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Employee plans (Tables)

12 Months Ended

Dec. 31, 2015

The fair value of stock option awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted-average fair values as follows:


Year Ended December 31	2015			2014			2013
Weighted-average fair value of grant	$	8.92		$	11.24		$	8.79
Risk-free interest rate		1.28	%		1.04	%		.54	%
Expected volatility		45.46	%		45.65	%		50.19	%
Expected life of options in years		4.92			3.71			3.69
Expected dividend yield		–			–			–

Summary of Stock Option Activity

A summary of stock option activity for the year ended December 31, 2015 follows (shares in thousands):


Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ($ in millions)
Outstanding at December 31, 2014		2,816		$	29.51
Granted		743			23.21
Exercised		(190	)		19.53
Forfeited and expired		(646	)		32.10
Outstanding at December 31, 2015		2,723			27.88		2.75	$	0.0
Expected to vest at December 31, 2015		1,281			26.23		4.18	$	0.0
Exercisable at December 31, 2015		1,398			29.51		1.36	$	0.0

Summary of Restricted Stock Unit Activity

A summary of restricted stock unit activity for the year ended December 31, 2015 follows (shares in thousands):


	Restricted Stock Units			Weighted-Average Grant-Date Fair Value
Outstanding at December 31, 2014		354		$	28.81
Granted		452			22.52
Vested		(87	)		23.85
Forfeited and expired		(250	)		29.01
Outstanding at December 31, 2015		469			23.57

Schedule of Accumulated Benefit Obligation in Excess of Plan Assets

Information for defined benefit retirement plans with an accumulated benefit obligation in excess of plan assets at December 31, 2015 and 2014 follows:


December 31 (millions)	2015		2014
Accumulated benefit obligation	$	7,231.2	$	8,412.6

Fair value of plan assets		5,228.6		6,167.2

Schedule of Projected Benefit Obligation in Excess of Plan Assets

Information for defined benefit retirement plans with a projected benefit obligation in excess of plan assets at December 31, 2015 and 2014 follows:


December 31 (millions)	2015		2014
Projected benefit obligation	$	7,235.4	$	8,417.9

Fair value of plan assets		5,228.6		6,167.2

Company's Investment Policy Targets and Ranges for Each Asset Category

The company’s investment policy targets and ranges for each asset category are as follows:


	U.S.				Int’l.
Asset Category	Target		Range		Target		Range

Equity securities		58%		52-64%		39%		33-45%

Debt securities		36%		33-39%		54%		47-61%

Real estate		6%		3-9%		1%		0-3%

Cash		0%		0-5%		1%		0-5%

Other		0%		0%		5%		0-10%

Assumed Health Care Cost Trend Rates


Assumed health care cost trend rates at December 31	2015			2014

Health care cost trend rate assumed for next year		6.1	%		6.4	%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.8	%		4.8	%

Year that the rate reaches the ultimate trend rate		2023			2023

Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates

A one-percentage-point change in assumed health care cost trend rates would have the following effects (in millions of dollars):


	1-Percentage- Point Increase		1-Percentage- Point Decrease

Effect on service and interest cost	$	.1	$	(.2	)

Effect on postretirement benefit obligation		3.4		(3.5	)

Schedule of Plans' Assets (Liabilities) at Fair Value

The following table sets forth by level, within the fair value hierarchy, the plans’ assets (liabilities) at fair value at December 31, 2015.


	U.S. Plans										International Plans
December 31, 2015 (millions)	Fair Value			Level 1			Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Pension plans
Equity Securities
Common Stocks	$	1,686.4		$	1,680.6		$	5.8			$	.6	$	.6
Commingled Funds		411.9						411.9				956.1			$	956.1
Debt Securities
U.S. Govt. Securities		162.2			162.2
Other Fixed Income		974.7						974.7				248.5				248.5
Insurance Contracts												120.6					$	120.6
Commingled Funds												905.4				905.4
Real Estate
Real Estate Investment Trusts		170.7			170.7							.7		.7
Real Estate		37.6							$	37.6		41.8						41.8
Other
Derivatives		.8			.3			.5				7.0				7.0
Private Equity		7.6								7.6
Commingled Funds		105.3						105.3				188.7				118.4		70.3
Pooled Funds		263.1						263.1
Cash		1.9			1.9							27.4		27.4
Receivables		77.1			77.1
Payables		(139.9	)		(139.9	)
Total	$	3,759.4		$	1,952.9		$	1,761.3	$	45.2	$	2,496.8	$	28.7	$	2,235.4	$	232.7
Other postretirement plans
Insurance Contracts	$	7.7							$	7.7

The following table sets forth by level, within the fair value hierarchy, the plans’ assets (liabilities) at fair value at December 31, 2014.


	U.S. Plans										International Plans
December 31, 2014 (millions)	Fair Value			Level 1			Level 2		Level 3		Fair Value			Level 1			Level 2		Level 3
Pension plans
Equity Securities
Common Stocks	$	1,837.4		$	1,831.6		$	5.8			$	1.6		$	1.6
Commingled Funds		461.6						461.6				1,054.8					$	1,054.8
Debt Securities
U.S. and UK Govt. Securities		176.9			176.9
Other Fixed Income		1,025.3						1,025.3				330.4						330.4
Insurance Contracts		17.4							$	17.4		135.5							$	135.5
Commingled Funds												991.1						991.1
Real Estate
Real Estate Investment Trusts		169.1			169.1							1.3			1.3
Real Estate		34.2								34.2		40.8								40.8
Other
Derivatives		18.2			5.9			12.3				7.2						7.2
Private Equity		12.8								12.8
Commingled Funds		102.1						102.1				136.5						85.8		50.7
Pooled Funds		297.2						297.2				1.2						1.2
Cash		(1.3	)		(1.3	)						18.6			18.6
Receivables		77.4			77.4
Payables		(158.6	)		(158.6	)						(.1	)		(.1	)
Total	$	4,069.7		$	2,101.0		$	1,904.3	$	64.4	$	2,718.9		$	21.4		$	2,470.5	$	227.0
Other postretirement plans
Insurance Contracts	$	7.3							$	7.3
Pooled Funds		1.8					$	1.8
Total	$	9.1					$	1.8	$	7.3

Summary of Changes in the Fair Value of the Plans' Level 3 Assets

The following table sets forth a summary of changes in the fair value of the plans’ Level 3 assets for the year ended December 31, 2015.


(millions)		January 1, 2015		Realized gains (losses)			Purchases or acquisitions		Sales or dispositions			Currency and unrealized gains (losses) relating to instruments still held at December 31, 2015			December 31, 2015
*U.S. plans*
Pension plan
Real Estate	$	34.2	$	.1				$	(.1	)	$	3.4		$	37.6
Private Equity		12.8		(8.2	)	$	.2		(6.6	)		9.4			7.6
Insurance Contracts		17.4		(.4	)				(16.6	)		(.4	)		–

Total	$	64.4	$	(8.5	)	$	.2	$	(23.3	)	$	12.4		$	45.2

Other postretirement plans
Insurance Contracts	$	7.3	$	(.1	)	$	.5							$	7.7

*International pension plans*
Insurance Contracts	$	135.5				$	9.4	$	(10.9	)	$	(13.4	)	$	120.6
Real Estate		40.8	$	.2			6.1		(5.9	)		.6			41.8
Commingled Funds		50.7					23.0		(.4	)		(3.0	)		70.3

Total	$	227.0	$	.2		$	38.5	$	(17.2	)	$	(15.8	)	$	232.7

The following table sets forth a summary of changes in the fair value of the plans’ Level 3 assets for the year ended December 31, 2014.


(millions)		January 1, 2014		Realized gains (losses)			Purchases or acquisitions		Sales or dispositions			Currency and unrealized gains (losses) relating to instruments still held at December 31, 2014			December 31, 2014
*U.S. plans*
Pension plan
Real Estate	$	34.7	$	4.7				$	(4.9	)	$	(.3	)	$	34.2
Private Equity		16.5		(24.4	)				(6.7	)		27.4			12.8
Insurance Contracts		79.5		.1					(63.0	)		.8			17.4

Total	$	130.7	$	(19.6	)			$	(74.6	)	$	27.9		$	64.4

Other postretirement plans
Insurance Contracts	$	7.5				$	.2	$	(.4	)				$	7.3

*International pension plans*
Insurance Contracts	$	151.3				$	7.0	$	(13.0	)	$	(9.8	)	$	135.5
Real Estate		42.8	$	(.2	)		15.3		(15.5	)		(1.6	)		40.8
Commingled Funds		50.2		.1			1.0		(.3	)		(.3	)		50.7

Total	$	244.3	$	(.1	)	$	23.3	$	(28.8	)	$	(11.7	)	$	227.0

Pension Plans

Funded Status of the Plan and Amounts Recognized in Consolidated Balance Sheet

Retirement plans’ funded status and amounts recognized in the company’s consolidated balance sheets at December 31, 2015 and 2014 follow:


	U.S. Plans						International Plans
December 31 (millions)	2015			2014			2015			2014

Change in projected benefit obligation

Benefit obligation at beginning of year	$	5,665.5		$	5,158.8		$	3,354.9		$	3,059.2

Service cost		–			–			8.7			8.4

Interest cost		224.1			248.3			94.1			117.9

Plan participants’ contributions		–			–			2.5			3.1

Plan amendment		(2.7	)		(46.3	)		(32.3	)		(1.0	)

Plan curtailment		–			–			–			(.3	)

Actuarial loss (gain)		(285.0	)		670.0			(79.5	)		559.4

Benefits paid		(370.5	)		(365.3	)		(112.8	)		(115.4	)

Foreign currency translation adjustments		–			–			(247.8	)		(276.4	)

Benefit obligation at end of year	$	5,231.4		$	5,665.5		$	2,987.8		$	3,354.9

Change in plan assets

Fair value of plan assets at beginning of year	$	4,069.7		$	4,048.0		$	2,718.9		$	2,681.8

Actual return on plan assets		(5.6	)		299.9			18.6			278.0

Employer contribution		65.8			87.1			82.5			96.3

Plan participants’ contributions		–			–			2.5			3.1

Benefits paid		(370.5	)		(365.3	)		(112.8	)		(115.4	)

Foreign currency translation adjustments		–			–			(212.9	)		(224.9	)

Fair value of plan assets at end of year	$	3,759.4		$	4,069.7		$	2,496.8		$	2,718.9

Funded status at end of year	$	(1,472.0	)	$	(1,595.8	)	$	(491.0	)	$	(636.0	)

Amounts recognized in the consolidated balance sheets consist of:

Prepaid postretirement assets	$	–		$	–		$	43.8		$	18.9

Other accrued liabilities		(6.8	)		(6.9	)		(.2	)		(.2	)

Long-term postretirement liabilities		(1,465.2	)		(1,588.9	)		(534.6	)		(654.7	)

Total funded status	$	(1,472.0	)	$	(1,595.8	)	$	(491.0	)	$	(636.0	)

Accumulated other comprehensive loss, net of tax

Net loss	$	2,816.2		$	2,973.5		$	1,018.6		$	1,076.1

Prior service (credit) cost	$	(44.9	)	$	(44.5	)	$	(35.8	)	$	(12.8	)

Accumulated benefit obligation	$	5,231.4		$	5,665.5		$	2,983.1		$	3,349.3

Components of Net Periodic Benefit (Income) Cost

Net periodic pension cost for 2015, 2014 and 2013 includes the following components:


	U.S. Plans									International Plans
Year ended December 31 (millions)	2015			2014			2013			2015			2014			2013

Service cost	$	–		$	–		$	–		$	8.7		$	8.4		$	10.4

Interest cost		224.1			248.3			220.4			94.1			117.9			106.6

Expected return on plan assets		(254.8	)		(287.1	)		(291.5	)		(155.4	)		(160.5	)		(141.9	)

Amortization of prior service (credit)		(2.4	)		(.4	)		.7			(1.9	)		(2.1	)		(2.1	)

Recognized net actuarial loss		132.7			109.7			139.0			63.6			40.2			51.9

Curtailment gain		–			–			–			–			(.6	)		–
Net periodic pension cost	$	99.6		$	70.5		$	68.6		$	9.1		$	3.3		$	24.9

Schedule of Weighted-Average Assumptions


	U.S. Plans									International Plans
Year ended December 31 (millions)	2015			2014			2013			2015			2014			2013

Weighted-average assumptions used to determine net periodic pension cost for the years ended December 31 were as follows:

Discount rate		4.09	%		5.02	%		4.01	%		3.05	%		4.15	%		3.92	%
Rate of compensation increase		N/A			N/A			N/A			1.68	%		2.08	%		2.06	%
Expected long-term rate of return on assets		6.80	%		7.72	%		8.00	%		6.45	%		6.45	%		6.40	%


Weighted-average assumptions used to determine benefit obligations at December 31 were as follows:

Discount rate		4.56	%		4.09	%		5.02	%		3.30	%		3.05	%		4.15	%
Rate of compensation increase		N/A			N/A			N/A			1.68	%		1.68	%		2.08	%

Expected Future Benefit Payments

As of December 31, 2015, the following benefit payments, which reflect expected future service where applicable, are expected to be paid from the defined benefit pension plans:


Year ending December 31 (millions)	U.S.		Int’l.

2016	$	361.8	$	104.6

2017		362.6		105.6

2018		362.9		107.1

2019		363.5		109.3

2020		364.5		110.8

2021 - 2025		1,814.7		573.9