Pension Plans (0 page, 5 points. Disclosed in footnotes)

a. Determine whether the firm has a defined-benefit or defined-contribution plan

b. identify the pension expense

c. If they have a defined-benefit plan, identify the PBO

d. If they have a defined-benefit plan, identify the market value of the plans assets

e. If they have a defined-benefit plan, identify the amount contributed

f. If they have a defined-benefit plan, identify the amount of benefits paid

g. If they have a defined-benefit plan, are they under- or over-funded

h. If they have a defined-benefit plan, identify the discount rate and expected rate of return

14. Pension and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. In addition, the Company provides medical benefits, principally to its eligible U.S. retirees and their dependents, through its other postretirement benefit plans. The Company uses December 31 as the year-end measurement date for all of its pension plans and other postretirement benefit plans. Net Periodic Benefit Cost The net periodic benefit cost (credit) for pension and other postretirement benefit plans consisted of the following components: U.S. 2018 $ 326 432 (851) 2017 $ 312 454 (862) Pension Benefits International 2016 2018 2017 2016 $ 282 $ 238 $ 252 $ 238 456 178 172 204 (831) (431) (393) (382) Other Postretirement Benefits 2018 2017 2016 $ 57 $ 57 $ 54 69 81 82 (83) (78) (107) Years Ended December 31 Service cost Interest cost Expected return on plan assets Amortization of unrecognized prior service cost Net loss amortization Termination benefits Curtailments Settlements Net periodic benefit cost (credit) (50) 232 - 19 10 5 123 (53) 180 44 3 - 78 (55) (13) 11984 2 2 5 1 - 13 (1) $ 72 (11) 98 4 (4) 5 123 (11) 87 4 (1) 6 145 (84) 1 3 (8) - (45) $ (98) 1 8 (31) - (60) $ (106) 3 4 (18) $ $ $ $ $ $ (88) The The changes in net periodic benefit cost (credit) year over year for pension plans are largely attributable to changes in the discount rate affecting net loss amortization. In connection with restructuring actions (see Note 5), termination charges were recorded in 2018, 2017 and 2016 on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring activities, curtailments were recorded on pension and other postretirement benefit plans and settlements were recorded on certain U.S. and international pension plans as reflected in the table above. The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 15), with the exception of certain amounts for termination benefits, curtailments and settlements, which are recorded in Restructuring costs if the event giving rise to the termination benefits, curtailment or settlement is related to restructuring actions as noted above. 110 Obligations and Funded Status Summarized information about the changes in plan assets and benefit obligations, the funded status and the amounts recorded at December 31 is as follows: Pension Benefits Other Postretirement U.S. International Benefits 2018 2017 2018 2017 2018 2017 Fair value of plan assets January 1 $ 10,896 $ 9,766 $ 9,339 $ 7,794 $ 1,114 $ 1,019 Actual return on plan assets (810) 1,723 (289) 677 (72) 161 Company contributions, net 378 58 167 226 6 (4) Effects of exchange rate changes (352) 843 Benefits paid (772) (651) (202) (198) (80) Settlements (44) - (106) (17) Other - 23 14 - Fair value of plan assets December 31 $ 9,648 $ 10,896 $ 8,580 $ 9,339 $ 968 $ 1,114 Benefit obligation January 1 $ 11,904 $ 10,849 $ 9,483 $ 8,372 $ 1,922 $ 1,922 Service cost 326 312 238 2525757 Interest cost 432 454178 1726981 Actuarial (gains) losses (1) (1,258) 881 (154) (7) (341) (87) Benefits paid (772) (651) (202) (198) (80) (62) Effects of exchange rate changes - - (387) 916 (6) 3 Plan amendments - - 10 (22) - Curtailments 13 15 (2) (3) Termination benefits 19 44 2 4 Settlements (44) - (106) (17) Other - 23 14 - Benefit obligation December 31 $ 10,620 $ 11,904 $ 9,083 $ 9,483 $ 1,615 $ 1,922 Funded status December 31 $ (972) $ (1,008) $ (503) $ (144) $ (647) $ (808) Recognized as: Other assets $ - $ - $ 659 $ 828 $ - $ - Accrued and other current liabilities (47) (59) (14) (17) (10) (11) Other noncurrent liabilities (925) (949) (1,148) (955) (637) (797) (1) Actuarial (gains) losses in 2018 and 2017 primarily reflect changes in discount rates. At December 31, 2018 and 2017, the accumulated benefit obligation was $19.0 billion and $20.5 billion, respectively, for all pension plans, of which $10.4 billion and $11.5 billion, respectively, related to U.S. pension plans. Iw | Information related to the funded status of selected pension plans at December 31 is as follows: U.S. International 2018 2017 2018 2017 $ $ $ 10,620 9,648 $ 11,904 10,896 6,251 5,089 3,323 2,352 Pension plans with a projected benefit obligation in excess of plan assets Projected benefit obligation Fair value of plan assets Pension plans with an accumulated benefit obligation in excess of plan assets Accumulated benefit obligation Fair value of plan assets $ $ $ $ 9,702 8,966 676 - 5,936 5,071 2,120 1,346 00 Plan Assets Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity. The Level 3 assets are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as instruments for which the determination of fair value requires significant judgment or estimation. At December 31, 2018 and 2017, $826 million and $488 million, respectively, or approximately 5% and 2%, respectively, of the Company's pension investments were categorized as Level 3 assets. If the inputs used to measure the financial assets fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 14. Pension and Other Postretirement Benefit Plans The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. In addition, the Company provides medical benefits, principally to its eligible U.S. retirees and their dependents, through its other postretirement benefit plans. The Company uses December 31 as the year-end measurement date for all of its pension plans and other postretirement benefit plans. Net Periodic Benefit Cost The net periodic benefit cost (credit) for pension and other postretirement benefit plans consisted of the following components: U.S. 2018 $ 326 432 (851) 2017 $ 312 454 (862) Pension Benefits International 2016 2018 2017 2016 $ 282 $ 238 $ 252 $ 238 456 178 172 204 (831) (431) (393) (382) Other Postretirement Benefits 2018 2017 2016 $ 57 $ 57 $ 54 69 81 82 (83) (78) (107) Years Ended December 31 Service cost Interest cost Expected return on plan assets Amortization of unrecognized prior service cost Net loss amortization Termination benefits Curtailments Settlements Net periodic benefit cost (credit) (50) 232 - 19 10 5 123 (53) 180 44 3 - 78 (55) (13) 11984 2 2 5 1 - 13 (1) $ 72 (11) 98 4 (4) 5 123 (11) 87 4 (1) 6 145 (84) 1 3 (8) - (45) $ (98) 1 8 (31) - (60) $ (106) 3 4 (18) $ $ $ $ $ $ (88) The The changes in net periodic benefit cost (credit) year over year for pension plans are largely attributable to changes in the discount rate affecting net loss amortization. In connection with restructuring actions (see Note 5), termination charges were recorded in 2018, 2017 and 2016 on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring activities, curtailments were recorded on pension and other postretirement benefit plans and settlements were recorded on certain U.S. and international pension plans as reflected in the table above. The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 15), with the exception of certain amounts for termination benefits, curtailments and settlements, which are recorded in Restructuring costs if the event giving rise to the termination benefits, curtailment or settlement is related to restructuring actions as noted above. 110 Obligations and Funded Status Summarized information about the changes in plan assets and benefit obligations, the funded status and the amounts recorded at December 31 is as follows: Pension Benefits Other Postretirement U.S. International Benefits 2018 2017 2018 2017 2018 2017 Fair value of plan assets January 1 $ 10,896 $ 9,766 $ 9,339 $ 7,794 $ 1,114 $ 1,019 Actual return on plan assets (810) 1,723 (289) 677 (72) 161 Company contributions, net 378 58 167 226 6 (4) Effects of exchange rate changes (352) 843 Benefits paid (772) (651) (202) (198) (80) Settlements (44) - (106) (17) Other - 23 14 - Fair value of plan assets December 31 $ 9,648 $ 10,896 $ 8,580 $ 9,339 $ 968 $ 1,114 Benefit obligation January 1 $ 11,904 $ 10,849 $ 9,483 $ 8,372 $ 1,922 $ 1,922 Service cost 326 312 238 2525757 Interest cost 432 454178 1726981 Actuarial (gains) losses (1) (1,258) 881 (154) (7) (341) (87) Benefits paid (772) (651) (202) (198) (80) (62) Effects of exchange rate changes - - (387) 916 (6) 3 Plan amendments - - 10 (22) - Curtailments 13 15 (2) (3) Termination benefits 19 44 2 4 Settlements (44) - (106) (17) Other - 23 14 - Benefit obligation December 31 $ 10,620 $ 11,904 $ 9,083 $ 9,483 $ 1,615 $ 1,922 Funded status December 31 $ (972) $ (1,008) $ (503) $ (144) $ (647) $ (808) Recognized as: Other assets $ - $ - $ 659 $ 828 $ - $ - Accrued and other current liabilities (47) (59) (14) (17) (10) (11) Other noncurrent liabilities (925) (949) (1,148) (955) (637) (797) (1) Actuarial (gains) losses in 2018 and 2017 primarily reflect changes in discount rates. At December 31, 2018 and 2017, the accumulated benefit obligation was $19.0 billion and $20.5 billion, respectively, for all pension plans, of which $10.4 billion and $11.5 billion, respectively, related to U.S. pension plans. Iw | Information related to the funded status of selected pension plans at December 31 is as follows: U.S. International 2018 2017 2018 2017 $ $ $ 10,620 9,648 $ 11,904 10,896 6,251 5,089 3,323 2,352 Pension plans with a projected benefit obligation in excess of plan assets Projected benefit obligation Fair value of plan assets Pension plans with an accumulated benefit obligation in excess of plan assets Accumulated benefit obligation Fair value of plan assets $ $ $ $ 9,702 8,966 676 - 5,936 5,071 2,120 1,346 00 Plan Assets Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity. The Level 3 assets are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as instruments for which the determination of fair value requires significant judgment or estimation. At December 31, 2018 and 2017, $826 million and $488 million, respectively, or approximately 5% and 2%, respectively, of the Company's pension investments were categorized as Level 3 assets. If the inputs used to measure the financial assets fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument