AT&T Wireless 2013 Annual Report Download - page 27

AT&T Inc. | 25
Pension and Postretirement Benefits Our actuarial
estimates of retiree benefit expense and the associated
significant weighted-average assumptions are discussed
in Note 12. Our assumed discount rate of 5.00%
at December 31, 2013, reflects the hypothetical
rate at which the projected benefit obligations could
be effectively settled or paid out to participants.
We determined our discount rate based on a range
of factors, including a yield curve composed of the rates
of return on several hundred high-quality, fixed income
corporate bonds available at the measurement date
and the related expected duration for the obligations.
These bonds were all rated at least Aa3 or AA- by
one of the nationally recognized statistical rating
organizations, denominated in U.S. dollars, and neither
callable, convertible nor index linked. For the year ended
December 31, 2013, we increased our discount rate
by 0.70%, resulting in a decrease in our pension plan
benefit obligation of $4,533 and a decrease in our
postretirement benefit obligation of $3,161. For the year
ended December 31, 2012, we decreased our discount
rate by 1.00%, resulting in an increase in our pension
plan benefit obligation of $7,030 and an increase in
our postretirement benefit obligation of $4,546.
Our expected long-term rate of return on plan
assets assumption was 7.75% for the year ended
December31,2013. Our expected return on plan assets
is calculated using the actual fair value of plan assets.
If all other factors were to remain unchanged, we
expect that a 0.50% decrease in the expected long-term
rate of return would cause 2014 combined pension and
postretirement cost to increase $262, which under our
accounting policy would be recognized in the current
year as part of our fourth-quarter remeasurement of
our retiree benefit plans. In 2013, the actual return on
our combined pension and postretirement plan assets
was 14.1%, resulting in an actuarial gain of $3,239.
We recognize gains and losses on pension and
postretirement plan assets and obligations immediately
in our operating results. These gains and losses are
generally measured annually as of December31 and
accordingly will normally be recorded during the
fourth quarter, unless an earlier remeasurement is
required. Should actual experience differ from actuarial
assumptions, the projected pension benefit obligation
and net pension cost and accumulated postretirement
benefit obligation and postretirement benefit cost would
be affected in future years. Note 12 also discusses the
effects of certain changes in assumptions related to
medical trend rates on retiree healthcare costs.
of minutes and video service through our U-verse service.
We will continue to develop innovative products that
capitalize on our IP-based network.
Additionally, we provide local, domestic intrastate and
interstate, international wholesale networking capacity,
and switched services to other service providers, primarily
large Internet Service Providers using the largest class
of nationwide Internet networks (Internet backbone),
wireless carriers, Competitive Local Exchange Carriers,
regional phone Incumbent Local Exchange Carriers, cable
companies and systems integrators. These services are
subject to additional competitive pressures from the
development of new technologies and the increased
availability of domestic and international transmission
capacity. The introduction of new products and service
offerings and increasing satellite, wireless, fiber-optic
and cable transmission capacity for services similar to those
provided by us continues to provide competitive pressures.
We face a number of international competitors, including
Orange Business Services, British Telecom, Singapore
Telecommunications Limited and Verizon Communications
Inc., as well as competition from a number of large systems
integrators, such as HP Enterprise Services.
ACCOUNTING POLICIES AND STANDARDS
Critical Accounting Policies and Estimates Because
of the size of the financial statement line items they relate
to or the extent of judgment required by our management,
some of our accounting policies and estimates have a more
significant impact on our consolidated financial statements
than others. The following policies are presented in the
order in which the topics appear in our consolidated
statements of income.
Allowance for Doubtful Accounts We maintain an
allowance for doubtful accounts for estimated losses
that result from the failure of our customers to make
required payments. When determining the allowance,
we consider the probability of recoverability based on
past experience, taking into account current collection
trends as well as general economic factors, including
bankruptcy rates. Credit risks are assessed based on
historical write-offs, net of recoveries, and an analysis
of the aged accounts receivable balances with
reserves generally increasing as the receivable ages.
Accounts receivable may be fully reserved for when
specific collection issues are known to exist, such as
pending bankruptcy or catastrophes. The analysis of
receivables is performed monthly, and the allowances
for doubtful accounts are adjusted through expense
accordingly. A 10% change in the amounts estimated to
be uncollectible would result in a change in the provision
for uncollectible accounts of approximately $95.