Pension And Postretirement Benefits

9 Months Ended

Sep. 30, 2012

Pension And Postretirement Benefits

Pension And Postretirement Benefits

NOTE 4. PENSION AND POSTRETIREMENT BENEFITS

Substantially all of our employees are covered by one of various noncontributory pension and death benefit plans. We also provide certain medical, dental and life insurance benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to meet the plans' obligations to provide benefits to employees upon their retirement. No significant cash contributions are required under ERISA regulations during 2012. In October 2012, we filed an application with the U.S. Department of Labor for approval to contribute a preferred equity interest in our Mobility business to the trust used to pay pension benefits, under plans sponsored by AT&T. The preferred equity interest is estimated to be valued at $9,500 upon contribution. We anticipate approval in 2013, and expect to make the contribution at that time.

The following table details pension and postretirement benefit costs included in operating expenses (in cost of services and sales, and selling, general and administrative expenses) in the accompanying consolidated statements of income. We recognize actuarial gains and losses from remeasuring our pension and postretirement plan obligations and assets in our operating results at our annual measurement date of December 31, unless earlier remeasurements are required.

In the following table, expense credits are denoted with parentheses. A portion of these benefit costs is capitalized as part of the benefit load on internal construction projects, providing a small reduction in the net expense recorded.

	Three months ended				Nine months ended
	September 30,				September 30,
	2012		2011		2012		2011
Pension cost:
Service cost – benefits earned during the period	$	301	$	297	$	915	$	890
Interest cost on projected benefit obligation		700		740		2,100		2,219
Expected return on assets		(880)		(923)		(2,640)		(2,767)
Amortization of prior service (credit)		(3)		(4)		(11)		(12)
Net pension cost	$	118	$	110	$	364	$	330
Postretirement cost:
Service cost – benefits earned during the period	$	81	$	90	$	247	$	271
Interest cost on accumulated postretirement benefit obligation		446		513		1,340		1,538
Expected return on assets		(200)		(260)		(601)		(780)
Amortization of prior service (credit)		(215)		(173)		(647)		(520)
Net postretirement cost	$	112	$	170	$	339	$	509
Combined net pension and postretirement cost	$	230	$	280	$	703	$	839

Our combined net pension and postretirement cost decreased$50 in the third quarter and $136 for the first nine months of 2012. The decreaseswere related to higher amortization of prior service credits due to our plan change that provides prescription drug benefits on a group basis under Medicare Part D, as allowed under federal healthcare law.The combined net pension and postretirement cost also reflects theprior year's performanceof the U.S. securities markets and declining bond rates, which contribute to lower interest costs on the projected benefit obligationlargely offset by lower expected return on plan assets.

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. Net supplemental retirement pension benefits cost, which is not included in the table above, was $31 in the third quarter of 2012, of which $29 was interest cost, and $94 for the first nine months, of which $87 was interest cost. In 2011, net supplemental retirement pension benefits cost was $35 in the third quarter, of which $31 was interest cost, and $106 for the first nine months, of which $94 was interest cost.