AT&T to take $10 billion charge over pension plan loss

The pension-related charge will not affect operating results or margins when it reports earnings on 24 January
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First Published: Fri, Jan 18 2013. 03 15 PM IST
The company also said it would take about a $175 million hit to operating income from storms, primarily Hurricane Sandy, in the earnings report. Photo: AFP
The company also said it would take about a $175 million hit to operating income from storms, primarily Hurricane Sandy, in the earnings report. Photo: AFP
New York: US telecom firm AT&T said Thursday it would take a $10 billion write-down on its fourth quarter earnings to cover accounting losses in its pension funds due to lower-than-expected interest rates.
The number two US wireless carrier said that, based on lowered rate forecasts, for the quarter to 31 December, “we expect to record a non-cash, pre-tax charge of approximately $10 billion related to actuarial gains and losses on pension and post employment benefit plans.”
AT&T said the move was necessary after it cuts its prediction of long-term gains on pension plan assets from 8.25% to 7.75% “due to the continued uncertainty in the securities markets and US economy in 2013.”
It said in a statement filed with the Securities and Exchange Commission that the recalculation resulted “in an actuarial loss of approximately $12.0 billion.”
The difference in the two figures is mainly due to gains made above what was expected on assets in the past year.
The pension-related charge will not affect operating results or margins when it reports earnings on 24 January.
But the company also said it would take about a $175 million hit to operating income from storms, primarily Hurricane Sandy, in the earnings report.
It said it sold about 10.2 million smartphones in the last quarter, but that “due to the high subsidies on these devices, we expect a near-term pressure on operating income, margins, and earnings per share.”
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First Published: Fri, Jan 18 2013. 03 15 PM IST
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