Retirement and Other Benefit Plans

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Retirement and Other Benefit Plans

Note J: Retirement and Other Benefit Plans

Defined Benefit Retirement Plans. The Company sponsors defined benefit retirement plans that cover substantially all employees. Defined retirement benefits for salaried employees are based on each employee’s years of service and average compensation for a specified period of time before retirement. Defined retirement benefits for hourly employees are generally stated amounts for specified periods of service.

The Company sponsors a Supplemental Excess Retirement Plan (SERP) that generally provides for the payment of retirement benefits in excess of allowable Internal Revenue Code limits. The SERP generally provides for a lump-sum payment of vested benefits. When these benefit payments exceed the sum of the service and interest costs for the SERP during a year, the Company recognizes a pro rata portion of the SERP’s unrecognized actuarial loss as settlement expense.

The net periodic benefit cost of defined benefit plans includes the following components:

years ended December 31 (in millions)	2024			2023			2022
Service cost	$	38		$	33		$	48
Interest cost		55			51			41
Expected return on assets		(79	)		(71	)		(77	)
Amortization of:
Prior service cost		6			6			4
Actuarial loss		2			1			4
Settlement charge		—			—			5
Net periodic benefit cost	$	22		$	20		$	25

The components of net periodic benefit cost, other than service cost, are included in the line item Other nonoperating income, net, in the consolidated statements of earnings. Based on the roles of the employees, service cost is included in Cost of revenues or Selling, general and administrative expenses line items in the consolidated statements of earnings.

The expected return on assets is calculated by applying an annually selected expected long-term rate of return assumption to the estimated fair value of the plan assets during the year, giving consideration to contributions and benefits paid.

The Company recognized the following pretax amounts in consolidated comprehensive earnings:

years ended December 31
(in millions)	2024			2023			2022
Actuarial (gain) loss	$	(44	)	$	21		$	(115	)
Prior service cost		—			—			48
Amortization of:
Prior service cost		(6	)		(6	)		(4	)
Actuarial loss		(2	)		(1	)		(4	)
Settlement charge		—			—			(5	)
Total	$	(52	)	$	14		$	(80	)

During 2022, the Company amended its qualified pension plan to provide an enhanced benefit for eligible hourly active participants who retire subsequent to April 30, 2022, which resulted in a remeasurement of the qualified pension plan as of February 28, 2022. The remeasurement increased the defined benefit plans’ unrecognized prior service cost by $48 million.

Accumulated other comprehensive loss includes the following amounts that have not yet been recognized in net periodic benefit cost:

December 31	2024				2023
(in millions)	Gross		Net of tax		Gross		Net of tax
Prior service cost	$	37	$	7	$	42	$	20
Actuarial loss		17		3		64		30
Total	$	54	$	10	$	106	$	50

The defined benefit plans’ change in projected benefit obligation is as follows:

years ended December 31
(in millions)	2024			2023
Net projected benefit obligation at beginning of year	$	970		$	858
Service cost		38			33
Interest cost		55			51
Actuarial (gain) loss		(46	)		73
Gross benefits paid		(50	)		(45	)
Net projected benefit obligation at end of year	$	967		$	970

The largest component of the actuarial gain in 2024 was the impact of the higher discount rate compared with 2023. The actuarial loss in 2023 was primarily attributable to a lower discount rate compared with 2022.

The Company’s change in plan assets, funded status and amounts recognized on the Company’s consolidated balance sheets are as follows:

years ended December 31
(in millions)	2024			2023
Fair value of plan assets at beginning of year	$	1,177		$	1,067
Actual return on plan assets, net		77			123
Employer contributions		34			32
Gross benefits paid		(50	)		(45	)
Fair value of plan assets at end of year	$	1,238		$	1,177

December 31
(in millions)	2024		2023
Funded status of the plan at end of year	$	271	$	207
Accrued benefit credit	$	271	$	207

December 31
(in millions)	2024			2023
Amounts recognized on consolidated balance sheets consist of:
Noncurrent asset	$	371		$	308
Current liability		(13	)		(8	)
Noncurrent liability		(87	)		(93	)
Net amount recognized at end of year	$	271		$	207

The accumulated benefit obligation for all defined benefit pension plans was $879 million and $882 million at December 31, 2024 and 2023, respectively.

Benefit obligations and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets are as follows:

December 31
(in millions)	2024		2023
Projected benefit obligation	$	100	$	101
Accumulated benefit obligation	$	90	$	91
Fair value of plan assets	$	—	$	1

Weighted-average assumptions used to determine benefit obligations as of December 31 are:

	2024	2023
Discount rate	6.00%	5.58%
Rate of increase in future compensation levels	4.50%	4.50%

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are:

	2024	2023	2022
Discount rate	5.58%	5.88%	3.44%
Rate of increase in future compensation levels	4.50%	4.50%	4.50%
Expected long-term rate of return on assets	6.75%	6.75%	6.75%

The expected long-term rate of return on pension fund assets is based on the current asset class mix of the Company's pension plan assets, current capital market conditions and a stochastic forecast of future conditions.

As of December 31, 2024 and 2023, the Company estimated the remaining lives of participants in the pension plans using the Pri-2012 Base tables. The no-collar table was used for salaried participants and the blue-collar table was used for hourly participants; the tables were adjusted to reflect both the mortality experience of the Company’s participants and a geospatial mortality analysis. The Company used the MP-2020 mortality improvement scale for 2024 and 2023.

Retirement plan assets are invested in listed stocks, bonds, real estate, private infrastructure and cash equivalents. The target allocation for 2024 and the actual pension plan asset allocation by asset class are as follows:

	Percentage of Plan Assets
		2024
		Target	December 31
Asset Class		Allocation	2024	2023
Equity securities		56%	58%	53%
Debt securities		28%	22%	27%
Real estate		10%	10%	12%
Private infrastructure		6%	8%	8%
Cash		0%	2%	0%
Total		100%	100%	100%

The Company’s investment strategy is for equity securities to be invested in mid-sized to large capitalization U.S. funds, and small capitalization, international and emerging growth funds. Debt securities, or fixed income investments, are invested in funds benchmarked to the Barclays U.S. Aggregate Bond Index.

The fair values of pension plan assets by asset class and fair value hierarchy level are as follows:

	Fair Value Measurements
December 31		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value		Total Fair Value
(in millions)		2024
Equity securities1:
Mid-sized to large cap		$	—	$	—	$	—	$	359	$	359
Small cap, international and emerging growth funds			—		—		—		361		361
Debt securities1:
Core fixed income			—		—		—		271		271
Real estate			—		—		—		130		130
Private infrastructure			—		—		—		96		96
Cash equivalents			—		—		—		21		21
Total		$	—	$	—	$	—	$	1,238	$	1,238
		2023
Equity securities1:
Mid-sized to large cap		$	—	$	—	$	—	$	307	$	307
Small cap, international and emerging growth funds			—		—		—		320		320
Debt securities1:
Core fixed income			—		—		—		319		319
Real estate			—		—		—		137		137
Private infrastructure			—		—		—		90		90
Cash equivalents			—		—		—		4		4
Total		$	—	$	—	$	—	$	1,177	$	1,177

1.These investments are common collective investment trusts valued using the net asset value (NAV) unit price provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund.

Real estate investments are stated at estimated fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Real estate investments are valued at NAV based on the plan’s proportionate shares of the real estate funds’ fair value as recorded by the trustees/general partner of the funds. The funds are real estate investment trust based funds that offer participation in an actively managed, primarily core portfolio of equity real estate. The funds allocate gains, losses and expenses to investors based on the ownership percentage to determine the NAV. Private infrastructure assets represent investments in a fund that is stated at fair value. For financial assets in the fund that are actively traded in organized financial markets, fair value is based on exchange-quoted market prices. For investments in the fund for which there is no quoted market price, fair value is determined by the trustees/general partner of the fund based on discounted expected future cash flows prepared by third-party professionals.

In 2024 and 2023, the Company made combined pension plan and SERP contributions of $34 million and $32 million, respectively. The Company currently estimates that it will contribute $40 million to its pension plans in 2025.

The expected benefit payments to be paid from plan assets for each of the next five years and the five-year period thereafter are as follows:

(in millions)
2025	$	59
2026	$	60
2027	$	63
2028	$	66
2029	$	65
Years 2030 - 2034	$	353

Postretirement and Postemployment Benefits. The Company provides other postretirement benefits for certain employees, including medical benefits for retirees and their spouses and retiree life insurance. Employees starting on or after January 1, 2002 are not eligible for postretirement welfare plans. Postretirement medical benefits are paid from the Company's assets. The obligation, if any, for retiree medical payments is subject to the terms of the plan. At December 31, 2024 and 2023, the Company's recorded benefit obligation related to these benefits totaled $7 million and $8 million, respectively. The Company also provides certain benefits, such as disability benefits, to former or inactive employees after employment but before retirement.

Defined Contribution Plan. The Company maintains a defined contribution plan that covers substantially all employees. This plan, qualified under Section 401(a) of the Internal Revenue Code, is a retirement savings and investment plan for the Company’s salaried and hourly employees. Under certain provisions of the plan, the Company matches employees’ eligible contributions at established rates. The Company’s matching obligations were $22 million in both 2024 and 2023, and $23 million in 2022.