IBM 2010 Annual Report Download - page 127

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies 125
Expected Benefit Payments
Defined Benefit Pension Plan Expected Payments
The following table presents the total expected benefit payments to defined benefit pension plan participants. These payments have been
estimated based on the same assumptions used to measure the plans’ PBO at December 31, 2010 and include benefits attributable to
estimated future compensation increases, where applicable.
The 2011 expected benefit payments to defined benefit pension
plan participants not covered by the respective plan assets (under-
funded plans) represent a component of compensation and
benefits, within current liabilities, in the Consolidated Statement of
Financial Position.
The 2011 expected benefit payments to nonpension postretirement
benefit plan participants not covered by the respective plan assets
represent a component of compensation and benefits, within current
liabilities, in the Consolidated Statement of Financial Position.
Medicare Prescription Drug Act
In connection with the Medicare Prescription Drug Improvement
and Modernization Act of 2003, the company is expected to con-
tinue to receive a federal subsidy of approximately $255 million to
subsidize the prescription drug coverage provided by the U.S.
nonpension postretirement benefit plan, which is expected to
extend until 2015. Approx imately $120 million of the subsidy will
be used by the company to reduce its obligation and cost related
to the U.S. nonpension postretirement benefit plan. The company
($ in millions)
Qualified Nonqualified Qualified Nonqualified Total Expected
U.S. Plan U.S. Plans Non-U.S. Plans Non-U.S. Plans Benefit
Payments Payments Payments Payments Payments
2011 $ 3,390 $ 96 $ 1,949 $ 344 $ 5,780
2012 3,394 98 1,939 350 5,782
2013 3,408 102 1,963 362 5,834
2014 3,428 103 1,986 364 5,881
2015 3,435 106 2,017 373 5,931
2016 – 2020 17,271 560 10,609 2,019 30,458
($ in millions)
Less: IBM Share Net Expected Qualified Nonqualified Total Expected
U.S. Plan of Expected U.S. Plan Non-U.S. Plans Non-U.S. Plans Benefit
Payments Medicare Subsidy Payments Payments Payments Payments
2011 $ 493 $(23) $ 470 $ 8 $ 30 $ 507
2012 483 (25) 458 9 33 500
2013 445 (25) 420 10 35 465
2014 427 (24) 403 10 38 451
2015 419 (23) 396 11 41 448
2016 – 2020 1,931 — 1,931 66 248 2,245
Nonpension Postretirement Benefit Plan Expected Payments
The following table reflects the total expected benefit payments
to nonpension postretirement benefit plan participants, as well
as the expected receipt of the company’s share of the Medicare
subsidy described below. These payments have been estimated
based on the same assumptions used to measure the plan’s APBO
at December 31, 2010.
will contribute the remaining subsidy of $135 million to the plan in
order to reduce contributions required by the participants. The
company received a total subsidy of $45 million for prescription
drug-related coverage during each of the years ended December
31, 2010 and 2009, which was utilized to reduce the company
contributions to the U.S. nonpension postretirement benefit plan.
The company has included the impact of its portion of the sub-
sidy in the determination of net periodic cost and APBO for the
U.S. nonpension postretirement benefit plan at and for the years
ended December 31, 2010, 2009 and 2008. The impact of the
subsidy resulted in a reduction in APBO of $107 million and $100
million at December 31, 2010 and 2009, respectively. The impact
of the subsidy resulted in a reduction in 2010, 2009 and 2008 net
periodic cost of $19 million, $28 million and $40 million, respectively.