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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
135
The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, exclud-
ing defined contribution plans.
($ in millions)
Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans
2014 2013 2014 2013 2014 2013 2014 2013
Change in benefit obligation
Benefit obligation at January 1 $51,034 $56,810 $ 48,620 $49,319 $ 4,633 $ 5,282 $ 832 $1,019
Service cost ——449 501 26 35 710
Interest cost 2,211 1,980 1,533 1,524 187 164 63 60
Plan participants’ contributions ——37 42 61 191 ——
Acquisitions/divestitures, net ——(90) 89 0(2) 00
Actuarial losses/(gains) 6,968 (4,344)6,662 (362)548 (481) 38 (89)
Benefits paid from trust (3,455) (3,303)(1,985) (1,920)(388) (557) (5) (6)
Direct benefit payments (114) (108)(465) (464)(37) (43) (26) (28)
Foreign exchange impact ——(5,073) (115)——(91) (89)
Medicare/Government subsidies ————23 30 ——
Amendments/curtailments/settlements/other ——146 6015 (1) (44)
Benefit obligation at December 31 $56,643 $51,034 $ 49,834 $48,620 $ 5,053 $ 4,633 $ 817 $ 832
Change in plan assets
Fair value of plan assets at January 1 $53,954 $53,630 $ 39,464 $38,058 $ 177 $ 433 $ 92 $ 119
Actual return on plan assets 5,274 3,626 5,579 2,515 0095
Employer contributions ——465 449 166 110 00
Acquisitions/divestitures, net ——(59) 35 0—00
Plan participants’ contributions ——37 42 61 191 ——
Benefits paid from trust (3,455) (3,303)(1,985) (1,920)(388) (557) (5) (6)
Foreign exchange impact ——(4,049) 121 ——(11) (14)
Amendments/curtailments/settlements/other ——93* 164* ——0(12)
Fair value of plan assets at December 31 $55,772 $53,954 $ 39,543 $39,464 $ 16 $ 177 $ 84 $ 92
Funded status at December 31 $ (871) $ 2,920 $(10,291) $ (9,157) $(5,037) $(4,456) $(733) $ (740)
Accumulated benefit obligation** $56,643 $51,034 $ 47,516 $47,806 N/A N/A N/A N/A
*
Includes the reinstatement of certain plan assets in Brazil due to government rulings in 2011 and 2013 allowing certain previously restricted plan assets to be returned to IBM. The
assets will be returned to IBM monthly over a three-year period, starting June 2011 and September 2013 respectively, with approximately $122 million returned during 2014. The
remaining surplus in Brazil at December 31, 2014 remains excluded from total plan assets due to continued restrictions imposed by the government on the use of those plan assets.
** Represents the benefit obligation assuming no future participant compensation increases.
N/A—Not applicable
The following table presents the net funded status recognized in the Consolidated Statement of Financial Position.
($ in millions)
Defined Benefit Pension Plans Nonpension Postretirement Benefit Plans
U.S. Plans Non-U.S. Plans U.S. Plan Non-U.S. Plans
At December 31: 2014 2013 2014 2013 2014 2013 2014 2013
Prepaid pension assets $ 1,065 $ 4,639 $ 1,095 $ 912 $ 0 $ 0 $ 0 $ 1
Current liabilities—compensation and benefits (111) (107)(326) (364)(381) (256) (13) (16)
Noncurrent liabilities—retirement and nonpension
postretirement benefit obligations (1,825) (1,612) (11,060) (9,705)(4,656) (4,200) (720) (725)
Funded status—net $ (871) $ 2,920 $(10,291) $(9,157)$(5,037) $(4,456) $(733) $(740)