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
_________________________


The following assumptions were used to determine Altria Group, Inc.’s postretirement benefit obligations at December 31:
 
2017

 
2016

Discount rate
3.7
%
 
4.1
%
Health care cost trend rate assumed for next year
7.0


7.0

    Ultimate trend rate
5.0


5.0

 Year that the rate reaches the ultimate trend rate
2022


2022

Components of Net Periodic Benefit Cost: Net periodic benefit cost consisted of the following for the years ended December 31, 2017, 2016 and 2015:
 
             Pension
 
               Postretirement
(in millions)
2017

 
2016

 
2015

 
2017

 
2016

 
2015

Service cost
$
75

 
$
76

 
$
86

 
$
16

 
$
17

 
$
18

Interest cost
288

 
281

 
337

 
76

 
77

 
100

Expected return on plan assets
(601
)
 
(553
)
 
(539
)
 

 

 

Amortization:
 
 
 
 
 
 
 
 
 
 
 
Net loss
197

 
171

 
234

 
25

 
25

 
43

Prior service cost (credit)
4

 
5

 
7

 
(38
)
 
(39
)
 
(39
)
Termination, settlement and curtailment
86

 
34

 
8

 

 
(2
)
 

Net periodic benefit cost
$
49

 
$
14

 
$
133

 
$
79

 
$
78

 
$
122

Termination, settlement and curtailment shown in the table above primarily relate to the settlement charge discussed below, and the productivity initiative and facilities consolidation discussed in Note 4. Asset Impairment, Exit and Implementation Costs.
In the third quarter of 2017, Altria Group, Inc. made a voluntary, limited-time offer to former employees with vested benefits in the Altria Retirement Plan who had not commenced receiving benefit payments and who met certain other conditions. Eligible participants were offered the opportunity to make a one-time election to receive their pension benefit as a single lump sum payment or as a monthly annuity. Distributions to former employees who elected to receive lump sum payments totaled approximately $277 million, substantially all of which were made in December 2017 from the Altria Retirement Plan’s assets. Payments began on January 1, 2018 to former employees who elected a monthly annuity. As a result of the lump sum distributions, Altria Group, Inc. recorded a one-time settlement charge of $81 million in 2017.
The amounts included in termination, settlement and curtailment in the table above were comprised of the following changes:
 
      Pension
 
Post-
retirement

(in millions)
2017

2016

2015

 
2016

Benefit obligation
$

$
23

$

 
$
11

Other comprehensive earnings/losses:
 
 

 
 
Net loss
86

9

8

 

Prior service cost (credit)

2


 
(13
)
 
$
86

$
34

$
8

 
$
(2
)
 
Beginning in 2016, Altria Group, Inc. began using a spot rate approach to estimate the service and interest cost components of net periodic benefit costs by applying the specific spot rates along the yield curve to the relevant projected cash flows, as Altria Group, Inc. believes that this approach is a more precise estimate of service and interest cost. This change resulted in a decrease of approximately $70 million and $20 million to its 2016 pre-tax pension and postretirement net periodic benefit cost, respectively. Prior to 2016, Altria Group, Inc. estimated the service and interest cost components of net periodic benefit cost using a single weighted-average discount rate derived from the yield curve used to measure the pension and postretirement plans benefit obligations.
The estimated net loss and prior service cost (credit) that are expected to be amortized from accumulated other comprehensive losses into net periodic benefit cost during 2018 is as follows:
(in millions)
Pension

 
Postretirement

Net loss
$
228

 
$
35

Prior service cost (credit)
4

 
(42
)



28