Print Page | Close Window

SEC Filings

8-K
ALTRIA GROUP, INC. filed this Form 8-K on 02/01/2018
Entire Document
 

Altria Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
_________________________


postretirement benefits. Prior to this contribution, Altria Group, Inc.’s postretirement plans were not funded.
The discount rates for Altria Group, Inc.’s plans were based on a yield curve developed from a model portfolio of high-quality
 
corporate bonds with durations that match the expected future cash flows of the pension and postretirement benefit obligations.
    
Obligations and Funded Status: The benefit obligations, plan assets and funded status of Altria Group, Inc.’s pension and postretirement plans at December 31, 2017 and 2016 were as follows:
 
              Pension
 
             Postretirement
(in millions)
2017

 
2016

 
2017

 
2016

Change in benefit obligation:
 
 
 
 
 
 
 
    Benefit obligation at beginning of year
$
8,312

 
$
8,011

 
$
2,364

 
$
2,392

   Service cost
75

 
76

 
16

 
17

   Interest cost
288

 
281

 
76

 
77

   Benefits paid
(703
)
 
(440
)
 
(139
)
 
(135
)
   Actuarial losses
589

 
367

 
56

 
24

       Termination, settlement and curtailment
(51
)
 
13

 

 
5

       Other

 
4

 
(38
)
 
(16
)
    Benefit obligation at end of year
8,510

 
8,312

 
2,335

 
2,364

Change in plan assets:
 
 
 
 
 
 
 
    Fair value of plan assets at beginning of year
7,475

 
6,706

 

 

   Actual return on plan assets
1,219

 
678

 

 

   Employer contributions
24

 
531

 
270

 

   Benefits paid
(703
)
 
(440
)
 

 

    Fair value of plan assets at end of year
8,015

 
7,475

 
270

 

    Funded status at December 31
$
(495
)
 
$
(837
)
 
$
(2,065
)
 
$
(2,364
)
Amounts recognized on Altria Group, Inc.’s consolidated balance sheets were as follows:
 
 
 
 
 
 
 
    Other accrued liabilities
$
(51
)
 
$
(32
)
 
$
(78
)
 
$
(147
)
    Accrued pension costs
(445
)
 
(805
)
 

 

    Other assets
1

 

 

 

    Accrued postretirement health care costs

 

 
(1,987
)
 
(2,217
)
 
$
(495
)
 
$
(837
)
 
$
(2,065
)
 
$
(2,364
)
The table above presents the projected benefit obligation for Altria Group, Inc.’s pension plans. The accumulated benefit obligation, which represents benefits earned to date, for the pension plans was $8.2 billion and $8.0 billion at December 31, 2017 and 2016, respectively.
For plans with accumulated benefit obligations in excess of plan assets at December 31, 2017, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $413 million, $364 million and $124 million, respectively. At December 31, 2016, the accumulated benefit obligations were in excess of plan assets for all pension plans.
The Patient Protection and Affordable Care Act (“PPACA”), as amended by the Health Care and Education Reconciliation Act of 2010, mandates health care reforms with staggered effective dates from 2010 to 2022, including the imposition of an excise tax on high cost health care plans effective in 2022. The
 
additional accumulated postretirement liability resulting from the PPACA, which is not material to Altria Group, Inc., has been included in Altria Group, Inc.’s accumulated postretirement benefit obligation at December 31, 2017 and 2016. Given the complexity of the PPACA and the extended time period during which implementation is expected to occur, future adjustments to Altria Group, Inc.’s accumulated postretirement benefit obligation may be necessary.
The following assumptions were used to determine Altria Group, Inc.’s pension benefit obligations at December 31:
 
2017

 
2016

Discount rate
3.7
%
 
4.1
%
Rate of compensation increase
4.0

 
4.0




27