Employee Pension and Other Postretirement Benefits (Tables)
|
12 Months Ended |
Dec. 31, 2018 |
Retirement Benefits [Abstract] |
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Fair Value of Assets in Pension Plan and Other Benefits Plan |
The following table sets forth the fair value of the assets in the Company's Pension Plan and Other Benefits Plan as of December 31, 2018 and 2017. | | | | | | | | | | | | | | | | | | | | Pension Plan | | Other Benefits Plan | | | Years Ended December 31, | | Years Ended December 31, | (Dollars in millions) | | 2018 | | 2017 | | 2018 | | 2017 | Change in plan assets: | | |
| | |
| | |
| | |
| Fair value of plan assets, beginning of year | | $ | 3,854 |
| | $ | 3,254 |
| | $ | 288 |
| | $ | 260 |
| Actual return on plan assets | | (196 | ) | | 608 |
| | (18 | ) | | 44 |
| Employer contributions | | — |
| | 115 |
| | — |
| | 1 |
| Plan participants' contributions | | — |
| | — |
| | 4 |
| | 4 |
| Benefits paid | | (129 | ) | | (123 | ) | | (19 | ) | | (21 | ) | Fair value of plan assets, end of year | | $ | 3,529 |
| | $ | 3,854 |
| | $ | 255 |
| | $ | 288 |
|
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Fair Value by Level Within Fair Value Hierarchy Assets by Major Asset Category for Pension Plan and Other Benefits Plan |
The following table provides the fair value by level within the fair value hierarchy of the Company's period-end assets by major asset category for the Pension Plan and Other Benefits Plan. For information about the fair value hierarchy levels, refer to Note 11 to these consolidated financial statements. The Plans do not hold any equity or debt securities issued by the Company or any related parties. | | | | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | Pension Plan Investments: | | |
| | |
| | |
| | |
| Cash and cash equivalents | | $ | — |
| | $ | 25 |
| | $ | — |
| | $ | 25 |
| U.S. government securities | | — |
| | 382 |
| | — |
| | 382 |
| Fixed and variable income securities | | — |
| | 824 |
| | — |
| | 824 |
| Equity securities | | 185 |
| | 6 |
| | — |
| | 191 |
| Mutual funds | | 620 |
| | — |
| | — |
| | 620 |
| Municipal bonds | | — |
| | 37 |
| | — |
| | 37 |
| Other | | — |
| | 20 |
| | — |
| | 20 |
| Total investments in the fair value hierarchy | | $ | 805 |
| | $ | 1,294 |
| | $ | — |
| | $ | 2,099 |
| Investments measured at net asset value (1) | | | | | | | | 1,420 |
| Investments at fair value | | | | | | | | 3,519 |
| Accrued dividends and interest receivable | | |
| | |
| | |
| | 12 |
| Net pending trades | | |
| | |
| | |
| | (2 | ) | Total plan assets | | |
| | |
| | |
| | $ | 3,529 |
|
| | (1) | In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets. |
| | | | | | | | | | | | | | | | | | | | December 31, 2017 | (Dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | Pension Plan Investments: | | |
| | |
| | |
| | |
| Cash and cash equivalents | | $ | — |
| | $ | 26 |
| | $ | — |
| | $ | 26 |
| U.S. government securities | | — |
| | 195 |
| | — |
| | 195 |
| Fixed and variable income securities | | — |
| | 638 |
| | — |
| | 638 |
| Equity securities | | 381 |
| | 7 |
| | — |
| | 388 |
| Mutual funds | | 830 |
| | — |
| | — |
| | 830 |
| Municipal bonds | | — |
| | 43 |
| | — |
| | 43 |
| Other | | 5 |
| | 11 |
| | — |
| | 16 |
| Total investments in the fair value hierarchy | | $ | 1,216 |
| | $ | 920 |
| | $ | — |
| | $ | 2,136 |
| Investments measured at net asset value (1) | | | | | | | | 1,704 |
| Investments at fair value | | | | | | | | 3,840 |
| Accrued dividends and interest receivable | | |
| | |
| | |
| | 8 |
| Net pending trades | | |
| | |
| | |
| | 6 |
| Total plan assets | | |
| | |
| | |
| | $ | 3,854 |
|
| | | | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | Other Postretirement Benefits Plan Investments: | | |
| | |
| | |
| | |
| Cash and cash equivalents | | $ | — |
| | $ | 1 |
| | $ | — |
| | $ | 1 |
| U.S. government securities | | — |
| | 37 |
| | — |
| | 37 |
| Fixed and variable income securities | | — |
| | 32 |
| | — |
| | 32 |
| Equity securities | | — |
| | — |
| | — |
| | — |
| Mutual funds | | 54 |
| | — |
| | — |
| | 54 |
| Total investments in the fair value hierarchy | | $ | 54 |
| | $ | 70 |
| | $ | — |
| | $ | 124 |
| Investments measured at net asset value (1) | | | | | | | | 134 |
| Investments at fair value | | | | | | | | 258 |
| Net pending trades | | |
| | |
| | |
| | (3 | ) | Total plan assets | | |
| | |
| | |
| | $ | 255 |
|
| | (1) | In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets. |
| | | | | | | | | | | | | | | | | | | | December 31, 2017 | (Dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | Other Postretirement Benefits Plan Investments: | | |
| | |
| | |
| | |
| Cash and cash equivalents | | $ | — |
| | $ | 3 |
| | $ | — |
| | $ | 3 |
| U.S. government securities | | — |
| | 44 |
| | — |
| | 44 |
| Fixed and variable income securities | | — |
| | 29 |
| | — |
| | 29 |
| Equity securities | | — |
| | 1 |
| | — |
| | 1 |
| Mutual funds | | 66 |
| | — |
| | — |
| | 66 |
| Total investments in the fair value hierarchy | | $ | 66 |
| | $ | 77 |
| | $ | — |
| | $ | 143 |
| Investments measured at net asset value (1) | | | | | | | | 157 |
| Investments at fair value | | | | | | | | 300 |
| Net pending trades | | |
| | |
| | |
| | (12 | ) | Total plan assets | | |
| | |
| | |
| | $ | 288 |
|
| | (1) | In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets. |
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Defined Benefit Plans Disclosures |
The following tables as of December 31, 2018 and 2017 present the Company's Pension Plan and Other Benefits Plan investments in which fair value is measured using net asset value per share (or its equivalent) as a practical expedient.
| | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Fair Value | | Unfunded Commitment | | Redemption Frequency | | Other Redemption Restrictions | | Redemption Notice Period | Pension Plan Investments | | | | | | | | | | | Domestic equity funds | | $ | 789 |
| | $ | — |
| | Daily | | None | | None | Real estate funds | | 415 |
| | — |
| | Quarterly | | Availability of fund's liquid assets and approval of the board of directors | | 45-90 days | Real estate funds | | 7 |
| | 3 |
| | None | | Hold until dissolution date | | None | International equity funds | | 159 |
| | — |
| | Monthly | | None | | 15 days | Money market funds | | 50 |
| | — |
| | Immediate | | None | | None | Total | | $ | 1,420 |
| | $ | 3 |
| | | | | |
|
| | | | | | | | | | | | | | | | | | December 31, 2017 | (Dollars in millions) | | Fair Value | | Unfunded Commitment | | Redemption Frequency | | Other Redemption Restrictions | | Redemption Notice Period | Pension Plan Investments | | | | | | | | | | | Domestic equity funds | | $ | 1,101 |
| | $ | — |
| | Daily | | None | | None | Real estate funds | | 343 |
| | — |
| | Quarterly | | Availability of fund's liquid assets and approval of the board of directors | | 45-90 days | Real estate funds | | 13 |
| | 5 |
| | None | | Hold until dissolution; approximately four to six years from original final closing date | | None | International equity funds | | 228 |
| | — |
| | Monthly | | None | | 15 days | Money market funds | | 19 |
| | — |
| | Immediate | | None | | None | Total | | $ | 1,704 |
| | $ | 5 |
| | | | | | |
| | | | | | | | | | | | | | | | | | December 31, 2018 | (Dollars in millions) | | Fair Value | | Unfunded Commitment | | Redemption Frequency | | Other Redemption Restrictions | | Redemption Notice Period | Other Postretirement Benefits Plan Investments | | | | | | | | | | | Domestic equity funds | | $ | 87 |
| | $ | — |
| | Daily | | None | | None | Pooled separate account - variable life insurance policies | | 46 |
| | — |
| | Quarterly | | Proof of death for death claim redemptions | | 7 business days | Money market funds | | 1 |
| | — |
| | Immediate | | None | | None | Total | | $ | 134 |
| | $ | — |
| | | | | | |
| | | | | | | | | | | | | | | | | | December 31, 2017 | (Dollars in millions) | | Fair Value | | Unfunded Commitment | | Redemption Frequency | | Other Redemption Restrictions | | Redemption Notice Period | Other Postretirement Benefits Plan Investments | | | | | | | | | | | Domestic equity funds | | $ | 100 |
| | $ | — |
| | Daily | | None | | None | Pooled separate account - variable life insurance policies | | 52 |
| | — |
| | Quarterly | | Proof of death for death claim redemptions | | 7 business days | Money market funds | | 5 |
| | — |
| | Immediate | | None | | None | Total | | $ | 157 |
| | $ | — |
| | | | | | |
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Changes in Fair Value of Assets Measured at Level 3 |
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Table of Benefit Obligation Activity and Funded Status for Each of Plans |
The following table sets forth the benefit obligation activity and the funded status for each of the Company's plans at December 31, 2018 and 2017. In addition, the table sets forth the over (under) funded status at December 31, 2018 and 2017. This pension benefits table does not include the obligations for Executive Supplemental Benefit Plans (ESBPs). | | | | | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | | | Years Ended December 31, | | Years Ended December 31, | (Dollars in millions) | | 2018 | | 2017 | | 2018 | | 2017 | Accumulated benefit obligation | | $ | 3,038 |
| | $ | 3,101 |
| | |
| | |
| Change in benefit obligation | | | | | | |
| | |
| Benefit obligation, beginning of year | | $ | 3,242 |
| | $ | 2,942 |
| | $ | 265 |
| | $ | 261 |
| Service cost | | 80 |
| | 71 |
| | 4 |
| | 6 |
| Interest cost | | 100 |
| | 100 |
| | 8 |
| | 8 |
| Plan participants' contributions | | — |
| | — |
| | 4 |
| | 4 |
| Actuarial loss/(gain) | | (246 | ) | | 252 |
| | (21 | ) | | 6 |
| Effect of plan amendments | | — |
| | — |
| | — |
| | — |
| Medicare Part D subsidy | | — |
| | — |
| | 1 |
| | 1 |
| Benefits paid | | (129 | ) | | (123 | ) | | (19 | ) | | (21 | ) | Benefit obligation, end of year | | 3,047 |
| | 3,242 |
| | 242 |
| | 265 |
| Fair value of plan assets, end of year | | 3,529 |
| | 3,854 |
| | 255 |
| | 288 |
| Over (Under) funded status | | $ | 482 |
| | $ | 612 |
| | $ | 13 |
| | $ | 23 |
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Table of Amounts Recognized in Accumulated Other Comprehensive Loss for Pension, Including ESBPs, and Other Benefits |
The following table illustrates the changes that were reflected in AOCI during 2018, 2017 and 2016. Pension benefits do not include the ESBPs. | | | | | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | (Dollars in millions) | | Net Actuarial (Gain) Loss | | Prior Service Credit | | Net Actuarial (Gain) Loss | | Prior Service Credit | Amounts Recognized in Other Comprehensive Loss: | | |
| | | | |
| | | Balance, December 31, 2015 | | $ | 1,027 |
| | $ | (121 | ) | | $ | 82 |
| | $ | (15 | ) | Arising during the year | | 133 |
| | (76 | ) | | 6 |
| | (47 | ) | Recognized in net income during the year | | (75 | ) | | 18 |
| | (10 | ) | | 12 |
| Balance, December 31, 2016 | | $ | 1,085 |
| | $ | (179 | ) | | $ | 78 |
| | $ | (50 | ) | Arising during the year | | (101 | ) | | — |
| | (19 | ) | | — |
| Recognized in net income during the year | | (79 | ) | | 27 |
| | (8 | ) | | 21 |
| Balance, December 31, 2017 | | $ | 905 |
| | $ | (152 | ) | | $ | 51 |
| | $ | (29 | ) | Arising during the year | | 218 |
| | — |
| | 18 |
| | — |
| Recognized in net income during the year | | (87 | ) | | 26 |
| | (5 | ) | | 15 |
| Balance, December 31, 2018 | | $ | 1,036 |
| | $ | (126 | ) | | $ | 64 |
| | $ | (14 | ) |
At December 31, 2018 and 2017, the following amounts were recognized in accumulated other comprehensive loss for pension, including ESBPs, and other benefits. | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2018 | | | Pension Benefits | | Other Postretirement Benefits | (Dollars in millions) | | Gross | | Tax | | Net of Tax | | Gross | | Tax | | Net of Tax | Net actuarial loss | | $ | 1,036 |
| | $ | 273 |
| | $ | 763 |
| | $ | 64 |
| | $ | 18 |
| | $ | 46 |
| Prior service credit | | (126 | ) | | (33 | ) | | (93 | ) | | (14 | ) | | (4 | ) | | (10 | ) | Pension and other postretirement benefits | | 910 |
| | 240 |
|
| 670 |
|
| 50 |
|
| 14 |
|
| 36 |
| Executive Supplemental Benefits Plans | | |
| | |
| | |
| | |
| | |
| | |
| Net actuarial loss | | 32 |
| | 8 |
| | 24 |
| | — |
| | — |
| | — |
| Prior service credit | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Executive supplemental benefits plans adjustment | | 32 |
| | 8 |
| | 24 |
| | — |
| | — |
| | — |
| Pension and other postretirement benefits, as adjusted | | $ | 942 |
| | $ | 248 |
| | $ | 694 |
| | $ | 50 |
| | $ | 14 |
| | $ | 36 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2017 | | | Pension Benefits | | Other Postretirement Benefits | (Dollars in millions) | | Gross | | Tax | | Net of Tax | | Gross | | Tax | | Net of Tax | Net actuarial loss | | $ | 905 |
| | $ | 238 |
| | $ | 667 |
| | $ | 51 |
| | $ | 14 |
| | $ | 37 |
| Prior service credit | | (152 | ) | | (40 | ) | | (112 | ) | | (29 | ) | | (8 | ) | | (21 | ) | Pension and other postretirement benefits | | 753 |
| | 198 |
| | 555 |
| | 22 |
| | 6 |
| | 16 |
| Executive Supplemental Benefits Plans | | |
| | |
| | |
| | |
| | |
| | |
| Net actuarial loss | | 40 |
| | 11 |
| | 29 |
| | — |
| | — |
| | — |
| Prior service credit | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Executive supplemental benefits plans adjustment | | 40 |
| | 11 |
| | 29 |
| | — |
| | — |
| | — |
| Pension and other postretirement benefits, as adjusted | | $ | 793 |
| | $ | 209 |
| | $ | 584 |
| | $ | 22 |
| | $ | 6 |
| | $ | 16 |
|
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Estimated Future Benefit Payments and Subsidies |
The following pension and postretirement benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next 10 years. This table does not include the ESBPs. | | | | | | | | | | (Dollars in millions) | | Pension Benefits | | Postretirement Benefits | Years ending December 31, | | |
| | |
| 2019 | | $ | 140 |
| | $ | 17 |
| 2020 | | 147 |
| | 17 |
| 2021 | | 153 |
| | 18 |
| 2022 | | 160 |
| | 18 |
| 2023 | | 166 |
| | 18 |
| Years 2024 - 2028 | | 914 |
| | 82 |
|
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Summary of Weighted Average Assumptions Used in Computing Present Value of Benefit Obligations and Net Periodic Benefit Cost |
The following tables summarize the weighted average assumptions used in computing the present value of the benefit obligations and the net periodic benefit cost. | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | | | Years Ended December 31, | | Years Ended December 31, | | | 2018 | | 2017 | | 2018 | | 2017 | Discount rate in determining net periodic benefit cost | | | | | | | | | For service cost | | 3.26 | % | | 3.79 | % | | 3.49 | % | | 3.97 | % | For interest cost | | 3.16 |
| | 3.42 |
| | 3.02 |
| | 3.19 |
| Discount rate in determining benefit obligations at year end | | 4.12 |
| | 3.48 |
| | 4.01 |
| | 3.37 |
| Rate of increase in future compensation levels for determining net periodic benefit cost | | 4.70 |
| | 4.70 |
| | n/a |
| | n/a |
| Rate of increase in future compensation levels for determining benefit obligations at year end | | 5.10 |
| | 4.70 |
| | n/a |
| | n/a |
| Expected return on plan assets | | 7.50 |
| | 7.50 |
| | 7.50 |
| | 7.50 |
| Cash balance crediting rate for determining net periodic benefit cost | | 2.74 |
| | 3.06 |
| | n/a |
| | n/a |
| Cash balance crediting rate for determining benefit obligations at year end | | 3.02 |
| | 2.74 |
| | n/a |
| | n/a |
|
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Components of Net Periodic Benefit Cost |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Benefits | | Other Postretirement Benefits | | ESBPs | | | Years Ended December 31, | | Years Ended December 31, | | Years Ended December 31, | (Dollars in millions) | | 2018 | | 2017 | | 2016 | | 2018 | | 2017 | | 2016 | | 2018 | | 2017 | | 2016 | Components of net periodic benefit cost: | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Service cost | | $ | 80 |
| | $ | 71 |
| | $ | 91 |
| | $ | 4 |
| | $ | 6 |
| | $ | 8 |
| | $ | — |
| | $ | — |
| | $ | 2 |
| Interest cost | | 100 |
| | 100 |
| | 103 |
| | 8 |
| | 8 |
| | 9 |
| | 3 |
| | 3 |
| | 2 |
| Expected return on plan assets | | (268 | ) | | (254 | ) | | (235 | ) | | (21 | ) | | (19 | ) | | (19 | ) | | — |
| | — |
| | — |
| Amortization of prior service credit | | (26 | ) | | (27 | ) | | (18 | ) | | (15 | ) | | (21 | ) | | (12 | ) | | — |
| | — |
| | — |
| Recognized net actuarial loss | | 87 |
| | 79 |
| | 75 |
| | 5 |
| | 8 |
| | 10 |
| | 3 |
| | 4 |
| | 3 |
| Curtailment gain | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (2 | ) | Total net periodic benefit cost | | $ | (27 | ) | | $ | (31 | ) | | $ | 16 |
| | $ | (19 | ) | | $ | (18 | ) | | $ | (4 | ) | | $ | 6 |
|
| $ | 7 |
| | $ | 5 |
|
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Summary of Amounts Forecasted to be Recognized, Net Periodic Benefit Costs |
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Schedule of Assumed Weighted-Average Healthcare Cost Trend Rates |
The Company's assumed weighted-average healthcare cost trend rates are as follows. | | | | | | | | | | | | | Years Ended December 31, | | | 2018 | | 2017 | | 2016 | Healthcare cost trend rate assumed for next year | | 4.44 | % | | 4.44 | % | | 4.64 | % | Rate to which cost trend rate is assumed to decline (the ultimate trend rate) | | 3.94 | % | | 3.94 | % | | 3.96 | % | Year the rate reaches the ultimate trend rate | | 2027 |
| | 2026 |
| | 2026 |
|
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Schedule of Effect of One-Percentage-Point Change in Assumed Healthcare Cost Trend Rates |
|