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Postemployment Benefit Plans | 12 Months Ended
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Dec. 31, 2013
Postemployment Benefit Plans |
Postemployment Benefit Plans | Note 14—Postemployment Benefit Plans Defined benefit pension plans and other postretirement employee benefit plans Overview—We maintain a single qualified defined benefit pension plan in the U.S. (the “U.S. Plan”) covering substantially all U.S. employees. We also maintain a funded supplemental benefit plan (the “Supplemental Plan”) that offers benefits to certain employees that are ineligible for benefits under the U.S. Plan and two unfunded supplemental benefit plans (the “Other Supplemental Plans”) that provide certain eligible employees with benefits in excess of those allowed under the U.S. Plan. Additionally, we maintain two funded and two unfunded defined benefit plans (collectively, the “Frozen Plans”) that we assumed in connection with our mergers with GlobalSantaFe and R&B Falcon Corporation, all of which were frozen prior to the respective mergers and for which benefits no longer accrue but the pension obligations have not been fully distributed. We refer to the U.S. Plan, the Supplemental Plan, the Other Supplemental Plans and the Frozen Plans, collectively, as the “U.S. Plans.” We maintain a defined benefit plan in the U.K. (the “U.K. Plan”) covering certain current and former employees in the U.K. We also provide seven funded defined benefit plans, primarily group pension schemes with life insurance companies, three of which we assumed in connection with our acquisition of Aker Drilling, and two unfunded plans covering our eligible Norway employees and former employees (the “Norway Plans”). We also maintain unfunded defined benefit plans (the “Other Plans”) that provide retirement and severance benefits for certain of our Indonesian, Nigerian and Egyptian employees. We refer to the U.K. Plan, the Norway Plans and the Other Plans, collectively, as the “Non-U.S. Plans.” We refer to the U.S. Plans and the Non-U.S. Plans, collectively, as the “Transocean Plans”. Additionally, we have several unfunded contributory and noncontributory other postretirement employee benefit plans (the “OPEB Plans”) covering substantially all of our U.S. employees. Assumptions—We estimated our benefit obligations using the following weighted-average assumptions:
|  | December 31, 2013 |  | December 31, 2012 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |
Discount rate |  | 5.01 | % | 4.92 | % | 4.54 | % | 4.19 | % | 5.37 | % | 3.63 | %
Compensation trend rate |  | 4.24 | % | 4.57 | % | n/a |  | 4.21 | % | 4.38 | % | n/a |
We estimated our net periodic benefit costs using the following weighted-average assumptions:
|  | Year ended December 31, 2013 |  | Year ended December 31, 2012 |  | Year ended December 31, 2011 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |
Discount rate |  | 4.19 | % | 5.13 | % | 3.39 | % | 4.67 | % | 5.43 | % | 4.27 | % | 5.49 | % | 5.73 | % | 4.94 | %
Expected rate of return |  | 7.48 | % | 5.79 | % | n/a |  | 7.47 | % | 6.07 | % | n/a |  | 8.49 | % | 6.42 | % | n/a |
Compensation trend rate |  | 4.22 | % | 4.21 | % | n/a |  | 4.22 | % | 4.61 | % | n/a |  | 4.24 | % | 4.62 | % | n/a |
Health care cost trend rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
-initial |  | n/a |  | n/a |  | 8.07 | % | n/a |  | n/a |  | 8.08 | % | n/a |  | n/a |  | 8.08 | %
-ultimate |  | n/a |  | n/a |  | 5.00 | % | n/a |  | n/a |  | 5.00 | % | n/a |  | n/a |  | 5.00 | %
-ultimate year |  | n/a |  | n/a |  | 2020 |  | n/a |  | n/a |  | 2019 |  | n/a |  | n/a |  | 2018 |
“n/a” means not applicable. Funded status—The changes in projected benefit obligation, plan assets and funded status and the amounts recognized on our consolidated balance sheets were as follows (in millions):
|  | Year ended December 31, 2013 |  | Year ended December 31, 2012 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Change in projected benefit obligation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation, beginning of period |  | $ | 1,452 |  | $ | 499 |  | $ | 58 |  | $ | 2,009 |  | $ | 1,260 |  | $ | 447 |  | $ | 53 |  | $ | 1,760 |
Actuarial (gains) losses, net |  | (147 | ) | 55 |  | (7 | ) | (99 | ) | 128 |  | (15 | ) | 4 |  | 117 |
Service cost |  | 55 |  | 27 |  | 1 |  | 83 |  | 49 |  | 31 |  | 1 |  | 81 |
Interest cost |  | 63 |  | 25 |  | 2 |  | 90 |  | 59 |  | 24 |  | 2 |  | 85 |
Currency exchange rate changes |  | — |  | (11 | ) | — |  | (11 | ) | — |  | 19 |  | — |  | 19 |
Benefits paid |  | (45 | ) | (28 | ) | (3 | ) | (76 | ) | (45 | ) | (23 | ) | (3 | ) | (71 | )
Participant contributions |  | — |  | 2 |  | 2 |  | 4 |  | — |  | 2 |  | 1 |  | 3 |
Special termination benefits |  | 1 |  | — |  | — |  | 1 |  | 1 |  | — |  | — |  | 1 |
Settlements and curtailments |  | 1 |  | 4 |  | — |  | 5 |  | — |  | 14 |  | — |  | 14 |
Projected benefit obligation, end of period |  | 1,380 |  | 573 |  | 53 |  | 2,006 |  | 1,452 |  | 499 |  | 58 |  | 2,009 |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets, beginning of period |  | 948 |  | 422 |  | — |  | 1,370 |  | 769 |  | 351 |  | — |  | 1,120 |
Actual return on plan assets |  | 149 |  | 45 |  | — |  | 194 |  | 116 |  | 28 |  | — |  | 144 |
Currency exchange rate changes |  | — |  | (10 | ) | — |  | (10 | ) | — |  | 15 |  | — |  | 15 |
Employer contributions |  | 64 |  | 50 |  | 1 |  | 115 |  | 108 |  | 49 |  | 2 |  | 159 |
Participant contributions |  | — |  | 2 |  | 2 |  | 4 |  | — |  | 2 |  | 1 |  | 3 |
Benefits paid |  | (45 | ) | (28 | ) | (3 | ) | (76 | ) | (45 | ) | (23 | ) | (3 | ) | (71 | )
Fair value of plan assets, end of period |  | 1,116 |  | 481 |  | — |  | 1,597 |  | 948 |  | 422 |  | — |  | 1,370 |
Funded status, end of period |  | $ | (264 | ) | $ | (92 | ) | $ | (53 | ) | $ | (409 | ) | $ | (504 | ) | $ | (77 | ) | $ | (58 | ) | $ | (639 | )
Balance sheet classification, end of period: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension asset, non-current |  | $ | — |  | $ | 8 |  | $ | — |  | $ | 8 |  | $ | — |  | $ | 3 |  | $ | — |  | $ | 3 |
Accrued pension liability, current |  | (2 | ) | (23 | ) | (4 | ) | (29 | ) | (3 | ) | (24 | ) | (3 | ) | (30 | )
Accrued pension liability, non-current |  | (262 | ) | (77 | ) | (49 | ) | (388 | ) | (501 | ) | (56 | ) | (55 | ) | (612 | )
Accumulated other comprehensive income (loss) (a) |  | (198 | ) | (114 | ) | 1 |  | (311 | ) | (469 | ) | (80 | ) | (6 | ) | (555 | )
(a) Amounts are before income tax effect. The aggregate projected benefit obligation and fair value of plan assets for plans with a projected benefit obligation in excess of plan assets were as follows (in millions):
|  | December 31, 2013 |  | December 31, 2012 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Projected benefit obligation |  | $ | 1,380 |  | $ | 573 |  | $ | 53 |  | $ | 2,006 |  | $ | 1,452 |  | $ | 482 |  | $ | 58 |  | $ | 1,992 |
Fair value of plan assets |  | 1,116 |  | 481 |  | — |  | 1,597 |  | 948 |  | 404 |  | — |  | 1,352 |
The accumulated benefit obligation for all defined benefit pension plans was $1.7 billion at December 31, 2013 and 2012. The aggregate accumulated benefit obligation and fair value of plan assets for plans with an accumulated benefit obligation in excess of plan assets were as follows (in millions):
|  | December 31, 2013 |  | December 31, 2012 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Accumulated benefit obligation |  | $ | 1,210 |  | $ | 374 |  | $ | 53 |  | $ | 1,637 |  | $ | 1,255 |  | $ | 335 |  | $ | 58 |  | $ | 1,648 |
Fair value of plan assets |  | 1,116 |  | 351 |  | — |  | 1,467 |  | 948 |  | 298 |  | — |  | 1,246 |
Plan assets—We periodically review our investment policies, plan assets and asset allocation strategies to evaluate performance relative to specified objectives. In determining our asset allocation strategies for the U.S. Plans, we review the results of regression models to assess the most appropriate target allocation for each plan, given the plan’s status, demographics and duration. For the U.K. Plans, the plan trustees establish the asset allocation strategies consistent with the regulations of the U.K. pension regulators and in consultation with financial advisors and company representatives. Investment managers for the U.S. Plans and the U.K. Plan are given established ranges within which the investments may deviate from the target allocations. For the Norway Plans, we establish minimum rates of return under the terms of investment contracts with insurance companies. As of December 31, 2013 and 2012, the weighted-average target and actual allocations of the investments for our funded Transocean Plans were as follows:
|  | December 31, 2013 |  | December 31, 2012 |
|  | Target allocation |  | Actual allocation |  | Target allocation |  | Actual allocation |
|  | U.S. Plans |  | Non-U.S. Plans |  | U.S. Plans |  | Non-U.S. Plans |  | U.S. Plans |  | Non-U.S. Plans |  | U.S. Plans |  | Non-U.S. Plans |
Equity securities |  | 63 | % | 51 | % | 68 | % | 53 | % | 65 | % | 49 | % | 64 | % | 49 | %
Fixed income securities |  | 37 | % | 15 | % | 32 | % | 17 | % | 35 | % | 14 | % | 36 | % | 17 | %
Other investments |  | — |  | 34 | % | — |  | 30 | % | — |  | 37 | % | — |  | 34 | %
Total |  | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | %
As of December 31, 2013, the investments for our funded Transocean Plans were categorized as follows (in millions):
|  | December 31, 2013 |
|  | Significant observable inputs |  | Significant other observable inputs |  | Total |
|  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |
Mutual funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. equity funds |  | $ | 610 |  | $ | — |  | $ | 610 |  | $ | — |  | $ | 43 |  | $ | 43 |  | $ | 610 |  | $ | 43 |  | $ | 653 |
Non-U.S. equity funds |  | 141 |  | — |  | 141 |  | 3 |  | 209 |  | 212 |  | 144 |  | 209 |  | 353 |
Bond funds |  | 357 |  | — |  | 357 |  | — |  | 83 |  | 83 |  | 357 |  | 83 |  | 440 |
Total mutual funds |  | 1,108 |  | — |  | 1,108 |  | 3 |  | 335 |  | 338 |  | 1,111 |  | 335 |  | 1,446 |
Other investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market funds |  | 5 |  | 1 |  | 6 |  | — |  | — |  | — |  | 5 |  | 1 |  | 6 |
Property collective trusts |  | — |  | — |  | — |  | — |  | 15 |  | 15 |  | — |  | 15 |  | 15 |
Investment contracts |  | — |  | — |  | — |  | — |  | 130 |  | 130 |  | — |  | 130 |  | 130 |
Total other investments |  | 5 |  | 1 |  | 6 |  | — |  | 145 |  | 145 |  | 5 |  | 146 |  | 151 |
Total investments |  | $ | 1,113 |  | $ | 1 |  | $ | 1,114 |  | $ | 3 |  | $ | 480 |  | $ | 483 |  | $ | 1,116 |  | $ | 481 |  | $ | 1,597 |
As of December 31, 2012, the investments for our funded Transocean Plans were categorized as follows (in millions):
|  | December 31, 2012 |
|  | Significant observable inputs |  | Significant other observable inputs |  | Total |
|  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |
Mutual funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. equity funds |  | $ | 525 |  | $ | — |  | $ | 525 |  | $ | — |  | $ | 32 |  | $ | 32 |  | $ | 525 |  | $ | 32 |  | $ | 557 |
Non-U.S. equity funds |  | 120 |  | — |  | 120 |  | 3 |  | 176 |  | 179 |  | 123 |  | 176 |  | 299 |
Bond funds |  | 296 |  | — |  | 296 |  | — |  | 73 |  | 73 |  | 296 |  | 73 |  | 369 |
Total mutual funds |  | 941 |  | — |  | 941 |  | 3 |  | 281 |  | 284 |  | 944 |  | 281 |  | 1,225 |
Other investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market funds |  | 4 |  | 2 |  | 6 |  | — |  | 6 |  | 6 |  | 4 |  | 8 |  | 12 |
Property collective trusts |  | — |  | — |  | — |  | — |  | 8 |  | 8 |  | — |  | 8 |  | 8 |
Investment contracts |  | — |  | — |  | — |  | — |  | 125 |  | 125 |  | — |  | 125 |  | 125 |
Total other investments |  | 4 |  | 2 |  | 6 |  | — |  | 139 |  | 139 |  | 4 |  | 141 |  | 145 |
Total investments |  | $ | 945 |  | $ | 2 |  | $ | 947 |  | $ | 3 |  | $ | 420 |  | $ | 423 |  | $ | 948 |  | $ | 422 |  | $ | 1,370 |
The U.S. Plans and the U.K. Plan invest primarily in passively managed funds that reference market indices. The funded Norway Plans are subject to contractual terms under selected insurance programs. Each plan’s investment managers have discretion to select the securities held within each asset category. Given this discretion, the managers may occasionally invest in our debt or equity securities, and may hold either long or short positions in such securities. As the plan investment managers are required to maintain well diversified portfolios, the actual investment in our securities would be immaterial relative to asset categories and the overall plan assets. Net periodic benefit costs—Net periodic benefit costs, before tax, included the following components (in millions):
|  | Year ended December 31, 2013 |  | Year ended December 31, 2012 |  | Year ended December 31, 2011 |
|  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |  | U.S. Plans |  | Non-U.S. Plans |  | Transocean Plans |
Service cost |  | $ | 55 |  | $ | 27 |  | $ | 82 |  | $ | 49 |  | $ | 31 |  | $ | 80 |  | $ | 43 |  | $ | 21 |  | $ | 64 |
Interest cost |  | 63 |  | 25 |  | 88 |  | 59 |  | 24 |  | 83 |  | 58 |  | 22 |  | 80 |
Expected return on plan assets |  | (70 | ) | (25 | ) | (95 | ) | (62 | ) | (22 | ) | (84 | ) | (63 | ) | (23 | ) | (86 | )
Settlements and curtailments |  | 2 |  | 3 |  | 5 |  | 3 |  | 19 |  | 22 |  | 2 |  | 1 |  | 3 |
Special termination benefits |  | 1 |  | — |  | 1 |  | 1 |  | — |  | 1 |  | — |  | — |  | — |
Actuarial losses, net |  | 45 |  | 3 |  | 48 |  | 41 |  | 4 |  | 45 |  | 23 |  | 4 |  | 27 |
Prior service cost, net |  | (1 | ) | 1 |  | — |  | (2 | ) | 1 |  | (1 | ) | (1 | ) | — |  | (1 | )
Net periodic benefit costs |  | $ | 95 |  | $ | 34 |  | $ | 129 |  | $ | 89 |  | $ | 57 |  | $ | 146 |  | $ | 62 |  | $ | 25 |  | $ | 87 |
For the OPEB Plans, the combined components of net periodic benefit costs, including service cost, interest cost, recognized net actuarial losses, prior service cost amortization and special termination benefits were $3 million, $3 million and $1 million in the years ended December 31, 2013, 2012 and 2011, respectively. The following table presents the amounts in accumulated other comprehensive income, before tax, that have not been recognized as components of net periodic benefit costs (in millions):
|  | December 31, 2013 |  | December 31, 2012 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Actuarial loss, net |  | $ | 205 |  | $ | 116 |  | $ | 1 |  | $ | 322 |  | $ | 477 |  | $ | 80 |  | $ | 8 |  | $ | 565 |
Prior service cost, net |  | (7 | ) | — |  | (2 | ) | (9 | ) | (8 | ) | — |  | (2 | ) | (10 | )
Transition obligation, net |  | — |  | (2 | ) | — |  | (2 | ) | — |  | — |  | — |  | — |
Total |  | $ | 198 |  | $ | 114 |  | $ | (1 | ) | $ | 311 |  | $ | 469 |  | $ | 80 |  | $ | 6 |  | $ | 555 |
The following table presents the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit costs during the year ending December 31, 2014 (in millions):
|  | Year ending December 31, 2014 |
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Actuarial loss, net |  | $ | 20 |  | $ | 5 |  | $ | — |  | $ | 25 |
Prior service cost, net |  | (1 | ) | — |  | (1 | ) | (2 | )
Transition obligation, net |  | — |  | — |  | — |  | — |
Total amount expected to be recognized |  | $ | 19 |  | $ | 5 |  | $ | (1 | ) | $ | 23 |
Funding contributions—In the years ended December 31, 2013, 2012 and 2011, we contributed $115 million, $159 million and $103 million, respectively, to the Transocean Plans and the OPEB Plans using our cash flows from operations. For the year ending December 31, 2014, we expect to contribute $69 million to the Transocean Plans, and we expect to fund benefit payments of approximately $3 million for the OPEB Plans as costs are incurred. Benefit payments—The following were the projected benefits payments (in millions):
|  | U.S. Plans |  | Non-U.S. Plans |  | OPEB Plans |  | Total |
Years ending December 31, |  |  |  |  |  |  |  |  |
2014 |  | $ | 48 |  | $ | 22 |  | $ | 3 |  | $ | 73 |
2015 |  | 52 |  | 11 |  | 4 |  | 67 |
2016 |  | 57 |  | 11 |  | 4 |  | 72 |
2017 |  | 63 |  | 11 |  | 4 |  | 78 |
2018 |  | 67 |  | 13 |  | 4 |  | 84 |
2019-2023 |  | 420 |  | 86 |  | 21 |  | 527 |
Defined contribution plans We sponsor two defined contribution plans, including (1) one qualified defined contribution savings plan covering certain employees working in the U.S. (the “U.S. Savings Plan”) and (2) one defined contribution savings plan covering certain employees working outside the U.S. (the “Non-U.S. Savings Plan”). For the U.S. Savings Plan, we make a matching contribution of up to 6.0 percent of each participant’s base salary based on the participant’s contribution to the plan. For the Non-U.S. Savings Plan, in addition to a matching contribution of up to 6.0 percent of each participant’s base salary based on the participant’s contribution to the plans, we contribute between 4.5 percent and 6.5 percent of each participant’s base salary, based on the participant’s years of eligible service. In the years ended December 31, 2013, 2012 and 2011, we recognized expense of $88 million, $85 million and $82 million, respectively, related to our defined contribution plans. One-time termination benefit plans During the year ended December 31, 2013, we committed to a plan to improve the organizational efficiency of our shore-based support activities worldwide. In connection with this initiative, we established certain one-time termination benefit plans for shore-based employees in the U.S. and the U.K. and for expatriate resident employees worldwide that were or are expected to be involuntarily terminated during the period from May 2013 through December 2014. The plans generally offer affected individuals a lump sum benefit payment equivalent to between four weeks and 52 weeks of the employee’s weekly base salary, calculated based on the employee’s annual base salary and years of service with additional amounts paid to those employees that would otherwise have been eligible for a bonus payment under our annual incentive program, and allowed for early retirement and immediate vesting for qualifying individuals under our defined benefit plans and other postretirement employee benefit plans. In the year ended December 31, 2013, we recognized expense of $32 million, associated with severance-related costs under these one-time termination benefit plans. In the year ended December 31, 2013, we made payments of $21 million for involuntary terminations under these plans.

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- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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