Benefit Plans (Tables)

12 Months Ended

Sep. 30, 2019

Net Pension and Other Postretirement Cost

Net pension cost for the years ended September 30 included the following components:

	Pension Plans
(Millions of dollars)	2019			2018			2017
Service cost	$	134		$	136		$	110
Interest cost	107			90			61
Expected return on plan assets	(180		)	(154		)	(112		)
Amortization of prior service credit	(13		)	(13		)	(14		)
Amortization of loss	78			78			92
Settlements	10			2			—
Net pension cost	$	135		$	137		$	138
Net pension cost included in the preceding table that is attributable to international plans	$	32		$	34		$	43

Change in Benefit Obligation, Change in Fair Value of Plan Assets

The change in benefit obligation, change in fair value of pension plan assets, funded status and amounts recognized in the Consolidated Balance Sheets for these plans were as follows:

	Pension Plans
(Millions of dollars)	2019			2018
Change in benefit obligation:
Beginning obligation	$	3,246		$	2,647
Service cost	134			136
Interest cost	107			90
Plan amendments	3			—
Benefits paid	(153		)	(162		)
Impact of (divestitures) acquisitions	(9		)	758
Actuarial loss (gain)	514			(82		)
Settlements	(63		)	(122		)
Other, includes translation	(49		)	(19		)
Benefit obligation at September 30	$	3,731		$	3,246
Change in fair value of plan assets:
Beginning fair value	$	2,642		$	1,932
Actual return on plan assets	279			70
Employer contribution	258			400
Benefits paid	(153		)	(162		)
Impact of (divestitures) acquisitions	(7		)	539
Settlements	(63		)	(122		)
Other, includes translation	(30		)	(15		)
Plan assets at September 30	$	2,926		$	2,642
Funded Status at September 30:
Unfunded benefit obligation	$	(804	)	$	(604	)
Amounts recognized in the Consolidated Balance Sheets at September 30:
Other	$	11		$	15
Salaries, wages and related items	(22		)	(15		)
Long-term Employee Benefit Obligations	(793		)	(604		)
Net amount recognized	$	(804	)	$	(604	)
Amounts recognized in Accumulated other comprehensive income (loss) before income taxes at September 30:
Prior service credit	$	44		$	60
Net actuarial loss	(1,289		)	(982		)
Net amount recognized	$	(1,246	)	$	(921	)

Pension Plans with Accumulated Benefit Obligations

Pension plans with accumulated benefit obligations in excess of plan assets and plans with projected benefit obligations in excess of plan assets consist of the following at September 30:

	Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets				Projected Benefit Obligation Exceeds the Fair Value of Plan Assets
(Millions of dollars)	2019		2018		2019		2018
Projected benefit obligation	$	3,623	$	2,618	$	3,698	$	3,121
Accumulated benefit obligation	$	3,476	$	2,533
Fair value of plan assets	$	2,821	$	2,012	$	2,882	$	2,502

Weighted Average Assumptions Determining Pension Plan

The weighted average assumptions used in determining pension plan information were as follows:

	2019		2018		2017
Net Cost
Discount rate:
U.S. plans (a)	4.26	%	3.71	%	3.42	%
International plans	2.30		2.30		1.70
Expected return on plan assets:
U.S. plans	7.25		7.20		7.25
International plans	4.98		4.95		4.65
Rate of compensation increase:
U.S. plans	4.29		4.51		4.25
International plans	2.36		2.31		2.33
Benefit Obligation
Discount rate:
U.S. plans	3.21		4.26		3.72
International plans	1.39		2.30		2.25
Rate of compensation increase:
U.S. plans	4.29		4.29		4.51
International plans	2.35		2.36		2.30

 

(a)

The Company calculated the service and interest components utilizing an approach that discounts the individual expected cash flows using the applicable spot rates derived from the yield curve over the projected cash flow period.

Expected Benefit Payments

Expected benefit payments are as follows:

(Millions of dollars)	Pension Plans
2020	$	212
2021	171
2022	173
2023	185
2024	190
2025-2029	1,066

Fair Value Measurements of U.S. Plan Assets

The following table provides the fair value measurements of U.S. plan assets, as well as the measurement techniques and inputs utilized to measure fair value of these assets, at September 30, 2019 and 2018. The categorization of fund investments is based upon the categorization of these funds’ underlying assets.

(Millions of dollars)	Total U.S. Plan Asset Balances				Investments Measured at Net Asset Value (a)				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018
Fixed Income:
Mortgage and asset-backed securities	$	—	$	28	$	—	$	—	$	—	$	—	$	—	$	28	$	—	$	—
Corporate bonds	401		484		—		—		48		101		353		383		—		—
Government and agency-U.S.	108		257		—		—		85		199		23		57		—		—
Government and agency-Foreign	85		122		—		8		69		85		16		28		—		—
Other fixed income	37		—		—		—		—		—		37		—		—		—
Equity securities	922		536		782		360		140		176		—		—		—		—
Cash and cash equivalents	254		39		—		—		254		39		—		—		—		—
Other	261		356		124		356		138		—		—		—		—		—
Fair value of plan assets	$	2,068	$	1,821	$	906	$	724	$	733	$	600	$	429	$	497	$	—	$	—

 

(a) As per applicable disclosure requirements, certain investments that were measured at net asset value per share or its equivalent have not been categorized within the fair value hierarchy. Values of such assets are based on the corroborated net asset value provided by the fund administrator.

Fair Value Measurements of Foreign Plan Assets

The following table provides the fair value measurements of international plan assets, as well as the measurement techniques and inputs utilized to measure fair value of these assets, at September 30, 2019 and 2018.

(Millions of dollars)	Total International Plan Asset Balances				Investments Measured at Net Asset Value (a)				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3) (b)
	2019		2018		2019		2018		2019		2018		2019		2018		2019		2018
Fixed Income:
Corporate bonds	$	33	$	28	$	—	$	—	$	15	$	14	$	18	$	14	$	—	$	—
Government and agency-U.S.	3		6		—		—		—		3		3		3		—		—
Government and agency-Foreign	199		150		—		—		105		104		94		46		—		—
Other fixed income	100		96		—		—		63		63		37		33		—		—
Equity securities	319		314		14		15		305		299		—		—		—		—
Cash and cash equivalents	8		9		—		—		8		9		—		—		—		—
Real estate	30		30		—		—		—		—		30		30		—		—
Insurance contracts	113		114		—		—		—		—		—		—		113		114
Other	53		74		—		—		52		55		1		20		—		—
Fair value of plan assets	$	859	$	821	$	14	$	15	$	549	$	546	$	182	$	146	$	113	$	114

(a) As per applicable disclosure requirements, certain investments that were measured at net asset value per share or its equivalent have not been categorized within the fair value hierarchy. Values of such assets are based on the corroborated net asset value provided by the fund administrator.

(b)

Changes in the fair value of international pension assets measured using Level 3 inputs for the years ended September 30, 2019 and 2018 were immaterial.