|
PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)
|
12 Months Ended |
|
Oct. 31, 2012
|
| PENSION AND OTHER POSTRETIREMENT BENEFITS |
|
| Components of Pension and Postretirement Benefit Costs |
|
The components of net periodic pension cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:
|
|
|
2012 |
|
2011 |
|
2010 |
|
|
Pensions |
|
|
|
|
|
|
|
|
Service cost |
|
$ |
220 |
|
$ |
197 |
|
$ |
176 |
|
|
Interest cost |
|
465 |
|
492 |
|
510 |
|
|
Expected return on plan assets |
|
(787 |
) |
(793 |
) |
(761 |
) |
|
Amortization of actuarial losses |
|
202 |
|
148 |
|
113 |
|
|
Amortization of prior service cost |
|
47 |
|
46 |
|
42 |
|
|
Early-retirement benefits |
|
3 |
|
|
|
|
|
|
Settlements/curtailments |
|
10 |
|
1 |
|
24 |
|
|
Net cost |
|
$ |
160 |
|
$ |
91 |
|
$ |
104 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions |
|
|
|
|
|
|
|
|
Discount rates |
|
4.4 |
% |
5.0 |
% |
5.5 |
% |
|
Rate of compensation increase |
|
3.9 |
% |
3.9 |
% |
3.9 |
% |
|
Expected long-term rates of return |
|
8.0 |
% |
8.1 |
% |
8.3 |
% |
The components of net periodic postretirement benefits cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:
|
|
|
2012 |
|
2011 |
|
2010 |
|
|
Health care and life insurance |
|
|
|
|
|
|
|
|
Service cost |
|
$ |
49 |
|
$ |
44 |
|
$ |
44 |
|
|
Interest cost |
|
281 |
|
326 |
|
337 |
|
|
Expected return on plan assets |
|
(100 |
) |
(113 |
) |
(122 |
) |
|
Amortization of actuarial losses |
|
136 |
|
271 |
|
311 |
|
|
Amortization of prior service credit |
|
(15 |
) |
(16 |
) |
(16 |
) |
|
Net cost |
|
$ |
351 |
|
$ |
512 |
|
$ |
554 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions |
|
|
|
|
|
|
|
|
Discount rates |
|
4.4 |
% |
5.2 |
% |
5.6 |
% |
|
Expected long-term rates of return |
|
7.7 |
% |
7.7 |
% |
7.8 |
% | |
|
| Schedule of Benefit Plan Costs Recorded in Net Income and Other Changes in Plan Assets and Benefit Obligations Recorded in Other Comprehensive Income |
|
The previous pension cost in net income and other changes in plan assets and benefit obligations in other comprehensive income in millions of dollars were as follows:
|
|
|
2012 |
|
2011 |
|
2010 |
|
|
Pensions |
|
|
|
|
|
|
|
|
Net cost |
|
$ |
160 |
|
$ |
91 |
|
$ |
104 |
|
|
Retirement benefit adjustments included in other comprehensive (income) loss: |
|
|
|
|
|
|
|
|
Net actuarial losses |
|
999 |
|
848 |
|
227 |
|
|
Prior service cost |
|
5 |
|
9 |
|
14 |
|
|
Amortization of actuarial losses |
|
(202 |
) |
(148 |
) |
(113 |
) |
|
Amortization of prior service cost |
|
(47 |
) |
(46 |
) |
(42 |
) |
|
Settlements/curtailments |
|
(10 |
) |
(1 |
) |
(24 |
) |
|
Total loss recognized in other comprehensive (income) loss |
|
745 |
|
662 |
|
62 |
|
|
Total recognized in comprehensive (income) loss |
|
$ |
905 |
|
$ |
753 |
|
$ |
166 |
|
The previous postretirement benefits cost in net income and other changes in plan assets and benefit obligations in other comprehensive income in millions of dollars were as follows:
|
|
|
2012 |
|
2011 |
|
2010 |
|
|
Health care and life insurance |
|
|
|
|
|
|
|
|
Net cost |
|
$ |
351 |
|
$ |
512 |
|
$ |
554 |
|
|
Retirement benefit adjustments included in other comprehensive (income) loss: |
|
|
|
|
|
|
|
|
Net actuarial losses (gain) |
|
335 |
|
132 |
|
(28 |
) |
|
Prior service cost |
|
2 |
|
|
|
|
|
|
Amortization of actuarial losses |
|
(136 |
) |
(271 |
) |
(311 |
) |
|
Amortization of prior service credit |
|
15 |
|
16 |
|
16 |
|
|
Total (gain) loss recognized in other comprehensive (income) loss |
|
216 |
|
(123 |
) |
(323 |
) |
|
Total recognized in comprehensive (income) loss |
|
$ |
567 |
|
$ |
389 |
|
$ |
231 |
| |
|
| Schedule of Benefit Plan Obligations, Funded Status and the Assumptions Related to Obligations |
|
The benefit plan obligations, funded status and the assumptions related to the obligations at October 31 in millions of dollars follow:
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
and |
|
|
|
|
Pensions |
|
Life Insurance |
|
|
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
|
Change in benefit obligations |
|
|
|
|
|
|
|
|
|
|
Beginning of year balance |
|
$ |
(10,925 |
) |
$ |
(10,197 |
) |
$ |
(6,652 |
) |
$ |
(6,467 |
) |
|
Service cost |
|
(220 |
) |
(197 |
) |
(49 |
) |
(44 |
) |
|
Interest cost |
|
(465 |
) |
(492 |
) |
(281 |
) |
(326 |
) |
|
Actuarial losses |
|
(947 |
) |
(656 |
) |
(347 |
) |
(113 |
) |
|
Amendments |
|
(5 |
) |
(9 |
) |
(2 |
) |
|
|
|
Benefits paid |
|
656 |
|
648 |
|
333 |
|
340 |
|
|
Health care subsidy receipts |
|
|
|
|
|
(15 |
) |
(14 |
) |
|
Settlements/curtailments |
|
10 |
|
1 |
|
|
|
|
|
|
Foreign exchange and other |
|
62 |
|
(23 |
) |
(10 |
) |
(28 |
) |
|
End of year balance |
|
(11,834 |
) |
(10,925 |
) |
(7,023 |
) |
(6,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets (fair value) |
|
|
|
|
|
|
|
|
|
|
Beginning of year balance |
|
9,552 |
|
9,504 |
|
1,459 |
|
1,637 |
|
|
Actual return on plan assets |
|
736 |
|
600 |
|
113 |
|
95 |
|
|
Employer contribution |
|
441 |
|
79 |
|
37 |
|
43 |
|
|
Benefits paid |
|
(656 |
) |
(648 |
) |
(333 |
) |
(340 |
) |
|
Settlements |
|
(10 |
) |
(1 |
) |
|
|
|
|
|
Foreign exchange and other |
|
(46 |
) |
18 |
|
11 |
|
24 |
|
|
End of year balance |
|
10,017 |
|
9,552 |
|
1,287 |
|
1,459 |
|
|
Funded status |
|
$ |
(1,817 |
) |
$ |
(1,373 |
) |
$ |
(5,736 |
) |
$ |
(5,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions |
|
|
|
|
|
|
|
|
|
|
Discount rates |
|
3.8 |
% |
4.4 |
% |
3.8 |
% |
4.4 |
% |
|
Rate of compensation increase |
|
3.9 |
% |
3.9 |
% |
|
|
|
| |
|
| Schedule of Amounts Recognized in Balance Sheet and Accumulated Other Comprehensive Income - Pretax |
|
The amounts recognized at October 31 in millions of dollars consist of the following:
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
and |
|
|
|
|
Pensions |
|
Life Insurance |
|
|
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
|
Amounts recognized in balance sheet |
|
|
|
|
|
|
|
|
|
|
Noncurrent asset |
|
$ |
20 |
|
$ |
30 |
|
|
|
|
|
|
Current liability |
|
(53 |
) |
(60 |
) |
$ |
(23 |
) |
$ |
(23 |
) |
|
Noncurrent liability |
|
(1,784 |
) |
(1,343 |
) |
(5,713 |
) |
(5,170 |
) |
|
Total |
|
$ |
(1,817 |
) |
$ |
(1,373 |
) |
$ |
(5,736 |
) |
$ |
(5,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive income — pretax |
|
|
|
|
|
|
|
|
|
|
Net actuarial losses |
|
$ |
5,260 |
|
$ |
4,473 |
|
$ |
2,266 |
|
$ |
2,067 |
|
|
Prior service cost (credit) |
|
105 |
|
147 |
|
(47 |
) |
(64 |
) |
|
Total |
|
$ |
5,365 |
|
$ |
4,620 |
|
$ |
2,219 |
|
$ |
2,003 |
| |
|
| Schedule of Accumulated Other Comprehensive Income Expected to be Amortized as Net Expense (Income) During Fiscal 2013 |
|
The amounts in accumulated other comprehensive income that are expected to be amortized as net expense (income) during fiscal 2013 in millions of dollars follow:
|
|
|
|
|
Health Care |
|
|
|
|
|
|
and |
|
|
|
|
Pensions |
|
Life Insurance |
|
|
Net actuarial losses |
|
$ |
263 |
|
$ |
147 |
|
|
Prior service cost (credit) |
|
33 |
|
(6 |
) |
|
Total |
|
$ |
296 |
|
$ |
141 |
| |
|
| Schedule of Future Benefits Expected to be Paid from the Benefit Plans and Medicare Subsidy Expected to be Received |
|
The benefits expected to be paid from the benefit plans, which reflect expected future years of service, and the Medicare subsidy expected to be received are as follows in millions of dollars:
|
|
|
|
|
Health Care |
|
Health Care |
|
|
|
|
|
|
and |
|
Subsidy |
|
|
|
|
Pensions |
|
Life Insurance |
|
Receipts* |
|
|
2013 |
|
$ |
682 |
|
$ |
338 |
|
$ |
4 |
|
|
2014 |
|
683 |
|
345 |
|
|
|
|
2015 |
|
680 |
|
356 |
|
|
|
|
2016 |
|
683 |
|
366 |
|
|
|
|
2017 |
|
689 |
|
384 |
|
|
|
|
2018 to 2022 |
|
3,490 |
|
1,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Medicare Part D subsidy. |
|
| Fair Values of Pension Plan and Health Care Assets |
|
The fair values of the pension plan assets at October 31, 2012 follow in millions of dollars:
|
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
Cash and short-term investments |
|
$ |
1,166 |
|
$ |
287 |
|
$ |
879 |
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
U.S. equity securities |
|
2,481 |
|
2,481 |
|
|
|
|
|
|
U.S. equity funds |
|
43 |
|
8 |
|
35 |
|
|
|
|
International equity securities |
|
1,477 |
|
1,477 |
|
|
|
|
|
|
International equity funds |
|
411 |
|
49 |
|
362 |
|
|
|
|
Fixed Income: |
|
|
|
|
|
|
|
|
|
|
Government and agency securities |
|
404 |
|
379 |
|
25 |
|
|
|
|
Corporate debt securities |
|
220 |
|
|
|
220 |
|
|
|
|
Mortgage-backed securities |
|
126 |
|
|
|
126 |
|
|
|
|
Fixed income funds |
|
853 |
|
92 |
|
761 |
|
|
|
|
Real estate |
|
537 |
|
104 |
|
14 |
|
$ |
419 |
|
|
Private equity/venture capital |
|
1,319 |
|
|
|
|
|
1,319 |
|
|
Hedge funds |
|
578 |
|
2 |
|
422 |
|
154 |
|
|
Other investments |
|
508 |
|
1 |
|
507 |
|
|
|
|
Derivative contracts - assets* |
|
721 |
|
1 |
|
720 |
|
|
|
|
Derivative contracts - liabilities** |
|
(454 |
) |
(20 |
) |
(434 |
) |
|
|
|
Receivables, payables and other |
|
(41 |
) |
(41 |
) |
|
|
|
|
|
Securities lending collateral |
|
223 |
|
|
|
223 |
|
|
|
|
Securities lending liability |
|
(223 |
) |
|
|
(223 |
) |
|
|
|
Securities sold short |
|
(332 |
) |
(332 |
) |
|
|
|
|
|
Total net assets |
|
$ |
10,017 |
|
$ |
4,488 |
|
$ |
3,637 |
|
$ |
1,892 |
|
* Includes contracts for interest rates of $707 million, foreign currency of $8 million and other of $6 million.
** Includes contracts for interest rates of $418 million, foreign currency of $12 million and other of $24 million.
The fair values of the health care assets at October 31, 2012 follow in millions of dollars:
|
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
Cash and short-term investments |
|
$ |
78 |
|
$ |
11 |
|
$ |
67 |
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
U.S. equity securities |
|
319 |
|
319 |
|
|
|
|
|
|
U.S. equity funds |
|
67 |
|
67 |
|
|
|
|
|
|
International equity securities |
|
69 |
|
69 |
|
|
|
|
|
|
International equity funds |
|
200 |
|
|
|
200 |
|
|
|
|
Fixed Income: |
|
|
|
|
|
|
|
|
|
|
Government and agency securities |
|
218 |
|
215 |
|
3 |
|
|
|
|
Corporate debt securities |
|
35 |
|
|
|
35 |
|
|
|
|
Mortgage-backed securities |
|
15 |
|
|
|
15 |
|
|
|
|
Fixed income funds |
|
72 |
|
|
|
72 |
|
|
|
|
Real estate |
|
53 |
|
7 |
|
29 |
|
$ |
17 |
|
|
Private equity/venture capital |
|
54 |
|
|
|
|
|
54 |
|
|
Hedge funds |
|
85 |
|
|
|
79 |
|
6 |
|
|
Other investments |
|
21 |
|
|
|
21 |
|
|
|
|
Derivative contracts - assets* |
|
8 |
|
|
|
8 |
|
|
|
|
Derivative contracts - liabilities** |
|
(1 |
) |
|
|
(1 |
) |
|
|
|
Receivables, payables and other |
|
8 |
|
8 |
|
|
|
|
|
|
Securities lending collateral |
|
38 |
|
|
|
38 |
|
|
|
|
Securities lending liability |
|
(38 |
) |
|
|
(38 |
) |
|
|
|
Securities sold short |
|
(14 |
) |
(14 |
) |
|
|
|
|
|
Total net assets |
|
$ |
1,287 |
|
$ |
682 |
|
$ |
528 |
|
$ |
77 |
|
* Includes contracts for interest rates of $7 million and foreign currency of $1 million.
** Includes contracts for foreign currency of $1 million.
The fair values of the pension plan assets at October 31, 2011 follow in millions of dollars:
|
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
Cash and short-term investments |
|
$ |
1,074 |
|
$ |
179 |
|
$ |
895 |
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
U.S. equity securities |
|
2,070 |
|
2,070 |
|
|
|
|
|
|
U.S. equity funds |
|
49 |
|
11 |
|
38 |
|
|
|
|
International equity securities |
|
1,086 |
|
1,086 |
|
|
|
|
|
|
International equity funds |
|
319 |
|
29 |
|
290 |
|
|
|
|
Fixed Income: |
|
|
|
|
|
|
|
|
|
|
Government and agency securities |
|
543 |
|
516 |
|
27 |
|
|
|
|
Corporate debt securities |
|
196 |
|
|
|
196 |
|
|
|
|
Mortgage-backed securities |
|
180 |
|
|
|
180 |
|
|
|
|
Fixed income funds |
|
1,077 |
|
54 |
|
1,023 |
|
|
|
|
Real estate |
|
505 |
|
75 |
|
14 |
|
$ |
416 |
|
|
Private equity/venture capital |
|
1,123 |
|
|
|
|
|
1,123 |
|
|
Hedge funds |
|
608 |
|
3 |
|
462 |
|
143 |
|
|
Other investments |
|
448 |
|
|
|
448 |
|
|
|
|
Derivative contracts - assets* |
|
787 |
|
21 |
|
766 |
|
|
|
|
Derivative contracts - liabilities** |
|
(473 |
) |
(15 |
) |
(458 |
) |
|
|
|
Receivables, payables and other |
|
(40 |
) |
(40 |
) |
|
|
|
|
|
Securities lending collateral |
|
750 |
|
|
|
750 |
|
|
|
|
Securities lending liability |
|
(750 |
) |
|
|
(750 |
) |
|
|
|
Total net assets |
|
$ |
9,552 |
|
$ |
3,989 |
|
$ |
3,881 |
|
$ |
1,682 |
|
* Includes contracts for interest rates of $742 million, foreign currency of $19 million and other of $26 million.
** Includes contracts for interest rates of $442 million, foreign currency of $17 million and other of $14 million.
The fair values of the health care assets at October 31, 2011 follow in millions of dollars:
|
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
Cash and short-term investments |
|
$ |
58 |
|
$ |
7 |
|
$ |
51 |
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
U.S. equity securities |
|
372 |
|
372 |
|
|
|
|
|
|
U.S. equity funds |
|
84 |
|
84 |
|
|
|
|
|
|
International equity securities |
|
64 |
|
64 |
|
|
|
|
|
|
International equity funds |
|
210 |
|
|
|
210 |
|
|
|
|
Fixed Income: |
|
|
|
|
|
|
|
|
|
|
Government and agency securities |
|
250 |
|
246 |
|
4 |
|
|
|
|
Corporate debt securities |
|
39 |
|
|
|
39 |
|
|
|
|
Mortgage-backed securities |
|
22 |
|
|
|
22 |
|
|
|
|
Fixed income funds |
|
107 |
|
|
|
107 |
|
|
|
|
Real estate |
|
57 |
|
4 |
|
32 |
|
$ |
21 |
|
|
Private equity/venture capital |
|
55 |
|
|
|
|
|
55 |
|
|
Hedge funds |
|
110 |
|
|
|
103 |
|
7 |
|
|
Other investments |
|
22 |
|
|
|
22 |
|
|
|
|
Derivative contracts - assets* |
|
12 |
|
1 |
|
11 |
|
|
|
|
Derivative contracts - liabilities** |
|
(2 |
) |
(1 |
) |
(1 |
) |
|
|
|
Receivables, payables and other |
|
(1 |
) |
(1 |
) |
|
|
|
|
|
Securities lending collateral |
|
215 |
|
|
|
215 |
|
|
|
|
Securities lending liability |
|
(215 |
) |
|
|
(215 |
) |
|
|
|
Total net assets |
|
$ |
1,459 |
|
$ |
776 |
|
$ |
600 |
|
$ |
83 |
|
* Includes contracts for interest rates of $10 million, foreign currency of $1 million and other of $1 million.
** Includes contracts for foreign currency of $1 million and other of $1 million. |
|
| Reconciliation of Level 3 Fair Value Measurements for Pension and Health Care Assets |
|
A reconciliation of Level 3 pension and health care asset fair value measurements in millions of dollars follows:
|
|
|
|
|
|
|
Private Equity/ |
|
|
|
|
|
|
|
|
Real |
|
Venture |
|
Hedge |
|
|
|
|
Total |
|
Estate |
|
Capital |
|
Funds |
|
|
October 31, 2010* |
|
$ |
1,443 |
|
$ |
378 |
|
$ |
912 |
|
$ |
153 |
|
|
Realized gain |
|
33 |
|
|
|
32 |
|
1 |
|
|
Change in unrealized gain |
|
192 |
|
48 |
|
141 |
|
3 |
|
|
Purchases, sales and settlements - net |
|
97 |
|
11 |
|
93 |
|
(7 |
) |
|
October 31, 2011* |
|
1,765 |
|
437 |
|
1,178 |
|
150 |
|
|
Realized gain |
|
18 |
|
|
|
18 |
|
|
|
|
Change in unrealized gain (loss) |
|
74 |
|
(4 |
) |
65 |
|
13 |
|
|
Purchases, sales and settlements - net |
|
112 |
|
3 |
|
112 |
|
(3 |
) |
|
October 31, 2012* |
|
$ |
1,969 |
|
$ |
436 |
|
$ |
1,373 |
|
$ |
160 |
|
* Health care Level 3 assets represent approximately 4 percent to 5 percent of the reconciliation amounts for 2012, 2011 and 2010. |
|