United Technologies 2012 Annual Report Download - page 86

84 UNITED TECHNOLOGIES CORPORATION
Postretirement Benefit Plans. We sponsor a number of
postretirement benefit plans that provide health and life benefits to
eligible retirees. Such benefits are provided primarily from domestic
plans, which comprise approximately 88% of the benefit obligation.
The postretirement plans are primarily unfunded. Assets in funded
plans are primarily invested in cash and cash equivalents.
(DOLLARS IN MILLIONS) 2012 2011
Change in Benefit Obligation:
Beginning balance $ 784 $ 832
Service cost 33
Interest cost 37 39
Actuarial loss (gain) 45 (7)
Total benefits paid (107) (104)
Business combinations 328 –
Other 16 21
Ending balance $ 1,106 $ 784
Change in Plan Assets:
Beginning balance $–$10
Actual return on plan assets –2
Employer contributions 85 76
Benefits paid from plan assets (107) (104)
Other 22 16
Ending balance $–$–
Funded Status:
Fair value of plan assets $–$–
Benefit obligations (1,106) (784)
Funded status of plan $ (1,106) $ (784)
Amounts Recognized in the Consolidated
Balance Sheet Consist of:
Current liability $ (91) $ (74)
Noncurrent liability (1,015) (710)
Net amount recognized $ (1,106) $ (784)
Amounts Recognized in Accumulated Other
Comprehensive Loss Consist of:
Net actuarial gain $ (65) $ (120)
Prior service (credit) cost (11) 2
Net amount recognized $ (76) $ (118)
As part of our acquisition of Goodrich on July 26, 2012, we
assumed approximately $328 million of postretirement projected
benefit obligations.
We modified the postretirement medical benefits provided
to legacy Goodrich salaried employees by eliminating any company
subsidy for retirements that occur after January 31, 2014. This
resulted in a $16 million reduction in the projected benefit obligation
as of July 26, 2012.
The components of net periodic benefit cost are as follows:
(DOLLARS IN MILLIONS) 2012 2011 2010
Other Postretirement Benefits:
Service cost $3 $3 $2
Interest cost 37 39 46
Expected return on plan assets –(1) (1)
Amortization of prior service credit (4) (2) (2)
Recognized actuarial net gain (6) (8) (1)
Net settlement and curtailment gain (2) (8) –
Net periodic other postretirement benefit cost $28 $23 $44
Other changes in plan assets and benefit obligations recog-
nized in other comprehensive loss in 2012 are as follows:
(DOLLARS IN MILLIONS)
Current year actuarial loss $49
Current year prior service credit (16)
Amortization of prior service credit 4
Amortization of actuarial net gain 6
Net settlements and curtailments (1)
Total recognized in other comprehensive loss $42
Net recognized in net periodic other postretirement benefit cost and
other comprehensive loss $70
The estimated amounts that will be amortized from accumu-
lated other comprehensive loss into net periodic benefit cost in
2013 include actuarial net gains of $4 million and prior service
credit of $11 million.
Major assumptions used in determining the benefit obliga-
tion and net cost for postretirement plans are presented in the fol-
lowing table as weighted-averages:
Benefit Obligation Net Cost
2012 2011 2012 2011 2010
Discount rate 3.6% 4.3% 4.2% 4.9% 5.5%
Expected return on plan assets –––5.0% 5.0%
Assumed health care cost trend rates are as follows:
2012 2011
Health care cost trend rate assumed for next year 8.0% 8.5%
Rate that the cost trend rate gradually declines to 5.0% 5.0%
Year that the rate reaches the rate it is assumed to remain at 2019 2019