Verizon Wireless 2011 Annual Report Download - page 76

74
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
Medicare
Prescription Drug
Subsidy
2012 $ 2,514 $ 1,944 $ 104
2013 2,308 1,805 –
2014 2,256 1,792 –
2015 2,233 1,743 –
2016 2,208 1,702 –
2017–2021 10,537 7,747 –
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, 2011, the
number of unallocated and allocated shares of common stock in this
ESOP was 1 million and 65 million, respectively. All leveraged ESOP shares
are included in earnings per share computations.
Total savings plan costs were $0.7 billion in 2011, 2010 and 2009.
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
2009 $ 1,104 $ 950 $ (522) $ 106 $ 1,638
2010 1,638 1,217 (1,307) 21 1,569
2011 1,569 32 (474) (14) 1,113
Severance, Pension and Benefit Charges
During 2011, we recorded net pre-tax severance, pension and benefits
charges of approximately $6.0 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. The charges were pri-
marily driven by a decrease in our discount rate assumption used to
determine the current year liabilities from 5.75% at December 31, 2010 to
5% at December 31, 2011 ($5.0 billion); the difference between our esti-
mated return on assets of 8% and our actual return on assets of 5% ($0.9
billion); and revisions to the life expectancy of participants and other
adjustments to assumptions.
During 2010, we recorded net pre-tax severance, pension and benefits
charges of $3.1 billion. The charges during 2010 included 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. Additionally, in 2010, we reached
an agreement 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, we recorded severance, pension and
benefits charges associated with approximately 11,900 union-repre-
sented employees who volunteered for the incentive offer. These charges
included $1.2 billion for severance for the 2010 separation 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
due to the workforce reductions.
During 2009, we recorded net pre-tax severance, pension and benefits
charges of $1.4 billion. These charges were primarily comprised of pen-
sion and postretirement curtailment losses and special termination
benefits of $1.9 billion; $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; and remeasurement gains of $1.4 bil-
lion 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.