AT&T Wireless 2015 Annual Report Download - page 70

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
68 | AT&T INC.
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:
2015 2014
Plan assets recognized in the
consolidated financial statements $42,195 $45,163
Preferred equity interest in Mobility 8,714 9,021
Net assets available for benefits $50,909 $54,184
Amounts recognized on our consolidated balance sheets at
December 31 are listed below:
Pension Benefits Postretirement Benefits
2015 2014 2015 2014
Current portion of
employee benefit
obligation1 $ — $ — $ (1,766) $ (1,842)
Employee benefit
obligation2 (13,269) (14,380) (19,461) (21,021)
Net amount
recognized $(13,269) $(14,380) $(21,227) $(22,863)
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 $54,007 at December 31, 2015, and
$57,949 at December 31, 2014.
In July 2014, the U.S. Department of Labor 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 $8,714 at
December 31, 2015. 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 2015. 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. We made such a contribution of $175 in 2015.
These contributions combined with our existing pension
assets are in excess of 90% of the pension obligation at
December 31, 2015.
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
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 $(2,821),
$7,232 and $(7,390) for the years ended December 31, 2015, 2014 and 2013. 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
2015 2014 2013 2015 2014 2013
Service cost – benefits earned during the period $ 1,212 $ 1,134 $ 1,321 $ 222 $ 233 $ 352
Interest cost on projected benefit obligation 1,902 2,470 2,429 967 1,458 1,532
Expected return on assets (3,317) (3,380) (3,312) (421) (653) (706)
Amortization of prior service credit (103) (94) (94) (1,278) (1,448) (1,161)
Actuarial (gain) loss (373) 5,419 (5,013) (1,632) 2,093 (2,738)
Net pension and postretirement (credit) cost $ (679) $ 5,549 $(4,669) $(2,142) $ 1,683 $(2,721)