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POST-RETIREMENT AND OTHER LONG-TERM EMPLOYEES BENEFITS (Tables) | 12 Months Ended
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Dec. 31, 2012
Changes in Benefit Obligation and Plan Assets | The changes in benefit obligation and plan assets were as follows:
|  | Pension Benefits |  |  | Other Long-Term Benefits |
|  | December 31, 2012 |  |  | December 31, 2011 |  |  | December 31, 2012 |  |  | December 31, 2011 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  |  | 794 |  |  |  | 701 |  |  |  | 52 |  |  |  | 50 |
Service cost |  |  | 40 |  |  |  | 34 |  |  |  | 9 |  |  |  | 8 |
Interest cost |  |  | 31 |  |  |  | 33 |  |  |  | 3 |  |  |  | 3 |
Employee contributions |  |  | 6 |  |  |  | 7 |  |  |  | — |  |  |  | — |
Benefits paid |  |  | (21 | ) |  |  | (20 | ) |  |  | (3 | ) |  |  | (2 | )
Effect of settlement |  |  | (31 | ) |  |  | (18 | ) |  |  | — |  |  |  | — |
Actuarial (gain) loss |  |  | 58 |  |  |  | 73 |  |  |  | 2 |  |  |  | (5 | )
Transfer in |  |  | 70 |  |  |  | 3 |  |  |  | 3 |  |  |  | 1 |
Transfer out |  |  | (70 | ) |  |  | (3 | ) |  |  | (3 | ) |  |  | (1 | )
Plan amendment |  |  | 4 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign currency translation adjustment |  |  | 20 |  |  |  | (16 | ) |  |  | — |  |  |  | (2 | )
Benefit obligation at end of year |  |  | 901 |  |  |  | 794 |  |  |  | 63 |  |  |  | 52 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Plan assets at fair value at beginning of year |  |  | 378 |  |  |  | 372 |  |  |  | — |  |  |  | — |
Expected return on plan assets |  |  | 18 |  |  |  | 20 |  |  |  | — |  |  |  | — |
Employer contributions |  |  | 34 |  |  |  | 30 |  |  |  | — |  |  |  | — |
Employee contributions |  |  | 6 |  |  |  | 7 |  |  |  | — |  |  |  | — |
Benefits paid |  |  | (11 | ) |  |  | (8 | ) |  |  | — |  |  |  | — |
Effect of settlement |  |  | (30 | ) |  |  | (16 | ) |  |  | — |  |  |  | — |
Actuarial gain (loss) |  |  | 17 |  |  |  | (25 | ) |  |  | — |  |  |  | — |
Transfer in |  |  | 40 |  |  |  | 1 |  |  |  | — |  |  |  | — |
Transfer out |  |  | (40 | ) |  |  | (1 | ) |  |  | — |  |  |  | — |
Foreign currency translation adjustments |  |  | 10 |  |  |  | (2 | ) |  |  | — |  |  |  | — |
Plan assets at fair value at end of year |  |  | 422 |  |  |  | 378 |  |  |  | — |  |  |  | — |
Funded status |  |  | (479 | ) |  |  | (416 | ) |  |  | (63 | ) |  |  | (52 | )
Net amount recognized in the balance sheet consisted of the following: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current assets |  |  | 5 |  |  |  | 1 |  |  |  | — |  |  |  | — |
Current liabilities |  |  | (16 | ) |  |  | (16 | ) |  |  | (3 | ) |  |  | (3 | )
Long-term liabilities |  |  | (468 | ) |  |  | (401 | ) |  |  | (60 | ) |  |  | (49 | )
Net amount recognized |  |  | (479 | ) |  |  | (416 | ) |  |  | (63 | ) |  |  | (52 | )
Accumulated Other Comprehensive Income (Loss) Before Tax Effects | The components of accumulated other comprehensive income (loss) before tax effects were as follows:
|  | Actuarial (gains)/losses |  |  | Prior service cost |  |  | Total |
Other comprehensive loss as at December 31, 2010 |  |  | 86 |  |  |  | 11 |  |  |  | 97 |
Net amount generated/arising in current year |  |  | 98 |  |  |  | — |  |  |  | 98 |
Amortization |  |  | (6 | ) |  |  | (1 | ) |  |  | (7 | )
Foreign currency translation adjustment |  |  | (3 | ) |  |  | — |  |  |  | (3 | )
Other comprehensive loss as at December 31, 2011 |  |  | 175 |  |  |  | 10 |  |  |  | 185 |
Net amount generated/arising in current year |  |  | 43 |  |  |  | 4 |  |  |  | 47 |
Amortization |  |  | (14 | ) |  |  | (5 | ) |  |  | (19 | )
Foreign currency translation adjustment |  |  | 5 |  |  |  | — |  |  |  | 5 |
Other comprehensive loss as at December 31, 2012 |  |  | 209 |  |  |  | 9 |  |  |  | 218 |
Components of Net Periodic Benefit Cost | The components of the net periodic benefit cost included the following:
|  | Pension Benefits |  |  | Other Long-term Benefits |
|  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |  |  | Year ended December 31, 2010 |  |  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |  |  | Year ended December 31, 2010 |
Service cost |  |  | 40 |  |  |  | 34 |  |  |  | 25 |  |  |  | 9 |  |  |  | 8 |  |  |  | 8 |
Interest cost |  |  | 31 |  |  |  | 33 |  |  |  | 26 |  |  |  | 3 |  |  |  | 3 |  |  |  | 2 |
Expected return on plan assets |  |  | (18 | ) |  |  | (20 | ) |  |  | (18 | ) |  |  | — |  |  |  | — |  |  |  | — |
Amortization of actuarial net loss (gain) |  |  | 12 |  |  |  | 6 |  |  |  | 4 |  |  |  | 2 |  |  |  | (5 | ) |  |  | 3 |
Amortization of prior service cost |  |  | 5 | (1) |  |  | 1 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Effect of settlement |  |  | — |  |  |  | (1 | ) |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | — |
Effect of curtailment |  |  | — |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | (1 | )
Net periodic benefit cost |  |  | 70 |  |  |  | 53 |  |  |  | 41 |  |  |  | 14 |  |  |  | 6 |  |  |  | 13 |
(1) | The amortization of prior service cost includes about $4 million costs in relation with ST-Ericsson April 2012 restructuring plan.
Weighted Average Assumptions Used in Determination of Benefit Obligation and Plan Asset | The weighted average assumptions used in the determination of the benefit obligation and the plan asset for the pension plans and the other long-term benefits were as follows:
Assumptions |  | December 31, 2012 |  |  | December 31, 2011 |
Discount rate |  |  | 3.43 | % |  |  | 4.14 | %
Salary increase rate |  |  | 2.92 | % |  |  | 2.99 | %
Expected long-term rate of return on funds for the pension expense of the year |  |  | 4.43 | % |  |  | 4.57 | %
The weighted average assumptions used in the determination of the net periodic benefit cost for the pension plans and the other long-term benefits were as follows:
Assumptions |  | Year ended December 31, 2012 |  |  | Year ended December 31, 2011 |  |  | Year ended December 31, 2010 |
Discount rate |  |  | 4.14 | % |  |  | 4.68 | % |  |  | 5.11 | %
Salary increase rate |  |  | 2.99 | % |  |  | 3.13 | % |  |  | 3.08 | %
Expected long-term rate of return on funds for the pension expense of the year |  |  | 4.57 | % |  |  | 4.99 | % |  |  | 5.28 | %
Pension Plan Asset Allocation | The Company’s pension plan asset allocation at December 31, 2012 and at December 31, 2011 is as follows:
|  | Percentage of Plan Assets at December |
Asset Category |  | 2012 |  |  | 2011 |
Equity securities |  |  | 37 | % |  |  | 31 | %
Bonds securities remunerating interest |  |  | 31 | % |  |  | 25 | %
Real estate |  |  | 2 | % |  |  | 3 | %
Other |  |  | 30 | % |  |  | 41 | %
Total |  |  | 100 | % |  |  | 100 | %
Pension Plan Asset Allocation Including Fair-Value Measurements | The Company’s detailed pension plan asset allocation including the fair-value measurements of those plan assets as at December 31, 2012 is as follows:
|  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Cash and cash equivalents |  |  | 5 |  |  |  | 5 |  |  |  | — |  |  |  | — |
Equity securities |  |  | 156 |  |  |  | 9 |  |  |  | 147 |  |  |  | — |
Government debt securities |  |  | 13 |  |  |  | 12 |  |  |  | 1 |  |  |  | — |
Corporate debt securities |  |  | 119 |  |  |  | 4 |  |  |  | 115 |  |  |  | — |
Investment funds |  |  | 7 |  |  |  | 1 |  |  |  | 3 |  |  |  | 3 |
Real estate |  |  | 9 |  |  |  | — |  |  |  | 5 |  |  |  | 4 |
Other (mainly insurance assets – contracts and reserves) |  |  | 113 |  |  |  | — |  |  |  | — |  |  |  | 113 |
TOTAL |  |  | 422 |  |  |  | 31 |  |  |  | 271 |  |  |  | 120 |
The Company’s detailed pension plan asset allocation including the fair-value measurements of those plan assets as at December 31, 2011 is as follows:
|  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Cash and cash equivalents |  |  | 10 |  |  |  | 10 |  |  |  | — |  |  |  | — |
Equity securities |  |  | 116 |  |  |  | 12 |  |  |  | 104 |  |  |  | — |
Government debt securities |  |  | 15 |  |  |  | 13 |  |  |  | 2 |  |  |  | — |
Corporate debt securities |  |  | 78 |  |  |  | 2 |  |  |  | 76 |  |  |  | — |
Derivatives |  |  | 16 |  |  |  | 16 |  |  |  | — |  |  |  | — |
Investment funds |  |  | 32 |  |  |  | — |  |  |  | 30 |  |  |  | 2 |
Real estate |  |  | 12 |  |  |  | — |  |  |  | 8 |  |  |  | 4 |
Other (mainly insurance assets – contracts and reserves) |  |  | 99 |  |  |  | 1 |  |  |  | — |  |  |  | 98 |
TOTAL |  |  | 378 |  |  |  | 54 |  |  |  | 220 |  |  |  | 104 |
Reconciliation for Plan Assets Measured at Fair Value Using Unobservable Inputs (Level 3) | For plan assets measured at fair value using significant unobservable inputs (Level 3), the reconciliation between January 1, 2012 and December 31, 2012 is presented as follows:
In millions of U.S. dollars |  | Fair Value Measurements using Significant Unobservable Inputs (Level 3) |
January 1, 2012 |  |  | 104 |
Actual return on plan assets |  |  | 3 |
Contributions (employer and employee) |  |  | 16 |
Benefits paid |  |  | (3 | )
Settlements |  |  | (7 | )
Reclassification to Level 3 |  |  | 4 |
Foreign currency translation adjustment |  |  | 3 |
December 31, 2012 |  |  | 120 |
For plan assets measured at fair value using significant unobservable inputs (Level 3), the reconciliation between January 1, 2011 and December 31, 2011 is presented as follows:
In millions of U.S. dollars |  | Fair Value Measurements using Significant Unobservable Inputs (Level 3) |
January 1, 2011 |  |  | 12 |
Reclassification to Level 2 |  |  | (2 | )
Reclassification to Level 3 |  |  | 94 |
December 31, 2011 |  |  | 104 |
Estimated Future Benefit Payments | The Company’s estimated future benefit payments as of December 2012 are as follows:
Years |  | Pension Benefits |  |  | Other Long-term Benefits |
2013 |  |  | 27 |  |  |  | 3 |
2014 |  |  | 32 |  |  |  | 5 |
2015 |  |  | 25 |  |  |  | 11 |
2016 |  |  | 30 |  |  |  | 4 |
2017 |  |  | 36 |  |  |  | 4 |
From 2018 to 2022 |  |  | 203 |  |  |  | 29 |

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