| |
|
 |
 |
|
 |
|
|
|
|
| note 16 (page
1 of 3) |
| EMPLOYEE BENEFITS |
We maintain noncontributory
defined benefit pension plans for substantially all
employees. The postretirement health care and life insurance
plans for our retirees and their dependents are both
contributory and noncontributory and include a limit
on the company’s share of cost for certain recent and
future retirees. Management employees hired after December
31, 2004 are not eligible for company- subsidized retiree
healthcare or retiree life insurance benefits. 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 |
|
| |
Pension |
|
|
Health
Care and Life |
|
|
 |
| At
December 31, |
2004 |
|
|
2003 |
|
|
2004 |
|
|
2003 |
|
|
|
|
| Change
in Benefit Obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Beginning
of year |
$ |
40,968 |
|
|
$ |
37,875 |
|
|
$ |
24,581 |
|
|
$ |
17,425 |
|
|
| Service
cost |
|
712 |
|
|
|
785 |
|
|
|
282 |
|
|
|
176 |
|
|
| Interest
cost |
|
2,289 |
|
|
|
2,436 |
|
|
|
1,479 |
|
|
|
1,203 |
|
|
| Plan
amendments |
|
(65 |
) |
|
|
854 |
|
|
|
248 |
|
|
|
4,932 |
|
|
| Actuarial
loss, net |
|
2,467 |
|
|
|
1,206 |
|
|
|
2,017 |
|
|
|
1,632 |
|
|
| Benefits
paid |
|
(2,884 |
) |
|
|
(3,924 |
) |
|
|
(1,532 |
) |
|
|
(1,316 |
) |
|
| Termination
benefits |
|
4 |
|
|
|
2,588 |
|
|
|
2 |
|
|
|
508 |
|
|
| Settlements |
|
(6,105 |
) |
|
|
(900 |
) |
|
|
– |
|
|
|
– |
|
|
|
|
| End
of year |
|
37,395 |
|
|
|
40,968 |
|
|
|
27,077 |
|
|
|
24,581 |
|
|
|
|
|
| Beginning
of year |
|
42,776 |
|
|
|
38,644 |
|
|
|
4,467 |
|
|
|
3,992 |
|
|
| Actual
return on plan assets |
|
4,874 |
|
|
|
8,659 |
|
|
|
471 |
|
|
|
777 |
|
|
| Company
contributions |
|
443 |
|
|
|
282 |
|
|
|
1,143 |
|
|
|
1,014 |
|
|
| Benefits
paid |
|
(2,884 |
) |
|
|
(3,924 |
) |
|
|
(1,532 |
) |
|
|
(1,316 |
) |
|
| Settlements |
|
(6,105 |
) |
|
|
(900 |
) |
|
|
– |
|
|
|
– |
|
|
| Acquisitions
and divestitures, net |
|
2 |
|
|
|
15 |
|
|
|
– |
|
|
|
– |
|
|
|
| End
of year |
|
39,106 |
|
|
|
42,776 |
|
|
|
4,549 |
|
|
|
4,467 |
|
|
|
|
|
| End
of year |
|
1,711 |
|
|
|
1,808 |
|
|
|
(22,528 |
) |
|
|
(20,114 |
) |
|
|
| Actuarial
loss, net |
|
5,486 |
|
|
|
5,065 |
|
|
|
7,335 |
|
|
|
5,576 |
|
|
| Prior
service cost |
|
1,387
|
|
|
|
1,512 |
|
|
|
4,193 |
|
|
|
4,179 |
|
|
| Transition
(asset) obligation |
|
1 |
|
|
|
(3 |
) |
|
|
18 |
|
|
|
20 |
|
|
|
| Net
amount recognized |
$ |
8,585 |
|
|
$ |
8,382 |
|
|
$ |
(10,982 |
) |
|
$ |
(10,339 |
) |
|
 |
|
| Amounts
recognized on the balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Prepaid
pension cost (in Other Assets) |
$ |
12,302 |
|
|
$ |
12,329 |
|
|
$ |
– |
|
|
$ |
– |
|
|
| Assets
held for sale |
|
1 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
| Employee
benefit obligation |
|
(5,774 |
) |
|
|
(5,398 |
) |
|
|
(10,953 |
) |
|
|
(10,339 |
) |
|
| Liabilities
related to assets held for sale |
|
– |
|
|
|
– |
|
|
|
(29 |
) |
|
|
– |
|
|
| Minority
interest |
|
145 |
|
|
|
79 |
|
|
|
– |
|
|
|
– |
|
|
| Accumulated
other comprehensive loss |
|
1,448 |
|
|
|
861 |
|
|
|
– |
|
|
|
– |
|
|
|
| Net
amount recognized |
$ |
8,585 |
|
|
$ |
8,382 |
|
|
$ |
(10,982 |
) |
|
$ |
(10,339 |
) |
|
|
|
Changes
in benefit obligations were caused by factors including
changes in actuarial assumptions (see “Assumptions”)
and settlements.
Verizon’s union contracts contain health care cost
provisions that limit company payments toward health
care costs to specific dollar amounts (known as caps).
These caps pertain to both current and future retirees,
and have a significant impact on the actuarial valuation
of postretirement benefits. These caps have been included
in union contracts for several years, but have exceeded
the annual health care cost every year until 2003. During
the negotiation of new collective bargaining agreements
for union contracts covering 79,000 unionized employees
in the second half of 2003, the date health care caps
would become effective was extended and the dollar amounts
of the caps were increased. In the fourth quarter of
2003, we began recording retiree health care costs as
if there were no caps, in connection with the ratification
of the union contracts. Since the caps are an assumption
included in the actuarial determination of Verizon’s
postretirement obligation, the effect of extending and
increasing the caps increased the accumulated postretirement
obligation in the fourth quarter of 2003 by $5,158 million.
In 2003 and 2002, Verizon reduced its workforce using
its employee severance plans (see Note 5). Additionally,
in 2004, 2003 and 2002, several of the pension plans’
lump-sum pension distributions surpassed the settlement
threshold equal to the sum of service cost and interest
cost requiring settlement recognition for all cash settlements
for each of those years.
The accumulated benefit obligation for all defined
benefit pension plans was $35,389 million and $39,012
million at December 31, 2004 and 2003, respectively.
Information for pension plans with an accumulated benefit
obligation in excess of plan assets follows: |
|
| At
December 31, |
|
2004 |
|
|
|
2003 |
|
|
|
|
| Projected
benefit obligation |
$ |
12,979 |
|
|
$ |
12,579 |
|
|
| Accumulated
benefit obligation |
|
12,508
|
|
|
|
12,061 |
|
|
| Fair
value of plan assets |
|
7,816 |
|
|
|
7,828 |
|
|
|
| Net
Periodic Cost |
|
| |
Pension |
Health
Care and Life |
|
|
|
| Years
Ended December 31, |
|
2004 |
|
|
|
2003 |
|
|
|
2002 |
|
|
|
2004 |
|
|
|
2003 |
|
|
|
2002 |
|
|
|
|
| Service
cost |
$ |
712 |
|
|
$ |
785 |
|
|
$ |
716 |
|
|
$ |
282 |
|
|
$ |
176 |
|
|
$ |
126 |
|
|
| Interest
cost |
|
2,289 |
|
|
|
2,436 |
|
|
|
2,486 |
|
|
|
1,479 |
|
|
|
1,203 |
|
|
|
1,066 |
|
|
| Expected
return on plan assets |
|
(3,709 |
) |
|
|
(4,150 |
) |
|
|
(4,881 |
) |
|
|
(414 |
) |
|
|
(430 |
) |
|
|
(476 |
) |
|
| Amortization
of transition asset |
|
(4 |
) |
|
|
(41 |
) |
|
|
(109 |
) |
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
| Amortization
of prior service cost |
|
60 |
|
|
|
23 |
|
|
|
(4 |
) |
|
|
234 |
|
|
|
(9 |
) |
|
|
(89 |
) |
|
| Actuarial
loss (gain), net |
|
57 |
|
|
|
(337 |
) |
|
|
(707 |
) |
|
|
187 |
|
|
|
130 |
|
|
|
70 |
|
|
|
| Net
periodic benefit (income) cost |
|
(595 |
) |
|
|
(1,284 |
) |
|
|
(2,499 |
) |
|
|
1,770 |
|
|
|
1,072 |
|
|
|
699 |
|
|
|
| Termination
benefits |
|
4 |
|
|
|
2,588 |
|
|
|
286 |
|
|
|
2 |
|
|
|
508 |
|
|
|
21 |
|
|
| Settlement
loss |
|
815 |
|
|
|
229 |
|
|
|
237 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
| Curtailment
(gain) loss and other, net |
|
1 |
|
|
|
65 |
|
|
|
315 |
|
|
|
2 |
|
|
|
(130 |
) |
|
|
441 |
|
|
|
| Subtotal |
|
820 |
|
|
|
2,882 |
|
|
|
838 |
|
|
|
4 |
|
|
|
378 |
|
|
|
462 |
|
|
|
| Total
cost (income) |
$ |
225 |
|
|
$ |
1,598 |
|
|
$ |
(1,661 |
) |
|
$ |
1,774 |
|
|
$ |
1,450 |
|
|
$ |
1,161 |
|
|
|
|
For
continuation of Note 16, see next page. |
|
|
|
|
