Emerson 2014 Annual Report Download - page 50

2014 Emerson > 46
Details of the changes in value for Level 3 assets follow:
2013 2014
Level 3, beginning $250 250
Gains (Losses) on assets held 25 (18)
Gains (Losses) on assets sold (22) 21
Purchases, sales and settlements, net (3) 55
Level 3, ending $250 308
(11) Postretirement Plans
The Company sponsors unfunded postretirement benefit plans (primarily health care) for certain U.S. retirees and
their dependents. The components of net postretirement benefits expense for the years ended September 30 follow:
2012 2013 2014
Service cost $ 2 2 1
Interest cost 16 12 11
Net amortization (11) (13) (21)
Net postretirement expense $ 7 1 (9)
Details of the changes in actuarial present value of accumulated postretirement benefit obligations follow:
2013 2014
Benefit obligation, beginning $367 278
Service cost 2 1
Interest cost 12 11
Actuarial (gain) loss (83) (12)
Benefits paid (20) (17)
Plan amendments — (13)
Benefit obligation, ending (recognized in balance sheet) $278 248
As of September 30, 2014 there were $172 of deferred actuarial gains in accumulated other comprehensive
income, of which approximately $22 will be amortized into earnings in 2015. The assumed discount rates used in
measuring the benefit obligations as of September 30, 2014, 2013 and 2012, were 3.75 percent, 4.00 percent and
3.25 percent, respectively. The assumed health care cost trend rate for 2015 is 6.5 percent declining to 5.0 percent
in 2018, and for 2014 was 7.0 percent declining to 5.0 percent in 2018. A one percentage point increase or decrease
in the assumed health care cost trend rate for each year would have an inconsequential impact on postretirement
benefits expense and the benefit obligation. The Company estimates that future health care benefit payments will
be $22 per year for 2015 through 2019 and $94 in total over the five years 2020 through 2024.
(12) Contingent Liabilities and Commitments
Emerson is a party to a number of pending legal proceedings and claims, including those involving general and
product liability and other matters, several of which claim substantial amounts of damages. The Company accrues
for such liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and
such costs can be reasonably estimated. Accruals are based on developments to date; management’s estimates
of the outcomes of these matters; the Company’s experience in contesting, litigating and settling similar matters;
and any related insurance coverage. Although it is not possible to predict the ultimate outcome of these matters,
the Company historically has been largely successful in defending itself against claims and suits that have been
brought against it, and will continue to defend itself vigorously in all such matters. While the Company believes a
material adverse impact is unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a
future development could have a material adverse impact on the Company. Two subsidiaries of the Company have
unrelated judgments against them totaling $50 which, based on their merits, are expected to be overturned.
On October 22, 2012, Invensys Systems, Inc. filed a suit for patent infringement against the Company and its
wholly-owned indirect subsidiary, Micro Motion, Inc., in the Eastern District of Texas captioned Invensys