XML 154 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Pension and Other Postretirement Benefit Plans
 12 Months Ended
Dec. 31, 2019
Defined Benefit Plan [Abstract]  
Pension and Other Postretirement Benefit Plans PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
We have funded and unfunded defined benefit pension plans that cover certain employees in North America, Europe, Asia and Brazil. The United States plans comprise the majority of our obligation. All but one of these plans are frozen for all participants. The primary formula for United States salaried employees covered under the qualified defined benefit plan was based on years of service and final average salary, while the primary formula for United States hourly employees covered under the defined benefit plans was based on specific dollar amounts for each year of service. There were multiple formulas for employees covered under the qualified and nonqualified defined benefit plans that were sponsored by Maytag, including a cash balance formula. We have foreign pension plans that accrue benefits. The plans generally provide benefit payments using a formula that is based upon employee compensation and length of service.
In addition, we sponsor an unfunded Supplemental Executive Retirement Plan that remains open to new participants and additional benefit accruals. This plan is nonqualified and provides certain key employees additional defined pension benefits that supplement those provided by the Company's other retirement plans.
A defined contribution plan is being provided to all United States employees and is not classified within the net periodic benefit cost. The Company provides annual match and automatic company contributions, in cash or Company stock, of up to 7% of employees' eligible pay. Our contributions during 2019, 2018 and 2017 were $84 million, $81 million and $82 million, respectively.
We provide postretirement health care benefits for eligible retired employees in the United States, Canada and Brazil. For our United States plan, which comprises the majority of our obligation, eligible retirees include those who were full-time employees with 10 years of service who attained age 55 while in service with us and those union retirees who met the eligibility requirements of their collective bargaining agreements. In general, the postretirement health and welfare benefit plans include cost-sharing provisions that limit our exposure for recent and future retirees and are contributory, with participants' contributions adjusted annually. In the United States, benefits for certain retiree populations follow a defined contribution model that allocates certain monthly or annual amounts to a retiree's account under the plan. The plans are unfunded. We reserve the right to modify these benefits in the future.

Defined Benefit - Pensions and Postretirement Benefit Plans
Obligations and Funded Status at End of Year
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Millions of dollars
 
2019

2018

2019

2018

2019

2018
Funded status
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
 
$
2,934

 
$
2,676

 
$
593

 
$
518

 
$
—

 
$
—

Benefit obligations
 
3,141

 
3,033

 
941

 
834

 
355

 
356

Funded status
 
$
(207
)
 
$
(357
)
 
$
(348
)
 
$
(316
)
 
$
(355
)
 
$
(356
)
Amounts recognized in the consolidated balance sheets
 

 
 
 
 
 
 
 
 
 
 
Noncurrent asset
 
$
—

 
$
—

 
$
11

 
$
12

 
$
—

 
$
—

Current liability
 
(6
)
 
(38
)
 
(17
)
 
(10
)
 
(33
)
 
(38
)
Noncurrent liability
 
(201
)
 
(319
)
 
(342
)
 
(318
)
 
(322
)
 
(318
)
Amount recognized
 
$
(207
)
 
$
(357
)
 
$
(348
)
 
$
(316
)
 
$
(355
)
 
$
(356
)
Amounts recognized in accumulated other comprehensive loss (pre-tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net actuarial loss
 
$
1,329

 
$
1,445

 
$
234

 
$
192

 
$
15

 
$
1

Prior service (credit) cost
 
1

 
(1
)
 
4

 
(2
)
 
(16
)
 
(16
)
Amount recognized
 
$
1,330

 
$
1,444

 
$
238

 
$
190

 
$
(1
)
 
$
(15
)

Change in Benefit Obligation
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Millions of dollars
 
2019

2018

2019

2018

2019

2018
Benefit obligation, beginning of year
 
$
3,033

 
$
3,415

 
$
834

 
$
952

 
$
356

 
$
394

Service cost
 
2

 
2

 
6

 
5

 
6

 
7

Interest cost
 
123

 
118

 
23

 
23

 
16

 
15

Plan participants' contributions
 
—

 
—

 
1

 
1

 
—

 
—

Actuarial loss (gain)
 
279

 
(197
)
 
85

 
(33
)
 
14

 
(16
)
Benefits paid
 
(263
)
 
(305
)
 
(30
)
 
(31
)
 
(28
)
 
(36
)
Plan amendments
 
—

 
—

 
6

 
1

 
(15
)
 
4

Transfer of liabilities
 
—

 
—

 
(2
)
 
—

 
—

 
—

Other adjustments
 
—

 
—

 
11

 
—

 
7

 
—

Special termination benefit
 
—

 
—

 
—

 
(5
)
 
—

 
—

Settlements / curtailment (gain)
 
(33
)
 
—

 
(13
)
 
(22
)
 
—

 
—

Foreign currency exchange rates
 
—

 
—

 
20

 
(53
)
 
(1
)
 
(5
)
Reclassification of obligation to held for sale
 
—

 
—

 
—

 
(4
)
 
—

 
(7
)
Benefit obligation, end of year
 
$
3,141

 
$
3,033

 
$
941

 
$
834

 
$
355

 
$
356

Accumulated benefit obligation, end of year
 
$
3,128

 
$
3,022

 
$
902

 
$
804

 
N/A

 
N/A









Change in Plan Assets
 
 
United States Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Millions of dollars
 
2019

2018

2019

2018

2019

2018
Fair value of plan assets, beginning of year
 
$
2,676

 
$
2,746

 
$
518

 
$
571

 
$
—

 
$
—

Actual return on plan assets
 
517

 
(145
)
 
61

 
(7
)
 
—

 
—

Employer contribution
 
37

 
380

 
33

 
39

 
28

 
36

Plan participants' contributions
 
—

 
—

 
1

 
1

 
—

 
—

Benefits paid
 
(263
)
 
(305
)
 
(30
)
 
(31
)
 
(28
)
 
(36
)
Transfer of plan assets
 
—

 
—

 
(2
)
 
—

 
—

 
—

Other adjustments
 
—

 
—

 
5

 
—

 
—

 
—

Settlements
 
(33
)
 
—

 
(13
)
 
(22
)
 
—

 
—

Foreign currency exchange rates
 
—

 
—

 
20

 
(31
)
 
—

 
—

Reclassification of plan assets to held for sale
 
—

 
—

 
—

 
(2
)
 
—

 
—

Fair value of plan assets, end of year
 
$
2,934

 
$
2,676

 
$
593

 
$
518

 
$
—

 
$
—


Components of Net Periodic Benefit Cost
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Millions of dollars
 
2019

2018

2017

2019

2018

2017

2019

2018

2017
Service cost
 
$
2

 
$
2

 
$
2

 
$
6

 
$
5

 
$
5

 
$
6

 
$
7

 
$
7

Interest cost
 
123

 
118

 
134

 
23

 
23

 
23

 
16

 
15

 
16

Expected return on plan assets
 
(177
)
 
(170
)
 
(175
)
 
(29
)
 
(32
)
 
(30
)
 
—

 
—

 
—

Amortization:
 
 
 

 

 
 
 

 

 
 
 

 

Actuarial loss
 
47

 
53

 
50

 
8

 
9

 
6

 
1

 
—

 
—

Prior service cost (credit)
 
(2
)
 
(3
)
 
(3
)
 
—

 
—

 
—

 
(16
)
 
—

 
(4
)
Special termination benefit
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
4

Curtailment (gain) / loss
 
—

 
—

 
—

 
—

 
(4
)
 
—

 
—

 
—

 
—

Settlement loss
 
9

 
—

 
—

 
2

 
3

 
2

 
—

 
—

 
—

Net periodic benefit cost
 
$
2

 
$
—

 
$
8

 
$
10

 
$
4

 
$
6

 
$
7

 
$
22

 
$
23


The following table summarizes the net periodic cost recognized in operating profit and interest and sundry (income) expense for the years ending December 31, 2019, 2018 and 2017:
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Millions of dollars
 
2019

2018

2017

2019

2018

2017

2019

2018

2017
Operating profit (loss)
 
$
2

 
$
2

 
$
2

 
$
6

 
$
5

 
$
5

 
$
6

 
$
7

 
$
7

Interest and sundry (income) expense
 
—

 
(2
)
 
6

 
4

 
(1
)
 
1

 
1

 
15

 
16

Net periodic benefit cost
 
$
2

 
$
—

 
$
8

 
$
10

 
$
4

 
$
6

 
$
7

 
$
22

 
$
23









Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) (Pre-Tax) in 2019
Millions of dollars
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Current year actuarial loss / (gain)
 
$
(60
)
 
$
52

 
$
14

Actuarial (loss) recognized during the year
 
(56
)
 
(10
)
 
(1
)
Current year prior service cost (credit)
 
—

 
6

 
(15
)
Prior service credit (cost) recognized during the year
 
2

 
—

 
16

Total recognized in other comprehensive income (loss) (pre-tax)
 
$
(114
)
 
$
48

 
$
14

Total recognized in net periodic benefit costs and other comprehensive income (loss) (pre-tax)
 
$
(112
)
 
$
58

 
$
21


Estimated Pre-Tax Amounts that will be amortized from Accumulated Other Comprehensive Loss into Net Periodic Pension Cost in 2020
Millions of dollars
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
Actuarial loss
 
$
62

 
$
12

 
$
1

Prior service (credit)
 
—

 
—

 
(8
)
Total
 
$
62

 
$
12

 
$
(7
)

We amortize actuarial losses and prior service costs (credits) over a period of up to 21 years and 13 years, respectively.
Assumptions
Weighted-Average Assumptions used to Determine Benefit Obligation at End of Year
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Discount rate
 
3.30
%
 
4.30
%
 
2.04
%
 
2.90
%
 
3.45
%
 
4.64
%
Rate of compensation increase
 
4.50
%
 
4.50
%
 
3.10
%
 
3.29
%
 
N/A

 
N/A

Weighted-Average Assumptions used to Determine Net Periodic Cost
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement
Benefits
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Discount rate
 
4.30
%
 
3.65
%
 
4.15
%
 
2.90
%
 
2.57
%
 
2.64
%
 
4.80
%
 
4.35
%
 
4.73
%
Expected long-term rate of return on plan assets
 
6.50
%
 
6.75
%
 
6.75
%
 
5.56
%
 
5.81
%
 
5.78
%
 
N/A

 
N/A

 
N/A

Rate of compensation increase
 
4.50
%
 
4.50
%
 
4.50
%
 
3.29
%
 
3.20
%
 
3.08
%
 
N/A

 
N/A

 
N/A

Health care cost trend rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Initial rate
 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
6.50
%
 
6.50
%
 
6.75
%
Ultimate rate
 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
5.00
%
 
5.00
%
 
5.00
%
Year that ultimate rate will be reached
 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
2025

 
2025

 
2025


Discount Rate
For our United States pension and postretirement benefit plans, the discount rate was selected using a hypothetical portfolio of high quality bonds outstanding at December 31 that would provide the necessary cash flows to match our projected benefit payments. For our foreign pension and postretirement benefit plans, the discount rate was primarily selected using high quality bond yields for the respective country or region covered by the plan.
Expected Return on Plan Assets

In the United States, the expected return on plan assets is developed considering asset mix, historical asset class data and long-term expectations. The resulting weighted-average return was rounded to the nearest quarter of one percent and applied to the fair value of plan assets at December 31, 2019.
For foreign pension plans, the expected rate of return on plan assets was primarily determined by observing historical returns in the local fixed income and equity markets and computing the weighted average returns with the weights being the asset allocation of each plan.
Estimated Impact of One Percentage-Point Change in Assumed Health Care Cost Trend Rate
A one percentage point change in assumed health care cost trend rates would have the following effects on our health care plan:
Millions of dollars
 
One Percentage
Point Increase
 
One Percentage
Point Decrease
Effect on total of service and interest cost
 
$
—

 
$
—

Effect on postretirement benefit obligations
 
3

 
(2
)

Cash Flows
Funding Policy
Our funding policy is to contribute to our United States pension plans amounts sufficient to meet the minimum funding requirement as defined by employee benefit and tax laws, plus additional amounts which we may determine to be appropriate. In certain countries other than the United States, the funding of pension plans is not common practice. Contributions to our United States pension plans may be made in the form of cash or, in narrow circumstances, company stock. We pay for retiree medical benefits as they are incurred.

There have been no contributions to the pension trust for our U.S. defined benefit plans during the twelve months ended December 31, 2019. On September 15, 2018, we contributed $358 million in cash contributions to the pension trust for our U.S. defined benefit pension plans, which included $350 million of discretionary contributions.
Expected Employer Contributions to Funded Plans
Millions of dollars
 
United States
Pension Benefits
 
Foreign
Pension Benefits
2020
 
$
—

 
$
18


Expected Benefit Payments
Millions of dollars
 
United States
Pension Benefits
 
Foreign
Pension Benefits
 
Other Postretirement Benefits              
2020
 
$
284

 
$
39

 
$
33

2021
 
257

 
35

 
33

2022
 
248

 
38

 
32

2023
 
238

 
38

 
30

2024
 
233

 
36

 
28

2025-2029
 
1,019

 
199

 
115


Plan Assets
Our overall investment strategy is to achieve an appropriate mix of investments for long-term growth and for near-term benefit payments with a wide diversification of asset types, fund strategies, and investment fund managers. The target allocation for our plans is approximately 24% in equity, 74% in fixed income securities and 2% in alternative investments, with exceptions for foreign pension plans. The fixed income securities duration is intended to match that of our United States pension liabilities.

Plan assets are reported at fair value based on an exit price, representing the amount that would be received to sell an asset in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset. As a basis for considering such assumptions, a three-tiered fair value hierarchy is established, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets that are observable, either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Certain investments are valued based on net asset value (NAV), which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. We manage the process and approve the results of a third-party pricing service to value the majority of our securities and to determine the appropriate level in the fair value hierarchy.

The fair values of our pension plan assets at December 31, 2019 and 2018, by asset category were as follows:
 
 
December 31,
 
 
Quoted prices
(Level 1)
 
Other significant
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
Net Asset Value
 
Total
Millions of dollars
 
2019
2018
 
2019
2018
 
2019
2018
 
2019
2018
 
2019
2018
Cash and cash equivalents
 
$
—

$
—

 
$
24

$
10

 
$
—

$
—

 
$
—

$
—

 
$
24

$
10

Government and government agency securities (1)
 


 


 


 


 
 
 
U.S. securities
 
—

—

 
488

761

 
—

—

 
—

—

 
488

761

International securities
 
—

—

 
97

97

 
—

—

 
—

—

 
97

97

Corporate bonds and notes (1)
 


 


 


 


 
 
 
U.S. companies
 
—

—

 
1,389

860

 
—

—

 
—

—

 
1,389

860

International companies
 
—

—

 
277

155

 
—

—

 
—

—

 
277

155

Equity securities (2)
 


 


 


 


 
 
 
U.S. companies
 
—

18

 
—

—

 
—

—

 
—

—

 
—

18

International companies
 
51

185

 
—

—

 
—

—

 
—

—

 
51

185

Mutual funds (3)
 
—

35

 
128

—

 
—

—

 
—

—

 
128

35

Investments at net asset value
 


 


 


 


 
 
 
U.S. equity securities (4)
 
—

—

 
—

—

 
—

—

 
367

501

 
367

501

International equity securities (4)
 
—

—

 
—

—

 
—

—

 
215

52

 
215

52

Short-term investment fund (4)
 
—

—

 
—

—

 
—

—

 
15

102

 
15

102

International debt securities (5)
 
—

—

 
—

—

 
—

—

 
251

209

 
251

209

International equity securities (5)
 
—

—

 
—

—

 
—

—

 
59

50

 
59

50

Real estate (6)
 
—

—

 
—

—

 
—

—

 
34

36

 
34

36

Limited partnerships (7)
 


 


 


 


 
 
 
U.S. private equity investments
 
—

—

 
—

—

 
53

68

 
—

—

 
53

68

Diversified fund of funds
 
—

—

 
—

—

 
5

6

 
—

—

 
5

6

Emerging growth
 
—

—

 
—

—

 
8

12

 
—

—

 
8

12

All other investments
 
—

—

 
34

18

 
—

—

 
32

19

 
66

37

 
 
$
51

$
238

 
$
2,437

$
1,901

 
$
66

$
86

 
$
973

$
969

 
$
3,527

$
3,194

(1) 
Valued using pricing vendors who use proprietary models to estimate the price a dealer would pay to buy a security using significant observable inputs, such as interest rates, yield curves, and credit risk.
(2) 
Valued using the closing stock price on a national securities exchange, which reflects the last reported sales price on the last business day of the year.
(3) 
Valued using the net asset value (NAV) of the fund, which is based on the fair value of underlying securities. The fund primarily invests in a diversified portfolio of equity securities, fixed income debt securities and real estate issued by non-U.S. companies.
(4) 
Common and collective trust funds valued using the NAV of the fund, which is based on the fair value of underlying securities.
(5) 
Fund of funds valued using the NAV of the fund, which is based on the fair value of underlying securities. International debt securities includes corporate bonds and notes and government and government agency securities.
(6) 
Valued using the NAV of the fund, which is based on the fair value of underlying assets.
(7) 
Valued at estimated fair value based on the proportionate share of the limited partnership's fair value, as determined by the general partner.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Millions of dollars
 
Limited
Partnerships
Balance, December 31, 2018
 
$
86

Realized gains (net)
 
16

Unrealized losses (net)
 
(14
)
Purchases
 
—

Settlements
 
(22
)
Balance, December 31, 2019
 
$
66


Additional Information
The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets at December 31, 2019 and 2018 were as follows:
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
Millions of dollars
 
2019

2018
 
2019
 
2018
Projected benefit obligation
 
$
2,622

 
$
3,033

 
$
844

 
$
753

Fair value of plan assets
 
2,409

 
2,676

 
491

 
430


The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2019 and 2018 were as follows:
 
 
United States
Pension Benefits
 
Foreign
Pension Benefits
Millions of dollars 
 
2019
 
2018
 
2019
 
2018
Projected benefit obligation
 
$
2,622

 
$
3,033

 
$
800

 
$
720

Accumulated benefit obligation
 
2,609

 
3,022

 
776

 
699

Fair value of plan assets
 
$
2,409

 
$
2,676

 
$
450

 
$
396