AT&T Uverse 2010 Annual Report Download - page 84

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
82 AT&T Inc.
The accumulated benefit obligation for our pension plans
represents the actuarial present value of benefits based on
employee service and compensation as of a certain date and
does not include an assumption about future compensation
levels. The accumulated benefit obligation for our pension
plans was $51,915 at December 31, 2010, and $49,122 at
December 31, 2009.
Net Periodic Benefit Cost and Other Amounts Recognized
in Other Comprehensive Income
Our combined net pension and postretirement cost recognized
in our consolidated statements of income was $3,750, $2,253
and $25,237 for the years ended December 31, 2010, 2009
and 2008. A portion of pension and postretirement benefit
costs are capitalized as part of the benefit load on internal
construction and capital expenditures, providing a small
reduction in the net expense recorded.
The following tables present the components of net periodic
benefit obligation cost, and other changes in plan assets and
benefit obligations recognized in OCI:
Amounts recognized on our consolidated balance sheets at
December 31 are listed below:
Pension Benefits Postretirement Benefits
2010 2009 2010 2009
Current portion of
employee benefit
obligation1 $ — $ — $ (2,394) $ (2,021)
Employee benefit
obligation2 (6,296) (3,977) (21,497) (22,691)
Net amount recognized $(6,296) $(3,977) $(23,891) $(24,712)
1Included in “Accounts payable and accrued liabilities.”
2Included in “Postemployment benefit obligation.”
Prior service credits included in our accumulated OCI that
have not yet been recognized in net periodic benefit cost
were $164 for pension and $4,760 for postretirement benefits
at December 31, 2010, and $181 for pension and $4,644 for
postretirement at December 31, 2009.
The following table presents the change in the value of plan assets for the years ended December 31 and the plans’ funded
status at December 31:
Pension Benefits Postretirement Benefits
2010 2009 2010 2009
Fair value of plan assets at beginning of year $46,873 $46,828 $ 11,513 $ 10,175
Actual return on plan assets 6,230 6,312 1,472 1,991
Benefits paid1 (5,485) (6,269) (244) (823)
Contributions — 2 — 195
Other 3 — 6 (25)
Fair value of plan assets at end of year 47,621 46,873 12,747 11,513
Unfunded status at end of year2 $ (6,296) $ (3,977) $(23,891) $(24,712)
1
At our discretion, certain postretirement benefits are paid from AT&T cash accounts and do not reduce Voluntary Employee Beneficiary Association (VEBA) assets. Future benefit
payments may be made from VEBA trusts and thus reduce those asset balances.
2
Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding is determined in accordance
with ERISA regulations.
Net Periodic Benefit Cost
Pension Benefits Postretirement Benefits
2010 2009 2008 2010 2009 2008
Service cost – benefits earned during the period $ 1,075 $ 1,070 $ 1,173 $ 348 $ 334 $ 429
Interest cost on projected benefit obligation 3,150 3,355 3,319 2,257 2,434 2,550
Expected return on plan assets1 (3,775) (3,766) (5,808) (943) (784) (1,339)
Amortization of prior service cost (credit) (16) 58 133 (624) (469) (360)
Actuarial (gain) loss1 1,768 (103) 22,559 510 124 2,581
Net pension and postretirement cost (benefit)2 $ 2,202 $ 614 $21,376 $1,548 $1,639 $ 3,861
1
Amounts for 2008 and 2009 are adjusted for the change in accounting policy as discussed in Note 1.
2
During 2010, 2009 and 2008, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 reduced postretirement benefit cost by $237, $255 and $263.
This effect is included in several line items above.