APThe running joke in news is that companies dump news when people aren’t looking, like before holidays or on Friday nights before long weekends.
ATT met the latter criteria this week.
On Friday night, ATT disclosed that in the fourth quarter, it will take a $7.9 billion noncash, pretax loss related to an adjustment in assumptions made for its pension plan.
The company announced that on Dec. 31, it adjusted its assumed discount rate for its pension obligation to 4.3%. Previously, the company
had used a 5% discount rate, according to its most recent 10-K filed with the SEC.
The discount rate used to measure a pension obligation is what the company assumes the pension fund will return over time in order to meet its obligations. Cutting this rate means that, basically, ATT’s pension fund is expected to yield less now than it was previously, and so as a result the company will have to put additional capital into the fund to meet its future obligations.
The company also said that contributing to the loss were “updated mortality assumptions,” which means that people covered under ATT’s pension plan are now living longer.
And in addition to the pension adjustment, ATT disclosed that its Q4 results will include a $2.1 billion charge due to the abandonment of network assets after the company determined that some copper assets won’t be needed to support its network in the future.
Shares of ATT were little changed in after-hours trade on Friday, as these kinds of impairments and hiccups can’t be totally unexpected for a company that employed more than 240,000 at the end of 2013 and has a market cap of more than $170 billion.
On Twitter, Bloomberg’s Joe Weisenthal noted that in January 2013, the company also took a $10 billion pension charge.
But still, this isn’t the best news, and burying news on a Friday night can give the impression that a company is hoping not everyone notices. Or something like that. You can read ATT’s filing with the SEC here »