Retirement Benefits

12 Months Ended

Sep. 30, 2011

Retirement Benefits [Abstract]

Retirement Benefits

12. Retirement Benefits

We sponsor funded and unfunded pension plans and other postretirement benefit plans for our employees. The pension plans cover most of our employees and provide for monthly pension payments to eligible employees after retirement. Pension benefits for salaried employees generally are based on years of credited service and average earnings. Pension benefits for hourly employees are primarily based on specified benefit amounts and years of service. Effective July 1, 2010 we closed participation in our U.S. and Canada pension plans to employees hired after June 30, 2010. Employees hired after June 30, 2010 are instead eligible to participate in employee savings plans. The Company contributions are based on age and years of service and range from 3% to 7% of eligible compensation. Effective October 1, 2010, we also closed participation in our UK pension plan to employees hired after September 30, 2010 and these employees are now eligible for a defined contribution plan. Benefits to be provided to plan participants hired before July 1, 2010 or October 1, 2010, respectively, are not affected by these changes. Our policy with respect to funding our pension obligations is to fund the minimum amount required by applicable laws and governmental regulations. We may, however, at our discretion, fund amounts in excess of the minimum amount required by laws and regulations, as we did in 2011 and 2010. Other postretirement benefits are primarily in the form of retirement medical plans that cover most of our United States employees and provide for the payment of certain medical costs of eligible employees and dependents after retirement.

In 2009, we changed our measurement date to September 30 as required by U.S. GAAP. We recorded a reduction in retained earnings of $12.2 million ($7.8 million net of tax) in the fourth quarter of 2009 related to this change.

The components of net periodic benefit cost are (in millions):

										Other Postretirement
	Pension Benefits									Benefits
	2011			2010			2009			2011			2010			2009
Service cost	$	70.1		$	68.7		$	56.0		$	3.5		$	3.8		$	3.6
Interest cost		163.9			159.7			154.7			10.2			12.5			13.3
Expected return on plan assets		(204.5	)		(192.1	)		(191.5	)		—			—			—
Amortization:
Prior service credit		(2.2	)		(3.8	)		(3.7	)		(10.6	)		(10.6	)		(10.6	)
Net transition obligation		0.4			0.4			0.3			—			—			—
Net actuarial loss		63.7			42.1			16.9			6.4			8.4			9.5
Net periodic benefit cost	$	91.4		$	75.0		$	32.7		$	9.5		$	14.1		$	15.8

Benefit obligation, plan assets, funded status, and net liability information is summarized as follows (in millions):

							Other Postretirement
	Pension Benefits						Benefits
	2011			2010			2011			2010
Benefit obligation at beginning of year	$	3,179.7		$	2,806.9		$	209.3		$	218.8
Service cost		70.1			68.7			3.5			3.8
Interest cost		163.9			159.7			10.2			12.5
Actuarial losses (gains)		220.5			233.0			(46.0	)		(13.4	)
Plan amendments		—			30.4			—			—
Curtailment loss		—			0.5			—			—
Plan participant contributions		5.7			4.8			11.0			10.4
Benefits paid		(182.4	)		(140.5	)		(30.2	)		(23.4	)
Currency translation and other		25.1			16.2			(0.1	)		0.6
Benefit obligation at end of year		3,482.6			3,179.7			157.7			209.3
Plan assets at beginning of year		2,486.6			2,207.8			—			—
Actual return on plan assets		50.3			213.8			—			—
Company contributions		184.7			181.2			19.2			13.0
Plan participant contributions		5.7			4.8			11.0			10.4
Benefits paid		(182.4	)		(140.5	)		(30.2	)		(23.4	)
Currency translation and other		28.0			19.5			—			—
Plan assets at end of year		2,572.9			2,486.6			—			—
Funded status of plans	$	(909.7	)	$	(693.1	)	$	(157.7	)	$	(209.3	)
Net amount on balance sheet consists of:
Prepaid pension	$	4.3		$	28.3		$	—		$	—
Compensation and benefits		(9.4	)		(8.8	)		(16.5	)		(17.9	)
Retirement benefits		(904.6	)		(712.6	)		(141.2	)		(191.4	)
Net amount on balance sheet	$	(909.7	)	$	(693.1	)	$	(157.7	)	$	(209.3	)

Amounts included in accumulated other comprehensive loss, net of tax, at September 30, 2011 and 2010 which have not yet been recognized in net periodic benefit cost are as follows (in millions):

							Other Postretirement
	Pension						Benefits
	2011			2010			2011			2010
Prior service credit	$	(2.1	)	$	(3.3	)	$	(28.4	)	$	(35.0	)
Net actuarial loss		1,038.0			834.4			26.2			58.6
Net transition (benefit) obligation		(0.1	)		0.2			—			—
Total	$	1,035.8		$	831.3		$	(2.2	)	$	23.6

During 2011, we recognized prior service credits of $12.9 million ($8.2 million net of tax), net actuarial losses of $70.1 million ($44.8 million net of tax) and a net transition obligation of $0.4 million ($0.3 million net of tax) in pension and other postretirement net periodic benefit cost, which were included in accumulated other comprehensive loss at September 30, 2010. In 2012 we expect to recognize prior service credits of $13.2 million ($8.4 million net of tax), net actuarial losses of $97.1 million ($62.5 million net of tax) and a net transition obligation of $0.2 million ($0.2 million net of tax) in pension and other postretirement net periodic benefit cost, which are included in accumulated other comprehensive loss at September 30, 2011.

In both 2011 and 2010, we made discretionary pre-tax contributions of $150.0 million to our U.S. qualified pension plan trust. In October 2011, we made another discretionary pre-tax contribution of $300.0 million to our U.S. qualified pension plan trust.

The accumulated benefit obligation for our pension plans was $3,264.9 million and $2,968.8 million at September 30, 2011 and 2010, respectively.

Net Periodic Benefit Cost Assumptions

Significant assumptions used in determining net periodic benefit cost for the period ended September 30 are (in weighted averages):

										Other Postretirement
	Pension Benefits									Benefits
	September 30,									September 30,
	2011			2010			2009			2011			2010			2009
U.S. Plans
Discount rate		5.60	%		6.20	%		6.75	%		5.10	%		6.00	%		6.50	%
Expected return on plan assets		8.00	%		8.00	%		8.00	%		—			—			—
Compensation increase rate		4.00	%		4.30	%		4.20	%		—			—			—
Non-U.S. Plans
Discount rate		4.14	%		4.67	%		5.49	%		4.75	%		5.00	%		6.00	%
Expected return on plan assets		6.07	%		6.18	%		6.30	%		—			—			—
Compensation increase rate		3.09	%		2.88	%		3.01	%		—			—			—

Net Benefit Obligation Assumptions

Significant assumptions used in determining the benefit obligations are (in weighted averages):

							Other Postretirement
	Pension Benefits						Benefits
	September 30,						September 30,
	2011			2010			2011			2010
U.S. Plans
Discount rate		5.20	%		5.60	%		4.90	%		5.10	%
Compensation increase rate		4.00	%		4.00	%		—			—
Healthcare cost trend rate(1)		—			—			8.50	%		9.00	%
Non-U.S. Plans
Discount rate		4.15	%		4.14	%		4.10	%		4.75	%
Compensation increase rate		3.03	%		3.09	%		—			—
Healthcare cost trend rate(2)		—			—			7.12	%		7.56	%

(1)

The healthcare cost trend rate reflects the estimated increase in gross medical claims costs. As a result of the plan amendment adopted effective October 1, 2002, our effective per person retiree medical cost increase is zero percent beginning in 2005 for the majority of our postretirement benefit plans. For our other plans, we assume the gross healthcare cost trend rate will decrease to 5.50% in 2017.

(2)

Decreasing to 4.50% in 2017.

In determining the expected long-term rate of return on assets assumption, we consider actual returns on plan assets over the long term, adjusted for forward-looking considerations, such as inflation, interest rates, equity performance and the active management of the plan’s invested assets. We also considered our current and expected mix of plan assets in setting this assumption. This resulted in the selection of the weighted average long-term rate of return on assets assumption. Our global weighted-average asset allocations at September 30, by asset category, are:

	Allocation		Target			September 30,
Asset Category	Range		Allocation			2011			2010
Equity Securities		30% – 65%		55	%		54	%		56	%
Debt Securities		35% – 50%		41	%		41	%		40	%
Other		0% – 25%		4	%		5	%		4	%

The investment objective for pension funds related to our defined benefit plans is to meet the plan’s benefit obligations, while maximizing the long-term growth of assets without undue risk. We strive to achieve this objective by investing plan assets within target allocation ranges and diversification within asset categories. Target allocation ranges are guidelines that are adjusted periodically based on ongoing monitoring by plan fiduciaries. Investment risk is controlled by rebalancing to target allocations on a periodic basis and ongoing monitoring of investment manager performance relative to the investment guidelines established for each manager.

As of September 30, 2011 and 2010, our pension plans do not own our common stock.

In certain countries where we operate, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations. In these instances, we typically make benefit payments directly from cash as they become due, rather than by creating a separate pension fund.

The valuation methodologies used for our pension plans’ investments measured at fair value are described as follows. There have been no changes in the methodologies used at September 30, 2011 and 2010.

Common stock — Valued at the closing price reported on the active market on which the individual securities are traded.

Corporate debt — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Government securities — Valued at the most recent closing price reported on the active market on which the individual securities are traded.

Common collective trusts and registered investment companies — Valued at the net asset value (NAV) as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding.

Private equity investments — Valued at the estimated fair value, as determined by the respective investment company, based on the net asset value of the investment units held at year end which is subject to judgment.

Insurance contracts — Valued at the aggregate amount of accumulated contribution and investment income less amounts used to make benefit payments and administrative expenses which approximates fair value.

Other — Consists of other fixed income investments and real estate. Other fixed income investments are valued at the most recent closing price reported on the active market on which the individual securities are traded.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Refer to Note 9 for further information regarding levels in the fair value hierarchy. The following table presents our pension plans’ investments measured at fair value as of September 30, 2011:

	Level 1		Level 2		Level 3		Total
Cash	$	23.8	$	—	$	—	$	23.8
Common stock		535.6		—		—		535.6
Corporate debt		—		399.7		—		399.7
Government securities		248.2		—		—		248.2
Common collective trusts		—		887.1		—		887.1
Registered investment companies		—		335.1		—		335.1
Private equity investments		—		—		85.0		85.0
Insurance contracts		—		—		27.8		27.8
Other		—		22.6		8.0		30.6
Total plan investments	$	807.6	$	1,644.5	$	120.8	$	2,572.9

The following table presents our pension plans’ investments measured at fair value as of September 30, 2010:

	Level 1		Level 2		Level 3		Total
Cash	$	71.6	$	—	$	—	$	71.6
Common stock		573.0		—		—		573.0
Corporate debt		—		363.1		—		363.1
Government securities		222.1		—		—		222.1
Common collective trusts		—		803.5		—		803.5
Registered investment companies		—		326.9		—		326.9
Private equity investments		—		—		62.2		62.2
Insurance contracts		—		—		29.4		29.4
Other		—		23.5		11.3		34.8
Total plan investments	$	866.7	$	1,517.0	$	102.9	$	2,486.6

The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2011.

								Purchases,
	Balance				Unrealized			sales,			Balance
	October 1,		Realized		gains			issuances, and			September 30,
	2010		gains		(losses)			settlements, net			2011
Private equity investments	$	62.2	$	3.2	$	13.3		$	6.3		$	85.0
Insurance contracts		29.4		—		(4.7	)		3.1			27.8
Other		11.3		—		0.2			(3.5	)		8.0
	$	102.9	$	3.2	$	8.8		$	5.9		$	120.8

The table below sets forth a summary of changes in fair market value of our pension plans’ Level 3 assets for the year ended September 30, 2010.

							Purchases,
	Balance						sales,			Balance
	October 1,		Realized		Unrealized		issuances, and			September 30,
	2009		gains		gains		settlements, net			2010
Private equity investments	$	43.1	$	1.2	$	6.8	$	11.1		$	62.2
Insurance contracts		27.4		—		0.4		1.6			29.4
Other		12.3		—		0.1		(1.1	)		11.3
	$	82.8	$	1.2	$	7.3	$	11.6		$	102.9

Estimated Future Payments

We expect to contribute approximately $339 million related to our worldwide pension plans and $17 million to our postretirement benefit plans in 2012.

The following benefit payments, which include employees’ expected future service, as applicable, are expected to be paid (in millions):

			Other
	Pension Benefits		Postretirement Benefits
2012	$	200.7	$	16.9
2013		197.7		15.9
2014		201.5		15.3
2015		206.5		14.5
2016		210.3		13.3
2017 – 2021		1,190.0		54.8

Other Postretirement Benefits

A one-percentage point change in assumed healthcare cost trend rates would have the following effect (in millions):

	One-Percentage				One-Percentage
	Point Increase				Point Decrease
	2011		2010		2011			2010
Increase (decrease) to total of service and interest cost components	$	0.2	$	0.2	$	(0.1	)	$	(0.2	)
Increase (decrease) to postretirement benefit obligation		2.7		2.3		(2.4	)		(1.9	)

Pension Benefits

Information regarding our pension plans with accumulated benefit obligations in excess of the fair value of plan assets (underfunded plans) at September 30, 2011 and 2010 are as follows (in millions):

	2011		2010
Projected benefit obligation	$	3,064.4	$	2,912.9
Accumulated benefit obligation		2,876.2		2,711.4
Fair value of plan assets		2,172.7		2,195.7

Defined Contribution Savings Plans

We also sponsor certain defined contribution savings plans for eligible employees. Expense related to these plans was $31.2 million in 2011, $23.3 million in 2010 and $30.5 million in 2009.