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Retirement Plans | 12 Months Ended
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Sep. 30, 2019
Retirement Benefits [Abstract] |
Retirement Plans | RETIREMENT PLANS Retirement plans expense includes the following components:
| U.S. Plans |  | Non-U.S. Plans
| 2017 |  |  | 2018 |  |  | 2019 |  |  | 2017 |  |  | 2018 |  |  | 2019 |
Defined benefit plans: |  |  |  |  |  |  |  |  |  |  |
Service cost (benefits earned during the period) | $ | 60 |  |  | 52 |  |  | 47 |  |  | 19 |  |  | 24 |  |  | 24 |
Interest cost | 134 |  |  | 141 |  |  | 155 |  |  | 30 |  |  | 39 |  |  | 38 |
Expected return on plan assets | (290 | ) |  | (283 | ) |  | (281 | ) |  | (56 | ) |  | (67 | ) |  | (68 | )
Net amortization and other | 211 |  |  | 129 |  |  | 81 |  |  | 22 |  |  | 14 |  |  | 6 |
Net periodic pension expense | 115 |  |  | 39 |  |  | 2 |  |  | 15 |  |  | 10 |  |  | — |
Defined contribution plans | 96 |  |  | 132 |  |  | 125 |  |  | 47 |  |  | 52 |  |  | 56 |
Total retirement plans expense | $ | 211 |  |  | 171 |  |  | 127 |  |  | 62 |  |  | 62 |  |  | 56 |
The decrease in net periodic pension expense in 2019 is primarily attributable to lower amortization expense compared to the prior year. In 2017, net periodic pension expense and defined contribution expense included $3 and $6, respectively, related to discontinued operations. For defined contribution plans, the Company makes cash contributions based on plan requirements, which are expensed as incurred. The Company's principal U.S. defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016. Details of the changes in the actuarial present value of the projected benefit obligation and the fair value of plan assets for defined benefit pension plans follow:
| U.S. Plans |  | Non-U.S. Plans
| 2018 |  |  | 2019 |  |  | 2018 |  |  | 2019 |
Projected benefit obligation, beginning | $ | 4,369 |  |  | 3,957 |  |  | 1,489 |  |  | 1,442 |
Service cost | 52 |  |  | 47 |  |  | 24 |  |  | 24 |
Interest cost | 141 |  |  | 155 |  |  | 39 |  |  | 38 |
Actuarial (gain) loss | (262 | ) |  | 608 |  |  | (51 | ) |  | 216 |
Benefits paid | (205 | ) |  | (206 | ) |  | (36 | ) |  | (36 | )
Settlements | (152 | ) |  | (152 | ) |  | (49 | ) |  | (41 | )
Acquisitions (Divestitures), net | 13 |  |  | — |  |  | 54 |  |  | 2 |
Foreign currency translation and other | 1 |  |  | 1 |  |  | (28 | ) |  | (61 | )
Projected benefit obligation, ending | $ | 3,957 |  |  | 4,410 |  |  | 1,442 |  |  | 1,584 |
Fair value of plan assets, beginning | $ | 4,292 |  |  | 4,233 |  |  | 1,236 |  |  | 1,243 |
Actual return on plan assets | 265 |  |  | 316 |  |  | 69 |  |  | 135 |
Employer contributions | 20 |  |  | 16 |  |  | 41 |  |  | 44 |
Benefits paid | (205 | ) |  | (206 | ) |  | (36 | ) |  | (36 | )
Settlements | (152 | ) |  | (152 | ) |  | (49 | ) |  | (41 | )
Acquisitions (Divestitures), net | 12 |  |  | — |  |  | 10 |  |  | — |
Foreign currency translation and other | 1 |  |  | 1 |  |  | (28 | ) |  | (61 | )
Fair value of plan assets, ending | $ | 4,233 |  |  | 4,208 |  |  | 1,243 |  |  | 1,284 |
Net amount recognized in the balance sheet | $ | 276 |  |  | (202 | ) |  | (199 | ) |  | (300 | )
Location of net amount recognized in the balance sheet: |  |  |  |  |  |  |
Noncurrent asset | $ | 465 |  |  | 67 |  |  | 126 |  |  | 97 |
Current liability | (10 | ) |  | (11 | ) |  | (13 | ) |  | (14 | )
Noncurrent liability | (179 | ) |  | (258 | ) |  | (312 | ) |  | (383 | )
Net amount recognized in the balance sheet | $ | 276 |  |  | (202 | ) |  | (199 | ) |  | (300 | )
Pretax accumulated other comprehensive loss | $ | (548 | ) |  | (1,040 | ) |  | (164 | ) |  | (307 | )
Approximately $162 of the $1,347 of pretax losses deferred in accumulated other comprehensive income (loss) at September 30, 2019 will be amortized to expense in 2020. As of September 30, 2019, U.S. pension plans were underfunded by $202 in total, including unfunded plans totaling $211. The non-U.S. plans were underfunded by $300, including unfunded plans totaling $311. As of the September 30, 2019 and 2018 measurement dates, the plans' total accumulated benefit obligation was $5,682 and $5,154, respectively. The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with accumulated benefit obligations in excess of plan assets were $1,113, $991 and $456, respectively, for 2019, and $585, $508 and $87, respectively, for 2018. Future benefit payments by U.S. plans are estimated to be $208 in 2020, $215 in 2021, $222 in 2022, $228 in 2023, $234 in 2024 and $1,233 in total over the five years 2025 through 2029. Based on foreign currency exchange rates as of September 30, 2019, future benefit payments by non-U.S. plans are estimated to be $74 in 2020, $72 in 2021, $78 in 2022, $80 in 2023, $84 in 2024 and $462 in total over the five years 2025 through 2029. The Company expects to contribute approximately $60 to its retirement plans in 2020. The weighted-average assumptions used in the valuation of pension benefits follow:
| U.S. Plans |  | Non-U.S. Plans
| 2017 |  |  | 2018 |  |  | 2019 |  |  | 2017 |  |  | 2018 |  |  | 2019 |
Net pension expense |  |  |  |  |  |  |  |  |  |  |
Discount rate used to determine service cost | 3.75 | % |  | 3.95 | % |  | 4.33 | % |  | 2.3 | % |  | 2.6 | % |  | 2.7 | %
Discount rate used to determine interest cost | 2.90 | % |  | 3.25 | % |  | 3.98 | % |  | 2.3 | % |  | 2.6 | % |  | 2.7 | %
Expected return on plan assets | 7.25 | % |  | 7.00 | % |  | 7.00 | % |  | 6.2 | % |  | 5.7 | % |  | 6.1 | %
Rate of compensation increase | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.2 | % |  | 3.4 | % |  | 3.5 | %
Benefit obligations |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.76 | % |  | 4.26 | % |  | 3.22 | % |  | 2.6 | % |  | 2.7 | % |  | 1.9 | %
Rate of compensation increase | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | 3.4 | % |  | 3.5 | % |  | 3.7 | %
The discount rate for the U.S. retirement plans was 3.22 percent as of September 30, 2019. An actuarially developed, company-specific yield curve is used to determine the discount rate. To determine the service and interest cost components of pension expense for its U.S. retirement plans, the Company applies the specific spot rates along the yield curve, rather than the single weighted-average rate, to the projected cash flows to provide more precise measurement of these costs. The expected return on plan assets assumption is determined by reviewing the investment returns of the plans for the past 10 years plus longer-term historical returns of an asset mix approximating the Company's asset allocation targets, and periodically comparing these returns to expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ significantly from the past. The Company's asset allocations at September 30, 2019 and 2018, and weighted-average target allocations follow:
| U.S. Plans |  | Non-U.S. Plans
| 2018 |  |  | 2019 |  |  | Target |  | 2018 |  |  | 2019 |  |  | Target
Equity securities | 62 | % |  | 53 | % |  | 50-60% |  | 52 | % |  | 42 | % |  | 40-50%
Debt securities | 34 |  |  | 46 |  |  | 40-50 |  | 38 |  |  | 47 |  |  | 45-55
Other | 4 |  |  | 1 |  |  | 0-10 |  | 10 |  |  | 11 |  |  | 5-15
Total | 100 | % |  | 100 | % |  | 100% |  | 100 | % |  | 100 | % |  | 100%
The primary objective for the investment of pension assets is to secure participant retirement benefits by earning a reasonable rate of return. Plan assets are invested consistent with the provisions of the prudence and diversification rules of ERISA and with a long-term investment horizon. The Company continuously monitors the value of assets by class and routinely rebalances to remain within target allocations. The equity strategy is to minimize concentrations of risk by investing primarily in a mix of companies that are diversified across geographies, market capitalization, style, sectors and industries worldwide. The approach for bonds emphasizes investment-grade corporate and government debt with maturities matching a portion of the longer duration pension liabilities. The bonds strategy also includes a high-yield element which is generally shorter in duration. For diversification, a small portion of U.S. plan assets is allocated to private equity partnerships and real asset fund investments, providing opportunities for above market returns. Leveraging techniques are not used and the use of derivatives in any fund is limited and inconsequential. The fair values of defined benefit pension assets as of September 30, organized by asset class and by the fair value hierarchy of ASC 820, Fair Value Measurement, follow. Investments valued based on the net asset value (NAV) of fund units held, as derived from the fair value of the underlying assets, are excluded from the fair value hierarchy.
| Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Measured at NAV |  | Total |  |  | % |
2019 |  |  |  |  |  |  |  |  |  |  |
U.S. equities | $ | 789 |  |  | 5 |  |  | 386 |  |  | 284 |  |  | 1,464 |  |  | 27 | %
International equities | 459 |  |  | 15 |  |  | — |  |  | 615 |  |  | 1,089 |  |  | 20 | %
Emerging market equities | — |  |  | — |  |  | — |  |  | 213 |  |  | 213 |  |  | 4 | %
Corporate bonds | — |  |  | 1,008 |  |  | — |  |  | 464 |  |  | 1,472 |  |  | 27 | %
Government bonds | 0 |  |  | 512 |  |  | — |  |  | 540 |  |  | 1,052 |  |  | 19 | %
High-yield bonds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Other | 1 |  |  | 8 |  |  | 129 |  |  | 64 |  |  | 202 |  |  | 3 | %
Total | $ | 1,249 |  |  | 1,548 |  |  | 515 |  |  | 2,180 |  |  | 5,492 |  |  | 100 | %
2018 |  |  |  |  |  |  |  |  |  |  |
U.S. equities | $ | 968 |  |  | 5 |  |  | 350 |  |  | 320 |  |  | 1,643 |  |  | 30 | %
International equities | 595 |  |  | 21 |  |  | — |  |  | 745 |  |  | 1,361 |  |  | 25 | %
Emerging market equities | — |  |  | — |  |  | — |  |  | 243 |  |  | 243 |  |  | 5 | %
Corporate bonds | — |  |  | 696 |  |  | — |  |  | 423 |  |  | 1,119 |  |  | 20 | %
Government bonds | — |  |  | 350 |  |  | — |  |  | 438 |  |  | 788 |  |  | 14 | %
High-yield bonds | — |  |  | — |  |  | — |  |  | 10 |  |  | 10 |  |  | — | %
Other | 107 |  |  | 6 |  |  | 121 |  |  | 78 |  |  | 312 |  |  | 6 | %
Total | $ | 1,670 |  |  | 1,078 |  |  | 471 |  |  | 2,257 |  |  | 5,476 |  |  | 100 | %
Asset Classes U.S. equities reflect companies domiciled in the U.S., including multinational companies. International equities are comprised of companies domiciled in developed nations outside the U.S. Emerging market equities are comprised of companies domiciled in portions of Asia, Eastern Europe and Latin America. Corporate bonds represent investment-grade debt of issuers primarily from the U.S. Government bonds include investment-grade instruments issued by federal, state and local governments, primarily in the U.S. High-yield bonds include noninvestment-grade debt from a diverse group of developed market issuers. Other includes cash, interests in mixed asset funds investing in commodities, natural resources, agriculture, real estate and infrastructure funds, life insurance contracts (U.S.), and shares in certain general investment funds of financial institutions or insurance arrangements (non-U.S.) that typically ensure no market losses or provide for a small minimum return guarantee. Fair Value Hierarchy Categories Valuations of Level 1 assets for all classes are based on quoted closing market prices from the principal exchanges where the individual securities are traded. Cash is valued at cost, which approximates fair value. Debt securities categorized as Level 2 assets are generally valued based on independent broker/dealer bids or by comparison to other debt securities having similar durations, yields and credit ratings. U.S. equity securities classified as Level 3 are fund investments in private companies. Valuation techniques and inputs for these assets include discounted cash flow analysis, earnings multiple approaches, recent transactions, transfer restrictions, prevailing discount rates, volatilities, credit ratings and other factors. In the Other class, interests in mixed asset funds are Level 2, and U.S. life insurance contracts and non-U.S. general fund investments and insurance arrangements are Level 3. Investments measured at net asset value are primarily nonexchange-traded commingled or collective funds where the underlying securities have observable prices available from active markets. Details of the changes in value for Level 3 assets follow:
| 2018 |  |  | 2019 |
Level 3, beginning | $ | 451 |  |  | 471 |
Gains (Losses) on assets held | 1 |  |  | — |
Gains (Losses) on assets sold | 37 |  |  | 34 |
Purchases, sales and settlements, net | (18 | ) |  | 10 |
Level 3, ending | $ | 471 |  |  | 515 |

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