14) PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company and certain of its subsidiaries sponsor qualified and non-qualified defined benefit pension plans, principally non-contributory, covering eligible employees. The majority of participants in these plans are retired employees or former employees of previously divested businesses. Most of the Company’s pension plans are closed to new entrants. The benefits for some plans are based primarily on an employee’s years of service and average pay near retirement. Benefits under other plans are based primarily on an employee’s pay for each year that the employee participated in the plan. Participating employees are vested in the plans after five years of service. The Company funds its pension plans in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), the Pension Protection Act of 2006, the Internal Revenue Code of 1986 and the applicable rules and regulations. Plan assets consist principally of corporate bonds, equity securities and U.S. government securities. The Company’s common stock represents approximately 1.9% and 2.2% of the plan assets’ fair values at December 31, 2014 and 2013, respectively.

In addition, the Company sponsors health and welfare plans that provide postretirement health care and life insurance benefits to eligible retired employees and their covered dependents. Eligibility is based in part on certain age and service requirements at the time of their retirement. Most of the plans are contributory and contain cost-sharing features such as deductibles and coinsurance which are adjusted annually. Claims are paid primarily with the Company’s funds.

The Company uses a December 31 measurement date for all pension and other postretirement benefit plans.

The following table sets forth the change in benefit obligation for the Company’s pension and postretirement benefit plans.



	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
Change in benefit obligation:
Benefit obligation, beginning of year	$	5,022		$	5,511		$	589		$	676
Service cost	31			38			—			—
Interest cost	237			211			25			26
Actuarial loss (gain)	444			(311		)	5			(51		)
Benefits paid	(396		)	(415		)	(74		)	(79		)
Participants’ contributions	—			—			11			10
Retiree Medicare drug subsidy	—			—			6			7
Settlements	(1		)	—			—			—
Cumulative translation adjustments	(14		)	(12		)	—			—
Benefit obligation, end of year	$	5,323		$	5,022		$	562		$	589

The following table sets forth the change in plan assets for the Company’s pension and postretirement benefit plans.



	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
Change in plan assets:
Fair value of plan assets, beginning of year	$	4,184		$	4,234		$	5		$	5
Actual return on plan assets	402			178			—			—
Employer contributions	50			199			57			62
Benefits paid	(396		)	(415		)	(74		)	(79		)
Participants’ contributions	—			—			11			10
Retiree Medicare drug subsidy	—			—			6			7
Settlements	(1		)	—			—			—
Cumulative translation adjustments	(15		)	(12		)	—			—
Fair value of plan assets, end of year	$	4,224		$	4,184		$	5		$	5

The funded status of pension and postretirement benefit obligations and the related amounts recognized on the Company’s Consolidated Balance Sheets were as follows:



	Pension Benefits						Postretirement Benefits
At December 31,	2014			2013			2014			2013
Funded status at end of year	$	(1,099	)	$	(838	)	$	(557	)	$	(584	)
Amounts recognized on the Consolidated Balance Sheets:
Other assets	$	15		$	17		$	—		$	—
Current liabilities	(50		)	(50		)	(57		)	(62		)
Noncurrent liabilities	(1,064		)	(805		)	(500		)	(522		)
Net amounts recognized	$	(1,099	)	$	(838	)	$	(557	)	$	(584	)

The Company’s qualified pension plans were underfunded by $425 million and $203 million at December 31, 2014 and 2013, respectively.

The following amounts were recognized in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.



	Pension Benefits						Postretirement Benefits
At December 31,	2014			2013			2014			2013
Net actuarial (loss) gain	$	(1,774	)	$	(1,533	)	$	222		$	248
Net prior service (cost) credit	(10		)	(11		)	—			1
Share of equity investee	(1		)	—			—			—
	(1,785		)	(1,544		)	222			249
Deferred income taxes	706			612			(35		)	(46		)
Net amount recognized in accumulated other comprehensive income (loss)	$	(1,079	)	$	(932	)	$	187		$	203

The accumulated benefit obligation for all defined benefit pension plans was $5.23 billion and $4.95 billion at December 31, 2014 and 2013, respectively.

Information for the pension plans with an accumulated benefit obligation in excess of plan assets is set forth below.



At December 31,	2014		2013
Projected benefit obligation	$	5,200	$	4,890
Accumulated benefit obligation	$	5,111	$	4,814
Fair value of plan assets	$	4,085	$	4,036

The following tables present the components of net periodic benefit cost and amounts recognized in other comprehensive income (loss).



	Pension Benefits									Postretirement Benefits
Year Ended December 31,	2014			2013			2012			2014			2013			2012
Components of net periodic cost:
Service cost	$	31		$	38		$	34		$	—		$	—		$	—
Interest cost	237			211			240			25			26			33
Expected return on plan assets	(262		)	(271		)	(247		)	—			—			—
Amortization of actuarial losses (gains)	63			85			70			(21		)	(16		)	(16		)
Amortization of prior service cost (credit)	1			1			1			(1		)	(1		)	(1		)
Net periodic cost	$	70		$	64		$	98		$	3		$	9		$	16



	Pension			Postretirement
Year Ended December 31, 2014	Benefits			Benefits
Other comprehensive income (loss):
Actuarial loss	$	(304	)	$	(5	)
Amortization of actuarial losses (gains) ^(a)	63			(21		)
Amortization of prior service cost (credit) ^(a)	1			(1		)
Share of equity investee	(1		)	—
	(241		)	(27		)
Deferred income taxes	94			11
Recognized in other comprehensive income, net of tax	$	(147	)	$	(16	)

(a) Reflects amounts reclassified from accumulated other comprehensive income (loss) to net earnings.

Estimated net actuarial losses and prior service costs related to the defined benefit pension plans of approximately $78 million and $1 million, respectively, will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in 2015.

Estimated net actuarial gains related to the other postretirement benefit plans of approximately $19 million will be amortized from accumulated other comprehensive income (loss) into net periodic benefit costs in 2015.



	Pension				Postretirement
	Benefits				Benefits
	2014		2013		2014		2013
Weighted average assumptions used to determine benefit obligations at December 31:
Discount rate	4.1	%	4.9	%	3.8	%	4.5	%
Rate of compensation increase	3.0	%	3.0	%	N/A		N/A
Weighted average assumptions used to determine net periodic costs for the year ended December 31:
Discount rate	4.9	%	4.0	%	4.5	%	4.0	%
Expected long-term return on plan assets	6.5	%	6.5	%	2.0	%	2.0	%
Rate of compensation increase	3.0	%	3.0	%	N/A		N/A

N/A - not applicable

The discount rates are determined based on the yield on portfolios of high quality bonds, constructed to provide cash flows necessary to meet the plans’ expected future benefit payments, as determined for the benefit obligations. The expected return on plan assets assumption is derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets.

The following additional assumptions were used in accounting for postretirement benefits.



	2014		2013
Projected health care cost trend rate for participants of age 65 and below	7.0	%	7.5	%
Projected health care cost trend rate for participants above age 65	7.0	%	7.5	%
Ultimate trend rate	5.0	%	5.0	%
Year ultimate trend rate is achieved for participants of age 65 and below	2019		2019
Year ultimate trend rate is achieved for participants above 65	2019		2019

A one percentage point change in assumed health care cost trend rates would have the following effects:



	One Percentage		One Percentage
	Point Increase		Point Decrease
Effect on total service and interest cost components	$	—	$	—
Effect on the accumulated postretirement benefit obligation	$	9	$	(9	)

Plan Assets

The asset allocations for the Company’s U.S. qualified defined benefit pension plan trust and international pension plan trusts are based upon an analysis of the timing and amount of projected benefit payments, projected company contributions, the expected returns and risk of the asset classes and the correlation of those returns. The target asset allocation for the Company’s U.S. pension plan trust, which accounted for 95% of total plan assets at December 31, 2014, is to invest between 70% - 80% in long duration fixed income instruments, 16% - 28% in equity securities and the remainder in cash and other investments. At December 31, 2014, this trust was invested approximately 76% in long duration fixed income portfolios, 22% in equity instruments, and the remainder in cash, cash equivalents and other investments. Other trusts, which fund the Company’s international pension plans, accounted for 5% of total plan assets at December 31, 2014 and are invested approximately 74% in fixed income instruments, 20% in equity instruments, and the remainder in cash, cash equivalents and other investments. Long duration fixed income investments primarily consist of a diversified portfolio of investment grade fixed income instruments with a duration that approximates the duration of the liabilities covered by the trust. All equity portfolios are diversified between U.S. and non-U.S. equities and include large and small capitalization equities. The asset allocations are reviewed regularly.

The following tables set forth the Company’s pension plan assets measured at fair value on a recurring basis at December 31, 2014 and 2013. These assets have been categorized according to the three-level fair value hierarchy established by the FASB which prioritizes the inputs used in measuring fair value. Level 1 is based on quoted prices for the asset in active markets. Level 2 is based on inputs that are observable other than quoted market prices in active markets, such as quoted prices for the asset in inactive markets or quoted prices for similar assets. Level 3 is based on unobservable inputs that market participants would use in pricing the asset.



At December 31, 2014	Level 1		Level 2		Level 3		Total
Cash and cash equivalents ^(a)	$	5	$	43	$	—	$	48
Fixed income securities:
U.S. treasury securities	139		—		—		139
Government-related securities	49		301		—		350
Corporate bonds ^(b)	—		2,560		—		2,560
Mortgage-backed and asset-backed securities	—		116		3		119
Equity securities: ^(c)
U.S. large capitalization	258		349		—		607
U.S. small capitalization	74		2		—		76
International equity ^(d)	—		242		—		242
Limited partnerships	—		—		56		56
Other	—		27		—		27
Total Assets	$	525	$	3,640	$	59	$	4,224



At December 31, 2013	Level 1		Level 2		Level 3		Total
Cash and cash equivalents ^(a)	$	8	$	55	$	—	$	63
Fixed income securities:
U.S. treasury securities	133		—		—		133
Government-related securities	44		234		—		278
Corporate bonds ^(b)	—		2,373		—		2,373
Mortgage-backed and asset-backed securities	—		128		4		132
Equity securities: ^(c)
U.S. large capitalization	345		355		—		700
U.S. small capitalization	98		3		—		101
International equity ^(d)	—		291		—		291
Limited partnerships	—		—		55		55
Other	—		58		—		58
Total Assets	$	628	$	3,497	$	59	$	4,184

(a) Assets categorized as Level 2 reflect investments in money market funds.

(b) Securities of diverse industries, substantially all investment grade.

(d) Includes investments in emerging market funds of $50 million and $59 million at December 31, 2014 and 2013, respectively.

Money market investments are carried at amortized cost which approximates fair value due to the short-term maturity of these investments. Investments in equity securities are reported at fair value based on quoted market prices on national security exchanges. The fair value of investments in common collective funds are determined using the Net Asset Value (“NAV”) provided by the administrator of the fund. The NAV is determined by each fund’s trustee based upon the fair value of the underlying assets owned by the fund, less liabilities, divided by the number of outstanding units. The fair value of U.S. treasury securities is determined based on quoted market prices in active markets. The fair value of government related securities and corporate bonds is determined based on quoted market prices on national security exchanges, when available, or using valuation models which incorporate certain other observable inputs including recent trading activity for comparable securities and broker quoted prices. The fair value of mortgage-backed and asset-backed securities is based upon valuation models which incorporate available dealer quotes and market information. Limited partnerships are valued using statements issued by the partnership which determine the value based on the fair value of the underlying investments.

The table below sets forth a summary of changes in the fair value of investments reflected as Level 3 at December 31, 2014.



	Limited Partnerships			Mortgage-backed Securities			Total
At January 1, 2013	$	52		$	4		$	56
Actual return related to investments held at end of year	4			—			4
Distributions	(1		)	—			(1		)
At December 31, 2013	55			4			59
Actual return related to investments held at end of year	1			—			1
Distributions	—			(1		)	(1		)
At December 31, 2014	$	56		$	3		$	59

The Company’s other postretirement benefits plan assets of $5 million at both December 31, 2014 and 2013 were invested in U.S. fixed income index funds, which are categorized as Level 1 assets.

Future Benefit Payments

Estimated future benefit payments are as follows:



	2015		2016		2017		2018		2019		2020-2024
Pension	$	398	$	388	$	381	$	372	$	364	$	1,691
Postretirement	$	67	$	65	$	62	$	59	$	57	$	236
Retiree Medicare drug subsidy	$	9	$	9	$	8	$	8	$	8	$	36

In 2015 the Company expects to make contributions of approximately $50 million to its non-qualified pension plans to satisfy the benefit payments due under these plans. Also in 2015, the Company expects to contribute approximately $58 million to its other postretirement benefit plans to satisfy the Company’s portion of benefit payments due under these plans.

Multiemployer Pension and Postretirement Benefit Plans

The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees including talent, writers, directors, producers and other employees, primarily in the entertainment industry. The other employers participating in these multiemployer plans are primarily in the entertainment and other related industries. The risks of participating in multiemployer plans are different from single-employer plans as assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers and if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. In addition, if the Company chooses to stop participating in some of its multiemployer plans it may be required to pay those plans a withdrawal liability based on the underfunded status of the plan.

The financial health of a multiemployer plan is indicated by the zone status, as defined by the Pension Protection Act of 2006, which represents the funded status of the plan as certified by the plan’s actuary. Plans in the red zone are less than 65% funded, the yellow zone are between 65% and 80% funded, and green zone are at least 80% funded.

The table below presents information concerning the Company’s participation in multiemployer defined benefit pension plans.



										Expiration
	Employer Identification	Pension Protection Act								Date of Collective-
	Number/Pension	Zone Status ^(a)		Company Contributions						Bargaining
Pension Plan	Plan Number	2014	2013	2014		2013		2012		Agreement
AFTRA Retirement Plan^(b)	13-6414972-001	Green	Green	$	7	$	7	$	7	(c)
Directors Guild of America - Producer	95-2892780-001	Green	Green	5		5		4		6/30/2017
Producer-Writers Guild of America	95-2216351-001	Green	Green	10		8		8		5/1/2017
Screen Actors Guild - Producers	95-2110997-001	Green	Green	7		7		6		6/30/2017
Motion Picture Industry	95-1810805-001	Green	Green	8		7		7		(d)
Other Plans				10		8		6
	Total contributions			$	47	$	42	$	38

(a) The Zone status for each individual plan listed was certified by each plan’s actuary as of the beginning of the plan years for 2014 and 2013. The plan year is the twelve months ending December 31 for each plan listed above except AFTRA Retirement Plan which has a plan year ending November 30.

(b) The Company was listed in AFTRA Retirement Plan’s Form 5500 as providing more than 5% of total contributions for the plan year ended November 30, 2013.

(d) The expiration dates range from March 2, 2015 through March 2, 2016.

As a result of the above noted zone status there were no funding improvements or rehabilitation plans implemented, as defined by ERISA, nor any surcharges imposed for any of the individual plans listed.

The Company also contributes to multiemployer plans that provide postretirement healthcare, defined contribution and other benefits to certain employees under collective bargaining agreements. The contributions to these plans were $20 million, $17 million and $18 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company recognizes the net periodic cost for multiemployer pension and postretirement benefit plans based on the required contributions to the plans.

Defined Contribution Plans

The Company sponsors defined contribution plans for the benefit of substantially all employees meeting eligibility requirements. Employer contributions to such plans were $49 million, $53 million and $49 million for the years ended December 31, 2014, 2013 and 2012, respectively.