Retirement Benefits

We sponsor funded and unfunded pension plans and other postretirement benefit plans for our employees. The pension plans cover most of our employees and provide for monthly pension payments to eligible employees after retirement. Pension benefits for salaried employees generally are based on years of credited service and average earnings. Pension benefits for hourly employees are primarily based on specified benefit amounts and years of service. Effective July 1, 2010 we closed participation in our U.S. and Canada pension plans to employees hired after June 30, 2010. Employees hired after June 30, 2010 are instead eligible to participate in employee savings plans. The Company contributions are based on age and years of service and range from 3% to 7% of eligible compensation. Effective October 1, 2010, we also closed participation in our UK pension plan to employees hired after September 30, 2010 and these employees are now eligible for a defined contribution plan. Benefits to be provided to plan participants hired before July 1, 2010 or October 1, 2010, respectively, are not affected by these changes. Our policy with respect to funding our pension obligations is to fund the minimum amount required by applicable laws and governmental regulations. We were not required to make contributions to satisfy minimum funding requirements in our U.S. pension plans. However, we made voluntary contributions of $300.0 million and $150.0 million to our U.S. qualified pension plan in 2012 and 2011, respectively. Other postretirement benefits are primarily in the form of retirement medical plans that cover most of our employees in the U.S. and Canada and provide for the payment of certain medical costs of eligible employees and dependents after retirement.

The components of net periodic benefit cost are (in millions):



										Other Postretirement
	Pension Benefits									Benefits
	2013			2012			2011			2013			2012			2011
Service cost	$	92.1		$	71.8		$	70.1		$	2.3		$	2.2		$	3.5
Interest cost	160.2			167.6			163.9			6.3			7.2			10.2
Expected return on plan assets	(226.3		)	(228.1		)	(204.5		)	—			—			—
Amortization:
Prior service credit	(2.5		)	(2.3		)	(2.2		)	(10.7		)	(10.6		)	(10.6		)
Net transition obligation	—			—			0.4			—			—			—
Net actuarial loss	144.6			94.7			63.7			4.4			2.4			6.4
Settlements	—			1.0			—			—			—			—
Net periodic benefit cost	$	168.1		$	104.7		$	91.4		$	2.3		$	1.2		$	9.5

Benefit obligation, plan assets, funded status, and net liability information is summarized as follows (in millions):



	Pension Benefits						Other Postretirement Benefits
	2013			2012			2013			2012
Benefit obligation at beginning of year	$	4,150.2		$	3,482.6		$	172.5		$	157.7
Service cost	92.1			71.8			2.3			2.2
Interest cost	160.2			167.6			6.3			7.2
Actuarial (gains) losses	(401.0		)	597.0			(14.9		)	24.0
Plan amendments	—			—			—			(3.1		)
Plan participant contributions	5.5			5.4			9.4			10.4
Benefits paid	(198.0		)	(176.6		)	(24.7		)	(26.6		)
Currency translation and other	(4.2		)	2.4			(0.7		)	0.7
Benefit obligation at end of year	3,804.8			4,150.2			150.2			172.5
Plan assets at beginning of year	3,213.3			2,572.9			—			—
Actual return on plan assets	309.0			470.6			—			—
Company contributions	41.3			341.1			15.3			16.2
Plan participant contributions	5.5			5.4			9.4			10.4
Benefits paid	(198.0		)	(176.6		)	(24.7		)	(26.6		)
Currency translation and other	(4.1		)	(0.1		)	—			—
Plan assets at end of year	3,367.0			3,213.3			—			—
Funded status of plans	$	(437.8	)	$	(936.9	)	$	(150.2	)	$	(172.5	)



Net amount on balance sheet consists of:
Other assets	$	10.3		$	0.8		$	—		$	—
Compensation and benefits	(10.8		)	(10.2		)	(14.7		)	(15.8		)
Retirement benefits	(437.3		)	(927.5		)	(135.5		)	(156.7		)
Net amount on balance sheet	$	(437.8	)	$	(936.9	)	$	(150.2	)	$	(172.5	)

Amounts included in accumulated other comprehensive loss, net of tax, at September 30, 2013 and 2012 which have not yet been recognized in net periodic benefit cost are as follows (in millions):



	Pension						Other Postretirement Benefits
	2013			2012			2013			2012
Prior service cost (credit)	$	1.4		$	(0.3	)	$	(15.1	)	$	(21.8	)
Net actuarial loss	812.2			1,210.7			25.4			37.5
Net transition benefit	(0.1		)	(0.1		)	—			—
Total	$	813.5		$	1,210.3		$	10.3		$	15.7

During 2013, we recognized prior service credits of $13.2 million ($8.4 million net of tax) and net actuarial losses of $149.0 million ($95.7 million net of tax) in pension and other postretirement net periodic benefit cost, which were included in accumulated other comprehensive loss at September 30, 2012. In 2014 we expect to recognize prior service credits of $12.9 million ($8.2 million net of tax), and net actuarial losses of $102.8 million ($66.5 million net of tax) in pension and other postretirement net periodic benefit cost, which are included in accumulated other comprehensive loss at September 30, 2013.

The accumulated benefit obligation for our pension plans was $3,563.2 million and $3,865.3 million at September 30, 2013 and 2012, respectively.

Net Periodic Benefit Cost Assumptions

Significant assumptions used in determining net periodic benefit cost for the period ended September 30 are (in weighted averages):



	Pension Benefits September 30,						Other Postretirement Benefits September 30,
	2013		2012		2011		2013		2012		2011
U.S. Plans
Discount rate	4.15	%	5.20	%	5.60	%	3.85	%	4.90	%	5.10	%
Expected return on plan assets	8.00	%	8.00	%	8.00	%	—		—		—
Compensation increase rate	4.00	%	4.00	%	4.00	%	—		—		—
Non-U.S. Plans
Discount rate	3.37	%	4.15	%	4.14	%	3.80	%	4.10	%	4.75	%
Expected return on plan assets	5.42	%	5.93	%	6.07	%	—		—		—
Compensation increase rate	3.03	%	3.03	%	3.09	%	—		—		—

Net Benefit Obligation Assumptions

Significant assumptions used in determining the benefit obligations are (in weighted averages):



	Pension Benefits September 30,				Other Postretirement Benefits September 30,
	2013		2012		2013		2012
U.S. Plans
Discount rate	5.05	%	4.15	%	4.60	%	3.85	%
Compensation increase rate	3.75	%	4.00	%	—		—
Healthcare cost trend rate⁽¹⁾	—		—		7.50	%	8.00	%
Non-U.S. Plans
Discount rate	3.69	%	3.37	%	4.20	%	3.80	%
Compensation increase rate	3.11	%	3.03	%	—		—
Healthcare cost trend rate⁽²⁾	—		—		6.27	%	6.68	%

____________________

(1)

The healthcare cost trend rate reflects the estimated increase in gross medical claims costs. As a result of the plan amendment adopted effective October 1, 2002, our effective per person retiree medical cost increase is zero percent beginning in 2005 for the majority of our postretirement benefit plans. For our other plans, we assume the gross healthcare cost trend rate will decrease to 5.50% in 2017.


(2)	Decreasing to 4.50% in 2017.

In determining the expected long-term rate of return on assets assumption, we consider actual returns on plan assets over the long term, adjusted for forward-looking considerations, such as inflation, interest rates, equity performance and the active management of the plan’s invested assets. We also considered our current and expected mix of plan assets in setting this assumption. This resulted in the selection of the weighted average long-term rate of return on assets assumption. Our global weighted-average targeted and actual asset allocations at September 30, by asset category, are:



	Allocation			Target	September 30,
Asset Category	Range			Allocations	2013	2012
Equity Securities	30%	–	65%	52%	53%	52%
Debt Securities	35%	–	50%	40%	40%	41%
Other	0%	–	35%	8%	7%	7%

The investment objective for pension funds related to our defined benefit plans is to meet the plan’s benefit obligations, while maximizing the long-term growth of assets without undue risk. We strive to achieve this objective by investing plan assets within target allocation ranges and diversification within asset categories. Target allocation ranges are guidelines that are adjusted periodically based on ongoing monitoring by plan fiduciaries. Investment risk is controlled by rebalancing to target allocations on a periodic basis and ongoing monitoring of investment manager performance relative to the investment guidelines established for each manager.

As of September 30, 2013 and 2012, our pension plans do not own our common stock.

In certain countries where we operate, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations. In these instances, we typically make benefit payments directly from cash as they become due, rather than by creating a separate pension fund.

The valuation methodologies used for our pension plans’ investments measured at fair value are described as follows. There have been no changes in the methodologies used at September 30, 2013 and 2012.

Common stock — Valued at the closing price reported on the active market on which the individual securities are traded.

Mutual funds — Valued at the closing price reported on the active market on which the individual funds are traded.

Corporate debt — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Government securities — Valued at the most recent closing price reported on the active market on which the individual securities are traded.

Common collective trusts — Valued at the net asset value (NAV) as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding.

Private equity and alternative equity — Valued at the estimated fair value, as determined by the respective fund manager, based on the NAV of the investment units held at year end, which is subject to judgment.

Real estate funds- Consists of the real estate funds, which provide an indirect investment into a diversified and multi-sector portfolio of property assets. Publicly-traded real estate funds are valued at the most recent closing price reported on the SIX Swiss Exchange. The remainder is valued at the estimated fair value, as determined by the respective fund manager, based on the NAV of the investment units held at year end, which is subject to judgment.

Insurance contracts — Valued at the aggregate amount of accumulated contribution and investment income less amounts used to make benefit payments and administrative expenses which approximates fair value.

Other — Consists of other fixed income investments and common collective trusts with a mix of equity and fixed income underlying assets. Other fixed income investments are valued at the most recent closing price reported on the active market on which the individual securities are traded.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Refer to Note 9 for further information regarding levels in the fair value hierarchy. The following table presents our pension plans’ investments measured at fair value as of September 30, 2013:



	Level 1		Level 2		Level 3		Total
U.S. Plans
Cash and cash equivalents	$	3.7	$	—	$	—	$	3.7
Equity securities:
Common stock	711.8		—		—		711.8
Mutual funds	196.3		—		—		196.3
Common collective trusts	—		561.5		—		561.5
Fixed income securities:
Corporate debt	—		535.7		—		535.7
Government securities	240.8		116.2		—		357.0
Common collective trusts	—		128.6		—		128.6
Other types of investments:
Private equity	—		—		80.4		80.4
Alternative equity	—		—		42.1		42.1
Insurance contracts	—		—		0.8		0.8
Non-U.S. Plans
Cash and cash equivalents	19.0		—		—		19.0
Equity securities:
Common stock	41.6		—		—		41.6
Common collective trusts	—		286.4		—		286.4
Fixed income securities:
Corporate debt	—		39.9		—		39.9
Government securities	3.9		13.7		—		17.6
Common collective trusts	—		239.0		—		239.0
Other types of investments:
Real estate funds	—		44.6		8.3		52.9
Insurance contracts	—		—		45.5		45.5
Other	—		3.0		4.2		7.2
Total plan investments	$	1,217.1	$	1,968.6	$	181.3	$	3,367.0

The following table presents our pension plans’ investments measured at fair value as of September 30, 2012:



	Level 1		Level 2		Level 3		Total
U.S. Plans
Cash and cash equivalents	$	0.4	$	—	$	—	$	0.4
Equity securities:
Common stock	653.7		—		—		653.7
Mutual funds	160.0		—		—		160.0
Common collective trusts	—		530.5		—		530.5
Fixed income securities:
Corporate debt	—		525.9		—		525.9
Government securities	287.9		80.5		—		368.4
Common collective trusts	—		145.5		—		145.5
Other types of investments:
Private equity	—		—		83.2		83.2
Alternative equity	—		—		53.4		53.4
Insurance contracts	—		—		0.8		0.8
Non-U.S. Plans
Cash and cash equivalents	26.8		—		—		26.8
Equity securities:
Common stock	39.3		—		—		39.3
Common collective trusts	—		296.9		—		296.9
Fixed income securities:
Corporate debt	—		68.7		—		68.7
Government securities	0.8		—		—		0.8
Common collective trusts	—		167.1		—		167.1
Other types of investments:
Real estate funds	—		46.2		—		46.2
Insurance contracts	—		—		38.5		38.5
Other	—		2.8		4.4		7.2
Total plan investments	$	1,168.9	$	1,864.1	$	180.3	$	3,213.3

The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2013.



	Balance October 1,		Realized Gains			Unrealized Gains			Purchases, Sales, Issuances, and Settlements,			Balance September 30,
	2012		(Losses)			(Losses)			Net			2013
U.S. Plans
Private equity	$	83.2	$	6.6		$	(10.8	)	$	1.4		$	80.4
Alternative equity	53.4		(1.1		)	4.1			(14.3		)	42.1
Insurance contracts	0.8		—			—			—			0.8
Non-U.S. Plans
Real estate	—		—			0.4			7.9			8.3
Insurance contracts	38.5		—			1.0			6.0			45.5
Other	4.4		—			0.2			(0.4		)	4.2
	$	180.3	$	5.5		$	(5.1	)	$	0.6		$	181.3

The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2012.



	Balance October 1,		Realized Gains		Unrealized Gains			Purchases, Sales, Issuances, and Settlements,			Balance September 30,
	2011		(Losses)		(Losses)			Net			2012
U.S. Plans
Private equity	$	85.0	$	18.0	$	(9.3	)	$	(10.5	)	$	83.2
Alternative equity	49.0		4.4		(1.4		)	1.4			53.4
Insurance contracts	0.9		—		—			(0.1		)	0.8
Non-U.S. Plans
Real estate	3.9		—		—			(3.9		)	—
Insurance contracts	26.9		—		7.9			3.7			38.5
Other	4.1		—		0.1			0.2			4.4
	$	169.8	$	22.4	$	(2.7	)	$	(9.2	)	$	180.3

Estimated Future Payments

We expect to contribute $41.1 million related to our worldwide pension plans and $15.1 million to our postretirement benefit plans in 2014.

The following benefit payments, which include employees’ expected future service, as applicable, are expected to be paid (in millions):



	Pension Benefits		Other Postretirement Benefits
2014	$	220.1	$	15.1
2015	213.7		14.6
2016	216.2		13.8
2017	223.2		12.9
2018	231.7		12.2
2019 – 2023	1,291.9		53.1