United Technologies 2012 Annual Report Download - page 82

80 UNITED TECHNOLOGIES CORPORATION
Pension Plans. We sponsor both funded and unfunded
domestic and foreign defined benefit pension plans that cover the
majority of our employees. Our plans use a December 31
measurement date consistent with our fiscal year.
(DOLLARS IN MILLIONS) 2012 2011
Change in Benefit Obligation:
Beginning balance $ 27,167 $ 24,445
Service cost 500 444
Interest cost 1,331 1,298
Actuarial loss 2,855 2,185
Total benefits paid (1,357) (1,233)
Net settlement and curtailment (gain) loss (90) 1
Plan amendments (195) 21
Business combinations 5,235 –
Other 262 6
Ending balance $ 35,708 $ 27,167
Change in Plan Assets:
Beginning balance $ 23,542 $ 22,384
Actual return on plan assets 3,306 1,320
Employer contributions 516 1,060
Benefits paid from plan assets (1,357) (1,233)
Business combinations 3,800 –
Other 121 11
Ending balance $ 29,928 $ 23,542
Funded Status:
Fair value of plan assets $ 29,928 $ 23,542
Benefit obligations (35,708) (27,167)
Funded status of plan $ (5,780) $ (3,625)
Amounts Recognized in the Consolidated
Balance Sheet Consist of:
Noncurrent assets $ 643 $ 552
Current liability (105) (64)
Noncurrent liability (6,318) (4,113)
Net amount recognized $ (5,780) $ (3,625)
Amounts Recognized in Accumulated Other
Comprehensive Loss Consist of:
Net actuarial loss $ 10,215 $ 9,436
Prior service credit (322) (152)
Transition obligation –6
Net amount recognized $ 9,893 $ 9,290
The amounts included in “Other” in the preceding table
reflect the impact of foreign exchange translation, primarily for plans
in the U.K. and Canada, partially offset by the impact of settle-
ments.
As part of the Goodrich acquisition on July 26, 2012, we
assumed approximately $5.2 billion of pension projected benefit
obligations and $3.8 billion of plan assets.
Qualified domestic pension plan benefits comprise approx-
imately 75% of the projected benefit obligation. Benefits for union
employees are generally based on a stated amount for each year of
service. For non-union employees, benefits are generally based on
an employee’s years of service and compensation near retirement.
Effective January 1, 2015, this formula will change to the existing
cash balance formula that was adopted in 2003 for newly hired
non-union employees and for other non-union employees who
made a one-time voluntary election to have future benefit accruals
determined under this formula. This plan change resulted in a $623
million reduction in the projected benefit obligation as of
December 31, 2009 and an additional $204 million reduction in the
projected benefit obligation as of July 26, 2012 when applied to
legacy Goodrich salaried employees. Certain foreign plans, which
comprise approximately 23% of the projected benefit obligation, are
considered defined benefit plans for accounting purposes. Non-
qualified domestic pension plans provide supplementary retirement
benefits to certain employees and are not a material component of
the projected benefit obligation.
We made $201 million of cash contributions to our domes-
tic defined benefit pension plans and made $229 million of cash
contributions to our foreign defined benefit pension plans in 2012.
In 2011, we made $156 million of cash contributions and con-
tributed $450 million in UTC common stock to our domestic
defined benefit pension plans and made $395 million of cash con-
tributions to our foreign defined benefit pension plans.
Information for pension plans with accumulated benefit
obligations in excess of plan assets:
(DOLLARS IN MILLIONS) 2012 2011
Projected benefit obligation $ 32,278 $ 24,091
Accumulated benefit obligation 31,147 23,198
Fair value of plan assets 25,889 19,949
The accumulated benefit obligation for all defined benefit
pension plans was $34.4 billion and $26.0 billion at December 31,
2012 and 2011, respectively.
The components of the net periodic pension cost are as
follows:
(DOLLARS IN MILLIONS) 2012 2011 2010
Pension Benefits:
Service cost $ 500 $ 444 $ 396
Interest cost 1,331 1,298 1,287
Expected return on plan assets (1,944) (1,834) (1,735)
Amortization of prior service credits (24) (12) (18)
Amortization of unrecognized net
transition obligation 111
Recognized actuarial net loss 722 462 285
Net settlement and curtailment loss 77 16 2
Net periodic pension cost—employer $ 663 $ 375 $ 218