Summary
AT&T Inc. (T) issued an 8-K filing on January 22, 2014, providing an update on select fourth-quarter 2013 financial items. The most significant announcement is an expected non-cash, pre-tax gain of approximately $7.6 billion. This gain primarily stems from actuarial adjustments related to AT&T's pension and postemployment benefit plans, specifically an increase in the assumed discount rate to 5.0% and asset gains exceeding the assumed rate of return. While this substantial gain impacts consolidated results, it is important to note that it will not affect AT&T's segment operating results or margins, as it is managed on a total company basis. Additionally, the company reported special termination and other employee-related charges of approximately $500 million within its "Other" segment, related to a voluntary retirement opportunity offered to certain eligible management employees.
Key Highlights
- 1AT&T expects a significant non-cash, pre-tax gain of approximately $7.6 billion for Q4 2013.
- 2The gain is primarily due to actuarial adjustments in pension and postemployment benefit plans.
- 3An increase in the assumed discount rate for pension plans to 5.0% contributed significantly to the gain.
- 4Asset gains on pension plans exceeded the assumed rate of return by approximately $3.2 billion.
- 5This gain is non-cash and will not impact AT&T's segment operating results or margins.
- 6The company recorded approximately $500 million in special termination and employee-related charges in its Other segment.
- 7These charges are associated with a voluntary retirement program for eligible management employees.