Pension and Postretirement Benefit Plans and Defined Contribution Plans (Tables)

12 Months Ended

Dec. 31, 2011

Schedule of Net Periodic Benefit Costs of Pension and Post Retirement Benefit Plans

The annual cost and other amounts recognized in other comprehensive (income)/loss for our benefit plans follow:

	YEAR ENDED DECEMBER 31,
	PENSION PLANS
	U.S. QUALIFIED(c)							U.S.  SUPPLEMENTAL (NON-QUALIFIED)(d)							INTERNATIONAL(e)							POSTRETIREMENT PLANS(f)
(MILLIONS OF DOLLARS)		2011		2010		2009			2011		2010		2009			2011		2010		2009			2011		2010		2009
Service cost(a)		$  351		$347		$ 252			$  36		$  28		$  24			$251		$230		$   188			$  68		$  79		$  39
Interest cost(a)		734		740		526			72		77		53			453		427		342			195		211		145
Expected return on plan assets(a)		(871	)	(782	)	(527	)		—		—		—			(448	)	(434	)	(375	)		(35	)	(31	)	(26	)
Amortization of:
Actuarial losses		145		151		212			36		29		31			86		67		30			17		15		18
Prior service (credits)/costs		(8	)	2		2			(3	)	(2	)	(2	)		(5	)	(4	)	(3	)		(53	)	(38	)	(3	)
Curtailments and settlements—net		95		(52	)	110			23		1		(2	)		3		(3	)	3			(68	)	(23	)	(3	)
Special termination benefits		23		73		61			26		180		137			4		6		8			3		19		24
Net periodic benefit costs		469		479		636			190		313		241			344		289		193			127		232		194
Other changes recognized in other comprehensive (income)/loss(b)		1,879		260		(783	)		36		117		(23	)		(365	)	152		1,004			421		(183	)	(122	)
Total recognized in net periodic benefit costs and other comprehensive (income)/loss		$2,348		$739		$(147	)		$226		$430		$218			$(21	)	$441		$1,197			$ 548		$  49		$  72

^(a)  The acquisition of Wyeth during fourth quarter 2009 contributed to the increase in certain components of net periodic benefit costs, such as service cost and interest cost, which was largely offset by higher expected returns on plan assets during 2010 from the inclusion of Wyeth plan assets. Further declines in interest rates during 2011 resulted in service costs continuing to increase on an overall basis. The decrease in 2011 postretirement plans’ service and interest costs is largely driven by the harmonization of the Wyeth plans.

^(b)  For details, see Note 6. Other Comprehensive Income/(Loss).

^(c)  2011 vs. 2010 – The decrease in the U.S. qualified pension plans’ net periodic benefit costs was largely driven by lower special termination benefits costs and higher expected returns due to contributions made to the plans, partially offset by lower curtailment gains and an increase in settlement costs associated with on-going restructuring efforts. 2010 vs. 2009 – The decrease in the U.S. qualified pension plans’ net periodic benefit costs was largely driven by curtailment gains and lower settlement charges associated with Wyeth-related restructuring initiatives.

^(d)  2011 vs. 2010 – The decrease in the U.S. supplemental (non-qualified) plans’ net periodic benefit costs was primarily driven by lower special termination benefits costs associated with Wyeth-related restructuring initiatives. 2010 vs. 2009 – The increase in the U.S. supplemental (non-qualified) plans’ net periodic benefit costs was primarily driven by special termination benefits recognized for certain executives as part of ongoing Wyeth-related restructuring initiatives.

^(e)  2011 vs. 2010 and 2010 vs. 2009 – The increase in the international plans’ net periodic benefit costs as compared to the prior year was primarily driven by changes in assumptions, including the decrease in discount rates across most plans.

^(f)  2011 vs. 2010 – The decrease in the postretirement plans’ net periodic benefit costs was due to the harmonization of the Wyeth postretirement medical program initiated in mid-2010. 2010 vs. 2009 – The increase postretirement plans’ net periodic benefit costs was due to the Wyeth acquisition, offset partially by the postretirement harmonization program.

Schedule of Amounts in Accumulated Other Comprehensive Income/(Loss) Expected to be Amortized into 2012 Net Periodic Benefit Costs

The amounts in Accumulated other comprehensive income/(loss) expected to be amortized into 2012 net periodic benefit costs follow:

	PENSION PLANS
(MILLIONS OF DOLLARS)	U.S. QUALIFIED		U.S. SUPPLEMENTAL (NON-QUALIFIED)		INTERNATIONAL		POSTRETIREMENT  PLANS
Actuarial losses		$(320)		$(44)		$(69)		$(33)
Prior service credits and other		15		3		7		50
Total		$(305)		$(41)		$(62)		$17

Schedule of Weighted-Average Actuarial Assumptions

The weighted-average actuarial assumptions of our benefit plans follow:

(PERCENTAGES)	2011			2010			2009
Weighted-average assumptions used to determine benefit obligations:
Discount rate:
U.S. qualified pension plans		5.1	%		5.9	%		6.3	%
U.S. non-qualified pension plans		5.0			5.8			6.2
International pension plans		4.7			4.8			5.1
Postretirement plans		4.8			5.6			6.0
Rate of compensation increase:
U.S. qualified pension plans		3.5			4.0			4.0
U.S. non-qualified pension plans		3.5			4.0			4.0
International pension plans		3.3			3.5			3.6
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate:
U.S. qualified pension plans		5.9			6.3			6.4
U.S. non-qualified pension plans		5.8			6.2			6.4
International pension plans		4.8			5.1			5.6
Postretirement plans		5.6			6.0			6.4
Expected return on plan assets:
U.S. qualified pension plans		8.5			8.5			8.5
International pension plans		6.0			6.4			6.7
Postretirement plans		8.5			8.5			8.5
Rate of compensation increase:
U.S. qualified pension plans		4.0			4.0			4.3
U.S. non-qualified pension plans		4.0			4.0			4.3
International pension plans		3.5			3.6			3.2

Schedule of Healthcare Cost Trend Rate Assumptions for U.S. Postretirement Benefit Plans

The healthcare cost trend rate assumptions for our U.S. postretirement benefit plans follow:

		0000000000000			0000000000000
	2011			2010
Healthcare cost trend rate assumed for next year		7.8	%		8.0	%
Rate to which the cost trend rate is assumed to decline		4.5	%		4.5	%
Year that the rate reaches the ultimate trend rate		2027			2027

Schedule of the Effect of a One-Percentage-Point Increase or Decrease in the Healthcare Cost Trend Rate Assumed for Postretirement Benefits

A one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits would have the following effects as of December 31, 2011:

		0000000000		0000000000
(MILLIONS OF DOLLARS)	INCREASE		DECREASE
Effect on total service and interest cost components		$  18		$  (17	)
Effect on postretirement benefit obligation		304		(270	)

Schedule of Analysis of the Changes in the Benefit Obligations, Plan assets and Accounting Funded Status of Pension and Postretirement Benefit Plans

An analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans follow:

	YEAR ENDED DECEMBER 31,
	PENSION PLANS
	U.S. QUALIFIED(a)			U.S. SUPPLEMENTAL (NON-QUALIFIED)(b)			INTERNATIONAL(c)			POSTRETIREMENT PLANS(d)
(MILLIONS OF DOLLARS)		2011	2010		2011	2010		2011	2010		2011	2010
Change in benefit obligation:
Benefit obligation at beginning of year		$13,035	$12,578		$ 1,401	$ 1,368		$ 9,132	$ 9,049		$ 3,582	$ 3,733
Service cost		351	347		36	28		251	230		68	79
Interest cost		734	740		72	77		453	427		195	211
Employee contributions		—	—		—	—		16	18		45	22
Plan amendments		(73)	(46)		(9)	(6)		4	(3)		(28)	(495)
Changes in actuarial assumptions and other		1,808	980		111	180		(536)	361		300	281
Foreign exchange impact		—	—		—	—		311	(504)		—	4
Acquisitions		56	1		—	(1)		2	10		14	—
Curtailments		(97)	(233)		(10)	(29)		(121)	(33)		17	1
Settlements		(476)	(905)		(128)	(235)		(64)	(53)		—	—
Special termination benefits		23	73		26	180		4	6		3	19
Benefits paid		(526)	(500)		(68)	(161)		(398)	(376)		(296)	(273)
Benefit obligation at end of year(e)		14,835	13,035		1,431	1,401		9,054	9,132		3,900	3,582
Change in plan assets:
Fair value of plan assets at beginning of year		10,596	9,977		—	—		6,699	6,516		414	370
Actual gain on plan assets		398	1,123		—	—		171	454		9	46
Company contributions		1,969	901		196	396		491	455		250	249
Employee contributions		—	—		—	—		16	18		45	22
Foreign exchange impact		—	—		—	—		203	(315)		—	—
Acquisitions		44	—		—	—		—	—		—	—
Settlements		(476)	(905)		(128)	(235)		(64)	(53)		—	—
Benefits paid		(526)	(500)		(68)	(161)		(398)	(376)		(296)	(273)
Fair value of plan assets at end of year(f)		12,005	10,596		—	—		7,118	6,699		422	414
Funded status—Plan assets less than the benefit obligation at end of year		$(2,830)	$(2,439)		$(1,431)	$(1,401)		$(1,936)	$(2,433)		$(3,478)	$(3,168)

^(a)  The unfavorable change in our U.S. qualified plans’ projected benefit obligations funded status was largely driven by changes in interest rates and lower than expected asset returns, partially offset by plan contributions of $2.0 billion.

^(b)  The U.S. supplemental (non-qualified) pension plans are not generally funded and these obligations, which are substantially greater than the annual cash outlay for these liabilities, are paid from cash generated from operations.

^(c)  The favorable change in our international plans’ projected benefit obligations funded status was largely driven by changes in actuarial assumptions, partially offset by the weakening of the U.S. dollar against the U.K. pound and euro. Outside the U.S., in general, we fund our defined benefit plans to the extent that tax or other incentives exist and we have accrued liabilities on our consolidated balance sheet to reflect those plans that are not fully funded.

^(d)  The unfavorable change in our postretirement plans’ accumulated benefit obligations (ABO) funded status was largely driven by changes in actuarial assumptions.

^(e)  For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit obligation is the accumulated postretirement benefit obligation. The ABO for all of our U.S. qualified pension plans was $13.8 billion in 2011 and $12.0 billion in 2010. The ABO for our U.S. supplemental (non-qualified) pension plans was $1.2 billion in both 2011 and 2010. The ABO for our international pension plans was $8.3 billion in 2011 and $8.1 billion in 2010.

^(f)  The U.S. qualified pension plans loan securities to other companies. Such securities may be onward loaned, sold or pledged by the other companies, but they may be required to be returned in a short period of time. We also require cash collateral from these companies and a maintenance margin of 103% of the fair value of the collateral relative to the fair value of the loaned securities. As of December 31, 2011, the fair value of collateral received was $2 million and, as of December 31, 2010, the fair value of collateral received was $581 million. The securities loaned continue to be included in the table above in Fair value of plan assets, and the securities-lending program for the pension plans will be discontinued in 2012.

Schedule of Amounts Recognized in Consolidated Balance Sheet

The funded status is recognized in our consolidated balance sheets as follows:

	AS OF DECEMBER 31,
	PENSION PLANS
	U.S. QUALIFIED				U.S. SUPPLEMENTAL (NON-QUALIFIED)				INTERNATIONAL				POSTRETIREMENT PLANS
(MILLIONS OF DOLLARS)	2011		2010		2011		2010		2011		2010		2011		2010
Noncurrent assets(a)		$         —		$       —		$      —		$       —		$    329		$     118		$         —		$       —
Current liabilities(b)		—		—		(130)		(156)		(41)		(41)		(134)		(133)
Noncurrent liabilities(c)		(2,830)		(2,439)		(1,301)		(1,245)		(2,224)		(2,510)		(3,344)		(3,035)
Funded status		$  (2,830)		$(2,439)		$(1,431)		$(1,401)		$(1,936)		$(2,433)		$  (3,478)		$(3,168)

^(a)  Included primarily in Taxes and other noncurrent assets.

^(b)  Included in Other current liabilities.

^(c)  Included in Pension benefit obligations and Postretirement benefit obligations, as appropriate.

Schedule of Amounts Recognized in Accumulated Other Comprehensive Income/(Loss)

The components of amounts recognized in Accumulated other comprehensive income/(loss) follow:

	AS OF DECEMBER 31,
	PENSION PLANS
	U.S. QUALIFIED				U.S. SUPPLEMENTAL (NON-QUALIFIED)				INTERNATIONAL				POSTRETIREMENT PLANS
(MILLIONS OF DOLLARS)	2011		2010		2011		2010		2011		2010		2011		2010
Actuarial losses(a)		$    (4,638)		$(2,699)		$    (566)		$  (525)		$    (2,020)		$(2,388)		$    (759)		$    (451)
Prior service (costs)/credits and other		123		63		26		21		(21)		(18)		468		581
Total		$    (4,515)		$(2,636)		$    (540)		$  (504)		$    (2,041)		$(2,406)		$    (291)		$     130

^(a)  The actuarial losses primarily represent the cumulative difference between the actuarial assumptions and actual return on plan assets, changes in discount rates and changes in other assumptions used in measuring the benefit obligations. These actuarial losses are recognized in Accumulated other comprehensive income/(loss) and are amortized into net periodic benefit costs over an average period of 9.9 years for our U.S. qualified plans, an average period of 9.7 years for our U.S. supplemental (non-qualified) plans, an average period of 14 years for our international plans and an average period of 11.1 years for our postretirement plans.

Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets

Information related to the funded status of selected benefit plans follows:

	AS OF DECEMBER 31,
	PENSION PLANS
	U.S. SUPPLEMENTAL
	U.S. QUALIFIED			(NON-QUALIFIED)			INTERNATIONAL
(MILLIONS OF DOLLARS)		2011	2010		2011	2010		2011	2010
Pension plans with an accumulated benefit obligation in excess of plan assets:
Fair value of plan assets		$  12,005	$10,596		$      —	$      —		$  2,529	$ 2,228
Accumulated benefit obligation		13,799	11,953		1,225	1,177		4,446	4,069
Pension plans with a projected benefit obligation in excess of plan assets:
Fair value of plan assets		12,005	10,596		—	—		2,686	5,731
Projected benefit obligation		14,835	13,035		1,431	1,401		4,951	8,283

Schedule of Components of Plan Assets

The components of plan assets follow:

			FAIR VALUE(a)								FAIR VALUE(a)
(MILLIONS OF DOLLARS)	AS OF DECEMBER 31, 2011		LEVEL 1		LEVEL 2		LEVEL 3		AS OF DECEMBER 31, 2010		LEVEL 1		LEVEL 2		LEVEL 3
U.S. qualified pension plans:
Cash and cash equivalents		$    2,111		$     —		$2,111		$    —		$   1,196		$     —		$  1,196		$     —
Equity securities:
Global equity securities		2,522		2,509		12		1		2,766		2,765		—		1
Equity commingled funds		1,794		—		1,794		—		1,708		—		1,708		––
Debt securities:
Fixed income commingled funds		870		—		870		—		817		—		817		—
Government bonds		808		—		805		3		660		—		660		—
Corporate debt securities		1,971		—		1,966		5		2,085		—		2,083		2
Other investments:
Private equity funds		920		—		—		920		899		—		—		899
Insurance contracts		353				353		—		—		—		—		—
Other		656		—		—		656		465		—		—		465
Total		12,005		2,509		7,911		1,585		10,596		2,765		6,464		1,367
International pension plans:
Cash and cash equivalents		311		—		311		—		518		—		518		—
Equity securities:
Global equity securities		1,513		1,432		81		—		1,458		1,166		292		—
Equity commingled funds		2,047		—		2,047		—		1,881		––		1,881		—
Debt securities:
Fixed income commingled funds		786		—		786		—		804		—		804		—
Government bonds		1,015		—		1,015		—		932		—		932		—
Corporate debt securities		542		—		542		—		376		—		376		—
Other investments:
Private equity funds		55		—		4		51		21		—		4		17
Insurance contracts		433		—		67		366		435		—		69		366
Other		416		—		67		349		274		—		59		215
Total		7,118		1,432		4,920		766		6,699		1,166		4,935		598
U.S. postretirement plans(b):
Cash and cash equivalents		19		—		19		—		12		—		12		—
Equity securities:
Global equity securities		24		24		––		—		29		29		—		—
Equity commingled funds		17		—		17		—		18		—		18		—
Debt securities:
Fixed income commingled funds		8		—		8		—		9		—		9		—
Government bonds		8		—		8		—		7		—		7		—
Corporate debt securities		19		—		19		—		21		—		21		—
Other investments
Insurance contracts		312		—		312		—		306		—		306		—
Others		15		—		15		—		12		—		12		—
Total		$    422		$     24		$   398		$    —		$      414		$    29		$     385		$     —

^(a)  Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 1E. Significant Accounting Policies: Fair Value).

^(b)  Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans.

Schedule of Changes in Significant Investments Valued Using Significant Unobservable Inputs

An analysis of changes in our more significant investments valued using significant unobservable inputs follows:

			ACTUAL RETURN ON PLAN ASSETS
(MILLIONS OF DOLLARS)	FAIR VALUE BEGINNING OF YEAR		ASSETS HELD, END OF YEAR			ASSETS SOLD DURING THE PERIOD			PURCHASES, SALES AND SETTLEMENTS, NET			TRANSFER INTO/(OUT OF) LEVEL 3			EXCHANGE RATE CHANGES			FAIR VALUE, END OF YEAR
2011
U.S. qualified pension plans:
Private equity funds		$    899		$    (246)			$    55			$    212			$    —			$    —			$    920
Other		465		24			(6	)		173			—			—			656
International pension plans:
Insurance contracts		366		8			—			(12	)		(15	)		19			366
Other		215		(4	)		—			120			12			6			349
2010
U.S. qualified pension plans:
Private equity funds		843		45			42			(31	)		—			—			899
Other		454		21			—			(10	)		—			—			465
International pension plans:
Insurance contracts		346		12			—			(10	)		52			(34	)		366
Other		127		(3	)		—			37			58			(4	)		215

Schedule of Long-Term Target Asset Allocations Ranges and the Percentage of the Fair Value of Plan Assets

The long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans follow:

	AS OF DECEMBER 31,
	TARGET ALLOCATION PERCENTAGE		PERCENTAGE OF PLAN ASSETS
(PERCENTAGES)		2011		2011	2010
U.S. qualified pension plans:
Cash and cash equivalents		0-5		17.6	11.3
Equity securities		25-50		36.0	42.2
Debt securities		30-55		30.4	33.6
Real estate and other investments		10-15		16.0	12.9
Total		100		100.0	100.0
International pension plans:
Cash and cash equivalents		0-5		4.4	7.7
Equity securities		25-50		50.0	49.8
Debt securities		30-55		32.9	31.6
Real estate and other investments		10-15		12.7	10.9
Total		100		100.0	100.0
U.S. postretirement plans:
Cash and cash equivalents		0-5		4.6	2.9
Equity securities		5-20		9.7	11.3
Debt securities		5-20		8.1	8.9
Real estate, insurance contracts and other investments		65-80		77.6	76.9
Total		100		100.0	100.0

Schedule of Expected Future Cash Flow Information

The expected future cash flow information related to our benefit plans follows:

	PENSION PLANS
(MILLIONS OF DOLLARS)	U.S. QUALIFIED		U.S. SUPPLEMENTAL (NON-QUALIFIED)		INTERNATIONAL		POST RETIREMENT PLANS
Expected employer contributions:
2012		$    19		$  130		$    431		$    394
Expected benefit payments:
2012		$  874		$  130		$    394		$    295
2013		806		173		403		308
2014		825		174		416		317
2015		819		165		436		326
2016		839		141		455		331
2017–2021		4,891		706		2,496		1,780