XML 75 R49.htm IDEA: XBRL DOCUMENT v3.10.0.1
Retirement-Related Benefits (Tables)
 12 Months Ended
Dec. 31, 2018
Retirement-Related Benefits  
Summary of total retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings

 

($ in millions)

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

Total

 

For the year ended December 31:

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

Defined benefit pension plans

 

$
542

 

$
237

 

$
(334

)

$
1,284

 

$
1,315

 

$
1,039

 

$
1,827

 

$
1,552

 

$
705

 

Retention Plan

 
17

 
16

 
17

 

—

 

—

 

—

 
17

 
16

 
17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total defined benefit pension plans (income)/cost

 

$
559

 

$
253

 

$
(317

)

$
1,284

 

$
1,315

 

$
1,039

 

$
1,843

 

$
1,568

 

$
722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBM 401(k) Plus Plan and non-U.S. plans

 

$
588

 

$
616

 

$
626

 

$
412

 

$
404

 

$
420

 

$
1,000

 

$
1,020

 

$
1,046

 

Excess 401(k)

 
24

 
26

 
24

 

—

 

—

 

—

 
24

 
26

 
24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total defined contribution plans cost

 

$
612

 

$
643

 

$
650

 

$
412

 

$
404

 

$
420

 

$
1,024

 

$
1,046

 

$
1,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonpension postretirement benefit plans cost

 

$
147

 

$
180

 

$
195

 

$
51

 

$
62

 

$
16

 

$
198

 

$
242

 

$
211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total retirement-related benefits net periodic cost

 

$
1,319

 

$
1,076

 

$
527

 

$
1,747

 

$
1,781

 

$
1,475

 

$
3,066

 

$
2,857

 

$
2,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of the total PBO for defined benefit plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and associated funded status

 

($ in millions)

 

 

 

Benefit Obligations

 

Fair Value of Plan Assets

 

Funded Status*

 

At December 31:

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

U.S. Plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Overfunded plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified PPP

 

$
46,145

 

$
50,602

 

$
48,213

 

$
52,694

 

$
2,069

 

$
2,092

 

Underfunded plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess PPP

 

$
1,395

 

$
1,532

 

$

—

 

$

—

 

$
(1,395

)

$
(1,532

)

Retention Plan

 
273

 
310

 

—

 

—

 
(273

)
(310

)

Nonpension postretirement benefit plan

 
3,912

 
4,184

 
29

 
18

 
(3,882

)
(4,165

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total underfunded U.S. plans

 

$
5,579

 

$
6,026

 

$
29

 

$
18

 

$
(5,550

)

$
(6,007

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-U.S. Plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Overfunded plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified defined benefit pension plans**

 

$
17,379

 

$
19,537

 

$
19,975

 

$
22,088

 

$
2,597

 

$
2,551

 

Nonpension postretirement benefit plans

 
0

 
0

 
0

 
0

 
0

 
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total overfunded non-U.S. plans

 

$
17,379

 

$
19,537

 

$
19,975

 

$
22,088

 

$
2,597

 

$
2,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underfunded plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Qualified defined benefit pension plans**

 

$
22,139

 

$
23,046

 

$
16,783

 

$
18,711

 

$
(5,356

)

$
(4,336

)

Nonqualified defined benefit pension plans

 
6,252

 
6,527

 

—

 

—

 
(6,252

)
(6,527

)

Nonpension postretirement benefit plans

 
704

 
732

 
65

 
70

 
(640

)
(663

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total underfunded non-U.S. plans

 

$
29,095

 

$
30,306

 

$
16,848

 

$
18,780

 

$
(12,248

)

$
(11,526

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total overfunded plans

 

$
63,524

 

$
70,139

 

$
68,190

 

$
74,782

 

$
4,666

 

$
4,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total underfunded plans

 

$
34,675

 

$
36,332

 

$
16,877

 

$
18,799

 

$
(17,798

)

$
(17,533

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Funded status is recognized in the Consolidated Statement of Financial Position as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability).

** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. non-qualified plans are unfunded.

Components of net periodic (income)/cost of the company's retirement-related benefit plans

 

($ in millions)

 

 

 

Defined Benefit Pension Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

For the year ended December 31:

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

Service cost

 

$

—

 

$

—

 

$

—

 

$
413

 

$
410

 

$
420

 

Interest cost (1)

 
1,719

 
1,913

 
2,048

 
830

 
837

 
1,035

 

Expected return on plan assets (1)

 
(2,701

)
(3,014

)
(3,689

)
(1,342

)
(1,325

)
(1,867

)

Amortization of transition assets (1)

 

—

 

—

 

—

 
0

 
0

 
0

 

Amortization of prior service costs/(credits) (1)

 
16

 
16

 
10

 
(83

)
(97

)
(106

)

Recognized actuarial losses (1)

 
1,525

 
1,337

 
1,314

 
1,401

 
1,507

 
1,408

 

Curtailments and settlements (1)

 

—

 

—

 

—

 
11

 
19

 
22

 

Multi-employer plans

 

—

 

—

 

—

 
38

 
40

 
43

 

Other costs/(credits)*

 

—

 

—

 

—

 
16

 
(76

)
84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net periodic (income)/cost

 

$
559

 

$
253

 

$
(317

)

$
1,284

 

$
1,315

 

$
1,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plan

 

Non-U.S. Plans

 

For the year ended December 31:

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

Service cost

 

$
13

 

$
14

 

$
17

 

$
5

 

$
6

 

$
5

 

Interest cost (1)

 
132

 
154

 
165

 
45

 
57

 
51

 

Expected return on plan assets (1)

 
0

 
0

 
0

 
(6

)
(7

)
(6

)

Amortization of transition assets (1)

 

—

 

—

 

—

 
0

 
0

 
0

 

Amortization of prior service costs/(credits) (1)

 
(7

)
(7

)
(7

)
0

 
0

 
(5

)

Recognized actuarial losses (1)

 
10

 
20

 
20

 
6

 
7

 
9

 

Curtailments and settlements (1)

 

—

 

—

 

—

 
0

 
0

 
(38

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total net periodic cost

 

$
147

 

$
180

 

$
195

 

$
51

 

$
62

 

$
16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

These components of net periodic pension costs are included in other (income) and expense in the Consolidated Statement of Earnings.

*

The non-U.S. plans amounts include a gain of $91 million in 2017 related to the IBM UK litigation and retirement-related charge of $56 million related to the IBM Spain pension litigation for 2016.

 

Changes in benefit obligations

 

($ in millions)

 

 

 

Defined Benefit Pension Plans

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at January 1

 

$
52,444

 

$
52,218

 

$
49,111

 

$
44,981

 

$
4,184

 

$
4,470

 

$
732

 

$
692

 

Service cost

 

—

 

—

 
413

 
410

 
13

 
14

 
5

 
6

 

Interest cost

 
1,719

 
1,913

 
830

 
837

 
132

 
154

 
45

 
57

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 

—

 

—

 

Acquisitions/divestitures, net

 

—

 

—

 
(27

)
24

 
0

 
0

 
0

 
0

 

Actuarial losses/(gains)

 
(2,743

)
1,895

 
(240

)
520

 
(71

)
(98

)
43

 
(3

)

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Direct benefit payments

 
(124

)
(123

)
(390

)
(384

)
(22

)
(24

)
(31

)
(30

)

Foreign exchange impact

 

—

 

—

 
(2,012

)
4,657

 

—

 

—

 
(86

)
18

 

Amendments/curtailments/settlements/other

 

—

 

—

 
34

 
(96

)

—

 

—

 
3

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at December 31

 

$
47,812

 

$
52,444

 

$
45,770

 

$
49,111

 

$
3,912

 

$
4,184

 

$
705

 

$
732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at January 1

 

$
52,694

 

$
51,405

 

$
40,798

 

$
36,020

 

$
18

 

$
26

 

$
70

 

$
71

 

Actual return on plan assets

 
(997

)
4,749

 
(610

)
2,583

 
1

 
0

 
12

 
6

 

Employer contributions

 

—

 

—

 
325

 
368

 
335

 
394

 
0

 
0

 

Acquisitions/divestitures, net

 

—

 

—

 
(22

)
(28

)
0

 
0

 
0

 
0

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 
0

 

—

 

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Foreign exchange impact

 

—

 

—

 
(1,754

)
3,694

 

—

 

—

 
(10

)
(1

)

Amendments/curtailments/settlements/other

 

—

 

—

 
(28

)
(2

)
0

 
(70

)
0

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at December 31

 

$
48,213

 

$
52,694

 

$
36,758

 

$
40,798

 

$
29

 

$
18

 

$
65

 

$
70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded status at December 31

 

$
401

 

$
250

 

$
(9,012

)

$
(8,312

)

$
(3,882

)

$
(4,165

)

$
(640

)

$
(663

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated benefit obligation*

 

$
47,812

 

$
52,444

 

$
45,161

 

$
47,974

 

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Represents the benefit obligation assuming no future participant compensation increases.

N/A — Not applicable

Changes in plan assets

 

($ in millions)

 

 

 

Defined Benefit Pension Plans

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at January 1

 

$
52,444

 

$
52,218

 

$
49,111

 

$
44,981

 

$
4,184

 

$
4,470

 

$
732

 

$
692

 

Service cost

 

—

 

—

 
413

 
410

 
13

 
14

 
5

 
6

 

Interest cost

 
1,719

 
1,913

 
830

 
837

 
132

 
154

 
45

 
57

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 

—

 

—

 

Acquisitions/divestitures, net

 

—

 

—

 
(27

)
24

 
0

 
0

 
0

 
0

 

Actuarial losses/(gains)

 
(2,743

)
1,895

 
(240

)
520

 
(71

)
(98

)
43

 
(3

)

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Direct benefit payments

 
(124

)
(123

)
(390

)
(384

)
(22

)
(24

)
(31

)
(30

)

Foreign exchange impact

 

—

 

—

 
(2,012

)
4,657

 

—

 

—

 
(86

)
18

 

Amendments/curtailments/settlements/other

 

—

 

—

 
34

 
(96

)

—

 

—

 
3

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at December 31

 

$
47,812

 

$
52,444

 

$
45,770

 

$
49,111

 

$
3,912

 

$
4,184

 

$
705

 

$
732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at January 1

 

$
52,694

 

$
51,405

 

$
40,798

 

$
36,020

 

$
18

 

$
26

 

$
70

 

$
71

 

Actual return on plan assets

 
(997

)
4,749

 
(610

)
2,583

 
1

 
0

 
12

 
6

 

Employer contributions

 

—

 

—

 
325

 
368

 
335

 
394

 
0

 
0

 

Acquisitions/divestitures, net

 

—

 

—

 
(22

)
(28

)
0

 
0

 
0

 
0

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 
0

 

—

 

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Foreign exchange impact

 

—

 

—

 
(1,754

)
3,694

 

—

 

—

 
(10

)
(1

)

Amendments/curtailments/settlements/other

 

—

 

—

 
(28

)
(2

)
0

 
(70

)
0

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at December 31

 

$
48,213

 

$
52,694

 

$
36,758

 

$
40,798

 

$
29

 

$
18

 

$
65

 

$
70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded status at December 31

 

$
401

 

$
250

 

$
(9,012

)

$
(8,312

)

$
(3,882

)

$
(4,165

)

$
(640

)

$
(663

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated benefit obligation*

 

$
47,812

 

$
52,444

 

$
45,161

 

$
47,974

 

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Represents the benefit obligation assuming no future participant compensation increases.

N/A — Not applicable

 

Accumulated benefit obligation

 

($ in millions)

 

 

 

Defined Benefit Pension Plans

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at January 1

 

$
52,444

 

$
52,218

 

$
49,111

 

$
44,981

 

$
4,184

 

$
4,470

 

$
732

 

$
692

 

Service cost

 

—

 

—

 
413

 
410

 
13

 
14

 
5

 
6

 

Interest cost

 
1,719

 
1,913

 
830

 
837

 
132

 
154

 
45

 
57

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 

—

 

—

 

Acquisitions/divestitures, net

 

—

 

—

 
(27

)
24

 
0

 
0

 
0

 
0

 

Actuarial losses/(gains)

 
(2,743

)
1,895

 
(240

)
520

 
(71

)
(98

)
43

 
(3

)

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Direct benefit payments

 
(124

)
(123

)
(390

)
(384

)
(22

)
(24

)
(31

)
(30

)

Foreign exchange impact

 

—

 

—

 
(2,012

)
4,657

 

—

 

—

 
(86

)
18

 

Amendments/curtailments/settlements/other

 

—

 

—

 
34

 
(96

)

—

 

—

 
3

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at December 31

 

$
47,812

 

$
52,444

 

$
45,770

 

$
49,111

 

$
3,912

 

$
4,184

 

$
705

 

$
732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at January 1

 

$
52,694

 

$
51,405

 

$
40,798

 

$
36,020

 

$
18

 

$
26

 

$
70

 

$
71

 

Actual return on plan assets

 
(997

)
4,749

 
(610

)
2,583

 
1

 
0

 
12

 
6

 

Employer contributions

 

—

 

—

 
325

 
368

 
335

 
394

 
0

 
0

 

Acquisitions/divestitures, net

 

—

 

—

 
(22

)
(28

)
0

 
0

 
0

 
0

 

Plan participants’ contributions

 

—

 

—

 
25

 
28

 
59

 
54

 
0

 

—

 

Benefits paid from trust

 
(3,484

)
(3,460

)
(1,976

)
(1,865

)
(383

)
(385

)
(7

)
(6

)

Foreign exchange impact

 

—

 

—

 
(1,754

)
3,694

 

—

 

—

 
(10

)
(1

)

Amendments/curtailments/settlements/other

 

—

 

—

 
(28

)
(2

)
0

 
(70

)
0

 
(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at December 31

 

$
48,213

 

$
52,694

 

$
36,758

 

$
40,798

 

$
29

 

$
18

 

$
65

 

$
70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded status at December 31

 

$
401

 

$
250

 

$
(9,012

)

$
(8,312

)

$
(3,882

)

$
(4,165

)

$
(640

)

$
(663

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated benefit obligation*

 

$
47,812

 

$
52,444

 

$
45,161

 

$
47,974

 

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Represents the benefit obligation assuming no future participant compensation increases.

N/A — Not applicable

Net funded status

 

($ 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:

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

Prepaid pension assets

 

$
2,069

 

$
2,092

 

$
2,597

 

$
2,551

 

$
0

 

$
0

 

$
0

 

$
0

 

Current liabilities — compensation and benefits

 
(120

)
(120

)
(302

)
(323

)
(340

)
(353

)
(36

)
(17

)

Noncurrent liabilities — retirement and nonpension postretirement benefit obligations

 
(1,548

)
(1,722

)
(11,306

)
(10,541

)
(3,542

)
(3,812

)
(605

)
(646

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded status — net

 

$
401

 

$
250

 

$
(9,012

)

$
(8,312

)

$
(3,882

)

$
(4,165

)

$
(640

)

$
(663

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI

 

($ in millions)

 

 

 

Defined Benefit Pension Plans

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

Net loss at January 1

 

$
18,045

 

$
19,222

 

$
18,275

 

$
20,544

 

$
486

 

$
605

 

$
145

 

$
154

 

Current period loss/(gain)

 
956

 
159

 
1,590

 
(740

)
(72

)
(99

)
33

 
(2

)

Curtailments and settlements

 

—

 

—

 
(11

)
(22

)

—

 

—

 
0

 
0

 

Amortization of net loss included in net periodic (income)/cost

 
(1,525

)
(1,337

)
(1,401

)
(1,507

)
(10

)
(20

)
(6

)
(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss at December 31

 

$
17,476

 

$
18,045

 

$
18,452

 

$
18,275

 

$
405

 

$
486

 

$
172

 

$
145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior service costs/(credits) at January 1

 

$
74

 

$
90

 

$
(90

)

$
(188

)

$
45

 

$
37

 

$
3

 

$
1

 

Current period prior service costs/(credits)

 

—

 

—

 
181

 

—

 

—

 

—

 
1

 

—

 

Curtailments, settlements and other

 

—

 

—

 
0

 
1

 

—

 

—

 
0

 
2

 

Amortization of prior service (costs)/credits included in net periodic (income)/cost

 
(16

)
(16

)
83

 
97

 
7

 
7

 
0

 
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior service costs/(credits) at December 31

 

$
57

 

$
74

 

$
172

 

$
(90

)

$
52

 

$
45

 

$
4

 

$
3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transition (assets)/liabilities at January 1

 

$

—

 

$

—

 

$
0

 

$
0

 

$

—

 

$

—

 

$
0

 

$
0

 

Amortization of transition assets/(liabilities) included in net periodic (income)/cost

 

—

 

—

 

—

 
0

 

—

 

—

 
0

 
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transition (assets)/liabilities at December 31

 

$

—

 

$

—

 

$
0

 

$
0

 

$

—

 

$

—

 

$
0

 

$
0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loss recognized in accumulated other comprehensive income/(loss)*

 

$
17,533

 

$
18,119

 

$
18,624

 

$
18,184

 

$
457

 

$
531

 

$
176

 

$
147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*See note L, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans.

Pre-tax estimated net loss, estimated prior service costs/(credits) and estimated transition (assets)/liabilities that will be amortized from AOCI into net periodic (income)/cost in the next fiscal year

 

($ in millions)

 

 

 

Defined Benefit

 

Nonpension Postretirement

 

 

 

Pension Plans

 

Benefit Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

U.S. Plan

 

Non-U.S. Plans

 

Net loss

 

$
560

 

$
1,261

 

$
2

 

$
11

 

Prior service costs/(credits)

 
16

 
(26

)
(2

)
0

 

Transition (assets)/liabilities

 

—

 

—

 

—

 

—

 

 

Assumptions used to measure the net periodic (income)/cost and year-end benefit obligations

 

 

 

Defined Benefit Pension Plans

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 
3.40

%
3.80

%
4.00

%
1.76

%
1.80

%
2.40

%

Expected long-term returns on plan assets

 
5.25

%
5.75

%
7.00

%
3.62

%
3.77

%
5.53

%

Rate of compensation increase

 

N/A

 

N/A

 

N/A

 
2.41

%
2.45

%
2.40

%

Weighted-average assumptions used to measure benefit obligations at December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 
4.10

%
3.40

%
3.80

%
1.85

%
1.76

%
1.80

%

Rate of compensation increase

 

N/A

 

N/A

 

N/A

 
2.18

%
2.41

%
2.45

%

 

N/A — Not applicable

 

 

 

 

Nonpension Postretirement Benefit Plans

 

 

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

Weighted-average assumptions used to measure net periodic cost for the year ended December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 
3.30

%
3.60

%
3.70

%
7.28

%
8.26

%
7.06

%

Expected long-term returns on plan assets

 

N/A

 

N/A

 

N/A

 
8.91

%
10.47

%
9.95

%

Weighted-average assumptions used to measure benefit obligations at December 31

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 
3.90

%
3.30

%
3.60

%
7.48

%
7.28

%
8.26

%

 

N/A — Not applicable

Defined benefit pension plans' asset classes and their associated fair value

 

The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2018. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.

 

($ in millions)

 

 

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities (1)

 

$
1,538

 

$

—

 

$

—

 

$
1,538

 

$
2,333

 

$
0

 

$
0

 

$
2,333

 

Equity mutual funds (2)

 
65

 

—

 

—

 
65

 
18

 
5

 

—

 
23

 

Fixed income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government and related (3)

 

—

 
19,661

 

—

 
19,661

 
20

 
8,951

 
2

 
8,973

 

Corporate bonds (4)

 

—

 
15,849

 
359

 
16,208

 

—

 
1,865

 
0

 
1,865

 

Mortgage and asset-backed securities

 

—

 
635

 
4

 
640

 

—

 
6

 

—

 
6

 

Fixed income mutual funds (5)

 
421

 

—

 

—

 
421

 
11

 

—

 

—

 
11

 

Insurance contracts

 

—

 

—

 

—

 

—

 

—

 
1,308

 

—

 
1,308

 

Cash and short-term investments (6)

 
55

 
1,020

 

—

 
1,075

 
322

 
431

 

—

 
753

 

Real estate

 

—

 

—

 

—

 

—

 

—

 

—

 
339

 
339

 

Derivatives (7)

 
3

 
(1

)

—

 
2

 
24

 
606

 

—

 
630

 

Other mutual funds (8)

 

—

 

—

 

—

 

—

 
24

 

—

 

—

 
24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 
2,081

 
37,164

 
363

 
39,608

 
2,753

 
13,172

 
341

 
16,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments measured at net asset value using the NAV practical expedient (9)

 

—

 

—

 

—

 
8,835

 

—

 

—

 

—

 
20,525

 

Other (10)

 

—

 

—

 

—

 
(230

)

—

 

—

 

—

 
(32

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets

 

$
2,081

 

$
37,164

 

$
363

 

$
48,213

 

$
2,753

 

$
13,172

 

$
341

 

$
36,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.03 percent of the non-U.S. Plans assets.

(2)

Invests in predominantly equity securities.

(3)

Includes debt issued by national, state and local governments and agencies.

(4)

The U.S. Plan does not include any IBM corporate bonds. Non-U.S. plans include IBM corporate bonds of $3 million representing 0.007 percent of the non-U.S. Plan assets.

(5)

Invests predominantly in fixed income securities.

(6)

Includes cash, cash equivalents and short-term marketable securities.

(7)

Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives.

(8)

Invests in both equity and fixed-income securities.

(9)

Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships.

(10)

Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.

 

The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2017. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.

 

($ in millions)

 

 

 

U.S. Plan

 

Non-U.S. Plans

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities (1)

 

$
2,215

 

$
0

 

$

—

 

$
2,215

 

$
3,508

 

$
0

 

$

—

 

$
3,508

 

Equity mutual funds (2)

 
108

 

—

 

—

 
108

 
24

 

—

 

—

 
24

 

Fixed income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government and related (3)

 

—

 
19,762

 

—

 
19,762

 

—

 
10,103

 
8

 
10,111

 

Corporate bonds (4)

 

—

 
17,864

 
372

 
18,236

 

—

 
2,000

 

—

 
2,000

 

Mortgage and asset-backed securities

 

—

 
619

 
4

 
623

 

—

 
5

 

—

 
5

 

Fixed income mutual funds (5)

 
338

 

—

 

—

 
338

 
86

 

—

 

—

 
86

 

Insurance contracts

 

—

 

—

 

—

 

—

 

—

 
1,366

 

—

 
1,366

 

Cash and short-term investments (6)

 
100

 
1,903

 

—

 
2,004

 
221

 
606

 

—

 
827

 

Real estate

 

—

 

—

 

—

 

—

 

—

 

—

 
356

 
356

 

Derivatives (7)

 
21

 
(4

)

—

 
17

 
20

 
744

 

—

 
764

 

Other mutual funds (8)

 

—

 

—

 

—

 

—

 
60

 

—

 

—

 
60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 
2,782

 
40,144

 
376

 
43,302

 
3,918

 
14,824

 
365

 
19,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments measured at net asset value using the NAV practical expedient (9)

 

—

 

—

 

—

 
9,537

 

—

 

—

 

—

 
21,744

 

Other (10)

 

—

 

—

 

—

 
(145

)

—

 

—

 

—

 
(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets

 

$
2,782

 

$
40,144

 

$
376

 

$
52,694

 

$
3,918

 

$
14,824

 

$
365

 

$
40,798

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $14 million, representing 0.03 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $7 million, representing 0.02 percent of the non-U.S. Plans assets.

(2)

Invests in predominantly equity securities.

(3)

Includes debt issued by national, state and local governments and agencies.

(4)

The U.S. Plan includes IBM corporate bonds of $1 million, representing 0.002 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $1 million representing 0.002 percent of the non-U.S. Plan assets.

(5)

Invests in predominantly fixed-income securities.

(6)

Includes cash and cash equivalents and short-term marketable securities.

(7)

Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives.

(8)

Invests in both equity and fixed-income securities.

(9)

Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships.

(10)

Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.
Reconciliation of the beginning and ending balances of Level 3 assets

 

The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2018 and 2017 for the U.S. Plan.

 

($ in millions)

 

 

 

 

 

Mortgage and

 

 

 

 

 

Corporate

 

Asset-Backed

 

 

 

 

 

Bonds

 

Securities

 

Total

 

Balance at January 1, 2018

 

$
372

 

$
4

 

$
376

 

Return on assets held at end of year

 
(23

)
0

 
(23

)

Return on assets sold during the year

 
0

 
0

 
0

 

Purchases, sales and settlements, net

 
10

 
0

 
10

 

Transfers, net

 

—

 
0

 
0

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$
359

 

$
4

 

$
363

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

Mortgage and

 

 

 

 

 

Corporate

 

Asset-Backed

 

 

 

 

 

Bonds

 

Securities

 

Total

 

Balance at January 1, 2017

 

$
101

 

$
5

 

$
106

 

Return on assets held at end of year

 
12

 
0

 
11

 

Return on assets sold during the year

 
1

 
0

 
1

 

Purchases, sales and settlements, net

 
259

 
(1

)
258

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

$
372

 

$
4

 

$
376

 

 

 

 

 

 

 

 

 

 

 

 

 

The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2018 and 2017 for the non-U.S. Plans.

 

($ in millions)

 

 

 

Government and

 

Private Real

 

 

 

 

 

Related

 

Estate

 

Total

 

Balance at January 1, 2018

 

$
8

 

$
356

 

$
365

 

Return on assets held at end of year

 
0

 
8

 
8

 

Return on assets sold during the year

 
(1

)
(2

)
(2

)

Purchases, sales and settlements, net

 
(3

)
(3

)
(6

)

Transfers, net

 
(2

)

—

 
(2

)

Foreign exchange impact

 
0

 
(21

)
(21

)

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$
2

 

$
339

 

$
341

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

 

Government

 

Corporate

 

Private Real

 

 

 

 

 

and Related

 

Bonds

 

Estate

 

Total

 

Balance at January 1, 2017

 

$
16

 

$
1

 

$
294

 

$
310

 

Return on assets held at end of year

 
2

 
0

 
24

 
26

 

Return on assets sold during the year

 
(3

)
0

 
(1

)
(4

)

Purchases, sales and settlements, net

 
(2

)
0

 
9

 
7

 

Transfers, net

 
(6

)
0

 

—

 
(6

)

Foreign exchange impact

 
2

 
0

 
30

 
31

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

$
8

 

$

—

 

$
356

 

$
365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total expected benefit payments

Defined Benefit Pension Plan Expected Payments

 

($ 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

 

2019

 

$
3,521

 

$
122

 

$
1,862

 

$
336

 

$
5,841

 

2020

 
3,537

 
123

 
1,874

 
343

 
5,877

 

2021

 
3,529

 
123

 
1,876

 
397

 
5,924

 

2022

 
3,489

 
122

 
1,911

 
414

 
5,937

 

2023

 
3,440

 
121

 
1,922

 
432

 
5,915

 

2024—2028

 
16,237

 
574

 
9,514

 
2,293

 
28,619

 

 

 

Nonpension Postretirement Benefit Plan Expected Payments

 

($ in millions)

 

 

 

 

 

Qualified

 

Nonqualified

 

Total Expected

 

 

 

U.S. Plan

 

Non-U.S. Plans

 

Non-U.S. Plans

 

Benefit

 

 

 

Payments

 

Payments

 

Payments

 

Payments

 

2019

 

$
377

 

$
7

 

$
33

 

$
416

 

2020

 
388

 
7

 
34

 
429

 

2021

 
397

 
7

 
36

 
440

 

2022

 
394

 
7

 
37

 
439

 

2023

 
377

 
7

 
39

 
423

 

2024—2028

 
1,587

 
41

 
218

 
1,846

 

 

Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets

 

($ in millions)

 

 

 

2018

 

2017

 

 

 

Benefit

 

Plan

 

Benefit

 

Plan

 

At December 31:

 

Obligation

 

Assets

 

Obligation

 

Assets

 

Plans with PBO in excess of plan assets

 

$
30,059

 

$
16,783

 

$
31,416

 

$
18,711

 

Plans with ABO in excess of plan assets

 
29,312

 
16,522

 
27,751

 
15,607

 

Plans with assets in excess of PBO

 
63,524

 
68,190

 
70,139

 
74,782