Verizon Wireless 2008 Annual Report Download - page 66

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Notes to Consolidated Financial Statements continued
Cash Flows
In 2008, we contributed $332 million to our qualified pension plans,
$155 million to our nonqualified pension plans and $1,227 million to
our other postretirement benefit plans. We estimate required qualified
pension plan contributions for 2009 to be approximately $300 million.
We also anticipate approximately $120 million in contributions to our
non-qualified pension plans and $1,770 million to our other postretire-
ment benefit plans in 2009.
Estimated Future Benefit Payments
The benefit payments to retirees, which reflect expected future service,
are expected to be paid as follows:
(dollars in millions)
Pension
Benets
Health Care and Life
Prior to Medicare
Prescription
Drug Subsidy
Expected
Medicare Prescription
Drug Subsidy
2009 $ 4,101 $ 1,979 $ 89
2010 3,110 2,085 99
2011 2,769 2,174 109
2012 2,324 2,195 122
2013 2,338 2,221 134
2014 – 2018 11,292 10,928 837
Savings Plan and Employee Stock Ownership Plans
We maintain four leveraged employee stock ownership plans (ESOP).
Only one plan currently has unallocated shares. We match a certain per-
centage of eligible employee contributions to the savings plans with
shares of our common stock from this ESOP. At December 31, 2008, the
number of unallocated and allocated shares of common stock in this
ESOP were 3 million and 68 million, respectively. All leveraged ESOP
shares are included in earnings per share computations.
Total savings plan costs were $683 million, $712 million, and $669 mil-
lion in 2008, 2007 and 2006, respectively.
Severance Benefits
The following table provides an analysis of our severance liability
recorded in accordance with SFAS No. 112, Employers’ Accounting for
Postemployment Benefits (SFAS No. 112):
(dollars in millions)
Year
Beginning
of Year
Charged to
Expense Payments Other End of Year
2006 $ 596 $ 343 $ (383) $ 88 $ 644
2007 644 743 (363) – 1,024
2008 1,024 570 (509) 19 1,104
The remaining severance liability is actuarially determined and includes
the impact of the activities described in “Severance, Pension and Benefit
Related Charges” below. The 2008 expense includes charges for the
involuntary separation of approximately 8,600 employees, including
approximately 800 during the fourth quarter of 2008 and 5,100 expected
during 2009. The 2007 expense includes charges for the involuntary sep-
aration of 9,000 employees as described below.
Severance, Pension and Benefit Related Charges
During 2008, we recorded net pretax severance, pension and benefits
charges of $950 million ($588 million after-tax). This charge primarily
included $586 million ($363 million after-tax) for workforce reductions
in connection with the separation of approximately 8,600 employees
and related charges; 3,500 of whom were separated in the second half
of 2008, with the remaining reductions expected to occur in 2009, in
accordance with SFAS No. 112. Also included are net pretax pension
settlement losses of $364 million ($225 million after-tax) related to
employees that received lump-sum distributions primarily resulting
from our separation plans. These charges were recorded in accordance
with SFAS No. 88, Employers’ Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits (SFAS No. 88),
which requires that settlement losses be recorded once prescribed pay-
ment thresholds have been reached.
During the fourth quarter of 2007, we recorded charges of $772 million
($477 million after-tax) primarily in connection with workforce reductions
of 9,000 employees and related charges, 4,000 of whom were separated
in the fourth quarter of 2007 with the remaining reductions occurring
throughout 2008. In addition, we adjusted our actuarial assumptions for
severance to align with future expectations.
During 2006, we recorded net pretax severance, pension and benefits
charges of $425 million ($258 million after-tax). These charges included
net pretax pension settlement losses of $56 million ($26 million after-
tax) related to employees that received lump-sum distributions primarily
resulting from our separation plans. These charges were recorded
in accordance with SFAS No. 88. Also included are pretax charges of
$369 million ($228 million after-tax) for employee severance and sev-
erance-related costs in connection with the involuntary separation of
approximately 4,100 employees.