XML 45 R27.htm IDEA: XBRL DOCUMENT v3.22.0.1
Pension, Other Postretirement Benefits and Savings Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Pension, Other Postretirement Benefits and Savings Plans

Note 18. Pension, Other Postretirement Benefits and Savings Plans

We provide employees with defined benefit pension or defined contribution savings plans. Our hourly U.S. pension plans are frozen, except for certain grandfathered participants in the Cooper Tire hourly pension plans who continue to accrue benefits, and provide benefits based on length of service. The principal salaried U.S. pension plans are frozen and provide benefits based on compensation and length of service. Salaried employees who made voluntary contributions to these plans receive higher benefits. We also provide certain U.S. employees and employees at certain non-U.S. subsidiaries with health care benefits or life insurance benefits upon retirement. Substantial portions of retiree health care benefits are not insured and are funded from operations.

During 2021, we recognized settlement charges of $43 million in Other (Income) Expense, primarily related to our salaried U.S pension plan. The settlement charges resulted from total lump sum payments exceeding annual service and interest cost of the applicable plans.

During 2020, we recognized settlement charges of $28 million, primarily related to certain of our salaried U.S. pension plans, of which $24 million was recognized in Other (Income) Expense and $4 million in Rationalizations, related to the exit of employees under approved rationalization plans. The settlement charges resulted from total lump sum payments exceeding annual service and interest cost of the applicable plans. In addition, we recognized a curtailment credit of $6 million in Other (Income) Expense during 2020, related to a freeze of one of our non-U.S. defined benefit pension plans.

During 2020, we also recognized a curtailment credit of $4 million related to one of our Other Postretirement Benefits plans and a termination benefits charge of $5 million related to our hourly U.S. pension plan in Rationalizations, related to the exit of employees under approved rationalization plans.

During 2019, we recognized settlement charges of $6 million in Other (Income) Expense primarily related to certain of our U.S. pension plans. The settlement charges resulted from total lump sum payments exceeding annual service and interest cost

of the applicable plans. During 2019, we also recognized curtailment and special termination benefit charges of $5 million in Rationalizations, primarily related to the acceptance of voluntary buy-outs at Gadsden.

Our U.K. pension plan obligations include $21 million to recognize the estimated impact to our plans from court rulings in 2018 and later, involving a plan with similar features to ours that was sponsored by another company, that required equal guaranteed minimum pension benefits for males and females. The increases were primarily recognized in AOCL during 2018 as prior service cost from plan amendments. The actual impact to our U.K. pension plans is still subject to the finalization of plan amendments in response to the court rulings and potential future judicial decisions.

Total benefits cost and amounts recognized in other comprehensive (income) loss follows:

 

 

 

Pension Plans

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

Non-U.S.

 

 

Other Postretirement Benefits

 

(In millions)

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

Benefits cost (credit):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

9

 

 

$

4

 

 

$

3

 

 

$

30

 

 

$

30

 

 

$

26

 

 

$

3

 

 

$

2

 

 

$

2

 

Interest cost

 

 

94

 

 

 

126

 

 

 

173

 

 

 

47

 

 

 

56

 

 

 

69

 

 

 

9

 

 

 

8

 

 

 

11

 

Expected return on plan assets

 

 

(196

)

 

 

(193

)

 

 

(223

)

 

 

(48

)

 

 

(54

)

 

 

(59

)

 

 

—

 

 

 

—

 

 

 

—

 

Amortization of prior service cost (credit)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

1

 

 

 

2

 

 

 

(6

)

 

 

(9

)

 

 

(9

)

Amortization of net losses

 

 

107

 

 

 

109

 

 

 

112

 

 

 

33

 

 

 

38

 

 

 

29

 

 

 

3

 

 

 

4

 

 

 

3

 

Net periodic cost

 

$

14

 

 

$

46

 

 

$

65

 

 

$

63

 

 

$

71

 

 

$

67

 

 

$

9

 

 

$

5

 

 

$

7

 

Net curtailments/settlements /termination benefits

 

 

41

 

 

 

31

 

 

 

8

 

 

 

2

 

 

 

(4

)

 

 

3

 

 

 

—

 

 

 

(4

)

 

 

—

 

Total benefits cost

 

$

55

 

 

$

77

 

 

$

73

 

 

$

65

 

 

$

67

 

 

$

70

 

 

$

9

 

 

$

1

 

 

$

7

 

Recognized in other comprehensive (income) loss before tax and minority:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior service cost (credit) from plan amendments

 

$

—

 

 

$

—

 

 

$

—

 

 

$

3

 

 

$

3

 

 

$

(2

)

 

$

(4

)

 

$

—

 

 

$

—

 

(Decrease) increase in net actuarial losses

 

 

(45

)

 

 

108

 

 

 

4

 

 

 

(136

)

 

 

(100

)

 

 

201

 

 

 

(20

)

 

 

5

 

 

 

6

 

Amortization of prior service (cost) credit in net periodic cost

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

(2

)

 

 

(2

)

 

 

6

 

 

 

9

 

 

 

9

 

Amortization of net losses in net periodic cost

 

 

(107

)

 

 

(109

)

 

 

(112

)

 

 

(33

)

 

 

(38

)

 

 

(29

)

 

 

(3

)

 

 

(4

)

 

 

(3

)

Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments and settlements

 

 

(41

)

 

 

(26

)

 

 

(5

)

 

 

(2

)

 

 

(9

)

 

 

(3

)

 

 

—

 

 

 

6

 

 

 

2

 

Total recognized in other comprehensive (income) loss before tax and minority

 

$

(193

)

 

$

(27

)

 

$

(113

)

 

$

(170

)

 

$

(146

)

 

$

165

 

 

$

(21

)

 

$

16

 

 

$

14

 

Total recognized in total benefits cost and other comprehensive (income) loss before tax and minority

 

$

(138

)

 

$

50

 

 

$

(40

)

 

$

(105

)

 

$

(79

)

 

$

235

 

 

$

(12

)

 

$

17

 

 

$

21

 

 

Service cost is recorded in CGS or SAG. Other components of net periodic cost are recorded in Other (Income) Expense. Net curtailments, settlements and termination benefits are recorded in Other (Income) Expense or Rationalizations if related to a rationalization plan.

We use the fair value of pension assets in the calculation of pension expense for all plans.

Total benefits cost for our other postretirement benefits was $5 million, $1 million and $3 million for our U.S. plans in 2021, 2020 and 2019, respectively, and $4 million, $0 million and $4 million for our non-U.S. plans in 2021, 2020 and 2019, respectively.

The Medicare Prescription Drug Improvement and Modernization Act provides plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health care plans. Our other postretirement benefits cost is presented net of this subsidy, which is less than $1 million annually.

The change in benefit obligation and plan assets for 2021 and 2020 and the amounts recognized in our Consolidated Balance Sheets at December 31, 2021 and 2020 are as follows:

 

 

 

Pension Plans

 

 

 

 

 

 

 

 

 

U.S.

 

 

Non-U.S.

 

 

Other Postretirement Benefits

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Change in benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(5,235

)

 

$

(5,009

)

 

$

(3,382

)

 

$

(3,195

)

 

$

(236

)

 

$

(241

)

Service cost — benefits earned

 

 

(9

)

 

 

(4

)

 

 

(30

)

 

 

(30

)

 

 

(3

)

 

 

(2

)

Interest cost

 

 

(94

)

 

 

(126

)

 

 

(47

)

 

 

(56

)

 

 

(9

)

 

 

(8

)

Plan amendments

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

4

 

 

 

—

 

Actuarial gain (loss)

 

 

153

 

 

 

(520

)

 

 

168

 

 

 

(123

)

 

 

21

 

 

 

(4

)

Participant contributions

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

(3

)

 

 

(8

)

 

 

(8

)

Curtailments/settlements/
termination benefits

 

 

90

 

 

 

51

 

 

 

10

 

 

 

21

 

 

 

—

 

 

 

—

 

Acquisition of Cooper Tire (1)

 

 

(1,088

)

 

 

—

 

 

 

(450

)

 

 

—

 

 

 

(205

)

 

 

—

 

Foreign currency translation

 

 

—

 

 

 

—

 

 

 

118

 

 

 

(133

)

 

 

2

 

 

 

4

 

Benefit payments

 

 

385

 

 

 

373

 

 

 

153

 

 

 

140

 

 

 

28

 

 

 

23

 

Ending balance

 

$

(5,798

)

 

$

(5,235

)

 

$

(3,464

)

 

$

(3,382

)

 

$

(406

)

 

$

(236

)

Change in plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

4,970

 

 

$

4,780

 

 

$

3,041

 

 

$

2,740

 

 

$

—

 

 

$

—

 

Actual return on plan assets

 

 

86

 

 

 

605

 

 

 

(9

)

 

 

305

 

 

 

—

 

 

 

—

 

Company contributions to plan assets

 

 

29

 

 

 

—

 

 

 

30

 

 

 

20

 

 

 

—

 

 

 

—

 

Cash funding of direct participant payments

 

 

10

 

 

 

14

 

 

 

22

 

 

 

22

 

 

 

20

 

 

 

15

 

Participant contributions

 

 

—

 

 

 

—

 

 

 

1

 

 

 

3

 

 

 

8

 

 

 

8

 

Settlements

 

 

(90

)

 

 

(56

)

 

 

(10

)

 

 

(8

)

 

 

—

 

 

 

—

 

Acquisition of Cooper Tire (1)

 

 

1,100

 

 

 

—

 

 

 

412

 

 

 

—

 

 

 

—

 

 

 

—

 

Foreign currency translation

 

 

—

 

 

 

—

 

 

 

(62

)

 

 

99

 

 

 

—

 

 

 

—

 

Benefit payments

 

 

(385

)

 

 

(373

)

 

 

(153

)

 

 

(140

)

 

 

(28

)

 

 

(23

)

Ending balance

 

$

5,720

 

 

$

4,970

 

 

$

3,272

 

 

$

3,041

 

 

$

—

 

 

$

—

 

Funded status at end of year

 

$

(78

)

 

$

(265

)

 

$

(192

)

 

$

(341

)

 

$

(406

)

 

$

(236

)

 

(1)
Represents the fair value of Cooper Tire related benefit plan obligations and plan assets as of the Closing Date.

 

Significant actuarial gains or losses related to changes in benefit obligations for 2021 and 2020 primarily resulted from changes in discount rates.

Other postretirement benefits unfunded status was $292 million and $106 million for our U.S. plans at December 31, 2021 and 2020, respectively, and $114 million and $130 million for our non-U.S. plans at December 31, 2021 and 2020, respectively.

The funded status recognized in the Consolidated Balance Sheets consists of:

 

 

 

Pension Plans

 

 

Other Postretirement

 

 

 

U.S.

 

 

Non-U.S.

 

 

Benefits

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Noncurrent assets

 

$

96

 

 

$

—

 

 

$

432

 

 

$

408

 

 

$

—

 

 

$

—

 

Current liabilities

 

 

(7

)

 

 

(11

)

 

 

(22

)

 

 

(22

)

 

 

(25

)

 

 

(16

)

Noncurrent liabilities

 

 

(167

)

 

 

(254

)

 

 

(602

)

 

 

(727

)

 

 

(381

)

 

 

(220

)

Net amount recognized

 

$

(78

)

 

$

(265

)

 

$

(192

)

 

$

(341

)

 

$

(406

)

 

$

(236

)

 

The amounts recognized in AOCL, net of tax and minority interest, consist of:

 

 

 

Pension Plans

 

 

Other Postretirement

 

 

 

U.S.

 

 

Non-U.S.

 

 

Benefits

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Prior service (credit) cost

 

$

(3

)

 

$

(3

)

 

$

26

 

 

$

25

 

 

$

(5

)

 

$

(7

)

Net actuarial loss

 

 

2,160

 

 

 

2,353

 

 

 

465

 

 

 

636

 

 

 

7

 

 

 

30

 

Gross amount recognized

 

 

2,157

 

 

 

2,350

 

 

 

491

 

 

 

661

 

 

 

2

 

 

 

23

 

Deferred income taxes

 

 

3

 

 

 

(43

)

 

 

(64

)

 

 

(104

)

 

 

(23

)

 

 

(29

)

Minority shareholders’ equity

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

(2

)

 

 

—

 

 

 

—

 

Net amount recognized

 

$

2,160

 

 

$

2,307

 

 

$

426

 

 

$

555

 

 

$

(21

)

 

$

(6

)

 

The following table presents significant weighted average assumptions used to determine benefit obligations at December 31:

 

 

 

Pension Plans

 

 

Other Postretirement Benefits

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Discount rate:

 

 

 

 

 

 

 

 

 

 

 

 

—U.S.

 

 

2.82

%

 

 

2.42

%

 

 

2.87

%

 

 

2.34

%

—Non-U.S.

 

 

2.01

 

 

 

1.49

 

 

 

4.69

 

 

 

4.09

 

Rate of compensation increase:

 

 

 

 

 

 

 

 

 

 

 

 

—U.S.

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

—Non-U.S.

 

 

2.77

 

 

 

2.89

 

 

N/A

 

 

N/A

 

 

The following table presents significant weighted average assumptions used to determine benefits cost for the years ended December 31:

 

 

 

Pension Plans

 

 

Other Postretirement Benefits

 

 

 

2021

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

2019

 

Discount rate for determining interest cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—U.S.

 

 

1.72

%

 

 

2.66

%

 

 

3.85

%

 

 

1.97

%

 

 

2.68

%

 

 

3.79

%

—Non-U.S.

 

 

1.82

 

 

 

2.26

 

 

 

2.84

 

 

 

6.54

 

 

 

5.68

 

 

 

6.25

 

Expected long term return on plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—U.S.

 

 

3.74

 

 

 

4.22

 

 

 

5.25

 

 

N/A

 

 

N/A

 

 

N/A

 

—Non-U.S.

 

 

2.27

 

 

 

2.52

 

 

 

2.95

 

 

N/A

 

 

N/A

 

 

N/A

 

Rate of compensation increase:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—U.S.

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

—Non-U.S.

 

 

2.89

 

 

 

2.92

 

 

 

2.91

 

 

N/A

 

 

N/A

 

 

N/A

 

 

For 2021, a weighted average discount rate of 1.72% was used to determine interest cost for the U.S. pension plans. This rate was derived from spot rates along a yield curve developed from a portfolio of corporate bonds from issuers rated AA or higher by established rating agencies as of December 31, 2020, or June 7, 2021 for the Cooper Tire pension plans, applied to our expected benefit payment cash flows. For our non-U.S. locations, a weighted average discount rate of 1.82% was used. This rate was developed based on the nature of the liabilities and local environments, using available bond indices, yield curves, projected cash flows, and long term inflation.

For 2021, an assumed weighted average long term rate of return of 3.74% was used for the U.S. pension plans. In developing the long term rate of return, we evaluated input from our pension fund consultant on asset class return expectations, including determining the appropriate rate of return for our plans, which are substantially invested in fixed income securities. For our non-U.S. locations, an assumed weighted average long term rate of return of 2.27% was used. Input from local pension fund consultants concerning asset class return expectations and long term inflation form the basis of this assumption.

The U.S. pension plan mortality assumption is based on our actual historical experience or published actuarial tables, and expected future mortality improvements based on published actuarial tables. For our non-U.S. locations, mortality assumptions are based on published actuarial tables which include projections of future mortality improvements.

The following table presents estimated future benefit payments from the plans as of December 31, 2021. Benefit payments for other postretirement benefits are presented net of retiree contributions and Medicare Part D Subsidy Receipts:

 

 

 

Pension Plans

 

 

Other
Postretirement

 

(In millions)

 

U.S.

 

 

Non-U.S.

 

 

Benefits

 

2022

 

$

476

 

 

$

155

 

 

$

26

 

2023

 

 

432

 

 

 

147

 

 

 

26

 

2024

 

 

421

 

 

 

151

 

 

 

25

 

2025

 

 

408

 

 

 

153

 

 

 

25

 

2026

 

 

406

 

 

 

156

 

 

 

25

 

2027-2031

 

 

1,830

 

 

 

831

 

 

 

121

 

 

The following table presents selected information on our pension plans:

 

 

 

U.S.

 

 

Non-U.S.

 

(In millions)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

All plans:

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated benefit obligation

 

$

5,780

 

 

$

5,220

 

 

$

3,385

 

 

$

3,284

 

Plans not fully-funded:

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation

 

$

1,847

 

 

$

5,235

 

 

$

1,273

 

 

$

933

 

Accumulated benefit obligation

 

 

1,829

 

 

 

5,220

 

 

 

1,216

 

 

 

856

 

Fair value of plan assets

 

 

1,674

 

 

 

4,970

 

 

 

650

 

 

 

185

 

 

Certain non-U.S. subsidiaries maintain unfunded pension plans consistent with local practices and requirements. At December 31, 2021, these plans accounted for $226 million of our accumulated pension benefit obligation, $253 million of our projected pension benefit obligation, and $57 million of our AOCL adjustment. At December 31, 2020, these plans accounted for $264 million of our accumulated pension benefit obligation, $299 million of our projected pension benefit obligation, and $90 million of our AOCL adjustment.

We expect to contribute $25 million to $50 million to our funded pension plans in 2022.

Assumed health care cost trend rates at December 31 follow:

 

 

 

2021

 

 

2020

 

Health care cost trend rate assumed for the next year

 

 

6.5

%

 

 

6.0

%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)

 

 

5.0

 

 

 

5.0

 

Year that the rate reaches the ultimate trend rate

 

 

2028

 

 

 

2025

 

 

Our pension plan weighted average investment allocation at December 31, by asset category, follows:

 

 

 

U.S.

 

 

Non-U.S.

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Cash and short term securities

 

 

1

%

 

 

3

%

 

 

2

%

 

 

2

%

Equity securities

 

 

6

 

 

 

4

 

 

 

6

 

 

 

4

 

Debt securities

 

 

92

 

 

 

93

 

 

 

90

 

 

 

93

 

Alternatives

 

 

1

 

 

 

—

 

 

 

2

 

 

 

1

 

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

Our pension investment policies recognize the long term nature of pension liabilities, and are primarily designed to offset the future impact of discount rate movements on the funded status for our plans, with target return-seeking allocations based upon given funded ratio levels. All assets are managed externally according to target asset allocation guidelines we have established. Manager guidelines prohibit the use of any type of investment derivative without our prior approval. Portfolio risk is controlled by having managers comply with guidelines, establishing the maximum size of any single holding in their portfolios, and using managers with different investment styles. We periodically undertake asset and liability modeling studies to determine the appropriateness of the investments.

The portfolio of our U.S. pension plan assets includes holdings of global high quality and high yield fixed income securities, fixed income, equity and real estate collective trust funds, short term interest bearing deposits, and private equity and credit securities. The target asset allocation of our U.S. pension plans is 91% in duration-matched fixed income securities, 5% in private equity and credit securities, 3% in equity securities and 1% in real estate funds. Actual U.S. pension fund asset allocations are reviewed on a periodic basis and the pension funds are rebalanced to target ranges on an as needed basis.

The portfolios of our non-U.S. pension plans include holdings of U.S. and non-U.S. equities, global high quality and high yield fixed income securities, insurance contracts, repurchase agreements, and short term interest bearing deposits. The weighted average target asset allocation of the non-U.S. pension funds is approximately 95% fixed income and 5% equities.

The fair values of our pension plan assets at December 31, 2021 by asset category are as follows:

 

 

 

U.S.

 

 

Non-U.S

 

(In millions)

 

Total

 

 

Quoted
Prices
in Active
Markets
for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Other
Unobservable
Inputs
(Level 3)

 

 

Total

 

 

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Other
Unobservable
Inputs
(Level 3)

 

Cash and Short Term Securities

 

$

71

 

 

$

71

 

 

$

—

 

 

$

—

 

 

$

56

 

 

$

51

 

 

$

5

 

 

$

—

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common and Preferred Stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

28

 

 

 

28

 

 

 

—

 

 

 

—

 

Commingled Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20

 

 

 

20

 

 

 

—

 

 

 

—

 

Mutual Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

37

 

 

 

8

 

 

 

29

 

 

 

—

 

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Bonds

 

 

2,673

 

 

 

—

 

 

 

2,673

 

 

 

—

 

 

 

286

 

 

 

5

 

 

 

281

 

 

 

—

 

Government Bonds

 

 

958

 

 

 

—

 

 

 

958

 

 

 

—

 

 

 

2,391

 

 

 

71

 

 

 

2,320

 

 

 

—

 

Repurchase Agreements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(570

)

 

 

—

 

 

 

(570

)

 

 

—

 

Asset Backed Securities

 

 

172

 

 

 

—

 

 

 

172

 

 

 

—

 

 

 

26

 

 

 

7

 

 

 

19

 

 

 

—

 

Commingled Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

29

 

 

 

20

 

 

 

9

 

 

 

—

 

Mutual Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9

 

 

 

9

 

 

 

—

 

 

 

—

 

Alternatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Contracts

 

 

1

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

25

 

 

 

—

 

 

 

—

 

 

 

25

 

Derivatives

 

 

4

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

Total Investments in the Fair Value Hierarchy

 

 

3,879

 

 

$

71

 

 

$

3,807

 

 

$

1

 

 

 

2,339

 

 

$

219

 

 

$

2,095

 

 

$

25

 

Investments Measured at Net Asset Value, as Practical Expedient:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

 

Mutual Funds

 

 

167

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

Partnership Interests

 

 

161

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds

 

 

877

 

 

 

 

 

 

 

 

 

 

 

 

76

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

388

 

 

 

 

 

 

 

 

 

 

 

 

708

 

 

 

 

 

 

 

 

 

 

Partnership Interests

 

 

143

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

 

Short Term Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

Pooled Separate Accounts

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Alternatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

60

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

5,771

 

 

 

 

 

 

 

 

 

 

 

 

3,337

 

 

 

 

 

 

 

 

 

 

Other

 

 

(51

)

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

 

 

 

 

Total Plan Assets

 

$

5,720

 

 

 

 

 

 

 

 

 

 

 

$

3,272

 

 

 

 

 

 

 

 

 

 

 

The fair values of our pension plan assets at December 31, 2020 by asset category are as follows:

 

 

U.S.

 

 

Non-U.S

 

(In millions)

 

Total

 

 

Quoted
Prices
in Active
Markets
for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Other
Unobservable
Inputs
(Level 3)

 

 

Total

 

 

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Other
Unobservable
Inputs
(Level 3)

 

Cash and Short Term Securities

 

$

122

 

 

$

122

 

 

$

—

 

 

$

—

 

 

$

46

 

 

$

42

 

 

$

4

 

 

$

—

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common and Preferred Stock

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

24

 

 

 

24

 

 

 

—

 

 

 

—

 

Commingled Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19

 

 

 

19

 

 

 

—

 

 

 

—

 

Mutual Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

6

 

 

 

—

 

 

 

—

 

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Bonds

 

 

2,843

 

 

 

—

 

 

 

2,842

 

 

 

1

 

 

 

230

 

 

 

24

 

 

 

206

 

 

 

—

 

Government Bonds

 

 

1,038

 

 

 

—

 

 

 

1,038

 

 

 

—

 

 

 

2,503

 

 

 

42

 

 

 

2,461

 

 

 

—

 

Repurchase Agreements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(650

)

 

 

—

 

 

 

(650

)

 

 

—

 

Asset Backed Securities

 

 

280

 

 

 

—

 

 

 

280

 

 

 

—

 

 

 

76

 

 

 

8

 

 

 

68

 

 

 

—

 

Commingled Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

20

 

 

 

20

 

 

 

—

 

 

 

—

 

Mutual Funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19

 

 

 

9

 

 

 

10

 

 

 

—

 

Alternatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Contracts

 

 

2

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

28

 

 

 

—

 

 

 

—

 

 

 

28

 

Other Investments

 

 

7

 

 

 

—

 

 

 

7

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

5

 

 

 

1

 

Total Investments in the Fair Value Hierarchy

 

 

4,292

 

 

$

122

 

 

$

4,167

 

 

$

3

 

 

 

2,327

 

 

$

194

 

 

$

2,104

 

 

$

29

 

Investments Measured at Net Asset Value, as Practical Expedient:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

 

 

Mutual Funds

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

Partnership Interests

 

 

166

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds

 

 

148

 

 

 

 

 

 

 

 

 

 

 

 

81

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

295

 

 

 

 

 

 

 

 

 

 

 

 

665

 

 

 

 

 

 

 

 

 

 

Partnership Interests

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

Short Term Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

Alternatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commingled Funds

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

Total Investments

 

 

5,048

 

 

 

 

 

 

 

 

 

 

 

 

3,148

 

 

 

 

 

 

 

 

 

 

Other

 

 

(78

)

 

 

 

 

 

 

 

 

 

 

 

(107

)

 

 

 

 

 

 

 

 

 

Total Plan Assets

 

$

4,970

 

 

 

 

 

 

 

 

 

 

 

$

3,041

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2021 and 2020, the Plans did not directly hold any of our common stock.

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. Investments that are measured at Net Asset Value ("NAV") as a practical expedient to estimate fair value are not classified in the fair value hierarchy. Under the practical expedient approach, the NAV is based on the fair value of the underlying investments held by each fund less its liabilities. This practical expedient would not be used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to total plan assets. Valuation methodologies used for assets and liabilities measured at fair value are as follows:

•
Cash and Short Term Securities: Cash and cash equivalents consist of U.S. and foreign currencies. Foreign currencies are reported in U.S. dollars based on currency exchange rates readily available in active markets. Short term securities held in commingled funds or pooled separate accounts are valued at the NAV of units held at year end, as determined by the investment manager.
•
Equity Securities: Common and preferred stock, which are held in non-U.S. companies, are valued at the closing price reported on the active market on which the individual securities are traded. Commingled funds are primarily valued at the NAV of units held at year end, as determined by a pricing vendor or the fund family. Mutual funds are valued at the NAV of shares held at year end, as determined by the closing price reported on the active market on which the individual securities are traded, or a pricing vendor or the fund family if an active market is not available. Partnership interests in private equity securities are priced based on valuations using the partnership’s latest available financial statements and the plan's percent ownership, adjusted for any cash transactions which occurred between the date of those financial statements and our year end.
•
Debt Securities: Corporate and government bonds, including asset backed securities, are valued at the closing price reported on the active market on which the individual securities are traded, or based on institutional bid evaluations using proprietary models if an active market is not available. Repurchase agreements are valued at the contract price plus accrued interest. These secured borrowings are collateralized by government bonds held by the non-U.S. plans and have maturities less than one year. Commingled funds are primarily valued at the NAV of units held at year end, as determined by a pricing vendor or the fund family. Mutual funds are valued at the NAV of shares held at year end, as determined by the closing price reported on the active market on which the individual securities are traded, or a pricing vendor or the fund family if an active market is not available. Partnership interests in private credit securities are priced based on valuations using the partnership’s latest available financial statements and the plan's percent ownership, adjusted for any cash transactions which occurred between the date of those financial statements and our year end.
•
Alternatives: Commingled funds, which primarily consist of real estate funds, are valued based on the NAV as determined by the fund manager using the most recent financial information available. Other investments primarily include derivative financial instruments, which are valued using independent pricing sources which utilize industry standard derivative valuation models. Directed insurance contracts are valued as reported by the issuer, based on discounted cash flows using weighted average discount rates of 2.1% and 1.7% at December 31, 2021 and 2020, respectively.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth a summary of changes in fair value of the non-U.S. pension plan insurance contracts classified as Level 3:

 

 

 

 

 

 

 

(In millions)

 

2021

 

 

2020

 

Balance, beginning of year

 

$

28

 

 

$

22

 

Unrealized gains relating to instruments still held at the reporting date

 

 

(1

)

 

 

3

 

Purchases, sales, issuances and settlements (net)

 

 

—

 

 

 

1

 

Foreign currency translation

 

 

(2

)

 

 

2

 

Balance, end of year

 

$

25

 

 

$

28

 

 

Savings Plans

Substantially all employees in the U.S. and employees of certain non-U.S. locations are eligible to participate in a defined contribution savings plan. Expenses recognized for contributions to these plans were $116 million, $100 million and $110 million for 2021, 2020 and 2019, respectively.