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PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)
 12 Months Ended
Oct. 29, 2017
PENSION AND OTHER POSTRETIREMENT BENEFITS  
Components of Pension and Postretirement Benefit Costs

The components of net periodic pension cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2015

 

Pensions

 

 

 

 

 

 

 

 

 

 

Service cost

    

$

274

 

$

254

 

$

282

 

Interest cost

 

 

361

 

 

391

 

 

474

 

Expected return on plan assets

 

 

(790)

 

 

(775)

 

 

(769)

 

Amortization of actuarial loss

 

 

247

 

 

211

 

 

223

 

Amortization of prior service cost

 

 

12

 

 

16

 

 

25

 

Other postemployment benefits

 

 

 

 

 

 2

 

 

 1

 

Settlements/curtailments

 

 

 2

 

 

11

 

 

11

 

Net cost

 

$

106

 

$

110

 

$

247

 

Weighted-average assumptions

 

 

 

 

 

 

 

 

 

 

Discount rates - service cost

 

 

3.5%

 

 
4.3%

 

 
4.0%

 

Discount rates - interest cost

 

 

3.0%

 

 
3.4%

 

 
4.0%

 

Rate of compensation increase

 

 

3.8%

 

 
3.8%

 

 
3.8%

 

Expected long-term rates of return

 

 

7.3%

 

 
7.3%

 

 
7.3%

 

 

The components of net periodic postretirement benefits cost and the assumptions related to the cost consisted of the following in millions of dollars and in percents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2015

 

Health care and life insurance

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

42

 

$

38

 

$

46

 

Interest cost

 

 

194

 

 

204

 

 

259

 

Expected return on plan assets

 

 

(17)

 

 

(35)

 

 

(55)

 

Amortization of actuarial loss

 

 

99

 

 

73

 

 

91

 

Amortization of prior service credit

 

 

(77)

 

 

(78)

 

 

(77)

 

Settlements/curtailments

 

 

 

 

 

 

 

 

 1

 

Net cost

 

$

241

 

$

202

 

$

265

 

Weighted-average assumptions

 

 

 

 

 

 

 

 

 

 

Discount rates - service cost

 

 

4.7%

 

 
5.0%

 

 
4.2%

 

Discount rates - interest cost

 

 

3.2%

 

 
3.5%

 

 
4.2%

 

Expected long-term rates of return

 

 

6.3%

 

 
6.6%

 

 
7.0%

 

 

Schedule of Benefit Plan Costs Recorded in Net Income and Other Changes in Plan Assets and Benefit Obligations Recorded in Other Comprehensive Income

The previous pension cost in net income and other changes in plan assets and benefit obligations in other comprehensive income in millions of dollars were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

2017

  

2016

  

2015

 

Pensions

 

 

 

 

 

 

 

 

 

 

Net cost

 

$

106

 

$

110

 

$

247

 

Retirement benefit adjustments included in other comprehensive (income) loss:

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

 

(702)

 

 

1,140

 

 

361

 

Prior service cost

 

 

 

 

 

 1

 

 

66

 

Amortization of actuarial loss

 

 

(247)

 

 

(211)

 

 

(223)

 

Amortization of prior service cost

 

 

(12)

 

 

(16)

 

 

(25)

 

Settlements/curtailments

 

 

(2)

 

 

(14)

 

 

(11)

 

Total (gain) loss recognized in other comprehensive (income) loss

 

 

(963)

 

 

900

 

 

168

 

Total recognized in comprehensive (income) loss

 

$

(857)

 

$

1,010

 

$

415

 

 

The previous postretirement benefits cost in net income and other changes in plan assets and benefit obligations in other comprehensive income in millions of dollars were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

2017

  

2016

  

2015

 

Health care and life insurance

 

 

 

 

 

 

 

 

 

 

Net cost

 

$

241

 

$

202

 

$

265

 

Retirement benefit adjustments included in other comprehensive (income) loss:

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

 

(309)

 

 

496

 

 

(141)

 

Prior service credit

 

 

 

 

 

(3)

 

 

(3)

 

Amortization of actuarial loss

 

 

(99)

 

 

(73)

 

 

(91)

 

Amortization of prior service credit

 

 

77

 

 

78

 

 

77

 

Settlements/curtailments

 

 

 

 

 

 

 

 

(2)

 

Total (gain) loss recognized in other comprehensive (income) loss

 

 

(331)

 

 

498

 

 

(160)

 

Total recognized in comprehensive (income) loss

 

$

(90)

 

$

700

 

$

105

 

 

Schedule of Benefit Plan Obligations, Funded Status and the Assumptions Related to Obligations

The benefit plan obligations, funded status, and the assumptions related to the obligations at October 29, 2017 and October 30, 2016, respectively, in millions of dollars follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

 

 

 

 

 

 

and

 

 

 

Pensions

 

Life Insurance

 

 

 

2017

 

2016

 

2017

 

2016

 

Change in benefit obligations

 

 

                 

 

 

                 

 

 

               

 

 

               

 

Beginning of year balance

 

$

(13,086)

 

$

(12,186)

 

$

(6,500)

 

$

(6,084)

 

Service cost

 

 

(274)

 

 

(254)

 

 

(42)

 

 

(38)

 

Interest cost

 

 

(361)

 

 

(391)

 

 

(194)

 

 

(204)

 

Actuarial gain (loss)

 

 

(35)

 

 

(1,001)

 

 

280

 

 

(478)

 

Amendments

 

 

 

 

 

(1)

 

 

 

 

 

 3

 

Benefits paid

 

 

704

 

 

702

 

 

312

 

 

321

 

Health care subsidies

 

 

 

 

 

 

 

 

(9)

 

 

(16)

 

Other postemployment benefits

 

 

 

 

 

(2)

 

 

 

 

 

 

 

Settlements/curtailments

 

 

 2

 

 

 6

 

 

 

 

 

 

 

Foreign exchange and other

 

 

(116)

 

 

41

 

 

(9)

 

 

(4)

 

End of year balance

 

 

(13,166)

 

 

(13,086)

 

 

(6,162)

 

 

(6,500)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in plan assets (fair value)

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of year balance

 

 

11,137

 

 

11,164

 

 

435

 

 

689

 

Actual return on plan assets

 

 

1,517

 

 

628

 

 

46

 

 

17

 

Employer contribution

 

 

62

 

 

80

 

 

366

 

 

47

 

Benefits paid

 

 

(704)

 

 

(702)

 

 

(312)

 

 

(321)

 

Settlements

 

 

(2)

 

 

(3)

 

 

 

 

 

 

 

Foreign exchange and other

 

 

83

 

 

(30)

 

 

 4

 

 

 3

 

End of year balance

 

 

12,093

 

 

11,137

 

 

539

 

 

435

 

Funded status

 

$

(1,073)

 

$

(1,949)

 

$

(5,623)

 

$

(6,065)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rates

 

 

3.6%

 

 
3.6%

 

 

3.7%

 

 
3.8%

 

Rate of compensation increase

 

 

3.8%

 

 
3.8%

 

 

 

 

 

 

 

 

Schedule of Amounts Recognized in Balance Sheet and Accumulated Other Comprehensive Income - Pretax

The amounts recognized at October 29, 2017 and October 30, 2016, respectively, in millions of dollars consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

 

 

 

 

 

 

and

 

 

 

Pensions

 

Life Insurance

 

 

 

2017

 

2016

 

2017

 

2016

 

Amounts recognized in balance sheet

 

 

               

 

 

              

 

 

               

 

 

              

 

Noncurrent asset

 

$

538

 

$

94

 

 

 

 

 

 

 

Current liability

 

 

(40)

 

 

(33)

 

$

(63)

 

$

(32)

 

Noncurrent liability

 

 

(1,571)

 

 

(2,010)

 

 

(5,560)

 

 

(6,033)

 

Total

 

$

(1,073)

 

$

(1,949)

 

$

(5,623)

 

$

(6,065)

 

Amounts recognized in accumulated other comprehensive income – pretax

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

$

4,358

 

$

5,309

 

$

1,457

 

$

1,865

 

Prior service cost (credit)

 

 

55

 

 

67

 

 

(182)

 

 

(259)

 

Total

 

$

4,413

 

$

5,376

 

$

1,275

 

$

1,606

 

 

Schedule of Accumulated Other Comprehensive Income Expected to be Amortized as Net Expense (Income) During Next Fiscal Year

The amounts in accumulated other comprehensive income that are expected to be amortized as net expense (income) and reported outside of income from operations during fiscal 2018 in millions of dollars follow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

 

 

 

and

 

 

    

    Pensions    

    

Life Insurance 

 

Net actuarial loss

 

$

225

 

$

67

 

Prior service cost (credit)

 

 

12

 

 

(77)

 

Total

 

$

237

 

$

(10)

 

 

Schedule of Future Benefits Expected to be Paid from the Benefit Plans

The benefits expected to be paid from the benefit plans, which reflect expected future years of service, are as follows in millions of dollars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Health Care

 

 

 

    

 

 

and

 

 

    

    Pensions    

    

Life Insurance*

 

2018

 

$

721

 

$

334

 

2019

 

 

726

 

 

337

 

2020

 

 

713

 

 

342

 

2021

 

 

701

 

 

346

 

2022

 

 

693

 

 

352

 

2023 to 2027

 

 

3,458

 

 

1,758

 

*       Net of prescription drug group benefit subsidy under Medicare Part D.

 

Fair Values of Pension Plan and Health Care Assets

The fair values of the pension plan assets at October 29, 2017 follow in millions of dollars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Level 1

 

Level 2

 

Cash and short-term investments

 

$

618

 

$

349

 

$

269

 

Equity:

 

 

 

 

 

 

 

 

 

 

U.S. equity securities

 

 

1,871

 

 

1,850

 

 

21

 

International equity securities

 

 

1,551

 

 

1,541

 

 

10

 

Fixed Income:

 

 

 

 

 

 

 

 

 

 

Government and agency securities

 

 

483

 

 

241

 

 

242

 

Corporate debt securities

 

 

1,285

 

 

   

 

 

1,285

 

Mortgage-backed securities

 

 

42

 

 

   

 

 

42

 

Real estate

 

 

103

 

 

101

 

 

 2

 

Derivative contracts - assets*

 

 

159

 

 

28

 

 

131

 

Derivative contracts - liabilities**

 

 

(76)

 

 

(2)

 

 

(74)

 

Receivables, payables, and other

 

 

 1

 

 

 1

 

 

   

 

Securities lending collateral

 

 

420

 

 

   

 

 

420

 

Securities lending liability

 

 

(420)

 

 

   

 

 

(420)

 

Securities sold short

 

 

(379)

 

 

(375)

 

 

(4)

 

Total of Level 1 and Level 2 assets

 

 

5,658

 

$

3,734

 

$

1,924

 

Investments at net asset value:

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

 

203

 

 

 

 

 

 

 

U.S. equity funds

 

 

1,704

 

 

 

 

 

 

 

International equity funds

 

 

921

 

 

 

 

 

 

 

Corporate debt funds

 

 

28

 

 

 

 

 

 

 

Fixed income funds

 

 

772

 

 

 

 

 

 

 

Real estate

 

 

567

 

 

 

 

 

 

 

Hedge funds

 

 

651

 

 

 

 

 

 

 

Private equity/venture capital

 

 

1,560

 

 

 

 

 

 

 

Other investments

 

 

29

 

 

 

 

 

 

 

Total net assets

 

$

12,093

 

 

 

 

 

 

 

*       Includes contracts for interest rates of $79 million, foreign currency of $49 million, equity of $27 million, and other of $4 million.

**    Includes contracts for interest rates of $48 million, foreign currency of $26 million, and other of $2 million.

 

 

The fair values of the health care assets at October 29, 2017 follow in millions of dollars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Level 1

 

Level 2

 

Cash and short-term investments

 

$

30

 

$

28

 

$

 2

 

Equity:

 

 

 

 

 

 

 

 

 

 

U.S. equity securities and funds

 

 

42

 

 

42

 

 

   

 

International equity securities

 

 

 9

 

 

 9

 

 

   

 

Fixed Income:

 

 

 

 

 

 

 

 

 

 

Government and agency securities

 

 

40

 

 

37

 

 

 3

 

Corporate debt securities

 

 

21

 

 

 

 

 

21

 

Mortgage-backed securities

 

 

10

 

 

 

 

 

10

 

Real estate

 

 

 1

 

 

 1

 

 

 

 

Interest rate derivative contracts - assets

 

 

 1

 

 

   

 

 

 1

 

Securities lending collateral

 

 

25

 

 

   

 

 

25

 

Securities lending liability

 

 

(25)

 

 

   

 

 

(25)

 

Securities sold short

 

 

(2)

 

 

(2)

 

 

 

 

Total of Level 1 and Level 2 assets

 

 

152

 

$

115

 

$

37

 

Investments at net asset value:

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

 

 1

 

 

 

 

 

 

 

U.S. equity funds

 

 

164

 

 

 

 

 

 

 

International equity funds

 

 

117

 

 

 

 

 

 

 

Fixed income funds

 

 

87

 

 

 

 

 

 

 

Real estate funds

 

 

 4

 

 

 

 

 

 

 

Hedge funds

 

 

 4

 

 

 

 

 

 

 

Private equity/venture capital

 

 

10

 

 

 

 

 

 

 

Total net assets

 

$

539

 

 

 

 

 

 

 

 

 

The fair values of the pension plan assets at October 30, 2016 follow in millions of dollars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Level 1

 

Level 2

 

Cash and short-term investments

 

$

684

 

$

322

 

$

362

 

Equity:

 

 

 

 

 

 

 

 

 

 

U.S. equity securities and funds

 

 

3,000

 

 

2,965

 

 

35

 

International equity securities and funds

 

 

1,711

 

 

1,697

 

 

14

 

Fixed Income:

 

 

 

 

 

 

 

 

 

 

Government and agency securities

 

 

440

 

 

224

 

 

216

 

Corporate debt securities

 

 

1,205

 

 

 

 

 

1,205

 

Mortgage-backed securities

 

 

39

 

 

 

 

 

39

 

Fixed income funds

 

 

20

 

 

20

 

 

 

 

Real estate

 

 

121

 

 

118

 

 

 3

 

Derivative contracts - assets*

 

 

191

 

 

 3

 

 

188

 

Derivative contracts - liabilities**

 

 

(59)

 

 

(14)

 

 

(45)

 

Receivables, payables, and other

 

 

 6

 

 

 5

 

 

 1

 

Securities lending collateral

 

 

693

 

 

108

 

 

585

 

Securities lending liability

 

 

(693)

 

 

(108)

 

 

(585)

 

Securities sold short

 

 

(338)

 

 

(333)

 

 

(5)

 

Total of Level 1 and Level 2 assets

 

 

7,020

 

$

5,007

 

$

2,013

 

Investments at net asset value:

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

 

216

 

 

 

 

 

 

 

U.S. equity funds

 

 

30

 

 

 

 

 

 

 

International equity funds

 

 

595

 

 

 

 

 

 

 

Corporate debt funds

 

 

25

 

 

 

 

 

 

 

Fixed income funds

 

 

482

 

 

 

 

 

 

 

Real estate

 

 

515

 

 

 

 

 

 

 

Hedge funds

 

 

624

 

 

 

 

 

 

 

Private equity/venture capital

 

 

1,603

 

 

 

 

 

 

 

Other investments

 

 

27

 

 

 

 

 

 

 

Total net assets

 

$

11,137

 

 

 

 

 

 

 

*      Includes contracts for interest rates of $125 million, foreign currency of $59 million, equity of $4 million, and other of $3 million.

**    Includes contracts for interest rates of $19 million, foreign currency of $33 million, equity of $6 million, and other of $1 million.

 

The fair values of the health care assets at October 30, 2016 follow in millions of dollars:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Level 1

 

Level 2

 

Cash and short-term investments

 

$

32

 

$

27

 

$

 5

 

Equity:

 

 

 

 

 

 

 

 

 

 

U.S. equity securities and funds

 

 

138

 

 

138

 

 

 

 

International equity securities and funds

 

 

25

 

 

25

 

 

 

 

Fixed Income:

 

 

 

 

 

 

 

 

 

 

Government and agency securities

 

 

43

 

 

40

 

 

 3

 

Corporate debt securities

 

 

30

 

 

 

 

 

30

 

Mortgage-backed securities

 

 

11

 

 

 

 

 

11

 

Real estate

 

 

 2

 

 

 2

 

 

 

 

Derivative contracts - assets*

 

 

 3

 

 

 

 

 

 3

 

Securities lending collateral

 

 

48

 

 

11

 

 

37

 

Securities lending liability

 

 

(48)

 

 

(11)

 

 

(37)

 

Securities sold short

 

 

(5)

 

 

(5)

 

 

 

 

Total of Level 1 and Level 2 assets

 

 

279

 

$

227

 

$

52

 

Investments at net asset value:

 

 

 

 

 

 

 

 

 

 

Short-term investments

 

 

 3

 

 

 

 

 

 

 

International equity funds

 

 

60

 

 

 

 

 

 

 

Fixed income funds

 

 

20

 

 

 

 

 

 

 

Real estate funds

 

 

 7

 

 

 

 

 

 

 

Hedge funds

 

 

44

 

 

 

 

 

 

 

Private equity/venture capital

 

 

22

 

 

 

 

 

 

 

Total net assets

 

$

435

 

 

 

 

 

 

 

*      Includes contracts for interest rates of $2 million and foreign currency of $1 million.