Verizon Wireless 2010 Annual Report Download - page 68

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Notes to Consolidated Financial Statements continued
Estimated Future Benefit Payments
The benefit payments to retirees are expected to be paid as follows:
(dollars in millions)
Year Pension Benefits
Health Care and Life
Prior to Medicare
Prescription
Drug Subsidy
Expected Medicare
Prescription
Drug Subsidy
2011 $ 3,114 $ 2,126 $ 107
2012 2,339 2,142 120
2013 2,273 1,951 –
2014 2,225 1,931 –
2015 2,188 1,873 –
2016 – 2020 10,536 8,452 –
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, 2010, the
number of unallocated and allocated shares of common stock in this
ESOP were 2 million and 66 million, respectively. All leveraged ESOP
shares are included in earnings per share computations.
Total savings plan costs were $0.7 billion in 2010, 2009 and 2008.
Severance Benefits
The following table provides an analysis of our actuarially determined
severance liability recorded in accordance with the accounting standard
regarding employers’ accounting for postemployment benefits:
(dollars in millions)
Year
Beginning
of Year
Charged to
Expense Payments Other End of Year
2008 $ 1,024 $ 512 $ (509) $ 77 $ 1,104
2009 1,104 950 (522) 106 1,638
2010 1,638 1,217 (1,307) 21 1,569
Charged to expense includes the impact of the activities described below.
Other primarily includes the expense incurred related to our ongoing
severance plans.
Severance, Pension and Benefit Charges
During 2010, we recorded net pre-tax severance, pension and ben-
efits charges of $3.1 billion primarily in connection with an agreement
we reached with certain unions on temporary enhancements to the
separation programs contained in their existing collective bargaining
agreements. These temporary enhancements were intended to help
address a previously declared surplus of employees and to help reduce
the need for layoffs. Accordingly, during 2010, we recorded severance,
pension and benefits charges associated with the approximately 11,900
union-represented employees who volunteered for the incentive offer.
These charges included $1.2 billion for severance for the 2010 programs
mentioned above and a planned workforce reduction of approximately
2,500 employees in 2011. In addition, we recorded $1.3 billion for pension
and postretirement curtailment losses and special termination benefits
that were due to the workforce reductions, which caused the elimination
of a significant amount of future service. Also, we recorded remeasure-
ment losses of $0.6 billion for our pension and postretirement plans
in accordance with our accounting policy to recognize actuarial gains
and losses in the year in which they occur. The remeasurement losses
included $0.1 billion of pension settlement losses related to employees
that received lump sum distributions, primarily resulting from our previ-
ously announced separation plans.
During 2009, we recorded net pre-tax severance, pension and benefits
charges of $1.4 billion primarily for pension and postretirement curtail-
ment losses and special termination benefits of $1.9 billion as workforce
reductions caused the elimination of a significant amount of future ser-
vice requiring us to recognize a portion of the prior service costs. These
charges also included $0.9 billion for workforce reductions of approxi-
mately 17,600 employees; 4,200 of whom were separated during late
2009 and the remainder in 2010. Also, we recorded remeasurement gains
of $1.4 billion for our pension and postretirement plans in accordance
with our accounting policy to recognize actuarial gains and losses in the
year in which they occur.
During 2008, we recorded net pre-tax severance, pension and benefits
charges of $15.6 billion primarily due to remeasurement losses of $15.0
billion for our pension and postretirement plans in accordance with our
accounting policy to recognize actuarial gains and losses in the year in
which they occur. These remeasurement losses included $0.5 billion of
pension settlement losses related to employees that received lump sum
distributions, primarily resulting from our previously announced separa-
tion plans. These severance, pension and benefit charges also included
$0.5 billion 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 and the remainder in 2009 and
$0.1 billion for pension and postretirement curtailment losses and special
termination benefits, that were due to the workforce reductions, which
caused the elimination of a significant amount of future service.