Telecommunications giant AT&T will have to deal with a massive charge as a result of new accounting related to its company retirement benefits.
According to the Wall Street Journal, the company has announced a $10 billion loss in the fourth quarter, related directly to long-term pension and post-retirement benefits the company promised over its many years before the wireless revolution – and the low interest rates which have limited pension investment earnings.
The company dropped its pension discount rate by a full percentage point at the end of 2011, resulting in a $12 billion accounting loss. Those losses were offset from a relatively good spree of investment success – the company actually earned 8.25 percent in its most recent profit cycle – though the company is also lowering its projected returns as it expects continued uncertainty in the markets in the year ahead.
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Costs related to infrastructure damage from Hurricane Sandy also heavily impacted the carrier.
AT&T's pension was said to be underfunded to the tune of $10 billion, including $56.1 billion in pension obligations. The company has proposed to contribute nearly $10 billion in equity to help bolster the system.
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