	7.13	%	7.13	%
Initial healthcare cost trend rate
Pre age 65	6.31	%	6.56	%	6.81	%
Post age 65	NA		NA		9.36	%
Catastrophic drug benefit	NA		12.50	%	NA
Ultimate healthcare cost trend rate	4.50	%	4.50	%	4.50	%
Year ultimate healthcare cost trend rate reached	2026		2026		2026
HRA credit inflation index for grandfathered retirees	2.50	%	2.50	%	NA



	2019		2018		2017
Discount rate	3.01	%	4.08	%	3.44	%
Expected long-term rate of return on plan assets, net of tax	4.00	%	7.13	%	7.13	%
Initial healthcare cost trend rate
Pre age 65	6.06	%	6.31	%	6.56	%
Post age 65	NA		NA		NA
Catastrophic drug benefit	NA		11.50	%	12.50	%
Ultimate healthcare cost trend rate	4.50	%	4.50	%	4.50	%
Year ultimate healthcare cost trend rate reached	2026		2026		2026
HRA credit inflation index for grandfathered retirees	2.50	%	2.50	%	2.50	%

The discount rate assumptions reflect the rates available on high-quality fixed income debt instruments as of December 31, the measurement date of each year. These rates have been selected due to their similarity to the duration of the projected cash flows of the postretirement healthcare benefit plan. As of December 31, 2019, the Company decreased the discount rate from 4.08% to 3.01% to reflect the decrease in the market interest rates at December 31, 2019.

The Company reviews external data and its own historical trends for healthcare costs to determine the healthcare cost trend rates. As of December 31, 2019, the initial healthcare cost trend rate was 6.06% for pre age 65. The

healthcare costs trend rates decline each year until reaching the ultimate trend rate of 2.50%. The plan amendment adopted in 2017 moves all post age 65 Medicare eligible retirees to an exchange and provides a subsidy to those retirees to purchase insurance. The amount of the subsidy is based on years of service and is indexed at 2.50% for grandfathered employees.

The Company has established a Group Benefit Trust (Trust) to fund the plan obligations and process benefit payments. In 2019, the Company liquidated previously held index funds and has temporarily invested all assets of the Trust in money market funds. The Company is in the process of transitioning the Trust assets from money market funds into a liability driven investment solution composed of growth assets and fixed income. The plan's assets are stated at fair value, which represents the net asset value of shares held by the plan in the registered investment companies at the quoted market prices (Level 1 input). The plan assets available for benefits are net of Trust liabilities, primarily related to deferred income taxes and taxes payable at December 31 (in millions of dollars):



	2019			2018
Registered investment companies:
Vanguard Federal Money Market Fund	$	109		$	—
Fidelity Government Money Market Fund	95			—
Fidelity Spartan U.S. Equity Index Fund	—			80
Vanguard 500 Index Fund	—			93
Vanguard Total International Stock	—			26
Plan Assets	204			199
Less: trust liabilities	(6		)	(23		)
Plan assets available for benefits	$	198		$	176

Consistent with the new investment strategy, the after-tax expected long-term rates of return on plan assets of 4.00% at December 31, 2019 is based on the historical average of long-term rates of return and an estimated tax rate. The required use of an expected long-term rate of return on plan assets may result in recognition of income that is greater or lower than the actual return on plan assets in any given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns and, therefore, result in a pattern of income recognition that more closely matches the pattern of the services provided by the employees.

The Company's investment policies include periodic reviews by management and trustees at least annually concerning: (1) the allocation of assets among various asset classes (e.g., domestic stocks, international stocks, short-term bonds, long-term bonds, etc.); (2) the investment performance of the assets, including performance comparisons with appropriate benchmarks; (3) investment guidelines and other matters of investment policy and (4) the hiring, dismissal or retention of investment managers.

The funding of the Trust is an estimated amount that is intended to allow the maximum deductible contribution under the Internal Revenue Code of 1986 (IRC), as amended. There are no minimum funding requirements and the Company intends to follow its practice of funding the maximum deductible contribution under the IRC.

The Company forecasts the following benefit payments related to postretirement (which include a projection for expected future employee service) for the next ten years (in millions of dollars):