AT&T Wireless 2014 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2014 AT&T Wireless annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 84

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84

AT&T INC.
|
65
Other Changes in Benefit Obligations Recognized in Other Comprehensive Income
The following table presents the after-tax changes in benefit obligations recognized in OCI and the after-tax prior service
credits that were amortized from OCI into net periodic benefit costs:
Pension Benefits Postretirement Benefits
2014 2013 2012 2014 2013 2012
Balance at beginning of year $583 $641 $ 92 $6,812 $4,766 $3,655
Prior service (cost) credit 45 — 559 383 2,765 1,686
Amortization of prior service credit (58) (58) (10) (898) (719) (575)
Reclassification to income of prior service credit 5 — — (40) — —
Total recognized in other comprehensive (income) loss (8) (58) 549 (555) 2,046 1,111
Balance at end of year $575 $583 $641 $6,257 $6,812 $4,766
The estimated prior service credits that will be amortized from accumulated OCI into net periodic benefit cost over the next
fiscal year is $104 ($64 net of tax) for pension and $1,274 ($790 net of tax) for postretirement benefits.
Assumptions
In determining the projected benefit obligation and the net pension and postemployment benefit cost, we used the
following significant weighted-average assumptions:
Pension Benefits Postretirement Benefits
2014 2013 2012 2014 2013 2012
Weighted-average discount rate for determining projected
benefit obligation at December 31 4.30% 5.00% 4.30% 4.20% 5.00% 4.30%
Discount rate in effect for determining net cost1 4.60% 4.30% 5.30% 5.00% 4.30% 5.30%
Long-term rate of return on plan assets 7.75% 7.75% 8.25% 7.75% 7.75% 8.25%
Composite rate of compensation increase for determining
projected benefit obligation 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Composite rate of compensation increase for determining
net pension cost (benefit) 3.00% 3.00% 4.00% 3.00% 3.00% 4.00%
1 Weighted-average discount rate of 5.00% in effect from January 1, 2014 through September 30, 2014. Discount rate of 3.50% in effect from October 1, 2014 through
December 31, 2014.
rate by 0.70%, resulting in an increase in our pension
plan benefit obligation of $4,854 and decreased our
postretirement discount rate 0.80%, resulting in an increase
in our postretirement benefit obligation of $2,786. For the
year ended December 31, 2013, we increased our pension
and postretirement discount rates 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.
Expected Long-Term Rate of Return Our expected long-
term rate of return on pension plan assets is 7.75% for
2015 and 2014. Our expected long-term rate of return on
postretirement plan assets was adjusted to 5.75% for 2015
from 7.75% for 2014 to reflect changes in the plan asset
mix. Our long-term rates of return reflect the average
rate of earnings expected on the funds invested, or to
be invested, to provide for the benefits included in the
projected benefit obligations. In setting the long-term
assumed rate of return, management considers capital
markets future expectations and the asset mix of the plans’
investments. Actual long-term return can, in relatively
We recognize gains and losses on pension and postretirement
plan assets and obligations immediately in our operating
results. These gains and losses are measured annually as of
December 31 and accordingly will be recorded during the
fourth quarter, unless earlier remeasurements are required.
Discount Rate Our assumed weighted-average discount
rate for pension and postretirement benefits of 4.30% and
4.20% respectively, at December 31, 2014, reflects the
hypothetical rate at which the projected benefit obligation
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
corresponding to the related expected durations of future
cash outflows. 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, 2014, when compared to the year ended
December 31, 2013, we decreased our pension discount