AT&T Wireless 2010 Annual Report Download - page 66

64 AT&T Inc.
Notes to Consolidated Financial Statements
Dollars in millions except per share amounts
Pension and Other Postretirement Benefits In January 2011,
we announced a change in our method of recognizing actuarial
gains and losses for pension and other postretirement benefits
for all benefit plans. Historically, we have recognized the
actuarial gains and losses as a component of the Stockholders’
Equity on our consolidated balance sheets on an annual basis
and have amortized them into our operating results over the
average future service period of the active employees of these
plans, to the extent such gains and losses were outside of a
corridor. We have elected to immediately recognize actuarial
gains and losses in our operating results, noting that it is
generally preferable to accelerate the recognition of deferred
gains and losses into income rather than to delay such
recognition. This change will improve transparency in our
operating results by more quickly recognizing the effects of
economic and interest rate conditions on plan obligations,
investments and assumptions. These gains and losses are
generally only measured annually as of December 31 and
accordingly will be recorded during the fourth quarter.
Additionally, for purposes of calculating the expected return
on plan assets, we will no longer use a permitted averaging
technique for the market-related value of plan assets but
instead will use actual fair value of plan assets. We have
applied these changes retrospectively, adjusting all prior
periods. The cumulative effect of the change on retained
earnings as of January 1, 2008, was a reduction of $1,533,
with an offset to accumulated other comprehensive income
(OCI). The annual recognition of actuarial gains and losses,
which is reported as “Actuarial loss on pension and
postretirement benefit plans” on our consolidated statement
of cash flows total $2,521 in 2010, $215 in 2009 and $25,150
in 2008. This change did not have a material impact on cash
provided by or used in operations for any period presented.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation Throughout this document, AT&T Inc.
is referred to as “AT&T,” “we” or the “Company.” The consoli-
dated financial statements include the accounts of the
Company and our majority-owned subsidiaries and affiliates.
Our subsidiaries and affiliates operate in the communications
services industry both domestically and internationally,
providing wireless and wireline communications services and
equipment, managed networking, wholesale services, and
advertising solutions.
All significant intercompany transactions are eliminated in
the consolidation process. Investments in partnerships and
less than majority-owned subsidiaries where we have
significant influence are accounted for under the equity
method. Earnings from certain foreign equity investments
accounted for using the equity method are included for
periods ended within up to one month of our year end
(see Note 7).
The preparation of financial statements in conformity with
U.S. generally accepted accounting principles (GAAP) requires
management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes, including estimates of probable losses
and expenses. Actual results could differ from those estimates.
We have reclassified certain amounts in prior-period financial
statements to conform to the current period’s presentation.
See Note 2 for a discussion of changes in reporting related
to discontinued operations, and Notes 4 and 11 for a
discussion of our changes in accounting and reporting for
our pension and other postretirement benefit costs and
intersegment activity.