Annual report pursuant to Section 13 and 15(d)

EMPLOYEE BENEFIT PLANS

v3.3.1.900
EMPLOYEE BENEFIT PLANS
12 Months Ended
Dec. 31, 2015
EMPLOYEE BENEFIT PLANS  
EMPLOYEE BENEFIT PLANS

 

17. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT AND OTHER POSTRETIREMENT BENEFIT PLANS

              Our employees participate in a trusteed, non-contributory defined benefit pension plan (the "Plan") that covers substantially all of our full-time U.S. employees. Effective July 1, 2004, the Plan formula for employees not covered by a collective bargaining agreement was converted to a cash balance design. For represented employees, participation in the cash balance design is subject to the terms of negotiated contracts. For participating employees, benefits accrued under the prior formula were converted to opening cash balance accounts. The new cash balance benefit formula provides annual pay credits from 4% to 12% of eligible pay, depending on age and service, plus accrued interest. Participants in the plan on July 1, 2004 may be eligible for additional annual pay credits from 1% to 8%, depending on their age and service as of that date, for up to five years. The conversion to the cash balance plan did not have a significant impact on the accrued benefit liability, the funded status or ongoing pension expense.

              We sponsor defined benefit plans in a number of countries outside of the U.S. The availability of these plans, and their specific design provisions, are consistent with local competitive practices and regulations.

              We also sponsor unfunded postretirement benefit plans other than pensions, which provide medical and life insurance benefits.

              Our postretirement benefit plans provide a fully insured Medicare Part D plan including prescription drug benefits affected by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). We cannot determine whether the medical benefits provided by our postretirement benefit plans are actuarially equivalent to those provided by the Act. We do not collect a subsidy and our net periodic postretirement benefits cost, and related benefit obligation, do not reflect an amount associated with the subsidy.

              Beginning July 1, 2014, the Huntsman Defined Benefit Pension Plan was closed to new non-union entrants and as of April 1, 2015, it was closed to new union entrants. In addition, as of January 1, 2015, Rubicon LLC also closed its defined benefit plan to new entrants. Following the closure of these plans, new hires have been provided with a defined contribution plan with a non-discretionary employer contribution of 6% of pay and a company match of up to 4% of pay, for a total company contribution of up to 10% of pay.

              In connection with the Rockwood Acquisition, we assumed certain pension and other postretirement benefit liabilities in the amount of approximately $233 million as of October 1, 2014.

              The following table sets forth the funded status of the plans for us and Huntsman International and the amounts recognized in our consolidated balance sheets at December 31, 2015 and 2014 (dollars in millions):

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

Other Postretirement Benefit Plans

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

 

$

1,001

 

$

3,317

 

$

877

 

$

2,859

 

$

137

 

$

6

 

$

105

 

$

5

 

Service cost

 

 

32

 

 

40

 

 

27

 

 

32

 

 

4

 

 

 

 

3

 

 

 

Interest cost

 

 

43

 

 

79

 

 

45

 

 

102

 

 

5

 

 

 

 

5

 

 

 

Participant contributions

 

 

 

 

6

 

 

 

 

7

 

 

3

 

 

 

 

3

 

 

 

Plan amendments

 

 

 

 

(31

)

 

 

 

(6

)

 

(40

)

 

 

 

 

 

 

Acquisitions/divestitures

 

 

 

 

 

 

9

 

 

333

 

 

 

 

 

 

3

 

 

 

Foreign currency exchange rate changes

 

 

 

 

(210

)

 

 

 

(294

)

 

 

 

(1

)

 

 

 

 

Curtailments

 

 

 

 

(4

)

 

 

 

(1

)

 

 

 

 

 

 

 

 

Special termination benefits

 

 

 

 

3

 

 

 

 

3

 

 

 

 

 

 

 

 

 

Actuarial (gain) loss

 

 

(65

)

 

(65

)

 

129

 

 

458

 

 

(9

)

 

 

 

30

 

 

1

 

Benefits paid

 

 

(50

)

 

(125

)

 

(86

)

 

(176

)

 

(12

)

 

 

 

(12

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Benefit obligation at end of year

 

$

961

 

$

3,010

 

$

1,001

 

$

3,317

 

$

88

 

$

5

 

$

137

 

$

6

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

$

761

 

$

2,587

 

$

755

 

$

2,443

 

$

 

$

 

$

 

$

 

Actual return on plan assets

 

 

(10

)

 

40

 

 

41

 

 

337

 

 

 

 

 

 

 

 

 

Foreign currency exchange rate changes

 

 

 

 

(153

)

 

 

 

(235

)

 

 

 

 

 

 

 

 

Participant contributions

 

 

 

 

6

 

 

 

 

7

 

 

3

 

 

 

 

3

 

 

 

Acquisitions/divestitures

 

 

 

 

 

 

6

 

 

106

 

 

 

 

 

 

 

 

 

Company contributions

 

 

21

 

 

76

 

 

45

 

 

105

 

 

9

 

 

 

 

9

 

 

 

Benefits paid

 

 

(50

)

 

(125

)

 

(86

)

 

(176

)

 

(12

)

 

 

 

(12

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Fair value of plan assets at end of year

 

$

722

 

$

2,431

 

$

761

 

$

2,587

 

$

 

$

 

$

 

$

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Funded status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets

 

$

722

 

$

2,431

 

$

761

 

$

2,587

 

$

 

$

 

$

 

$

 

Benefit obligation

 

 

961

 

 

3,010

 

 

1,001

 

 

3,317

 

 

88

 

 

5

 

 

137

 

 

6

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Accrued benefit cost

 

$

(239

)

$

(579

)

$

(240

)

$

(730

)

$

(88

)

$

(5

)

$

(137

)

$

(6

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Amounts recognized in balance sheet:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent asset

 

$

 

$

35

 

$

 

$

8

 

$

 

$

 

$

 

$

 

Current liability

 

 

(6

)

 

(5

)

 

(6

)

 

(7

)

 

(9

)

 

 

 

(9

)

 

 

Noncurrent liability

 

 

(233

)

 

(609

)

 

(234

)

 

(731

)

 

(79

)

 

(5

)

 

(128

)

 

(6

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

$

(239

)

$

(579

)

$

(240

)

$

(730

)

$

(88

)

$

(5

)

$

(137

)

$

(6

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman Corporation

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

Other Postretirement Benefit Plans

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

Amounts recognized in accumulated other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

$

359

 

$

906

 

$

390

 

$

916

 

$

38

 

$

1

 

$

50

 

$

1

 

Prior service cost

 

 

(22

)

 

(34

)

 

(29

)

 

(2

)

 

(58

)

 

 

 

(23

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

$

337

 

$

872

 

$

361

 

$

914

 

$

(20

)

$

1

 

$

27

 

$

1

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman International

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

Other Postretirement Benefit Plans

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

Amounts recognized in accumulated other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

$

361

 

$

952

 

$

391

 

$

968

 

$

38

 

$

1

 

$

50

 

$

1

 

Prior service cost

 

 

(22

)

 

(35

)

 

(28

)

 

(2

)

 

(58

)

 

 

 

(23

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

 

$

339

 

$

917

 

$

363

 

$

966

 

$

(20

)

$

1

 

$

27

 

$

1

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows (dollars in millions):

Huntsman Corporation

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

Other Postretirement
Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

Actuarial loss

 

$

24

 

$

43

 

$

2

 

$

 

Prior service cost

 

 

(5

)

 

(4

)

 

(7

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total

 

$

19

 

$

39

 

$

(5

)

$

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman International

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

Other Postretirement
Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S.
Plans

 

U.S. Plans

 

Non-U.S.
Plans

 

Actuarial loss

 

$

24

 

$

51

 

$

2

 

$

 

Prior service cost

 

 

(5

)

 

(4

)

 

(7

)

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total

 

$

19

 

$

47

 

$

(5

)

$

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              Components of net periodic benefit costs for the years ended December 31, 2015, 2014 and 2013 were as follows (dollars in millions):

Huntsman Corporation

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Service cost

 

$

32

 

$

27

 

$

31

 

$

40

 

$

32

 

$

38

 

Interest cost

 

 

43

 

 

45

 

 

40

 

 

79

 

 

102

 

 

90

 

Expected return on plan assets

 

 

(57

)

 

(56

)

 

(50

)

 

(143

)

 

(138

)

 

(124

)

Amortization of prior service cost

 

 

(6

)

 

(6

)

 

(7

)

 

 

 

 

 

1

 

Amortization of actuarial loss

 

 

32

 

 

19

 

 

35

 

 

43

 

 

34

 

 

43

 

Settlement loss

 

 

 

 

 

 

 

 

 

 

13

 

 

12

 

Special termination benefits

 

 

 

 

 

 

 

 

3

 

 

3

 

 

9

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Net periodic benefit cost

 

$

44

 

$

29

 

$

49

 

$

22

 

$

46

 

$

69

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

Other Postretirement Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Service cost

 

$

4

 

$

3

 

$

4

 

$

 

$

 

$

 

Interest cost

 

 

5

 

 

5

 

 

5

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

(5

)

 

(4

)

 

(2

)

 

 

 

 

 

 

Amortization of actuarial loss

 

 

3

 

 

1

 

 

2

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Net periodic benefit cost

 

$

7

 

$

5

 

$

9

 

$

 

$

 

$

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman International

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Service cost

 

$

32

 

$

27

 

$

31

 

$

40

 

$

32

 

$

38

 

Interest cost

 

 

43

 

 

45

 

 

40

 

 

79

 

 

102

 

 

90

 

Expected return on plan assets

 

 

(57

)

 

(56

)

 

(50

)

 

(143

)

 

(138

)

 

(124

)

Amortization of prior service cost

 

 

(6

)

 

(6

)

 

(7

)

 

 

 

 

 

1

 

Amortization of actuarial loss

 

 

32

 

 

19

 

 

35

 

 

51

 

 

41

 

 

49

 

Settlement loss

 

 

 

 

 

 

 

 

 

 

13

 

 

12

 

Special termination benefits

 

 

 

 

 

 

 

 

3

 

 

3

 

 

9

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Net periodic benefit cost

 

$

44

 

$

29

 

$

49

 

$

30

 

$

53

 

$

75

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

Other Postretirement Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Service cost

 

$

4

 

$

3

 

$

4

 

$

 

$

 

$

 

Interest cost

 

 

5

 

 

5

 

 

5

 

 

 

 

 

 

 

Amortization of prior service cost

 

 

(5

)

 

(4

)

 

(2

)

 

 

 

 

 

 

Amortization of actuarial loss

 

 

3

 

 

1

 

 

2

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Net periodic benefit cost

 

$

7

 

$

5

 

$

9

 

$

 

$

 

$

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              The amounts recognized in net periodic benefit cost and other comprehensive income (loss) as of December 31, 2015, 2014 and 2013 were as follows (dollars in millions):

Huntsman Corporation

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Current year actuarial loss (gain)

 

$

2

 

$

144

 

$

(149

)

$

33

 

$

257

 

$

(40

)

Amortization of actuarial loss

 

 

(32

)

 

(19

)

 

(35

)

 

(43

)

 

(34

)

 

(43

)

Current year prior service (credits) cost

 

 

 

 

 

 

 

 

(32

)

 

(6

)

 

1

 

Amortization of prior service cost (credits)

 

 

6

 

 

6

 

 

7

 

 

 

 

 

 

(1

)

Settlements

 

 

 

 

 

 

 

 

 

 

(13

)

 

(12

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in other comprehensive loss (income)

 

 

(24

)

 

131

 

 

(177

)

 

(42

)

 

204

 

 

(95

)

Net periodic benefit cost

 

 

44

 

 

29

 

 

49

 

 

22

 

 

46

 

 

69

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in net periodic benefit cost and other comprehensive (loss) income

 

$

20

 

$

160

 

$

(128

)

$

(20

)

$

250

 

$

(26

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

Other Postretirement Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Current year actuarial loss (gain)

 

$

(9

)

$

30

 

$

(8

)

$

 

$

1

 

$

(1

)

Amortization of actuarial loss

 

 

(3

)

 

(1

)

 

(2

)

 

 

 

 

 

 

Current year prior service credit

 

 

(40

)

 

 

 

(22

)

 

 

 

 

 

 

Amortization of prior service cost

 

 

5

 

 

4

 

 

2

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in other comprehensive loss (income)

 

 

(47

)

 

33

 

 

(30

)

 

 

 

1

 

 

(1

)

Net periodic benefit cost

 

 

7

 

 

5

 

 

9

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in net periodic benefit cost and other comprehensive (loss) income

 

$

(40

)

$

38

 

$

(21

)

$

 

$

1

 

$

(1

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Huntsman International

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Current year actuarial loss (gain)

 

$

2

 

$

144

 

$

(149

)

$

33

 

$

257

 

$

(39

)

Amortization of actuarial loss

 

 

(32

)

 

(19

)

 

(35

)

 

(51

)

 

(41

)

 

(49

)

Current year prior service (credits) cost

 

 

 

 

 

 

 

 

(32

)

 

(6

)

 

1

 

Amortization of prior service cost (credits)

 

 

6

 

 

6

 

 

7

 

 

 

 

 

 

(1

)

Settlements

 

 

 

 

 

 

 

 

 

 

(13

)

 

(12

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in other comprehensive loss (income)

 

 

(24

)

 

131

 

 

(177

)

 

(50

)

 

197

 

 

(100

)

Net periodic benefit cost

 

 

44

 

 

29

 

 

49

 

 

30

 

 

53

 

 

75

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in net periodic benefit cost and other comprehensive (loss) income

 

$

20

 

$

160

 

$

(128

)

$

(20

)

$

250

 

$

(25

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

Other Postretirement Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Current year actuarial loss (gain)

 

$

(9

)

$

30

 

$

(8

)

$

 

$

1

 

$

(1

)

Amortization of actuarial loss

 

 

(3

)

 

(1

)

 

(2

)

 

 

 

 

 

 

Current year prior service credit

 

 

(40

)

 

 

 

(22

)

 

 

 

 

 

 

Amortization of prior service cost

 

 

5

 

 

4

 

 

2

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in other comprehensive loss (income)

 

 

(47

)

 

33

 

 

(30

)

 

 

 

1

 

 

(1

)

Net periodic benefit cost

 

 

7

 

 

5

 

 

9

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Total recognized in net periodic benefit cost and other comprehensive (loss) income

 

$

(40

)

$

38

 

$

(21

)

$

 

$

1

 

$

(1

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              The following weighted-average assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost for the year:

                                                                                                                                                                                    

 

 

Defined Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Projected benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.90% 

 

 

4.25% 

 

 

5.13% 

 

 

2.53% 

 

 

2.48% 

 

 

3.62% 

 

Rate of compensation increase

 

 

4.17% 

 

 

4.16% 

 

 

4.17% 

 

 

3.23% 

 

 

3.23% 

 

 

3.37% 

 

Net periodic pension cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.25% 

 

 

5.13% 

 

 

4.18% 

 

 

2.48% 

 

 

3.62% 

 

 

3.38% 

 

Rate of compensation increase

 

 

4.16% 

 

 

4.17% 

 

 

4.19% 

 

 

3.23% 

 

 

3.37% 

 

 

3.34% 

 

Expected return on plan assets

 

 

7.74% 

 

 

7.75% 

 

 

7.75% 

 

 

5.79% 

 

 

5.82% 

 

 

5.75% 

 

 

                                                                                                                                                                                    

 

 

Other Postretirement Benefit Plans

 

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2013

 

2015

 

2014

 

2013

 

Projected benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.68% 

 

 

4.17% 

 

 

4.79% 

 

 

7.25% 

 

 

6.44% 

 

 

6.49% 

 

Net periodic pension cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.20% 

 

 

4.79% 

 

 

3.89% 

 

 

6.44% 

 

 

6.49% 

 

 

5.79% 

 

              At December 31, 2015 and 2014, the health care trend rate used to measure the expected increase in the cost of benefits was assumed to be 7.0% and 6.5%, respectively, decreasing to 5% after 2024. Assumed health care cost trend rates can have a significant effect on the amounts reported for the postretirement benefit plans. A one-percent point change in assumed health care cost trend rates would have the following effects (dollars in millions):

                                                                                                                                                                                    

 

 

Increase

 

Decrease

 

Asset category

 

 

 

 

 

 

 

Effect on total of service and interest cost

 

$

 

$

 

Effect on postretirement benefit obligation

 

 

 

 

(2)

 

              The projected benefit obligation and fair value of plan assets for the defined benefit plans with projected benefit obligations in excess of plan assets as of December 31, 2015 and 2014 were as follows (dollars in millions):

                                                                                                                                                                                    

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2015

 

2014

 

Projected benefit obligation in excess of plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation

 

$

961 

 

$

1,002 

 

$

2,129 

 

$

2,945 

 

Fair value of plan assets

 

 

722 

 

 

761 

 

 

1,514 

 

 

2,206 

 

              The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2015 and 2014 were as follows (dollars in millions):

                                                                                                                                                                                    

 

 

U.S. plans

 

Non-U.S. plans

 

 

 

2015

 

2014

 

2015

 

2014

 

Accumulated benefit obligation in excess of plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation

 

$

961 

 

$

1,002 

 

$

1,403 

 

$

2,253 

 

Accumulated benefit obligation

 

 

941 

 

 

980 

 

 

1,312 

 

 

2,108 

 

Fair value of plan assets

 

 

722 

 

 

761 

 

 

823 

 

 

1,554 

 

              Expected future contributions and benefit payments are as follows (dollars in millions):

                                                                                                                                                                                    

 

 

U.S. Plans

 

Non-U.S. Plans

 

 

 

Defined
Benefit
Plans

 

Other
Postretirement
Benefit
Plans

 

Defined
Benefit
Plans

 

Other
Postretirement
Benefit
Plans

 

2016 expected employer contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

To plan trusts

 

$

 

$

 

$

60 

 

$

 

Expected benefit payments

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

67 

 

 

 

 

111 

 

 

 

2017

 

 

71 

 

 

 

 

112 

 

 

 

2018

 

 

62 

 

 

 

 

116 

 

 

 

2019

 

 

65 

 

 

 

 

118 

 

 

 

2020

 

 

65 

 

 

 

 

121 

 

 

 

2021 - 2025

 

 

354 

 

 

37 

 

 

650 

 

 

 

              Our investment strategy with respect to pension assets is to pursue an investment plan that, over the long term, is expected to protect the funded status of the plan, enhance the real purchasing power of plan assets, and not threaten the plan's ability to meet currently committed obligations. Additionally, our investment strategy is to achieve returns on plan assets, subject to a prudent level of portfolio risk. Plan assets are invested in a broad range of investments. These investments are diversified in terms of domestic and international equities, both growth and value funds, including small, mid and large capitalization equities; short-term and long-term debt securities; real estate; and cash and cash equivalents. The investments are further diversified within each asset category. The portfolio diversification provides protection against a single investment or asset category having a disproportionate impact on the aggregate performance of the plan assets.

              Our pension plan assets are managed by outside investment managers. The investment managers value our plan assets using quoted market prices, other observable inputs or unobservable inputs. For certain assets, the investment managers obtain third-party appraisals at least annually, which use valuation techniques and inputs specific to the applicable property, market, or geographic location. During 2015, there were no transfers into or out of Level 3 assets.

              We have established target allocations for each asset category. Our pension plan assets are periodically rebalanced based upon our target allocations.

              The fair value of plan assets for the pension plans was $3.2 billion and $3.3 billion at December 31, 2015 and 2014, respectively. The following plan assets are measured at fair value on a recurring basis (dollars in millions):

                                                                                                                                                                                    

 

 

 

 

Fair Value Amounts Using

 

Asset category

 

December 31,
2015

 

Quoted prices in active
markets for identical
assets (Level 1)

 

Significant other
observable inputs
(Level 2)

 

Significant
unobservable inputs
(Level 3)

 

U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

387 

 

$

279 

 

$

108 

 

$

 

Fixed income

 

 

277 

 

 

211 

 

 

66 

 

 

 

Real estate/other

 

 

58 

 

 

 

 

 

 

58 

 

Cash

 

 

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total U.S. pension plan assets

 

$

722 

 

$

490 

 

$

174 

 

$

58 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Non-U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

830 

 

$

446 

 

$

384 

 

$

 

Fixed income

 

 

1,113 

 

 

514 

 

 

599 

 

 

 

Real estate/other

 

 

477 

 

 

84 

 

 

339 

 

 

54 

 

Cash

 

 

11 

 

 

10 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total Non-U.S. pension plan assets

 

$

2,431 

 

$

1,054 

 

$

1,323 

 

$

54 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

 

                                                                                                                                                                                    

 

 

 

 

Fair Value Amounts Using

 

Asset category

 

December 31,
2014

 

Quoted prices in active
markets for identical
assets (Level 1)

 

Significant other
observable inputs
(Level 2)

 

Significant
unobservable inputs
(Level 3)

 

U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

454 

 

$

268 

 

$

186 

 

$

 

Fixed income

 

 

216 

 

 

83 

 

 

133 

 

 

 

Real estate/other

 

 

85 

 

 

34 

 

 

 

 

51 

 

Cash

 

 

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total U.S. pension plan assets

 

$

761 

 

$

391 

 

$

319 

 

$

51 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Non-U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

933 

 

$

487 

 

$

446 

 

$

 

Fixed income

 

 

1,207 

 

 

821 

 

 

386 

 

 

 

Real estate/other

 

 

383 

 

 

28 

 

 

310 

 

 

45 

 

Cash

 

 

64 

 

 

59 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

Total Non-U.S. pension plan assets

 

$

2,587 

 

$

1,395 

 

$

1,147 

 

$

45 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              The following table reconciles the beginning and ending balances of plan assets measured at fair value using unobservable inputs (Level 3) (dollars in millions):

                                                                                                                                                                                    

 

 

Real Estate/Other

 

Fair Value Measurements of Plan Assets Using Significant Unobservable Inputs (Level 3)

 

Year ended
December 31,
2015

 

Year ended
December 31,
2014

 

Balance at beginning of period

 

$

96 

 

$

76 

 

Return on pension plan assets

 

 

 

 

 

Purchases, sales and settlements

 

 

12 

 

 

 

Transfers (out of) into Level 3

 

 

 

 

 

Acquisition date fair value of pension plan assets acquired

 

 

 

 

 

​  

​  

​  

​  

Balance at end of period

 

$

112 

 

$

96 

 

​  

​  

​  

​  

​  

​  

​  

​  

Based upon historical returns, the expectations of our investment committee and outside advisors, the expected long-term rate of return on the pension assets is estimated to be between 5.75% and 7.75%. The asset allocation for our pension plans at December 31, 2015 and 2014 and the target allocation for 2016, by asset category are as follows:

                                                                                                                                                                                    

Asset category

 

Target
Allocation
2016

 

Allocation at
December 31,
2015

 

Allocation at
December 31,
2014

 

U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

Equities

 

 

53% 

 

 

54% 

 

 

60% 

 

Fixed income

 

 

40% 

 

 

38% 

 

 

28% 

 

Real estate/other

 

 

7% 

 

 

8% 

 

 

11% 

 

Cash

 

 

 

 

 

 

1% 

 

​  

​  

​  

​  

​  

​  

Total U.S. pension plans

 

 

100% 

 

 

100% 

 

 

100% 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

Non-U.S. pension plans:

 

 

 

 

 

 

 

 

 

 

Equities

 

 

36% 

 

 

34% 

 

 

36% 

 

Fixed income

 

 

44% 

 

 

46% 

 

 

47% 

 

Real estate/other

 

 

11% 

 

 

20% 

 

 

15% 

 

Cash

 

 

9% 

 

 

 

 

2% 

 

​  

​  

​  

​  

​  

​  

Total non-U.S. pension plans

 

 

100% 

 

 

100% 

 

 

100% 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

​  

              Equity securities in our pension plans did not include any direct investments in equity securities of our Company or our affiliates at the end of 2015.

DEFINED CONTRIBUTION PLANSU.S.

              We have a money purchase pension plan covering substantially all of our domestic employees who were hired prior to January 1, 2004. Employer contributions are made based on a percentage of employees' earnings (ranging up to 8%). During 2014, we closed this plan to non-union participants, continuing to provide equivalent benefits to those covered under this plan into their salary deferral account.

              We also have a salary deferral plan covering substantially all U.S. employees. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute an amount equal to one-half of the participant's contribution, not to exceed 2% of the participant's compensation.

              Along with the introduction of the cash balance formula within our defined benefit pension plan, the money purchase pension plan was closed to new hires. At the same time, our match in the salary deferral plan was increased, for new hires, to a 100% match, not to exceed 4% of the participant's compensation, once the participant has achieved six years of service with our Company.

              Our total combined expense for the above defined contribution plans for each of the years ended December 31, 2015, 2014 and 2013 was $23 million, $15 million and $14 million, respectively.

DEFINED CONTRIBUTION PLANS—NON-U.S.

              We have defined contribution plans in a variety of non-U.S. locations.

              Our total combined expense for these defined contribution plans for the years ended December 31, 2015, 2014 and 2013 was $13 million, $14 million and $14 million, respectively, primarily related to the Huntsman UK Pension Plan.

              All UK associates are eligible to participate in the Huntsman UK Pension Plan, a contract-based arrangement with a third party. Company contributions vary by business during a five year transition period. Plan participants elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute a matching amount not to exceed 12% of the participant's salary for new hires and 15% of the participant's salary for all other participants.

SUPPLEMENTAL SALARY DEFERRAL PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

              The Huntsman Supplemental Savings Plan ("Huntsman SSP") is a non-qualified plan covering key management employees and allows participants to defer amounts that would otherwise be paid as compensation. The participant can defer up to 75% of their salary and bonus each year. This plan also provides benefits that would be provided under the Huntsman Salary Deferral Plan if that plan were not subject to legal limits on the amount of contributions that can be allocated to an individual in a single year. The Huntsman SSP was amended and restated effective as of January 1, 2005 to allow eligible executive employees to comply with Section 409A of the Internal Revenue Code of 1986.

              The SERP is an unfunded non-qualified pension plan established to provide certain executive employees with benefits that could not be provided, due to legal limitations, under the Huntsman Defined Benefit Pension Plan, a qualified defined benefit pension plan, and the Huntsman Money Purchase Pension Plan, a qualified money purchase pension plan.

              Assets of these plans are included in other noncurrent assets and as of December 31, 2015 and 2014 were $26 million and $24 million, respectively. During each of the years ended December 31, 2015, 2014 and 2013, we expensed a total of $1 million as contributions to the Huntsman SSP and the SERP.

STOCK-BASED INCENTIVE PLAN

              In connection with the initial public offering of common and preferred stock on February 16, 2005, we adopted the Huntsman Stock Incentive Plan (the "Stock Incentive Plan"). The Stock Incentive Plan permits the grant of non-qualified stock options, incentive stock options, stock appreciation rights, nonvested stock, phantom stock, performance awards and other stock-based awards to our employees, directors and consultants and to employees and consultants of our subsidiaries, provided that incentive stock options may be granted solely to employees. As of December 31, 2015 we are authorized to grant up to 37.2 million shares under the Stock Incentive Plan. See "Note 22. Stock-Based Compensation Plan."

INTERNATIONAL PLANS

              International employees are covered by various post-employment arrangements consistent with local practices and regulations. Such obligations are included in other long-term liabilities in our consolidated balance sheets.