Telecommunications giant AT&T Inc. (T: Quote) said in a regulatory filing Thursday that it expects to record a non-cash, pre-tax charge of about $10 billion for the fourth quarter of 2012 related to actuarial gains and losses on pension and postemployment benefit plans.
The company said it lowered its assumed discount rate to 4.3% at the end of 2012, resulting in an actuarial loss of about $12.0 billion.
Partially offsetting the impact of the discount rate is an asset gain, which is about $1.9 billion in excess of the company’s assumed rate of return of 8.25%.
Despite the gain, due to the continued uncertainty in the securities markets and U.S. economy in 2013, the company has lowered its expected long-term rate of return on asset assumption to 7.75%. Gains on claims experience and other actuarial assumptions of about $100 million also partially offset the loss associated with the lower discount rate.
Actuarial gains and losses are managed on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, the loss will not affect segment operating results or margins, AT&T said in the filing. The company said it expects a near-term pressure on operating income, margins, and earnings per share in the fourth quarter of 2012 due to the high subsidies on smartphones, about 10.2 million of such devices were sold by the company in the fourth quarter.
The estimated reduction in the company’s fourth-quarter operating income due to storms, including Superstorm Sandy, is about $175 million, which mainly impacts its Wireless segment.
AT&T shares closed Thursday’s regular trading session at $33.20, down 6 cents, and lost an additional 64 cents or 1.93% in after hours trading.
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by RTT Staff Writer
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