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Long-Term Employee Benefit Liabilities | 12 Months Ended
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Dec. 31, 2019
Postemployment Benefits [Abstract] |
Long-Term Employee Benefit Liabilities |
19. | LONG-TERM EMPLOYEE BENEFIT LIABILITIES
Long-term employee benefit liabilities consist of:
|  | 2019 |  |  | 2018 |
Defined benefit pension plans and other [a] |  | $ | 203 |  |  | $ | 184 |
Termination and long service arrangements [b] |  |  | 437 |  |  |  | 381 |
Retirement medical benefits plans [c] |  |  | 27 |  |  |  | 27 |
Other long-term employee benefits |  |  | 10 |  |  |  | 5 |
Long-term employee benefit obligations |  | $ | 677 |  |  | $ | 597 |
[a] | Defined benefit pension plans
The Company sponsors a number of defined benefit pension plans and similar arrangements for its employees. All pension plans are funded to at least the minimum legal funding requirements, while European defined benefit pension plans are unfunded. The weighted average significant actuarial assumptions adopted in measuring the Company’s obligations and costs are as follows:
|  | 2019 |  |  | 2018 |
Projected benefit obligation |  |  |  |  |  |  |  |
Discount rate |  |  | 2.5 | % |  |  | 3.1 | %
Rate of compensation increase |  |  | 2.6 | % |  |  | 2.5 | %
Net periodic benefit cost |  |  |  |  |  |  |  |
Discount rate |  |  | 3.2 | % |  |  | 2.8 | %
Rate of compensation increase |  |  | 2.6 | % |  |  | 2.5 | %
Expected return on plan assets |  |  | 4.9 | % |  |  | 5.8 | %
Information about the Company’s defined benefit pension plans is as follows:
|  | 2019 |  |  | 2018 |
Projected benefit obligation |  |  |  |  |  |  |  |
Beginning of year |  | $ | 633 |  |  | $ | 687 |
Current service cost |  |  | 11 |  |  |  | 14 |
Interest cost |  |  | 20 |  |  |  | 18 |
Actuarial losses (gains) and changes in actuarial assumptions |  |  | 79 |  |  |  | (33 | )
Benefits paid |  |  | (21 | ) |  |  | (24 | )
Divestiture |  |  | (68 | ) |  |  | — |
Foreign exchange |  |  | 5 |  |  |  | (29 | )
End of year |  |  | 659 |  |  |  | 633 |
Plan assets at fair value [i] |  |  |  |  |  |  |  |
Beginning of year |  |  | 406 |  |  |  | 443 |
Return on plan assets |  |  | 78 |  |  |  | (11 | )
Employer contributions |  |  | 11 |  |  |  | 12 |
Benefits paid |  |  | (17 | ) |  |  | (19 | )
Divestiture |  |  | (10 | ) |  |  | — |
Foreign exchange |  |  | 10 |  |  |  | (19 | )
End of year |  |  | 478 |  |  |  | 406 |
Ending funded status |  | $ | 181 |  |  | $ | 227 |
Amounts recorded in the consolidated balance sheet |  |  |  |  |  |  |  |
Non-current asset [note 1 4 ] |  | $ | (23 | ) |  | $ | (18 | )
Current liability |  |  | 1 |  |  |  | 1 |
Liabilities held for sale [note 3] [ii] |  |  | — |  |  |  | 60 |
Non-current liability |  |  | 203 |  |  |  | 184 |
Net amount |  | $ | 181 |  |  | $ | 227 |
Amounts recorded in accumulated other comprehensive income |  |  |  |  |  |  |  |
Unrecognized actuarial losses |  | $ | (141 | ) |  | $ | (134 | )
Net periodic benefit cost |  |  |  |  |  |  |  |
Current service cost |  | $ | 11 |  |  | $ | 14 |
Interest cost |  |  | 20 |  |  |  | 18 |
Return on plan assets |  |  | (19 | ) |  |  | (25 | )
Actuarial losses |  |  | 4 |  |  |  | 4 |
Net periodic benefit cost |  | $ | 16 |  |  | $ | 11 |
| [i] | The asset allocation of the Company’s defined benefit pension plans at December 31, 2019 and the target allocation for 2020 is as follows:
|  | 2020 |  |  | 2019 |
Fixed income securities |  |  | 55-75 | % |  |  | 59 | %
Equity securities |  |  | 25-45 | % |  |  | 37 | %
Cash and cash equivalents |  |  | 0-10 | % |  |  | 4 | %
|  |  | 100 | % |  |  | 100 | %
Substantially all of the plan assets’ fair value has been determined using significant observable inputs [level 2] from indirect market prices on regulated financial exchanges.
| [ii] | Includes $58 million of long-term employee benefit liabilities and $2 million of accrued salaries and wages which were reclassified to liabilities held for sale.
The expected rate of return on plan assets was determined by considering the Company’s current investment mix, the historic performance of these investment categories and expected future performance of these investment categories.
[b] | Termination and long service arrangements
Pursuant to labour laws and national labour agreements in certain European countries and Mexico, the Company is obligated to provide lump sum termination payments to employees on retirement or involuntary termination, and long service payments contingent upon persons reaching a predefined number of years of service. The weighted average significant actuarial assumptions adopted in measuring the Company’s projected termination and long service benefit obligations and net periodic benefit cost are as follows:
|  | 2019 |  |  | 2018 |
Discount rate |  |  | 2.1 | % |  |  | 2.8 | %
Rate of compensation increase |  |  | 3.1 | % |  |  | 2.9 | %
Information about the Company’s termination and long service arrangements is as follows:
|  | 2019 |  |  | 2018 |
Projected benefit obligation |  |  |  |  |  |  |  |
Beginning of year |  | $ | 394 |  |  | $ | 378 |
Current service cost |  |  | 29 |  |  |  | 22 |
Interest cost |  |  | 10 |  |  |  | 8 |
Actuarial losses and changes in actuarial assumptions |  |  | 39 |  |  |  | 14 |
Benefits paid |  |  | (19 | ) |  |  | (14 | )
(Divestiture) acquisition |  |  | (3 | ) |  |  | 2 |
Foreign exchange |  |  | (4 | ) |  |  | (16 | )
Ending funded status |  | $ | 446 |  |  | $ | 394 |
Amounts recorded in the consolidated balance sheet |  |  |  |  |  |  |  |
Current liability |  | $ | 9 |  |  | $ | 9 |
Liabilities held for sale [note 3] |  |  | — |  |  |  | 4 |
Non-current liability |  |  | 437 |  |  |  | 381 |
Net amount |  | $ | 446 |  |  | $ | 394 |
Amounts recorded in accumulated other comprehensive income |  |  |  |  |  |  |  |
Unrecognized actuarial losses |  | $ | (124 | ) |  | $ | (88 | )
Net periodic benefit cost |  |  |  |  |  |  |  |
Current service cost |  | $ | 29 |  |  | $ | 22 |
Interest cost |  |  | 10 |  |  |  | 8 |
Actuarial losses (gains) |  |  | 4 |  |  |  | (1 | )
Net periodic benefit cost |  | $ | 43 |  |  | $ | 29 |
[c] | Retirement medical benefits plans
The Company sponsors a number of retirement medical plans which were assumed on certain acquisitions in prior years. These plans are frozen to new employees and incur no current service costs. In addition, the Company sponsors a retirement medical benefits plan that was amended during 2009 such that substantially all employees retiring on or after August 1, 2009 no longer participate in the plan. The weighted average discount rates used in measuring the Company’s projected retirement medical benefit obligations and net periodic benefit cost are as follows:
|  | 2019 |  |  | 2018 |
Retirement medical benefit obligations |  |  | 3.1 | % |  |  | 4.0 | %
Net periodic benefit cost |  |  | 4.0 | % |  |  | 3.4 | %
Health care cost inflation |  |  | 6.8 | % |  |  | 6.8 | %
Information about the Company’s retirement medical benefits plans are as follows:
|  | 2019 |  |  | 2018 |
Projected benefit obligation |  |  |  |  |  |  |  |
Beginning of year |  | $ | 29 |  |  | $ | 33 |
Interest cost |  |  | 1 |  |  |  | 1 |
Actuarial gains and changes in actuarial assumptions |  |  | — |  |  |  | (3 | )
Benefits paid |  |  | (1 | ) |  |  | (1 | )
Foreign exchange |  |  | — |  |  |  | (1 | )
Ending funded status |  | $ | 29 |  |  | $ | 29 |
Amounts recorded in the consolidated balance sheet |  |  |  |  |  |  |  |
Current liability |  | $ | 2 |  |  | $ | 2 |
Non-current liability |  |  | 27 |  |  |  | 27 |
Net amount |  | $ | 29 |  |  | $ | 29 |
Amounts recorded in accumulated other comprehensive income |  |  |  |  |  |  |  |
Unrecognized actuarial gains |  |  | 11 |  |  |  | 12 |
Total accumulated other comprehensive income |  | $ | 11 |  |  | $ | 12 |
Net periodic benefit cost |  |  |  |  |  |  |  |
Interest cost |  | $ | 1 |  |  | $ | 1 |
Actuarial gains |  |  | (1 | ) |  |  | (1 | )
Net periodic benefit cos t |  | $ | — |  |  | $ | — |
The effect of a one-percentage point increase or decrease in health care trend rates would not have a significant impact on the Company’s net income.
[d] | Future benefit payments
|  | Defined benefit pension plans |  |  | Termination and long service arrangements |  |  | Retirement medical benefits plans |  |  | Total |
Expected employer contributions - 2020 |  | $ | 11 |  |  | $ | 9 |  |  | $ | 2 |  |  | $ | 22 |
Expected benefit payments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2020 |  | $ | 22 |  |  | $ | 10 |  |  | $ | 1 |  |  | $ | 33 |
2021 |  |  | 22 |  |  |  | 11 |  |  |  | 2 |  |  |  | 35 |
2022 |  |  | 23 |  |  |  | 11 |  |  |  | 2 |  |  |  | 35 |
2023 |  |  | 23 |  |  |  | 14 |  |  |  | 2 |  |  |  | 39 |
2024 |  |  | 24 |  |  |  | 18 |  |  |  | 2 |  |  |  | 43 |
Thereafter |  |  | 131 |  |  |  | 119 |  |  |  | 8 |  |  |  | 250 |
|  | $ | 245 |  |  | $ | 183 |  |  | $ | 17 |  |  | $ | 435 |

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI http://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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