AT&T Wireless 2013 Annual Report Download - page 61

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The following table presents this reconciliation and shows the change in the projected benefit obligation for the years
ended December 31:
Pension Benefits Postretirement Benefits
2013 2012 2013 2012
Benefit obligation at beginning of year $58,911 $56,110 $37,431 $34,953
Service cost – benefits earned during the period 1,321 1,216 352 336
Interest cost on projected benefit obligation 2,429 2,800 1,532 1,725
Amendments — (905) (4,460) (2,768)
Actuarial (gain) loss (2,390) 6,707 (2,098) 4,844
Special termination benefits 255 12 1 5
Benefits paid (3,966) (5,729) (2,473) (2,608)
Transfer for sale of Advertising Solutions segment — (149) — (207)
Plan transfers — (1,151) — 1,151
Benefit obligation at end of year $56,560 $58,911 $30,285 $37,431
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
2013 2012 2013 2012
Fair value of plan assets at beginning of year $45,060 $ 45,907 $ 9,295 $ 9,890
Actual return on plan assets 5,935 5,041 1,347 1,266
Benefits paid1 (3,966) (5,729) (1,682) (1,842)
Contributions 209 3 — —
Transfer for sale of Advertising Solutions segment — (165) — (19)
Other — 3 — —
Fair value of plan assets at end of year3 47,238 45,060 8,960 9,295
Unfunded status at end of year2 $ (9,322) $(13,851) $(21,325) $(28,136)
1 At our discretion, certain postretirement benefits may be paid from AT&T cash accounts, which does not reduce 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.
3 Net assets available for benefits at December 31, 2013 were $56,447 and include a $9,209 preferred equity interest in AT&T Mobility II LLC, as discussed below.
existing pension assets are essentially equivalent to the
pension obligation at December 31, 2013.
On September 9, 2013, the Department of Labor (DOL)
published a proposed exemption that authorized retroactive
approval of this voluntary contribution. The proposal was open
for public comment and we are currently awaiting a final
decision by the DOL. Our retirement benefit plans, including
required contributions, are subject to the provisions of ERISA.
As noted above, this preferred equity interest represents a plan
asset of our pension trust, which is recognized in the separate
financial statements of our pension plan as a qualified plan
asset for funding purposes. The following table presents a
reconciliation of our pension plan assets recognized in the
consolidated financial statements of the Company with the
net assets available for benefits included in the separate
financial statements of the pension plan at December 31:
2013 2012
Plan assets recognized in the
consolidated financial statements $47,238 $45,060
Preferred equity interest in Mobility 9,209 —
Net assets available for benefits $56,447 $45,060
On September 9, 2013, we made a voluntary contribution of
a preferred equity interest in AT&T Mobility II LLC (Mobility),
the holding company for our wireless business, to the trust
used to pay pension benefits under our qualified pension
plans. The preferred equity interest had a value of $9,104
on the contribution date and was valued at $9,209 at
December 31, 2013. The trust is entitled to receive
cumulative cash distributions of $560 per annum, which
will be distributed quarterly in equal amounts and will be
accounted for as contributions. So long as we make the
distributions, we will have no limitations on our ability to
declare a dividend, or repurchase shares. This preferred
equity interest is a plan asset under ERISA and is recognized
as such in the plan’s separate financial statements. However,
because the preferred equity interest is not unconditionally
transferable to an unrelated party, it is not reflected in plan
assets in our consolidated financial statements and instead
has been eliminated in consolidation. At the time of the
contribution of the preferred equity interest, we made an
additional cash contribution of $175 and have agreed to
annual cash contributions of $175 no later than the due
date for our federal income tax return for each of 2014,
2015 and 2016. These contributions combined with our