Annual report pursuant to Section 13 and 15(d)

COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)

v2.4.0.6
COMPANY-SPONSORED EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2012
Net Periodic Benefit Cost for Pension and Postretirement Benefit Plans
Information about net periodic benefit cost for the company-sponsored pension and postretirement benefit plans is as follows (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Net Periodic Cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
998

 
$
870

 
$
723

 
$
89

 
$
89

 
$
86

 
$
41

 
$
34

 
$
24

Interest cost
1,410

 
1,309

 
1,199

 
208

 
207

 
214

 
41

 
39

 
34

Expected return on assets
(1,970
)
 
(1,835
)
 
(1,381
)
 
(18
)
 
(16
)
 
(22
)
 
(47
)
 
(43
)
 
(36
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transition obligation

 

 

 

 

 

 

 

 

Prior service cost
173

 
171

 
172

 
5

 
7

 
4

 
2

 
1

 
1

Actuarial (gain) loss
4,388

 
736

 
70

 
374

 

 

 
69

 
91

 
42

Other

 

 

 

 

 

 
(10
)
 

 
6

Net periodic benefit cost
$
4,999

 
$
1,251

 
$
783

 
$
658

 
$
287

 
$
282

 
$
96

 
$
122

 
$
71

Effects of One Percent Change in Assumed Health Care Cost Trend
A one-percent change in assumed health care cost trend rates would have had the following effects on 2012 results (in millions):
 
1% Increase
 
1% Decrease
Effect on total of service cost and interest cost
$
4

 
$
(4
)
Effect on postretirement benefit obligation
$
58

 
$
(69
)
Reconciliation of the Changes in the Plans' Benefit Obligations and Fair Value of Plan Assets
The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets as of the respective measurement dates in each year (in millions).
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Benefit Obligations:
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
$
24,386

 
$
21,342

 
$
3,836

 
$
3,597

 
$
841

 
$
680

Service cost
998

 
870

 
89

 
89

 
41

 
34

Interest cost
1,410

 
1,309

 
208

 
207

 
41

 
39

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Plan participants’ contributions

 

 
16

 
16

 
4

 
1

Plan amendments
(2
)
 
3

 
1

 
(24
)
 

 
7

Actuarial (gain)/loss
5,850

 
1,519

 
495

 
170

 
112

 
99

Foreign currency exchange rate changes

 

 

 

 
24

 
(4
)
Curtailments and settlements

 

 

 

 
(5
)
 

Other

 

 

 

 
51

 

Projected benefit obligation at end of year
$
31,868

 
$
24,386

 
$
4,412

 
$
3,836

 
$
1,089

 
$
841

 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Fair Value of Plan Assets:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
22,663

 
$
20,092

 
$
174

 
$
233

 
$
613

 
$
561

Actual return on plan assets
2,684

 
1,956

 
19

 
9

 
56

 
10

Employer contributions
368

 
1,272

 
475

 
108

 
74

 
56

Plan participants’ contributions

 

 
16

 
16

 
1

 
1

Gross benefits paid
(774
)
 
(657
)
 
(233
)
 
(219
)
 
(20
)
 
(15
)
Foreign currency exchange rate changes

 

 

 

 
20

 

Curtailments and settlements

 

 

 

 
(4
)
 

Other

 

 
9

 
27

 
61

 

Fair value of plan assets at end of year
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613

Funded Status as of the Respective Measurement Dates in Each Year and the Amounts Recognized in Balance Sheet
The following table discloses the funded status of our plans and the amounts recognized in our balance sheet as of December 31 (in millions):
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension
 Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Funded Status:
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets
$
24,941

 
$
22,663

 
$
460

 
$
174

 
$
801

 
$
613

Benefit obligation
(31,868
)
 
(24,386
)
 
(4,412
)
 
(3,836
)
 
(1,089
)
 
(841
)
Funded status recognized at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Funded Status Amounts Recognized in our Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
Other non-current assets
$

 
$

 
$

 
$

 
$
26

 
$
1

Other current liabilities
(14
)
 
(13
)
 
(108
)
 
(93
)
 
(3
)
 
(3
)
Pension and postretirement benefit obligations
(6,913
)
 
(1,710
)
 
(3,844
)
 
(3,569
)
 
(311
)
 
(226
)
Net liability at December 31
$
(6,927
)
 
$
(1,723
)
 
$
(3,952
)
 
$
(3,662
)
 
$
(288
)
 
$
(228
)
Amounts Recognized in AOCI:
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net prior service cost
$
(1,318
)
 
$
(1,492
)
 
$
(79
)
 
$
(82
)
 
$
(13
)
 
$
(14
)
Unrecognized net actuarial loss
(3,187
)
 
(2,439
)
 
(441
)
 
(307
)
 
(86
)
 
(52
)
Gross unrecognized cost at December 31
(4,505
)
 
(3,931
)
 
(520
)
 
(389
)
 
(99
)
 
(66
)
Deferred tax asset at December 31
1,694

 
1,479

 
196

 
146

 
26

 
16

Net unrecognized cost at December 31
$
(2,811
)
 
$
(2,452
)
 
$
(324
)
 
$
(243
)
 
$
(73
)
 
$
(50
)
Projected Benefit Obligation, Accumulated Benefit Obligation, and Fair Value of Plan Assets for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets
At December 31, 2012 and 2011, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with benefit obligations in excess of plan assets were as follows (in millions):
 
Projected Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
 
Accumulated Benefit Obligation
Exceeds the Fair Value of  Plan
Assets
2012
 
2011
 
2012
 
2011
U.S. Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
31,868

 
$
24,386

 
$
31,868

 
$
7,499

Accumulated benefit obligation
29,382

 
22,574

 
29,382

 
7,395

Fair value of plan assets
24,941

 
22,663

 
24,941

 
6,646

International Pension Benefits
 
 
 
 
 
 
 
Projected benefit obligation
$
1,028

 
$
814

 
$
678

 
$
499

Accumulated benefit obligation
917

 
714

 
606

 
448

Fair value of plan assets
723

 
594

 
388

 
296

Fair Values of U.S. Pension and Postretirement Benefit Plan Assets by Asset Category as Well as the Percentage That Each Category Comprises of Total Plan Assets and the Respective Target Allocations
The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2012 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2012
 
Target
Allocation
2012
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
103

 
$
139

 
$

 
$
242

 
0.9
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,548

 
2,162

 

 
4,710

 
 
 
 
U.S. Small Cap
450

 
31

 

 
481

 
 
 
 
Emerging Markets
1,160

 
123

 

 
1,283

 
 
 
 
Global Equity
2,242

 

 

 
2,242

 
 
 
 
International Equity
442

 
694

 

 
1,136

 
 
 
 
Total Equity Securities
6,842

 
3,010

 

 
9,852

 
38.8

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
4,008

 
443

 

 
4,451

 
 
 
 
Corporate Bonds
9

 
3,113

 
138

 
3,260

 
 
 
 
Global Bonds

 
457

 

 
457

 
 
 
 
Municipal Bonds

 
83

 

 
83

 
 
 
 
Total Fixed Income Securities
4,017

 
4,096

 
138

 
8,251

 
32.5

 
25-35
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,829

 
2,829

 
11.1

 
5-15
Private Equity

 

 
1,416

 
1,416

 
5.6

 
1-10
Real Estate
177

 
23

 
1,039

 
1,239

 
4.9

 
1-10
Structured Products(1)

 
210

 

 
210

 
0.8

 
0-5
Other(2)

 

 
1,362

 
1,362

 
5.4

 
1-10
Total U.S. Plan Assets
$
11,139

 
$
7,478

 
$
6,784

 
$
25,401

 
100.0
%
 
 

(1) Represents mortgage and asset-backed securities.
(2) Represents global balanced-risk commingled funds, consisting primarily of equity, bonds, and some currencies and commodities.

The fair values of U.S. pension and postretirement benefit plan assets by asset category as of December 31, 2011 are presented below (in millions), as well as the percentage that each category comprises of our total plan assets and the respective target allocations.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
Percentage of
Plan Assets -
2011
 
Target
Allocation
2011
Asset Category:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
74

 
$
1

 
$

 
$
75

 
0.3
%
 
0-5
Equity Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Large Cap
2,264

 
2,460

 

 
4,724

 
 
 
 
U.S. Small Cap
706

 
27

 

 
733

 
 
 
 
Emerging Markets
533

 
264

 

 
797

 
 
 
 
Global Equity
1,115

 
12

 

 
1,127

 
 
 
 
International Equity
810

 
1,091

 

 
1,901

 
 
 
 
Total Equity Securities
5,428

 
3,854

 

 
9,282

 
40.7

 
35-55
Fixed Income Securities:
 
 
 
 
 
 
 
 
 
 
 
U.S. Government Securities
3,374

 
1,131

 

 
4,505

 
 
 
 
Corporate Bonds
9

 
3,462

 
80

 
3,551

 
 
 
 
Global Bonds
38

 
69

 

 
107

 
 
 
 
Municipal Bonds

 
121

 

 
121

 
 
 
 
Total Fixed Income Securities
3,421

 
4,783

 
80

 
8,284

 
36.3

 
20-40
Other Investments:
 
 
 
 
 
 
 
 
 
 
 
Hedge Funds

 

 
2,132

 
2,132

 
9.3

 
5-15
Private Equity

 

 
1,354

 
1,354

 
5.9

 
1-10
Real Estate
151

 

 
948

 
1,099

 
4.8

 
1-10
Other(1)

 

 
611

 
611

 
2.7

 
1-10
Total U.S. Plan Assets
$
9,074

 
$
8,638

 
$
5,125

 
$
22,837

 
100.0
%
 
 
Fair Value Measurement of Plan Assets Using Significant Unobservable Inputs (Level 3)
The following tables presents the changes in the Level 3 instruments measured on a recurring basis for the years ended December 31, 2012 and 2011 (in millions):
 
 
Corporate
Bonds
 
Hedge
Funds
 
Real
Estate
 
Private
Equity
 
Other
 
Total
Balance on January 1, 2011
$
193

 
$
1,765

 
$
789

 
$
1,309

 
$
258

 
$
4,314

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
(14
)
 
69

 
144

 
145

 
53

 
397

Assets Sold During the Year
3

 
22

 
5

 

 

 
30

Purchases
57

 
457

 
150

 
164

 
300

 
1,128

Sales
(159
)
 
(181
)
 
(140
)
 
(264
)
 

 
(744
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2011
$
80

 
$
2,132

 
$
948

 
$
1,354

 
$
611

 
$
5,125

Actual Return on Assets:
 
 
 
 
 
 
 
 
 
 
 
Assets Held at End of Year
1

 
59

 
85

 
163

 
151

 
459

Assets Sold During the Year
(3
)
 
5

 
4

 

 

 
6

Purchases
71

 
1,300

 
144

 
184

 
600

 
2,299

Sales
(11
)
 
(667
)
 
(142
)
 
(285
)
 

 
(1,105
)
Settlements

 

 

 

 

 

Transfers Into (Out of) Level 3

 

 

 

 

 

Balance on December 31, 2012
$
138

 
$
2,829

 
$
1,039

 
$
1,416

 
$
1,362

 
$
6,784

Amounts in AOCI Expected to be Amortized and Recognized as a Component of Net Periodic Benefit Cost
The estimated amounts of prior service cost in AOCI expected to be amortized and recognized as a component of net periodic benefit cost in 2013 are as follows (in millions):
 
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Prior service cost / (benefit)
$
172

 
$
4

 
$
2

Expected Cash Flows for Pension and Postretirement Benefit Plans
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):
 
U.S.
Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International Pension
Benefits
Employer Contributions:
 
 
 
 
 
2013 (expected) to plan trusts
$

 
$

 
$
76

2013 (expected) to plan participants
14

 
111

 
3

Expected Benefit Payments:
 
 
 
 
 
2013
$
798

 
$
255

 
$
20

2014
887

 
237

 
22

2015
978

 
254

 
25

2016
1,076

 
271

 
27

2017
1,182

 
288

 
30

2018 - 2022
7,815

 
1,575

 
199

Net Periodic Benefit Cost
 
Weighted Average Actuarial Assumptions Used Disclosure
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
 
2012
 
2011
 
2010
Discount rate
5.64
%
 
5.98
%
 
6.58
%
 
5.47
%
 
5.77
%
 
6.43
%
 
4.63
%
 
5.36
%
 
5.84
%
Rate of compensation increase
4.50
%
 
4.50
%
 
4.50
%
 
N/A

 
N/A

 
N/A

 
3.58
%
 
3.57
%
 
3.62
%
Expected return on assets
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
8.75
%
 
7.20
%
 
7.31
%
 
7.25
%
Benefit Obligations
 
Weighted Average Actuarial Assumptions Used Disclosure
The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of our plans.
 
U.S. Pension Benefits
 
U.S. Postretirement
Medical Benefits
 
International
Pension Benefits
 
2012
 
2011
 
2012
 
2011
 
2012
 
2011
Discount rate
4.42
%
 
5.64
%
 
4.21
%
 
5.47
%
 
4.00
%
 
4.63
%
Rate of compensation increase
4.16
%
 
4.50
%
 
N/A

 
N/A

 
3.03
%
 
3.58
%