XML 55 R22.htm IDEA: XBRL DOCUMENT
v3.22.4

Employee Benefits | 12 Months Ended
--- | ---
Dec. 31, 2022
Retirement Benefits [Abstract] |
Employee Benefits | Employee Benefits Pension, Post-Retirement and Other Post-Employment Benefits We sponsor various defined benefit pension plans (qualified and non-qualified) which, in the aggregate, cover a substantial portion of our employees. Pension benefits for participants of the Lumen Combined Pension Plan ("Combined Pension Plan") and, through the October 3, 2022 sale of the ILEC business, the Lumen Pension Plan, who are represented by a collective bargaining agreement are based on negotiated schedules. All other participants' pension benefits are based on each individual participant's years of service and compensation. We also maintain non-qualified pension plans for certain current and former highly compensated employees. We maintain post-retirement benefit plans that provide health care and life insurance benefits for certain eligible retirees. We also provide other post-employment benefits for certain eligible former employees. We use a December 31 measurement date for all our plans. On October 19, 2021, we, as sponsor of the Combined Pension Plan, along with the Plan’s independent fiduciary, entered into an agreement committing the Plan to use a portion of its plan assets to purchase an annuity from an insurance company (the "Insurer") to transfer approximately $1.4 billion of the Plan’s pension liabilities. This agreement irrevocably transferred to the Insurer future Plan benefit obligations for approximately 22,600 U.S. Lumen participants (“Transferred Participants”) effective on December 31, 2021. This annuity transaction was funded entirely by existing Plan assets. The Insurer assumed responsibility for administrative and customer service support, including distribution of payments to the Transferred Participants. Transferred Participants’ benefits were not reduced as a result of this transaction. As of January 1, 2022, we spun off the Lumen Pension Plan from the Lumen Combined Pension Plan in anticipation of the sale of the ILEC business, as described further in Note 2—Divestitures of the Latin American and ILEC Businesses and Planned Divestiture of the EMEA Business. At the time of the spin-off, the Lumen Pension Plan covered approximately 2,500 active plan participants along with 19,000 other participants. At the time of the spin-off, the Lumen Pension Plan had a pension benefit obligation of $2.5 billion and assets of $2.2 billion. In addition, the December 31, 2021 actuarial (loss) gain and prior service cost included in accumulated other comprehensive loss was allocated between the Lumen Pension Plan and the Lumen Combined Pension Plan. Following a revaluation of the pension obligation and pension assets for the Lumen Pension Plan, in preparation for the closing of the sale of the ILEC business, we contributed approximately $319 million of Lumen's cash to the Lumen Pension Plan trust to fully fund the pension plan in September 2022. The amounts allocated to the Lumen Pension Plan were subject to adjustment up to the closing of the sale of the ILEC business on October 3, 2022, at which time the plan was transferred along with the rest of the assets and liabilities of the ILEC business. We recognized pension costs related to both plans through the sale of the ILEC business, at which time balances related to the Lumen Pension Plan were reflected in the calculation of our gain on the sale of the business. Pension Benefits United States funding laws require a company with a pension shortfall to fund the annual cost of benefits earned in addition to a seven-year amortization of the shortfall. Our funding policy for our Combined Pension Plan is to make contributions with the objective of accumulating ample assets to pay all qualified pension benefits when due under the terms of the plan. The accounting unfunded status of the Combined Pension Plan was $580 million and $1.1 billion as of December 31, 2022 and 2021, respectively. We made no voluntary cash contributions to the Combined Pension Plan in 2022 or 2021. As discussed above, we contributed approximately $319 million of cash to the Lumen Pension Plan trust to fully fund the pension plan in September 2022 in preparation for the closing of the sale of the ILEC business. We paid $5 million of benefits directly to participants of our non-qualified pension plans in both 2022 and 2021. Benefits paid by the Combined Pension Plan are paid through a trust that holds all of the Plan's assets. The amount of required contributions to the Combined Pension Plan in 2023 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. Based on current laws and circumstances, we do not believe we are required to make any contributions to the Combined Pension Plan in 2023 and we do not expect to make voluntary contributions to the trust for the Combined Pension Plan in 2023. We estimate that in 2023 we will pay $5 million of benefits directly to participants of our non-qualified pension plans. We recognize in our consolidated balance sheets the funded status of the legacy Level 3 defined benefit post-retirement plans. These plans were fully funded as of December 31, 2022. The net unfunded status of these plans was $17 million, as of December 31, 2021. Additionally, as previously mentioned, we sponsor unfunded non-qualified pension plans for certain current and former highly-compensated employees. The net unfunded status of our non-qualified pension plans was $35 million and $46 million for the years ended December 31, 2022 and 2021, respectively. Due to the insignificant impact of these pension plans on our consolidated financial statements, we have predominantly excluded them from the remaining employee benefit disclosures in this Note, unless otherwise specifically stated. Post-Retirement Benefits Our post-retirement benefit plans provide post-retirement benefits to qualified retirees and allow (i) eligible employees retiring before certain dates to receive benefits at no or reduced cost and (ii) eligible employees retiring after certain dates to receive benefits on a shared cost basis. The post-retirement benefits not paid by the trusts are funded by us and we expect to continue funding these post-retirement obligations as benefits are paid. The accounting unfunded status of our qualified post-retirement benefit plan was $2.0 billion and $2.8 billion as of December 31, 2022 and 2021, respectively. Assets in the post-retirement trusts were substantially depleted as of December 31, 2016; as of December 31, 2019 the Company ceased to pay certain post-retirement benefits through the trusts. No contributions were made to the post-retirement trusts in 2022 nor 2021. Benefits are paid directly by us with available cash. In 2022, we paid $210 million of post-retirement benefits, net of participant contributions and direct subsidies. In 2023, we currently expect to pay directly $210 million of post-retirement benefits, net of participant contributions and direct subsidies. We expect our expected health care cost trend to range from 5.00% to 7.20% in 2023 and grading to 4.50% by 2030. Our post-retirement benefit cost, for certain eligible legacy Qwest retirees and certain eligible legacy CenturyLink retirees, is capped at a set dollar amount. Therefore, those health care benefit obligations are not subject to increasing health care trends after the effective date of the caps. Expected Cash Flows The Combined Pension Plan payments, post-retirement health care benefit payments and premiums, and life insurance premium payments are either distributed from plan assets or paid by us. The estimated benefit payments provided below are based on actuarial assumptions using the demographics of the employee and retiree populations and have been reduced by estimated participant contributions.
| Combined Pension Plan |  | Post-Retirement Benefit Plans |  | Medicare Part D Subsidy Receipts
| (Dollars in millions)
Estimated future benefit payments: |  |  |  |  |
2023 | $ | 566 |  |  | 213 |  |  | (3) |
2024 | 514 |  |  | 205 |  |  | (3) |
2025 | 500 |  |  | 198 |  |  | (2) |
2026 | 482 |  |  | 191 |  |  | (2) |
2027 | 463 |  |  | 184 |  |  | (2) |
2028 - 2032 | 2,065 |  |  | 805 |  |  | (7) |
Net Periodic Benefit Expense (Income) We utilize a full yield curve approach in connection with estimating the service and interest components of net periodic benefit expense by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flow. The actuarial assumptions used to compute the net periodic benefit expense for our Combined Pension Plan and post-retirement benefit plans are based upon information available as of the beginning of the year, as presented in the following table.
| Combined Pension Plan |  | Post-Retirement Benefit Plans
| 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Actuarial assumptions at beginning of year: |  |  |  |  |  |  |  |  |  |  |
Discount rate | 2.29% - 3.12% |  | 1.70% - 2.88% |  | 2.79% - 3.55% |  | 2.19% - 5.78% |  | 1.58% - 2.60% |  | 1.69% - 3.35%
Rate of compensation increase | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  | N/A |  | N/A |  | N/A
Expected long-term rate of return on plan assets(1) | 5.50 | % |  | 5.50 | % |  | 6.50 | % |  | 4.00 | % |  | 4.00 | % |  | 4.00 | %
Initial health care cost trend rate | N/A |  | N/A |  | N/A |  | 5.00% / 5.75% |  | 6.25% / 5.00% |  | 6.50% / 5.00%
Ultimate health care cost trend rate | N/A |  | N/A |  | N/A |  | 4.50 | % |  | 4.50 | % |  | 4.50 | %
Year ultimate trend rate is reached | N/A |  | N/A |  | N/A |  | 2025 |  | 2025 |  | 2025
_______________________________________________________________________________ N/A - Not applicable (1)Rates are presented net of projected fees and administrative costs. Prior to the sale of the ILEC business on October 3, 2022, we realized pension costs related to the Lumen Pension Plan. Net periodic benefit expense (income) for our Combined Pension Plan and the Lumen Pension Plan (together the "Pension Plans") includes the following components:
| Pension Plans Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Service cost | $ | 44 |  |  | 56 |  |  | 59 |
Interest cost | 194 |  |  | 201 |  |  | 324 |
Expected return on plan assets | (385) |  |  | (535) |  |  | (593) |
Settlement charges | — |  |  | 383 |  |  | — |
Realized to gain on sale of businesses | 546 |  |  | — |  |  | — |
Special termination benefits charge | — |  |  | 6 |  |  | 13 |
Recognition of prior service credit | (10) |  |  | (9) |  |  | (9) |
Recognition of actuarial loss | 122 |  |  | 184 |  |  | 202 |
Net periodic pension expense (income) | $ | 511 |  |  | 286 |  |  | (4) |
Net periodic benefit expense for our post-retirement benefit plans includes the following components:
| Post-Retirement Plans Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Service cost | $ | 10 |  |  | 14 |  |  | 14 |
Interest cost | 72 |  |  | 47 |  |  | 69 |
Expected return on plan assets | — |  |  | — |  |  | (1) |
Realized to gain on sale of businesses | (32) |  |  | — |  |  | — |
Recognition of prior service cost | 8 |  |  | 15 |  |  | 16 |
Recognition of actuarial loss | (4) |  |  | 4 |  |  | — |
Curtailment loss | — |  |  | — |  |  | 8 |
Net periodic post-retirement benefit expense | $ | 54 |  |  | 80 |  |  | 106 |
Service costs for our Combined Pension Plan and post-retirement benefit plans are included in the cost of services and products and selling, general and administrative line items on our consolidated statements of operations and all other costs listed above, except for amounts realized as part of the net gain on sale of businesses, are included in other income (expense), net on our consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020. Additionally, a portion of the service cost is also allocated to certain assets under construction, which are capitalized and reflected as part of property, plant and equipment in our consolidated balance sheets. As a result of ongoing efforts to reduce our workforce, we recognized one-time charges in 2021 of $6 million and in 2020 of $21 million for curtailment and special termination benefit enhancements paid to certain eligible employees upon voluntary retirement. Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits. We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump sum payments only if, in the aggregate, they exceed or are probable to exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. The lump sum pension settlement payments for 2021 exceeded the settlement threshold. In addition, during the fourth quarter of 2021, we executed an annuity purchase contract with a third party insurer that triggered additional settlement activity (see discussion above for further information). As a result, we recognized a non-cash settlement charge of $383 million as of December 31, 2021 to accelerate the recognition of a portion of the previously unrecognized actuarial losses in the qualified pension plan, which is reflected in other income (expense), net in our consolidated statement of operations for the year ended December 31, 2021. This non-cash charge increased our recorded net loss and increased our recorded accumulated deficit, with an offset to accumulated other comprehensive loss in shareholders' equity for the year ended December 31, 2021. The amount of any future non-cash settlement charges will be dependent on several factors, including the total amount of our future lump sum benefit payments. Benefit Obligations The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2022 and 2021 and are as follows:
| Combined Pension Plan |  | Post-Retirement Benefit Plans
| December 31, |  | December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
Actuarial assumptions at end of year: |  |  |  |  |  |  |
Discount rate | 5.56 | % |  | 2.85 | % |  | 5.55 | % |  | 2.84 | %
Rate of compensation increase | 3.25 | % |  | 3.25 | % |  | N/A |  | N/A
Initial health care cost trend rate | N/A |  | N/A |  | 7.20% / 5.00% |  | 5.75% / 5.00%
Ultimate health care cost trend rate | N/A |  | N/A |  | 4.50 | % |  | 4.50 | %
Year ultimate trend rate is reached | N/A |  | N/A |  | 2030 |  | 2025
_______________________________________________________________________________ N/A - Not applicable In 2021 and 2020, we adopted the revised mortality tables and projection scales released by the Society of Actuaries, which increased the projected benefit obligation of our benefit plans by $37 million for 2021, and decreased the projected benefit obligation of our benefit plans by $3 million for 2020. The Society of Actuaries did not release any revised mortality tables or projection scales in 2022. The short-term and long-term interest crediting rates during 2022 for cash balance components of the Combined Pension Plan were 3.75% and 3.5%, respectively. The following tables summarize the change in the benefit obligations for the Combined Pension Plan and post-retirement benefit plans:
| Combined Pension Plan Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Change in benefit obligation |  |  |  |  |
Benefit obligation at beginning of year | $ | 9,678 |  |  | 12,202 |  |  | 12,217 |
Plan spin-off | (2,552) |  |  | — |  |  | — |
Service cost | 37 |  |  | 56 |  |  | 59 |
Interest cost | 154 |  |  | 201 |  |  | 324 |
Plan amendments | — |  |  | (13) |  |  | (3) |
Special termination benefits charge | — |  |  | 6 |  |  | 13 |
Actuarial (gain) loss | (1,432) |  |  | (337) |  |  | 749 |
Benefits paid from plan assets | (590) |  |  | (766) |  |  | (1,157) |
Settlement payments and annuity purchase | — |  |  | (1,671) |  |  | — |
Benefit obligation at end of year | $ | 5,295 |  |  | 9,678 |  |  | 12,202 |
| Post-Retirement Benefit Plans Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Change in benefit obligation |  |  |  |  |
Benefit obligation at beginning of year | $ | 2,781 |  |  | 3,048 |  |  | 3,037 |
Benefit obligation transferred to purchaser upon sale of business | (26) |  |  | — |  |  | — |
Service cost | 10 |  |  | 14 |  |  | 14 |
Interest cost | 72 |  |  | 47 |  |  | 69 |
Participant contributions | 37 |  |  | 41 |  |  | 46 |
Direct subsidy receipts | 2 |  |  | 3 |  |  | 6 |
Plan amendments | (41) |  |  | — |  |  | — |
Actuarial (gain) loss | (591) |  |  | (125) |  |  | 134 |
Curtailment loss | — |  |  | — |  |  | 4 |
Benefits paid by company | (249) |  |  | (247) |  |  | (255) |
Benefits paid from plan assets | — |  |  | — |  |  | (7) |
Benefit obligation at end of year | $ | 1,995 |  |  | 2,781 |  |  | 3,048 |
Plan Assets We maintain plan assets for our Combined Pension Plan and certain post-retirement benefit plans. As previously noted, assets in the post-retirement benefit plan trusts were substantially depleted as of December 31, 2016. The fair value of post-retirement benefit plan assets was $5 million at December 31, 2022, 2021 and 2020. Due to the insignificance of these assets on our consolidated financial statements, we have predominantly excluded them from the disclosures of plan assets in this Note, unless otherwise indicated. The following table summarizes the change in the fair value of plan assets for the Combined Pension Plan:
| Combined Pension Plan Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| (Dollars in millions)
Change in plan assets |  |  |  |  |
Fair value of plan assets at beginning of year | $ | 8,531 |  |  | 10,546 |  |  | 10,493 |
Plan spin-off | (2,239) |  |  | — |  |  | — |
Return on plan assets | (987) |  |  | 422 |  |  | 1,210 |
Benefits paid from plan assets | (590) |  |  | (766) |  |  | (1,157) |
Settlement payments and annuity purchase | — |  |  | (1,671) |  |  | — |
Fair value of plan assets at end of year | $ | 4,715 |  |  | 8,531 |  |  | 10,546 |
The expected rate of return on plan assets is the long-term rate of return we expect to earn on the plan's assets, net of administrative expenses paid from plan assets. It is determined annually based on the strategic asset allocation and the long-term risk and return forecast for each asset class. Our investment objective for the Combined Pension Plan assets is to achieve an attractive risk-adjusted return over time that will provide for the payment of benefits and minimize the risk of large losses. We employ a liability-aware investment strategy designed to reduce the volatility of pension assets relative to pension liabilities. This strategy is evaluated frequently and is expected to evolve over time with changes in the funded status and other factors. Approximately 55% of plan assets is targeted to long-duration investment grade bonds and interest rate sensitive derivatives and 45% is targeted to diversified equity, fixed income and private market investments that are expected to outperform the liability with moderate funded status risk. At the beginning of 2023, our expected annual long-term rate of return on pension assets before consideration of administrative expenses is assumed to be 7.0%. Administrative expenses, including projected PBGC (Pension Benefit Guaranty Corporation) premiums, reduce the annual long-term expected return, net of administrative expenses, to 6.5%. Permitted investments: Plan assets are managed consistent with the restrictions set forth by the Employee Retirement Income Security Act of 1974, as amended. Fair Value Measurements: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the FASB. For additional information on the fair value hierarchy, see Note 14—Fair Value of Financial Instruments. At December 31, 2022, we used the following valuation techniques to measure fair value for assets. There were no changes to these methodologies during 2022: •Level 1—Assets were valued using the closing price reported in the active market in which the individual security was traded. U.S. Treasury securities are valued at the bid price reported in an active market in which the security is traded. Variation margin due from/(to) brokers is valued at the expected next day cash settlement amount. •Level 2—Assets were valued using quoted prices in markets that are not active, broker dealer quotations, and other methods by which all significant inputs were observable at the measurement date. Fixed income securities primarily utilize observable market information and are based on a spread to U.S. Treasury securities and consider yields available on comparable securities of issuers with similar credit ratings, the new issue market for similar securities, secondary trading markets and dealer quotes. Option adjusted spread models are utilized to evaluate fixed income securities that have early redemption features. Derivative securities traded over the counter are valued based on gains or losses due to fluctuations in indices, interest rates, foreign currency exchange rates, security prices or other underlying factors. Repurchase agreements are valued based on expected settlement per the contract terms. •Level 3—Assets were valued using unobservable inputs in which little or no market data exists as reported by the respective institutions at the measurement date. Valuation methods may consider a range of factors, including estimates based on the assumptions of the investment entity or actuarial assumptions of insurers for valuing Group Annuity Contracts. The Combined Pension Plan's assets are invested in various asset categories utilizing multiple strategies and investment managers. Interests in commingled funds are fair valued using a practical expedient to the net asset value ("NAV") per unit (or its equivalent) of each fund. The NAV reported by the fund manager is based on the market value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding. Commingled funds can be redeemed at NAV, with a frequency that includes daily, monthly, quarterly, semi-annually and annually. These commingled funds include redemption notice periods between same day and 180 days. Investments in private funds, primarily limited partnerships, represent long-term commitments with a fixed maturity date and are also valued at NAV. The plan has unfunded commitments related to certain private fund investments, which in aggregate are not material to the plan. Valuation inputs for these private fund interests are generally based on assumptions and other information not observable in the market. Underlying investments held in funds are aggregated and are classified based on the fund mandate. Investments held in separate accounts are individually classified. The table below presents the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2022. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivables, pending trades and accrued expenses.
| Fair Value of Combined Pension Plan Assets at December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Assets |  |  |  |  |  |  |
Investment grade bonds (a) | $ | 446 |  |  | 1,720 |  |  | — |  |  | 2,166 |
High yield bonds (b) | — |  |  | 48 |  |  | 4 |  |  | 52 |
Emerging market bonds (c) | 49 |  |  | 78 |  |  | — |  |  | 127 |
U.S. stocks (d) | 214 |  |  | — |  |  | 1 |  |  | 215 |
Non-U.S. stocks (e) | 149 |  |  | 1 |  |  | — |  |  | 150 |
Multi-asset strategies (l) | 25 |  |  | — |  |  | — |  |  | 25 |
Cash equivalents and short-term investments (o) | — |  |  | 1 |  |  | — |  |  | 1 |
Total investments, excluding investments valued at NAV | $ | 883 |  |  | 1,848 |  |  | 5 |  |  | 2,736 |
Liabilities |  |  |  |  |  |  |
Repurchase agreements (n) | $ | — |  |  | (269) |  |  | — |  |  | (269) |
Derivatives (m) | (1) |  |  | (10) |  |  | — |  |  | (11) |
Investments valued at NAV |  |  |  |  |  |  | 2,259 |
Total pension plan assets |  |  |  |  |  |  | $ | 4,715 |
The table below presents the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2021. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivable, pending trades and accrued expenses.
| Fair Value of Combined Pension Plan Assets at December 31, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Assets |  |  |  |  |  |  |
Investment grade bonds (a) | $ | 862 |  |  | 3,744 |  |  | — |  |  | 4,606 |
High yield bonds (b) | — |  |  | 172 |  |  | 6 |  |  | 178 |
Emerging market bonds (c) | 64 |  |  | 169 |  |  | — |  |  | 233 |
U.S. stocks (d) | 330 |  |  | 3 |  |  | 5 |  |  | 338 |
Non-U.S. stocks (e) | 256 |  |  | — |  |  | — |  |  | 256 |
Multi-asset strategies (l) | 41 |  |  | — |  |  | — |  |  | 41 |
Derivatives (m) | — |  |  | 1 |  |  | — |  |  | 1 |
Cash equivalents and short-term investments (o) | 2 |  |  | 379 |  |  | — |  |  | 381 |
Total investments, excluding investments valued at NAV | $ | 1,555 |  |  | 4,468 |  |  | 11 |  |  | 6,034 |
Liabilities |  |  |  |  |  |  |
Repurchase agreements (n) | $ | — |  |  | (193) |  |  | — |  |  | (193) |
Investments valued at NAV |  |  |  |  |  |  | 2,690 |
Total pension plan assets |  |  |  |  |  |  | $ | 8,531 |
The table below presents the fair value of plan assets valued at NAV by category for our Combined Pension Plan at December 31, 2022 and 2021.
| Fair Value of Plan Assets Valued at NAV
| Combined Pension Plan at December 31,
| 2022 |  | 2021
| (Dollars in millions)
Investment grade bonds (a) | $ | 99 |  |  | 127 |
High yield bonds (b) | 81 |  |  | 70 |
U.S. stocks (d) | 79 |  |  | 71 |
Non-U.S. stocks (e) | 270 |  |  | 398 |
Emerging market stocks (f) | 15 |  |  | 11 |
Private equity (g) | 326 |  |  | 348 |
Private debt (h) | 438 |  |  | 495 |
Market neutral hedge funds (i) | 135 |  |  | 141 |
Directional hedge funds (j) | 166 |  |  | 241 |
Real estate (k) | 333 |  |  | 420 |
Multi-asset strategies (l) | 24 |  |  | 38 |
Cash equivalents and short-term investments (o) | 293 |  |  | 330 |
Total investments valued at NAV | $ | 2,259 |  |  | 2,690 |
Below is an overview of the asset categories and the underlying strategies used in the preceding tables: (a) Investment grade bonds represent investments in fixed income securities as well as commingled bond funds comprised of U.S. Treasury securities, agencies, corporate bonds, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. (b) High yield bonds represent investments in below investment grade fixed income securities as well as commingled high yield bond funds. (c) Emerging market bonds represent investments in securities issued by governments and other entities located in emerging countries as well as registered mutual funds and commingled emerging market bond funds. (d) U.S. stocks represent investments in stocks of U.S. based companies as well as commingled U.S. stock funds. (e) Non-U.S. stocks represent investments in stocks of companies based in developed countries outside the U.S. as well as commingled funds. (f) Emerging market stocks represent investments in commingled funds comprised of stocks of companies located in emerging markets. (g) Private equity represents non-public investments in domestic and foreign buy out and venture capital funds. Private equity funds are primarily structured as limited partnerships and are valued according to the valuation policy of each partnership, subject to prevailing accounting and other regulatory guidelines. (h) Private debt represents non-public investments in distressed or mezzanine debt funds and pension group insurance contracts. (i) Market neutral hedge funds hold investments in a diversified mix of instruments that are intended in combination to exhibit low correlations to market fluctuations. These investments are typically combined with futures to achieve uncorrelated excess returns over various markets. (j) Directional hedge funds—This asset category represents investments that may exhibit somewhat higher correlations to market fluctuations than the market neutral hedge funds. Investments in hedge funds include both direct investments and investments in diversified funds of funds. (k) Real estate represents investments in commingled funds and limited partnerships that invest in a diversified portfolio of real estate properties. (l) Multi-asset strategies represent broadly diversified strategies that have the flexibility to tactically adjust exposures to different asset classes through time. (m) Derivatives include exchange traded futures contracts as well as privately negotiated over the counter contracts. The market values represent gains or losses that occur due to differences between stated contract terms and fluctuations in underlying market instruments. (n) Repurchase Agreements includes contracts where the security owner sells a security with the agreement to buy it back at a future date and price. (o) Cash equivalents and short-term investments represent investments that are used in conjunction with derivatives positions or are used to provide liquidity for the payment of benefits or other purposes. Derivative instruments: Derivative instruments are used to reduce risk as well as provide return. The gross notional exposure of the derivative instruments directly held by the Combined Pension Plan is shown below. The notional amount of the derivatives corresponds to market exposure but does not represent an actual cash investment.
| Gross Notional Exposure
| Combined Pension Plan Years Ended December 31,
| 2022 |  | 2021
| (Dollars in millions)
Derivative instruments: |  |  |
Exchange-traded U.S. equity futures | $ | 70 |  |  | 108 |
Exchange-traded Treasury and other interest rate futures | 1,256 |  |  | 1,688 |
Exchange-traded Foreign currency futures | 2 |  |  | 11 |
Exchange-traded EURO futures | — |  |  | 5 |
Interest rate swaps | 82 |  |  | 127 |
Credit default swaps | 139 |  |  | 132 |
Index swaps | 90 |  |  | 1,036 |
Foreign exchange forwards | 50 |  |  | 93 |
Options | 251 |  |  | 654 |
Concentrations of Risk: Investments, in general, are exposed to various risks, such as significant world events, interest rate, credit, foreign currency and overall market volatility risk. These risks are managed by broadly diversifying assets across numerous asset classes and strategies with differing expected returns, volatilities and correlations. Risk is also broadly diversified across numerous market sectors and individual companies. Financial instruments that potentially subject the plans to concentrations of counterparty risk consist principally of investment contracts with high quality financial institutions. These investment contracts are typically collateralized obligations and/or are actively managed, limiting the amount of counterparty exposure to any one financial institution. Although the investments are well diversified, the value of plan assets could change materially depending upon the overall market volatility, which could affect the funded status of the plan. The table below presents a rollforward of the Combined Pension Plan assets valued using Level 3 inputs:
| Combined Pension Plan Assets Valued Using Level 3 Inputs
| High Yield Bonds |  | U.S. Stocks |  |  |  | Total
| (Dollars in millions)
Balance at December 31, 2020 | $ | 6 |  |  | 2 |  |  |  |  | 8 |
Actual return on plan assets | — |  |  | 3 |  |  |  |  | 3 |
Balance at December 31, 2021 | 6 |  |  | 5 |  |  |  |  | 11 |
Dispositions | (1) |  |  | (4) |  |  |  |  | (5) |
Actual return on plan assets | (1) |  |  | — |  |  |  |  | (1) |
Balance at December 31, 2022 | $ | 4 |  |  | 1 |  |  |  |  | 5 |
Certain gains and losses are allocated between assets sold during the year and assets still held at year-end based on transactions and changes in valuations that occurred during the year. These allocations also impact our calculation of net acquisitions and dispositions. For the year ended December 31, 2022, the investment program produced actual losses on Combined Pension Plan assets of $987 million as compared to expected returns of $329 million, for a difference of $1.3 billion. For the year ended December 31, 2021, the investment program produced actual gains on Combined Pension Plan assets of $422 million as compared to the expected returns of $535 million, for a difference of $113 million. The short-term annual returns on plan assets will almost always be different from the expected long-term returns and the plans could experience net gains or losses, due primarily to the volatility occurring in the financial markets during any given year. Unfunded Status The following table presents the unfunded status of the Combined Pension Plan and post-retirement benefit plans:
| Combined Pension Plan |  | Post-Retirement Benefit Plans
| Years Ended December 31, |  | Years Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (Dollars in millions)
Benefit obligation | $ | (5,295) |  |  | (9,678) |  |  | (1,995) |  |  | (2,781) |
Fair value of plan assets | 4,715 |  |  | 8,531 |  |  | 5 |  |  | 5 |
Unfunded status | (580) |  |  | (1,147) |  |  | (1,990) |  |  | (2,776) |
Current portion of unfunded status | — |  |  | — |  |  | (210) |  |  | (212) |
Non-current portion of unfunded status | $ | (580) |  |  | (1,147) |  |  | (1,780) |  |  | (2,564) |
The current portion of our post-retirement benefit obligations is recorded on our consolidated balance sheets in accrued expenses and other current liabilities-salaries and benefits. Accumulated Other Comprehensive Loss-Recognition and Deferrals The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2021, items recognized as a component of net periodic benefits expense in 2022, additional items deferred during 2022 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2022. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
| As of and for the Years Ended December 31,
| 2021 |  | Recognition of Net Periodic Benefits Expense |  | Deferrals |  | Net Change in AOCL |  | 2022
| (Dollars in millions)
Accumulated other comprehensive (loss) income |  |  |  |  |  |  |  |  |
Pension plans: |  |  |  |  |  |  |  |  |
Net actuarial (loss) gain | $ | (2,564) |  |  | 688 |  |  | 124 |  |  | 812 |  |  | (1,752) |
Settlement charge | 383 |  |  | — |  |  | — |  |  | — |  |  | 383 |
Prior service benefit (cost) | 45 |  |  | (28) |  |  | — |  |  | (28) |  |  | 17 |
Deferred income tax benefit (expense) | 559 |  |  | (166) |  |  | (26) |  |  | (192) |  |  | 367 |
Total pension plans | (1,577) |  |  | 494 |  |  | 98 |  |  | 592 |  |  | (985) |
Post-retirement benefit plans: |  |  |  |  |  |  |  |  |
Net actuarial (loss) gain | (217) |  |  | (3) |  |  | 591 |  |  | 588 |  |  | 371 |
Prior service (cost) benefit | (5) |  |  | 1 |  |  | 41 |  |  | 42 |  |  | 37 |
Curtailment loss | 4 |  |  | — |  |  | — |  |  | — |  |  | 4 |
Deferred income tax benefit (expense) | 54 |  |  | 1 |  |  | (159) |  |  | (158) |  |  | (104) |
Total post-retirement benefit plans | (164) |  |  | (1) |  |  | 473 |  |  | 472 |  |  | 308 |
Total accumulated other comprehensive (loss) income | $ | (1,741) |  |  | 493 |  |  | 571 |  |  | 1,064 |  |  | (677) |
The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2020, items recognized as a component of net periodic benefits expense in 2021, additional items deferred during 2021 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2020. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
| As of and for the Years Ended December 31,
| 2020 |  | Recognition of Net Periodic Benefits Expense |  | Deferrals |  | Net Change in AOCL |  | 2021
| (Dollars in millions)
Accumulated other comprehensive (loss) income |  |  |  |  |  |  |  |  |
Pension plans: |  |  |  |  |  |  |  |  |
Net actuarial (loss) gain | $ | (2,993) |  |  | 186 |  |  | 243 |  |  | 429 |  |  | (2,564) |
Settlement charge | — |  |  | 383 |  |  | — |  |  | 383 |  |  | 383 |
Prior service benefit (cost) | 41 |  |  | (9) |  |  | 13 |  |  | 4 |  |  | 45 |
Deferred income tax benefit (expense) | 755 |  |  | (137) |  |  | (59) |  |  | (196) |  |  | 559 |
Total pension plans | (2,197) |  |  | 423 |  |  | 197 |  |  | 620 |  |  | (1,577) |
Post-retirement benefit plans: |  |  |  |  |  |  |  |  |
Net actuarial (loss) gain | (346) |  |  | 4 |  |  | 125 |  |  | 129 |  |  | (217) |
Prior service (cost) benefit | (20) |  |  | 15 |  |  | — |  |  | 15 |  |  | (5) |
Curtailment loss | 4 |  |  | — |  |  | — |  |  | — |  |  | 4 |
Deferred income tax benefit (expense) | 90 |  |  | (5) |  |  | (31) |  |  | (36) |  |  | 54 |
Total post-retirement benefit plans | (272) |  |  | 14 |  |  | 94 |  |  | 108 |  |  | (164) |
Total accumulated other comprehensive (loss) income | $ | (2,469) |  |  | 437 |  |  | 291 |  |  | 728 |  |  | (1,741) |
Medicare Prescription Drug, Improvement and Modernization Act of 2003 We sponsor post-retirement health care plans with several benefit options that provide prescription drug benefits that we deem actuarially equivalent to or exceeding Medicare Part D. We recognize the impact of the federal subsidy received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 in the calculation of our post-retirement benefit obligation and net periodic post-retirement benefit expense. Other Benefit Plans Health Care and Life Insurance We provide health care and life insurance benefits to essentially all of our active employees. We are largely self-funded for the cost of the health care plan. Our health care benefit expense for current employees was $296 million, $309 million and $307 million for the years ended December 31, 2022, 2021 and 2020, respectively. Union-represented employee benefits are based on negotiated collective bargaining agreements. Employees contributed $101 million, $120 million, $133 million for the years ended December 31, 2022, 2021 and 2020, respectively. Our group basic life insurance plans are fully insured and the premiums are paid by us. 401(k) Plans We sponsor a qualified defined contribution plan covering substantially all of our U.S. employees. Under this plan, employees may contribute a percentage of their annual compensation up to certain maximums, as defined by the plan and by the Internal Revenue Service. Currently, we match a percentage of employee contributions in cash. At December 31, 2022 and 2021, the assets of the plan included approximately 10 million shares of our common stock, all of which were the result of the combination of previous employer match and participant directed contributions. We recognized expenses related to this plan of $91 million, $96 million and $101 million for the years ended December 31, 2022, 2021 and 2020, respectively. Deferred Compensation Plans We sponsor non-qualified deferred compensation plans for various groups that included certain of our current and former highly compensated employees. The value of liabilities related to these plans was not significant.

X
- References No definition available. + Details
Name: | us-gaap_CompensationAndRetirementDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for retirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 55 -Paragraph 17 -URI https://asc.fasb.org/extlink&oid=123450688&loc=d3e4179-114921 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section S99 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=21916913&loc=d3e273930-122802 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(i) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (o) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (p) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 70 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=49170846&loc=d3e28014-114942 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI https://asc.fasb.org/topic&trid=2235017 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 60 -Section 50 -Paragraph 3 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=6414203&loc=d3e39689-114964 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(iv)(03) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (q) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (r)(1) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (d)(iii) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 20 -Section 50 -Paragraph 1 -Subparagraph (r)(2) -URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration