Retirement-Related Benefits:

3 Months Ended

Mar. 31, 2012

Retirement-Related Benefits:

Retirement-Related Benefits:

8. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits.  The following table provides the total retirement-related benefit plans’ impact on income before income taxes:

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended March 31:	2012		2011		Change
Retirement-related plans – cost
Defined benefit and contribution pension plans – cost	$	532	$	432	23.2	%
Nonpension postretirement plans – cost	84		86		(1.8	)
Total	$	616	$	517	19.0	%

The following table provides the components of the cost/(income) for the company’s pension plans:

Cost/(Income) of Pension Plans

(Dollars in millions)	U.S. Plans						Non-U.S. Plans
For the three months ended March 31:	2012			2011			2012			2011
Service cost	$	—		$	—		$	112		$	131
Interest cost	550			620			450			454
Expected return on plan assets	(1,011		)	(1,015		)	(580		)	(620		)
Amortization of prior service costs/(credits)	2			2			(39		)	(40		)
Recognized actuarial losses	336			211			259			245
Curtailments and settlements	—			—			1			0
Multi-employer plans/other costs	—			—			23			34
Total net periodic pension (income)/cost of defined benefit plans	(122		)	(182		)	227			204
Cost of defined contribution plans	264			265			163			146
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	$	142		$	82		$	390		$	349

In 2012, the company expects to contribute to its non-U.S. defined benefit plans approximately $800 million, which is the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first three months of 2012 were $159 million.

The following table provides the components of the cost for the company’s nonpension postretirement plans:

Cost of Nonpension Postretirement Plans

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the three months ended March 31:	2012		2011		2012			2011
Service cost	$	9	$	8	$	2		$	3
Interest cost	49		59		17			17
Expected return on plan assets	—		—		(3		)	(3		)
Amortization of prior service costs/(credits)	—		—		(1		)	(1		)
Recognized actuarial losses	6		—		4			3
Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings	$	64	$	67	$	20		$	19

The company received a $16.5 million subsidy in the first quarter of 2012 in connection with the Medicare Prescription Drug Improvement and Modernization Act of 2003. A portion of this amount is used by the company to reduce its obligation and expense related to the plan, and the remainder is contributed to the plan to reduce contributions required by the participants. For further information related to the Medicare Prescription Drug Act, see page 134 in the company’s 2011 Annual Report.