Pensions and Postretirement Benefits Other than Pensions

3 Months Ended

Mar. 31, 2012

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Pensions and Postretirement Benefits Other than Pensions

Pensions and Postretirement Benefits Other than Pensions

The Company sponsors several U.S. defined benefit and defined contribution pension plans covering substantially all of our U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution pension plans covering non-U.S. eligible employees. Postretirement benefits, other than pensions, provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.

Pension Plans

The Company has noncontributory defined benefit pension plans covering substantially all U.S. employees. Most of the plans for non-collectively bargained U.S. employees provide benefits on an average pay formula while most plans for collectively bargained U.S. employees provide benefits on a flat dollar benefit formula. In addition, the Company maintains non-U.S. pension plans for certain eligible non-U.S. employees. These plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key employees.

In connection with the Hussmann divestiture, the Company transferred its obligations for pension benefits for all current and former employees related to the divestiture.

The components of the Company’s net periodic pension benefit costs for the three months ended March 31 were as follows:

In millions	2012			2011
Service cost	$	25.3		$	24.1
Interest cost	41.3			47.6
Expected return on plan assets	(43.3		)	(55.9		)
Net amortization of:
Prior service costs	1.4			1.4
Plan net actuarial losses	14.9			13.7
Net periodic pension benefit cost	39.6			30.9
Net curtailment and settlement (gains) losses	0.1			5.8
Net periodic pension benefit cost after net curtailment and  settlement (gains)  losses	$	39.7		$	36.7
Amounts recorded in continuing operations	$	36.8		$	36.5
Amounts recorded in discontinued operations	2.9			0.2
Total	$	39.7		$	36.7

The Company made required and discretionary employer contributions of $8.2 million and $31.7 million to its defined benefit pension plans during the three months ended March 31, 2012 and 2011, respectively.

The curtailment and settlement losses in 2012 and 2011 are associated with lump sum distributions under supplemental benefit plans for officers and other key employees.

Postretirement Benefits Other Than Pensions

The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.

The Company approved healthcare benefit amendments on February 1, 2012 to its postretirement plans for post-65 retiree medical coverage. Effective January 1, 2013, the Company will discontinue offering company-sponsored retiree medical coverage for certain individuals 65 and older. The Company will transition such individuals to coverage through the individual Medicare market and will provide a tax-advantaged subsidy to those retirees currently eligible for subsidized company coverage that can be used toward reimbursing premiums for individual Medicare supplemental coverage purchased through the Company's third-party Medicare coordinator and other qualified medical expenses. As a result of these changes, the Company's projected benefit obligations were remeasured as of February 1, 2012, which included updating the discount rate assumption to 3.75% from the 4.00% assumed at December 31, 2011. The remeasurement resulted in a decrease of $40.5 million to the projected benefit obligation, an actuarial loss of $21.3 million and a credit of $61.8 million to prior service cost. Postretirement benefit cost for 2012 is projected to be $39.7 million as compared to $51.8 million projected at December 31, 2011.

The Company will continue to monitor healthcare reform legislation to review provisions which could impact its accounting for retiree medical benefits in future periods. The Company may consider future plan amendments, which may have accounting implications as further regulations are promulgated and interpretations of the legislation become available.

In connection with the Hussmann divestiture, the Company transferred its obligations for postretirement benefits other than pensions for all current and former employees related to the divestiture.

The components of net periodic postretirement benefit cost for the three months ended March 31 were as follows:

In millions	2012			2011
Service cost	$	2.0		$	2.1
Interest cost	8.1			10.4
Net amortization of:
Prior service gains	(2.0		)	(0.9		)
Net actuarial losses	2.5			0.7
Net periodic postretirement benefit cost	$	10.6		$	12.3
Amounts recorded in continuing operations	$	6.7		$	8.1
Amounts recorded in discontinued operations	3.9			4.2
Total	$	10.6		$	12.3