Notes to Consolidated Financial Statements

NOTE 12 (1 OF 4)

EMPLOYEE BENEFITS

We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory, and include a limit on the Company’s share of cost for certain recent and future retirees. We also sponsor defined contribution savings plans to provide opportunities for eligible employees to save for retirement on a tax-deferred basis. We use a measurement date of December 31 for our pension and postretirement health care and life insurance plans.

Pension and Other Postretirement Benefits

Pension and other postretirement benefits for many of our employees are subject to collective bargaining agreements. Modifications in benefits have been bargained from time to time, and we may also periodically amend the benefits in the management plans. The following tables summarize benefit costs, as well as the benefit obligations, plan assets, funded status and rate assumptions associated with pension and postretirement health care and life insurance benefit plans.

Obligations and Funded Status

(dollars in millions)

 

Pension

 

Health Care and Life

 

At December 31,

2009

 

2008

 

2009

 

2008

 

Change in Benefit Obligations

Beginning of year

$

30,394

 

$

32,495

 

$

27,096

 

$

27,306

 

Service cost

 

384

 

 

382

 

 

311

 

 

306

 

Interest cost

 

1,924

 

 

1,966

 

 

1,766

 

 

1,663

 

Plan amendments

 

 

 

300

 

 

(5

)

 

24

 

Actuarial (gain) loss, net

 

2,056

 

 

(154

)

 

(469

)

 

(483

)

Benefits paid

 

(2,565

)

 

(2,577

)

 

(1,740

)

 

(1,529

)

Termination benefits

 

75

 

 

32

 

 

18

 

 

7

 

Curtailment (gain) loss, net

 

1,245

 

 

 

 

352

 

 

(29

)

Acquisitions and divestitures, net

 

192

 

 

(183

)

 

8

 

 

(169

)

Settlements

 

(1,887

)

 

(1,867

)

 

 

 

 

End of year

 

31,818

 

 

30,394

 

 

27,337

 

 

27,096

 

 

Change in Plan Assets

Beginning of year

 

27,791

 

 

42,659

 

 

2,555

 

 

4,142

 

Actual return on plan assets

 

4,793

 

 

(10,680

)

 

638

 

 

(1,285

)

Company contributions

 

337

 

 

487

 

 

1,638

 

 

1,227

 

Benefits paid

 

(2,565

)

 

(2,577

)

 

(1,740

)

 

(1,529

)

Settlements

 

(1,887

)

 

(1,867

)

 

 

 

 

Acquisitions and divestitures, net

 

123

 

 

(231

)

 

 

 

 

End of year

 

28,592

 

 

27,791

 

 

3,091

 

 

2,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

End of year

$

(3,226

)

$

(2,603

)

$

(24,246

)

$

(24,541

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognized on the balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets

$

3,141

 

$

3,132

 

$

 

$

 

Current liabilities

 

(139

)

 

(122

)

 

(542

)

 

(496

)

Noncurrent liabilities

 

(6,228

)

 

(5,613

)

 

(23,704

)

 

(24,045

)

Total

$

(3,226

)

$

(2,603

)

$

(24,246

)

$

(24,541

)

 

Amounts recognized in Accumulated Other

Comprehensive Loss (Pretax)

Actuarial loss, net

$

12,200

 

$

13,296

 

$

5,806

 

$

6,848

 

Prior service cost

 

999

 

 

1,162

 

 

2,667

 

 

3,235

 

Total

$

13,199

 

$

14,458

 

$

8,473

 

$

10,083

 

Changes in benefit obligations were caused by factors including changes in actuarial assumptions, settlements and curtailments.

The accumulated benefit obligation for all defined benefit pension plans was $30,793 million and $29,405 million at December 31, 2009 and 2008, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets follows:

(dollars in millions)

At December 31,

2009

 

2008

 

Projected benefit obligation

$

28,719

 

$

27,171

 

Accumulated benefit obligation

 

28,128

 

 

26,641

 

Fair value of plan assets

 

22,352

 

 

21,436