POST-RETIREMENT AND OTHER LONG-TERM EMPLOYEES BENEFITS (Tables)

12 Months Ended

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