Retirement Plans | Other Benefit Plans | ||||||||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||
Service cost | $ | 906 | 722 | 638 | 196 | 175 | 149 | ||||||||||||
Interest cost | 908 | 878 | 853 | 151 | 165 | 188 | |||||||||||||
Expected return on plan assets | (1,447 | ) | (1,236 | ) | (1,108 | ) | (6 | ) | (4 | ) | (1 | ) | |||||||
Amortization of prior service cost (credit) | 6 | 6 | 9 | (2 | ) | (3 | ) | (3 | ) | ||||||||||
Amortization of net transition obligation | 1 | 1 | 1 | — | — | — | |||||||||||||
Recognized actuarial losses | 681 | 494 | 388 | 111 | 76 | 45 | |||||||||||||
Curtailments and settlements | — | — | — | 2 | — | — | |||||||||||||
Net periodic benefit cost | $ | 1,055 | 865 | 781 | 452 | 409 | 378 |
(Dollars in Millions) | |||
Amortization of net transition obligation | $ | — | |
Amortization of net actuarial losses | 553 | ||
Amortization of prior service cost | 3 |
Retirement Plans | Other Benefit Plans | |||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||
Worldwide Benefit Plans | ||||||||||||||||||
Discount rate | 4.78 | % | 4.25 | % | 5.13 | % | 5.25 | % | 4.55 | % | 5.25 | % | ||||||
Expected long-term rate of return on plan assets | 8.46 | % | 8.45 | % | 8.62 | % | ||||||||||||
Rate of increase in compensation levels | 4.08 | % | 4.08 | % | 4.19 | % | 4.29 | % | 4.28 | % | 4.28 | % |
Health Care Plans | 2013 | 2012 | ||||
Health care cost trend rate assumed for next year | 6.50 | % | 6.50 | % | ||
Rate to which the cost trend rate is assumed to decline (ultimate trend) | 4.50 | % | 4.50 | % | ||
Year the rate reaches the ultimate trend rate | 2032 | 2032 |
One-Percentage- | One-Percentage- | |||||||
(Dollars in Millions) | Point Increase | Point Decrease | ||||||
Health Care Plans | ||||||||
Total interest and service cost | $ | 45 | $ | (34 | ) | |||
Post-retirement benefit obligation | 432 | (347 | ) |
Retirement Plans | Other Benefit Plans | |||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||
Change in Benefit Obligation | ||||||||||||||
Projected benefit obligation — beginning of year | $ | 21,829 | 17,424 | 4,159 | 3,790 | |||||||||
Service cost | 906 | 722 | 196 | 175 | ||||||||||
Interest cost | 908 | 878 | 151 | 165 | ||||||||||
Plan participant contributions | 54 | 35 | — | — | ||||||||||
Amendments | 35 | 12 | 7 | — | ||||||||||
Actuarial (gains) losses | (1,432 | ) | 2,662 | 296 | 459 | |||||||||
Divestitures & acquisitions | 8 | 629 | — | — | ||||||||||
Curtailments, settlements & restructuring | (15 | ) | (6 | ) | (11 | ) | — | |||||||
Benefits paid from plan | (751 | ) | (697 | ) | (373 | ) | (432 | ) | ||||||
Effect of exchange rates | (54 | ) | 170 | (18 | ) | 2 | ||||||||
Projected benefit obligation — end of year | $ | 21,488 | 21,829 | 4,407 | 4,159 | |||||||||
Change in Plan Assets | ||||||||||||||
Plan assets at fair value — beginning of year | $ | 17,536 | 13,736 | 122 | 8 | |||||||||
Actual return on plan assets | 3,573 | 1,926 | 15 | 3 | ||||||||||
Company contributions | 565 | 1,838 | 323 | 543 | ||||||||||
Plan participant contributions | 54 | 35 | — | — | ||||||||||
Settlements | (4 | ) | (2 | ) | — | — | ||||||||
Divestitures & acquisitions | 9 | 593 | — | — | ||||||||||
Benefits paid from plan assets | (751 | ) | (697 | ) | (373 | ) | (432 | ) | ||||||
Effect of exchange rates | (81 | ) | 107 | — | — | |||||||||
Plan assets at fair value — end of year | $ | 20,901 | 17,536 | 87 | 122 | |||||||||
Funded status — end of year | $ | (587 | ) | (4,293 | ) | (4,320 | ) | (4,037 | ) | |||||
Amounts Recognized in the Company’s Balance Sheet consist of the following: | ||||||||||||||
Non-current assets | $ | 2,363 | 194 | $ | — | — | ||||||||
Current liabilities | (71 | ) | (65 | ) | (302 | ) | (307 | ) | ||||||
Non-current liabilities | (2,879 | ) | (4,422 | ) | (4,018 | ) | (3,730 | ) | ||||||
Total recognized in the consolidated balance sheet — end of year | $ | (587 | ) | (4,293 | ) | $ | (4,320 | ) | (4,037 | ) | ||||
Amounts Recognized in Accumulated Other Comprehensive Income consist of the following: | ||||||||||||||
Net actuarial loss | $ | 3,344 | 7,586 | $ | 1,732 | 1,601 | ||||||||
Prior service cost (credit) | 26 | 9 | (6 | ) | (14 | ) | ||||||||
Unrecognized net transition obligation | 2 | 2 | — | — | ||||||||||
Total before tax effects | $ | 3,372 | 7,597 | $ | 1,726 | 1,587 | ||||||||
Accumulated Benefit Obligations — end of year | $ | 19,203 | 19,267 | |||||||||||
Retirement Plans | Other Benefit Plans | |||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||||||||||||
Net periodic benefit cost | $ | 1,055 | 865 | $ | 452 | 409 | ||||||||
Net actuarial (gain) loss | (3,559 | ) | 2,007 | 248 | 458 | |||||||||
Amortization of net actuarial loss | (681 | ) | (494 | ) | (111 | ) | (76 | ) | ||||||
Prior service cost | 34 | 12 | 8 | — | ||||||||||
Amortization of prior service (cost) credit | (13 | ) | (6 | ) | — | 3 | ||||||||
Effect of exchange rates | (6 | ) | 79 | (6 | ) | 1 | ||||||||
Total recognized in other comprehensive income, before tax | $ | (4,225 | ) | 1,598 | $ | 139 | 386 | |||||||
Total recognized in net periodic benefit cost and other comprehensive income | $ | (3,170 | ) | 2,463 | $ | 591 | 795 |
U.S. Plans | International Plans | ||||||||||||||||
Qualified Plans | Non-Qualified Plans | Funded Plans | Unfunded Plans | ||||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||
Plan Assets | $ | 13,990 | 11,464 | — | — | 6,911 | 6,072 | — | — | ||||||||
Projected Benefit Obligation | 11,921 | 12,420 | 1,296 | 1,343 | 7,797 | 7,586 | 474 | 480 | |||||||||
Accumulated Benefit Obligation | 10,745 | 11,001 | 1,065 | 1,070 | 6,974 | 6,774 | 419 | 422 | |||||||||
Over (Under) Funded Status | |||||||||||||||||
Projected Benefit Obligation | $ | 2,069 | (956 | ) | (1,296 | ) | (1,343 | ) | (886 | ) | (1,514 | ) | (474 | ) | (480 | ) | |
Accumulated Benefit Obligation | 3,245 | 463 | (1,065 | ) | (1,070 | ) | (63 | ) | (702 | ) | (419 | ) | (422 | ) |
(Dollars in Millions) | 2014 | 2015 | 2016 | 2017 | 2018 | 2019-2023 | |||||||||||||
Projected future benefit payments | |||||||||||||||||||
Retirement plans | $ | 778 | 794 | 840 | 890 | 933 | 6,071 | ||||||||||||
Other benefit plans | $ | 313 | 309 | 305 | 302 | 299 | 1,469 |
(Dollars in Millions) | 2014 | 2015 | 2016 | 2017 | 2018 | 2019-2023 | |||||||||||||
Projected future contributions | $ | 74 | 73 | 78 | 95 | 89 | 524 |
Percent of Plan Assets | Target Allocation | ||||||||
2013 | 2012 | 2014 | |||||||
Worldwide Retirement Plans | |||||||||
Equity securities | 76 | % | 75 | % | 71 | % | |||
Debt securities | 24 | 25 | 29 | ||||||
Total plan assets | 100 | % | 100 | % | 100 | % |
• | Short-term investments — Cash and quoted short-term instruments are valued at the closing price or the amount held on deposit by the custodian bank. Other investments are through investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in a market that is not active and classified as Level 2. |
• | Government and agency securities — A limited number of these investments are valued at the closing price reported on the major market on which the individual securities are traded. Where quoted prices are available in an active market, the investments are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. When quoted market prices for a security are not available in an active market, they are classified as Level 2. |
• | Debt instruments — A limited number of these investments are valued at the closing price reported on the major market on which the individual securities are traded. Where quoted prices are available in an active market, the investments are classified as Level 1. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are classified as Level 2. Level 3 debt instruments are priced based on unobservable inputs. |
• | Equity securities — Common stocks are valued at the closing price reported on the major market on which the individual securities are traded. Substantially all common stock is classified within Level 1 of the valuation hierarchy. |
• | Commingled funds — These investment vehicles are valued using the NAV provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Assets in the Level 2 category have a quoted market price in a market that is not active. |
• | Insurance contracts — The instruments are issued by insurance companies. The fair value is based on negotiated value and the underlying investments held in separate account portfolios as well as considering the credit worthiness of the issuer. The underlying investments are government, asset-backed and fixed income securities. In general, insurance contracts are classified as Level 3 as there are no quoted prices nor other observable inputs for pricing. |
• | Other assets — Other assets are represented primarily by limited partnerships and real estate investments, as well as commercial loans and commercial mortgages that are not classified as corporate debt. Other assets that are exchange listed and actively traded are classified as Level 1, while inactively traded assets are classified as Level 2. Most limited partnerships represent investments in private equity and similar funds that are valued by the general partners. Certain of these limited partnerships, as well as any other assets valued using unobservable inputs, are classified as Level 3. |
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total Assets | ||||||||||||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Short-term investment funds | $ | 304 | 155 | 561 | 627 | — | — | 865 | 782 | ||||||||||||||||
Government and agency securities | — | 53 | 1,965 | 1,706 | — | — | 1,965 | 1,759 | |||||||||||||||||
Debt instruments | — | 2 | 1,215 | 1,641 | 1 | 3 | 1,216 | 1,646 | |||||||||||||||||
Equity securities | 10,526 | 8,104 | 23 | 1 | 4 | 4 | 10,553 | 8,109 | |||||||||||||||||
Commingled funds | — | 11 | 5,846 | 4,985 | 44 | 50 | 5,890 | 5,046 | |||||||||||||||||
Insurance contracts | — | — | 2 | — | 23 | 24 | 25 | 24 | |||||||||||||||||
Other assets | 4 | — | 314 | 101 | 69 | 69 | 387 | 170 | |||||||||||||||||
Trust investments at fair value | $ | 10,834 | 8,325 | 9,926 | 9,061 | 141 | 150 | 20,901 | 17,536 |
(Dollars in Millions) | Debt Instruments | Equity Securities | Commingled Funds | Insurance Contracts | Other Assets | Total Level 3 | |||||||||||||
Balance January 1, 2012 | $ | 9 | 16 | 33 | 25 | 65 | 148 | ||||||||||||
Realized gains (losses) | — | (1 | ) | — | — | (5 | ) | (6 | ) | ||||||||||
Unrealized gains (losses) | — | — | — | — | — | — | |||||||||||||
Purchases, sales, issuances and settlements, net | (6 | ) | (11 | ) | 17 | (1 | ) | 9 | 8 | ||||||||||
Balance December 30, 2012 | 3 | 4 | 50 | 24 | 69 | 150 | |||||||||||||
Realized gains (losses) | — | — | — | — | (5 | ) | (5 | ) | |||||||||||
Unrealized gains (losses) | — | (1 | ) | — | (1 | ) | — | (2 | ) | ||||||||||
Purchases, sales, issuances and settlements, net | (2 | ) | 1 | (6 | ) | — | 5 | (2 | ) | ||||||||||
Balance December 29, 2013 | $ | 1 | 4 | 44 | 23 | 69 | 141 |