IBM 2011 Annual Report Download - page 128

Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies126
($ in millions)
Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans
2011 2010 2011 2010 2011 2010 2011 2010
Net loss at January 1 $15,865 $14,880 $17,580 $17,172 $492 $397 $180 $167
Current period loss/(gain) 3,514 1,456 1,696 1,130 241 96 45 24
Curtailments and settlements ——(11) (10) ————
Amortization of net loss included
in net periodic (income)/cost (818) (471) (957) (712) ——(13) (12)
Net loss at December 31 $18,561 $15,865 $18,309 $17,580 $734 $492 $211 $180
Prior service costs/(credits) at January 1 $ 149 $ 159 $ (958) $ (1,104)$ — $ (14) $ (14) $ (19)
Current period prior service costs/(credits) ——28 (28)——(0) (0)
Curtailments and settlements ————————
Amortization of prior service (costs)/credits
included in net periodic (income)/cost (10) (10)162 174 —14 45
Prior service costs/(credits) at December 31 $ 139 $ 149 $ (768) $ (958) $ — $ — $ (10) $ (14)
Transition (assets)/liabilities at January 1 $ — $ — $ (0) $ (1) $ — $ — $ 1 $ 1
Amortization of transition assets/(liabilities)
included in net periodic (income)/cost ——00——(0) (0)
Transition (assets)/liabilities at December 31 $ — $ — $ (0) $ (0) $ — $ — $ 0 $ 1
Total loss recognized in accumulated other
comprehensive income/(loss)*$18,701 $16,014 $17,541 $16,621 $734 $492 $202 $167
* See note L, “Equity Activity,” on pages 110 to 112 for the total change in the accumulated other comprehensive income/(loss) and the Consolidated Statement of Comprehensive
Income for the components of net periodic (income)/cost, including the related tax effects, recognized in other comprehensive income/(loss) for the retirement-related benefit plans.
The following table presents the pre-tax estimated net loss, estimated prior service costs/(credits) and estimated transition (assets)/
liabilities of the retirement-related benefit plans that will be amortized from accumulated other comprehensive income/(loss) into net periodic
(income)/cost in 2012.
($ in millions)
Defined Benefit
Pension Plans
Nonpension Postretirement
Benefit Plans
U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans
Net loss $1,343 $1,047 $24 $16
Prior service costs/(credits) 9 (157) — (4)
Transition (assets)/liabilities — (0) — 0
During the years ended December 31, 2011, 2010 and 2009, the
company paid $16 million, $22 million and $140 million, respectively,
for mandatory pension insolvency insurance coverage premiums
in certain non-U.S. countries (Germany, Canada, Luxembourg and
the U.K.). Premiums were significantly higher in 2009 due to the
increased level of insolvencies experienced by other companies as
a result of the economic crisis in that period.
No significant amendments of retirement-related benefit plans
occurred during the years ended December 31, 2011 and 2010 that
had a material effect in the Consolidated Statement of Earnings.
In 2009, the company approved changes to the United Kingdom
Pension Plan which included ending benefit accruals under this plan
effective April 2011. As a result of this action, the company recorded
a curtailment gain of $124 million which was included in 2009 net
periodic (income)/cost and reduced the PBO by $85 million.
Assumptions Used to Determine Plan Financial Information
Underlying both the measurement of benefit obligations and net
periodic (income)/cost are actuarial valuations. These valuations
use participant-specific information such as salary, age and years
of service, as well as certain assumptions, the most significant of
which include estimates of discount rates, expected return on plan
assets, rate of compensation increases, interest crediting rates and
mortality rates. The company evaluates these assumptions, at a
minimum, annually, and makes changes as necessary.