Retirement Benefits | 12 Months Ended |
Dec. 31, 2014 |
Compensation and Retirement Disclosure [Abstract] | |
Retirement Benefits | 11. Retirement Benefits |
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Pension Plans |
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A significant number of employees of the Company and its subsidiaries participate in the Company's defined benefit plans or retirement/termination indemnity plans. |
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The following table provides a reconciliation of the changes in the plans' benefit obligation and fair value of assets for the years ended December 31, 2014 and 2013 and a statement of the funded status as of December 31, 2014 and 2013: |
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| | | 2014 | | 2013 | | | | | | | | | |
| | | | | | | Rest of | | | | | | Rest of | | | | | | | | | |
| | | U.S. | U.K. | World | U.S. | U.K. | World | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | |
Total accumulated benefit obligation at December 31, | | $ | 349 | | $ | 1,460 | | $ | 754 | | $ | 767 | | $ | 4,730 | | $ | 865 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit obligations at beginning of period | | $ | 769 | | $ | 4,729 | | $ | 930 | | $ | 1,073 | | $ | 4,730 | | $ | 955 | | | | | | | | | |
| Service cost | | | 2 | | | - | | | 21 | | | 2 | | | - | | | 23 | | | | | | | | | |
| Interest cost | | | 37 | | | 206 | | | 34 | | | 42 | | | 189 | | | 36 | | | | | | | | | |
| Plan amendments | | | - | | | 7 | | | 2 | | | - | | | - | | | 1 | | | | | | | | | |
| Actuarial (gain) loss | | | 105 | | | 1,384 | | | 237 | | | -133 | | | -7 | | | -34 | | | | | | | | | |
| Foreign currency exchange rate changes | | | - | | | -321 | | | -113 | | | - | | | 95 | | | - | | | | | | | | | |
| Settlement/Curtailment (gain) loss | | | -520 | | | -4,283 | | | -224 | | | -153 | | | - | | | - | | | | | | | | | |
| Benefits paid | | | -43 | | | -262 | | | -46 | | | -62 | | | -278 | | | -51 | | | | | | | | | |
Benefit obligations at December 31, | | | 350 | | | 1,460 | | | 841 | | | 769 | | | 4,729 | | | 930 | | | | | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at beginning of period | | | 695 | | | 5,763 | | | 328 | | | 804 | | | 5,552 | | | 303 | | | | | | | | | |
| Actual return on plan assets, less plan expense | | | 82 | | | 1,022 | | | 31 | | | 46 | | | 320 | | | 48 | | | | | | | | | |
| Foreign currency exchange rate changes | | | - | | | -361 | | | -26 | | | - | | | 122 | | | -23 | | | | | | | | | |
| Company contributions | | | 41 | | | 219 | | | 61 | | | 60 | | | 47 | | | 51 | | | | | | | | | |
| Settlements | | | -520 | | | -4,283 | | | -223 | | | -153 | | | - | | | - | | | | | | | | | |
| Benefits paid | | | -43 | | | -262 | | | -46 | | | -62 | | | -278 | | | -51 | | | | | | | | | |
Fair value of plan assets at December 31, | | | 255 | | | 2,098 | | | 125 | | | 695 | | | 5,763 | | | 328 | | | | | | | | | |
Funded status at December 31, | | $ | -95 | | $ | 638 | | $ | -716 | | $ | -74 | | $ | 1,034 | | $ | -602 | | | | | | | | | |
During 2014, the Company undertook a number of actions to abate a significant portion of pension obligations in the U.S., U.K. and Canada by offering lump sum payments to certain active and former employees and entering into group annuity contracts with third party carriers to pay and administer future annuity payments related to substantially all retirees. These actions resulted in settlement charges of $117 million, $600 million and $73 million in the U.S., U.K. and Canada, respectively. A significant portion of these actions were financed with plan assets; however, additional cash contributions of $163 million and $12 million in the U.K. and Canada, respectively, were required. |
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During 2013 and 2012, the Company undertook a number of similar actions in respect of its U.S. defined benefit plans. Participants who accepted the offers received lump sum payments in the amount of $148 million and $298 million which were paid from plan assets in 2013 and 2012, respectively. The Company recognized settlement losses of $35 million in 2013 and $88 million in 2012. |
The following table provides the amounts recognized in the consolidated balance sheets: | | | | | | | | | |
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| | | As of December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | |
| | | | | | | Rest of | | | | | | Rest of | | | | | | | | | |
| | | U.S. | U.K. | World | U.S. | U.K. | World | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | |
| Non-current assets | | $ | 2 | | $ | 638 | | $ | 23 | | $ | 2 | | $ | 1,034 | | $ | 23 | | | | | | | | | |
| Current liabilities | | | - | | | - | | | -22 | | | - | | | - | | | -25 | | | | | | | | | |
| Liabilities held-for-sale | | | - | | | - | | | -40 | | | - | | | - | | | - | | | | | | | | | |
| Long-term liabilities | | | -97 | | | - | | | -677 | | | -76 | | | - | | | -600 | | | | | | | | | |
| Net amount recognized | | $ | -95 | | $ | 638 | | $ | -716 | | $ | -74 | | $ | 1,034 | | $ | -602 | | | | | | | | | |
The pre-tax amounts recognized in accumulated other comprehensive earnings (losses) consist of: | | | | | | | | | |
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| | | As of December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | |
| | | | | | | Rest of | | | | | | Rest of | | | | | | | | | |
| | | U.S. | U.K. | World | U.S. | U.K. | World | | | | | | | | | |
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| | | (Dollars in millions) | | | | | | | | | |
| Prior service benefit (cost) | | $ | - | | $ | - | | $ | -4 | | $ | - | | $ | - | | $ | -3 | | | | | | | | | |
| Net gain (loss) | | | -80 | | | -210 | | | -300 | | | -132 | | | -144 | | | -197 | | | | | | | | | |
| Accumulated other comprehensive earnings (loss) | | $ | -80 | | $ | -210 | | $ | -304 | | $ | -132 | | $ | -144 | | $ | -200 | | | | | | | | | |
Information for pension plans with an accumulated benefit obligation in excess of plan assets is as follows: | | | | | | | | | | | | | | | |
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| | | As of December 31, | | | | | | | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | Rest of | | | | | | | | | | | | | | | |
| | | U.S. | World | U.S. | World | | | | | | | | | | | | | | | |
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| | | (Dollars in millions) | | | | | | | | | | | | | | | |
| Projected benefit obligation | | $ | 341 | | $ | 752 | | $ | 748 | | $ | 636 | | | | | | | | | | | | | | | |
| Accumulated benefit obligation | | | 339 | | | 665 | | | 746 | | | 572 | | | | | | | | | | | | | | | |
| Fair value of assets | | | 244 | | | 13 | | | 672 | | | 11 | | | | | | | | | | | | | | | |
The following table provides the components of net pension cost (income) and other amounts recognized in other comprehensive (earnings) loss for the Company's defined benefit pension plans and defined contribution plans: |
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| | | Years Ended December 31, |
| | | 2014 | | 2013 | | 2012 |
| | | | | | | Rest of | | | | | | Rest of | | | | | | Rest of |
| | | U.S. | U.K. | World | U.S. | U.K. | World | U.S. | U.K. | World |
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| | | (Dollars in millions) |
Net pension cost (income) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Defined benefit plans: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Service cost | | $ | 2 | | $ | - | | $ | 21 | | $ | 2 | | $ | - | | $ | 23 | | $ | 4 | | $ | - | | $ | 19 |
Interest cost | | | 37 | | | 206 | | | 34 | | | 42 | | | 189 | | | 36 | | | 59 | | | 215 | | | 38 |
Expected return on plan assets | | | -49 | | | -341 | | | -16 | | | -59 | | | -315 | | | -20 | | | -80 | | | -328 | | | -20 |
Settlement/Curtailment (gain) loss | | | 117 | | | 600 | | | 72 | | | 35 | | | - | | | - | | | 92 | | | - | | | 2 |
Amortization of prior service (benefit) cost | | | - | | | - | | | 1 | | | - | | | - | | | 1 | | | 2 | | | - | | | - |
Amortization of net (gain) loss | | | 8 | | | - | | | 11 | | | 27 | | | - | | | 18 | | | 19 | | | - | | | 9 |
| Defined benefit plans | | | 115 | | | 465 | | | 123 | | | 47 | | | -126 | | | 58 | | | 96 | | | -113 | | | 48 |
Defined contribution plans cost | | | 23 | | | 4 | | | 24 | | | 22 | | | 3 | | | 16 | | | 22 | | | 3 | | | 16 |
| Net pension cost (income) | | | 138 | | | 469 | | | 147 | | | 69 | | | -123 | | | 74 | | | 118 | | | -110 | | | 64 |
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Other changes in plan assets and benefit obligations recognized in other comprehensive (earnings) loss | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prior service (benefit) cost | | | - | | | 7 | | | 2 | | | - | | | - | | | -1 | | | - | | | - | | | 1 |
Net (gain) loss | | | 72 | | | 703 | | | 223 | | | -120 | | | -12 | | | -61 | | | 33 | | | 295 | | | 125 |
Effect of exchange rates on amounts included in AOCI | | | - | | | -45 | | | -36 | | | - | | | 3 | | | -4 | | | - | | | -2 | | | 7 |
Amortization or curtailment recognition of prior service benefit (cost) | | | - | | | -7 | | | -1 | | | - | | | - | | | 1 | | | -2 | | | - | | | -1 |
Amortization or settlement recognition of net gain (loss) | | | -125 | | | -592 | | | -84 | | | -62 | | | - | | | -19 | | | -110 | | | - | | | -11 |
Total recognized in other comprehensive (earnings) loss | | | -53 | | | 66 | | | 104 | | | -182 | | | -9 | | | -84 | | | -79 | | | 293 | | | 121 |
Total recognized net pension (income) cost and other comprehensive (earnings) loss | | $ | 85 | | $ | 535 | | $ | 251 | | $ | -113 | | $ | -132 | | $ | -10 | | $ | 39 | | $ | 183 | | $ | 185 |
The estimated amounts that will be amortized from accumulated other comprehensive earnings over the next fiscal year are as follows: | | | | | | | | | | | | | | | | | | | | | |
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| | | Year Ending | | | | | | | | | | | | | | | | | | | | | |
| | | 31-Dec-15 | | | | | | | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | | | | | | | | | | | | | | | | | | |
| | | U.S. | World | | | | | | | | | | | | | | | | | | | | | |
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| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | |
| Prior service (benefit) cost | | $ | - | | $ | 1 | | | | | | | | | | | | | | | | | | | | | |
| Net (gain) loss | | | 7 | | | 29 | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 7 | | $ | 30 | | | | | | | | | | | | | | | | | | | | | |
Plan Assumptions. The weighted-average assumptions used to determine net periodic benefit cost were: |
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| | | Years Ended December 31, |
| | | 2014 | | 2013 | | 2012 |
| | | | | | | | | Rest of | | | | | | | | Rest of | | | | | | | | Rest of |
| | | U.S. | | U.K. | | World | | U.S. | | U.K. | | World | | U.S. | | U.K. | | World |
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Discount rate | | 5 | % | | 4.5 | % | | 4.18 | % | | 4 | % | | 4.25 | % | | 3.9 | % | | 4.75 | % | | 4.75 | % | | 4.82 | % |
Expected long-term return on plan assets | | 7.5 | % | | 6.25 | % | | 6.31 | % | | 7.75 | % | | 6.25 | % | | 6.53 | % | | 7.75 | % | | 6.25 | % | | 6.5 | % |
Rate of increase in compensation levels | | 3.5 | % | | N/A | | 2.9 | % | | 5 | % | | N/A | | 2.9 | % | | 4.76 | % | | N/A | | 2.92 | % |
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To develop the expected long-term rate of return on asset assumptions, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. The U.K. pension plan and certain of the U.S. pension plans are closed to future benefits, therefore the rate of increase in compensation was not applicable in determining the net period benefit cost for 2014, 2013 and 2012, nor in determining the benefit obligation as of December 31, 2014 and 2013. |
The weighted-average assumptions used to calculate the benefit obligations were: | | | | | | | | | |
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| | | As of December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | |
| | | | | | | | | Rest of | | | | | | | | Rest of | | | | | | | | | |
| | | U.S. | | U.K. | | World | | U.S. | | U.K. | | World | | | | | | | | | |
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Discount rate | | 4.25 | % | | 3.75 | % | | 2.41 | % | | 5 | % | | 4.5 | % | | 4.18 | % | | | | | | | | | |
Rate of increase in compensation levels | | 5 | % | | N/A | | 2.89 | % | | 3.5 | % | | N/A | | 2.9 | % | | | | | | | | | |
Plan Assets. The U.S. and U.K. plan assets represent approximately 95% of the total plan assets of defined benefit plans. All remaining assets are deemed immaterial and not reflected below. |
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The goals and investment objectives of the asset strategy are to ensure that there is an adequate level of assets to meet benefit obligations to participants and retirees over the life of the participants and maintain liquidity in the plan assets sufficient to cover current benefit obligations. Risk is managed by investing in a broad range of asset classes and the use of liability matching derivative instruments. Within the asset classes, investments are made in a broad range of individual securities. There are no equity securities of the Company in the equity asset category. |
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The investment policies for the U.K. and U.S. pension plans are based on a low volatility and risk asset allocation that targets a sufficient level of return to meet benefit payments as they become due over the long term. The investment policy includes a significant allocation to a liability driven cash-flow matching strategy which also includes a substantial interest rate hedging program as well as an inflation hedging program in the U.K. The remaining assets are invested mainly in physical and synthetic equities (with a degree of protection from downside risk), a range of U.K., U.S. and other credit opportunities (including asset backed securities) and property to achieve a diversified real return to meet the expected future liability outflows. |
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As of December 31, 2014, the investment policy resulted in an asset allocation for all plans of 52% in fixed income investments, 5% in equity and structured equity investments, 4% in real estate, and 39% in cash and other investments. Equity investments include investments in large-cap and mid-cap companies and mutual funds located throughout the world. Structured equity investments include equity option “collar” structures which reduce the outright exposure to falls in the levels of underlying equity markets. Fixed income securities include government bonds, corporate bonds of companies from diversified industries, asset backed securities and collateral assets held in government bonds for structured equity holdings. Real estate includes investments in real estate and funds that invest in real estate. Cash and other investments primarily include cash held by the plan, U.K. government treasuries and certain types of derivative instruments including interest rate and inflation swaps that are utilized to manage risks associated with the assets held by the plan. |
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The fair values of the Company's U.S. and U.K. pension plan assets by asset category using the fair value three-level hierarchy (see Note 12) are as follows: |
| | | As of December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | | | | | | | | | |
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| | | (Dollars in millions) | | | | | | | | | |
Cash and cash equivalents | | $ | 943 | | $ | - | | $ | - | | $ | 656 | | $ | - | | $ | - | | | | | | | | | |
Fixed income investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate bonds | | | - | | | 109 | | | - | | | - | | | 1,864 | | | - | | | | | | | | | |
| U.K. government guaranteed bonds | | | 359 | | | - | | | - | | | 1,724 | | | - | | | - | | | | | | | | | |
| Collateral assets for structured equity holdings | | | 86 | | | - | | | - | | | 80 | | | - | | | - | | | | | | | | | |
| Asset backed securities | | | - | | | 665 | | | - | | | - | | | 1,081 | | | - | | | | | | | | | |
Equities: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | | 2 | | | - | | | - | | | 4 | | | - | | | - | | | | | | | | | |
| Structured equity holdings | | | - | | | 114 | | | - | | | - | | | 916 | | | - | | | | | | | | | |
Real estate | | | - | | | 99 | | | - | | | - | | | 148 | | | - | | | | | | | | | |
Other | | | - | | | -24 | | | - | | | - | | | -15 | | | - | | | | | | | | | |
| Total assets at fair value | | $ | 1,390 | | $ | 963 | | $ | - | | $ | 2,464 | | $ | 3,994 | | $ | - | | | | | | | | | |
Contributions. In 2015, the Company's minimum expected funding is $7 million for the U.K. pension plan and approximately $29 million for pension plans in the rest of the world. However, the Company may, at its discretion, make additional contributions. The Company does not expect to make any funding contributions to the U.S. plans in 2015. |
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Expected Future Pension Benefit Payments. The following pension benefit payments, which reflect current obligations and expected future service, as appropriate, are expected to be paid from the underlying plans to the participants: |
| | | U.S. | | U.K. | | Rest of World | | | | | | | | | | | | | | | |
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| Years Ending December 31, | | (Dollars in millions) | | | | | | | | | | | | | | | | |
| 2015 | | $ | 7 | | | $ | 29 | | | $ | 24 | | | | | | | | | | | | | | | | |
| 2016 | | | 36 | | | | 24 | | | | 26 | | | | | | | | | | | | | | | | |
| 2017 | | | 10 | | | | 26 | | | | 28 | | | | | | | | | | | | | | | | |
| 2018 | | | 11 | | | | 28 | | | | 30 | | | | | | | | | | | | | | | | |
| 2019 | | | 12 | | | | 32 | | | | 31 | | | | | | | | | | | | | | | | |
| 2020 - 2024 | | | 76 | | | | 225 | | | | 183 | | | | | | | | | | | | | | | | |
Other Benefits. The Company also sponsors qualified defined contribution pension plans covering employees at certain operations and an unfunded non-qualified defined contribution plan for a select group of highly compensated employees. These plans allow participants to defer compensation, and generally provide employer matching contributions. |
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Postretirement Benefits Other Than Pensions (“OPEB”) |
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The Company provides health care and life insurance benefits for a substantial number of its retired employees in the United States and Canada, and for certain future retirees. The health care plans provide for the sharing of costs, in the form of retiree contributions, deductibles and coinsurance. Life insurance benefits are generally noncontributory. The Company's policy is to fund the cost of postretirement health care and life insurance benefits as those benefits become payable. |
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The following table provides a reconciliation of the changes in the plans' benefit obligation and fair value of assets during the years ended December 31, 2014 and December 31, 2013, and a statement of the funded status of the programs as of December 31, 2014 and 2013: |
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| | | 2014 | | 2013 | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | Rest of | | | | | | | | | | | | | | | |
| | | U.S. | World | U.S. | World | | | | | | | | | | | | | | | |
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| | | (Dollars in millions) | | | | | | | | | | | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Benefit obligations at beginning of period | | $ | 323 | | $ | 88 | | $ | 330 | | $ | 103 | | | | | | | | | | | | | | | |
| Service cost | | | - | | | 1 | | | 1 | | | 1 | | | | | | | | | | | | | | | |
| Interest cost | | | 15 | | | 4 | | | 14 | | | 4 | | | | | | | | | | | | | | | |
| Actuarial (gain) loss | | | -23 | | | 10 | | | -40 | | | -10 | | | | | | | | | | | | | | | |
| Foreign currency exchange rate changes | | | - | | | -7 | | | - | | | -6 | | | | | | | | | | | | | | | |
| Plan amendments | | | - | | | - | | | 57 | | | 3 | | | | | | | | | | | | | | | |
| Plan participant contributions | | | 1 | | | - | | | 1 | | | - | | | | | | | | | | | | | | | |
| Benefits paid | | | -28 | | | -6 | | | -40 | | | -7 | | | | | | | | | | | | | | | |
Benefit obligations at December 31, | | | 288 | | | 90 | | | 323 | | | 88 | | | | | | | | | | | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of plan assets at beginning of period | | | - | | | - | | | - | | | - | | | | | | | | | | | | | | | |
| Company contributions | | | 27 | | | 6 | | | 39 | | | 7 | | | | | | | | | | | | | | | |
| Plan participant contributions | | | 1 | | | - | | | 1 | | | - | | | | | | | | | | | | | | | |
| Benefits paid | | | -28 | | | -6 | | | -40 | | | -7 | | | | | | | | | | | | | | | |
Fair value of plan assets at December 31, | | | - | | | - | | | - | | | - | | | | | | | | | | | | | | | |
Funded status at December 31, | | $ | -288 | | $ | -90 | | $ | -323 | | $ | -88 | | | | | | | | | | | | | | | |
The following table provides the amounts recognized in the consolidated balance sheets: | | | | | | | | | | | | | | | |
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| | | As of December 31, | | | | | | | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | Rest of | | | | | | | | | | | | | | | |
| | | U.S. | World | U.S. | World | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | | | | | | | |
| Current liabilities | | $ | -26 | | $ | -6 | | $ | -30 | | $ | -6 | | | | | | | | | | | | | | | |
| Long-term liabilities | | | -262 | | | -84 | | | -293 | | | -82 | | | | | | | | | | | | | | | |
| Total amount recognized | | $ | -288 | | $ | -90 | | $ | -323 | | $ | -88 | | | | | | | | | | | | | | | |
The pre-tax amounts recognized in accumulated other comprehensive earnings (losses) consist of: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of December 31, | | | | | | | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | Rest of | | | | | | | | | | | | | | | |
| | | U.S. | World | U.S. | World | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | | | | | | | |
| Prior service benefit (cost) | | $ | 50 | | $ | 10 | | $ | 58 | | $ | 17 | | | | | | | | | | | | | | | |
| Net gain (loss) | | | 19 | | | -7 | | | -2 | | | 2 | | | | | | | | | | | | | | | |
| Accumulated other comprehensive earnings (loss) | | $ | 69 | | $ | 3 | | $ | 56 | | $ | 19 | | | | | | | | | | | | | | | |
The following table provides the components of net postretirement benefit (income) cost and other amounts recognized in other comprehensive (earnings) loss for the plans. | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | 2012 | | | | | | | | | |
| | | | | Rest of | | | | Rest of | | | | Rest of | | | | | | | | | |
| | | U.S. | | World | | U.S. | | World | | U.S. | | World | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | |
Net postretirement benefit (income) cost: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Service cost | | $ | - | | $ | 1 | | $ | 1 | | $ | 1 | | $ | 1 | | $ | 1 | | | | | | | | | |
Interest cost | | | 15 | | | 4 | | | 14 | | | 4 | | | 16 | | | 5 | | | | | | | | | |
Curtailment/Settlement (gain) loss | | | - | | | - | | | -29 | | | - | | | -36 | | | - | | | | | | | | | |
Amortization of prior service (benefit) cost | | | -8 | | | -5 | | | -13 | | | -5 | | | -22 | | | -7 | | | | | | | | | |
Amortization of net (gain) loss | | | -2 | | | - | | | 1 | | | 1 | | | - | | | 1 | | | | | | | | | |
| Net postretirement benefit (income) cost | | | 5 | | | - | | | -26 | | | 1 | | | -41 | | | - | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other changes in plan assets and benefit obligations recognized in other comprehensive (earnings) loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prior service (benefit) cost | | | - | | | - | | | 57 | | | 3 | | | - | | | 3 | | | | | | | | | |
Net (gain) loss | | | -23 | | | 10 | | | -40 | | | -9 | | | -6 | | | -8 | | | | | | | | | |
Amortization or curtailment recognition of prior service benefit (cost) | | | 8 | | | 5 | | | 31 | | | 5 | | | 51 | | | 6 | | | | | | | | | |
Amortization or settlement recognition of net gain (loss) | | | 2 | | | 1 | | | 9 | | | - | | | 6 | | | -1 | | | | | | | | | |
Total recognized in other comprehensive (earnings) loss | | | -13 | | | 16 | | | 57 | | | -1 | | | 51 | | | - | | | | | | | | | |
Total recognized net postretirement benefit (income) cost and other comprehensive (earnings) loss | | $ | -8 | | $ | 16 | | $ | 31 | | $ | - | | $ | 10 | | $ | - | | | | | | | | | |
Curtailments and Settlements. The Company recorded curtailment/settlement gains during the years ended December 31, 2013 and 2012 of approximately $28 million and $36 million, respectively, related to the termination of retiree medical benefits for certain salaried and hourly employees. In addition, during the year ended December 31, 2013, the Company recorded settlement gains of approximately $1 million related to retiree medical buyouts. |
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The estimated amounts that will be amortized from accumulated other comprehensive earnings over the next fiscal year are as follows: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ending | | | | | | | | | | | | | | | | | | | | | |
| | | 31-Dec-15 | | | | | | | | | | | | | | | | | | | | | |
| | | | | Rest of | | | | | | | | | | | | | | | | | | | | | |
| | | U.S. | World | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | |
| Prior service (benefit) cost | | $ | -7 | | $ | -5 | | | | | | | | | | | | | | | | | | | | | |
| Net actuarial (gain) loss | | | -4 | | | - | | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | -11 | | $ | -5 | | | | | | | | | | | | | | | | | | | | | |
Plan Assumptions. The weighted-average assumptions used to determine net postretirement benefit (income) cost were: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended December 31, | | | | | | | | | |
| | | 2014 | | 2013 | | 2012 | | | | | | | | | |
| | | | | | Rest of | | | | | Rest of | | | | | Rest of | | | | | | | | | |
| | | U.S. | | World | | U.S. | | World | | U.S. | | World | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Discount rate | | 5 | % | | 4.75 | % | | 4 | % | | 4 | % | | 4.75 | % | | 4.5 | % | | | | | | | | | |
The discount rate and assumed health care cost trend rates used in the measurement of the benefit obligation as of the applicable measurement dates were: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | As of December 31, | | | | | | | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | | | | | | | |
| | | | | | Rest of | | | | | Rest of | | | | | | | | | | | | | | | |
| | | U.S. | | World | | U.S. | | World | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Discount rate | | 4 | % | | 3.75 | % | | 5 | % | | 4.75 | % | | | | | | | | | | | | | | | |
Initial health care cost trend rate at end of year | | 7 | % | | 4.5 | % | | 6.9 | % | | 4 | % | | | | | | | | | | | | | | | |
Ultimate health care cost trend rate | | 4.5 | % | | 5 | % | | 5 | % | | 5 | % | | | | | | | | | | | | | | | |
Year in which ultimate rate is reached | | 2022 | | | 2017 | | | 2018 | | | 2017 | | | | | | | | | | | | | | | | |
A one-percentage-point change in the assumed health care cost trend rate would have had the following effects: | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | One-Percentage-Point | | | | | | | | | | | |
| | | Increase | | Decrease | | | | | | | | | | | |
| | | | | | | Rest of | | | | | | Rest of | | | | | | | | | | | |
| | | U.S. | | World | | U.S. | | World | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (Dollars in millions) | | | | | | | | | | | |
Effect on total of service and interest cost components for the year ended December 31, 2014 | | $ | 1 | | | $ | - | | | $ | -1 | | | $ | - | | | | | | | | | | | | |
Effect on postretirement benefit obligation as of measurement date | | $ | 21 | | | $ | 7 | | | $ | -18 | | | $ | -7 | | | | | | | | | | | | |
Contributions. The Company funds its OPEB obligations on a pay-as-you-go basis. In 2015, the Company expects to contribute approximately $32 million to its OPEB plans. |
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Expected Future Postretirement Benefit Payments. The following postretirement benefit payments, which reflect expected future service, as appropriate, are expected to be paid: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | U.S. | | Rest of World | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ending December 31, | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | |
| 2015 | | $ | 27 | | | $ | 5 | | | | | | | | | | | | | | | | | | | | |
| 2016 | | | 26 | | | | 5 | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | 25 | | | | 5 | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | 24 | | | | 5 | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | 23 | | | | 5 | | | | | | | | | | | | | | | | | | | | |
| 2020 -2024 | | | 96 | | | | 28 | | | | | | | | | | | | | | | | | | | | |