AT&T Wireless 2014 Annual Report Download - page 66

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
64 | AT&T INC.
In July 2014, the U.S. Department of Labor (DOL) published
in the Federal Register their final retroactive approval of our
September 9, 2013 voluntary contribution of a preferred
equity interest in AT&T Mobility II LLC, the primary 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 $9,021 at December
31, 2014. 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. We distributed $560 to the trust during 2014.
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 (see Note 14), 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 existing pension assets are in excess of 90%
of the pension obligation at December 31, 2014.
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:
2014 2013
Plan assets recognized in the
consolidated financial statements $45,163 $47,238
Preferred equity interest in Mobility 9,021 9,209
Net assets available for benefits $54,184 $56,447
Amounts recognized on our consolidated balance sheets at
December 31 are listed below:
Pension Benefits Postretirement Benefits
2014 2013 2014 2013
Current portion of
employee benefit
obligation1 $ — $ — $ (1,842) $ (1,949)
Employee benefit
obligation2 (14,380) (9,322) (21,021) (19,376)
Net amount
recognized $(14,380) $(9,322) $(22,863) $(21,325)
1 Included in “Accounts payable and accrued liabilities.”
2 Included in “Postemployment benefit obligation.”
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 $57,949 at December 31, 2014,
and $55,077 at December 31, 2013.
Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income
Periodic Benefit Costs
Our combined net pension and postretirement (credit) cost recognized in our consolidated statements of income was $7,232,
$(7,390) and $10,257 for the years ended December 31, 2014, 2013 and 2012. A portion of pension and postretirement
benefit costs is capitalized as part of the benefit load on internal construction and capital expenditures, providing a small
reduction in the net expense recorded. The following table presents the components of net periodic benefit cost:
Pension Benefits Postretirement Benefits
2014 2013 2012 2014 2013 2012
Service cost – benefits earned during the period $ 1,134 $ 1,321 $ 1,216 $ 233 $ 352 $ 336
Interest cost on projected benefit obligation 2,470 2,429 2,800 1,458 1,532 1,725
Expected return on assets (3,380) (3,312) (3,520) (653) (706) (811)
Amortization of prior service credit (94) (94) (15) (1,448) (1,161) (927)
Actuarial (gain) loss 5,419 (5,013) 5,206 2,093 (2,738) 4,247
Net pension and postretirement (credit) cost $ 5,549 $(4,669) $ 5,687 $ 1,683 $(2,721) $4,570