RETIREMENT PENSION PLANS (Tables)

12 Months Ended

Sep. 30, 2017

Schedule of US Pension Benefit Obligation Expense and Net Expense Assumptions

The following are the significant assumptions used in the measurement of the projected benefit obligation (PBO) and net periodic pension expense:



	U.S. Plans
	2017			2016			2015
Discount rate	3.70%	—	3.75%	3.50%	—	3.55%	4.25%	—	4.35%
Assumed return on plan assets (beginning of the year)	7.75%			7.75%			8.00%

Schedule of Non-US Pension Benefit Obligation Expense and Net Expense Assumptions



	Non-U.S. Plans ⁽²⁾
	2017	2016	2015
Discount rate ⁽¹⁾	2.80%	2.50%	1.00%	—	3.80%
Assumed return on plan assets (beginning of the year) ⁽¹⁾	6.00%	6.00%	2.25%	—	7.25%
Rate of compensation increase ⁽³⁾	N/A	N/A	2.00%


⁽¹⁾	The discount rate for the company’s U.K. pension plan was 2.80 percent, 2.50 percent and 3.80 percent for 2017, 2016 and 2015, respectively. The assumed return on plan assets for this plan was 6.00 percent, 6.00 percent and 7.25 percent for 2017, 2016 and 2015, respectively.


⁽²⁾	In fiscal year 2015, our German and Canadian pension plans were settled. In 2017 and 2016, assumptions presented are for the U.K pension plan, which is the only significant non-U.S. plan remaining.


⁽³⁾	Rate of compensation increase for 2017 and 2016 is not applicable as the U.K. pension plan is frozen.

Rollforward of Pension Liability and Pension Plan Assets

The following table reconciles the change in the PBO, the change in plan assets and amounts included in the consolidated balance sheet for the years ended September 30, 2017 and 2016, respectively (in millions):



	2017									2016
	U.S.			Non- U.S.			Total			U.S.			Non- U.S.			Total
PBO — beginning of year	$	1,112		$	616		$	1,728		$	1,042		$	614		$	1,656
Service cost	—			—			—			—			1			1
Interest cost	38			15			53			45			20			65
Actuarial gain	(32		)	(21		)	(53		)	105			115			220
Prior service cost	1			—			1			—			—			—
Benefit payments	(83		)	(30		)	(113		)	(80		)	(35		)	(115		)
Foreign currency rate changes	—			19			19			—			(99		)	(99		)
PBO — end of year	$	1,036		$	599		$	1,635		$	1,112		$	616		$	1,728
Change in plan assets
Fair value of assets — beginning of year	$	834		$	734		$	1,568		$	830		$	717		$	1,547
Actual return on plan assets	65			1			66			79			169			248
Employer contributions	5			1			6			5			1			6
Benefit payments	(83		)	(30		)	(113		)	(80		)	(35		)	(115		)
Foreign currency rate changes	—			24			24			—			(118		)	(118		)
Fair value of assets — end of year	$	821		$	730		$	1,551		$	834		$	734		$	1,568
Funded status	$	(215	)	$	131		$	(84	)	$	(278	)	$	118		$	(160	)

Schedule of Balance Sheet Classification of Net Pension Liability

Amounts included in the consolidated balance sheet at September 30 are comprised of the following (in millions):



	2017									2016
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Non-current assets	$	—		$	135		$	135		$	—		$	123		$	123
Current liabilities	(5		)	—			(5		)	(6		)	—			(6		)
Retirement benefits-non-current	(210		)	(4		)	(214		)	(272		)	(5		)	(277		)
Net amount recognized	$	(215	)	$	131		$	(84	)	$	(278	)	$	118		$	(160	)

Schedule of Pension Costs Recognized in Other Comprehensive Loss

The following tables summarize the amounts included in Accumulated Other Comprehensive Loss net of tax related to pension liabilities as of September 30, 2017 and 2016 and changes recognized in Other Comprehensive Income (Loss) net of tax for the year ended September 30, 2017.



	Net Actuarial Loss
	U.S.			Non-U.S.			Total
Balance at September 30, 2016	$	454		$	190		$	644
Net prior service cost for the year	1			—			1
Net actuarial gain for the year	(36		)	11			(25		)
Amortization for the year	(22		)	(8		)	(30		)
Deferred tax impact	21			—			21
Balance at September 30, 2017	$	418		$	193		$	611

Balance at September 30, 2015	$	410		$	206		$	616
Net actuarial loss for the year	87			(11		)	76
Amortization for the year	(18		)	(5		)	(23		)
Deferred tax impact	(25		)	—			(25		)
Balance at September 30, 2016	$	454		$	190		$	644

Pension and Other Postretirement Benefits

The non-current portion of the pension liability is included in Retirement Benefits in the consolidated balance sheet as follows (in millions):



	September 30,
	2017		2016
Pension liability	$	214	$	277
Retiree medical liability — long term (see Note 21)	86		414
Other	14		12
Total retirement benefits	$	314	$	703

Schedule of Projected Benefit Obligation Accumulated Benefit Obligation and Plan Assets

Additional information is as follows (in millions):



	2017						2016
	ABO Exceeds Assets		Assets Exceed ABO		Total		ABO Exceeds Assets		Assets Exceed ABO		Total
PBO	$	1,041	$	594	$	1,635	$	1,116	$	612	$	1,728
ABO	1,041		594		1,635		1,116		612		1,728
Plan Assets	821		730		1,551		834		734		1,568

Schedule of Net Periodic Pension Benefit Costs

The components of net periodic pension expense are as follows (in millions):



	2017			2016			2015
Service cost	$	—		$	1		$	2
Interest cost	53			65			70
Assumed rate of return on plan assets	(96		)	(99		)	(111		)
Amortization of —
Actuarial losses	30			23			26
Settlement loss	—			—			59
Net periodic pension expense (income)	$	(13	)	$	(10	)	$	46

Pension Plan Investments Measured at Fair Value by Level Within Fair Value Hierarchy

The fair value of plan assets at September 30, 2017 by asset category is as follows (in millions):



U.S. Plans	2017
Asset Category	Level 1		Level 2		Level 3		Total
Equity investments
U.S. – Large cap	$	54	$	—	$	—	$	54
U.S. – Small cap	26		—		—		26
Private equity	—		—		19		19
International equity	37		—		—		37
Equity investments measured at net asset value ⁽¹⁾	—		—		—		195
Total equity investments	$	117	$	—	$	19	$	331
Fixed income investments
U.S. fixed income	$	5	$	213	$	—	$	218
Emerging fixed income	—		22		—		22
Partnerships fixed income	14		—		—		14
Fixed income investments measured at net asset value ⁽¹⁾	—		—		—		37
Total fixed income	$	19	$	235	$	—	$	291
Alternatives – Partnerships	—		—		77		77
Alternatives – Partnerships measured at net asset value ⁽¹⁾	—		—		—		88
Cash and cash equivalents	—		34		—		34
Total assets at fair value	$	136	$	269	$	96	$	821

Non-U.S. Plans	2017
Asset Category	Level 1		Level 2		Level 3		Total
Equity investments
International equity	$	168	$	—	$	—	$	168
Total equity investments	$	168	$	—	$	—	$	168
Fixed income investments
Other fixed income investments	$	5	$	149	$	—	$	154
Fixed income investments measured at net asset value ⁽¹⁾	—		—		—		226
Total fixed income	$	5	$	149	$	—	$	380
Commingled funds	—		5		—		5
Alternative investments measured at net asset value ⁽¹⁾	—		—		—		136
Real estate measured at net asset value ⁽¹⁾	—		—		—		40
Cash and cash equivalents	—		1		—		1
Total assets at fair value	$	173	$	155	$	—	$	730


⁽¹⁾	In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

The fair value of plan assets at September 30, 2016 by asset category is as follows (in millions):



U.S. Plans	2016
Asset Category	Level 1		Level 2		Level 3		Total
Equity investments
U.S. – Large cap	$	71	$	—	$	—	$	71
U.S. – Small cap	22		—		—		22
Private equity	—		—		11		11
International equity	41		—		—		41
Equity investments measured at net asset value ⁽¹⁾	—		—		—		152
Total equity investments	$	134	$	—	$	11	$	297
Fixed income investments
U.S. fixed income	$	10	$	265	$	—	$	275
Emerging fixed income	—		20		—		20
Partnerships fixed income	—		—		1		1
Fixed income investments measured at net asset value ⁽¹⁾	—		—		—		45
Total fixed income	$	10	$	285	$	1	$	341
Alternatives – Partnerships	—		—		77		77
Alternatives – Partnerships measured at net asset value ⁽¹⁾	—		—		—		84
Cash and cash equivalents	—		35		—		35
Total assets at fair value	$	144	$	320	$	89	$	834

Non-U.S. Plans	2016
Asset Category	Level 1		Level 2		Level 3		Total
Equity investments
International equity	$	61	$	—	$	—	$	61
Equity investments measured at net asset value ⁽¹⁾	—		—		—		82
Total equity investments	$	61	$	—	$	—	$	143
Fixed income investments
Other fixed income investments	$	—	$	222	$	—	$	222
Fixed income investments measured at net asset value ⁽¹⁾	—		—		—		198
Total fixed income	$	—	$	222	$	—	$	420
Commingled funds	—		6		—		6
Alternative investments measured at net asset value ⁽¹⁾	—		—		—		114
Real estate measured at net asset value⁽¹⁾	—		—		—		37
Cash and cash equivalents	—		14		—		14
Total assets at fair value	$	61	$	242	$	—	$	734


⁽¹⁾	In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

Changes in Level 3, Pension Plan Investments

The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2017 (in millions):



U.S. Plans	2017
	Fair Value at October 1, 2016		Return on Plan Assets: Attributable to Assets Held at September 30, 2017		Purchases		Settlements			Net Transfers Into (Out of) Level 3		Fair Value at September 30, 2017
Asset Category
Private equity	$	11	$	4	$	4	$	—				$	19
Partnerships –
Fixed income	1		—		—		(1		)			—
Alternatives –
Partnerships	77		4		1		(5		)			77
Total Level 3 fair value	$	89	$	8	$	5	$	(6	)	$	—	$	96

The following table summarizes the changes in Level 3 pension plan assets measured at fair value on a recurring basis for the year ended September 30, 2016 (in millions):



U.S. Plans	2016
	Fair Value at October 1, 2015		Return on Plan Assets: Attributable to Assets Held at September 30, 2016			Purchases		Settlements			Net Transfers Into (Out of) Level 3		Fair Value at September 30, 2016
Asset Category
Private equity	$	15	$	(4	)	$	—	$	—		$	—	$	11
Partnerships –
Fixed income	1		—			—		—			—		1
Alternatives –
Partnerships	84		(5		)	—		(2		)	—		77
Total Level 3 fair value	$	100	$	(9	)	$	—	$	(2	)	$	—	$	89

Pension Plan Estimated Future Contributions and Benefit Payments

Information about the expected cash flows for the U.S. and non-U.S. pension plans is as follows (in millions):



	U.S.		Non U.S.		Total
Expected employer contributions:
Fiscal 2018	$	5	$	1	$	6
Expected benefit payments:
Fiscal 2018	72		18		90
Fiscal 2019	73		18		91
Fiscal 2020	72		19		91
Fiscal 2021	71		19		90
Fiscal 2022	70		20		90
Fiscal 2023-2027	331		110		441