Analyzing Footnote Disclosure of Pension Buy-out In a press release dated December 3, 2018, Bristol Myers Squibb disclosed the following with respec to its pension plans (excerpted). NEW YORK (BUSINESS WIRE) Bristol-Myers Squibb Company (NYSE: BMY) today announced it will transfer $3.8 billion of U.S. pension obligations through a full termination of its U.S. Retirement Income Plan. The obligations will be distributed through a combination of lump sums to Plan participants who elect such payments, and the purchase of a group annuity contract from Athene Annuity and Life Company, for all remaining liabilities. The Plan includes approximately 4,800 active employees, 1,400 retirees and their beneficiaries receiving benefits, and 18,000 prior Bristol-Myers Squibb employees who have not yet initiated their benefits. Current Plan provisions, benefit payment options and in-pay benefits will remain available for all participants. Upon closing of this transaction in the third quarter of 2019, the Company expects a noncash pre-tax pension settlement charge of approximately $1.5 billion-$2 billion. Required a. Why would the company engage in such a transaction? To limit future cash flow for the pension plan b. What are the two payout options available to the company's employees, retirees, and prior employees?
Analyzing Footnote Disclosure of Pension Buy-out In a press release dated December 3, 2018, Bristol Myers Squibb disclosed the following with respec to its pension plans (excerpted). NEW YORK (BUSINESS WIRE) Bristol-Myers Squibb Company (NYSE: BMY) today announced it will transfer $3.8 billion of U.S. pension obligations through a full termination of its U.S. Retirement Income Plan. The obligations will be distributed through a combination of lump sums to Plan participants who elect such payments, and the purchase of a group annuity contract from Athene Annuity and Life Company, for all remaining liabilities. The Plan includes approximately 4,800 active employees, 1,400 retirees and their beneficiaries receiving benefits, and 18,000 prior Bristol-Myers Squibb employees who have not yet initiated their benefits. Current Plan provisions, benefit payment options and in-pay benefits will remain available for all participants. Upon closing of this transaction in the third quarter of 2019, the Company expects a noncash pre-tax pension settlement charge of approximately $1.5 billion-$2 billion. Required a. Why would the company engage in such a transaction? To limit future cash flow for the pension plan b. What are the two payout options available to the company's employees, retirees, and prior employees?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes
Section: Chapter Questions
Problem 21E
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning