The fair values of our pension plan assets at December 31, by asset class were as follows: | |||||||||||||||||||
Millions of Dollars | |||||||||||||||||||
U.S. | International | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
2013 | |||||||||||||||||||
Equity Securities | |||||||||||||||||||
U.S. | $ | 1,018 | - | - | 1,018 | 531 | - | - | 531 | ||||||||||
International | 702 | - | - | 702 | 437 | - | - | 437 | |||||||||||
Common/collective trusts | - | 529 | - | 529 | - | 217 | - | 217 | |||||||||||
Mutual funds | - | - | - | - | 373 | - | - | 373 | |||||||||||
Debt Securities | |||||||||||||||||||
Government | 106 | 69 | - | 175 | 557 | - | - | 557 | |||||||||||
Corporate | - | 333 | 3 | 336 | - | 150 | - | 150 | |||||||||||
Agency and mortgage-backed | |||||||||||||||||||
securities | - | 97 | - | 97 | - | 25 | 1 | 26 | |||||||||||
Common/collective trusts | - | - | - | - | - | 356 | - | 356 | |||||||||||
Mutual funds | - | - | - | - | 191 | - | - | 191 | |||||||||||
Cash and cash equivalents | - | 123 | - | 123 | 30 | 17 | - | 47 | |||||||||||
Private equity funds | - | - | 1 | 1 | - | - | 21 | 21 | |||||||||||
Derivatives | (1) | 2 | - | 1 | 19 | 12 | - | 31 | |||||||||||
Real estate | - | - | - | - | - | - | 190 | 190 | |||||||||||
Total* | $ | 1,825 | 1,153 | 4 | 2,982 | 2,138 | 777 | 212 | 3,127 | ||||||||||
*Excludes the participating interest in the insurance annuity contract with a net asset value of $110 million and net receivables related to | |||||||||||||||||||
security transactions of $5 million. | |||||||||||||||||||
2012 | |||||||||||||||||||
Equity Securities | |||||||||||||||||||
U.S. | $ | 875 | - | - | 875 | 443 | - | - | 443 | ||||||||||
International | 587 | - | - | 587 | 381 | - | - | 381 | |||||||||||
Common/collective trusts | - | 472 | - | 472 | - | 195 | - | 195 | |||||||||||
Mutual funds | - | - | - | - | 319 | - | - | 319 | |||||||||||
Debt Securities | |||||||||||||||||||
Government | 146 | 54 | - | 200 | 496 | - | - | 496 | |||||||||||
Corporate | - | 306 | 2 | 308 | - | 155 | 1 | 156 | |||||||||||
Agency and mortgage-backed | |||||||||||||||||||
securities | - | 59 | - | 59 | - | 29 | - | 29 | |||||||||||
Common/collective trusts | - | - | - | - | - | 314 | - | 314 | |||||||||||
Mutual funds | - | - | - | - | 155 | - | - | 155 | |||||||||||
Cash and cash equivalents | - | 94 | - | 94 | 22 | 18 | - | 40 | |||||||||||
Private equity funds | - | - | 4 | 4 | - | - | 18 | 18 | |||||||||||
Derivatives | - | 1 | - | 1 | 10 | 13 | - | 23 | |||||||||||
Real estate | - | - | - | - | - | - | 183 | 183 | |||||||||||
Total* | $ | 1,608 | 986 | 6 | 2,600 | 1,826 | 724 | 202 | 2,752 | ||||||||||
*Excludes the participating interest in the insurance annuity contract with a net asset value of $133 million and net receivables related to | |||||||||||||||||||
security transactions of $7 million. |
Included in accumulated other comprehensive income at December 31 were the following before-tax amounts | ||||||||||||
that had not been recognized in net periodic benefit cost: | ||||||||||||
Millions of Dollars | ||||||||||||
Pension Benefits | Other Benefits | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
U.S. | Int’l. | U.S. | Int’l. | |||||||||
Unrecognized net actuarial loss (gain) | $ | 767 | 578 | 1,509 | 758 | (31) | 29 | |||||
Unrecognized prior service cost (credit) | 22 | (54) | 28 | (60) | (8) | (12) |
Amounts included in accumulated other comprehensive income at December 31, 2013, that are expected to | ||||||
be amortized into net periodic benefit cost during 2014 are provided below: | ||||||
Millions of Dollars | ||||||
Pension | Other | |||||
Benefits | Benefits | |||||
U.S. | Int’l. | |||||
Unrecognized net actuarial loss (gain) | $ | 76 | 58 | (3) | ||
Unrecognized prior service cost (credit) | 6 | (8) | (4) |
Millions of Dollars | |||||||||||||
Pension Benefits | Other Benefits | ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
U.S. | Int’l. | U.S. | Int’l. | ||||||||||
Sources of Change in Other | |||||||||||||
Comprehensive Income | |||||||||||||
Net gain (loss) arising during the period | $ | 524 | 107 | (450) | (206) | 57 | (48) | ||||||
Separation of Downstream business | - | - | 810 | 94 | - | (7) | |||||||
Amortization of loss included in income* | 218 | 73 | 371 | 59 | 3 | - | |||||||
Net change during the period | $ | 742 | 180 | 731 | (53) | 60 | (55) | ||||||
Prior service credit arising during the period | $ | - | 1 | - | 2 | - | - | ||||||
Separation of Downstream business | - | - | 17 | (12) | - | 3 | |||||||
Amortization of prior service cost (credit) | |||||||||||||
included in income | 6 | (7) | 7 | (8) | (4) | (4) | |||||||
Net change during the period | $ | 6 | (6) | 24 | (18) | (4) | (1) | ||||||
*Includes settlement losses recognized during the period. |
Millions of Dollars | |||||||||||||
Pension Benefits | Other Benefits | ||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
U.S. | Int’l. | U.S. | Int’l. | ||||||||||
Amounts Recognized in the | |||||||||||||
Consolidated Balance Sheet at | |||||||||||||
December 31 | |||||||||||||
Noncurrent assets | $ | - | 128 | - | 94 | - | - | ||||||
Current liabilities | (35) | (8) | (21) | (8) | (53) | (54) | |||||||
Noncurrent liabilities | (827) | (571) | (1,472) | (764) | (629) | (711) | |||||||
Total recognized | $ | (862) | (451) | (1,493) | (678) | (682) | (765) | ||||||
Weighted-Average Assumptions Used to | |||||||||||||
Determine Benefit Obligations at | |||||||||||||
December 31 | |||||||||||||
Discount rate | 4.40 | % | 4.75 | 3.55 | 4.50 | 4.45 | 3.55 | ||||||
Rate of compensation increase | 4.75 | 4.60 | 4.75 | 4.45 | - | - | |||||||
Weighted-Average Assumptions Used to | |||||||||||||
Determine Net Periodic Benefit Cost for | |||||||||||||
Years Ended December 31 | |||||||||||||
Discount rate | 3.55 | % | 4.50 | 4.00 | 4.95 | 3.55 | 4.25 | ||||||
Expected return on plan assets | 7.00 | 6.00 | 7.00 | 6.10 | - | - | |||||||
Rate of compensation increase | 4.75 | 4.45 | 4.50 | 4.50 | - | - |
An analysis of the projected benefit obligations for our pension plans and accumulated benefit obligations for | ||||||||||||
our postretirement health and life insurance plans follows: | ||||||||||||
Millions of Dollars | ||||||||||||
Pension Benefits | Other Benefits | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
U.S. | Int’l. | U.S. | Int’l. | |||||||||
Change in Benefit Obligation | ||||||||||||
Benefit obligation at January 1 | $ | 4,225 | 3,438 | 6,175 | 3,484 | 765 | 926 | |||||
Service cost | 138 | 102 | 170 | 91 | 3 | 6 | ||||||
Interest cost | 143 | 145 | 186 | 152 | 26 | 33 | ||||||
Plan participant contributions | - | 6 | - | 7 | 22 | 23 | ||||||
Separation of Downstream business | - | - | (2,464) | (653) | - | (199) | ||||||
Actuarial (gain) loss | (205) | 72 | 735 | 297 | (57) | 47 | ||||||
Benefits paid | (347) | (110) | (577) | (113) | (75) | (72) | ||||||
Foreign currency exchange rate change | - | (70) | - | 173 | (2) | 1 | ||||||
Benefit obligation at December 31* | $ | 3,954 | 3,583 | 4,225 | 3,438 | 682 | 765 | |||||
*Accumulated benefit obligation portion of above at | 3,516 | 2,798 | 3,710 | 2,972 | ||||||||
December 31: | $ | |||||||||||
Change in Fair Value of Plan Assets | ||||||||||||
Fair value of plan assets at January 1 | $ | 2,732 | 2,760 | 4,149 | 2,722 | - | - | |||||
Actual return on plan assets | 505 | 315 | 509 | 267 | - | - | ||||||
Company contributions | 202 | 198 | 363 | 204 | 53 | 49 | ||||||
Plan participant contributions | - | 6 | - | 7 | 22 | 23 | ||||||
Separation of Downstream business | - | - | (1,712) | (479) | - | - | ||||||
Benefits paid | (347) | (110) | (577) | (113) | (75) | (72) | ||||||
Foreign currency exchange rate change | - | (37) | - | 152 | - | - | ||||||
Fair value of plan assets at December 31 | $ | 3,092 | 3,132 | 2,732 | 2,760 | - | - | |||||
Funded Status | $ | (862) | (451) | (1,493) | (678) | (682) | (765) |
Compensation Expense—Total share-based compensation expense recognized in income related to continuing | ||||||
and discontinued operations and the associated tax benefit for the years ended December 31 were as follows: | ||||||
Millions of Dollars | ||||||
2013 | 2012 | 2011 | ||||
Compensation cost | $ | 308 | 321 | 246 | ||
Tax benefit | 109 | 118 | 86 |
The following benefit payments, which are exclusive of amounts to be paid from the insurance annuity | ||||||
contract and which reflect expected future service, as appropriate, are expected to be paid: | ||||||
Millions of Dollars | ||||||
Pension | Other Benefits | |||||
Benefits | Benefits | |||||
U.S. | Int’l. | |||||
2014 | $ | 402 | 117 | 61 | ||
2015 | 361 | 121 | 62 | |||
2016 | 362 | 123 | 62 | |||
2017 | 366 | 134 | 62 | |||
2018 | 400 | 137 | 62 | |||
2019–2023 | 1,965 | 791 | 294 |
The components of net periodic benefit cost of all defined benefit plans are presented in the following table: | |||||||||||||||||||
Millions of Dollars | |||||||||||||||||||
Pension Benefits | Other Benefits | ||||||||||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||
U.S. | Int’l. | U.S. | Int’l. | U.S. | Int’l. | ||||||||||||||
Components of Net | |||||||||||||||||||
Periodic Benefit Cost | |||||||||||||||||||
Service cost | $ | 138 | 102 | 170 | 91 | 225 | 98 | 3 | 6 | 10 | |||||||||
Interest cost | 143 | 145 | 186 | 152 | 247 | 178 | 26 | 33 | 42 | ||||||||||
Expected return on plan | |||||||||||||||||||
assets | (186) | (160) | (223) | (158) | (280) | (175) | - | - | - | ||||||||||
Amortization of prior | |||||||||||||||||||
service cost (credit) | 6 | (7) | 7 | (8) | 9 | - | (4) | (4) | (7) | ||||||||||
Recognized net actuarial | |||||||||||||||||||
loss (gain) | 151 | 73 | 191 | 59 | 165 | 46 | 3 | - | (5) | ||||||||||
Settlements | 67 | - | 181 | - | 21 | - | - | - | - | ||||||||||
Net periodic benefit cost | $ | 319 | 153 | 512 | 136 | 387 | 147 | 28 | 35 | 40 |
The following summarizes our stock-settled Performance Share Program activity for the year ended December 31, 2013. | |||||||
Weighted-Average | Millions of Dollars | ||||||
Stock Units | Grant-Date Fair Value | Total Fair Value | |||||
Outstanding at December 31, 2012 | 5,184,284 | $ | 51.54 | ||||
Granted | 7,650 | 60.00 | |||||
Forfeited | - | - | |||||
Issued | (290,748) | $ | 18 | ||||
Outstanding at December 31, 2013 | 4,901,186 | $ | 51.60 | ||||
Not Vested at December 31, 2013 | 1,150,628 | $ | 52.83 |
The following summarizes our cash-settled Performance Share Program activity for the year ended December 31, 2013: | |||||||
Weighted-Average | Millions of Dollars | ||||||
Stock Units | Grant-Date Fair Value | Total Fair Value | |||||
Outstanding at December 31, 2012 | - | $ | - | ||||
Granted | 128,567 | 58.08 | |||||
Forfeited | - | - | |||||
Settled | (3,791) | $ | - | ||||
Outstanding at December 31, 2013 | 124,776 | $ | 58.08 | ||||
Not Vested at December 31, 2013 | 82,793 | $ | 58.08 |
The following summarizes our stock option activity for the year ended December 31, 2013: | |||||||||||
Weighted- | |||||||||||
Weighted- | Average | Millions of Dollars | |||||||||
Average | Grant-Date | Aggregate | |||||||||
Options | Exercise Price | Fair Value | Intrinsic Value | ||||||||
Outstanding at December 31, 2012 | 16,297,005 | $ | 43.67 | ||||||||
Granted | 3,109,800 | 58.08 | $ | 9.90 | |||||||
Exercised | (3,078,576) | 33.45 | $ | 95 | |||||||
Forfeited | - | - | |||||||||
Expired or canceled | (13,139) | 60.53 | |||||||||
Outstanding at December 31, 2013 | 16,315,090 | $ | 48.33 | ||||||||
Vested at December 31, 2013 | 13,418,902 | $ | 46.42 | $ | 320 | ||||||
Exercisable at December 31, 2013 | 11,600,659 | $ | 44.88 | $ | 294 |
The following summarizes our stock unit activity for the year ended December 31, 2013: | ||||||||
Weighted-Average | Millions of Dollars | |||||||
Stock Units | Grant-Date Fair Value | Total Fair Value | ||||||
Outstanding at December 31, 2012 | 11,477,122 | $ | 46.58 | |||||
Granted | 4,881,483 | 57.99 | ||||||
Forfeited | (364,716) | 51.38 | ||||||
Issued | (3,832,737) | $ | 245 | |||||
Outstanding at December 31, 2013 | 12,161,152 | $ | 51.37 | |||||
Not Vested at December 31, 2013 | 8,626,833 | $ | 52.66 |
The fair market values of the options granted over the past three years were measured on the date of grant using | ||||||||
the Black-Scholes-Merton option-pricing model. The weighted-average assumptions used were as follows: | ||||||||
2013 | 2012 | 2011 | ||||||
Assumptions used | ||||||||
Risk-free interest rate | 1.09 | % | 1.62 | 3.10 | ||||
Dividend yield | 4.00 | % | 4.00 | 4.00 | ||||
Volatility factor | 28.95 | % | 33.30 | 33.40 | ||||
Expected life (years) | 5.95 | 7.42 | 6.87 |
The following summarizes the aggregate activity of these restricted shares and units for the year ended | |||||||
December 31, 2013: | |||||||
Weighted-Average | Millions of Dollars | ||||||
Stock Units | Grant-Date Fair Value | Total Fair Value | |||||
Outstanding at December 31, 2012 | 1,132,556 | $ | 27.34 | ||||
Granted | 76,920 | 62.52 | |||||
Forfeited | (3,458) | 20.22 | |||||
Issued | (33,417) | $ | 2 | ||||
Outstanding at December 31, 2013 | 1,172,601 | $ | 29.31 | ||||
Not Vested at December 31, 2013 | - |