Retirement and Post-Retirement Benefit Plans

6 Months Ended

Apr. 30, 2012

Retirement and Post-Retirement Benefit Plans

Retirement and Post-Retirement Benefit Plans

Note 14: Retirement and Post-Retirement Benefit Plans

        HP's net pension and post-retirement benefit costs were as follows:

	Three months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	74		$	89		$	2		$	2
Interest cost		141			149			174			177			8			9
Expected return on plan assets		(198	)		(186	)		(206	)		(225	)		(9	)		(9	)
Amortization and deferrals:
Actuarial loss		11			8			59			60			(1	)		—
Prior service benefit		—			—			(6	)		(4	)		(22	)		(20	)
Net periodic benefit (gain) cost		(46	)		(29	)		95			97			(22	)		(18	)
Settlement loss		—			—			8			2			—			—
Special termination benefits		—			—			1			6			—			—
Net benefit (gain) cost	$	(46	)	$	(29	)	$	104		$	105		$	(22	)	$	(18	)

	Six months ended April 30
	U.S. Defined Benefit Plans						Non-U.S. Defined Benefit Plans						Post- Retirement Benefit Plans
	2012			2011			2012			2011			2012			2011
	In millions
Service cost	$	—		$	—		$	148		$	174		$	4		$	4
Interest cost		283			297			349			346			17			17
Expected return on plan assets		(396	)		(372	)		(413	)		(438	)		(18	)		(18	)
Amortization and deferrals:
Actuarial loss		21			17			119			122			(2	)		1
Prior service benefit		—			—			(12	)		(7	)		(44	)		(41	)
Net periodic benefit (gain) cost		(92	)		(58	)		191			197			(43	)		(37	)
Settlement (gain) loss		—			—			(20	)		2			—			—
Special termination benefits		—			—			2			8			—			—
Net benefit (gain) cost	$	(92	)	$	(58	)	$	173		$	207		$	(43	)	$	(37	)

        During the first quarter of fiscal 2012, HP completed the transfer of the substitutional portion of its Japan pension liability and obligation to the Japanese government. This transfer resulted in recognizing a net gain of $28 million, which is comprised of a net settlement loss of $150 million and a gain on government subsidy of $178 million. The government subsidy consisted of the elimination of $344 million of pension obligations and the transfer of $166 million of pension assets to the Japanese government.

• Employer Contributions and Funding Policy

        HP previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2011 that it expected to contribute approximately $597 million to its pension plans and approximately $31 million to cover benefit payments to U.S. non-qualified plan participants. HP expects to pay approximately $30 million to cover benefit claims for HP's post-retirement benefit plans. HP's funding policy is to contribute cash to its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities.

        During the six months ended April 30, 2012, HP made $345 million of contributions to its pension plans, paid $15 million to cover benefit payments to U.S. non-qualified plan participants, and paid $14 million to cover benefit claims under post-retirement benefit plans. During the remainder of fiscal 2012, HP anticipates making additional contributions of approximately $252 million to its pension plans and approximately $16 million to its U.S. non-qualified plan participants and expects to pay up to $16 million to cover benefit claims under post-retirement benefit plans. HP's pension and other post-retirement benefit costs and obligations are dependent on various assumptions. Differences between expected and actual returns on investments will be reflected as unrecognized gains or losses, and such gains or losses will be amortized and recorded in future periods. Poor financial performance of invested assets in any year could lead to increased contributions in certain countries and increased future pension plan expense. Asset gains or losses are determined at the measurement date and amortized over the remaining service life or life expectancy of plan participants. HP's next measurement date is October 31, 2012.