| Pension And Other Postretirement Benefits |
16. Pension and Other Postretirement Benefits
The benefit obligations and plan assets associated with the Corporation's principal benefit plans are measured on December 31.
For U.S. plans, the discount rate is determined by constructing a portfolio of high-quality, noncallable bonds with cash flows that match estimated outflows for benefit payments. For major non-U.S. plans, the discount rate is determined by using bond portfolios with an average maturity approximating that of the liabilities or spot yield curves, both of which are constructed using high-quality, local-currency-denominated bonds.
The measurement of the accumulated postretirement benefit obligation assumes an initial health care cost trend rate of 5.5 percent that declines to 4.5 percent by 2015. A one-percentage-point increase in the health care cost trend rate would increase service and interest cost by $63 million and the postretirement benefit obligation by $696 million. A one-percentage-point decrease in the health care cost trend rate would decrease service and interest cost by $49 million and the postretirement benefit obligation by $567 million.
The funding levels of all qualified pension plans are in compliance with standards set by applicable law or regulation. As shown in the table below, certain smaller U.S. pension plans and a number of non-U.S. pension plans are not funded because local tax conventions and regulatory practices do not encourage funding of these plans. All defined benefit pension obligations, regardless of the funding status of the underlying plans, are fully supported by the financial strength of the Corporation or the respective sponsoring affiliate.
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Pension Benefits |
|
| |
|
U.S. |
|
|
|
|
Non-U.S. |
|
| |
|
2011 |
|
|
2010 |
|
|
|
|
2011 |
|
|
2010 |
|
| |
|
(millions of dollars) |
|
|
Assets in excess of/(less than) benefit obligation |
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Balance at December 31 |
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|
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|
|
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Funded plans |
|
$ |
(4,141 |
) |
|
$ |
(2,349 |
) |
|
|
|
$ |
(5,319 |
) |
|
$ |
(2,769 |
) |
|
Unfunded plans |
|
|
(2,238 |
) |
|
|
(1,823 |
) |
|
|
|
|
(6,632 |
) |
|
|
(6,188 |
) |
|
Total |
|
$ |
(6,379 |
) |
|
$ |
(4,172 |
) |
|
|
|
$ |
(11,951 |
) |
|
$ |
(8,957 |
) |
The authoritative guidance for defined benefit pension and other postretirement plans requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income.
The long-term expected rate of return on funded assets shown below is established for each benefit plan by developing a forward-looking, long-term return assumption for each asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation and the long-term return assumption for each asset class.
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Pension Benefits |
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Other Postretirement
Benefits |
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U.S. |
|
|
|
|
Non-U.S. |
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|
|
|
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2011 |
|
|
2010 |
|
|
2009 |
|
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
|
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 |
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(percent) |
|
|
Discount rate |
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|
5.50 |
|
|
|
6.00 |
|
|
|
6.25 |
|
|
|
|
|
4.80 |
|
|
|
5.20 |
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|
|
5.50 |
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5.50 |
|
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6.00 |
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|
|
6.25 |
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Long-term rate of return on funded assets |
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|
7.50 |
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|
7.50 |
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|
8.00 |
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|
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|
6.80 |
|
|
|
6.70 |
|
|
|
7.30 |
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|
|
7.50 |
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|
7.50 |
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|
8.00 |
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|
Long-term rate of compensation increase |
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|
5.25 |
|
|
|
5.25 |
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|
|
5.00 |
|
|
|
|
|
5.20 |
|
|
|
5.00 |
|
|
|
4.70 |
|
|
|
|
|
5.25 |
|
|
|
5.25 |
|
|
|
5.00 |
|
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Components of net periodic benefit cost |
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|
(millions of dollars) |
|
|
Service cost |
|
$ |
546 |
|
|
$ |
468 |
|
|
$ |
438 |
|
|
|
|
$ |
574 |
|
|
$ |
480 |
|
|
$ |
421 |
|
|
|
|
$ |
121 |
|
|
$ |
101 |
|
|
$ |
94 |
|
|
Interest cost |
|
|
792 |
|
|
|
798 |
|
|
|
809 |
|
|
|
|
|
1,267 |
|
|
|
1,175 |
|
|
|
1,121 |
|
|
|
|
|
393 |
|
|
|
395 |
|
|
|
408 |
|
|
Expected return on plan assets |
|
|
(769 |
) |
|
|
(726 |
) |
|
|
(656 |
) |
|
|
|
|
(1,168 |
) |
|
|
(1,010 |
) |
|
|
(886 |
) |
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|
|
|
(41 |
) |
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|
(37 |
) |
|
|
(35 |
) |
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Amortization of actuarial loss/(gain) |
|
|
485 |
|
|
|
525 |
|
|
|
694 |
|
|
|
|
|
647 |
|
|
|
554 |
|
|
|
648 |
|
|
|
|
|
162 |
|
|
|
147 |
|
|
|
176 |
|
|
Amortization of prior service cost |
|
|
9 |
|
|
|
2 |
|
|
|
– |
|
|
|
|
|
103 |
|
|
|
84 |
|
|
|
79 |
|
|
|
|
|
35 |
|
|
|
52 |
|
|
|
69 |
|
|
Net pension enhancement and curtailment/settlement expense |
|
|
286 |
|
|
|
321 |
|
|
|
485 |
|
|
|
|
|
34 |
|
|
|
9 |
|
|
|
2 |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
– |
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|
Net periodic benefit cost |
|
$ |
1,349 |
|
|
$ |
1,388 |
|
|
$ |
1,770 |
|
|
|
|
$ |
1,457 |
|
|
$ |
1,292 |
|
|
$ |
1,385 |
|
|
|
|
$ |
670 |
|
|
$ |
658 |
|
|
$ |
712 |
|
|
Changes in amounts recorded in accumulated other comprehensive income: |
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Net actuarial loss/(gain) |
|
$ |
2,218 |
|
|
$ |
44 |
|
|
$ |
(231 |
) |
|
|
|
$ |
4,133 |
|
|
$ |
1,202 |
|
|
$ |
(33 |
) |
|
|
|
$ |
468 |
|
|
$ |
251 |
|
|
$ |
(107 |
) |
|
Amortization of actuarial (loss)/gain |
|
|
(771 |
) |
|
|
(846 |
) |
|
|
(1,179 |
) |
|
|
|
|
(681 |
) |
|
|
(563 |
) |
|
|
(650 |
) |
|
|
|
|
(162 |
) |
|
|
(147 |
) |
|
|
(176 |
) |
|
Prior service cost/(credit) |
|
|
– |
|
|
|
80 |
|
|
|
– |
|
|
|
|
|
187 |
|
|
|
160 |
|
|
|
69 |
|
|
|
|
|
– |
|
|
|
26 |
|
|
|
– |
|
|
Amortization of prior service (cost)/credit |
|
|
(9 |
) |
|
|
(2 |
) |
|
|
– |
|
|
|
|
|
(103 |
) |
|
|
(84 |
) |
|
|
(79 |
) |
|
|
|
|
(35 |
) |
|
|
(52 |
) |
|
|
(69 |
) |
|
Foreign exchange rate changes |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
(90 |
) |
|
|
96 |
|
|
|
608 |
|
|
|
|
|
— |
|
|
|
2 |
|
|
|
2 |
|
|
Total recorded in other comprehensive income |
|
|
1,438 |
|
|
|
(724 |
) |
|
|
(1,410 |
) |
|
|
|
|
3,446 |
|
|
|
811 |
|
|
|
(85 |
) |
|
|
|
|
271 |
|
|
|
80 |
|
|
|
(350 |
) |
|
Total recorded in net periodic benefit cost and other comprehensive income, before tax |
|
$ |
2,787 |
|
|
$ |
664 |
|
|
$ |
360 |
|
|
|
|
$ |
4,903 |
|
|
$ |
2,103 |
|
|
$ |
1,300 |
|
|
|
|
$ |
941 |
|
|
$ |
738 |
|
|
$ |
362 |
|
Costs for defined contribution plans were $378 million, $347 million and $339 million in 2011, 2010 and 2009, respectively.
A summary of the change in accumulated other comprehensive income is shown in the table below:
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| |
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Total Pension and Other Postretirement Benefits |
|
| |
|
2011 |
|
|
2010 |
|
|
2009 |
|
| (Charge)/credit to other comprehensive income, before tax |
|
(millions of dollars) |
|
|
U.S. pension |
|
$ |
(1,438 |
) |
|
$ |
724 |
|
|
$ |
1,410 |
|
|
Non-U.S. pension |
|
|
(3,446 |
) |
|
|
(811 |
) |
|
|
85 |
|
|
Other postretirement benefits |
|
|
(271 |
) |
|
|
(80 |
) |
|
|
350 |
|
|
Total (charge)/credit to other comprehensive income, before tax |
|
|
(5,155 |
) |
|
|
(167 |
) |
|
|
1,845 |
|
|
(Charge)/credit to income tax (see Note 18) |
|
|
1,495 |
|
|
|
35 |
|
|
|
(591 |
) |
|
(Charge)/credit to investment in equity companies |
|
|
(30 |
) |
|
|
11 |
|
|
|
(133 |
) |
|
(Charge)/credit to other comprehensive income including noncontrolling interests, after tax |
|
$ |
(3,690 |
) |
|
$ |
(121 |
) |
|
$ |
1,121 |
|
|
Charge/(credit) to equity of noncontrolling interests |
|
|
288 |
|
|
|
95 |
|
|
|
93 |
|
|
(Charge)/credit to other comprehensive income attributable to ExxonMobil |
|
$ |
(3,402 |
) |
|
$ |
(26 |
) |
|
$ |
1,214 |
|
The Corporation's investment strategy for benefit plan assets reflects a long-term view, a careful assessment of the risks inherent in various asset classes and broad diversification to reduce the risk of the portfolio. The benefit plan assets are primarily invested in passive equity and fixed income index funds to diversify risk while minimizing costs. The equity funds hold ExxonMobil stock only to the extent necessary to replicate the relevant equity index. The fixed income funds are largely invested in high-quality corporate and government debt securities.
Studies are periodically conducted to establish the preferred target asset allocation. The target asset allocation for the U.S. benefit plans is 50 percent equity securities and 50 percent debt securities. The target asset allocation for the non-U.S. plans in aggregate is 47 percent equities, 50 percent debt and 3 percent real estate funds. The equity targets for the U.S. and non-U.S. plans include an allocation to private equity partnerships that primarily focus on early-stage venture capital of 5 percent and 3 percent, respectively.
The fair value measurement levels are accounting terms that refer to different methods of valuing assets. The terms do not represent the relative risk or credit quality of an investment.
The 2011 fair value of the benefit plan assets, including the level within the fair value hierarchy, is shown in the tables below:
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
U.S. Pension |
|
|
|
|
Non-U.S. Pension |
|
| |
|
Fair Value Measurement at December 31, 2011, Using: |
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|
|
|
|
|
|
Fair Value Measurement at December 31, 2011, Using: |
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|
|
|
| |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| |
|
(millions of dollars) |
|
|
|
|
(millions of dollars) |
|
|
Asset category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
– |
|
|
$ |
2,247 |
(1) |
|
$ |
– |
|
|
$ |
2,247 |
|
|
|
|
$ |
– |
|
|
$ |
2,589 |
(1) |
|
$ |
– |
|
|
$ |
2,589 |
|
|
Non-U.S. |
|
|
– |
|
|
|
2,636 |
(1) |
|
|
– |
|
|
|
2,636 |
|
|
|
|
|
194 |
(2) |
|
|
4,835 |
(1) |
|
|
– |
|
|
|
5,029 |
|
|
Private equity |
|
|
– |
|
|
|
– |
|
|
|
458 |
(3) |
|
|
458 |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
393 |
(3) |
|
|
393 |
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
– |
|
|
|
2,728 |
(4) |
|
|
– |
|
|
|
2,728 |
|
|
|
|
|
2 |
(5) |
|
|
1,857 |
(4) |
|
|
– |
|
|
|
1,859 |
|
|
Government |
|
|
– |
|
|
|
2,482 |
(4) |
|
|
– |
|
|
|
2,482 |
|
|
|
|
|
186 |
(5) |
|
|
6,317 |
(4) |
|
|
– |
|
|
|
6,503 |
|
|
Asset-backed |
|
|
– |
|
|
|
11 |
(4) |
|
|
– |
|
|
|
11 |
|
|
|
|
|
– |
|
|
|
102 |
(4) |
|
|
– |
|
|
|
102 |
|
|
Private mortgages |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
4 |
(6) |
|
|
4 |
|
|
Real estate funds |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
397 |
(7) |
|
|
397 |
|
|
Cash |
|
|
– |
|
|
|
71 |
(8) |
|
|
– |
|
|
|
71 |
|
|
|
|
|
76 |
|
|
|
13 |
(9) |
|
|
– |
|
|
|
89 |
|
|
Total at fair value |
|
$ |
– |
|
|
$ |
10,175 |
|
|
$ |
458 |
|
|
$ |
10,633 |
|
|
|
|
$ |
458 |
|
|
$ |
15,713 |
|
|
$ |
794 |
|
|
$ |
16,965 |
|
|
Insurance contracts at contract value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152 |
|
|
Total plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
17,117 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other Postretirement |
|
| |
|
Fair Value Measurement at December 31, 2011, Using: |
|
|
|
|
| |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| |
|
(millions of dollars) |
|
|
Asset category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
– |
|
|
$ |
166 |
(1) |
|
$ |
– |
|
|
$ |
166 |
|
|
Non-U.S. |
|
|
– |
|
|
|
155 |
(1) |
|
|
– |
|
|
|
155 |
|
|
Private equity |
|
|
– |
|
|
|
– |
|
|
|
7 |
(2) |
|
|
7 |
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
– |
|
|
|
77 |
(3) |
|
|
– |
|
|
|
77 |
|
|
Government |
|
|
– |
|
|
|
120 |
(3) |
|
|
– |
|
|
|
120 |
|
|
Asset-backed |
|
|
– |
|
|
|
12 |
(3) |
|
|
– |
|
|
|
12 |
|
|
Private mortgages |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Cash |
|
|
– |
|
|
|
1 |
|
|
|
– |
|
|
|
1 |
|
|
Total at fair value |
|
$ |
– |
|
|
$ |
531 |
|
|
$ |
7 |
|
|
$ |
538 |
|
| (1) |
For U.S. and non-U.S. equity securities held in the form of fund units that are redeemable at the measurement date, the unit value is treated as a Level 2 input. The fair value of the securities owned by the funds is based on observable quoted prices on active exchanges, which are Level 1 inputs. |
| (2) |
For private equity, fair value is generally established by using revenue or earnings multiples or other relevant market data including Initial Public Offerings. |
| (3) |
For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. |
The change in the fair value in 2011 of Level 3 assets that use significant unobservable inputs to measure fair value is shown in the table below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2011 |
|
| |
|
Pension |
|
|
|
|
Other Postretirement |
|
| |
|
U.S. |
|
|
|
|
Non U.S. |
|
|
|
|
|
|
|
|
|
| |
|
Private
Equity |
|
|
Private
Mortgages |
|
|
|
|
Private
Equity |
|
|
Private
Mortgages |
|
|
Real
Estate |
|
|
|
|
Private
Equity |
|
|
Private
Mortgages |
|
| |
|
(millions of dollars) |
|
| |
|
|
|
|
|
|
|
|
|
|
Fair value at January 1 |
|
$ |
408 |
|
|
$ |
128 |
|
|
|
|
$ |
315 |
|
|
$ |
4 |
|
|
$ |
417 |
|
|
|
|
$ |
5 |
|
|
$ |
2 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net realized gains/(losses) |
|
|
1 |
|
|
|
5 |
|
|
|
|
|
7 |
|
|
|
– |
|
|
|
3 |
|
|
|
|
|
– |
|
|
|
– |
|
|
Net unrealized gains/(losses) |
|
|
56 |
|
|
|
– |
|
|
|
|
|
33 |
|
|
|
– |
|
|
|
6 |
|
|
|
|
|
2 |
|
|
|
– |
|
|
Net purchases/(sales) |
|
|
(7 |
) |
|
|
(133 |
) |
|
|
|
|
38 |
|
|
|
– |
|
|
|
(29) |
|
|
|
|
|
– |
|
|
|
(2) |
|
|
Fair value at December 31 |
|
$ |
458 |
|
|
$ |
– |
|
|
|
|
$ |
393 |
|
|
$ |
4 |
|
|
$ |
397 |
|
|
|
|
$ |
7 |
|
|
$ |
– |
|
The 2010 fair value of the benefit plan assets, including the level within the fair value hierarchy, is shown in the tables below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
U.S. Pension |
|
|
|
|
Non-U.S. Pension |
|
| |
|
Fair Value Measurement at December 31, 2010, Using: |
|
|
|
|
|
|
|
Fair Value Measurement at December 31, 2010, Using: |
|
|
|
|
| |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| |
|
(millions of dollars) |
|
|
|
|
(millions of dollars) |
|
|
Asset category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
– |
|
|
$ |
2,648 |
(1) |
|
$ |
– |
|
|
$ |
2,648 |
|
|
|
|
$ |
– |
|
|
$ |
2,443 |
(1) |
|
$ |
– |
|
|
$ |
2,443 |
|
|
Non-U.S. |
|
|
– |
|
|
|
3,530 |
(1) |
|
|
– |
|
|
|
3,530 |
|
|
|
|
|
228 |
(2) |
|
|
6,502 |
(1) |
|
|
– |
|
|
|
6,730 |
|
|
Private equity |
|
|
– |
|
|
|
– |
|
|
|
408 |
(3) |
|
|
408 |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
315 |
(3) |
|
|
315 |
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
– |
|
|
|
1,152 |
(4) |
|
|
– |
|
|
|
1,152 |
|
|
|
|
|
2 |
(5) |
|
|
1,629 |
(4) |
|
|
– |
|
|
|
1,631 |
|
|
Government |
|
|
– |
|
|
|
2,847 |
(4) |
|
|
– |
|
|
|
2,847 |
|
|
|
|
|
146 |
(5) |
|
|
4,709 |
(4) |
|
|
– |
|
|
|
4,855 |
|
|
Asset-backed |
|
|
– |
|
|
|
31 |
(4) |
|
|
– |
|
|
|
31 |
|
|
|
|
|
– |
|
|
|
98 |
(4) |
|
|
– |
|
|
|
98 |
|
|
Private mortgages |
|
|
– |
|
|
|
– |
|
|
|
128 |
(6) |
|
|
128 |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
4 |
(6) |
|
|
4 |
|
|
Real estate funds |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
417 |
(7) |
|
|
417 |
|
|
Cash |
|
|
68 |
|
|
|
– |
|
|
|
– |
|
|
|
68 |
|
|
|
|
|
63 |
|
|
|
51 |
(8) |
|
|
– |
|
|
|
114 |
|
|
Total at fair value |
|
$ |
68 |
|
|
$ |
10,208 |
|
|
$ |
536 |
|
|
$ |
10,812 |
|
|
|
|
$ |
439 |
|
|
$ |
15,432 |
|
|
$ |
736 |
|
|
$ |
16,607 |
|
|
Insurance contracts at contract value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158 |
|
|
Total plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
16,765 |
|
| (1) |
For U.S. and non-U.S. equity securities held in the form of fund units that are redeemable at the measurement date, the unit value is treated as a Level 2 input. The fair value of the securities owned by the funds is based on observable quoted prices on active exchanges, which are Level 1 inputs. |
| (2) |
For non-U.S. equity securities held in separate accounts, fair value is based on observable quoted prices on active exchanges. |
| (3) |
For private equity, fair value is generally established by using revenue or earnings multiples or other relevant market data including Initial Public Offerings. |
| (4) |
For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. |
| (5) |
For corporate and government debt securities that are traded on active exchanges, fair value is based on observable quoted prices. |
| (6) |
For private mortgages, fair value is based on proprietary credit spread matrices developed using market data and monthly surveys of active mortgage bankers. |
| (7) |
For real estate funds, fair value is based on appraised values developed using comparable market transactions. |
| (8) |
For cash balances that are subject to withdrawal penalties or other adjustments, the fair value is treated as a Level 2 input. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other Postretirement |
|
| |
|
Fair Value Measurement at December 31, 2010, Using: |
|
|
|
|
| |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Unobservable
Inputs
(Level 3) |
|
|
Total |
|
| |
|
(millions of dollars) |
|
|
Asset category: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
– |
|
|
$ |
180 |
(1) |
|
$ |
– |
|
|
$ |
180 |
|
|
Non-U.S. |
|
|
– |
|
|
|
191 |
(1) |
|
|
– |
|
|
|
191 |
|
|
Private equity |
|
|
– |
|
|
|
– |
|
|
|
5 |
(2) |
|
|
5 |
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
– |
|
|
|
49 |
(3) |
|
|
– |
|
|
|
49 |
|
|
Government |
|
|
– |
|
|
|
117 |
(3) |
|
|
– |
|
|
|
117 |
|
|
Asset-backed |
|
|
– |
|
|
|
13 |
(3) |
|
|
– |
|
|
|
13 |
|
|
Private mortgages |
|
|
– |
|
|
|
– |
|
|
|
2 |
(4) |
|
|
2 |
|
|
Cash |
|
|
1 |
|
|
|
– |
|
|
|
– |
|
|
|
1 |
|
|
Total at fair value |
|
$ |
1 |
|
|
$ |
550 |
|
|
$ |
7 |
|
|
$ |
558 |
|
| (1) |
For U.S. and non-U.S. equity securities held in the form of fund units that are redeemable at the measurement date, the unit value is treated as a Level 2 input. The fair value of the securities owned by the funds is based on observable quoted prices on active exchanges, which are Level 1 inputs. |
| (2) |
For private equity, fair value is generally established by using revenue or earnings multiples or other relevant market data including Initial Public Offerings. |
| (3) |
For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions. |
| (4) |
For private mortgages, fair value is based on proprietary credit spread matrices developed using market data and monthly surveys of active mortgage bankers. |
The change in the fair value in 2010 of Level 3 assets that use significant unobservable inputs to measure fair value is shown in the table below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2010 |
|
| |
|
Pension |
|
|
|
|
Other Postretirement |
|
| |
|
U.S. |
|
|
|
|
Non U.S. |
|
|
|
|
|
|
|
|
|
| |
|
Private
Equity |
|
|
Private
Mortgages |
|
|
|
|
Private
Equity |
|
|
Private
Mortgages |
|
|
Real
Estate |
|
|
|
|
Private
Equity |
|
|
Private
Mortgages |
|
| |
|
(millions of dollars) |
|
| |
|
|
|
|
|
|
|
|
|
|
Fair value at January 1 |
|
$ |
349 |
|
|
$ |
280 |
|
|
|
|
$ |
239 |
|
|
$ |
5 |
|
|
$ |
413 |
|
|
|
|
$ |
4 |
|
|
$ |
3 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net realized gains/(losses) |
|
|
– |
|
|
|
36 |
|
|
|
|
|
(1 |
) |
|
|
(1 |
) |
|
|
– |
|
|
|
|
|
– |
|
|
|
1 |
|
|
Net unrealized gains/(losses) |
|
|
47 |
|
|
|
(3 |
) |
|
|
|
|
26 |
|
|
|
1 |
|
|
|
(4 |
) |
|
|
|
|
1 |
|
|
|
– |
|
|
Net purchases/(sales) |
|
|
12 |
|
|
|
(185 |
) |
|
|
|
|
51 |
|
|
|
(1 |
) |
|
|
8 |
|
|
|
|
|
– |
|
|
|
(2 |
) |
|
Fair value at December 31 |
|
$ |
408 |
|
|
$ |
128 |
|
|
|
|
$ |
315 |
|
|
$ |
4 |
|
|
$ |
417 |
|
|
|
|
$ |
5 |
|
|
$ |
2 |
|
A summary of pension plans with an accumulated benefit obligation in excess of plan assets is shown in the table below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension Benefits |
|
| |
|
U.S. |
|
|
|
|
Non-U.S. |
|
| |
|
2011 |
|
|
2010 |
|
|
|
|
2011 |
|
|
2010 |
|
| |
|
(millions of dollars) |
|
|
For funded pension plans with an accumulated benefit obligation in excess of plan assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation |
|
$ |
14,797 |
|
|
$ |
13,184 |
|
|
|
|
$ |
17,668 |
|
|
$ |
9,865 |
|
|
Accumulated benefit obligation |
|
|
12,606 |
|
|
|
11,383 |
|
|
|
|
|
16,175 |
|
|
|
9,074 |
|
|
Fair value of plan assets |
|
|
10,655 |
|
|
|
10,834 |
|
|
|
|
|
12,832 |
|
|
|
7,131 |
|
| |
|
|
|
|
|
|
For unfunded pension plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation |
|
$ |
2,238 |
|
|
$ |
1,823 |
|
|
|
|
$ |
6,632 |
|
|
$ |
6,188 |
|
|
Accumulated benefit obligation |
|
|
1,475 |
|
|
|
1,381 |
|
|
|
|
|
5,753 |
|
|
|
5,413 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension Benefits |
|
|
|
|
Other Postretirement
Benefits |
|
| |
|
U.S. |
|
|
Non-U.S. |
|
|
|
|
| |
|
(millions of dollars) |
|
|
Estimated 2012 amortization from accumulated other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss/(gain) (1) |
|
$ |
1,033 |
|
|
$ |
889 |
|
|
|
|
$ |
173 |
|
|
Prior service cost (2) |
|
|
7 |
|
|
|
109 |
|
|
|
|
|
34 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pension Benefits |
|
|
|
|
Other Postretirement Benefits |
|
| |
|
U.S. |
|
|
Non-U.S. |
|
|
|
|
Gross |
|
|
Medicare Subsidy Receipt |
|
| |
|
(millions of dollars) |
|
| |
|
|
|
|
|
|
Contributions expected in 2012 |
|
$ |
1,650 |
|
|
$ |
1,250 |
|
|
|
|
$ |
– |
|
|
$ |
– |
|
|
Benefit payments expected in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
1,490 |
|
|
|
1,342 |
|
|
|
|
|
442 |
|
|
|
23 |
|
|
2013 |
|
|
1,579 |
|
|
|
1,360 |
|
|
|
|
|
458 |
|
|
|
25 |
|
|
2014 |
|
|
1,547 |
|
|
|
1,383 |
|
|
|
|
|
472 |
|
|
|
26 |
|
|
2015 |
|
|
1,524 |
|
|
|
1,418 |
|
|
|
|
|
485 |
|
|
|
27 |
|
|
2016 |
|
|
1,489 |
|
|
|
1,462 |
|
|
|
|
|
497 |
|
|
|
28 |
|
|
2017 - 2021 |
|
|
6,616 |
|
|
|
7,731 |
|
|
|
|
|
2,611 |
|
|
|
163 |
|
|