Large accelerated filer [X]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [ ]
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(1)
|
Portions of AT&T Inc.’s Annual Report to Stockholders for the fiscal year ended December 31, 2013 (Parts I and II).
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(2)
|
Portions of AT&T Inc.’s Notice of 2014 Annual Meeting and Proxy Statement dated on or about March 11, 2014 to be filed within the period permitted under General Instruction G(3) (Parts III and IV).
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Name of each exchange
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||
Title of each class
|
on which registered
|
|
Common Shares (Par Value $1.00 Per Share)
|
New York Stock Exchange
|
|
6.125% AT&T Inc.
|
New York Stock Exchange
|
|
Global Notes due April 2, 2015
|
||
5.875% AT&T Inc.
|
New York Stock Exchange
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|
Global Notes due April 28, 2017
|
||
1.875% AT&T Inc.
Global Notes due December 4, 2020
|
New York Stock Exchange
|
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2.65% AT&T Inc.
Global Notes due December 17 , 2021
|
New York Stock Exchange
|
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2.5% AT&T Inc.
Global Notes due March 15, 2023
|
New York Stock Exchange
|
|
3.5% AT&T Inc.
Global Notes due December 17, 2025
|
New York Stock Exchange
|
|
3.55% AT&T Inc.
Global Notes due December 17, 2032
|
New York Stock Exchange
|
|
7.00% AT&T Inc.
|
New York Stock Exchange
|
|
Global Notes due April 30, 2040
|
||
4.25% AT&T Inc.
Global Notes due June 1, 2043
|
New York Stock Exchange
|
|
4.875% AT&T Inc.
Global Notes due June 1, 2044
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New York Stock Exchange
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Item
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Page |
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PART I
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||||
1.
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Business
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1 |
|
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1A.
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Risk Factors
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9
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|
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2.
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Properties
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10
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|
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3.
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Legal Proceedings
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10
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|
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4.
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Mine Safety Disclosures
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10 |
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Executive Officers of the Registrant
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11 |
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||
PART II
|
||||
5.
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Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
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12 |
|
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6.
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Selected Financial Data
|
13 |
|
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7.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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13 |
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7A.
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Quantitative and Qualitative Disclosures about Market Risk
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13 |
|
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8.
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Financial Statements and Supplementary Data
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13 |
|
|
9.
|
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
|
13 |
|
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9A.
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Controls and Procedures
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13 |
|
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9B.
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Other Information
|
14 |
|
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PART III
|
||||
10.
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Directors, Executive Officers and Corporate Governance
|
14 |
|
|
11.
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Executive Compensation
|
14 |
|
|
12.
|
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
|
14 |
|
|
13.
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Certain Relationships and Related Transactions, and Director Independence
|
16 |
|
|
14.
|
Principal Accountant Fees and Services
|
16 |
|
|
PART IV
|
||||
15.
|
Exhibits and Financial Statement Schedules
|
16 |
AT&T Inc.
|
·
|
wireless subsidiaries provide both wireless voice and data communications services across the U.S. and, through roaming agreements, in a substantial number of foreign countries.
|
·
|
wireline subsidiaries provide primarily landline voice and data communication services, AT&T U-verse® high-speed broadband, video, and voice services (U-verse) and managed networking to business customers.
|
·
|
other subsidiaries include results from corporate and other operations, our portion of results from our equity investments and impacts from corporate-wide decisions for which the individual operating segments are not being evaluated.
|
AT&T Inc.
|
AT&T Inc.
|
AT&T Inc.
|
AT&T Inc.
|
AT&T Inc.
|
Percentage of Total
Consolidated Operating Revenues
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Wireless Segment
|
||||||||||||
Data
|
17 | % | 14 | % | 12 | % | ||||||
Voice, text and other service
|
31 | % | 32 | % | 33 | % | ||||||
Equipment
|
6 | % | 6 | % | 5 | % | ||||||
Wireline Segment
|
||||||||||||
Data
|
26 | % | 25 | % | 23 | % | ||||||
Voice
|
16 | % | 18 | % | 20 | % | ||||||
Other1
|
4 | % | 4 | % | 4 | % |
AT&T Inc.
|
AT&T Inc.
|
AT&T Inc.
|
·
|
Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers’ ability to access financial markets at favorable rates and terms.
|
·
|
Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
|
·
|
Increases in our benefit plans’ costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse medical cost trends, unfavorable or delayed implementation of healthcare legislation, regulations or related court decisions; and our inability to receive retroactive approval from the Department Of Labor of our voluntary contribution of a preferred interest in our wireless business.
|
·
|
The final outcome of FCC and other federal or state agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limit, intercarrier compensation, interconnection obligations, the transition from legacy technologies to IP-based infrastructure, universal service, broadband deployment, E911 services, competition policy, net neutrality, unbundled network elements and other wholesale obligations, availability of new spectrum from the FCC on fair and balanced terms, and wireless license awards and renewals.
|
·
|
The final outcome of state and federal legislative efforts involving issues that are important to our business, including deregulation of IP-based services, relief from Carrier of Last Resort obligations, and elimination of state commission review of the withdrawal of services.
|
·
|
Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.
|
·
|
Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies (e.g., cable, wireless and VoIP) and our ability to maintain capital expenditures.
|
·
|
The extent of competition and the resulting pressure on customer and access line totals and wireline and wireless operating margins.
|
·
|
Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets.
|
·
|
The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies (e.g., VoIP).
|
·
|
The continued development of attractive and profitable U-verse service offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.
|
·
|
Our continued ability to attract and offer a diverse portfolio of wireless devices, some on an exclusive basis.
|
·
|
The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
|
·
|
Our ability to manage growth in wireless data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.
|
·
|
The outcome of pending, threatened or potential litigation, including patent and product safety claims by or against third parties.
|
·
|
The impact on our networks and business from major equipment failures; security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks.
|
·
|
The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.
|
·
|
The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any taxing jurisdictions.
|
·
|
Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.
|
·
|
Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments.
|
·
|
The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant reduction in government spending and reluctance of businesses and consumers to spend in general and on our products and services specifically, due to this fiscal uncertainty.
|
AT&T Inc.
|
(a)
|
In 2012, AT&T Mobility entered into an administrative settlement with the U.S. Environmental Protection Agency (EPA) regarding alleged violations of federal environmental statutes in connection with management of back-up power systems at AT&T Mobility facilities. As part of the settlement, we are required to audit our compliance at over 1,300 facilities and to pay stipulated penalties for any violations discovered by those audits. At this time, it is possible that as a result of these audits, we could face civil penalties in excess of one hundred thousand dollars, but we do not anticipate such fines would be in an amount that would be material.
|
(b)
|
On March 29, 2012, attorneys in an investigation led by the California Attorney General’s Office informed us of claimed violations of California state hazardous waste statutes arising from the disposal of batteries, aerosol cans, and electronic waste at various California facilities. We are analyzing the claims while cooperating with investigators and implementing remedial measures where appropriate. At this time, it is possible that we could face civil penalties in excess of one hundred thousand dollars, but we do not anticipate such fines would be in an amount that would be material.
|
(c)
|
In December 2011, Harris County, Texas brought suit on behalf of itself and the Texas Commission on Environmental Quality (TCEQ) alleging AT&T to be liable for statutory civil penalties for past leakage at eleven petroleum storage tank locations. All eleven sites have been remediated (with de minimis actual impact) in accordance with state programs and the TCEQ has issued No Further Action (NFA) letters closing the sites. Notwithstanding these facts, Harris County declined to dismiss its claims and is proceeding with litigation. Trial is set for July 2014. While it is possible that Harris County may recover civil penalties exceeding one hundred thousand dollars, we do not expect the amount, if any, to be material.
|
AT&T Inc.
|
EXECUTIVE OFFICERS OF THE REGISTRANT
|
(As of February 1, 2014)
|
Name
|
Age
|
Position
|
Held Since
|
|
Randall L. Stephenson
|
53
|
Chairman of the Board, Chief Executive Officer and President
|
6/2007
|
|
William A. Blase Jr.
|
58
|
Senior Executive Vice President – Human Resources
|
6/2007
|
|
James W. Cicconi
|
61
|
Senior Executive Vice President – External and Legislative Affairs, AT&T Services, Inc.
|
11/2008
|
|
Catherine M. Coughlin
|
56
|
Senior Executive Vice President and Global Marketing Officer
|
6/2007
|
|
Ralph de la Vega
|
62
|
President and Chief Executive Officer, AT&T Mobility
|
10/2008
|
|
John M. Donovan
|
53
|
Senior Executive Vice President – AT&T Technology and Network Operations
|
1/2012
|
|
Andrew M. Geisse
|
57
|
Chief Executive Officer – AT&T Business Solutions
|
8/2012
|
|
Lori M. Lee
|
48
|
Senior Executive Vice President – Home Solutions
|
4/2013
|
|
John T. Stankey
|
51
|
Group President and Chief Strategy Officer
|
2/2012
|
|
John J. Stephens
|
54
|
Senior Executive Vice President and Chief Financial Officer
|
6/2011
|
|
Wayne Watts
|
60
|
Senior Executive Vice President and General Counsel
|
6/2007
|
AT&T Inc.
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
(a)
Total Number of
Shares (or Units)
Purchased 1,2
|
|
(b)
Average Price Paid
Per Share (or Unit)
|
|
(c)
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs 1
|
|
(d)
Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) That May Yet Be
Purchased Under The
Plans or Programs
|
||
|
|
|
|
|
|
|
|
|
|
|
October 1, 2013 -
October 31, 2013
|
|
12,001,157
|
|
$
|
34.65
|
|
12,000,000
|
|
204,447,551
|
|
November 1, 2013 -
November 30, 2013
|
|
22,401,629
|
|
|
35.75
|
|
22,398,600
|
|
182,048,951
|
|
December 1, 2013 -
December 31, 2013
|
|
19,673,371
|
|
|
34.50
|
|
19,650,000
|
|
162,398,951
|
|
Total
|
|
54,076,157
|
|
$
|
35.05
|
|
54,048,600
|
|
|
|
1
|
In March 2013, our Board of Directors authorized the repurchase of up to 300 million shares of our common stock. The March 2013 authorization has no expiration date.
|
|||||||||
2
|
Of the shares purchased, 27,557 shares were acquired through the withholding of taxes on the vesting of restricted stock or through the payment in stock of taxes on the exercise price of options.
|
AT&T Inc.
|
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
|
AT&T Inc.
|
AT&T Inc.
|
Equity Compensation Plan Information
|
|||
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
|
Weighted-
average exercise
price of
outstanding options, warrants
and rights
|
Number of securities
remaining available for
future issuance under
equity compensation
Plans (excluding
securities reflected in
column (a))
|
(a)
|
(b)
|
(c)
|
|
Equity compensation plans approved by security holders | 40,187,209(1) | $29.26 | 127,640,511(2) |
Equity compensation plans not approved by security holders | - | - | - |
Total
|
40,187,209(3)
|
$29.26
|
127,640,511
|
(1)
|
Includes the issuance of stock in connection with the following stockholder approved plans: (a) 11,089,765 stock options under the 1996 Stock and Incentive Plan, 2001 Incentive Plan, and Stock Purchase and Deferral Plan (SPDP), (b) 1,787,960 phantom stock units under the Stock Savings Plan (SSP), 7,763,499 phantom stock units under the SPDP, 2,782,850 restricted stock units under the 2006 Incentive Plan, and 3,046,098 restricted stock units under the 2011 Incentive Plan, (c) 3,460,888 target number of stock-settled performance shares under the 2006 Incentive Plan, and (d) 6,660,160 target number of stock-settled performance shares under the 2011 Incentive Plan. At payout, the target number of performance shares may be reduced to zero or increased by up to 150%. Each phantom stock unit and performance share is settleable in stock on a 1-to-1 basis. The weighted-average exercise price in the table does not include outstanding performance shares or phantom stock units.
|
|
The SSP was approved by stockholders in 1994 and then was amended by the Board of Directors in 2000 to increase the number of shares available for purchase under the plan (including shares from the Company match and reinvested dividend equivalents) and shares subject to options. Stockholder approval was not required for the amendment. To the extent applicable, the amount shown for approved plans in column (a), in addition to the above amounts, includes 2,744,464 phantom stock units (computed on a first-in-first-out basis) and 851,525 stock options that were approved by the Board in 2000. Under the SSP, shares could be purchased with payroll deductions and reinvested dividend equivalents by mid-level and above managers and limited Company partial matching contributions. No new contributions may be made to the plan. In addition, participants received approximately 2 options for each share purchased with employee payroll deductions. The options have a 10-year term and a strike price equal to the fair market value of the stock on the date of grant.
|
(2)
|
Includes 30,096,939 shares that may be issued under the SPDP, 76,733,156 shares that may be issued under the 2011 Incentive Plan, and up to 3,919,185 shares that may be purchased through reinvestment of dividends on phantom shares held in the SSP.
|
(3)
|
Does not include certain stock options issued by companies acquired by AT&T that were converted into options to acquire AT&T stock. As of December 31, 2013, there were 68,266 shares of AT&T common stock subject to the converted options, having a weighted-average exercise price of $19.82. Also, does not include 61,170 outstanding phantom stock units that were issued by companies acquired by AT&T that are convertible into stock on a 1-to-1 basis, along with up to 57,462 shares that may be purchased with reinvested dividend equivalents paid on the outstanding phantom stock units. These units have no exercise price. No further phantom stock units, other than reinvested dividends, may be issued under the assumed plans. The weighted-average exercise price in the table does not include outstanding performance shares or phantom stock units. These units have no exercise price. No further phantom stock units, other than reinvested dividends, may be issued under the assumed plans. The weighted-average exercise price in the table does not include outstanding performance shares or phantom stock units.
|
AT&T Inc.
|
|
*
|
Incorporated herein by reference to the appropriate portions of the registrant’s Annual Report to Stockholders for the fiscal year ended December 31, 2013. (See Part II.)
|
|
Financial statement schedules other than those listed above have been omitted because the required information is contained in the financial statements and notes thereto, or because such schedules are not required or applicable.
|
Exhibit
Number
|
|
3-a
|
Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on December 13, 2013. (Exhibit 3.1 to Form 8-K dated December 13, 2013.)
|
3-b
|
Bylaws amended June 24, 2011. (Exhibit 3 to Form 8-K dated June 24, 2011.)
|
4-a
|
No instrument which defines the rights of holders of long-term debt of the registrant and all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601b)(4)(iii)(A), except for the instruments referred to in 4-b, 4-c, 4-d, 4-e, 4-f, 4-g, and 4-h below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC upon request.
|
4-b
|
Guaranty of certain obligations of Pacific Bell Telephone Co. and Southwestern Bell Telephone Co. (Exhibit 4-c to Form 10-K for 2011.)
|
AT&T Inc.
|
4-c | Guaranty of certain obligations of Ameritech Capital Funding Corp., Indiana Bell Telephone Co. Inc., Michigan Bell Telephone Co., Pacific Bell Telephone Co., and Wisconsin Bell, Inc. (Exhibit 4-d to Form 10-K for 2011.) |
4-d
|
Guarantee of certain obligations of AT&T Corp. (Exhibit 4-e to Form 10-K for 2011.)
|
4-e
|
Guarantee of certain obligations of BellSouth Corp. (Exhibit 4-f to Form 10-K for 2011.)
|
4-f
|
Cingular Third Supplemental Indenture. (Exhibit 4-g to Form 10-K for 2011.)
|
4-g
|
Indenture dated as of November 1, 1994 between SBC Communications Inc. and The Bank of New York, as Trustee.
|
4-h
|
Indenture, dated as of May 15, 2013, between AT&T Inc. and The Bank of New York Mellon Trust Company, N.A. as Trustee (Exhibit 4.1 to Form 8-K dated May 15, 2013.)
|
10-a
|
Short Term Incentive Plan, amended and restated effective January 1, 2014.
|
10-b
|
2006 Incentive Plan, amended and restated effective through January 28, 2010. (Exhibit 10-c to Form 10-Q filed for June 30, 2010.)
|
10-c
|
2011 Incentive Plan, amended December 12, 2013. (Exhibit 10.1 to Form 8-K dated December 12, 2013.)
|
10-d
|
Supplemental Life Insurance Plan, amended and restated effective January 1, 2010. (Exhibit 10-d to Form 10-Q filed for June 30, 2009.)
|
10-e
|
Supplemental Retirement Income Plan, amended and restated December 31, 2008.
|
10-f
|
2005 Supplemental Employee Retirement Plan, amended and restated May 1, 2012. (Exhibit 10-a to Form 10-Q filed for June 30, 2012.)
|
10-g
|
Senior Management Deferred Compensation Program of 1988 (effective for Units of Participation Having a Unit Start Date of January 1, 1988 or later) as amended through April 1, 2002.
|
10-h
|
Salary and Incentive Award Deferral Plan, dated December 31, 2004. (Exhibit 10-k to Form 10-K for 2011.)
|
10-i
|
Stock Savings Plan, dated December 31, 2004. (Exhibit 10-l to Form 10-K for 2011.)
|
10-j
|
Stock Purchase and Deferral Plan, amended April 26, 2013. (Exhibit 10 to Form 10-Q filed for March 31, 2013.)
|
10-k
|
Cash Deferral Plan, amended and restated January 31, 2013. (Exhibit 10-n to Form 10-K for 2012).
|
10-l
|
Master Trust Agreement for AT&T Inc. Deferred Compensation Plans and Other Executive Benefit Plans and subsequent amendments dated August 1, 1995 and November 1, 1999. (Exhibit 10-dd to Form 10-K for 2009.)
|
10-m
|
Officer Disability Plan, amended and restated effective January 1, 2010. (Exhibit 10-i to Form 10-Q filed for June 30, 2009.)
|
AT&T Inc.
|
10-n | AT&T Inc. Health Plan, amended and restated effective January 1, 2014. (Exhibit 10 to Form 10-Q filed for June 30, 2013.) | |
10-o | Pension Benefit Makeup Plan No.1, amended and restated December 31, 2010. (Exhibit 10-jj to Form 10-K for 2010.) | |
10-p
|
AT&T Inc. Change in Control Severance Plan, amended and restated effective February 1, 2013. (Exhibit 10-t to Form 10-K for 2012.)
|
|
10-q
|
AT&T Inc. Equity Retention and Hedging Policy. (Exhibit 10.2 to Form 8-K dated December 15, 2011.)
|
|
10-r
|
Administrative Plan, amended and restated effective January 1, 2013. . (Exhibit 10-w to Form 10-K for 2012).
|
|
10-s
|
AT&T Inc. Non-Employee Director Stock and Deferral Plan, amended and restated June 26, 2008.
|
|
10-t
|
AT&T Inc. Non-Employee Director Stock Purchase Plan, effective June 27, 2008.
|
|
10-u
|
Communications Concession Program for Directors, amended and restated February 1, 2013. (Exhibit 10-aa to Form 10-K for 2012.)
|
|
10-v
|
Form of Indemnity Agreement, effective July 1, 1986, between SBC (now AT&T Inc.) and its directors and officers. (Exhibit 10-bb to Form 10-K for 2011.)
|
|
10-w
|
Transition Agreement by and between BellSouth Corporation and Rafael de la Vega, dated December 29, 2003. (Exhibit 10-cc to Form 10-K for 2011.)
|
|
10-x
|
Pacific Telesis Group Deferred Compensation Plan for Nonemployee Directors. (Exhibit 10-hh to Form 10-K for 2011.)
|
|
10-x(i)
|
Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10-hh(i) to Form 10-K for 2011.)
|
|
10-y
|
Pacific Telesis Group Outside Directors’ Deferred Stock Unit Plan. (Exhibit 10-ii to Form 10-K for 2011.)
|
|
10-z
|
Pacific Telesis Group 1996 Directors’ Deferred Compensation Plan. (Exhibit 10-jj to Form 10-K for 2011.)
|
|
10-z(i)
|
Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10-hh(i) to Form 10-K for 2011.)
|
|
10-aa
|
AT&T Corp. Executive Deferred Compensation Plan (formerly known as AT&T Corp. Senior Management Incentive Award Deferral Plan), amended and restated January 1, 2008.
|
|
10-bb
|
Master Trust Agreement for AT&T Corp. Deferred Compensation Plans and Other Executive Benefit Plans, effective January 13, 1994. (Exhibit 10-nn to Form 10-K for 2011.)
|
|
10-bb(i)
|
First Amendment to Master Trust Agreement, effective December 23, 1997. (Exhibit 10-nn(i) to Form 10-K for 2011.)
|
|
10-cc
|
AT&T Corp. Non-Qualified Pension Plan, as amended and restated effective December 31, 2008.
|
AT&T Inc.
|
10-dd | AT&T Corp. Excess Benefit and Compensation Plan, as amended and restated effective December 31, 2008. | |
10-ee | BellSouth Corporation Nonqualified Deferred Compensation Plan, dated January 1, 2005. (Exhibit 10-ss to Form 10-K for 2011.) | |
10-ff
|
BellSouth Corporation Deferred Compensation Plan for Non-Employee Directors, dated March 9, 1984. (Exhibit 10-uu to Form 10-K for 2011.)
|
|
10-gg
|
BellSouth Corporation Director’s Compensation Deferral Plan, as amended and restated effective as of January 1, 2005. (Exhibit 10-vv to Form 10-K for 2011.)
|
|
10-hh
|
BellSouth Corporation Stock and Incentive Compensation Plan, as amended June 28, 2004. (Exhibit 10-qq for Form 10-K for 2009.)
|
|
10-hh(i)
|
First Amendment to the BellSouth Corporation Stock and Incentive Compensation Plan, dated September 26, 2005. (Exhibit 10-xx(i) to Form 10-K for 2011.)
|
|
10-hh(ii)
|
Second Amendment to BellSouth Corporation Stock and Incentive Compensation Plan, effective June 26, 2008.
|
|
10-ii
|
BellSouth Corporation Supplemental Executive Retirement Plan, amended and restated as of May 1, 2012. (Exhibit10-c to Form 10-Q filed for June 30, 2012.)
|
|
10-jj
|
BellSouth Corporation Non-Employee Director Non-Qualified Stock Option Terms and Conditions (for options granted under the BellSouth Corporation Stock and Incentive Compensation Plan). (Exhibit 10-tt to Form 10-K for 2009.)
|
|
10-kk
|
BellSouth Corporation Amended And Restated Trust Under Board Of Directors Benefit Plan(s), effective October 11, 2006. (Exhibit 10-aaa to Form 10-K for 2011.)
|
|
10-ll
|
BellSouth Supplemental Life Insurance Plan, amended and restated November 1, 2009. (Exhibit 10-aaa to Form 10-K for 2009.)
|
|
10-mm
|
BellSouth Nonqualified Deferred Income Plan, as amended and restated May 1, 2012. (Exhibit 10-fff to Form 10-K for 2012.)
|
|
10-nn
|
Cingular Wireless Cash Deferral Plan, effective November 1, 2001. (Exhibit 10-hhh to Form 10-K for 2011.)
|
|
10-oo
|
AT&T Mobility 2005 Cash Deferral Plan. (Exhibit 10-lll to Form 10-K for 2011.)
|
|
10-pp
|
Credit Agreement dated December 11, 2012. (Exhibit 10.b to Form 8-K dated December 11, 2012.)
|
|
10-qq
|
Amended and Restated Credit Agreement dated December 11, 2013. (Exhibit 10.1 to Form 8-K dated December 11, 2013.)
|
|
10-rr
|
Agreement and Plan of Merger, dated as of July 12, 2013, by and among Leap Wireless International, Inc., AT&T Inc., Laser, Inc. and Mariner Acquisition Sub Inc. (exhibit 10.1 to Form 8-K dated July 12, 2013.)
|
|
10-ss
|
Stock Purchase Agreement, dated as of December 16, 2013, by and between AT&T Inc. and Frontier Communications Corporation. (Exhibit 10.1 to Form 8-K dated December 16, 2013.)
|
|
12
|
Computation of Ratios of Earnings to Fixed Charges.
|
AT&T Inc.
|
13 | Portions of AT&T’s Annual Report to Stockholders for the fiscal year ended December 31, 2011. Only the information incorporated by reference into this Form 10-K is included in the exhibit. |
21
|
Subsidiaries of AT&T Inc.
|
23
|
Consent of Ernst & Young LLP, independent registered public accounting firm for AT&T.
|
24
|
Powers of Attorney.
|
31
|
Rule 13a-14(a)/15d-14(a) Certifications
|
31.1
|
Certification of Principal Executive Officer
|
31.2
|
Certification of Principal Financial Officer
|
32
|
Section 1350 Certification
|
101
|
XBRL Instance Document
|
COL. A
|
COL. B
|
COL. C
|
COL. D
|
COL. E
|
||||
Additions
|
||||||||
(1)
|
(2)
|
(3)
|
||||||
Balance at
Beginning of
Period
|
Charged to
Costs and
Expenses (a)
|
Charged to
Other
Accounts (b)
|
Acquisitions
|
Deductions (c)
|
Balance at End
of Period
|
|||
Year 2013
|
$
|
547
|
954
|
(30)
|
-
|
988
|
$
|
483
|
Year 2012
|
$
|
878
|
1,117
|
48
|
-
|
1,496
|
$
|
547
|
Year 2011
|
$
|
957
|
1,136
|
38
|
-
|
1,253
|
$
|
878
|
(a)
|
Includes amounts previously written off which were credited directly to this account when recovered. Excludes direct charges and credits to expense for nontrade receivables in the consolidated statements of income.
|
(b)
|
Includes amounts related to long-distance carrier receivables which were billed by AT&T.
|
(c)
|
Amounts written off as uncollectible, or related to divested entities.
|
AT&T INC. | |
/s/ John J. Stephens | |
John J. Stephens
Senior Executive Vice President
and Chief Financial Officer
|
/s/ John J. Stephens | |
John J. Stephens, as attorney-in-fact
and on his own behalf as Principal
Financial Officer and Principal
Accounting Officer
|
February 21, 2014 | |
Directors:
|
|
Randall L. Stephenson*
|
Michael B. McCallister*
|
Reuben V. Anderson*
|
John B. McCoy*
|
James H. Blanchard*
|
Beth E. Mooney*
|
Jaime Chico Pardo*
|
Joyce M. Roché*
|
Scott T. Ford*
|
Matthew K. Rose*
|
James P. Kelly*
|
Cynthia B. Taylor*
|
Jon C. Madonna*
|
Laura D’Andrea Tyson*
|
|
ARTICLE 1
|
|
DEFINITIONS AND INCORPORATION BY REFERENCE1
|
1.01 Definitions..................................................................................................
|
1 |
|
1.02 Other Definitions.......................................................................................
|
4
|
1.03 Incorporation by Reference of Trust Indenture Act...........................
|
4
|
1.04 Rules of Construction..............................................................................
|
4
|
|
ARTICLE 2
|
2.01 Issuable in Series.......................................................................................
|
5
|
2.02 Establishment of Terms and Form of Series of Securities...................
|
5
|
2.03 Execution, Authentication and Delivery................................................
|
7
|
2.04 Registrar and Paying Agent....................................................................
|
10
|
2.05 Payment on Securities..............................................................................
|
10
|
2.06 Paying Agent to Hold Money in Trust..................................................
|
11
|
2.07 Securityholder Lists; Ownership of Securities.....................................
|
12
|
2.08 Registration of Transfer and Exchange.................................................
|
12
|
2.09 Replacement Securities............................................................................
|
15
|
2.10 Outstanding Securities............................................................................
|
16
|
2.11 Treasury Securities..................................................................................
|
17
|
2.12 Temporary Securities...............................................................................
|
17
|
2.13 Cancellation..............................................................................................
|
18
|
2.14 Defaulted Interest....................................................................................
|
18
|
2.15 CUSIP Numbers........................................................................................
|
18
|
|
ARTICLE 3
|
REDEMPTION..................................................................19
|
3.01 Notice to Trustee......................................................................................
|
19
|
3.02 Selection of Securities to be Redeemed................................................
|
19
|
3.03 Notice of Redemption..............................................................................
|
19
|
3.04 Effect of Notice of Redemption..............................................................
|
20
|
3.05 Deposit of Redemption Price..................................................................
|
20
|
3.06 Securities Redeemed in Part...................................................................
|
21
|
|
ARTICLE 4
|
COVENANTS.....................................................................21
|
4.01 Payment of Securities................................................................................
|
21
|
4.02 Reports by SBC..........................................................................................
|
21
|
4.03 Statement as to Compliance......................................................................
|
22
|
4.04 Calculation of Original Issue Discount...................................................
|
22
|
|
ARTICLE 5
|
SUCCESSORS....................................................................22
|
5.01 When SBC May Merge, etc......................................................................
|
22
|
|
ARTICLE 6
|
DEFAULTS AND REMEDIES.........................................23
|
6.01 Events of Default........................................................................................
|
23
|
6.02 Acceleration................................................................................................
|
24
|
6.03 Other Remedies Available to Trustee....................................................
|
25
|
6.04 Waiver of Existing Defaults......................................................................
|
26
|
6.05 Control by Majority...................................................................................
|
26
|
6.06 Limitation on Suits by Securityholders..................................................
|
27
|
6.07 Rights of Holders to Receive Payment...................................................
|
27
|
6.08 Collection Suits by Trustee......................................................................
|
27
|
6.09 Trustee May File Proofs of Claim............................................................
|
28
|
6.10 Priorities.......................................................................................................
|
28
|
6.11 Undertaking for Costs...............................................................................
|
28
|
|
ARTICLE 7
|
TRUSTEE........................................................................... 29
|
7.01 Duties of Trustee......................................................................................
|
29
|
7.02 Rights of Trustee......................................................................................
|
30
|
7.03 Individual Rights of Trustee...................................................................
|
31
|
7.04 Trustee's Disclaimer.................................................................................
|
31
|
7.05 Notice of Defaults.....................................................................................
|
31
|
7.06 Reports by Trustee to Holders...............................................................
|
31
|
7.07 Compensation and Indemnity.................................................................
|
32
|
7.08 Replacement of Trustee...........................................................................
|
32
|
7.09 Successor Trustee, Agents by Merger, etc..........................................
|
34
|
7.10 Eligibility; Disqualification......................................................................
|
34
|
7.11 Preferential Collection of Claims Against..............................................
|
35
|
|
ARTICLE 8
|
|
DISCHARGE OF INDENTURE.......................................35
|
8.01 Termination of SBC's Obligations...........................................................
|
35
|
8.02 Application of Trust Money....................................................................
|
36
|
8.03 Repayment to.............................................................................................
|
36
|
8.04 Indemnity for Government Obligations.................................................
|
36
|
|
ARTICLE 9
|
|
AMENDMENTS AND WAIVERS................................ 37
|
9.01 Without Consent of Holders...................................................................
|
37
|
9.02 With Consent of Holders........................................................................
|
37
|
9.03 Compliance with Trust Indenture Act...................................................
|
39
|
9.04 Revocation and Effect of Consents.......................................................
|
39
|
9.05 Notation on or Exchange of Securities..................................................
|
39
|
9.06 Trustee Protected.....................................................................................
|
39
|
9.07 Execution of Supplemental Indentures.................................................
|
39
|
|
ARTICLE 10
|
MISCELLANEOUS........................................................... 40
|
10.01 Trust Indenture Act Controls................................................................
|
40
|
10.02 Notices......................................................................................................
|
40
|
10.03 Communication by Holders with Other Holders.................................
|
41
|
10.04 Certificate and Opinion as to Conditions Precedent..........................
|
41
|
10.05 Statements Required in Certificate or Opinion....................................
|
41
|
10.06 Rules by Trustee and Agents...............................................................
|
42
|
10.07 Legal Holidays........................................................................................
|
42
|
10.08 Governing Law.........................................................................................
|
42
|
10.09 No Adverse Interpretation of Other Agreements..............................
|
42
|
10.10 No Recourse Against Others...............................................................
|
42
|
10.11 Acts of Holders......................................................................................
|
42
|
10.12 Execution in Counterparts.....................................................................
|
44
|
|
Attention:
|
Assistant Treasurer-Corporate Finance
|
1.
|
Definitions.
|
A.
|
Performance Goals
|
(1)
|
Financial performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or a division of any of the foregoing. Such financial performance may be based on net income, Value Added (after-tax cash operating profit less depreciation and less a capital charge), EBITDA (earnings before interest, taxes, depreciation and amortization), revenues, sales, expenses, costs, gross margin, operating margin, profit margin, pre-tax profit, market share, volumes of a particular product or service or category thereof, including but not limited to the product’s life cycle (for example, products introduced in the last two years), number of customers or subscribers, number of items in service, including but not limited to every category of access or other telecommunication or television lines, return on net assets, return on assets, return on capital, return on invested capital, cash flow, free cash flow, operating cash flow, operating revenues, operating expenses, and/or operating income.
|
(2)
|
Service performance of the Company (on a consolidated basis), of one or more of its Subsidiaries, and/or of a division of any of the foregoing. Such service performance may be based upon measured customer perceptions of service quality. Employee satisfaction, employee retention, product development, completion of a joint venture or other corporate transaction, completion of an identified special project, and effectiveness of management.
|
(3)
|
The Company’s stock price, return on stockholders’ equity, total stockholder return (stock price appreciation plus dividends, assuming the reinvestment of dividends), and/or earnings per Share.
|
(4)
|
Impacts of acquisitions, dispositions, or restructurings, on any of the foregoing.
|
B.
|
Adjustments.
|
(1)
|
AT&T net income and any relevant revenue modifier shall exclude the dilutive impacts of any merger and acquisition activity, including intangible amortization, asset write-offs, accelerated depreciation and transaction and restructuring costs. Merger and acquisition activity is defined as the direct or indirect acquisition of or an equity investment in a company by AT&T or a direct or indirect wholly-owned subsidiary of AT&T (excluding acquisitions of or investment in wholly owned subsidiaries of AT&T), where the consideration that would be given for the direct or indirect acquisition or equity investment exceeds $2.0 billion, in each case, whether or not the transaction is consummated.
|
(2)
|
The net dilutive impact resulting from the implementation of mandatory changes under The Patient Protection and Affordable Care Act of 2010, as amended from time to time, will also be excluded from the calculation of AT&T net income and any relevant revenue modifier.
|
(3)
|
Gains and losses related to the assets and liabilities from pension plans and other post-retirement benefit plans (and any associated tax effects) shall be disregarded in determining whether or the extent to which a Performance Goal has been met.
|
(4)
|
If the matters in a specific category below have a collective net impact (whether positive or negative) on net income, after taxes and available and collectible insurance, that exceed $500 million in a calendar year, then such matters (as well as any related effects on cash flow, if applicable) shall be excluded in determining whether or the extent to which the relevant performance goals applicable to such year are met:
|
|
Categories:
|
|
(1) changes in accounting principles;
|
|
(2) extraordinary items;
|
|
(3) changes in Federal tax law;
|
|
(4) changes in the tax laws of the states;
|
|
(5) expenses caused by natural disasters, including but not limited to floods, hurricanes, and earthquakes;
|
|
(6) expenses resulting from intentionally caused damage to property of the Company or its Subsidiaries taken as a whole;
|
|
(7) non-cash accounting write-downs of goodwill and other intangible assets.
|
4.
|
Key Contributor Awards.
|
·
|
Financial results above objective
|
·
|
Outstanding customer service results
|
·
|
Advancement of workforce diversity
|
·
|
Outstanding individual contribution
|
·
|
Outstanding leadership
|
·
|
Innovation and skills of the future
|
Become an Eligible Employee after the beginning of the Performance Period
|
Prorate according to time of active service in the eligible position
|
|
Modification of an Award during the Performance Period
|
Prorate for the amount of active service under each set of Awards
|
|
Leave of Absence
|
Prorate to date leave commences and from date leave ceases unless otherwise provided by the Administrator
|
|
Dismissal for cause during or after a Performance Period
|
No Award
|
|
Involuntary Termination
|
Prorate to date of termination
|
|
Voluntary Termination
|
No Award
|
|
Retirement or Termination of Employment due to death or Disability during a Performance Period
|
Prorate to date of Termination of Employment
|
(a)
|
No person shall have any claim to be granted an Award under the Plan and there is no obligation for uniformity of treatment of Employees under the Plan. Awards under the Plan may not be assigned or alienated.
|
(b)
|
Neither the Plan nor any action taken hereunder shall be construed as giving to any Employee the right to be retained in the employ of AT&T or any subsidiary thereof.
|
(c)
|
Awards shall be subject to applicable withholding taxes as required by law.
|
7.
|
Designation of Beneficiaries.
|
8.
|
Administrator.
|
9.
|
Modification or Termination of Plan.
|
1.0
|
Administrator. Prior to August 22, 2006, “Administrator” means the Executive Vice President – Human Resources of AT&T Corp. (or his or her delegate). On and after August 22, 2006, “Administrator” means the most senior vice president of AT&T Inc. responsible for human resource matters (or his or her designee). The Administrator shall have absolute discretion to interpret, manage and administer the Plan in accordance with its terms and conditions.
|
1.1
|
Affiliate. “Affiliate” means (i) any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or governmental or political subdivision thereof that directly, or through one or more intermediates, controls, or is controlled by, or is under common control with, the Company; or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee, provided, however, that effective immediately after the Closing, the term “Affiliate” shall not include any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, or governmental or political subdivision that was not an Affiliate immediately prior to the Closing other than AT&T Enterprise Services, Inc.
|
1.2
|
Annual Base Salary. “Annual Base Salary” means the amount of annual cash compensation for an active Officer or E-Band that is identified and treated as “salary” in accordance with the compensation and pay procedures of the Company, as in effect from time to time. For clarification, “Annual Base Salary” does not include Annual Bonus.
|
1.3
|
Annual Bonus. “Annual Bonus” means a cash payment of incentive compensation to an Officer or E-Band pursuant to the provisions of the AT&T Short Term Incentive Plan, as amended from time to time.
|
1.4
|
AT&T Common Stock. For periods prior to the Closing, “AT&T Common Stock” means the common shares, par value of $1.00 per share, of AT&T Corp. After the Closing, “AT&T Common Stock” means the common shares, par value $1.00 per share, of AT&T Inc. (known as SBC Communications Inc. prior to November 18, 2005).
|
1.5
|
AT&T Share Price. “AT&T Share Price” means the average of the daily high and low sale prices of shares of AT&T Common Stock on the New York Stock Exchange (“NYSE”) during each of the five (5) trading days ending on the applicable Determination Date, or during each of the five trading days immediately preceding the applicable Determination Date, if the NYSE is closed on the Determination Date.
|
1.6
|
Basic Deferral Distribution Option. “Basic Deferral Distribution Option” means the distribution option under the Grandfathered Deferral Program that is provided for in Section 2.6.
|
1.7
|
Broadband Spin-Off. “Broadband Spin-Off” means the spin-off of the Company’s broadband unit that conducted business as “AT&T Broadband” (or the spin-off of a newly-formed holding company for such broadband business) to the Company’s shareholders pursuant to the definitive merger agreement for the AT&T-Comcast transaction, as approved by the Board and announced by the Company on December 19, 2001.
|
1.8
|
Beneficiary. “Beneficiary” means the person, trust, entity, organization or estate of a Participant designated pursuant to Section 2.5(f) or Section 3.10 that is entitled to receive benefits under the Grandfathered Deferral Program or the Executive Deferral Program, as applicable, upon the death of a Participant.
|
1.9
|
Board. “Board” means the Board of Directors of the Company.
|
1.10
|
Change in Control. “Change in Control” has the same meaning assigned to that term in the AT&T 2004 Long Term Incentive Program as in effect on May 19, 2004.
|
1.11
|
CIC Eligible Employee. “CIC Eligible Employee” means a “Senior Officer” (as defined in the AT&T Senior Officer Separation Plan), a “Senior Manager” (as defined in the AT&T Senior Manager Separation Plan), or an “Executive” (as defined in the AT&T Executive Separation Plan) or an “Employee” (as defined in the AT&T Separation Plan), as the case may be who, within two (2) years following a Change in Control (a) is terminated for reasons other than (i) “cause”, or (ii) by reason of becoming eligible for benefits under any Company-sponsored long-term disability plan; or (b) terminates employment for “good reason” occurring after a Change in Control.
|
1.12
|
Closing. “Closing” means the closing of SBC Communications Inc.’s acquisition of AT&T Corp. as defined in the definitive Agreement and Plan of Merger dated January 30, 2005, between AT&T Corp. and SBC Communications Inc. The Closing occurred on November 18, 2005.
|
1.13
|
Code. “Code” means the Internal Revenue Code of 1986, as amended.
|
1.14
|
Committee. For periods prior to the Closing, “Committee” means the Compensation and Employee Benefits Committee of the Board (or the successor to such committee). For period on or after the Closing, “Committee” means the Administrator.
|
1.15
|
Company. “Company” means AT&T Corp., a New York corporation, and any successors to such entity.
|
1.16
|
Company Matching Contribution. “Company Matching Contribution” means the matching contribution made by the Company to a Participant’s deferral account under the Executive Deferral Program in accordance with the provisions of Section 3.5.
|
1.17
|
Determination Date. “Determination Date” means the date on which a completed election form for the Basic Deferral Distribution Option from a Participant is received by the Administrator.
|
1.18
|
E-Band. “E-Band” means a management employee of a Participating Company holding a position classified as a “Manager 5” or “Manager E”, or its equivalent, in a non-banded environment, or at the salary grade level of “E-Band”, or its equivalent, in a banded environment (also referred to as an “Executive” or “Director” from time to time), as determined in the discretion of the Administrator.
|
1.19
|
Eligible Executive. “Eligible Executive” means (i) in the context of the Grandfathered Deferral Program, an active management employee of a Participating Company who satisfies the eligibility requirements set forth in Section 2.1; and (ii) in the context of the Executive Deferral Program, an active management employee of a Participating Company who satisfies the eligibility requirements set forth in Section 3.1.
|
1.20
|
Employer. “Employer” means the Company and certain of its subsidiaries and affiliates, as determined by the Company in its sole discretion. Effective immediately after the Closing, the term “Employer” shall, in addition, include AT&T Enterprise Services, Inc. (known as “SBC Enterprise Services, Inc.” prior to January 19, 2006), which following the Closing became an affiliate of the Company.
|
1.21
|
ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
1.22
|
Executive Deferral Program. “Executive Deferral Program” means the nonqualified deferred compensation program described in Section 3 that is applicable to amounts of compensation deferred by Officers and E-Bands that was not earned and vested prior to January 1, 2005.
|
1.23
|
Grandfathered Deferral Program. “Grandfathered Deferral Program” means the nonqualified deferred compensation program described in Section 2 that is applicable to amounts of compensation deferred by Officers that was earned and vested prior to January 1, 2005. The substantive terms and conditions of the Grandfathered Deferral Program, including all benefits and rights thereunder, are those that existed under the AT&T Senior Management Incentive Award Deferral Plan on October 3, 2004, without any subsequent “material modifications” (as referred to in the federal income tax regulations underlying Code Section 409A).
|
1.24
|
Long Term Award. “Long Term Award” means an Eligible Executive’s annual grant from a Participating Company of “performance shares” (as defined in the 2004 Incentive Program) and/or restricted stock units.
|
1.25
|
Officer. “Officer” means a management employee of a Participating Company holding a position classified as a “Manager 6”, “Manager O” or higher level in a non-banded environment, or at a salary grade level above “E-Band”, or its equivalent, in a banded environment (formerly referred to as a “Senior Manager” from time to time), as determined in the discretion of the Administrator.
|
1.26
|
Participant. “Participant” means (i) in the context of the Grandfathered Deferral Program, an active or former Officer or E-Band who has satisfied the requirements in Section 2.1 to be an Eligible Executive, has made one or more elections to defer compensation under the Grandfathered Deferral Program, and has an account balance under the Grandfathered Deferral Program; and (ii) in the context of the Executive Deferral Program, an active or former Officer or E-Band who has satisfied the requirements in Section 3.1 to be an Eligible Executive, has made one or more elections to defer compensation under the Executive Deferral Program, and has an account balance under the Executive Deferral Program.
|
1.27
|
Participating Company. “Participating Company” means AT&T Corp. and any Affiliate.
|
1.28
|
Plan. “Plan” means the AT&T Executive Deferred Compensation Plan, which shall be evidenced by this plan document, as amended from time to time. During the period beginning on January 1, 1984, and ending on December 31, 2004, the Plan was known as the “AT&T Senior Management Incentive Award Deferral Plan”. Prior to January 1, 1984, the Plan was known as the “Bell System Senior Management Incentive Award Deferral Plan”. A reference in this document to the “Plan” shall generally be construed as a reference to the Grandfathered Deferral Program and the Executive Deferral Program, collectively, unless another meaning is clearly required by the context in which the term “Plan” is used.
|
1.29
|
Savings Plan. “Savings Plan” means the AT&T Long Term Savings Plan for Management Employees (or any successor to such plan).
|
1.30
|
Separation From Service. “Separation From Service” means, for purposes of the Executive Deferral Program, a Participant’s termination of the employment with the Employer for any reason which constitutes a "separation from service" under Code Section 409A(a)(2). Notwithstanding the foregoing, the employment relationship of a Participant with the Employer is considered to remain intact while the Participant is on military leave, sick leave or other bona fide leave of absence if there is a reasonable expectation that the Participant will return to perform services for the Employer and the period of such leave does not exceed six (6) months, or if longer, so long as the Participant retains a right to reemployment with the Employer under applicable law or contract. Whether an Participant has terminated employment with the Employer will be determined by the Employer based on whether (i) it is reasonably anticipated by the Employer and the Participant that the Participant will permanently cease providing services to the Employer (as either an employee or independent contractor); or (ii) the level of bona fide services to be performed by the Participant (as either an employee or independent contractor) will permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (as either an employee or independent contractor) over the immediately preceding thirty-six (36) month period or such shorter period during which the Participant was performing services for the Employer. If a leave of absence occurs during such thirty-six (36) month or shorter period which is not considered a separation from service, unpaid leaves of absence shall be disregarded and the level of services provided during any paid leave of absence shall be presumed to be the level of services required to receive the compensation paid with respect to such leave of absence.
|
1.31
|
Service Period. “Service Period” means the calendar year during which an Eligible Executive’s right to compensation from a Participating Company in the form of Annual Base Salary, Annual Bonus, and/or Long Term Award arises.
|
1.32
|
Service Recipient. “Service Recipient” means the Employer and all other corporations, entities, and businesses (including, but not limited to, AT&T Inc., a Delaware corporation) that together with the Employer are considered a single employer under Code Sections 414(b) and 414(c).
|
1.33
|
Specified Employee. “Specified Employee” means any Participant who is a “Key Employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company in accordance with its uniform policy with respect to all arrangements subject to Code Section 409A, based upon the 12-month period ending on each December 31st (such 12-month period is referred to below as the “identification period”). All Participants who are determined to be Key Employees under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period shall be treated as Key Employees for purposes of the Plan during the 12-month period that begins on the first day of the 4th month following the close of such identification period.
|
1.34
|
2004 Incentive Program. “2004 Incentive Program” means the AT&T 2004 Long Term Incentive Program.
|
1.35
|
Year of Service. “Year of Service” shall have the same meaning as that assigned to such term under the Savings Plan from time to time.
|
2.0
|
Continuation of Prior Deferred Compensation Plan. The Grandfathered Deferral Program, as set forth in Section 2, represents a restatement of the substantive terms and conditions of the AT&T Senior Management Incentive Award Deferral Plan, including all benefits and rights thereunder, as they existed on October 3, 2004. The text set forth in Section 2 substantially tracks that in the AT&T Senior Management Incentive Award Deferral Plan document, as amended, through October 3, 2004. Certain headings and introductory phrases have been introduced to the text for reference and transitional purposes; however, it is the Company’s intent that the Grandfathered Deferral Program, as set forth herein, reflect no “material modification” (as referred to in the federal income tax regulations underlying Code Section 409A) to those terms and conditions in existence under the AT&T Senior Management Incentive Award Deferral Plan on October 3, 2004. It is further the Company’s intent that the deferral accounts previously established under the AT&T Senior Management Incentive Award Deferral Plan that was earned and vested prior to January 1, 2005 (including all earning thereon) and all deferral and distribution elections made with respect to such deferral accounts, be treated as exempt from the application of the provisions of Code Section 409A.
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2.1
|
Eligibility to Participate. An active Officer of a Participating Company who is eligible for an award under the AT&T Short Term Incentive Award Plan and/or who has been granted a “performance award” or “stock unit award” under the AT&T Senior Management Long Term Incentive Plan, the 1987 Long Term Incentive Plan, the AT&T 1997 Long Term Incentive Program or the 2004 Incentive Program shall be eligible to commence participation in the Grandfathered Deferral Program, provided, however, that no active Officer or other individual may be or become eligible to participate under the Grandfathered Deferral Program with respect to the deferral of any form of compensation with respect to which the Officer or other individual did not, prior to January 1, 2005, have a legally binding right to such compensation, and that right was earned and vested.
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2.2
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Participation Elections. An Officer who satisfies the eligibility requirements in Section 2.1 may elect to participate in the Grandfathered Deferral Program by making an election to defer compensation in accordance with the following provisions:
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(a)
|
Elections to Defer Awards and Dividend Equivalent Payments. Prior to the beginning of any calendar year, any Officer may elect to participate in the Grandfathered Deferral Program by directing that (i) all or part of an annual short term incentive award or a “performance award” or “stock unit award” under the 1987 Long Term Incentive Plan, the AT&T 1997 Long Term Incentive Program or the 2004 Incentive Program, and/or (ii) all or part of the dividend equivalent payments under the 1987 Long Term Incentive Plan, the AT&T 1997 Long Term Incentive Program or the 2004 Incentive Program, that such employee’s Participating Company would otherwise pay currently to such employee in such calendar year, shall be credited to a deferred account subject to the terms of the Grandfathered Deferral Program. However, in no event shall the part of an award under any plan credited during any calendar year be less than $1,000 (based on a valuation at the time the award would otherwise be paid). There shall be no such minimum limitation on amounts credited during any calendar year that are related to dividend equivalent payments.
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(b)
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Elections by Designated Officers to Defer Salary. Prior to the beginning of any calendar year, the Chairman of the Board and any other Officer designated by the Chairman of the Board may elect to participate in the Grandfathered Deferral Program by directing that all or part of such Officer’s salary that such employee’s Participating Company would otherwise pay currently to such employee in such calendar year shall be credited to a deferred account subject to the terms of the Grandfathered Deferral Program.
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(c)
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Elections to Defer Other Compensation. Subject to approval by the Committee, prior to the beginning of any calendar year, any Officer may elect to participate in the Grandfathered Deferral Program as to other awards under the 1987 Long Term Incentive Plan, AT&T 1997 Long Term Incentive Program or 2004 Incentive Program, or other amounts of compensation of such Officer, by directing that all or part of such awards or compensation that such Officer’s Participating Company would otherwise pay currently to such Officer in such calendar year be credited to a deferred account subject to the terms of the Grandfathered Deferral Program.
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(d)
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Form of Deferral Elections. An election to participate in the Grandfathered Deferral Program described in Section 2.2(a), Section 2.2(b) or Section 2.2(c) shall be in the form of a document executed by the Officer and filed with the Executive Vice President – Human Resources of AT&T Corp. (or his or her designee).
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(e)
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Irrevocability of Deferral Elections. Except as provided in Section 2.5(k) or Section 2.6, an election related to awards, dividend equivalent payments, salary and/or other compensation otherwise payable currently in any calendar year shall become irrevocable on the last day prior to the beginning of such calendar year.
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(f)
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Elections to Defer Made by Newly-Eligible Officers. Notwithstanding anything to the contrary contained in this Section 2.2, in the case of an Officer who is newly eligible to participate in the Grandfathered Deferral Program, or in the case of any Officer with respect to awards or compensation newly eligible to be deferred under the Grandfathered Deferral Program, a deferral election may be made with respect to compensation earned and otherwise receivable in the same calendar year in which the election is made and subsequent to such election, provided such election is made within ninety (90) days of such eligibility.
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2.3
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Deferred Amounts – Amounts Otherwise Payable in Cash. Amounts of compensation deferred under the Grandfathered Deferral Program pursuant to elections made under the provisions of Section 2.2 that otherwise would be payable in cash shall be credited to the Officer’s account and administered in accordance with the following provisions:
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(a)
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General Rule. Deferred amounts related to awards, dividend equivalent payments which would otherwise have been distributed in cash by a Participating Company and deferred amounts related to salary and/or other cash compensation shall be credited to the employee’s account and shall bear interest from the date the awards, dividend equivalent payments, salary and/or other cash compensation would otherwise have been paid.
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(b)
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Interest Crediting Rate and Methodology. The interest credited to the account will be compounded at the end of each calendar quarter, and the annual rate of interest applied at the end of any calendar quarter shall be determined by the Committee from time to time; provided, however, that:
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(i)
|
The annual interest rate to be applied with respect to the cash portion of an employee’s (or former employee’s) deferred account balance as of December 31, 1998, plus any additions to such account after December 31, 1998, but prior to January 1, 2000, that result from deferral elections made by the employee prior to December 31, 1998 (reduced by any distributions attributable to such portion of the employee’s deferred account balance), shall not be less than the applicable ten (10) year U.S. Treasury Note rate for the prior calendar quarter, plus five percent (5%).
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(ii)
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The annual interest rate to be applied with respect to any additions to the cash portion of an employee’s (or former employee’s) deferred account after December 31, 1999, but prior to January 1, 2001, that result from deferral elections made by the employee prior to December 31, 1999, shall be the applicable ten (10) year U.S. Treasury Note rate for the prior calendar quarter, plus five percent (5%).
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(iii)
|
The annual interest rate to be applied with respect to any additions to the cash portion of an employee’s (or former employee’s) deferred account after December 31, 2000, shall be the applicable ten (10) year U.S. Treasury Note rate for the prior calendar quarter, plus two percent (2%).
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(c)
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Special Transition Rule. If an employee made an election described in Section 2.2, which election was effective on December 31, 1983, then such employee’s account shall also be credited during 1984 with an amount equal to the deferred amounts which would have been credited to the employee’s account during 1984 had the company which employed the employee on December 31, 1983, continued to be a Participating Company during 1984, and such amount shall bear interest in accordance with Section 2.3(b) from the date such amount would have been credited had such company continued to be a Participating Company during 1984.
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2.4
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Deferred Amounts – Amounts Otherwise Payable in AT&T Common Stock. Amounts of compensation deferred under the Grandfathered Deferral Program pursuant to elections made under the provisions of Section 2.2 that otherwise would be payable in AT&T Common Stock shall be credited to the Officer’s account and administered in accordance with the following provisions:
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(a)
|
General Rule. Deferred amounts related to awards that would otherwise have been distributed in AT&T Common Stock by a Participating Company shall be credited to the employee’s account as deferred AT&T Common Stock.
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(b)
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Special Transition Rule. If an employee made an election described in Section 2.2, which election was effective on December 31, 1983, then such employee’s account shall also be credited during 1984 with the deferred AT&T shares which would have been credited to the employee’s account had the company which employed the employee on December 31, 1983, continued to be a Participating Company in the Plan and in the AT&T Senior Management Long Term Incentive Plan during 1984.
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(c)
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Deferred Amounts Related to Dividend Equivalent Payments. Prior to the beginning of any calendar year, the Chairman of the Board and any other Officer designated by the Chairman of the Board may elect that deferred amounts related to dividend equivalent payments, which would otherwise have been distributed in cash by a Participating Company during such calendar year, shall be credited to the employee’s account as deferred AT&T Common Stock. The number of deferred AT&T Common Stock credited, with respect to each dividend equivalent, shall be determined in accordance with the conversion formula set forth in Section 2.4(d), as if such dividend equivalent were the amount to be converted to a number of additional deferred AT&T Common Stock.
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(d)
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Dividend Payment Conversions to AT&T Common Stock. The employee’s account shall also be credited on each dividend payment date for deferred AT&T Common Stock with an amount equivalent to the dividend payable on the number of deferred AT&T shares of Common Stock equal to the number of deferred AT&T shares of Common Stock in the employee’s account on the record date for such dividend. Such amount shall then be converted to a number of additional deferred AT&T shares of Common Stock determined by dividing such amount by the price of AT&T Common Stock, as determined in the following sentence. The price of AT&T Common Stock related to any dividend payment date shall be the average of the daily high and low sale prices of AT&T Common Stock on the New York Stock Exchange (“NYSE”) for the period of five (5) trading days ending on such dividend payment date, or the period of five (5) trading days immediately preceding such dividend payment date if the NYSE is closed on the dividend payment date.
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(e)
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Adjustments in Number of Deferred AT&T Common Stock. In the event of any change in outstanding shares of AT&T Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change, the Committee shall make such adjustments, if any, that it deems appropriate in the number of deferred AT&T shares of Common Stock then credited to employees’ accounts. Any and all such adjustments shall be conclusive and binding upon all parties concerned.
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(f)
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Special Deferred Share Conversion Election. An employee with deferred shares of AT&T Common Stock credited to his account may make an irrevocable, one-time election to convert all or a portion of the deferred shares of AT&T Common Stock credited to his deferred account to their cash value amount and have such amount credited to the employee’s account. If an employee makes this conversion election, the value of the deferred shares of AT&T Common Stock subject to the employee’s conversion election shall be determined by multiplying (i) the number of deferred shares of AT&T Common Stock credited to the employee’s account that are subject to the employee’s conversion election, by (ii) the average of the daily high and low sale prices of AT&T Common Stock on the NYSE during each of the five (5) trading days immediately preceding the date applicable to the AT&T Wireless Group split-off transaction, as determined by the Executive Vice President - Human Resources of AT&T Corp., in consultation with the AT&T Law Department. After such cash value amount has been credited to the employee’s account, it shall thereafter be credited with interest from time to time at the applicable rate determined under Section 2.3(b) for amounts of salary and/or other cash compensation deferred during the year in which the split-off of the AT&T Wireless Group is consummated. An employee’s conversion election must be made within the time period established by the Executive Vice President - Human Resources of AT&T Corp., in consultation with the AT&T Law Department. Notwithstanding the foregoing provisions of this Section 2.4(f), no conversion of deferred shares of AT&T Common Stock to their cash value amount shall have been effective unless (i) the Board (or its delegate) approves the Separation and Distribution Agreement By and Between AT&T Corp. and AT&T Wireless Services, Inc. (“Wireless Separation and Distribution Agreement”); (ii) the Board (or its delegate) approves the Employee Benefits Agreement By and Between AT&T Corp. and AT&T Wireless Services, Inc. (“Wireless Employee Benefits Agreement”); and (iii) the AT&T Wireless Group split-off transaction contemplated by the Wireless Separation and Distribution Agreement and the Wireless Employee Benefits Agreement is consummated. The period during which an employee may submit a Special Deferred Share Conversion Election has closed, and no such further elections shall be permitted under the Plan.
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2.5
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Distributions. The amounts credited to an employee’s deferred account shall be distributed in accordance with the following provisions:
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(a)
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Distribution Elections. At the time an eligible employee makes an election to participate in the Grandfathered Deferral Program, the employee shall also make an election with respect to the distribution (during the employee’s lifetime or in the event of the employee’s death) of the amounts credited to the employee’s deferred account. Except as provided in Section 2.5(k) or Section 2.6, such an election related to the distribution during the employee’s lifetime, of amounts otherwise payable currently in any calendar year, shall become irrevocable on the last day prior to the beginning of such calendar year. The election related to the distribution in the event of the employee’s death, including the designation of a Beneficiary or Beneficiaries, may be changed by the employee at any time by filing the appropriate document with the Executive Vice President – Human Resources of AT&T Corp. (or his or her designee).
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(b)
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Form of Distributions. Amounts credited as cash plus accumulated interest shall be distributed in cash; amounts credited as deferred shares of AT&T Common Stock shall be distributed in the form of an equal number of AT&T shares of Common Stock.
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(c)
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Number of Installment Payments. With respect to amounts related to deferred cash credited to the employee’s account under Section 2.3(a), and to deferred shares of AT&T Common Stock credited to the employee’s account under Section 2.4(a), Section 2.4(b) or Section 2.4(c), an employee may elect to receive such amounts in one payment or in some other number of approximately equal annual installments (not exceeding twenty (20)), provided however, that the number of annual installments may not extend beyond the life expectancy of the employee, determined as of the date the first installment is paid.
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(d)
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Time of Commencement of Payments. The employee’s election made pursuant to the provisions of Section 2.5(a) shall also specify that the first installment (or the single payment if the employee has so elected) shall be paid either (i) as soon as practicable after the first day of the calendar quarter next following the end of the month in which the employee attains the age specified in such election, which age shall not be earlier than age fifty-five (55) or later than age seventy and one-half (70½), or (ii) as soon as practicable after the first day of the calendar quarter next following the end of the month in which the employee retires from a Participating Company or otherwise terminates employment with a Participating Company (except for a transfer to another Participating Company); provided, however, that the Committee may, in its sole discretion, direct that the first installment (or the single payment) shall be paid as soon as practicable after the first day of the first calendar quarter in the calendar year next following the year of retirement or other termination of employment. In addition, any Officer eligible to defer salary may specify that the first installment (or the single payment if the employee has so elected) shall be paid as soon as practicable after the first day of the first calendar quarter in the calendar year next following the calendar year in which the employee retires from a Participating Company or otherwise terminates employment with a Participating Company (except for a transfer to another Participating Company).
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(e)
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Acceleration of Distributions. Notwithstanding an election pursuant to Section 2.5(c) and Section 2.5(d), the entire amount then credited to an employee’s account shall be paid immediately in a single payment (i) if the employee is discharged for cause by his Participating Company; (ii) if the such Participating Company determines that the employee engaged in misconduct in connection with the employee’s employment with the Participating Company; (iii) if the employee, without the consent of his Participating Company and while employed by such Participating Company or after the termination of such employment, establishes a relationship with a competitor of the Participating Company or engages in activity which is in conflict with or adverse to the interest of the Participating Company as determined under the AT&T Non-Competition Guideline; or (iv) the employee becomes employed by a governmental agency having jurisdiction over the activities of a Participating Company or any of its subsidiaries.
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(f)
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Distributions to Beneficiaries. An employee may elect that, in the event the employee should die before full payment of all amounts credited to the employee’s deferred account, the balance of the deferred account shall be distributed in one payment or in some other number of approximately equal annual installments (not exceeding ten (10)) to the Beneficiary or Beneficiaries designated in writing by the employee, or if no designation has been made, to the estate of the employee. The first installment (or the single payment if the employee has so elected) shall be paid on the first day of the calendar quarter next following the month of death; provided, however, that the Committee may, in its sole discretion, direct that the first installment (or the single payment) shall be paid as soon as practicable after the first day of the first calendar quarter in the calendar year next following the year of death.
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(g)
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Installment Payment Methodology. Installments subsequent to the first installment to the employee, or to a Beneficiary or to the employee’s estate, shall be paid on the first day of the applicable calendar quarter in each succeeding calendar year until the entire amount credited to the employee’s deferred account shall have been paid. Deferred amounts held pending distribution shall continue to be credited with interest or additional deferred shares of AT&T Common Stock, as applicable, determined in accordance with Section 2.3, Section 2.4(a), Section 2.4(b), Section 2.4(c), and Section 2.4(d).
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(h)
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Severe Financial Hardship. In the event an employee, or the employee’s beneficiary after the employee’s death, incurs a severe financial hardship, the Committee, in its sole discretion, may accelerate or otherwise revise the distribution schedules from the employee’s account to the extent reasonably necessary to eliminate the severe financial hardship. For the purpose of this Section 2.5(h), a severe financial hardship will be considered to have occurred only if (i) the hardship has been caused by an accident, illness, or other event beyond the control of the employee or, if applicable, the beneficiary; and (ii) the hardship cannot be satisfied by other reasonably available financial resources of the employee, or if applicable, the beneficiary.
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(i)
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Obligation to Make Distributions of Deferred Amounts. The obligation to make a distribution of deferred amounts credited to an employee’s account during any calendar year, plus the additional amounts credited on such deferred amounts pursuant to Section 2.3, Section 2.4(a), Section 2.4(b), Section 2.4(c), and Section 2.4(d), shall be borne by the Participating Company which otherwise would have paid the related award or salary currently. However, the obligation to make distribution with respect to deferred amounts which are related to amounts credited to an employee’s account under Section 2.3(c) and under Section 2.4(b), and with respect to which no Participating Company would otherwise have paid the related award currently, shall be borne by the Participating Company which employed the employee on January 1, 1984.
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(j)
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Elections to Forego Deferred Compensation. Notwithstanding any provision of the Plan to the contrary, the amount credited to a former Officer’s account shall be reduced by the amount specified in an Election to Forego Compensation Form executed by the former Officer under the AT&T Corp. Estate Enhancement Program, and the reduction shall be effective as of the effective date of such election.
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(k)
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Modified Distribution Elections. Notwithstanding the provisions of Section 2.5(a), Section 2.5(d), and any election made thereunder, an employee may modify a prior distribution election to preclude payment of his deferred account balance upon termination of employment and to provide for payment of the amount credited to his deferred account to commence as soon as practicable after attainment of a specific age (not greater than age sixty-five (65)) and to be distributed in one payment or in some other number of approximately equal annual installments (not exceeding ten (10)), provided that such modified distribution election (the “Modified Deferral Election”) shall be effective with respect to the employee only if (i) the Board (or its delegate) approves the Wireless Separation and Distribution Agreement and the Wireless Employee Benefits Agreement; (ii) the Modified Deferral Election is made on or before December 31, 2000, or such later date as approved by the AT&T Corp. Tax Department; (iii) the AT&T Wireless Group split-off transaction contemplated by the Wireless Separation and Distribution Agreement and the Wireless Employee Benefits Agreement is consummated; and (iv) the employee becomes a “Transferred Individual” as defined in the Wireless Employee Benefits Agreement. A Modified Deferral Election must be made within the time period established by the Executive Vice President - Human Resources of AT&T Corp., in consultation with the AT&T Corp. Law Department. Once made, a Modified Deferral Election shall be irrevocable. If an employee makes more than one Modified Deferral Election, all such Modified Deferral Elections made by the employee shall provide for payments to commence at the same specific age and in the same number of annual installments. The period during which an employee may submit a Modified Deferral Election has closed, and no such further elections shall be permitted under the Plan.
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2.6
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Basic Deferral Distribution Option.
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(a)
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Notwithstanding the provisions of Section 2.5(a), Section 2.5(b), Section 2.5(c), and Section 2.5(d) to the contrary, effective thirty (30) days after the date on which the Broadband Spin-Off occurs, a Participant shall have an option to relinquish all of his rights under all prior deferral and distribution elections made under the Grandfathered Deferral Program. The rights to be relinquished shall include, but not be limited to, the right to continued deferral of the balance of his deferred account in the Grandfathered Deferral Program (until full payment is made in accordance with the Participant’s previous distribution elections made pursuant to Section 2.5), the right (to the extent applicable) to future interest credits on the cash portion of his deferred account as provided for in Section 2.3(a) and Section 2.3(b), and ten (10) percent of his or her deferred account balance as of the Determination Date. In exchange for relinquishing all of his or her rights under the Grandfathered Deferral Program, the Participant shall receive a single payment of an amount equal to ninety percent (90%) of the Participant’s deferred account balance as of the Determination Date (as determined under Section 2.6(a)(ii) and Section 2.6(a)(iii)), payable in the form of AT&T Common Stock, provided, however, that, effective as of November 20, 2008, accounts distributed under the Basic Deferral Distribution Option shall be made pursuant to Section 2.6(a)(iv). The distribution shall be made as soon as administratively practicable after the applicable Determination Date, in a manner determined by the Administrator, subject to the following terms and conditions:
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(i)
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The Basic Deferral Distribution Option may be exercised only by an irrevocable written election made by a Participant on a form approved by the Administrator and filed with the Administrator on a date not earlier than thirty (30) days after the date on which the Broadband Spin-Off occurs;
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(ii)
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For purposes of the Basic Deferral Distribution Option, the value of a Participant’s deferred account as of the Determination Date shall equal the sum of (1) the value of the deferred cash portion, and (2) the value of the portion represented by the deferred shares of AT&T Common Stock, determined as follows:
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(A)
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The value of the deferred cash portion of a Participant’s deferred account shall be the Participant’s deferred account balance (excluding any deferred shares of AT&T Common Stock credited to such account) as of the Determination Date (including all interest credited to such deferred account through that date); and
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(B)
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The value of the portion represented by the deferred shares of AT&T Common Stock (if any) of the Participant’s deferred account shall be determined by (1) multiplying the number of deferred shares of AT&T Common Stock credited to the Participant’s deferred account on the Determination Date, by (2) the AT&T Share Price;
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(iii)
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For periods prior to November 20, 2008, the number of shares of AT&T Common Stock to be distributed to a Participant who elects the Basic Deferral Distribution Option shall be determined by dividing (1) ninety percent (90%) of the value of the Participant’s deferred account (as determined in Section 2.6(a)(ii)), by (2) the AT&T Share Price.
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(iv) |
On or after November 20, 2008, the distribution shall consist of (1) ninety percent (90%) of the deferred shares of AT&T Common Stock (if any) credited to the Participant’s deferred account, and (2) ninety percent (90%) of the value of the deferred cash portion of a Participant’s deferred account balance (excluding any deferred shares of AT&T Common Stock credited to such account) as of the Determination Date (including all interest credited to such deferred account through that date).
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(v)
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If a Participant is deceased, the Participant did not file an election for the Basic Deferral Distribution Option with the Administrator prior to the Participant’s death, and amounts are payable to one or more Beneficiaries from a deceased Participant’s deferred account, each of the Participant’s Beneficiaries shall have the independent right to elect the Basic Deferral Distribution Option with respect to the portion of the deceased Participant’s deferred account to which the respective Beneficiary is then entitled, subject to substantially the same terms and conditions that would be applicable under this Section 2.6 if the Beneficiary were a Participant; and
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(vi)
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The Administrator may, in his or her sole discretion, require the Participant to execute a written receipt or such other documentation determined to be appropriate, on a form approved by the Administrator, as a condition for receipt of the shares of AT&T Common Stock.
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(b)
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No Participant’s election of the Basic Deferral Distribution Option pursuant to Section 2.6(a) shall be effective (and no distribution shall be made pursuant to a Participant’s election of the Basic Deferral Distribution Option) until the later of (i) thirty (30) days after the date on which the Broadband Spin-Off occurs; or (ii) the satisfaction of all federal and state securities law requirements relative to the distribution of AT&T Common Stock to Participants who elect the Basic Deferral Distribution Option.
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2.7
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Termination of Participation. A Participant’s participation in the Grandfathered Deferral Program shall terminate when the first of any of the following events occurs:
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(a)
|
The death of the Participant;
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(b)
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The Participant ceases to have an account balance under the Grandfathered Deferral Program;
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(c)
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The Board (or its delegate) terminates the Grandfathered Deferral Program pursuant to the provisions of Section 5.1; or
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(d)
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The Board (or its delegate) terminates the Plan pursuant to the provisions of Section 5.1.
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3.0
|
Establishment of Executive Deferral Program. The Executive Deferral Program was established as part of the Plan, effective January 1, 2005, and applies to payments of Annual Base Salary and Annual Bonus, and grants of Long Term Awards, to Eligible Executives by a Participating Company that were not earned and vested prior to January 1, 2005.
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3.1
|
Eligibility. An individual shall be an Eligible Executive who is eligible to participate in the Executive Deferral Program if he or she is an active employee of a Participating Company who is classified as either an Officer or an E-Band.
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3.2
|
Commencement of Participation. An Eligible Executive may elect to participate in the Executive Deferral Program initially, and for any Service Period thereafter, by making a deferral election in accordance with the provisions of Section 3.3.
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(a)
|
Form of Deferral Elections. Any deferral election under the Executive Deferral Program shall be made in writing on such form, or in such other manner, as the Administrator (or his or her designee) shall prescribe from time to time. Each deferral election shall apply to a specified Service Period, and with respect to such Service Period shall (i) designate the type of compensation identified in Section 3.3(b) the Eligible Executive elects to defer; (ii) specify the amount (subject to the percentage limitations in Section 3.3(b)) of each type of compensation attributable to the Service Period which the Eligible Executive elects to defer; and (iii) indicate the Eligible Executive’s election to receive distribution of the deferred amounts upon his or her Separation From Service in a manner that conforms with the provisions of Section 3.8 and/or in the form of an in-service distribution that conforms with the provisions of Section 3.9.
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(b)
|
Allowable Amounts of Compensation for Deferral. Under the Executive Deferral Program, an Eligible Executive may elect to defer the following amounts of compensation with respect to any Service Period:
|
(i)
|
Up to fifty percent (50%) of the Eligible Executive’s Annual Base Salary;
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(ii)
|
Up to one hundred percent (100%) of the Eligible Executive’s Annual Bonus; and
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(iii)
|
Up to one hundred percent (100%) of the Eligible Executive’s annual grant of Long-Term Awards.
|
(c)
|
Time of Deferral Elections. Except as provided in Section 3.3(d), a deferral election under the Executive Deferral Program must be made no later than the time specified by the Administrator; provided, however, that:
|
(i)
|
A deferral election with respect to the deferral of an Eligible Executive’s Annual Base Salary shall be made no later than the last day of the calendar year immediately preceding the Service Period to which such deferral election applies; and
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(ii)
|
A deferral election with respect to the deferral of an Eligible Executive’s Annual Bonus and/or Long Term Awards that constitute “performance-based compensation” (as defined in the federal income tax regulations for Code Section 409A) shall be made no later than six (6) months before the end of the applicable Service Period.
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(d)
|
Newly Eligible Executives. If an Eligible Executive first becomes eligible to participate in the Executive Deferral Program during a Service Period, the Eligible Executive may make an initial deferral election within thirty (30) days after the Eligible Executive first becomes eligible to participate in the Executive Deferral Program. Such deferral election shall be made only with respect to Annual Base Salary, Annual Bonus, and Long Term Award compensation earned, payable or granted for services performed by the Eligible Executive after the deferral election is made.
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(e)
|
Irrevocability of Deferral Elections. A deferral election (including the distribution elections comprising part of a deferral election) under the Executive Deferral Program shall be deemed made when it is received by the Administrator (or his or her designee) but in any event such election must be received before the commencement of the Service Period. Once a deferral election under the Executive Deferral Program has been made, it shall be irrevocable, and except as provided in Section 3.14 and Section 3.15, shall not be subject to any subsequent modification as to the amount of compensation to be deferred for the particular Service Period and/or the time and form of payment of the deferred compensation to which such election applies.
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(f)
|
Cessation of Deferrals. Notwithstanding any provision of the Plan to the contrary, no Eligible Executive may make an election to defer compensation under the Executive Deferral Program that provides for the crediting of any amount of deferred compensation to a deferral account under the Plan after December 31, 2006.
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(g)
|
Independent Annual Deferral Elections. An Eligible Executive may annually make a deferral election covering his or her Annual Base Salary, Annual Bonus, and Long Term Awards attributable to a particular Service Period. The Eligible Executive’s deferral election made for each Service Period shall be independent of his or her deferral elections made for other Service Periods. All deferral elections made under the Executive Deferral Program shall be independent of the Eligible Executive’s deferral elections, if any, made under the Grandfathered Deferral Program.
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3.4
|
Crediting Accounts.
|
(a)
|
Types of Deferred Compensation Credited to Accounts. The deferred compensation credited to the cash portion of a Participant’s deferral account under the Executive Deferral Program shall be amounts of deferred Annual Base Salary and Annual Bonus that, but for the Participant’s deferral election, would have been payable to the Participant as cash, plus the Company Matching Contributions associated with such deferred compensation. The deferred compensation credited to the deferred AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program shall be deferred Long Term Awards that, but for the Participant’s deferral election, would have been payable to the Participant as shares of AT&T Common Stock.
|
(b)
|
Amounts of Deferred Compensation Credited to Accounts. The amounts of deferred compensation credited to a Participant’s account under the Executive Deferral Program with respect to any deferral election shall be determined in accordance with the following provisions:
|
(i)
|
Annual Base Salary. The amount of Annual Base Salary to which a Participant’s deferral election shall be applied shall first be reduced by any pre-tax benefit deductions (including medical benefit premiums payable under a Code Section 125 plan and/or any contributions to a healthcare reimbursement account plan), but shall not be reduced for contributions made to the Savings Plan. The amount of Annual Base Salary credited to a Participant’s deferral account shall be the percentage of his or her Annual Base Salary in any paycheck to be deferred under the Executive Deferral Program, net of withholding deductions for FICA and Medicare taxes due on the deferred amount of Annual Salary and federal and state income tax withholding based on the FICA and Medicare tax deductions.
|
|
(ii)
|
Annual Bonus. The amount of Annual Bonus credited to a Participant’s deferral account shall be the percentage of Annual Bonus to be deferred under the Executive Deferral Program, net of withholding deductions for FICA and Medicare taxes due on the deferred amount of the Annual Bonus and federal and state income tax withholding based on the FICA and Medicare tax deductions.
|
(iii)
|
Long Term Awards. The amount of Long Term Awards credited to a Participant’s deferral account shall be the percentage of Long Term Awards to be deferred under the Executive Deferral Program, net of withholding deductions for FICA and Medicare taxes due on the deferred amount of the Long Term Awards and federal and state income tax withholding based on the FICA and Medicare tax deductions.
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3.5
|
Company Matching Contributions. Amounts of Annual Base Salary and Annual Bonus deferred under the Executive Deferral Program are eligible for Matching Company Contributions as provided in this Section 3.5.
|
(a)
|
Matching Contribution Rate Formula. Subject to the limitations set forth in Section 3.5(b), the Company shall match a Participant’s contributions of deferred Annual Base Salary and deferred Annual Bonus under the Executive Deferral Program for a payroll period with periodic cash contributions to the Participant’s deferral account at the rate of two-thirds of the sum of the Participant’s deferred Annual Base Salary and Annual Bonus under the Executive Deferral Program for such payroll period.
|
(b)
|
Maximum Company Matching Contribution. Notwithstanding the provisions of Section 3.5(a), the Company Matching Contribution to the Executive Deferral Program with respect to a Participant for any payroll period shall not exceed four percent (4%) of the sum of a Participant’s Annual Base Salary and Annual Bonus for the payroll period (before reduction by the amount of Participant’s deferrals under the Executive Deferral Program, the amount of the Participant’s elective deferrals under the Savings Plan, and the amount of any pre-tax salary reductions for the Participant under a Company-sponsored Code Section 125 cafeteria plan), less the amount of “company matching contributions” allocated to the Participant’s account under the Savings Plan for the corresponding payroll period. For purposes of applying this limitation, the Company shall first match a Participant’s contributions, if any, to the Savings Plan until the allowable annual compensation and/or contribution limitations under the Savings Plan are attained; provided, however, that the Company Matching Contribution on the deferred portion of an Officer’s Annual Bonus shall be credited entirely to his or her deferral account under the Executive Deferral Program.
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(c)
|
Annual Limitation on Company Matching Contribution. In no event shall the amount of the Company Matching Contribution made pursuant to Section 3.5(a) and Section 3.5(b) with respect to any Participant for any Plan Year exceed one hundred percent (100%) of the “matching company contribution” that could have been credited to the Participant’s account under the Savings Plan in the absence of any plan-based restrictions that reflect the limits on qualified plan contributions under the Code.
|
(a)
|
Participant Contributions. A Participant shall be one hundred percent (100%) vested at all times in his or her contributions of deferred Annual Base Salary, Annual Bonus, and Long Term Awards (and all earnings thereon) to his or her deferral account under the Executive Deferral Program.
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(b)
|
Company Matching Contributions. The Company Matching Contributions credited to a Participant’s deferral account under the Executive Deferral Program (and any earning thereon) shall be one hundred percent (100%) vested after the Participant completes three (3) Years of Service. If not then vested, the Company Matching Contributions credited to a Participant’s account under the Executive Deferral Program (and any earning thereon) shall also become one hundred percent (100%) vested, regardless of his or her number of Years of Service, upon the occurrence of any of the following events prior to (or concurrent with) his or her Separation From Service:
|
(i)
|
The Participant terminates employment the Company with eligibility for AT&T Corp. Postretirement Welfare Benefits under the AT&T Pension Plan or the AT&T Management Pension Plan;
|
(ii)
|
The Participant separates from service due to permanent disability;
|
(iii)
|
The Participant attains the first day of the month in which his or her sixty-fifth (65th) birthday occurs;
|
(iv)
|
The Participant separates from service pursuant to a Company-initiated force reduction program or in accordance with the Company’s practices with respect to technological displacement;
|
(v)
|
The Participant is laid off (Participant’s position is eliminated or relocated and redeployment is not possible);
|
(vi)
|
The Participant dies;
|
(vii)
|
The Participant is assigned to an entity, other than a Participating Company or another Affiliate., and terminates employment with a Participating Company solely for this purpose;
|
||
(viii)
|
The Participant’s employment with a Participating Company is terminated on account of a disposition of assets or disposition of a subsidiary;
|
(ix)
|
The Participant’s employment with a Participating Company is terminated as part of an outsourcing transaction;
|
(x)
|
This Plan is terminated or partially terminated, or there is a complete discontinuance of contributions by a Participating Company, other than by reason of being merged into, or consolidated with, another Participating Company; or
|
(xi)
|
Upon the date a “Change in Control” (as such term is defined in the 2004 Incentive Program as of May 19, 2004) occurs, provided he or she is a CIC Eligible Employee.
|
(c)
|
Forfeitures. If a Participant terminates employment with the Employer before the Company Matching Contributions credited to his or her deferral account are one hundred percent (100%) vested, the Participant’s Company Matching Contributions and the associated earnings credited to the Participant’s deferral account under the Executive Deferral Program shall be forfeited. The Company Matching Contributions and any earnings thereon credited to a Participant’s deferral account under the Executive Deferral Program shall also be forfeited if the Participant violates the AT&T Non-Competition Guidelines or the AT&T Code of Conduct.
|
(a)
|
Earnings on Cash Portion of Deferral Account. The annual rate of interest crediting on amounts allocated to the cash portion of a Participant’s deferral account under the Executive Deferral Program shall be equal to the yield on the ten (10) year U.S. Treasury Note, plus a premium amount, denominated as a percentage rate, determined by the Board (or its designee) from time to time. For 2005 and all subsequent years until modified by the Board (or its designee), the applicable premium amount shall be equal to two percent (2%). Interest on amounts held in the cash portion of a Participant’s deferral account under the Executive Deferral Program shall be credited quarterly, at the end of each calendar quarter, based on the actual average ten (10) year U.S. Treasury Note rate (and if applicable, any premium adjustment) for the prior calendar quarter.
|
(b)
|
Earnings on Share Unit Portion of Deferral Account. The deferred AT&T share unit portion of each Participant’s deferral account under the Executive Deferral Program shall be credited on each dividend payment date for AT&T Common Stock with an amount equal to the dividend payment on the number of shares of AT&T Common Stock that is equal to the number of AT&T share units credited to the respective Participant’s deferral account. That amount is then converted to an additional number of deferred AT&T share units and credited to the respective Participant’s deferral account under the Executive Deferral Program. For valuation purposes, the deferred AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program will be indexed to the AT&T Share Price.
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3.8
|
Distributions of Deferred Compensation Upon Separation From Service.
|
(a)
|
General Rule. Subject to Section 3.8(d), distributions of amounts of Annual Base Salary, Annual Bonus, and Long Term Awards deferred under the Executive Deferral Program pursuant to a specific deferral election (and any associated Company Matching Contributions and earnings) shall be made upon the Participant’s Separation From Service at a time and in a form elected pursuant to Section 3.3 which conforms with the provisions of this Section 3.8, except to the extent that the Participant elects to have permissible amounts of such deferred compensation paid in the form of an in-service distribution pursuant to Section 3.9.
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(b)
|
Form of Payments. An Eligible Executive’s deferral election that includes an election to receive payment of deferred compensation upon the Eligible Executive’s Separation From Service shall specify whether the deferred compensation to which the deferral election applies shall be paid in the form of either (i) a single payment; or (ii) annual installments. If the Eligible Executive elects the annual installment payment option, he or she shall also specify the number of annual installments to be made, ranging between a minimum of two (2) annual installments and a maximum of ten (10) annual installments. If a Participant elects the single payment option, the Plan shall make a single payment to the Participant of all amounts of compensation (and any associated Company Matching Contributions and earnings) credited to the Participant’s deferral account for the particular Service Period. If a Participant elects the installment payment option, the Plan shall pay to the Participant all amounts of compensation (and any associated Company Matching Contributions and earnings) credited to the Participant’s deferral account for the particular Service Period in the specified number of annual installment payments.
|
(c)
|
Medium of Payment. Under either the single payment or the annual installment payment options described in Section 3.8(b), (i) the distributable amount credited to the cash portion of a Participant’s deferral account under the Executive Deferral Program attributable to the particular Service Period shall be paid in the form of cash; and (ii) the distributable amount credited to the AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program attributable to the particular Service Period shall be paid in the form of shares of AT&T Common Stock equal to the number of AT&T share units credited to the AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program.
|
(d)
|
Timing of Payments.
|
(i)
|
Single Payment Option. As part of each deferral election that provides for payment of deferred compensation upon the Participant’s Separation From Service in the form of a single payment, the Participant shall specify whether such payment is to be made either:
|
(A)
|
On the first day of the calendar quarter that begins six (6) months after the calendar quarter during which the Participant incurs a Separation From Service with the Employer; or
|
(B)
|
On the first day of the calendar quarter that immediately follows the first one-year anniversary of the Participant’s Separation From Service with the Employer.
|
(ii)
|
Installment Payments. As part of each deferral election that provides for payment of deferred compensation upon the Participant’s Separation From Service in the form of installment payments, the Participant shall specify whether such payments shall commence either:
|
(A)
|
On the first day of the calendar quarter that begins six (6) months after the calendar quarter during which the Participant incurs a Separation From Service with the Company, with any subsequent annual installment payments being made on the first day of the same calendar quarter of each subsequent calendar year; or
|
(B)
|
On the first day of the calendar quarter that immediately follows the first one-year anniversary of the Participant’s Separation From Service with the Company, with any subsequent annual installment payments being made on the first day of the same calendar quarter of each subsequent calendar year.
|
(a)
|
Election of In-Service Distributions. In lieu of making an election for a distribution of deferred compensation upon Separation From Service pursuant to Section 3.8, a Participant may, as part of his or her deferral election for a particular Service Period, elect to receive an in-service distribution. An in-service distribution election must specify (i) a source of the in-service distribution; and (ii) an in-service payment date. Pursuant to Section 3.3(e), an in-service distribution election which comprises part of a deferral election shall be irrevocable once it is received by the Administrator.
|
(b)
|
Source of In-Service Distribution. The source of an in-service distribution is limited to either the Annual Base Salary (plus any earnings thereon) or the Annual Bonus (plus any earnings thereon) which a Participant elects pursuant to Section 3.3 to defer for the particular Service Period. An in-service distribution election shall apply to the entire amount of the specified source of compensation that is deferred by the Participant for the particular Service Period. Company Matching Contributions made with respect to a Participant’s deferral of Annual Base Salary or Annual Bonus for a Service Period shall not be distributed as part of an in-service distribution.
|
(c)
|
In-Service Payment Date. An election to receive an in-service distribution shall specify a future date (referred to as the “in-service payment date”) as of which the in-service distribution shall be made. Such in-service payment shall be at least four (4) years but no more than ten (10) years after the date on which the deferral election that includes the in-service distribution election is made.
|
(d)
|
Timing of In-Service Distribution. An in-service distribution shall be made to a Participant as soon as practicable during the third calendar quarter (July 1 to September 30) of the year during which the in-service payment date specified by the Participant occurs.
|
(e)
|
Form of Payment. All in-service distributions shall be made in the form of a lump sum cash payment.
|
(f)
|
Limitation on Number of In-Service Distribution Elections. A Participant may have no more than three (3) in-service distribution elections in force under the Executive Deferral Program at anytime.
|
(g)
|
Priority of Payment. In the event that an Eligible Executive has a Separation From Service prior to the date indicated in his or her in-service distribution election, the Eligible Executive’s entire deferred compensation under the Plan shall be payable at the time and form as if the eligible executive had made a deferral election that provides for distribution pursuant to Section 3.8(d)(i)(A) upon a Separation From Service.
|
(a)
|
Beneficiary Election. At the time an Eligible Executive first enrolls to participate in the Executive Deferral Program, the Eligible Executive shall be required to make and file a Beneficiary Election with the Administrator (or his or her designee). The Beneficiary Election shall be made in writing on such form or forms as the Administrator (or his or her designee) shall prescribe. As part of the Beneficiary Election, the Participant shall (i) designate a Beneficiary to receive the distribution of the balance of the Participant’s deferral account under the Executive Deferral Program in the event of the Participant’s death; and (ii) specify the number of annual installment payments (up to a maximum of five (5) payments) through which such account balance is to be made to the Participant’s Beneficiary. Such Beneficiary Election shall be effective upon the Participant’s death. Prior to death, a Participant may change his or her designated Beneficiary (but not the specified number of annual installment payments) from time to time following the procedures established by the Administrator (or his or her designee). Once a Participant’s Beneficiary Election is made, the Participant’s specification of the number of annual installment payments shall be irrevocable. The designation of a Participant’s Beneficiary on his or her Beneficiary Election shall be irrevocable upon the death of the Participant. If, for any reason, the Administrator (or his or her designee) determines that it does not have a valid Beneficiary Election on file at the time of the Participant’s death, the Participant shall be deemed to have made a Beneficiary Election in which the Participant (i) designated his or her estate as the Beneficiary; and (ii) specified that his or her deferral account under the Executive Deferral Program be paid to the Beneficiary in a single payment.
|
(b)
|
Payments to Beneficiary. Upon the death of a Participant, the first payment of all of the Participant’s deferral account balance under the Executive Deferral Program shall be made to the Participant’s Beneficiary during the calendar quarter that begins immediately after the calendar quarter during which the Participant’s death occurs. If the Participant dies after the commencement of payment of his or her deferral account under the Executive Deferral Program, the Plan shall pay the remainder of the balance of the Participant’s account under the Executive Deferral Program to the Participant’s Beneficiary in the number of payments specified in the Participant’s Beneficiary Election at such time as when the payments would have been paid to the Participant had his or her death not occurred. Any in-service distribution that a Participant may have elected pursuant to Section 3.9 but not received prior to the date of his or her death shall be paid to the Participant’s Beneficiary during the calendar quarter that begins immediately after the calendar quarter during which the Participant’s death occurs. If, for any reason, the AT&T Executive Compensation Department is not notified of the Participant’s death until after the end of the calendar quarter that begins immediately after the calendar quarter during which the Participant’s death occurs, the first payment of all of the Participant’s deferral account balance under the Executive Deferral Program and the payment of any in-service distribution the Participant had elected but not received prior to his or her death shall be made to the Participant’s Beneficiary within such period of time as may be provided for under the provisions of Code Section 409A.
|
(c)
|
Medium of Payment to Beneficiary. Amounts credited to the cash portion of a Participant’s deferral account under the Executive Deferral Program shall be paid to the Participant’s Beneficiary in the form of cash. Amounts credited to the AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program shall be paid to the Participant’s Beneficiary in the form of shares of AT&T Common Stock equal to the number of AT&T share units credited to the AT&T share unit portion of a Participant’s deferral account under the Executive Deferral Program.
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3.11
|
Periodic Statements to Participants. The Administrator (or his or her designee) shall deliver a statement to each Participant in the Executive Deferral Program each calendar quarter that reports with respect to the immediately preceding calendar quarter (i) the amount of contributions of the Participant’s deferred compensation received by the Plan during such calendar quarter; (ii) the amount of Company Matching Contributions credited to the Participant’s deferral account during such calendar quarter; (iii) the amount of interest credited to the cash portion of a Participant’s deferral account under the Executive Deferral Program during such calendar quarter; and (iv) the amount of dividends (if any) reinvested in the AT&T share unit portion of the Participant’s’ deferral account during such calendar quarter.
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3.12
|
Impact of Participation in Executive Deferral Program. The rules and procedures for the Executive Deferral Program set forth in this Section 3 shall only apply to the Executive Deferral Program. Neither the establishment of the Executive Deferral Program nor the rules and procedures for the Executive Deferral Program set forth in this Section 3 shall have any bearing or impact on the Grandfathered Deferral Program or any Participant’s deferral account or deferral and distribution elections made thereunder. An Eligible Executive’s decision to participate in the Executive Deferral Program, and any deferral election made under the Executive Deferral Program as a result of such decision to participate, shall not, in any way, impact the Eligible Executive’s deferral account or deferral and distribution elections made under the Grandfathered Deferral Program. A Participant’s Beneficiary Election made pursuant to Section 3.10 (including his or her designation of a Beneficiary) shall be independent of any election as to the form or number of payments upon death or any designation of a Beneficiary made by a Participant for purposes of the Grandfathered Deferral Program.
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3.13
|
Delay in Deferred Compensation Payments to Specified Employees. Notwithstanding any other provision of the Plan or the Executive Deferral Program to the contrary, if a Participant in the Executive Deferral Program incurs a Separation From Service on or after January 1, 2005, and at the time of such Separation From Service the Participant is a Specified Employee, no payment of deferred compensation from the Participant’s deferral account under the Executive Deferral Program shall be made to, or with respect to, such Participant before the date that is six (6) months after the Participant’s Separation From Service (or if earlier, the date of the Participant’s death). Any payment from a deferral account under the Executive Deferral Program that, but for the application of the preceding provisions of this Section 3.13, would have been paid to a Participant at any time during the first six (6) months after the Participant’s Separation From Service (or if earlier, the date of the Participant’s death) shall be accumulated (including any earnings thereon credited in accordance with Section 3.7 during the period that payment is delayed pursuant to this Section 3.13) and paid to the Participant on the first day of the seventh (7th) month following the Participant’s Separation From Service. Any payment under the Executive Deferral Program to a Specified Employee not scheduled to be made during the first six (6) months after the Participant’s Separation From Service shall be made at the time or times provided for in the Participant’s Deferral Election and Section 3.8 or Section 3.9, as applicable. Notwithstanding the foregoing, in the event that an Eligible Executive’s in-service distribution date occurs within six (6) months following his or her Separation From Service, such in-service distribution date shall be disregarded and shall be of no force or effect.
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3.14
|
Prohibition on Acceleration of Payments of Deferred Compensation. Notwithstanding any provision of the Executive Deferral Program as set for the herein to the contrary except the provisions of Section 3.15, any acceleration of the time or schedule of any payment of deferred compensation under the terms of the Executive Deferral Program or the amount of such deferred compensation scheduled to be paid under the terms of the Executive Deferral Program, shall be prohibited on or after January 1, 2005, unless such change to the time, schedule or amount of the deferred compensation payment qualifies for an exception established in the federal income tax regulations underlying the prohibition on acceleration of deferred compensation payments set forth in Code Section 409A(a)(3).
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3.15
|
Special Distribution Provision. Notwithstanding any provision of the Executive Deferral Program as set forth herein to the contrary, in the event that (i) the Internal Revenue Service prevails in a claim that all or any portion of a Participant’s deferral account under the Executive Deferral Program is required to be included in the Participant’s taxable income for any taxable year of such Participant prior to the taxable year during which such amount is otherwise to be distributed to him or her due to the Plan’s failure to satisfy the requirements of Code Section 409A; or (ii) legal counsel satisfactory to the Company and the applicable Participant renders an opinion that the Internal Revenue Service would likely prevail in such a claim, the affected portion of the Participant’s deferral account that is required to be included in the Participant’s taxable income shall be immediately distributed to the Participant (or his or her Beneficiary). For purposes of this Section 3.15, the Internal Revenue Service shall be deemed to have prevailed in a claim if such claim is upheld by a court of final jurisdiction, or if the Company or Participant, based on an opinion of legal counsel satisfactory to the Company and the Participant fails to appeal a decision of the Internal Revenue Service, or a court of applicable jurisdiction, with respect to such claim, to an appropriate Internal Revenue Service appeals authority or to a court of higher jurisdiction within the appropriate time period.
|
3.16
|
Termination of Participation in Executive Deferral Program. A Participant’s participation in the Executive Deferral Program shall terminate upon the occurrence of the first of any of the following events:
|
(a)
|
The death of the Participant;
|
(b)
|
The Participant ceases to have a deferral account balance under the Executive Deferral Program;
|
(c)
|
The Board (or its delegate) terminates the Executive Deferral Program pursuant to the provisions of Section 5.1; or
|
(d)
|
The Board (or its delegate) terminates the Plan pursuant to the provisions of Section 5.1.
|
4.0
|
Claims. A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Executive Compensation Administration Department, setting forth his or her claim. The request must be addressed to the AT&T Executive Compensation Administration Department at its then principal place of business.
|
4.1
|
Claim Decision. Upon receipt of a claim, the AT&T Executive Compensation Administration Department shall review the claim and provide the Claimant with a written notice of its decision within a reasonable period of time, not to exceed ninety (90) days, after the claim is received. If the AT&T Executive Compensation Administration Department determines that special circumstances require an extension of time beyond the initial ninety (90) day claim review period, the AT&T Executive Compensation Administration Department shall notify the Claimant in writing within the initial ninety (90) day period and explain the special circumstances that require the extension and state the date by which the AT&T Executive Compensation Administration Department expects to render its decision on the claim. If this notice is provided, the AT&T Executive Compensation Administration Department may take up to an additional ninety (90) days (for a total of one hundred eighty (180) days after receipt of the claim) to render its decision on the claim.
|
4.2
|
Request for Review. Within sixty (60) days after the receipt by the Claimant of the written decision on the claim provided for in Section 4.1, the Claimant may request in writing that the Administrator review the determination of the AT&T Executive Compensation Administration Department. Such request must be addressed to the Administrator at the address for giving notice to the Administrator designated in Section 7.5. To assist the Claimant in deciding whether to request a review of a denied claim or in preparing a request for review of a denied claim, a Claimant shall be provided, upon written request to the Administrator and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim. The Claimant or his or her duly authorized representative may, but need not, submit a statement of the issues and comments in writing, as well as other documents, records or other information relating to the claim for consideration by the Administrator. If the Claimant does not request a review of the AT&T Executive Compensation Administration Department’s decision by the Administrator within such sixty (60) day period, the Claimant shall be barred and estopped from challenging the determination of the AT&T Executive Compensation Administration Department.
|
4.3
|
Review of Decision. Within sixty (60) days after the Administrator’s receipt of a request for review, the Administrator will review the decision of the AT&T Executive Compensation Administration Department. If the Administrator determines that special circumstances require an extension of time beyond the initial sixty (60) day review period, the Administrator shall notify the Claimant in writing within the initial sixty (60) day period and explain the special circumstances that require the extension and state the date by which the Administrator expects to render its decision on the review of the claim. If this notice is provided, the Administrator may take up to an additional sixty (60) days (for a total of one hundred twenty (120) days after receipt of the request for review) to render its decision on the review of the claim.
|
(a)
|
Take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial review of the claim conducted pursuant to Section 4.1;
|
(b)
|
Follow reasonable procedures to verify that its benefit determination is made in accordance with the applicable Plan documents; and
|
(c)
|
Follow reasonable procedures to ensure that the applicable Plan provisions are applied to the Participant to whom the claim relates in a manner consistent with how such provisions have been applied to other similarly-situated Participants.
|
5.0
|
Continuation of Program. The Company does not guarantee the continuation of the Plan or any benefits during employment or after termination of employment, nor does the Company guarantee any specific level of benefits. Benefits are provided under the Plan at the Company’s discretion and do not create a contract of employment. Neither the establishment nor the continuance of the Plan shall be construed as conferring any legal rights upon any Eligible Executive, Participant or other person for continuation of employment, nor shall such establishment or continuance interfere with the right of the Company to discharge any Eligible Executive, Participant or other person without regard to the existence of the Plan. The Company intends to continue the Plan indefinitely; however, the Committee (for periods ending prior to the Closing) and the Board or its delegate (for periods beginning on or after the Closing) reserve the right to amend or terminate the Plan at any time pursuant to Section 5.1.
|
5.1
|
Amendment or Termination. The Committee (for periods ending prior to the Closing) and the Board or its delegate (for periods beginning on or after the Closing) may, at any time, amend or terminate the Plan or any underlying program, but such amendment or termination shall not adversely affect the rights of any Participant without his or her consent, to any benefit under the Plan to which such Participant may have previously become entitled prior to the effective date of such amendment or termination. The Executive Vice President – Human Resources of AT&T Corp. (or his or her successor), with the concurrence of the General Counsel of AT&T Corp. (or his or her successor), shall be authorized to make minor or administrative changes to the Plan, as well as amendments required by applicable federal or state law (or authorized or made desirable by such statutes).
|
6.0
|
Coverage of Individual Deferral Agreements. Upon the occurrence of a “Change in Control” or a “Potential Change in Control” (as those terms are defined in the AT&T Corp. Benefits Protection Trust as in effect on October 23, 2000), each individual deferral agreement (including any individual nonqualified pension arrangement) made between an Officer (active or former) and a Participating Company for the deferral of compensation, retirement and/or severance benefits (and the deferred account balance, if any, under each such agreement) identified by the Executive Vice President – Human Resources of AT&T Corp. (or his or her successor), in his or her discretion, shall be deemed to be a deferred compensation obligation under the Plan. Notwithstanding any other provision of the Plan to the contrary, (i) each of the individual deferral agreements (including each of the individual nonqualified pension arrangements) deemed to be a deferred compensation obligation of the Plan pursuant to the provisions of this Section 6.0 shall be treated under the Plan in a manner that is consistent with the express terms and conditions of the respective individual deferral agreement; and (ii) the deferred compensation (including nonqualified pension benefit) entitlement of an Officer under the Plan with respect to any such individual deferral agreement (including individual nonqualified pension arrangements) shall be limited solely to the benefit provided under the express terms and conditions of the respective individual deferral agreement. Nothing contained in this Section 6.0 shall entitle an Officer to any other deferred compensation benefits under the Plan except as expressly provided in the individual deferral agreement (including any individual nonqualified pension arrangement).
|
6.1
|
Vesting Upon Change in Control. Upon the occurrence of a “Change in Control” (as defined in the 2004 Incentive Program as in effect on May 19, 2004), the portion, if any, of each deferred account balance under the Plan (including the deferred account balance of any former Officer, the deferred account balance under any individual deferral agreement, and the benefits under any individual nonqualified pension arrangement deemed pursuant to the provisions of Section 6.0 to be an obligation of the Plan), that was not vested immediately prior to such “Change in Control”, shall become fully vested.
|
6.2
|
Interest Crediting After Change in Control. After the occurrence of a “Change in Control” (as defined in the 2004 Incentive Program as in effect on May 19, 2004), the interest credited to a deferred account (including the deferred account of any former Officer and the deferred account under any individual deferral agreement deemed pursuant to the provisions of Section 6.0 to be an obligation of the Plan) for any period, to the extent applicable, shall not be less than the interest derived under the interest rate formula applicable to such deferred account (and used to calculate the interest credited to such deferred account) for the interest crediting period immediately prior to the occurrence of such “Change in Control” (unless the provisions of any individual deferral agreement provide otherwise).
|
6.3
|
Prohibition on Deferral of Short-Term Incentive Awards. Notwithstanding any provision of any Officer’s deferral election to the contrary, after the occurrence of a “Change in Control” (as defined in the 2004 Incentive Program as in effect on May 19, 2004), no payment of any Officer’s short term incentive award, if any, under the AT&T Short Term Incentive Plan for the performance year during which such “Change in Control” occurs shall be deferred under the Plan.
|
7.0
|
Named Fiduciary. The Administrator is hereby designated as the “named fiduciary” under this Plan. The named fiduciary shall have authority to control and manage the operation and administration of this Program.
|
7.1
|
Plan Administration. The Administrator (or his or her designee) shall have authority to establish, from time to time, and implement reasonable and necessary procedures for the administration of the Plan.
|
7.2
|
Cooperation With Administrator. All Participants and Beneficiaries shall be required to reasonably cooperate with the direction of the Administrator (or his or her designee) with respect to the administration of the Plan. Such cooperation shall include (i) timely completion, execution, and return of all enrollment forms, deferral election forms, and other administrative forms and documents in the manner prescribed by the Administrator; and (ii) compliance with such further administrative requirements and conditions as may be reasonably established by the Administrator from time to time.
|
7.3
|
Effective Date. The effective date of this amended and restated Plan document is January 1, 2008, unless otherwise stated herein.
|
7.4
|
Calendar Year Plan. All Plan records shall be maintained on a calendar year basis, beginning January 1 and ending December 31.
|
7.5
|
Notice Under Plan. Any notice to be given under this Plan shall be in writing and shall be either delivered in person or mailed by United States Mail, first-class postage pre-paid. If notice is to be given to the Administrator by mail, such notice shall be addressed as indicated below and mailed to the Administrator at the following address:
|
7.6
|
Binding Effect. This Plan shall be binding upon the Company’s successors and assigns, and upon the Participants and their Beneficiaries, heirs, executors, and administrators.
|
7.7
|
Pension Benefit Plan Under ERISA. The Plan is intended to constitute an “employee pension benefit plan” within the meaning of Section 3(2)(A) of ERISA, covering a select group of management or highly compensated employees.
|
7.8
|
Plan Document. This Plan document is the plan document required by ERISA. The information contained herein provides the final and exclusive statement of the terms of the Plan. Unless otherwise authorized by the Board or its delegate, no amendment or modification to this Plan shall be effective until reduced to writing and adopted pursuant to Section 5.1. This document legally governs the operation of the Plan, and any claim of right or entitlement under the Plan shall be determined solely in accordance with the provisions of Section 4. No other evidence, whether written or oral, shall be taken into account in determining the right of an Eligible Executive, a Participant or a Beneficiary, as applicable, to any benefit of any type provided under the Plan.
|
7.9
|
Source of Funds. The amounts of compensation deferred under this Plan (and any earnings thereon) shall be held in the general funds of the Participating Companies. The Participating Companies shall not be required to reserve, or otherwise set aside, funds for the payment of such amounts of compensation deferred (or the earnings thereon).
|
7.10
|
Prohibition on Assignments. The rights of a Participant or Beneficiary to any deferred amounts of compensation deferred under this Plan, plus the additional amounts credited thereon pursuant to Section 2.3, Section 2.4(a), Section 2.4(b), Section 2.4(c), Section 2.4(d), and Section 3.7, shall not be subject to assignment by the Participant or any Beneficiary.
|
7.11
|
Governing Law. To the extent not preempted by applicable federal law, the Plan shall be governed by, and construed and interpreted in accordance with, the laws of the State of Texas (irrespective of the choice of laws principles of the State of Texas).
|
7.12
|
Severability. If any provision of this Plan or the application thereof to any person or circumstance shall be held by a court of competent jurisdiction to be invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remainder of the Plan and shall not affect the application of any provision of the Plan to any other person or circumstance.
|
7.13
|
Headings. The headings and subheadings preceding the Sections of this Plan have been inserted solely as a matter of convenience of reference, and shall have no force or effect in the construction or interpretation of the Plan or any of its provisions.
|
7.14
|
Construction. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where the plural form would apply (and vice versa). Pronouns and other words of one gender used herein shall be construed to include the other gender as the context requires. The word “or” shall not be exclusive; “may not” is prohibitive and not permissive. The term “earnings” shall refer to the amounts of interest and/or dividend equivalents credited to a deferral account hereunder pursuant to the provisions of Section 2.3(b), Section 2.4(d), and Section 3.7. The words, “hereof”, “herein”, “hereunder” and words of similar import shall refer to the entire Plan document, and not to any particular Section or paragraph of the Plan document, unless the context clearly indicates otherwise. All Section references made in this Plan document are to the applicable Sections of this Plan document unless otherwise specified.
|
7.15
|
Plan to Comply with Section 409A. The Plan (other than with respect to the Grandfathered Deferral Program) is at all times intended to comply with and operate in a manner that is consistent with the requirements of Section 409A of the Code. Notwithstanding any other provision to the contrary in this Plan, each provision in this Plan (other than with respect to the Grandfathered Deferral Program) shall be interpreted to permit the deferral of compensation in accordance with Section 409A of the Code and any provision that would conflict with such requirements shall not be valid or enforceable.
|
Article 1
|
-1-
|
Purpose
|
Article 1
|
-2-
|
Purpose
|
Article 1
|
-3-
|
Purpose
|
Section 2.01
|
Adjusted Career Average Pay
|
|
A.
|
the sum of (1) and (2), where (1) is the product of (a) the average of the Officer’s annual Short Term Incentive Awards includable in the 1989 Base Period, and (b) the Officer’s Term of Employment as of December 31, 1989, and (2) is his or her Short Term Incentive Awards and any Deferred Salary for the period from January 1, 1990 through the earliest to occur of (i) July 31, 1997, (ii) the date specified in the applicable provision of Section 3.02(c) for purposes of determining a benefit under the Alternate Formula, or (iii) the date of the Participant’s termination of employment from a Participating Company.
|
|
B.
|
the sum of (1) and (2), where (1) is the product of (a) the Participant’s average annual “Compensation” (as defined in the Pension Plan) for the 1992 Base Period, and (b) the Participant’s Term of Employment as of December 31, 1992, and (2) is the Participant’s “Compensation” (as defined in the Pension Plan) for the period from January 1, 1993 through the earliest to occur of (i) July 31, 1997, (ii) the date specified in the applicable provision of Section 3.02(c) for purposes of determining a benefit under the Alternate Formula, or (iii) the date of the Participant’s termination of employment from a Participating Company.
|
Section 2.02
|
Administrator
|
Section 2.03
|
Affiliated Corporation
|
Article 2
|
-4-
|
Definitions
|
Section 2.04
|
AT&T, Company
|
Section 2.05
|
AT&T Controlled Group
|
Section 2.06
|
1989 Base Period
|
Section 2.07
|
1992 Base Period
|
Section 2.08
|
1996 Base Period
|
Section 2.09
|
Board
|
Section 2.10
|
Cash Balance Account
|
Article 2
|
-5-
|
Definitions
|
Section 2.11
|
Cash Balance Participant
|
Section 2.12
|
CIC Eligible Employee
|
Section 2.13
|
Code
|
Section 2.14
|
Committee
|
Section 2.15
|
Concert Employee
|
Section 2.16
|
Covered Compensation Base
|
Article 2
|
-6-
|
Definitions
|
Section 2.17
|
Deferral Participant
|
Section 2.18
|
Deferred Salary
|
Section 2.19
|
Deferred Vested Benefit
|
Section 2.20
|
Disability Benefit
|
Section 2.21
|
E-band Employee
|
Section 2.22
|
ERISA
|
Article 2
|
-7-
|
Definitions
|
Section 2.23
|
50% Joint and Survivor Annuity
|
Section 2.24
|
100% Joint and Survivor Annuity
|
Section 2.25
|
Leave of Absence
|
Article 2
|
-8-
|
Definitions
|
Section 2.26
|
Normal Retirement Date
|
Section 2.27
|
Officer
|
Section 2.28
|
Participant
|
Section 2.29
|
Participating Company
|
Section 2.30
|
Pension Commencement Date
|
Section 2.31
|
Pension Plan
|
Section 2.32
|
Pension Plan Benefit
|
Article 2
|
-9-
|
Definitions
|
Section 2.33
|
Plan
|
Section 2.34
|
Position Rate
|
Section 2.35
|
Qualified Deferral
|
Section 2.36
|
Qualified Deferrals Cash Balance Account
|
Article 2
|
-10-
|
Definitions
|
Section 2.37
|
SERP
|
Section 2.38
|
SERP Effective Date
|
Section 2.39
|
SERP Election
|
Section 2.40
|
SERP Participant
|
Section 2.41
|
SERP Vesting Date
|
Section 2.42
|
Service Benefit
|
Section 2.43
|
Service Pension Eligible
|
|
(i)
|
the Participant’s term of employment has been at least thirty years, regardless of his or her age, or
|
|
(ii)
|
the Participant’s term of employment has been at least twenty-five years and he or she has reached the age of fifty years, or
|
Article 2
|
-11-
|
Definitions
|
|
(iii)
|
the Participant’s term of employment has been at least twenty years and he or she has reached the age of fifty-five years, or
|
(iv)
|
the Participant’s term of employment has been at least ten years and he or she has reached the age of sixty-five years.
|
Section 2.44
|
Short Term Incentive Award
|
Section 2.45
|
Special Update Adjusted Career Average Pay
|
Article 2
|
-12-
|
Definitions
|
Section 2.46
|
Specified Employee
|
Section 2.47
|
Successor Plan Sponsor
|
Section 2.48
|
Spouse
|
Section 2.49
|
Term of Employment
|
Section 2.50
|
Termination of Employment
|
Article 2
|
-13-
|
Definitions
|
Section 2.51
|
Total Compensation
|
Section 2.52
|
Transition Employee
|
Section 2.53
|
Years of Service
|
Article 2
|
-14-
|
Definitions
|
Section 3.01
|
Eligibility to Accrue Plan Benefits
|
Section 3.02
|
Eligibility to Receive Plan Benefits
|
Article 3
|
-15-
|
Participation And Eligibility
For Plan Benefits
|
(i)
|
If the Participant is a Cash Balance Participant, a Benefit Based on the Cash Balance Account, as described in Section 4.03E(f), provided that the Participant is vested under the Pension Plan at the time of his or her termination of employment from the AT&T Controlled Group;
|
(ii)
|
If the Participant is Service Pension Eligible at the time of his or her termination of employment with a Participating Company, a Service Benefit determined in accordance with the applicable provision of Section 4.01E and Section 4.02E (with regard to benefits frozen prior to January 1, 1998);
|
(iii)
|
If the Participant is not Service Pension Eligible at the time specified in the relevant Plan provision, a Deferred Vested Benefit determined in accordance with Section 4.02E(a) or Section 4.02E(d) (with regard to benefits frozen prior to January 1, 1998), as applicable, provided that the Participant is vested under the Pension Plan at the time of his or her termination of employment from the AT&T Controlled Group;
|
(iv)
|
If the Participant became eligible for a disability pension from the Pension Plan while an Officer, a Disability Benefit, determined in accordance with Section 4.02E(a) or Section 4.02E(d) (with regard to benefits frozen prior to January 1, 1998), as applicable. Such Disability Benefit shall be paid in lieu of any other benefit under the Plan, so long as the Participant is prevented by such disability from resuming active service with a Participating Company. If the Participant’s disability continues to his or her Normal Retirement Date, the Disability Benefit shall be converted to a Service Benefit commencing on the first day of the month following such Normal Retirement Date;
|
(v)
|
If an individual first becomes an Officer after December 31, 2008, the only benefits payable under the Plan with respect to such individual will be benefits attributable to Qualified Deferrals, if any, and benefits that were accrued under the Plan prior to January 1, 1998, if any. Benefits earned prior to January 1, 1998 will be paid pursuant to the provisions of Section 3.02(b) applicable to Participants who are E-band Employees, and benefits attributable to Qualified Deferrals pursuant to Section 3.02(d). The benefit with respect to such Participant shall be calculated as of the SERP Effective Date as the immediate single life annuity that would be payable under the Plan commencing on such date, and once determined, the amount of the single life annuity payable under this Plan shall not change.
|
Article 3
|
-16-
|
Participation And Eligibility
For Plan Benefits
|
(i)
|
If the Participant is Service Pension Eligible at the time of his or her termination of employment from a Participating Company, a Service Benefit determined in accordance with the applicable provision of Section 4.01E and Section 4.02E (with respect to benefits frozen prior to January 1, 1998) ;
|
(ii)
|
If the Participant is not Service Pension Eligible at the time of his or her termination of employment with a Participating Company, a Deferred Vested Benefit determined in accordance with Section 4.02E(a) or Section 4.02E(d) (with respect to benefits frozen prior to January 1, 1998), as applicable, provided that the Participant is vested under the Pension Plan at the time of his or her termination of employment from the AT&T Controlled Group.
|
|
(i)
|
An Officer who, on or after January 1, 1986 and before January 1, 1998, was reassigned to a position evaluated below the E-band level for reasons other than unsatisfactory performance, and who has satisfied the vesting requirements of the Pension Plan as of the reassignment date shall be eligible for benefits as follows:
|
(1)
|
an amount computed in accordance with Section 4.02(a), the Basic Formula, or Section 4.02(d), the Special Update to the Basic Formula, as applicable, as in effect on the reassignment date. For purposes of determining a benefit under the Basic Formula, the Participant’s Term of Employment shall exclude any period following the earliest to occur of the last day of the year in which he or she was reassigned, July 31, 1997, or termination of employment; and
|
Article 3
|
-17-
|
Participation And Eligibility
For Plan Benefits
|
(2)
|
an amount computed in accordance with Section 4.02(b) (the Alternate Formula), or Section 4.02(e) (the Special Update to the Alternate Formula), as applicable, as in effect on the reassignment date. For purposes of determining a benefit under the Alternate Formula, the Participant’s Term of Employment shall exclude any period following the last day of 1988 or if later, the earliest to occur of the last day of the year in which he or she was reassigned, July 31, 1997, or termination of employment.
|
|
(ii)
|
An Officer who, on or after January 1, 1986 and before January 1, 1998, was reassigned to a position evaluated below the E-band level, and who was not Service Pension Eligible or eligible for a deferred vested pension pursuant to the Pension Plan as of the reassignment date, will not be eligible for benefits under this Plan.
|
|
(iii)
|
An Officer who, on or after January 1, 1986 and before January 1, 1998, was reassigned to a position evaluated at the E-band level for reasons other than unsatisfactory performance, shall be eligible for benefits as follows:
|
(1)
|
an amount computed in accordance with Section 4.02(a), the Basic Formula, or Section 4.02(d), the Special Update to the Basic Formula, as applicable, as in effect on the reassignment date. For purposes of determining a benefit under the Basic Formula, the Participant’s Term of Employment shall exclude any period following the earliest to occur of the last day of the year in which his or her job was reclassified, July 31, 1997, or termination of employment; for purposes of determining a benefit under the Special Update to the Basic Formula, the Participant’s Term of Employment shall exclude any period following the earliest to occur of the last day of the year in which his or her job was reclassified, December 31, 1996, or termination of employment; and
|
Article 3
|
-18-
|
Participation And Eligibility
For Plan Benefits
|
(2)
|
an amount computed in accordance with Section 4.02(b) (the Alternate Formula), or Section 4.02(e) (the Special Update to the Alternate Formula), as applicable, as in effect on the reassignment date. For purposes of determining a benefit under the Alternate Formula, the Participant’s Term of Employment shall exclude any period following the last day of 1988 or if later, the earliest to occur of the last day of the year in which his or her job was reclassified, July 31, 1997, or termination of employment; for purposes of determining a benefit under the Special Update to the Alternate Formula, the Participant’s Term of Employment shall exclude any period following the earliest to occur of the last day of the year in which his or her job was reclassified, December 31, 1996, or termination of employment.
|
|
(iv)
|
A Participant, other than an Officer, whose job was classified or reclassified during or after 1986 and prior to January 1, 1998 to a level below E-band, will be eligible for the Service Benefit computed in accordance with Section 4.02(b) (the Alternate Formula), or Section 4.02(e) (the Special Update to the Alternate Formula), as applicable, as in effect on the reclassification date, provided he or she is Service Pension Eligible as of the date of such classification or reclassification, and further provided he or she is not demoted subsequent to such day because of unsatisfactory job performance prior to termination of employment. For purposes of determining a benefit under the Alternate Formula, the Participant’s Term of Employment shall exclude any period following the last day of 1988 or if later, the earliest to occur of the last day of the year in which his or her job was reclassified, July 31, 1997, or termination of employment; For purposes of determining a benefit under the Special Update to the Alternate Formula, the Participant’s Term of Employment shall exclude any period following the earliest to occur of the last day of the year in which his or her job was reclassified, December 31, 1996, or termination of employment.
|
Article 3
|
-19-
|
Participation And Eligibility
For Plan Benefits
|
(v)
|
The benefit with respect to a Participant who is an Officer on or after January 1, 1998 who is reassigned on or after January 1, 1998 and before January 1, 2009, shall be determined pursuant to Section 4.03(f); provided, however, that the benefit of such former Officer shall be determined in accordance with subparagraphs (i) through (iii) of this Section 3.02(c) assuming a reassignment date of December 31, 1997, if such determination produces a higher benefit, as of the Participant’s Pension Commencement Date.
|
Article 3
|
-20-
|
Participation And Eligibility
For Plan Benefits
|
Section 4.01
|
Applicable Benefit Formulas.
|
|
(i)
|
Participants Whose Eligibility to Accrue Benefits Ends Prior to August 1, 1997.
|
|
(A)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he or she leaves the service of a Participating Company prior to August 1, 1997, and who is Service Pension Eligible as of the last day of his or her Term of Employment, will be the greater of the annual benefit amount determined under the Basic Formula described in Section 4.02E(a), the annual benefit amount determined under the Alternate Formula described in Section 4.02E(b), or, in the case of an Officer who had at least five Years of Service as an Officer as of December 31, 1993, the annual benefit amount determined under the Alternate Minimum Formula described in Section 4.02E(c).
|
|
(B)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he leaves the service of a Participating Company prior to August 1, 1997, but who is not Service Pension Eligible as of the last day of his or her Term of Employment, will be a Deferred Vested Benefit determined under the Basic Formula described in Section 4.02E(a), provided he or she is vested under the Pension Plan at the time of termination of employment from the AT&T Controlled Group. Notwithstanding the provisions of the immediately preceding sentence, if such Participant was an Officer who had at least five Years of Service as an Officer as of December 31, 1993, the annual benefit shall not be less than the annual benefit determined under the Alternate Minimum Formula described in Section 4.02E(c).
|
Article 4
|
-21-
|
Pension Benefits After 2008
|
|
(C)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an E-band Employee on January 1, 1997, who terminates employment as an E-band Employee prior to August 1, 1997 and who is Service Pension Eligible as of the last day of his or her Term of Employment, will be the annual benefit amount determined under the Alternate Formula described in Section 4.02E(b).
|
|
(D)
|
Effective August 1, 1997, the annual benefit of a Participant described in this Section 4.01(b)(i) shall increase (but shall not be decreased) to the amount determined pursuant to the following subsection 4.01(b)(ii)(A), if the Participant is described in subsection 4.01(b)(i)(A), or to the amount determined pursuant to subsection 4.01(b)(ii)(B) if the Participant is described in subsection 4.01(b)(i)(B), or to the amount determined pursuant to the following subsection 4.01(b)(ii)(D), if the Participant is described in subsection 4.01(b)(i)(C). For purposes of applying the provisions of Section 4.01(b)(ii) to increase a benefit which commenced prior to August 1, 1997 pursuant to this subsection 4.01(b)(i)(D), any age-based reduction shall be based on such Participant’s age on his or her original Pension Commencement Date.
|
|
(ii)
|
Participants Whose Eligibility to Accrue Benefits Ends after July 31, 1997.
|
|
(A)
|
Subject to the provisions of subsection 4.01(b)(ii)(C) for Officers after December 31, 1997, the annual benefit of a Participant who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he or she leaves the service of a Participating Company after July 31, 1997, and who is Service Pension Eligible as of his or her termination of employment from a Participating Company, will be the greater of the annual benefit amount determined under the Special Update to the Basic Formula described in Section 4.02E(d) and the annual benefit amount determined under the Special Update to the Alternate Formula described in Section 4.02E(e). Notwithstanding the preceding, in no event shall be the benefit with respect to a Participant described in this subsection 4.01(b)(ii)(A) be less than the amounts determined pursuant to Section 4.01(b)(i)(A).
|
|
(B)
|
Subject to the provisions of subsection 4.01(b)(ii)(C), the annual benefit of a Participant who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he leaves the service of a Participating Company after July 31, 1997 but who is not Service Pension Eligible as of the last day of his or her termination of employment will be a Deferred Vested Benefit equal to the greater of the annual benefit amount determined under the Special Update to the Basic Formula described in Section 4.02E(d) or the amounts determined pursuant to Section 4.01(b)(i)(B), provided he or she is vested under the Pension Plan at the time of termination of employment from the AT&T Controlled Group.
|
Article 4
|
-22-
|
Pension Benefits After 2008
|
|
(C)
|
The annual benefit of a Participant on January 1, 1997 who is also an Officer on or after January 1, 1998 shall not be less than the amount determined pursuant to subsection 4.01(d).
|
|
(D)
|
Subject to the provisions of Section 4.01(d)(ii) regarding an E-band Employee who becomes an Officer on or after January 1, 1998, the benefit of a Participant who is an E-band Employee on January 1, 1997, who terminates employment as an E-band Employee after July 31, 1997, and who is Service Pension Eligible as of his or her termination of employment from a Participating Company, will be the annual benefit amount determined under the Special Update to the Alternate Formula described in Section 4.02E(e), but shall in no event be less than the amount determined pursuant to Section 4.01(b)(i)(C).
|
|
(i)
|
An individual who first becomes a Participant after January 1, 1997 and before January 1, 1998, and who is an Officer on January 1, 1998, shall be eligible for benefits determined pursuant to Section 4.01(d).
|
|
(ii)
|
An individual who first becomes an Officer on or after August 1, 1997, who was not previously an E-band Employee, and who leaves the service of a Participating Company prior to January 1, 1998 shall not be eligible for benefits under the Plan.
|
|
(iii)
|
An individual, who first becomes a Participant after January 1, 1997 and before January 1, 1998, who is not an Officer at any time on or after January 1, 1998, and who terminates employment with a Participating Company on or after January 1, 1998 shall be eligible for a Service Benefit if the Participant is Service Pension Eligible at the time of his or her termination of employment from a Participating Company. Such benefit shall be determined only under the Alternate Formula described in Section 4.02E(b). No benefit shall be payable from the Plan if such Participant is not Service Pension Eligible at the time of his or her termination of employment from a Participating Company.
|
|
(i) An individual who is an Officer on or after January 1, 1998, who first became an Officer on or after August 1, 1997 and who was not previously an E-band Employee shall be eligible for a benefit determined under Section 4.03 if such Officer is vested in his or her benefit under the Pension Plan upon his or her termination of employment from the AT&T Controlled Group.
|
|
(ii) An individual who is an Officer on or after January 1, 1998, who was an Officer or an E-band Employee prior to August 1, 1997, and whose Pension Commencement Date is after July 1, 1998, shall be eligible for a benefit from the Plan if such Officer is vested in his or her benefit under the Pension Plan upon termination of employment from the AT&T Controlled Group. The benefit shall be the greater of (A) the benefit determined pursuant to Section 4.03, or (B) the sum of (I) the Mid-Career Pension Benefit determined pursuant to Section 4.07 and (II) the benefit accrued under the Plan prior to January 1, 1998 and payable pursuant to the terms of Section 4.01E(b)(ii)(A) or Section 4.01E(b)(ii)(B), as applicable. For purposes of the preceding sentence, the determination of the greater of (A) and (B) shall be made taking into account the Pension Commencement Date and the form of payment determined in accordance with Section 4.09E.
|
Article 4
|
-23-
|
Pension Benefits After 2008
|
|
(iii)
|
Notwithstanding the preceding Sections 4.01(d)(i) and 4.01(d)(ii), benefits, if any, with respect to an individual who first becomes on Officer after December 31, 2008 shall be determined pursuant to the provisions of the Plan related to a Qualified Deferral Participant and to a Participant who is an E-band Employee, as applicable with respect to such individual. Such a Participant shall not be eligible for benefits determined under the Cash Balance Formula.
|
Article 4
|
-24-
|
Pension Benefits After 2008
|
Section 4.02
|
Benefit Formulas (other than Cash Balance)
|
Section 4.03
|
Cash Balance Accounts
|
Section 4.04
|
Automatic Survivor Annuities
|
Article 4
|
-25-
|
Pension Benefits After 2008
|
Section 4.05
|
Special Increases
|
Section 4.06
|
Monthly Payments
|
Section 4.07
|
Mid-Career Pension Benefit
|
Section 4.08
|
Treatment During Subsequent Employment
|
Article 4
|
-26-
|
Pension Benefits After 2008
|
Section 4.09
|
Payment of Pensions
|
Article 4
|
-27-
|
Pension Benefits After 2008
|
Article 4
|
-28-
|
Pension Benefits After 2008
|
(A)
|
Employee who is not a SERP Participant: with respect to a Participant described in Section 4.09(c)(ii)(B) or Section 4.09(c)(iii)(A), an amount equal to the present value of the single life annuity that would be payable under the Plan commencing on the Participant’s Normal Retirement Date. Such present value shall be determined on the basis of actuarial assumptions under the Qualified Plan as of such date, calculated as follows: the annual amount of such benefit payable at Normal Retirement Date shall be multiplied by the factor for determining the lump sum value as set forth in Appendix B of the Qualified Plan for the Participant’s age at Termination of Employment. Notwithstanding the preceding, for a Participant described in Section 4.09(c)(ii)(B), the present value shall be based on the Participant’s age as of December 1, 2008, and the amount so determined will be accumulated to July 1, 2009 at an effective annual interest rate of four percent; and
|
Article 4
|
-29-
|
Pension Benefits After 2008
|
(B)
|
Employee who is a SERP Participant other than a SERP Participant on December 31, 2008: with respect to a Participant described in Section 4.09(c)(iii)(C), the present value of the amount payable commencing at Termination of Employment shall be determined by multiplying the Frozen Single Life Annuity (determined pursuant to Section 4.09(c)(iii)(C)(I)) by an immediate annuity factor based on the age of the Participant at Termination of Employment. The immediate annuity factor shall be based on the Mortality Tables and the GAAP Rate, both as in effect for the calendar year immediately preceding the calendar year of the Participant’s Termination of Employment, and as defined in the SERP.
|
Article 4
|
-30-
|
Pension Benefits After 2008
|
Section 4.10
|
Payment of Plan Benefits Following Death
|
Article 4
|
-31-
|
Pension Benefits After 2008
|
Section 4.11
|
Qualified Deferrals Cash Balance Account
|
Article 4
|
-32-
|
Pension Benefits After 2008
|
Article 4
|
-33-
|
Pension Benefits After 2008
|
Section 5.01
|
Participation
|
Article 5
|
-34-
|
Death Benefits
|
Section 5.02
|
Death Benefits
|
Article 5
|
-35-
|
Death Benefits
|
|
(A)
|
Post-Retirement Survivor Annuity described in Section 4.04(b),
|
|
(B)
|
Pensioner Death Benefit described in Section 5.02(a),
|
|
(C)
|
Group Life Differential Death Benefit described in Section 5.02(b)(i),
|
|
(D)
|
Pensioner Death Benefit described in Article 5 of the Pension Plan,
|
|
(E)
|
The Death Benefit described in Section 5 of the AT&T Senior Management Long Term Disability and Survivor Protection Plan, and
|
|
(F)
|
The Death Benefit described in the AT&T Excess Benefit and Compensation Plan.
|
Article 5
|
-36-
|
Death Benefits
|
Section 6.01
|
Source of Payments
|
Article 6
|
-37-
|
Source Of Payment
|
Section 6.02
|
Unfunded Status
|
Article 6
|
-38-
|
Source Of Payment
|
Section 7.01
|
Administration and Authorities
|
Section 7.02
|
Committee
|
Section 7.03
|
Indemnification
|
Article 7
|
-39-
|
Administration Of The Plan
|
Section 7.04
|
Benefit Claims and Appeals
|
Article 7
|
-40-
|
Administration Of The Plan
|
Article 7
|
-41-
|
Administration Of The Plan
|
Section 8.01
|
Adoption of Plan
|
Section 8.02
|
Amendment and Termination
|
Section 8.03
|
Sale, Spin-Off, or Other Disposition of Participating Company
|
Article
|
-42-
|
Adoption, Amendment
And Termination
|
Article
|
-43-
|
Adoption, Amendment
And Termination
|
Section 9.01
|
Binding Effect
|
Section 9.02
|
Fiduciary Relationship
|
Section 9.03
|
No Guarantee of Employment
|
Section 9.04
|
Tax Withholding
|
Section 9.05
|
Assignment of Benefits
|
Article 9
|
-44-
|
General Provisions
|
Section 9.06
|
Facility of Payment
|
Section 9.07
|
Severability
|
Section 9.08
|
Effective Date
|
Section 9.09
|
Plan Year
|
Article 9
|
-45-
|
General Provisions
|
Section 9.10
|
Headings
|
Section 9.11
|
Governing Law
|
Section 9.12
|
Forfeiture of Benefits
|
Section 9.13
|
Special Classification
|
Section 9.14
|
Claims Release
|
Article 9
|
-46-
|
General Provisions
|
Section 9.15
|
Damage Claims or Suits
|
Section 9.16
|
Judgment or Settlement
|
Section 9.17
|
Payment under Law
|
Article 9
|
-47-
|
General Provisions
|
Section 9.18
|
CIC Provision
|
(b)
|
Nonforfeitable Benefits
|
(c)
|
Amendments to CIC Provisions
|
Section 9.19
|
Entire Plan
|
Section 9.20
|
Overpayments
|
Article 9
|
-48-
|
General Provisions
|
Service/Age
|
50
or
less
|
51 | 52 | 53 | 54 | 55 | 56 | 57 | 58 | 59 | 60 | 61 | 62 | 63 | 64 | 65 | |||
20 or less
|
1.33 | 1.33 | 1.33 | 1.36 | 1.43 | 1.47 | 1.43 | 1.38 | 1.33 | 1.28 | 1.25 | 1.20 | 1.15 | 1.10 | 1.05 | 1.00 | |||
21 | 1.38 | 1.32 | 1.32 | 1.35 | 1.42 | 1.46 | 1.42 | 1.37 | 1.32 | 1.27 | 1.24 | 1.19 | 1.14 | 1.09 | 1.05 | 1.00 | |||
22 | 1.42 | 1.37 | 1.31 | 1.34 | 1.41 | 1.45 | 1.41 | 1.36 | 1.30 | 1.26 | 1.23 | 1.18 | 1.14 | 1.09 | 1.05 | 1.00 | |||
23 | 1.47 | 1.41 | 1.36 | 1.33 | 1.40 | 1.44 | 1.40 | 1.35 | 1.29 | 1.25 | 1.22 | 1.17 | 1.13 | 1.09 | 1.04 | 1.00 | |||
24 | 1.52 | 1.46 | 1.40 | 1.39 | 1.39 | 1.43 | 1.39 | 1.34 | 1.29 | 1.24 | 1.21 | 1.17 | 1.12 | 1.08 | 1.04 | 1.00 | |||
25 | 1.58 | 1.51 | 1.45 | 1.43 | 1.45 | 1.42 | 1.38 | 1.33 | 1.28 | 1.23 | 1.20 | 1.16 | 1.12 | 1.08 | 1.04 | 1.00 | |||
26 | 1.57 | 1.50 | 1.44 | 1.42 | 1.44 | 1.41 | 1.37 | 1.32 | 1.27 | 1.22 | 1.19 | 1.15 | 1.11 | 1.08 | 1.04 | 1.00 | |||
27 | 1.57 | 1.49 | 1.43 | 1.42 | 1.43 | 1.40 | 1.36 | 1.31 | 1.26 | 1.21 | 1.18 | 1.15 | 1.11 | 1.07 | 1.04 | 1.00 | |||
28 | 1.56 | 1.48 | 1.42 | 1.41 | 1.43 | 1.39 | 1.36 | 1.31 | 1.25 | 1.21 | 1/18 | 1.14 | 1.11 | 1.07 | 1.04 | 1.00 | |||
29 | 1.55 | 1.48 | 1.42 | 1.40 | 1.42 | 1.39 | 1.35 | 1.30 | 1.25 | 1.20 | 1.17 | 1.14 | 1.10 | 1.07 | 1.03 | 1.00 | |||
30 | 1.38 | 1.36 | 1.33 | 1.35 | 1.39 | 1.38 | 1.34 | 1.29 | 1.24 | 1.19 | 1.17 | 1.13 | 1.10 | 1.07 | 1.03 | 1.00 | |||
31 | 1.38 | 1.35 | 1.33 | 1.34 | 1.39 | 1.37 | 1.34 | 1.29 | 1.24 | 1.19 | 1.16 | 1.13 | 1.10 | 1.06 | 1.03 | 1.00 | |||
32 | 1.37 | 1.35 | 1.32 | 1.34 | 1.38 | 1.37 | 1.33 | 1.28 | 1.23 | 1.18 | 1.16 | 1.12 | 1.09 | 1.06 | 1.03 | 1.00 | |||
33 | 1.37 | 1.34 | 1.32 | 1.34 | 1.38 | 1.36 | 1.33 | 1.28 | 1.23 | 1.18 | 1.15 | 1.12 | 1.09 | 1.06 | 1.03 | 1.00 | |||
34 | 1.36 | 1.34 | 1/31 | 1.33 | 1.37 | 1.36 | 1.32 | 1.27 | 1.22 | 1.17 | 1.15 | 1.12 | 1.09 | 1.06 | 1.03 | 1.00 | |||
35 or more
|
1.36 | 1.33 | 1.31 | 1.33 | 1.37 | 1.35 | 1.32 | 1.27 | 1.22 | 1.17 | 1.14 | 1.11 | 1.09 | 1.06 | 1.03 | 1.00 |
Appendix A
|
-49-
|
Section 4.02(c)E Alternate Minimum Formula
- Table of Factors
|
Years/Months
|
0
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
50
|
.29
|
.29
|
.30
|
.30
|
.31
|
.31
|
.32
|
.32
|
.32
|
.33
|
.33
|
.34
|
51
|
.34
|
.34
|
.35
|
.35
|
.36
|
.36
|
.37
|
.37
|
.37
|
.38
|
.38
|
.39
|
52
|
.39
|
.40
|
.40
|
.41
|
.42
|
.42
|
.43
|
.44
|
.44
|
.45
|
.46
|
.46
|
53
|
.47
|
.48
|
.48
|
.49
|
.50
|
.50
|
.51
|
.52
|
.52
|
.53
|
.54
|
.54
|
54
|
.55
|
.56
|
.57
|
.57
|
.58
|
.59
|
.60
|
.60
|
.61
|
.62
|
.63
|
.63
|
55
|
.64
|
.64
|
.66
|
.66
|
.66
|
.66
|
.67
|
.67
|
.67
|
.67
|
.69
|
.69
|
56
|
.69
|
.69
|
.71
|
.71
|
.71
|
.72
|
.72
|
.72
|
.74
|
.74
|
.74
|
.76
|
57
|
.76
|
.76
|
.78
|
.78
|
.78
|
.79
|
.79
|
.79
|
.81
|
.81
|
.81
|
.83
|
58
|
.83
|
.83
|
.84
|
.84
|
.86
|
.86
|
.88
|
.88
|
.88
|
.90
|
.90
|
.91
|
59
|
.91
|
.91
|
.93
|
.93
|
.95
|
.95
|
.97
|
.97
|
.97
|
.98
|
.98
|
1.00
|
60
|
1.00
|
Appendix B
|
-50-
|
Early Retirement Factors - Alternate
Formula, Special Update to the Alternate
|
Age
|
Conversion
Factor
|
Age
|
Conversion
Factor
|
20
|
17.16
|
43
|
50.04
|
21
|
17.88
|
44
|
51.60
|
22
|
18.48
|
45
|
52.92
|
23
|
19.20
|
46
|
55.08
|
24
|
20.04
|
47
|
57.12
|
25
|
20.76
|
48
|
59.28
|
26
|
22.08
|
49
|
61.32
|
27
|
24.12
|
50
|
63.24
|
28
|
26.16
|
51
|
65.88
|
29
|
29.76
|
52
|
68.28
|
30
|
31.68
|
53
|
70.80
|
31
|
33.72
|
54
|
73.20
|
32
|
35.16
|
55
|
75.60
|
33
|
36.48
|
56
|
78.60
|
34
|
37.44
|
57
|
81.60
|
35
|
38.40
|
58
|
84.60
|
36
|
40.08
|
59
|
87.48
|
37
|
41.64
|
60
|
90.36
|
38
|
42.84
|
61
|
94.56
|
39
|
44.16
|
62
|
98.76
|
40
|
45.36
|
63
|
102.84
|
41
|
46.92
|
64
|
106.92
|
42
|
48.60
|
65 or later
|
111.12
|
Appendix C
|
-51-
|
Initial Conversion Factors
|
Years\Months
|
0
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
50
|
0.26
|
0.26
|
0.26
|
0.26
|
0.26
|
0.26
|
0.27
|
0.27
|
0.27
|
0.27
|
0.27
|
0.28
|
51
|
0.28
|
0.28
|
0.28
|
0.28
|
0.28
|
0.29
|
0.29
|
0.29
|
0.29
|
0.29
|
0.30
|
0.30
|
52
|
0.30
|
0.30
|
0.30
|
0.31
|
0.31
|
0.31
|
0.31
|
0.32
|
0.32
|
0.32
|
0.32
|
0.32
|
53
|
0.33
|
0.33
|
0.33
|
0.33
|
0.34
|
0.34
|
0.34
|
0.34
|
0.34
|
0.35
|
0.35
|
0.35
|
54
|
0.35
|
0.36
|
0.36
|
0.36
|
0.36
|
0.37
|
0.37
|
0.37
|
0.37
|
0.38
|
0.38
|
0.38
|
55
|
0.38
|
0.39
|
0.39
|
0.39
|
0.40
|
0.40
|
0.40
|
0.40
|
0.41
|
0.41
|
0.41
|
0.42
|
56
|
0.42
|
0.42
|
0.43
|
0.43
|
0.43
|
0.44
|
0.44
|
0.44
|
0.44
|
0.45
|
0.45
|
0.45
|
57
|
0.46
|
0.46
|
0.46
|
0.47
|
0.47
|
0.48
|
0.48
|
0.48
|
0.49
|
0.49
|
0.49
|
0.50
|
58
|
0.50
|
0.50
|
0.51
|
0.51
|
0.52
|
0.52
|
0.52
|
0.53
|
0.53
|
0.54
|
0.54
|
0.54
|
59
|
0.55
|
0.55
|
0.56
|
0.56
|
0.57
|
0.57
|
0.57
|
0.58
|
0.58
|
0.59
|
0.59
|
0.60
|
60
|
0.60
|
0.61
|
0.61
|
0.62
|
0.62
|
0.63
|
0.63
|
0.64
|
0.64
|
0.65
|
0.65
|
0.66
|
61
|
0.66
|
0.67
|
0.67
|
0.68
|
0.68
|
0.69
|
0.70
|
0.70
|
0.71
|
0.71
|
0.72
|
0.72
|
62
|
0.73
|
0.74
|
0.74
|
0.75
|
0.76
|
0.76
|
0.77
|
0.78
|
0.78
|
0.79
|
0.80
|
0.80
|
63
|
0.81
|
0.82
|
0.82
|
0.83
|
0.84
|
0.85
|
0.85
|
0.86
|
0.87
|
0.88
|
0.88
|
0.89
|
64
|
0.90
|
0.91
|
0.91
|
0.92
|
0.93
|
0.94
|
0.95
|
0.96
|
0.97
|
0.97
|
0.98
|
0.99
|
65
|
l.00
|
Appendix D
|
-52-
|
Deferred Vested Benefit - Early
Commencement Factors
|
|
(i)
|
Participants Whose Eligibility to Accrue Benefits Ends Prior to August 1, 1997.
|
|
(A)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he or she leaves the service of a Participating Company prior to August 1, 1997, and who is Service Pension Eligible as of the last day of his or her Term of Employment, will be the greater of the annual benefit amount determined under the Basic Formula described in Section 4.02(a), the annual benefit amount determined under the Alternate Formula described in Section 4.02(b), or, in the case of an Officer who had at least five Years of Service as an Officer as of December 31, 1993, the annual benefit amount determined under the Alternate Minimum Formula described in Section 4.02(c).
|
|
(B)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he leaves the service of a Participating Company prior to August 1, 1997, but who is not Service Pension Eligible as of the last day of his or her Term of Employment, will be a Deferred Vested Benefit determined under the Basic Formula described in Section 4.02(a), provided he or she is vested under the Pension Plan at the time of termination of employment from the AT&T Controlled Group. Notwithstanding the provisions of the immediately preceding sentence, if such Participant was an Officer who had at least five Years of Service as an Officer as of December 31, 1993, the annual benefit shall not be less than the annual benefit determined under the Alternate Minimum Formula described in Section 4.02(c).
|
Appendix E
|
-53-
|
Article 4E - Pension Benefits
|
|
(C)
|
Subject to the provisions of Section 4.01(b)(i)(D), the annual benefit of a Participant, who is an E-band Employee on January 1, 1997, who terminates employment as an E-band Employee prior to August 1, 1997 and who is Service Pension Eligible as of the last day of his or her Term of Employment, will be the annual benefit amount determined under the Alternate Formula described in Section 4.02(b).
|
|
(D)
|
Effective August 1, 1997, the annual benefit of a Participant described in this Section 4.01(b)(i) shall increase (but shall not be decreased) to the amount determined pursuant to the following subsection 4.01(b)(ii)(A), if the Participant is described in subsection 4.01(b)(i)(A), or to the amount determined pursuant to subsection 4.01(b)(ii)(B) if the Participant is described in subsection 4.01(b)(i)(B), or to the amount determined pursuant to the following subsection 4.01(b)(ii)(D), if the Participant is described in subsection 4.01(b)(i)(C). For purposes of applying the provisions of Section 4.01(b)(ii) to increase a benefit which commenced prior to August 1, 1997 pursuant to this subsection 4.01(b)(i)(D), any age-based reduction shall be based on such Participant’s age on his or her original Pension Commencement Date.
|
|
(ii)
|
Participants Whose Eligibility to Accrue Benefits Ends after July 31, 1997.
|
|
(A)
|
Subject to the provisions of subsection 4.01(b)(ii)(C) for Officers after December 31, 1997, the annual benefit of a Participant who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he or she leaves the service of a Participating Company after July 31, 1997, and who is Service Pension Eligible as of his or her termination of employment from a Participating Company, will be the greater of the annual benefit amount determined under the Special Update to the Basic Formula described in Section 4.02(d) and the annual benefit amount determined under the Special Update to the Alternate Formula described in Section 4.02(e). Notwithstanding the preceding, in no event shall be the benefit with respect to a Participant described in this subsection 4.01(b)(ii)(A) be less than the amounts determined pursuant to Section 4.01(b)(i)(A).
|
|
(B)
|
Subject to the provisions of subsection 4.01(b)(ii)(C), the annual benefit of a Participant who is an Officer or an E-band Employee on January 1, 1997, who is an Officer at the time he leaves the service of a Participating Company after July 31, 1997 but who is not Service Pension Eligible as of the last day of his or her termination of employment will be a Deferred Vested Benefit equal to the greater of the annual benefit amount determined under the Special Update to the Basic Formula described in Section 4.02(d) or the amounts determined pursuant to Section 4.01(b)(i)(B), provided he or she is vested under the Pension Plan at the time of termination of employment from the AT&T Controlled Group.
|
Appendix E
|
-54-
|
Article 4E - Pension Benefits
|
|
(C)
|
The annual benefit of a Participant on January 1, 1997 who is also an Officer on or after January 1, 1998 shall not be less than the amount determined pursuant to subsection 4.01(d).
|
|
(D)
|
Subject to the provisions of Section 4.01(d)(ii) regarding an E-band Employee who becomes an Officer on or after January 1, 1998, the benefit of a Participant who is an E-band Employee on January 1, 1997, who terminates employment as an E-band Employee after July 31, 1997, and who is Service Pension Eligible as of his or her termination of employment from a Participating Company, will be the annual benefit amount determined under the Special Update to the Alternate Formula described in Section 4.02(e), but shall in no event be less than the amount determined pursuant to Section 4.01(b)(i)(C).
|
|
(i)
|
An individual who first becomes a Participant after January 1, 1997 and before January 1, 1998, and who is an Officer on January 1, 1998, shall be eligible for benefits determined pursuant to Section 4.01(d).
|
|
(ii)
|
An individual who first becomes an Officer on or after August 1, 1997, who was not previously an E-band Employee, and who leaves the service of a Participating Company prior to January 1, 1998 shall not be eligible for benefits under the Plan.
|
|
(iii)
|
An individual, who first becomes a Participant after January 1, 1997 and before January 1, 1998, who is not an Officer at any time on or after January 1, 1998, and who terminates employment with a Participating Company on or after January 1, 1998 shall be eligible for a Service Benefit if the Participant is Service Pension Eligible at the time of his or her termination of employment from a Participating Company. Such benefit shall be determined only under the Alternate Formula described in Section 4.02(b). No benefit shall be payable from the Plan if such Participant is not Service Pension Eligible at the time of his or her termination of employment from a Participating Company.
|
(i)
|
An individual who is an Officer on or after January 1, 1998, who first became an Officer on or after August 1, 1997 and who was not previously an E-band Employee shall be eligible for a benefit determined under Section 4.03 if such Officer is vested in his or her benefit under the Pension Plan upon his or her termination of employment from the AT&T Controlled Group.
|
(ii)
|
An individual who is an Officer on or after January 1, 1998, who was an Officer or an E-band Employee prior to August 1, 1997, and whose Pension Commencement Date is after July 1, 1998, shall be eligible for a benefit from the Plan if such Officer is vested in his or her benefit under the Pension Plan upon termination of employment from the AT&T Controlled Group. The benefit shall be the greater of (A) the benefit determined pursuant to Section 4.03, or (B) the sum of (I) the Mid-Career Pension Benefit determined pursuant to Section 4.07 and (II) the benefit accrued under the Plan prior to January 1, 1998 and payable pursuant to the terms of Section 4.01(b)(ii)(A) or Section 4.01(b)(ii)(B), as applicable. For purposes of the preceding sentence, the determination of the greater of (A) and (B) shall be made taking into account the Pension Commencement Date and the form of payment determined in accordance with Section 4.09.
|
Appendix E
|
-55-
|
Article 4E - Pension Benefits
|
|
(iii)
|
Notwithstanding the preceding Sections 4.01(d)(ii) and 4.01(d)(ii), benefits, if any, with respect to an individual who first becomes on Officer after December 31, 2008 shall be determined pursuant to the provisions of the Plan related to a Qualified Deferral Participant or to a Participant who is an E-band Employee, as more fully described in the provisions of Article 4 of the main text of the Plan effective after December 31, 2008 (such provisions which are not included in this Appendix E). Such a Participant shall not be eligible for benefits determined under the Cash Balance Formula.
|
Appendix E
|
-56-
|
Article 4E - Pension Benefits
|
|
(i)
|
Service Benefit. The annual Service Benefit under the Basic Formula shall be determined by adding (A) the product of one and five-tenths percent (1.5%) of the average annual Short Term Incentive Awards for the 1989 Base Period and the Officer’s Term of Employment as of December 31, 1989, and (B) the sum of one and six-tenths percent (1.6%) of the Short Term Incentive Award for each successive full or partial calendar year of employment following 1989, through the earlier of the date of termination of active participation in the Plan or July 31, 1997.
|
Appendix E
|
-57-
|
Article 4E - Pension Benefits
|
|
(ii)
|
Service Benefit - Early Commencement. If a Participant commences distribution of the annual Service Benefit prior to attainment of age fifty-five, the Service Benefit determined in accordance with the Basic Formula of this Section 4.02(a) shall be reduced by one-half percent for each calendar month or part thereof by which his or her age at commencement is less than fifty-five years, except that the Service Benefit for an Officer who terminates employment with a Term of Employment of thirty or more years shall be reduced by one-quarter percent for each calendar month or part thereof by which such Officer’s age at commencement is less than fifty-five years.
|
|
(iii)
|
Deferred Vested Benefit.
|
|
(A)
|
with respect to payments for the months occurring on or after January, 1997 and prior to August, 1997, the amount determined pursuant to Section 4.02(a)(i) shall be multiplied by a factor determined in accordance with Appendix D, based on the Participant’s age on his or her Pension Commencement Date, or
|
|
(B)
|
with respect to payments for months commencing on or after August 1, 1997, the amount determined pursuant to Section 4.02(a)(i) shall be multiplied by a factor of one-half percent for each calendar month or part thereof by which the Participant’s age at commencement is less than fifty-five years, except that the reduction with respect to an Officer with a Term of Employment of thirty or more years shall be one-quarter percent for each calendar month or part thereof by which such Officer’s age at commencement is less than fifty-five years. |
|
(iv)
|
Disability Benefit. The annual Disability Benefit payable to a Participant who becomes eligible for a disability pension from the Pension Plan because of total disability as a result of sickness or injury incurred while an Officer, shall be equal to the Service Benefit determined pursuant to this Section 4.02(a), unreduced for early commencement. Such Disability Benefit shall continue to be paid so long as the employee is prevented by such disability from resuming active service with a Participating Company. If the employee’s disability continues to his or her Normal Retirement Date, the Disability Benefit shall be converted to a Service Benefit.
|
Appendix E
|
-58-
|
Article 4E - Pension Benefits
|
|
(i)
|
Formula A. For purposes of the Alternate Minimum Formula in this Section 4.02(c), Formula A means the sum of (a) the product of one and five tenths percent of average calendar year Total Compensation for the 1992 Base Period and the Term of Employment as of December 31, 1992 and (b) one and six tenths percent of Total Compensation for the calendar year 1993. Such sum shall be actuarially reduced in case of commencement before age fifty-five by applying the appropriate reduction factor set forth in Section 4.02(a)(ii).
|
|
(ii)
|
Formula B. For purposes of the Alternate Minimum Formula in this Section 4.02(c), Formula B means the product of (a) the excess of one and seven tenths percent of Adjusted Career Average Pay, over eight tenths of one percent of the Covered Compensation Base (determined as of December 31, 1993), and (b) the Officer’s Term of Employment at December 31, 1993. Such product shall be actuarially reduced in case of commencement before age sixty by applying the appropriate reduction factor set forth in Appendix B. Solely for purposes of this Formula B, “Adjusted Career Average Pay” means the Participant’s Total Compensation for his or her Term of Employment through December 31, 1993, divided by such Participant’s Term of Employment as of December 31, 1993.
|
Appendix E
|
-59-
|
Article 4E - Pension Benefits
|
|
(i)
|
Service Benefit. The annual Service Benefit under the Special Update to the Basic Formula shall be equal to one and six-tenths percent of the sum of the Officer’s average annual Short Term Incentive Awards and the average annual Deferred Salary for the 1996 Base Period, multiplied by the lesser of (1) one plus the Officer’s Term of Employment as of December 31, 1996 and (2) one hundred and five percent of the Officer’s Term of Employment as of December 31, 1996. The Special Update to the Basic Formula is equal to zero for any determination date prior to January 1, 1997.
|
(ii)
|
Service Benefit - Early Commencement. If a Participant commences distribution of the annual Service Benefit prior to attainment of age fifty-five, the Service Benefit determined in accordance with the Special Update to the Basic Formula of this Section 4.02(d), shall be reduced by one-half percent for each calendar month or part thereof by which his or her age at commencement is less than fifty-five years, except that the Service Benefit for an Officer who terminates employment with a Term of Employment of thirty or more years shall be reduced by one-quarter percent for each calendar month or part thereof by which such Officer’s age at commencement is less than fifty-five years.
|
(iii)
|
Deferred Vested Benefit. The annual benefit determined under the Special Update to the Basic Formula for each Officer eligible for a Deferred Vested Benefit under the provisions of Section 3.02(a)(iii) shall be payable commencing at the Normal Retirement Date in an amount equal to the benefit determined pursuant to Section 4.02(d)(i). An Officer who has elected to have his deferred vested pension under the Pension Plan payable early in reduced amounts pursuant to the terms and conditions of the Pension Plan shall be deemed to have elected to have his or her Deferred Vested Benefit under this Plan payable early in reduced amounts. In the event of such an election, the amount determined pursuant to Section 4.02(d)(i) shall be reduced by one-half percent for each calendar month or part thereof by which the Participant’s age at commencement is less than fifty-five years, except that the reduction with respect to an Officer with a Term of Employment of thirty or more years shall be one-quarter percent for each calendar month or part thereof by which such Officer’s age at commencement is less than fifty-five years.
|
Appendix E
|
-60-
|
Article 4E - Pension Benefits
|
Appendix E
|
-61-
|
Article 4E - Pension Benefits
|
(x)
|
if the sum of the pay taken into account for such Participant under the Pension Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting “1997 Considered Pay”) is equal to or greater than the Social Security Wage Base for 1997, the credit described in Section 4.03(c)(i)(B) shall be equal to the Participant’s 1997 Deferred Salary multiplied by two times the pay factor, and
|
(xi)
|
if the sum of the Participant’s 1997 Deferred Salary and 1997 Considered Pay (as defined in (x) above) is less than or equal to the Social Security Wage Base for 1997, the credit described in Section 4.03(c)(i)(B) shall be equal to the Participant’s 1997 Deferred Salary multiplied by one times the pay factor, and
|
(xii)
|
if the 1997 Considered Pay, (as defined in (x) above), is less than the Social Security Wage Base for 1997, but the sum of the Participant’s 1997 Deferred Salary and 1997 Considered Pay is greater than such Social Security Wage Base, the credit described in Section 4.03(c)(i)(B) shall be equal to the sum of (I) and (II), where (I) is the 1997 Deferred Salary multiplied by one times the pay factor, and (II) is one times the pay factor multiplied by the excess over the 1997 Social Security Wage Base of the sum of 1997 Deferred Salary and 1997 Considered Pay.
|
Appendix E
|
-62-
|
Article 4E - Pension Benefits
|
(xiii)
|
if the sum of the pay taken into account for such Participant under the Pension Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting “Considered Pay”) is equal to or greater than the Social Security Wage Base for the calendar year, the credit described in Section 4.03(c)(ii)(B) shall be equal to the Participant’s Deferred Salary multiplied by two times the pay factor, and
|
(xiv)
|
if the sum of the Participant’s Deferred Salary and Considered Pay (as defined in (xiii) above) is less than or equal to the Social Security Wage Base for the calendar year, the credit described in Section 4.03(c)(ii)(B) shall be equal to the Participant’s Deferred Salary multiplied by one times the pay factor, and
|
(xv)
|
if the Considered Pay, (as defined in (xiii) above), is less than the Social Security Wage Base for the calendar year, but the sum of the Participant’s Deferred Salary and Considered Pay is greater than such Social Security Wage Base, the credit described in Section 4.03(c)(ii)(B) shall be equal to the sum of (I) and (II), where (I) is the Deferred Salary multiplied by one times the pay factor, and (II) is one times the pay factor multiplied by the excess over such Social Security Wage Base of the sum of the Participant’s Deferred Salary and Considered Pay.
|
Appendix E
|
-63-
|
Article 4E - Pension Benefits
|
|
(A)
|
with respect to the Mid-Career Cash Balance Subaccount for a Participant who is Officer on January 1, 1998, interest credits, beginning in 1998, determined in the manner described in Section 4.03(d);
|
|
(B)
|
with respect to the Mid-Career Cash Balance Subaccount for a Participant who is not an Officer on January 1, 1998, interest credits determined as follows:
|
(I)
|
an initial interest credit effective as of the date the Mid-Career Cash Balance Subaccount is established, equal to the interest that would have been credited in accordance with the provisions of Section 4.03(d) for the period beginning January 1, 1998 to the date such Subaccount is established; and
|
(II)
|
interest credits determined in the manner described in Section 4.03(d), effective for periods following the establishment of such Subaccount.
|
Appendix E
|
-64-
|
Article 4E - Pension Benefits
|
Appendix E
|
-65-
|
Article 4E - Pension Benefits
|
Appendix E
|
-66-
|
Article 4E - Pension Benefits
|
Appendix E
|
-67-
|
Article 4E - Pension Benefits
|
Appendix E
|
-68-
|
Article 4E - Pension Benefits
|
Appendix E
|
-69-
|
Article 4E - Pension Benefits
|
Appendix E
|
-70-
|
Article 4E - Pension Benefits
|
Appendix E
|
-71-
|
Article 4E - Pension Benefits
|
(xvi)
|
if the sum of the pay taken into account for such Participant under the Pension Plan and the AT&T Excess Benefit and Compensation Plan (such sum constituting “Considered Pay”) is equal to or greater than the Social Security Wage Base for the calendar year, the annual qualified deferral credit shall be equal to the Qualified Deferral multiplied by two times the pay factor, and
|
(xvii)
|
if the sum of the participant’s Qualified Deferral and Considered Pay (as defined in (xvi) above) is less than or equal to the Social Security Wage Base for the calendar year, the annual qualified deferral credit shall be equal to the participant’s Qualified Deferrals multiplied by one times the pay factor, and
|
(xviii)
|
if the Considered Pay, (as defined in (xvi) above), is less than the Social Security Wage Base for the calendar year, but the sum of the participant’s Qualified Deferrals and Considered Pay is greater than such Social Security Wage Base, the annual qualified deferral credit shall be equal to the sum of (I) and (II), where (I) is the Qualified Deferrals multiplied by one times the pay factor, and (II) is one times the pay factor multiplied by the excess over such Social Security Wage Base of the sum of the participant’s Qualified Deferrals and Considered Pay.
|
Appendix E
|
-72-
|
Article 4E - Pension Benefits
|
(i)
|
The CIC Eligible Employee’s Qualified Deferral for the calendar year immediately preceding the calendar year in which the “change in control” (as such term is defined in the Pension Plan) occurs, multiplied by the lesser of (A) five percent for each whole year of the CIC Eligible Employee’s Term of Employment as of the last day of the month in which the change in control occurs, or (B) one hundred percent;
|
(ii)
|
An interest credit on the amount determined in (i) above from the first of the month following the month in which the change in control occurs through the last day of the month in which such termination of employment occurs, based on the effective annual rates set forth in Section 4.10(d), as in effect for the period beginning on the first of the month following the month in which the change in control occurs through the month in which such termination of employment described in this Section 4.10(c) occurs.
|
Appendix E
|
-73-
|
Article 4E - Pension Benefits
|
Appendix E
|
-75-
|
Article 4E - Pension Benefits
|
2.1.
|
Administrator
|
2.2.
|
AT&T Corp.
|
2.3.
|
AT&T Inc. or AT&T
|
2.4.
|
AT&T Company
|
2.5.
|
AT&T Corp. Subsidiary
|
2.6.
|
AT&T Management Pension Plan
|
2.7.
|
AT&T Pension Plan
|
2.8.
|
Beneficiary
|
2.9.
|
Benefit Limitation
|
2.10.
|
Board
|
2.11.
|
Change in Control
|
2.12.
|
CIC Eligible Employee
|
2.13.
|
Code
|
2.14.
|
Code Section 401(a)(17) Excess Retirement Benefit
|
2.15.
|
Code Section 415 Excess Retirement Benefit
|
2.16.
|
Committee
|
2.17.
|
Company
|
2.18.
|
Compensation Limitation
|
2.19.
|
Eligible Employee
|
2.21.
|
Excess Death Benefit
|
2.22.
|
Excess Retirement Benefit
|
2.23.
|
Executive
|
2.24.
|
Leave of Absence
|
2.25.
|
Normal Retirement Date
|
2.26.
|
Officer
|
2.27.
|
Participant
|
2.28.
|
Participating Company
|
2.29.
|
Plan
|
2.30.
|
Plan Administrator
|
2.31.
|
Qualified Plan
|
2.32.
|
Specified Employees
|
2.33.
|
SERP
|
2.34.
|
SERP Participant
|
2.35.
|
SERP Vesting Date
|
2.36.
|
Surviving Spouse
|
2.37.
|
Termination of Employment
|
2.38.
|
VRIP
|
3.1.
|
Participation
|
3.2.
|
Surviving Spouse Benefit
|
3.3.
|
Relationship To Other Plans
|
3.4.
|
Forfeiture of Benefits
|
4.1
|
Excess Retirement Benefits
|
4.2
|
Amount of Code Section 415 Excess Retirement Benefit
|
4.3
|
Amount of Code Section 401(a)(17) Excess Retirement Benefit
|
4.4.
|
Time and Form of Benefits Payable to a Participant or Surviving Spouse
|
(1)
|
With respect to a Participant whose Qualified Plan benefit is payable under the AT&T Management Pension Plan and who terminates employment prior to January 1, 1998, and with respect to a Participant whose Qualified Plan benefit is payable under the AT&T Pension Plan and who terminates employment prior to July 1, 1999, the Excess Retirement Benefit shall commence at the same time and shall be paid in the same benefit form as the Participant’s or Surviving Spouse’s benefits are paid under the AT&T Management Pension Plan or the AT&T Pension Plan, whichever is applicable, provided, however, that the Committee shall have the right to approve the election of the form of the Excess Retirement Benefit payable to the Participant under this Plan; and
|
(2)
|
With respect to a Participant whose Qualified Plan benefit is payable under the AT&T Management Pension Plan and who terminates employment after December 31, 1997, the Excess Retirement Benefit shall commence at the same time and shall be paid in the same form of annuity in which all or a portion of the Participant’s or Surviving Spouse’s benefits under the AT&T Management Pension Plan are paid, or if no annuity is payable from the AT&T Management Pension Plan under the form of payment elected, shall be paid in the form of a single life annuity, unless the Committee, in its sole discretion, elects to pay the Excess Retirement Benefit in the form of a single lump sum payment; and
|
(3)
|
With respect to a Participant whose Qualified Plan benefit is payable under the AT&T Pension Plan and who terminates employment after June 30, 1999, the Excess Retirement Benefit shall commence at the same time and shall be paid in the same form of annuity in which all or a portion of the Participant’s or Surviving Spouse’s benefits under the AT&T Pension Plan benefits are paid, or if no annuity is elected under the AT&T Pension Plan, shall be paid in the form of a single life annuity, unless the Committee, in its sole discretion, elects to pay the Excess Retirement Benefit in the form of a single lump sum payment.
|
4.5.
|
Additional Provisions for Payment of Excess Retirement Benefit Following Death
|
4.6.
|
Future Benefit Adjustments
|
4.7.
|
Suspension and Recommencement of Benefit Payments
|
4.8.
|
Application of Code Section 417(e)
|
4.9.
|
Change in Control Provisions
|
4.10.
|
Excess Death Benefit
|
5.1.
|
Determination of Benefits
|
5.2.
|
Mandatory Portability Agreement
|
6.1.
|
Sale, Spin-Off, or Other Disposition of Participating Company
|
7.1.
|
Source of Payments
|
7.2.
|
Unfunded Status
|
7.3.
|
Fiduciary Relationship
|
8.1.
|
Administration
|
8.2.
|
Indemnification
|
8.3.
|
Claims Procedure
|
8.4.
|
Named Fiduciaries
|
8.5.
|
Role of the Committee
|
8.6.
|
Allocation of Responsibilities
|
8.7.
|
Multiple Capacities
|
9.1.
|
Amendment and Termination
|
10.1.
|
Binding Effect
|
10.2.
|
No Guarantee of Employment
|
10.3.
|
Assignment of Benefits
|
10.4.
|
Facility of Payment
|
10.5.
|
Severability
|
10.6.
|
Plan Year
|
10.7.
|
Headings
|
10.8.
|
Governing Law
|
10.9.
|
Entire Plan
|
10.10.
|
Overpayments
|
1
|
Purpose.
|
2
|
Definitions.
|
3
|
Plan ("SRIP") Benefits.
|
3.1
|
Termination of Employment/Vesting.
|
|
- Immediate Annuity Value of any AT&T/PTG Qualified Pensions as of
December 31, 2004
|
|
- Immediate Annuity Value of any other AT&T/PTG Non-Qualified
Pensions as of December 31, 2004
|
= Annual Value of Life with 10 Year Certain SRIP Benefit immediately payable upon Termination of Employment
|
|
December 31, 2004
|
-
|
Immediate Annuity Value of any AT&T/PTG Non-Qualified Pensions,
as of December 31, 2004
|
= Annual Value of Life with 10 Year Certain SRIP Benefit immediately payable upon Termination of Employment
|
(a)
|
Revised Retirement Percentage = Retirement Percent + Service Factor.
|
(b)
|
For purposes of determining the Service Factor, the Participant's actual Years of Service as of the earlier of the date of Termination of Employment or December 31, 2004, to the day, shall be used.
|
(c)
|
For purposes of determining the Final Average Earnings, the Participant's Earnings history prior to January 1, 2005 shall be used.
|
(d)
|
Age Discount means the Participant's SRIP Benefit shall be decreased by five-tenths of one percent (.5%) for each month that December 31, 2008, or, if earlier, the Participant’s Termination of Employment, precedes the date on which the Participant will attain age 60.
|
(a)
|
Recovery from Disability,
|
(b)
|
Retirement (determined without regard to the 5 Years of Service requirement otherwise applicable to certain Participants age 55 or older), or
|
(c)
|
Death.
|
3.3
|
Benefit Payout Alternatives.
|
(a)
|
Life with a 10-Year Certain Benefit. An annuity payable during the longer of (i) the life of the Participant or (ii) the 10-year period commencing on the date of the first payment and ending on the day next preceding the tenth anniversary of such date (the "Life With 10-Year Certain Benefit"). If a Participant who is receiving a Life with 10-Year Certain Benefit dies prior to the expiration of the 10-year period described in this Section 3.3(a), the Participant's Beneficiary shall be entitled to receive the remaining Life With 10-Year Certain Benefit installments which would have been paid to the Participant had the Participant survived for the entire such 10-year period.
|
(b)
|
Joint and 100% Survivor Benefit. A joint and one hundred percent (100%) survivor annuity payable for life to the Participant and at his or her death to his or her Beneficiary, in an amount equal to one hundred percent (100%) of the amount payable during the Participant's life, for life (the "Joint and 100% Survivor Benefit").
|
(c)
|
Joint and 50% Survivor Benefit. A joint and fifty percent (50%) survivor annuity payable for life to the Participant and at his or her death to his or her Beneficiary, in an amount equal to fifty percent (50%) of the amount payable during the Participant's life, for life (the "Joint and 50% Survivor Benefit").
|
(d)
|
Lump Sum Benefit. Effective for a Termination of Employment on or after June 19, 2001, if the Participant has attained the age of fifty-five years as of his or her Termination of Employment, the Participant is eligible to receive a lump sum benefit as described in Section 3.4.
|
3.4
|
Lump Sum Benefit Election.
|
(a)
|
A Participant who has attained the age of fifty-five (55) years as of his or her Termination of Employment and whose Termination of Employment occurs after December 31, 2001 shall be eligible to make an election for a lump sum benefit. A lump sum benefit election may be made in or after the calendar year immediately preceding the calendar year in which the Participant attains age fifty-five (55); provided, however, such election shall not be effective unless the Participant attains age fifty-five on or before such Participant's Termination of Employment, and, in such event, the Participant shall be deemed to have elected the Benefit Payout Alternative described in Section 3.3(a).
|
(b)
|
A Participant who was eligible to receive a lump sum benefit at Retirement, but who elected (or is deemed to have elected) one of the Benefit Payout Alternatives described in Section 3.3(a), 3.3(b) or 3.3(c), may elect to convert such annuity distribution to a lump sum benefit in a timely filed election. The Beneficiary of a deceased Participant shall be eligible to make such conversion election to the same extent the Participant was eligible to make such election as of the day immediately preceding the Participant’s death. An election to convert an annuity benefit into a lump sum benefit is timely filed only if it is delivered by the Participant (or the Beneficiary), in writing, telecopy, email or in another electronic format, to the Administrative Committee no later than December 31 of the calendar year following the calendar year in which the Participant’s Termination of Employment occurred. The value of the lump sum benefit resulting from the conversion of a previously elected annuity benefit, shall be the Participant’s lump sum benefit valued as of the Participant’s Termination of Employment, less the payments, adjusted for interest (using the same GAAP Rate that was used to calculate the Lump Sum Benefit as of the Participant’s Termination of Employment), that were received prior to the effective date of the conversion. If a Participant (or his or her Beneficiary) makes a timely election to convert an annuity benefit into a lump sum benefit, such election shall be effective on or about March 1st of the calendar year immediately following the calendar year in which such election is made, and the annuity benefit shall continue to be paid through such March 1st, whereupon the lump sum benefit election shall become effective. If an election to convert an annuity benefit into a lump sum benefit is not timely filed, the annuity benefit shall continue to be distributed in the form elected (or deemed elected) by the Participant.
|
(c)
|
A Participant or Beneficiary who elects a lump sum benefit under Section 3.3(d) and/or Section 3.4 must, contemporaneous with such Lump Sum Benefit election, elect to defer all or a portion of the lump sum benefit (including any interest accrued thereon as provided in Section 3.5) in accordance with a payment schedule timely elected by the Participant (or Beneficiary); provided, however,
|
(i)
|
with respect to a lump sum benefit effective at Retirement, the Participant must defer the receipt of one hundred percent (100%) of such lump sum benefit (including any interest thereon) until the later of:
|
(A)
|
his or her Termination of Employment; or
|
(B)
|
March 1 of the calendar year in which the Participant realizes a Termination of Employment;
|
(ii)
|
the Participant must defer the receipt of at least seventy percent (70%) of such lump sum benefit (excluding any interest accrued thereon as provided in Section 3.5) until at least the third (3rd) anniversary of such Participant’s Termination of Employment; provided, however, if the Participant attained the age of sixty (60) as of his or her Termination of Employment, the Participant is not required to defer receipt of such Lump Sum Benefit if he or she agrees, in writing, substantially in the form provided in Attachment B, not to compete with an Employer Business within the meaning of Section 7.2 for a period of three (3) years from such Participant’s Termination of Employment and further agrees that if he or she fails to abide by such agreement, the non-compete agreement is challenged or the non-compete agreement is unenforceable, he or she shall forfeit all benefits hereunder and repay the Lump Sum Benefit to AT&T; and
|
(iii)
|
the Participant (or Beneficiary) may not defer the receipt of all or any portion of such lump sum benefit, including any interest accrued thereon, beyond the twentieth (20th) calendar year after the Participant’s Termination of Employment.
|
3.5
|
Lump Sum Benefit Account Balance.
|
3.6
|
One-Time Acceleration of Deferred Lump Sum Benefit.
|
4
|
Death Benefits.
|
4.1
|
Death.
|
4.2
|
Disability.
|
4.3
|
Termination of Employment.
|
5
|
Payment.
|
5.1
|
Commencement of Payments.
|
5.2
|
Withholding; Unemployment Taxes.
|
a.
|
A payment may be made from the Plan to reflect the payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to a Participant (the “State, Local, or Foreign Tax Amount”). Such payment may not exceed the amount of such taxes due as a result of participation in the Plan. Such payment may be made by distributions to the Participant in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by distribution directly to the Participant. Additionally, a payment may be made from the Plan to pay the income tax at source on wages imposed under Code Section 3401 as a result of the payment of the State, Local, or Foreign Tax Amount and to pay the additional income tax at source on wages attributable to such additional Code Section 3401 wages and taxes. However, the total payment under this Section (a) shall not exceed the aggregate of the State, Local, or Foreign Tax Amount and the income tax withholding related to such State, Local, or Foreign Tax Amount.
|
(b)
|
A payment may be made from the Plan to pay the Federal Insurance Contributions Act tax imposed by Code Sections 3101, 3121(a), and 3121(v)(2) on compensation deferred under the Plan (the “FICA Amount”). Additionally, a payment may be made from the Plan to pay the income tax at source on wages imposed under Code Section 3401 or the corresponding withholding provisions of applicable state, local or foreign tax laws as a result of the payment of the FICA Amount and to pay the additional income tax at source on wages attributable to the pyramiding section 3401 wages and taxes. However, the total payment under this Section (b) shall not exceed the aggregate of the FICA Amount and the income tax withholding related to such FICA Amount.
|
5.3
|
Recipients of Payments; Designation of Beneficiary.
|
5.4
|
Additional Benefit.
|
5.5
|
No Other Benefits.
|
5.6
|
Small Benefit.
|
5.7
|
Special Increases.
|
5.7.1
|
1990 Special Increase.
|
(a)
|
Effective July 1, 1990, the monthly pension benefit amount then being paid hereunder to a retired Participant whose Plan payments began before January 1990 shall be increased by 1/30 of 5.0% for each month from and including January 1988 or the month in which said Participant's pension
payments began, whichever is later, through and including June 1990, inclusive.
|
(b)
|
Effective July 1, 1990, the present and/or future monthly payment hereunder of a surviving annuitant of a Participant whose Plan payments began before January 1990 or of a Participant who died in active service before January 1990, shall be increased by the same percentage as the related
pension was or would have been increased under the provisions of Paragraph (a) of this Section 5.7.1.
|
5.7.2
|
Enhanced Management Pension (EMP) Flow-Through for Participant Receiving Other than an ATTPBP "Cash Balance" Benefit.
|
(a)
|
Effective December 30, 1991, a Participant who as of the date of his or her Retirement satisfies the requirements for a service pension under the terms of the ATTPBP as it existed prior to December 30, 1991, shall have his or her SRIP Benefit determined without subtracting any increase in his or her
ATTPBP (or successor plan) pension amount attributable to the Enhanced Management Pension ("EMP") provisions thereof, i.e., EMP benefits will "flow-through" to the Participant; provided, however, such additional benefit amounts corresponding to term of employment extending beyond
age 65 through application of the EMP provisions shall be subtracted.
|
(b)
|
EMP flow-through shall not apply in the case of any person who becomes an Eligible Employee after December 31, 1997.
|
5.7.3
|
1993 Special Increase and Subsequent Special Increases.
|
(a)
|
Effective July 1, 1993, the monthly pension benefit amount then being paid hereunder to (1) all retired Participants whose Plan payments began before July 1, 1993, (2) then current and contingent annuitants of such retired Participants who elected one of the Plan’s survivor annuities and (3) then
current annuitants of employees who before July 1, 1993 died in active service shall be increased in the same percentages as the ATTPBP ad hoc pension increase percentages effective July 1, 1993.
|
(b)
|
Any time after July 1, 1993 that the ATTPBP is amended to provide for an ad hoc pension increase for ATTPBP nonbargained participants, the same percentage increase shall apply to Plan benefit amounts.
|
6
|
Conditions Related to Benefits.
|
6.1
|
Administration of Plan.
|
6.2
|
No Right to AT&T Assets.
|
6.3
|
Trust Fund.
|
6.4
|
No Employment Rights.
|
6.5
|
Modification or Termination of Plan.
|
6.6
|
Offset.
|
6.7
|
Change in Status.
|
7
|
Miscellaneous.
|
7.1
|
Nonassignability.
|
7.2
|
Non-Competition.
|
7.3
|
Notice.
|
7.4
|
Validity.
|
7.5
|
Applicable Law.
|
7.6
|
Plan Provisions in Effect Upon Termination of Employment.
|
7.7
|
Plan To Be Interpreted and Applied So As Not To Be Subject To Code Section 409A.
|
1.
|
The Plan is hereby incorporated into and made a part of this Agreement as though set forth in full herein. The parties shall be bound by, and have the benefit of, each and every provision of the Plan as set forth in the Plan.
|
2.
|
The Participant was born on ___________, and his or her present employment began on _____________,
|
3.
|
The Participant's "Retirement Percent" which is described in the Plan shall be ________ percent (__%)
|
4.
|
Election as to Form of Benefits. The Participant elects the Benefit Payout Alternative as shown on the Supplemental Retirement Income Plan (SRIP) Benefit Election form attached hereto and incorporated herein for all purposes (the "Form"). The Participant may change this election
at any time prior to the end of the calendar year immediately preceding the Participant's Termination of Employment, and the Participant's election in effect at the time will control the distribution of benefit under the Plan. If the Participant has not elected a Benefit Payout Alternative
prior to the end of the calendar year immediately preceding the Participant's Termination of Employment, the Participant's form of benefit under the Plan shall be the Life With 10-Year Certain Benefit.
|
Supplemental Retirement Income Plan (SRIP)
|
Payment Election |
1. Form of Payment
|
a.
|
____Life with 10-Year Certain Benefit. Complete Section 4.
|
b.
|
____Joint and 100% Survivor Benefit. Complete Section 4.
|
c.
|
____Joint and 50% Survivor Benefit. Complete Section 4.
|
d.
|
____Lump Sum. Complete Section 2. (Only available if age 54 or older at time of election and age 55 or older at Termination of Employment).
|
e.
|
____Defer making an election until no later than the last day of the calendar year preceding the calendar year in which my Termination of Employment takes place or my SRIP benefit commences. Complete Section 4.
|
2. SRIP Lump Sum Deferral Amount
|
3. Distribution Election for Deferred Lump Sum and Accrued Interest ("Deferred Balance")
|
·
|
Complete Section 3a if you wish to receive monthly interest only payments. You must also complete Section 3b to elect how to receive your remaining deferred balance.
|
·
|
Complete Section 3b to specify distribution of your deferred balance. Subject to the 70% Rule, payment will begin within 60 days of your retirement date if you elect distribution in your year of retirement.
|
·
|
The deferred balance must be distributed no later than the 20th anniversary of your retirement.
|
·
|
If applicable, the dates you complete in Section a and b cannot overlap.
|
a.
|
Interest Paid Monthly
|
b.
|
Ratable Distribution Over a Period of Years
|
r
|
Paid ratably for the period(s) selected in 3b. (e.g. 1/20th, 1/19th, 1/18th …. If payment is requested over 20 years).
|
r
|
Paid in equal annual installments for the period(s) selected in 3b.
|
4. Authorization
|
|
Exhibit 10-g
|
SENIOR MANAGEMENT
|
DEFERRED COMPENSATION PLAN
|
OF 1988
|
SENIOR MANAGEMENT
|
DEFERRED COMPENSATION PLAN OF 1988
|
Section 1
|
Statement of Purpose. The purpose of the Senior Management Deferred Compensation Plan of 1988 is to provide retirement, death, or termination-of-employment benefits to a select group of management employees consisting of Eligible Employees of SBC Communications Inc. (the “Company”) and its Subsidiaries (“Participating Companies”).
|
Section 2
|
Definitions. For the purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise.
|
|
*
|
The Company Match Rate Expressed as a Percent means the maximum percent of salary that can be received as Employer matching contribution under the SBC Communications Inc. Savings Plan for Salaried Employees, e.g., a match of 66 2/3% of the amount of basic allotment (up to 6%) of salary results in a Company Match Rate Expressed as a Percent of .667 x 6% -- 4%.
|
Section 3
|
Administration of the Plan. The Administrative Committee shall be the sole administrator of the Plan and will administer the Plan, interpret, construe and apply its provisions in accordance with its terms. The Administrative Committee shall further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. All decisions of the Administrative Committee shall be final and binding.
|
Section 4
|
Participation.
|
Section 5
|
Deferred Compensation.
|
Section 6
|
Retirement Benefits. Section 6 shall apply to all Units of Participation under this Plan. The benefits specified in this Section 6 shall be provided under the Retirement Benefit Option.
|
|
(a)
|
Termination of Employment Before Attaining Age 55. Upon any termination of employment of the Participant for reasons other than death or Disability before the Participant attains age fifty-five (55), the Company shall pay to the Participant, with respect to a Unit of Participation, as compensation earned for services rendered prior to his termination of service, a lump sum equal to the vested portion of the amounts standing credited to his Deferred Compensation Account for such Unit of Participation as of the date of such termination of service (“Termination Benefit”).
|
|
(b)
|
Termination of a Unit of Participation. A Participant may discontinue a Unit of Participation while continuing in the service of the Employer. Notwithstanding any other provision of the Plan, upon such discontinuance, the Participant shall immediately cease to be eligible for any benefits other than his Termination Benefit with respect to that Unit of Participation except as provided under Section 8.1.
|
|
(c)
|
Loss of Eligibility. In the event that the Participant ceases to be an Eligible Employee by reason of a change to an employment status which is not eligible to participate in this Plan, except as provided under Section 8.1, the Participant shall immediately cease to be eligible for any benefits other than a modified Termination Benefit which shall consist of a lump sum equal to the vested amounts standing credited to his Deferred Compensation Accounts as of the date of such loss of eligibility, provided the Participant shall continue to be credited with interest on such amounts as provided under Section 5.1 and to vest in such amounts as provided under Section 5.4 while he remains in employment with the Employer. However, no further Participant deferrals or Employer contributions shall be made to this Plan pursuant to Sections 5.2 or 5.3 subsequent to the date of such loss of eligibility. Each such lump sum Termination Benefit shall be payable upon the Participant's termination of employment by the Employer, whether by death, Normal Retirement, Early Retirement or any other means. The provisions of this subparagraph 6.4(c) shall not apply if the Participant in his new employment status is an eligible employee under another similar deferred compensation plan of the Employer. In such event the provisions of Section 8.6 of this Plan shall apply.
|
|
(d)
|
No Other Benefits Payable. When a Participant terminates employment, terminates a Unit of Participation or ceases to be an Eligible Employee under circumstances in which Section 6.4(a), (b) or (c) applies, no Survivor Benefit or other benefit shall thereafter be payable under this Plan to either the Participant or any Beneficiary of the Participant with respect to such Unit of Participation except as provided under Section 8.1.
|
|
(a)
|
If a Participant dies while in service with the Employer (or while suffering from a Disability prior to attaining age 55) prior to eligibility for Early Retirement with respect to a Unit of Participation, upon the Participant's death the Employer will pay to the Participant's Beneficiary with respect to each Unit of Participation an amount per month, as specified in paragraph 6 of his Agreement, equal to the greater of (i) [(50% of the sum of the Total Unit Deferral Amount plus the Projected Employer Contribution for such Unit of Participation) divided by 12] or (ii) the balance in the Deferred Compensation Account (excluding any Short Term Incentive Award deferred pursuant to Section 5.2 and excluding any interest earned on the Short Term Incentive Award) divided by the number of months payments are to be made as stated below, plus interest in accordance with the interest methodology of Section 6.2. Payments are to be made for the greater of one hundred twenty (120) months or the number of months from the date of Participant's death until he would have been age 65 (“Pre-Retirement Survivor Benefit”).
|
|
(b)
|
If a Participant dies while in service after eligibility for Early Retirement with respect to a Unit of Participation, but prior to commencement of payment of an Early or Normal Retirement Benefit with respect to such Unit of Participation, the Employer will pay to the Participant's Beneficiary the greater of (i) the benefit that such Participant's Beneficiary would have received with respect to such Unit of Participation had the Participant retired and commenced to receive an Early Retirement Benefit on the day prior to such Participant's death or (ii) a benefit equal to the Pre-Retirement Survivor Benefit. The Administrative Committee shall determine which benefit is greater on a present value basis using such interest rate as the Administrative Committee may determine in its sole discretion. Payments will commence upon the Participant's death, irrespective of when Early Retirement Benefit payments would have commenced if the Participant had survived. Such payments shall be made in accordance with the method of payment which the Participant had elected for payment of his Normal or Early Retirement Benefit.
|
|
(c)
|
If a Participant dies after Early or Normal Retirement but before commencement of payment of an Early or Normal Retirement Benefit with respect to a Unit of Participation, the Employer will pay to the Participant's Beneficiary the installments of any such benefit that such Participant's Beneficiary would have received with respect to such Unit of Participation had the Participant commenced to receive an Early or Normal Retirement Benefit on the day prior to such Participant's death. Payments will commence upon the Participant's death, irrespective of when Early or Normal Retirement Benefit payments would have commenced if the Participant had survived. Such payments shall be made in accordance with the method of payment which the Participant had elected for payment of his Normal or Early Retirement Benefit.
|
|
(d)
|
If a Participant dies after the commencement of payment of an Early or Normal Retirement Benefit with respect to a Unit of Participation, the Employer will pay to the Participant's Beneficiary the remaining installments of any such benefit that would have been paid to the Participant had the Participant survived.
|
|
(e)
|
As an additional benefit, if a Participant dies subsequent to eligibility to commence payment of a Standard or Alternative Retirement Benefit, and has a surviving spouse, the Employer shall pay to the spouse commencing on the later of (a) the sixteenth (16th) year after commencement of payment of any Standard or Alternative Retirement Benefit or (b) the first of the month following the Participant's death, an amount per month for the life of the spouse equal to sixty-six and two-thirds percent (66-2/3%) of the Standard Retirement Benefit. If the spouse is more than three (3) years younger or older than the Participant on the date of Participant's death, the amount of such benefit shall be actuarially adjusted based on standard mortality tables.
|
Section 7
|
Intentionally Omitted.
|
Section 8
|
Payment of Benefits.
|
Section 9
|
Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his Beneficiary or Beneficiaries (both primary as well as contingent) to whom payment under this Plan shall be made in the event of his death prior to complete distribution to Participant of the benefits due him under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Administrative Committee during the Participant’s lifetime on a form prescribed by the Administrative Committee with written acknowledgment of receipt.
|
Section 10
|
Discontinuation, Termination, Amendment.
|
Section 11
|
Miscellaneous.
|
|
RETIREMENT BENEFIT OPTION
|
|
(a)
|
_______
|
To receive a Standard Retirement Benefit, payable for a period of one hundred eighty (180) months.
|
|
(b)
|
_______
|
To receive an Alternative Retirement Benefit to be paid in accordance with one of the following payment modes: (please initial one of the following)
|
|
(i)
|
______
|
In a lump sum payment.
|
|
(ii)
|
______
|
In equal monthly installments for a period of sixty (60) months.
|
|
(iii)
|
______
|
In equal monthly installments for a period of one hundred twenty (120) months.
|
|
(a)
|
_______
|
Commencing at age 65.
|
|
(b)
|
_______
|
Commencing at Early Retirement.
|
|
EXHIBIT A
|
|
19__ Unit of Participation
|
(1) This amount will be deferred in equal amounts on a monthly basis.
|
(a)
|
"Annual Retainer" or "Retainer" means the payments made to Directors for their annual Board service. It includes any additional Retainer paid to Committee Chairpersons or the Lead Director. "Base Annual Retainer" means the Annual Retainer without any additional amounts for Committee Chairpersons, Lead Directors or otherwise.
|
|
(b)
|
"Award" means, individually or collectively, an award under this Plan of Stock Units.
|
(c)
|
"Board" means the Board of Directors of the Company.
|
|
(d)
|
"Business Day" means any day that the Company is open for the regular transaction of business.
|
(e)
|
"Company" means AT&T Inc., a Delaware corporation.
|
|
(f)
|
"Director" means any individual who is a member of the Board, including Advisory Directors.
|
(g)
|
"Employee" means any full-time, nonunion, salaried employee of the Company or of the Company’s directly or indirectly held subsidiaries. For purposes of the Plan, an individual whose only employment relationship with the Company is as a Director shall not be deemed to be an Employee.
|
|
(h)
|
"Fair Market Value" or "FMV" means the closing price on the New York Stock Exchange ("NYSE") for Shares on the relevant date, all as determined by the Company. In lieu of the foregoing, the Board may select any other index or measurement to determine the FMV of Shares under the Plan.
|
(i)
|
"Non-Employee Director" means any individual who is a member of the Board but who is not otherwise an Employee, nor has otherwise been an Employee.
|
|
(j)
|
"Participant" means a person who is entitled to participate in the Plan.
|
(k)
|
"Shares" means shares of common stock of the Company, par value one dollar ($1.00) per share.
|
|
(l)
|
"Stock Unit" or "Unit" means an Award acquired by a Participant as a measure of participation under the Plan, and having a value equal to one (1) Share.
|
(m)
|
"Trading Day" means any day that the Shares are traded on the NYSE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT 12
|
||
AT&T INC.
|
|||||||||||||||||
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
|
|||||||||||||||||
Dollars in Millions
|
|||||||||||||||||
|
|
|
|
||||||||||||||
|
|
|
Year Ended December 31,
|
||||||||||||||
|
|||||||||||||||||
|
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
|
2009
|
|||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
27,777
|
|
$
|
10,439
|
|
$
|
6,716
|
|
$
|
18,238
|
|
$
|
18,518
|
||
Equity in net income of affiliates included above
|
|
|
(642)
|
|
|
(752)
|
|
|
(784)
|
|
|
(762)
|
|
|
(734)
|
||
Fixed charges
|
|
|
5,452
|
|
|
4,876
|
|
|
4,835
|
|
|
4,723
|
|
|
5,012
|
||
Distributed income of equity affiliates
|
|
|
318
|
|
|
137
|
|
|
161
|
|
|
161
|
|
|
317
|
||
Interest capitalized
|
|
|
(284)
|
|
|
(263)
|
|
|
(162)
|
|
|
(772)
|
|
|
(740)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings, as adjusted
|
|
$
|
32,621
|
|
$
|
14,437
|
|
$
|
10,766
|
|
$
|
21,588
|
|
$
|
22,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
3,940
|
|
$
|
3,444
|
|
$
|
3,535
|
|
$
|
2,994
|
|
$
|
3,368
|
||
Interest capitalized
|
|
|
284
|
|
|
263
|
|
|
162
|
|
|
772
|
|
|
740
|
||
Portion of rental expense representative of interest factor
|
|
|
1,228
|
|
|
1,169
|
|
|
1,138
|
|
|
957
|
|
|
904
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Fixed Charges
|
|
$
|
5,452
|
|
$
|
4,876
|
|
$
|
4,835
|
|
$
|
4,723
|
|
$
|
5,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Earnings to Fixed Charges
|
|
|
5.98
|
|
|
2.96
|
|
|
2.23
|
|
|
4.57
|
|
|
4.46
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial and Operating Data
|
|
|
|
|
|
|||||||||||||||
Dollars in millions except per share amounts
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
At December 31 and for the year ended:
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||
Financial Data
|
|
|
|
|
|
|||||||||||||||
Operating revenues
|
$ | 128,752 | $ | 127,434 | $ | 126,723 | $ | 124,280 | $ | 122,513 | ||||||||||
Operating expenses
|
$ | 98,273 | $ | 114,437 | $ | 117,505 | $ | 104,707 | $ | 101,513 | ||||||||||
Operating income
|
$ | 30,479 | $ | 12,997 | $ | 9,218 | $ | 19,573 | $ | 21,000 | ||||||||||
Interest expense
|
$ | 3,940 | $ | 3,444 | $ | 3,535 | $ | 2,994 | $ | 3,368 | ||||||||||
Equity in net income of affiliates
|
$ | 642 | $ | 752 | $ | 784 | $ | 762 | $ | 734 | ||||||||||
Other income - net
|
$ | 596 | $ | 134 | $ | 249 | $ | 897 | $ | 152 | ||||||||||
Income tax expense (benefit)
|
$ | 9,224 | $ | 2,900 | $ | 2,532 | $ | (1,162 | ) | $ | 6,091 | |||||||||
Net Income
|
$ | 18,553 | $ | 7,539 | $ | 4,184 | $ | 20,179 | $ | 12,447 | ||||||||||
Less: Net Income Attributable to Noncontrolling Interest
|
$ | (304 | ) | $ | (275 | ) | $ | (240 | ) | $ | (315 | ) | $ | (309 | ) | |||||
Net Income Attributable to AT&T
|
$ | 18,249 | $ | 7,264 | $ | 3,944 | $ | 19,864 | $ | 12,138 | ||||||||||
Earnings Per Common Share:
|
||||||||||||||||||||
Net Income Attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 | $ | 3.36 | $ | 2.06 | ||||||||||
Earnings Per Common Share - Assuming Dilution:
|
||||||||||||||||||||
Net Income Attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 | $ | 3.35 | $ | 2.05 | ||||||||||
Total assets
|
$ | 277,787 | $ | 272,315 | $ | 270,442 | $ | 269,473 | $ | 268,312 | ||||||||||
Long-term debt
|
$ | 69,290 | $ | 66,358 | $ | 61,300 | $ | 58,971 | $ | 64,720 | ||||||||||
Total debt
|
$ | 74,788 | $ | 69,844 | $ | 64,753 | $ | 66,167 | $ | 72,081 | ||||||||||
Construction and capital expenditures
|
$ | 21,228 | $ | 19,728 | $ | 20,272 | $ | 20,302 | $ | 17,294 | ||||||||||
Dividends declared per common share
|
$ | 1.81 | $ | 1.77 | $ | 1.73 | $ | 1.69 | $ | 1.65 | ||||||||||
Book value per common share
|
$ | 17.50 | $ | 16.61 | $ | 17.85 | $ | 18.94 | $ | 17.28 | ||||||||||
Ratio of earnings to fixed charges1
|
5.98 | 2.96 | 2.23 | 4.57 | 4.46 | |||||||||||||||
Debt ratio
|
45.0 | % | 43.0 | % | 38.0 | % | 37.1 | % | 41.4 | % | ||||||||||
Weighted-average common shares outstanding (000,000)
|
5,368 | 5,801 | 5,928 | 5,913 | 5,900 | |||||||||||||||
Weighted-average common shares outstanding with dilution (000,000)
|
5,385 | 5,821 | 5,950 | 5,938 | 5,924 | |||||||||||||||
End of period common shares outstanding (000,000)
|
5,226 | 5,581 | 5,927 | 5,911 | 5,902 | |||||||||||||||
Operating Data
|
||||||||||||||||||||
Wireless subscribers (000)2
|
110,376 | 106,957 | 103,247 | 95,536 | 85,120 | |||||||||||||||
In-region network access lines in service (000)1
|
24,639 | 29,279 | 34,054 | 39,211 | 47,534 | |||||||||||||||
Broadband connections (000)3
|
16,425 | 16,390 | 16,427 | 16,309 | 15,789 | |||||||||||||||
Number of employees
|
243,360 | 241,810 | 256,420 | 266,590 | 282,720 | |||||||||||||||
1 Prior-period amounts are restated to conform to current-period reporting methodology.
|
||||||||||||||||||||
2 The number presented represents 100% of AT&T Mobility wireless subscribers.
|
||||||||||||||||||||
3 Broadband connections include U-verse high speed Internet access, DSL lines and satellite broadband.
|
|
|
Percent Change
|
||||||||||||||||||
|
2013
|
2012
|
2011
|
2013 vs.
2012
|
2012 vs.
2011
|
|||||||||||||||
|
||||||||||||||||||||
Operating Revenues
|
$ | 128,752 | $ | 127,434 | $ | 126,723 | 1.0 | % | 0.6 | % | ||||||||||
Operating expenses
|
||||||||||||||||||||
Cost of services and sales
|
51,464 | 55,228 | 54,904 | (6.8 | ) | 0.6 | ||||||||||||||
Selling, general and administrative
|
28,414 | 41,066 | 41,314 | (30.8 | ) | (0.6 | ) | |||||||||||||
Impairment of intangible assets
|
- | - | 2,910 | - | - | |||||||||||||||
Depreciation and amortization
|
18,395 | 18,143 | 18,377 | 1.4 | (1.3 | ) | ||||||||||||||
Total Operating Expenses
|
98,273 | 114,437 | 117,505 | (14.1 | ) | (2.6 | ) | |||||||||||||
Operating Income
|
30,479 | 12,997 | 9,218 | - | 41.0 | |||||||||||||||
Interest expense
|
3,940 | 3,444 | 3,535 | 14.4 | (2.6 | ) | ||||||||||||||
Equity in net income of affiliates
|
642 | 752 | 784 | (14.6 | ) | (4.1 | ) | |||||||||||||
Other income (expense) – net
|
596 | 134 | 249 | - | (46.2 | ) | ||||||||||||||
Income Before Income Taxes
|
27,777 | 10,439 | 6,716 | - | 55.4 | |||||||||||||||
Net Income
|
18,553 | 7,539 | 4,184 | - | 80.2 | |||||||||||||||
Net Income Attributable to AT&T
|
$ | 18,249 | $ | 7,264 | $ | 3,944 | - | 84.2 | % |
Wireless
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2013
|
2012
|
2011
|
2013 vs.
2012
|
2012 vs.
2011
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Data
|
$ | 21,719 | $ | 18,297 | $ | 14,861 | 18.7 | % | 23.1 | % | ||||||||||
Voice, text and other service
|
39,833 | 40,889 | 41,865 | (2.6 | ) | (2.3 | ) | |||||||||||||
Equipment
|
8,347 | 7,577 | 6,489 | 10.2 | 16.8 | |||||||||||||||
Total Segment Operating Revenues
|
69,899 | 66,763 | 63,215 | 4.7 | 5.6 | |||||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
44,508 | 43,296 | 41,282 | 2.8 | 4.9 | |||||||||||||||
Depreciation and amortization
|
7,468 | 6,873 | 6,329 | 8.7 | 8.6 | |||||||||||||||
Total Segment Operating Expenses
|
51,976 | 50,169 | 47,611 | 3.6 | 5.4 | |||||||||||||||
Segment Operating Income
|
17,923 | 16,594 | 15,604 | 8.0 | 6.3 | |||||||||||||||
Equity in Net Income (Loss) of Affiliates
|
(75) | (62) | (29) | (21.0 | ) | - | ||||||||||||||
Segment Income
|
$ | 17,848 | $ | 16,532 | $ | 15,575 | 8.0 | % | 6.1 | % |
The following table highlights other key measures of performance for the Wireless segment:
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
(Subscribers in 000s) |
2013
|
2012
|
2011
|
2013 vs.
2012
|
2012 vs.
2011
|
|||||||||||||||
Wireless Subscribers1
|
||||||||||||||||||||
Postpaid smartphones2
|
51,874 | 47,076 | 39,376 | 10.2 | % | 19.6 | % | |||||||||||||
Postpaid feature phones and data-centric devices
|
20,764 | 23,421 | 29,933 | (11.3 | ) | (21.8 | ) | |||||||||||||
Postpaid
|
72,638 | 70,497 | 69,309 | 3.0 | 1.7 | |||||||||||||||
Prepaid
|
7,384 | 7,328 | 7,225 | 0.8 | 1.4 | |||||||||||||||
Reseller
|
14,028 | 14,875 | 13,644 | (5.7 | ) | 9.0 | ||||||||||||||
Connected devices3
|
16,326 | 14,257 | 13,069 | 14.5 | 9.1 | |||||||||||||||
Total Wireless Subscribers
|
110,376 | 106,957 | 103,247 | 3.2 | 3.6 | |||||||||||||||
Net Additions4
|
||||||||||||||||||||
Postpaid2
|
1,776 | 1,438 | 1,429 | 23.5 | 0.6 | |||||||||||||||
Prepaid
|
(13 | ) | 128 | 674 | - | (81.0 | ) | |||||||||||||
Reseller
|
(1,074 | ) | 1,027 | 1,874 | - | (45.2 | ) | |||||||||||||
Connected devices
|
2,032 | 1,171 | 3,722 | 73.5 | (68.5 | ) | ||||||||||||||
Net Subscriber Additions
|
2,721 | 3,764 | 7,699 | (27.7 | ) % | (51.1 | ) % | |||||||||||||
Total Churn5
|
1.37 | % | 1.35 | % | 1.37 | % |
2 BP
|
(2) BP
|
||||||||||||
Postpaid Churn5
|
1.06 | % | 1.09 | % | 1.18 | % |
(3) BP
|
(9) BP
|
||||||||||||
1 Represents 100% of AT&T Mobility wireless subscribers. | ||||||||||||||||||||
2 Includes approximately 1,534 smartphones sold in 2013 under the AT&T Next program. | ||||||||||||||||||||
3 Includes data-centric devices (eReaders and automobile monitoring systems). Excludes tablets, which are primarily included in postpaid. | ||||||||||||||||||||
4 Excludes merger and acquisition-related additions during the period. | ||||||||||||||||||||
5 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a period divided by the total number of wireless subscribers at the beginning of that period. The churn rate for the period is equal to the average of the churn rate for each month of that period. |
·
|
Equipment costs increased $817, reflecting sales of more expensive smartphones, partially offset by the overall decline in upgrade activity and total device sales.
|
·
|
Selling expenses (other than commissions) and administrative expenses increased $712 due primarily to a $265 increase in employee-related costs, a $246 increase in advertising costs, $187 increase in information technology costs in conjunction with ongoing support systems development, and $107 increase in nonemployee-related costs, partially offset by an $84 decrease in bad debt expense.
|
·
|
Network system costs increased $146 primarily due to higher network traffic, personnel-related network support costs and cell site related costs in conjunction with our network enhancement efforts.
|
·
|
Commission expenses increased $59 due to a year-over-year increase in smartphone sales as a percentage of total device sales, partially offset by the overall decline in handset upgrade activity and total device sales.
|
·
|
Interconnect and long-distance costs decreased $353 due to third-party credits, lower usage costs and our ongoing network transition to more efficient Ethernet/IP-based technologies in 2013.
|
·
|
USF fees decreased $104 primarily due to USF rate decreases, which are offset by lower USF revenues.
|
·
|
Incollect roaming fees decreased $73 primarily due to rate declines and lower roaming use associated with the integration of previously acquired subscribers into our network.
|
·
|
Commission expenses increased $636 due to a year-over-year increase in smartphone sales as a percentage of total device sales, partially offset by the overall decline in handset upgrade activity and total device sales.
|
·
|
Selling expenses (other than commissions) and administrative expenses increased $526 due primarily to a $181 increase in information technology costs in conjunction with ongoing support systems development, $137 increase in employee-related costs, $99 increase in nonemployee-related costs, and $89 increase in bad debt expense, partially offset by a $57 decline in advertising costs.
|
·
|
Equipment costs increased $507, reflecting sales of more expensive smartphones, partially offset by the overall decline in upgrade activity and total device sales.
|
·
|
Network system, interconnect, and long-distance costs increased $202 primarily due to higher network traffic, personnel-related network support costs and cell site related costs in conjunction with our network enhancement efforts and storm costs.
|
·
|
USF fees increased $166 primarily due to USF rate increases.
|
·
|
Handset insurance cost increased $141 due to claims on more expensive devices.
|
Wireline
|
||||||||||||||||||||
Segment Results
|
||||||||||||||||||||
Percent Change
|
||||||||||||||||||||
2013
|
2012
|
2011
|
2013 vs.
2012
|
2012 vs.
2011
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||||||
Data
|
$ | 33,593 | $ | 31,841 | $ | 29,548 | 5.5 | % | 7.8 | % | ||||||||||
Voice
|
20,333 | 22,614 | 25,121 | (10.1 | ) | (10.0 | ) | |||||||||||||
Other
|
4,888 | 5,118 | 5,480 | (4.5 | ) | (6.6 | ) | |||||||||||||
Total Segment Operating Revenues
|
58,814 | 59,573 | 60,149 | (1.3 | ) | (1.0 | ) | |||||||||||||
Segment operating expenses
|
||||||||||||||||||||
Operations and support
|
41,638 | 41,207 | 41,361 | 1.0 | (0.4 | ) | ||||||||||||||
Depreciation and amortization
|
10,907 | 11,123 | 11,615 | (1.9 | ) | (4.2 | ) | |||||||||||||
Total Segment Operating Expenses
|
52,545 | 52,330 | 52,976 | 0.4 | (1.2 | ) | ||||||||||||||
Segment Operating Income
|
6,269 | 7,243 | 7,173 | (13.4 | ) | 1.0 | ||||||||||||||
Equity in Net Income (Loss) of Affiliates
|
2 | (1) | (2) | - | - | |||||||||||||||
Segment Income
|
$ | 6,271 | $ | 7,242 | $ | 7,171 | (13.4 | ) % | 1.0 | % |
·
|
IP data revenues (excluding strategic business services below) increased $1,662, or 11.3%, in 2013 and $1,781, or 13.8%, in 2012 primarily driven by higher U-verse penetration, customer additions, and migration from our legacy voice and DSL services. In 2013 and 2012 U-verse revenue from consumer customers increased $1,289 and $1,154 for broadband high-speed Internet access, $995 and $1,056 for video and $282 and $250 for voice, respectively. These increases were partially offset by a decrease of $777 and $628 in DSL revenue as customers continue to shift to our U-verse or competitors’ high speed Internet access offerings.
|
·
|
Strategic business services, which include VPN, Ethernet, hosting, IP conferencing, VoIP, Ethernet-access to Managed Internet Service (EaMIS), security services and U-verse provided to business customers, increased $1,105, or 15.0%, in 2013 and $1,029, or 16.2%, in 2012 primarily driven by migration from our legacy services. In 2013 and 2012, revenues from VPN increased $360 and $432, Ethernet increased $310 and $280, U-verse services increased $143 and $85, EaMIS increased $126 and $111 and VoIP increased $93 and $61, respectively.
|
·
|
Traditional data revenues, which include transport (excluding Ethernet) and packet-switched data services, decreased $1,016, or 10.4%, in 2013 and $528, or 5.1%, in 2012. These decreases were primarily due to lower demand as customers continue to shift to more advanced IP-based technology such as VPN, Ethernet, U-verse high speed Internet access and managed Internet services.
|
·
|
Local voice revenues decreased $1,420, or 10.2%, in 2013 and $1,526, or 9.9%, in 2012. The decrease in 2013 and 2012 was driven primarily by a 15.8% and 14.0% decline in switched access lines.
|
·
|
Long-distance revenues decreased $843, or 11.0%, in 2013 and $965, or 11.2%, in 2012. Lower demand for long-distance service from our business and consumer customers decreased revenues $709 in 2013 and $801 in 2012. Additionally, expected declines in the number of national mass-market customers decreased revenues $135 in 2013 and $162 in 2012.
|
|
|
|
|
Percent Change
|
||||||||||||||||
(in 000s)
|
2013
|
2012
|
2011
|
2013 vs.
2012
|
2012 vs.
2011
|
|||||||||||||||
U-verse high speed Internet
|
10,375 | 7,717 | 5,224 | 34.4 | % | 47.7 | % | |||||||||||||
DSL and other broadband connections
|
6,050 | 8,673 | 11,203 | (30.2 | ) | (22.6 | ) | |||||||||||||
Total Wireline Broadband Connections1
|
16,425 | 16,390 | 16,427 | 0.2 | (0.2 | ) | ||||||||||||||
|
||||||||||||||||||||
Total U-verse Video Connections
|
5,460 | 4,536 | 3,791 | 20.4 | 19.7 | |||||||||||||||
|
||||||||||||||||||||
Retail consumer switched access lines
|
12,403 | 15,707 | 18,952 | (21.0 | ) | (17.1 | ) | |||||||||||||
U-verse consumer VoIP connections
|
3,848 | 2,905 | 2,278 | 32.5 | 27.5 | |||||||||||||||
Total Retail Consumer Voice Connections2
|
16,251 | 18,612 | 21,230 | (12.7 | ) | (12.3 | ) | |||||||||||||
|
||||||||||||||||||||
Switched Access Lines
|
||||||||||||||||||||
Retail consumer
|
12,403 | 15,707 | 18,952 | (21.0 | ) | (17.1 | ) | |||||||||||||
Retail business
|
10,364 | 11,484 | 12,750 | (9.8 | ) | (9.9 | ) | |||||||||||||
Retail Subtotal2
|
22,767 | 27,191 | 31,702 | (16.3 | ) | (14.2 | ) | |||||||||||||
|
||||||||||||||||||||
Wholesale Subtotal2
|
1,626 | 1,775 | 1,978 | (8.4 | ) | (10.3 | ) | |||||||||||||
|
||||||||||||||||||||
Total Switched Access Lines2, 3
|
24,639 | 29,279 | 34,054 | (15.8 | ) % | (14.0 | ) % | |||||||||||||
1 Total wireline broadband connections include U-verse high speed Internet access, DSL lines and satellite broadband. | ||||||||||||||||||||
2 Prior-period amounts are restated to conform to current-period reporting methodology. | ||||||||||||||||||||
3 Total switched access lines include access lines provided to national mass markets and private payphone service providers of 246 at December 31, 2013, 313 at December 31, 2012, and 374 at December 31, 2011. |
Advertising Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
Percent Change
|
|||||||||||||
2013 | 2012 | 2011 |
2013 vs.
2012
|
2012 vs.
2011
|
||||||||||||||||
Total Segment Operating Revenues
|
$
|
-
|
$
|
1,049
|
$
|
3,293
|
-
|
|
|
(68.1)
|
%
|
|||||||||
Segment operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operations and support
|
|
-
|
|
773
|
|
2,265
|
-
|
|
|
(65.9)
|
|
|||||||||
Impairment of intangible assets
|
|
-
|
|
-
|
|
2,910
|
-
|
|
|
-
|
|
|||||||||
Depreciation and amortization
|
|
-
|
|
106
|
|
386
|
-
|
|
|
(72.5)
|
|
|||||||||
Total Segment Operating Expenses
|
|
-
|
|
879
|
|
5,561
|
-
|
|
|
(84.2)
|
|
|||||||||
Segment Income (Loss)
|
$
|
-
|
$
|
170
|
$
|
(2,268)
|
-
|
|
|
-
|
|
Other
|
|
|
|
|
|
|||||||||||||||
Segment Results
|
|
|
|
|
|
|||||||||||||||
|
|
Percent Change
|
||||||||||||||||||
|
|
|
|
2013 vs.
2012
|
2012 vs.
2011
|
|||||||||||||||
|
2013
|
2012
|
2011
|
|||||||||||||||||
Total Segment Operating Revenues
|
$ | 39 | $ | 49 | $ | 66 | (20.4 | ) % | (25.8 | ) % | ||||||||||
Total Segment Operating Expenses
|
1,336 | 1,065 | 5,077 | 25.4 | (79.0 | ) | ||||||||||||||
Segment Operating Loss
|
(1,297) | (1,016) | (5,011) | (27.7 | ) | 79.7 | ||||||||||||||
Equity in Net Income of Affiliates
|
715 | 815 | 815 | (12.3 | ) | - | ||||||||||||||
Segment Income (Loss)
|
$ | (582) | $ | (201) | $ | (4,196) | - | 95.2 | % |
|
2013
|
2012
|
2011
|
|||||||||
América Móvil
|
$ | 532 | $ | 686 | $ | 720 | ||||||
YP Holdings
|
182 | 130 | - | |||||||||
Telmex1
|
- | - | 95 | |||||||||
Other
|
1 | (1 | ) | - | ||||||||
Other Segment Equity in Net Income of Affiliates
|
$ | 715 | $ | 815 | $ | 815 | ||||||
1 Acquired by América Móvil in 2011.
|
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
|
·
|
$20,944 in capital expenditures, excluding interest during construction.
|
·
|
$284 in interest during construction.
|
·
|
$4,050 purchase of wireless spectrum licenses and operations.
|
·
|
$1,179 from the sale of a portion of our shares in América Móvil.
|
·
|
$712 from the sale of various properties.
|
·
|
$200 from the repayment of advances to YP Holdings.
|
·
|
$101 from the return of investment in YP Holdings.
|
·
|
February 2013 issuance of $1,000 of 0.900% global notes due 2016 and $1,250 of floating rate notes due 2016. The floating rate is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 38.5 basis points.
|
·
|
March 2013 issuance of $500 of 1.400% global notes due 2017.
|
·
|
March 2013 issuance of €1,250 of 2.500% global notes due 2023 (equivalent to $1,626 when issued) and €400 of 3.550% global notes due 2032 (equivalent to $520 when issued).
|
·
|
May 2013 issuance of £1,000 of 4.250% global notes due 2043 (equivalent to $1,560 when issued).
|
·
|
November 2013 issuance of €1,000 of 2.650% global notes due 2021 (equivalent to $1,349 when issued) and €1,000 of 3.500% global notes due 2025 (equivalent to $1,349 when issued).
|
·
|
November 2013 issuance of CDN$1,000 of 3.825% global notes due 2020 (equivalent to $954 when issued).
|
·
|
November 2013 issuance of $1,600 of 2.375% global notes due 2018 and $400 of floating rate notes due 2018. The floating rate is based upon the three-month LIBOR, reset quarterly, plus 91 basis points.
|
·
|
March 2013 repayment of €1,250 4.375% notes (equivalent to $1,641 when repaid) and $147 of 6.5% notes.
|
·
|
July 2013 early redemption of $300 of 7.375% notes originally due in July 2043.
|
·
|
October 2013 early redemption of $550 of 6.625% notes originally due in October 2034.
|
·
|
We also completed debt tender offers covering $5,000 of various notes with stated rates of 5.20% to 8.75% for $5,556 in cash payments.
|
·
|
$1,000 of annual put reset securities issued by BellSouth Corporation that may be put back to us each April until maturity in 2021.
|
·
|
An accreting zero-coupon note that may be redeemed each May until maturity in 2022. If the zero-coupon note (issued for principal of $500 in 2007) is held to maturity, the redemption amount will be $1,030.
|
·
|
at a variable annual rate equal to (1) the highest of: (a) the base (or prime) rate of the bank affiliate of Citibank, N.A. which is serving as administrative agent under the Agreement, (b) 0.50% per annum above the Federal funds rate, and (c) the LIBOR applicable to U.S. dollars for a period of one month plus 1.00% per annum, plus (2) an applicable margin, as set forth in the Agreement (Applicable Margin); or
|
·
|
at a rate equal to: (i) the LIBOR for a period of one, two, three or six months, as applicable, plus (ii) the Applicable Margin.
|
·
|
We fail to pay principal or interest, or other amounts under the agreement beyond any grace period.
|
·
|
We fail to pay when due other debt of $400 or more that results in acceleration of that debt (commonly referred to as cross-acceleration) or a creditor commences enforcement proceedings within a specified period after a money judgment of $400 or more has become final.
|
·
|
A person acquires beneficial ownership of more than 50% of AT&T common shares or more than a majority of AT&T’s directors change in any 24-month period other than as elected by the remaining directors.
|
·
|
We fail to make certain minimum funding payments under the Employee Retirement Income Security Act of 1974, as amended (ERISA).
|
·
|
Our bankruptcy or insolvency.
|
Payments Due By Period
|
||||||||||||||||||||
Total
|
Less than
1 Year
|
1-3
Years
|
3-5
Years
|
More than
5 Years
|
||||||||||||||||
Contractual Obligations
|
||||||||||||||||||||
Long-term debt obligations1
|
$ | 75,500 | $ | 5,472 | $ | 13,181 | $ | 11,057 | $ | 45,790 | ||||||||||
Interest payments on long-term debt
|
53,219 | 3,350 | 6,035 | 5,328 | 38,506 | |||||||||||||||
Finance obligations2
|
3,945 | 221 | 454 | 473 | 2,797 | |||||||||||||||
Operating lease obligations
|
24,952 | 3,003 | 5,551 | 4,691 | 11,707 | |||||||||||||||
Unrecognized tax benefits3
|
2,332 | 265 | - | - | 2,067 | |||||||||||||||
Purchase obligations4
|
14,320 | 5,749 | 5,182 | 2,570 | 819 | |||||||||||||||
Total Contractual Obligations
|
$ | 174,268 | $ | 18,060 | $ | 30,403 | $ | 24,119 | $ | 101,686 | ||||||||||
1 Represents principal or payoff amounts of notes and debentures at maturity or, for putable debt, the next put opportunity. | ||||||||||||||||||||
2 Represents future minimum payments under the sublease arrangement for our tower transactions (see Note 16). | ||||||||||||||||||||
3 The noncurrent portion of the UTBs is included in the “More than 5 Years” column, as we cannot reasonably estimate the timing or amounts of additional cash payments, if any, at this time. See Note 11 for additional information. | ||||||||||||||||||||
4 We calculated the minimum obligation for certain agreements to purchase goods or services based on termination fees that can be paid to exit the contract. If we elect to exit these contracts, termination fees for all such contracts in the year of termination could be approximately $489 in 2014, $567 in the | ||||||||||||||||||||
aggregate for 2015 and 2016, $174 in the aggregate for 2017 and 2018, and $8 in the aggregate thereafter. Certain termination fees are excluded from the above table, as the fees would not be paid every year and the timing of such payments, if any, is uncertain. |
|
Maturity
|
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Fair Value
|
||||||||||||||||||||||||
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
Total
|
12/31/13
|
||||||||||||||||||||||||
Interest Rate Derivatives
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Interest Rate Swaps:
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Receive Fixed/Pay
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Variable Notional
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Amount Maturing
|
$ | 500 | $ | 1,500 | $ | - | $ | - | $ | 1,000 | $ | 1,750 | $ | 4,750 | $ | 184 | ||||||||||||||||
Weighted-Average
|
||||||||||||||||||||||||||||||||
Variable Rate Payable1
|
2.3 | % | 3.2 | % | 4.8 | % | 5.9 | % | 7.3 | % | 7.9 | % | ||||||||||||||||||||
Weighted-Average
|
||||||||||||||||||||||||||||||||
Fixed Rate Receivable
|
4.6 | % | 5.1 | % | 5.7 | % | 5.7 | % | 5.8 | % | 5.8 | % | ||||||||||||||||||||
1 Interest payable based on current and implied forward rates for One, Three, or Six Month LIBOR plus a spread ranging between approximately 4 and 425 basis points. |
·
|
Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers’ ability to access financial markets at favorable rates and terms.
|
·
|
Changes in available technology and the effects of such changes, including product substitutions and deployment costs.
|
·
|
Increases in our benefit plans’ costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse medical cost trends, unfavorable or delayed implementation of healthcare legislation, regulations or related court decisions; and our inability to receive retroactive approval from the DOL of our voluntary contribution of a preferred interest in our wireless business.
|
·
|
The final outcome of FCC and other federal or state agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limit, intercarrier compensation, interconnection obligations, the transition from legacy technologies to IP-based infrastructure, universal service, broadband deployment, E911 services, competition policy, net neutrality, unbundled network elements and other wholesale obligations, availability of new spectrum from the FCC on fair and balanced terms, and wireless license awards and renewals.
|
·
|
The final outcome of state and federal legislative efforts involving issues that are important to our business, including deregulation of IP-based services, relief from Carrier of Last Resort obligations, and elimination of state commission review of the withdrawal of services.
|
·
|
Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.
|
·
|
Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies (e.g., cable, wireless and VoIP) and our ability to maintain capital expenditures.
|
·
|
The extent of competition and the resulting pressure on customer and access line totals and wireline and wireless operating margins.
|
·
|
Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets.
|
·
|
The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies (e.g., VoIP).
|
·
|
The continued development of attractive and profitable U-verse service offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.
|
·
|
Our continued ability to attract and offer a diverse portfolio of wireless devices, some on an exclusive basis.
|
·
|
The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
|
·
|
Our ability to manage growth in wireless data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.
|
·
|
The outcome of pending, threatened or potential litigation, including patent and product safety claims by or against third parties.
|
·
|
The impact on our networks and business from major equipment failures; security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks.
|
·
|
The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.
|
·
|
The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any taxing jurisdictions.
|
·
|
Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.
|
·
|
Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments.
|
·
|
The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant reduction in government spending and reluctance of businesses and consumers to spend in general and on our products and services specifically, due to this fiscal uncertainty.
|
AT&T Inc.
|
||||||||||||
Consolidated Statements of Income
|
||||||||||||
Dollars in millions except per share amounts
|
||||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Operating Revenues
|
$ | 128,752 | $ | 127,434 | $ | 126,723 | ||||||
|
||||||||||||
Operating Expenses
|
||||||||||||
Cost of services and sales (exclusive of depreciation
|
51,464 | 55,228 | 54,904 | |||||||||
and amortization shown separately below)
|
||||||||||||
Selling, general and administrative
|
28,414 | 41,066 | 41,314 | |||||||||
Impairment of intangible assets
|
- | - | 2,910 | |||||||||
Depreciation and amortization
|
18,395 | 18,143 | 18,377 | |||||||||
Total operating expenses
|
98,273 | 114,437 | 117,505 | |||||||||
Operating Income
|
30,479 | 12,997 | 9,218 | |||||||||
|
||||||||||||
Other Income (Expense)
|
||||||||||||
Interest expense
|
(3,940 | ) | (3,444 | ) | (3,535 | ) | ||||||
Equity in net income of affiliates
|
642 | 752 | 784 | |||||||||
Other income (expense) – net
|
596 | 134 | 249 | |||||||||
Total other income (expense)
|
(2,702 | ) | (2,558 | ) | (2,502 | ) | ||||||
Income Before Income Taxes
|
27,777 | 10,439 | 6,716 | |||||||||
Income tax expense
|
9,224 | 2,900 | 2,532 | |||||||||
Net Income
|
18,553 | 7,539 | 4,184 | |||||||||
Less: Net Income Attributable to Noncontrolling Interest
|
(304 | ) | (275 | ) | (240 | ) | ||||||
Net Income Attributable to AT&T
|
$ | 18,249 | $ | 7,264 | $ | 3,944 | ||||||
|
||||||||||||
Basic Earnings Per Share Attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 | ||||||
Diluted Earnings Per Share Attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
AT&T Inc.
|
|
|
|
|||||||||
Consolidated Statements of Comprehensive Income
|
|
|
|
|||||||||
Dollars in millions
|
|
|
|
|||||||||
|
2013
|
2012
|
2011
|
|||||||||
Net income
|
$ | 18,553 | $ | 7,539 | $ | 4,184 | ||||||
Other comprehensive income, net of tax:
|
||||||||||||
Foreign Currency:
|
||||||||||||
Foreign currency translation adjustments (includes $(2), $0 and $(1)
attributable to noncontrolling interest), net of taxes of $(78), $48 and $(117)
|
(140 | ) | 87 | (219 | ) | |||||||
Reclassification adjustment included in net income, net of taxes of $30, $0 and
$183
|
55 | - | 341 | |||||||||
Available-for-sale securities:
|
||||||||||||
Net unrealized gains (losses), net of taxes of $137, $64, and $(21)
|
257 | 118 | (41 | ) | ||||||||
Reclassification adjustment included in net income, net of taxes of $(42), $(36)
and $(29)
|
(79 | ) | (68 | ) | (54 | ) | ||||||
Cash flow hedges:
|
||||||||||||
Net unrealized gains (losses), net of taxes of $286, $154 and $(140)
|
525 | 283 | (256 | ) | ||||||||
Reclassification adjustment included in net income, net of taxes of $16, $15
and $8
|
30 | 28 | 15 | |||||||||
Defined benefit postretirement plans:
|
||||||||||||
Net actuarial loss from equity method investees arising during period, net
of taxes of $0, $(32) and $0
|
- | (53 | ) | - | ||||||||
Reclassification adjustment included in net income, net of taxes of $7, $0 and
$0
|
11 | - | - | |||||||||
Net prior service credit arising during period, net of taxes of $1,695, $1,378
and $699
|
2,765 | 2,249 | 1,140 | |||||||||
Amortization of net prior service credit included in net income, net of taxes of
$(480), $(361) and $(282)
|
(782 | ) | (588 | ) | (460 | ) | ||||||
Other
|
- | - | 1 | |||||||||
Other comprehensive income
|
2,642 | 2,056 | 467 | |||||||||
Total comprehensive income
|
21,195 | 9,595 | 4,651 | |||||||||
Less: Total comprehensive income attributable to noncontrolling interest
|
(302 | ) | (275 | ) | (239 | ) | ||||||
Total Comprehensive Income Attributable to AT&T
|
$ | 20,893 | $ | 9,320 | $ | 4,412 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
AT&T Inc.
|
||||||||
Consolidated Balance Sheets
|
||||||||
Dollars in millions except per share amounts
|
||||||||
|
December 31,
|
|||||||
|
2013
|
2012
|
||||||
Assets
|
|
|
||||||
Current Assets
|
|
|
||||||
Cash and cash equivalents
|
$ | 3,339 | $ | 4,868 | ||||
Accounts receivable - net of allowances for doubtful accounts of $483 and $547
|
12,918 | 12,657 | ||||||
Prepaid expenses
|
960 | 1,035 | ||||||
Deferred income taxes
|
1,199 | 1,036 | ||||||
Other current assets
|
4,780 | 3,110 | ||||||
Total current assets
|
23,196 | 22,706 | ||||||
Property, Plant and Equipment – Net
|
110,968 | 109,767 | ||||||
Goodwill
|
69,273 | 69,773 | ||||||
Licenses
|
56,433 | 52,352 | ||||||
Customer Lists and Relationships – Net
|
763 | 1,391 | ||||||
Other Intangible Assets – Net
|
5,016 | 5,032 | ||||||
Investments in and Advances to Equity Affiliates
|
3,860 | 4,581 | ||||||
Other Assets
|
8,278 | 6,713 | ||||||
Total Assets
|
$ | 277,787 | $ | 272,315 | ||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities
|
||||||||
Debt maturing within one year
|
$ | 5,498 | $ | 3,486 | ||||
Accounts payable and accrued liabilities
|
21,107 | 20,494 | ||||||
Advanced billings and customer deposits
|
4,212 | 4,225 | ||||||
Accrued taxes
|
1,774 | 1,026 | ||||||
Dividends payable
|
2,404 | 2,556 | ||||||
Total current liabilities
|
34,995 | 31,787 | ||||||
Long-Term Debt
|
69,290 | 66,358 | ||||||
Deferred Credits and Other Noncurrent Liabilities
|
||||||||
Deferred income taxes
|
36,308 | 28,491 | ||||||
Postemployment benefit obligation
|
29,946 | 41,392 | ||||||
Other noncurrent liabilities
|
15,766 | 11,592 | ||||||
Total deferred credits and other noncurrent liabilities
|
82,020 | 81,475 | ||||||
Stockholders’ Equity
|
||||||||
Common stock ($1 par value, 14,000,000,000 authorized at December 31, 2013
|
||||||||
and 2012: issued 6,495,231,088 at December 31, 2013 and 2012)
|
6,495 | 6,495 | ||||||
Additional paid-in capital
|
91,091 | 91,038 | ||||||
Retained earnings
|
31,141 | 22,481 | ||||||
Treasury stock (1,268,914,913 at December 31, 2013 and 913,836,325
|
||||||||
at December 31, 2012, at cost)
|
(45,619 | ) | (32,888 | ) | ||||
Accumulated other comprehensive income
|
7,880 | 5,236 | ||||||
Noncontrolling interest
|
494 | 333 | ||||||
Total stockholders’ equity
|
91,482 | 92,695 | ||||||
Total Liabilities and Stockholders’ Equity
|
$ | 277,787 | $ | 272,315 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
|
AT&T Inc.
|
||||||||||||
Consolidated Statements of Cash Flows
|
||||||||||||
Dollars in millions
|
||||||||||||
|
2013
|
2012
|
2011
|
|||||||||
Operating Activities
|
|
|
|
|||||||||
Net income
|
$ | 18,553 | $ | 7,539 | $ | 4,184 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
18,395 | 18,143 | 18,377 | |||||||||
Undistributed earnings from investments in equity affiliates
|
(324 | ) | (615 | ) | (623 | ) | ||||||
Provision for uncollectible accounts
|
954 | 1,117 | 1,136 | |||||||||
Deferred income tax expense
|
6,242 | 1,747 | 2,929 | |||||||||
Net (gain) loss from sale of investments, net of impairments
|
(492 | ) | (19 | ) | (89 | ) | ||||||
Impairment of intangible assets
|
- | - | 2,910 | |||||||||
Actuarial (gain) loss on pension and postretirement benefits
|
(7,584 | ) | 9,994 | 6,280 | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(1,329 | ) | (1,365 | ) | (1,164 | ) | ||||||
Other current assets
|
412 | 1,017 | (397 | ) | ||||||||
Accounts payable and accrued liabilities
|
(152 | ) | 1,798 | (341 | ) | |||||||
Retirement benefit funding
|
(209 | ) | - | (1,000 | ) | |||||||
Other - net
|
330 | (180 | ) | 2,541 | ||||||||
Total adjustments
|
16,243 | 31,637 | 30,559 | |||||||||
Net Cash Provided by Operating Activities
|
34,796 | 39,176 | 34,743 | |||||||||
|
||||||||||||
Investing Activities
|
||||||||||||
Construction and capital expenditures:
|
||||||||||||
Capital expenditures
|
(20,944 | ) | (19,465 | ) | (20,110 | ) | ||||||
Interest during construction
|
(284 | ) | (263 | ) | (162 | ) | ||||||
Acquisitions, net of cash acquired
|
(4,113 | ) | (828 | ) | (2,368 | ) | ||||||
Dispositions
|
1,923 | 812 | 1,301 | |||||||||
Sales (purchases) of securities, net
|
- | 65 | 62 | |||||||||
Return of advances to and investments in equity affiliates
|
301 | - | - | |||||||||
Other
|
(7 | ) | (1 | ) | 27 | |||||||
Net Cash Used in Investing Activities
|
(23,124 | ) | (19,680 | ) | (21,250 | ) | ||||||
|
||||||||||||
Financing Activities
|
||||||||||||
Net change in short-term borrowings with original maturities of
three months or less
|
20 | 1 | (1,625 | ) | ||||||||
Issuance of other short-term borrowings
|
1,476 | - | - | |||||||||
Repayment of other short-term borrowings
|
(1,476 | ) | - | (28 | ) | |||||||
Issuance of long-term debt
|
12,040 | 13,486 | 7,936 | |||||||||
Repayment of long-term debt
|
(7,698 | ) | (8,733 | ) | (7,574 | ) | ||||||
Issuance of other long-term financing obligations
|
4,796 | - | - | |||||||||
Purchase of treasury stock
|
(13,028 | ) | (12,752 | ) | - | |||||||
Issuance of treasury stock
|
114 | 477 | 237 | |||||||||
Dividends paid
|
(9,696 | ) | (10,241 | ) | (10,172 | ) | ||||||
Other
|
251 | 89 | (423 | ) | ||||||||
Net Cash Used in Financing Activities
|
(13,201 | ) | (17,673 | ) | (11,649 | ) | ||||||
Net (decrease) increase in cash and cash equivalents
|
(1,529 | ) | 1,823 | 1,844 | ||||||||
Cash and cash equivalents beginning of year
|
4,868 | 3,045 | 1,201 | |||||||||
Cash and Cash Equivalents End of Year
|
$ | 3,339 | $ | 4,868 | $ | 3,045 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
|
AT&T Inc.
|
|
|
|
|
|
|
|
|
|
|||||
Consolidated Statements of Changes in Stockholders’ Equity
|
|
|
|
|
||||||||||
Dollars and shares in millions except per share amounts
|
|
|
|
|
|
|
|
|
|
|||||
|
2013
|
|
2012
|
|
2011
|
|||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
Amount
|
||||
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
6,495
|
|
$
|
6,495
|
|
6,495
|
|
$
|
6,495
|
|
6,495
|
$
|
6,495
|
|
Issuance of stock
|
-
|
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
-
|
|
Balance at end of year
|
6,495
|
|
$
|
6,495
|
|
6,495
|
|
$
|
6,495
|
|
6,495
|
$
|
6,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-In Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
|
$
|
91,038
|
|
|
|
$
|
91,156
|
|
|
$
|
91,731
|
|
Issuance of treasury stock
|
|
|
|
(8)
|
|
|
|
|
120
|
|
|
|
132
|
|
Share-based payments
|
|
|
|
62
|
|
|
|
|
(78)
|
|
|
|
(118)
|
|
Share of equity method investee capital
transactions
|
|
|
|
-
|
|
|
|
|
(160)
|
|
|
|
(290)
|
|
Change related to acquisition of interests
held by noncontrolling owners
|
|
|
|
(1)
|
|
|
|
|
-
|
|
|
|
(299)
|
|
Balance at end of year
|
|
|
$
|
91,091
|
|
|
|
$
|
91,038
|
|
|
$
|
91,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
|
$
|
22,481
|
|
|
|
$
|
25,453
|
|
|
$
|
31,792
|
|
Net income attributable to AT&T ($3.39,
$1.25 and $0.66 per diluted share)
|
|
|
|
18,249
|
|
|
|
|
7,264
|
|
|
|
3,944
|
|
Dividends to stockholders ($1.81, $1.77 and
$1.73 per share)
|
|
|
|
(9,589)
|
|
|
|
|
(10,236)
|
|
|
|
(10,283)
|
|
Balance at end of year
|
|
|
$
|
31,141
|
|
|
|
$
|
22,481
|
|
|
$
|
25,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
(914)
|
|
$
|
(32,888)
|
|
(568)
|
|
$
|
(20,750)
|
|
(584)
|
$
|
(21,083)
|
|
Repurchase of common stock
|
(366)
|
|
|
(13,028)
|
|
(371)
|
|
|
(12,752)
|
|
-
|
|
-
|
|
Issuance of treasury stock
|
11
|
|
|
297
|
|
25
|
|
|
614
|
|
16
|
|
333
|
|
Balance at end of year
|
(1,269)
|
|
$
|
(45,619)
|
|
(914)
|
|
$
|
(32,888)
|
|
(568)
|
$
|
(20,750)
|
|
The accompanying notes are an integral part of the consolidated financial statements.
|
AT&T Inc.
|
|
|
|
|
|
|
|||
Consolidated Statements of Changes in Stockholders’ Equity (continued)
|
|||||||||
Dollars and shares in millions except per share amounts
|
|
|
|
|
|
|
|||
|
|
2013
|
|
2012
|
|
2011
|
|||
|
|
Amount
|
|
Amount
|
|
Amount
|
|||
Accumulated Other Comprehensive Income
Attributable to AT&T, net of tax:
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
5,236
|
|
$
|
3,180
|
|
$
|
2,712
|
Other comprehensive income
attributable to AT&T
|
|
|
2,644
|
|
|
2,056
|
|
|
468
|
Balance at end of year
|
|
$
|
7,880
|
|
$
|
5,236
|
|
$
|
3,180
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling Interest:
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
333
|
|
$
|
263
|
|
$
|
303
|
Net income attributable to noncontrolling
interest
|
|
|
304
|
|
|
275
|
|
|
240
|
Distributions
|
|
|
(231)
|
|
|
(205)
|
|
|
(220)
|
Contributions
|
|
|
51
|
|
|
-
|
|
|
-
|
Acquisitions of noncontrolling interests
|
|
|
44
|
|
|
-
|
|
|
-
|
Acquisition of interests held by
noncontrolling owners
|
|
|
(5)
|
|
|
-
|
|
|
(59)
|
Translation adjustments attributable to
noncontrolling interest, net of taxes
|
|
|
(2)
|
|
|
-
|
|
|
(1)
|
Balance at end of year
|
|
$
|
494
|
|
$
|
333
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity at beginning of year
|
|
$
|
92,695
|
|
$
|
105,797
|
|
$
|
111,950
|
Total Stockholders’ Equity at end of year
|
|
$
|
91,482
|
|
$
|
92,695
|
|
$
|
105,797
|
The accompanying notes are an integral part of the consolidated financial statements.
|
Year Ended December 31,
|
2013
|
2012
|
2011
|
|||||||||
Numerators
|
|
|
|
|||||||||
Numerator for basic earnings per share:
|
|
|
|
|||||||||
Net income
|
$ | 18,553 | $ | 7,539 | $ | 4,184 | ||||||
Net income attributable to noncontrolling interest
|
(304 | ) | (275 | ) | (240 | ) | ||||||
Net income attributable to AT&T
|
18,249 | 7,264 | 3,944 | |||||||||
Dilutive potential common shares:
|
||||||||||||
Share-based payment
|
12 | 12 | 11 | |||||||||
Numerator for diluted earnings per share
|
$ | 18,261 | $ | 7,276 | $ | 3,955 | ||||||
Denominators (000,000)
|
||||||||||||
Denominator for basic earnings per share:
|
||||||||||||
Weighted-average number of common shares outstanding
|
5,368 | 5,801 | 5,928 | |||||||||
Dilutive potential common shares:
|
||||||||||||
Share-based payment (in shares)
|
17 | 20 | 22 | |||||||||
Denominator for diluted earnings per share
|
5,385 | 5,821 | 5,950 | |||||||||
Basic earnings per share attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 | ||||||
Diluted earnings per share attributable to AT&T
|
$ | 3.39 | $ | 1.25 | $ | 0.66 |
|
Foreign
Currency
Translation
Adjustment5
|
Net Unrealized
Gains (Losses)
on Available-
for-Sale
Securities5
|
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges5
|
Defined Benefit
Postretirement
Plans5
|
Accumulated
Other
Comprehensive
Income5
|
|||||||||||||||
Balance as of December 31, 2012
|
$ | (284 | ) | $ | 272 | $ | (110 | ) | $ | 5,358 | $ | 5,236 | ||||||||
Other comprehensive income
(loss) before reclassifications
|
(138 | ) | 257 | 525 | 2,765 | 3,409 | ||||||||||||||
Amounts reclassified
from accumulated OCI
|
55 | 1 | (79 | )2 | 30 | 3 | (771 | )4 | (765 | ) | ||||||||||
Net other comprehensive
income (loss)
|
(83 | ) | 178 | 555 | 1,994 | 2,644 | ||||||||||||||
Balance as of December 31, 2013
|
$ | (367 | ) | $ | 450 | $ | 445 | $ | 7,352 | $ | 7,880 | |||||||||
1 Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||||||||
2 Realized gains are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||||||||
3 Realized (gains) losses are included in interest expense in the consolidated statements of income. See Note 10 for additional information. | ||||||||||||||||||||
4 The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income (see Note 12). Actuarial loss | ||||||||||||||||||||
reclassifications related to our equity method investees are included in Other income (expense) - net in the consolidated statements of income. | ||||||||||||||||||||
5 The balance at December 31, 2011 for each component of accumulated OCI, respectively, was $(371), $222, $(421), and $3,750, for a total of $3,180. |
Segment Results, including a reconciliation to AT&T consolidated results, for 2013, 2012, and 2011 are as follows:
|
||||||||||||||||||||||||
At December 31, 2013 and for the year ended
|
Advertising
Solutions
|
Consolidated
Results
|
||||||||||||||||||||||
Wireless
|
Wireline
|
Other
|
Consolidations
|
|||||||||||||||||||||
Data | $ | 21,719 | $ | 33,593 | $ | - | $ | - | $ | - | $ | 55,312 | ||||||||||||
Voice, text and other | 39,833 | 20,333 | - | - | - | 60,166 | ||||||||||||||||||
Equipment and other | 8,347 | 4,888 | - | 39 | - | 13,274 | ||||||||||||||||||
Total segment operating revenues
|
69,899 | 58,814 | - | 39 | - | 128,752 | ||||||||||||||||||
Operations and support expenses
|
44,508 | 41,638 | - | 1,316 | (7,584 | ) | 79,878 | |||||||||||||||||
Depreciation and amortization expenses
|
7,468 | 10,907 | - | 20 | - | 18,395 | ||||||||||||||||||
Total segment operating expenses
|
51,976 | 52,545 | - | 1,336 | (7,584 | ) | 98,273 | |||||||||||||||||
Segment operating income (loss)
|
17,923 | 6,269 | - | (1,297 | ) | 7,584 | 30,479 | |||||||||||||||||
Interest expense
|
- | - | - | - | 3,940 | 3,940 | ||||||||||||||||||
Equity in net income (loss) of affiliates
|
(75 | ) | 2 | - | 715 | - | 642 | |||||||||||||||||
Other income (expense) – net
|
- | - | - | - | 596 | 596 | ||||||||||||||||||
Segment income (loss) before
income taxes
|
$ | 17,848 | $ | 6,271 | $ | - | $ | (582 | ) | $ | 4,240 | $ | 27,777 | |||||||||||
Segment Assets
|
$ | 141,196 | $ | 123,714 | $ | - | $ | 12,875 | $ | 2 | $ | 277,787 | ||||||||||||
Investments in and advances
to equity method affiliates
|
61 | - | - | 3,799 | - | 3,860 | ||||||||||||||||||
Expenditures for additions
to long-lived assets
|
11,191 | 10,036 | - | 1 | - | 21,228 | ||||||||||||||||||
At December 31, 2012 and for the year ended
|
Advertising
Solutions
|
Consolidated Results
|
||||||||||||||||||||||
Wireless
|
Wireline
|
Other
|
Consolidations
|
|||||||||||||||||||||
Data | $ | 18,297 | $ | 31,841 | $ | - | $ | - | $ | - | $ | 50,138 | ||||||||||||
Voice, text and other | 40,889 | 22,614 | - | - | - | 63,503 | ||||||||||||||||||
Equipment and other | 7,577 | 5,118 | 1,049 | 49 | - | 13,793 | ||||||||||||||||||
Total segment operating revenues
|
66,763 | 59,573 | 1,049 | 49 | - | 127,434 | ||||||||||||||||||
Operations and support expenses
|
43,296 | 41,207 | 773 | 1,024 | 9,994 | 96,294 | ||||||||||||||||||
Depreciation and amortization expenses
|
6,873 | 11,123 | 106 | 41 | - | 18,143 | ||||||||||||||||||
Total segment operating expenses
|
50,169 | 52,330 | 879 | 1,065 | 9,994 | 114,437 | ||||||||||||||||||
Segment operating income (loss)
|
16,594 | 7,243 | 170 | (1,016 | ) | (9,994 | ) | 12,997 | ||||||||||||||||
Interest expense
|
- | - | - | - | 3,444 | 3,444 | ||||||||||||||||||
Equity in net income (loss) of affiliates
|
(62 | ) | (1 | ) | - | 815 | - | 752 | ||||||||||||||||
Other income (expense) – net
|
- | - | - | - | 134 | 134 | ||||||||||||||||||
Segment income (loss) before
income taxes
|
$ | 16,532 | $ | 7,242 | $ | 170 | $ | (201 | ) | $ | (13,304 | ) | $ | 10,439 | ||||||||||
Segment Assets
|
$ | 132,556 | $ | 125,340 | $ | - | $ | 14,416 | $ | 3 | $ | 272,315 | ||||||||||||
Investments in and advances
to equity method affiliates
|
41 | - | - | 4,540 | - | 4,581 | ||||||||||||||||||
Expenditures for additions
to long-lived assets
|
10,795 | 8,914 | 13 | 6 | - | 19,728 | ||||||||||||||||||
For the year ended December 31, 2011
|
Advertising
Solutions
|
Consolidated Results
|
||||||||||||||||||||||
Wireless
|
Wireline
|
Other
|
Consolidations
|
|||||||||||||||||||||
Data | $ | 14,861 | $ | 29,548 | $ | - | $ | - | $ | - | $ | 44,409 | ||||||||||||
Voice, text and other | 41,865 | 25,121 | - | - | - | 66,986 | ||||||||||||||||||
Equipment and other | 6,489 | 5,480 | 3,293 | 66 | - | 15,328 | ||||||||||||||||||
Total segment operating revenues
|
63,215 | 60,149 | 3,293 | 66 | - | 126,723 | ||||||||||||||||||
Operations and support expenses
|
41,282 | 41,361 | 5,175 | 5,030 | 6,280 | 99,128 | ||||||||||||||||||
Depreciation and amortization expenses
|
6,329 | 11,615 | 386 | 47 | - | 18,377 | ||||||||||||||||||
Total segment operating expenses
|
47,611 | 52,976 | 5,561 | 5,077 | 6,280 | 117,505 | ||||||||||||||||||
Segment operating income (loss)
|
15,604 | 7,173 | (2,268 | ) | (5,011 | ) | (6,280 | ) | 9,218 | |||||||||||||||
Interest expense
|
- | - | - | - | 3,535 | 3,535 | ||||||||||||||||||
Equity in net income (loss) of affiliates
|
(29 | ) | (2 | ) | - | 815 | - | 784 | ||||||||||||||||
Other income (expense) – net
|
- | - | - | - | 249 | 249 | ||||||||||||||||||
Segment income (loss) before
income taxes
|
$ | 15,575 | $ | 7,171 | $ | (2,268 | ) | $ | (4,196 | ) | $ | (9,566 | ) | $ | 6,716 |
Assets held for sale:
|
||||
Current assets
|
$ | 155 | ||
Property, plant and equipment - net
|
1,289 | |||
Goodwill
|
799 | |||
Other assets
|
17 | |||
Total assets
|
$ | 2,260 | ||
Liabilities related to assets held for sale:
|
||||
Current liabilities
|
$ | 128 | ||
Noncurrent liabilities
|
480 | |||
Total liabilities
|
$ | 608 |
Lives (years)
|
2013
|
2012
|
||||||||||
Land
|
- | $ | 1,523 | $ | 1,689 | |||||||
Buildings and improvements
|
10-44 | 31,485 | 28,939 | |||||||||
Central office equipment1
|
3-10 | 86,370 | 86,185 | |||||||||
Cable, wiring and conduit
|
15-50 | 76,107 | 80,338 | |||||||||
Other equipment
|
3-15 | 67,887 | 61,387 | |||||||||
Software
|
3 | 8,150 | 7,957 | |||||||||
Under construction
|
- | 3,276 | 4,412 | |||||||||
274,798 | 270,907 | |||||||||||
Accumulated depreciation and amortization
|
163,830 | 161,140 | ||||||||||
Property, plant and equipment - net
|
$ | 110,968 | $ | 109,767 | ||||||||
1 Includes certain network software. |
|
Wireless
|
Wireline
|
Advertising
Solutions
|
Other
|
Total
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Balance as of January 1, 2012
|
$ | 35,755 | $ | 33,638 | $ | 1,059 | $ | 390 | $ | 70,842 | ||||||||||
Goodwill acquired
|
13 | 5 | - | - | 18 | |||||||||||||||
Other
|
35 | 327 | (1,059 | ) | (390 | ) | (1,087 | ) | ||||||||||||
Balance as of December 31, 2012
|
35,803 | 33,970 | - | - | 69,773 | |||||||||||||||
Goodwill acquired
|
305 | - | - | - | 305 | |||||||||||||||
Held for sale
|
- | (799 | ) | - | - | (799 | ) | |||||||||||||
Other
|
(2 | ) | (4 | ) | - | - | (6 | ) | ||||||||||||
Balance as of December 31, 2013
|
$ | 36,106 | $ | 33,167 | $ | - | $ | - | $ | 69,273 |
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||
Other Intangible Assets
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
||||||||||||
Amortized intangible assets:
|
|
|
|
|
||||||||||||
Customer lists and relationships:
|
|
|
|
|
||||||||||||
AT&T Mobility LLC
|
$ | 982 | $ | 771 | $ | 6,760 | $ | 6,335 | ||||||||
BellSouth Corporation
|
5,825 | 5,317 | 5,825 | 4,994 | ||||||||||||
AT&T Corp.
|
2,482 | 2,438 | 2,490 | 2,356 | ||||||||||||
Other
|
- | - | 351 | 350 | ||||||||||||
Subtotal
|
9,289 | 8,526 | 15,426 | 14,035 | ||||||||||||
Other
|
284 | 169 | 304 | 174 | ||||||||||||
Total
|
$ | 9,573 | $ | 8,695 | $ | 15,730 | $ | 14,209 |
Indefinite-lived intangible assets not subject to amortization:
|
|
|
|
|
||||
Licenses
|
|
$
|
56,433
|
|
|
$
|
52,352
|
|
Trade names
|
|
|
4,901
|
|
|
|
4,902
|
|
Total
|
|
$
|
61,334
|
|
|
$
|
57,254
|
|
|
2013
|
2012
|
||||||
Beginning of year
|
$ | 4,581 | $ | 3,718 | ||||
Additional investments
|
111 | 405 | ||||||
Equity in net income of affiliates
|
642 | 752 | ||||||
Dividends and Distributions received
|
(318 | ) | (137 | ) | ||||
Currency translation adjustments
|
61 | 95 | ||||||
Sale of América Móvil shares
|
(781 | ) | - | |||||
Return of advances to and investments in YP Holdings
|
(301 | ) | - | |||||
América Móvil equity adjustments
|
(124 | ) | (260 | ) | ||||
Other adjustments
|
(11 | ) | 8 | |||||
End of year
|
$ | 3,860 | $ | 4,581 |
|
2013
|
2012
|
||||||||||||||
Notes and debentures
|
||||||||||||||||
|
Interest Rates
|
Maturities1
|
|
|
||||||||||||
|
0.60% – 2.99% | 2015 – 2022 | $ | 18,774 | $ | 13,969 | ||||||||||
|
3.00% – 4.99% | 2013 – 2045 | 22,327 | 14,590 | ||||||||||||
|
5.00% – 6.99% | 2013 – 2095 | 28,513 | 35,226 | ||||||||||||
|
7.00% – 9.10% | 2013 – 2097 | 6,268 | 7,059 | ||||||||||||
|
Other
|
1 | 2 | |||||||||||||
Fair value of interest rate swaps recorded in debt
|
154 | 267 | ||||||||||||||
|
76,037 | 71,113 | ||||||||||||||
Unamortized (discount) premium - net
|
(1,553 | ) | (1,535 | ) | ||||||||||||
Total notes and debentures
|
74,484 | 69,578 | ||||||||||||||
Capitalized leases
|
283 | 265 | ||||||||||||||
Total long-term debt, including current maturities
|
74,767 | 69,843 | ||||||||||||||
Current maturities of long-term debt
|
(5,477 | ) | (3,485 | ) | ||||||||||||
Total long-term debt
|
$ | 69,290 | $ | 66,358 | ||||||||||||
1 Maturities assume putable debt is redeemed by the holders at the next opportunity. |
|
2013
|
2012
|
||||||
Current maturities of long-term debt
|
$ | 5,477 | $ | 3,485 | ||||
Commercial paper
|
20 | - | ||||||
Bank borrowings1
|
1 | 1 | ||||||
Total
|
$ | 5,498 | $ | 3,486 | ||||
1 Outstanding balance of short-term credit facility of a foreign subsidiary. |
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
||||||||||||||||||
Debt repayments1
|
$ | 5,472 | $ | 6,514 | $ | 6,667 | $ | 5,257 | $ | 5,800 | $ | 45,790 |
|
|||||||||||
Weighted-average interest rate
|
4.9 | % | 3.2 | % | 2.7 | % | 2.4 | % | 4.6 | % | 5.1 |
%
|
||||||||||||
1 Debt repayments assume putable debt is redeemed by the holders at the next opportunity. |
·
|
at a variable annual rate equal to (1) the highest of: (a) the base (or prime) rate of the bank affiliate of Citibank, N.A. which is serving as administrative agent under the Agreement, (b) 0.50% per annum above the Federal funds rate, and (c) the London Interbank Offered Rate (LIBOR) applicable to U.S. dollars for a period of one month plus 1.00% per annum, plus (2) an applicable margin, as set forth in the Agreement (Applicable Margin); or
|
·
|
at a rate equal to: (i) the LIBOR for a period of one, two, three or six months, as applicable, plus (ii) the Applicable Margin.
|
·
|
We fail to pay principal or interest, or other amounts under the agreement beyond any grace period.
|
·
|
We fail to pay when due other debt of $400 or more that results in acceleration of that debt (commonly referred to as cross-acceleration) or a creditor commences enforcement proceedings within a specified period after a money judgment of $400 or more has become final.
|
·
|
A person acquires beneficial ownership of more than 50% of AT&T common shares or more than a majority of AT&T’s directors change in any 24-month period other than as elected by the remaining directors.
|
·
|
We fail to make certain minimum funding payments under ERISA.
|
·
|
Our bankruptcy or insolvency.
|
Level 1
|
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
|
Level 2
|
Inputs to the valuation methodology include:
|
·
|
Quoted prices for similar assets and liabilities in active markets.
|
·
|
Quoted prices for identical or similar assets or liabilities in inactive markets.
|
·
|
Inputs other than quoted market prices that are observable for the asset or liability.
|
·
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
Level 3
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
·
|
Fair value is often based on developed models in which there are few, if any, external observations.
|
|
December 31, 2013
|
December 31, 2012
|
||||||||||||||
|
Carrying
|
Fair
|
Carrying
|
Fair
|
||||||||||||
|
Amount
|
Value
|
Amount
|
Value
|
||||||||||||
Notes and debentures
|
$ | 74,484 | $ | 79,309 | $ | 69,578 | $ | 81,310 | ||||||||
Commercial paper
|
20 | 20 | - | - | ||||||||||||
Bank borrowings
|
1 | 1 | 1 | 1 | ||||||||||||
Investment securities
|
2,450 | 2,450 | 2,218 | 2,218 |
|
December 31, 2013
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Available-for-Sale Securities
|
|
|
|
|
||||||||||||
Domestic equities
|
$ | 1,049 | $ | - | $ | - | $ | 1,049 | ||||||||
International equities
|
563 | - | - | 563 | ||||||||||||
Fixed income bonds
|
- | 759 | - | 759 | ||||||||||||
Asset Derivatives1
|
||||||||||||||||
Interest rate swaps
|
- | 191 | - | 191 | ||||||||||||
Cross-currency swaps
|
- | 1,951 | - | 1,951 | ||||||||||||
Liability Derivatives1
|
||||||||||||||||
Interest rate swaps
|
- | (7 | ) | - | (7 | ) | ||||||||||
Cross-currency swaps
|
- | (519 | ) | - | (519 | ) | ||||||||||
|
||||||||||||||||
|
December 31, 2012
|
|||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Available-for-Sale Securities
|
||||||||||||||||
Domestic equities
|
$ | 873 | $ | - | $ | - | $ | 873 | ||||||||
International equities
|
469 | - | - | 469 | ||||||||||||
Fixed income bonds
|
- | 837 | - | 837 | ||||||||||||
Asset Derivatives1
|
||||||||||||||||
Interest rate swaps
|
- | 287 | - | 287 | ||||||||||||
Cross-currency swaps
|
- | 752 | - | 752 | ||||||||||||
Foreign exchange contracts
|
- | 1 | - | 1 | ||||||||||||
Liability Derivatives1
|
||||||||||||||||
Cross-currency swaps
|
- | (672 | ) | - | (672 | ) | ||||||||||
1 Derivatives designated as hedging instruments are reflected as "Other Assets," "Other noncurrent liabilities" and, for a portion of interest rate swaps, "Other current assets" in our consolidated balance sheets. |
|
2013
|
2012
|
||||||
Interest rate swaps
|
$ | 4,750 | $ | 3,000 | ||||
Cross-currency swaps
|
17,787 | 12,071 | ||||||
Foreign exchange contracts
|
- | 51 | ||||||
Total
|
$ | 22,537 | $ | 15,122 |
Following is the related hedged items affecting our financial position and performance:
|
||||||||||||
|
|
|
|
|||||||||
Effect of Derivatives in the Consolidated Statements of Income
|
|
|
|
|||||||||
Fair Value Hedging Relationships
|
|
|
|
|||||||||
For the years ended December 31,
|
2013
|
2012
|
2011
|
|||||||||
Interest rate swaps (Interest expense):
|
|
|
|
|||||||||
Gain (Loss) on interest rate swaps
|
$ | (113 | ) | $ | (179 | ) | $ | 10 | ||||
Gain (Loss) on long-term debt
|
113 | 179 | (10 | ) |
Cash Flow Hedging Relationships
|
|
|
|
|||||||||
For the year ended December 31,
|
2013
|
2012
|
2011
|
|||||||||
Cross-currency swaps:
|
|
|
|
|||||||||
Gain (Loss) recognized in accumulated OCI
|
$ | 813 | $ | 432 | $ | (219 | ) | |||||
Interest rate locks:
|
||||||||||||
Gain (Loss) recognized in accumulated OCI
|
- | - | (167 | ) | ||||||||
Interest income (expense) reclassified from
accumulated OCI into income
|
(46 | ) | (43 | ) | (23 | ) | ||||||
Foreign exchange contracts:
|
||||||||||||
Gain (Loss) recognized in accumulated OCI
|
(2 | ) | 5 | (10 | ) |
NOTE 11. INCOME TAXES
|
|
2013
|
2012
|
||||||
Depreciation and amortization
|
$ | 43,623 | $ | 41,411 | ||||
Intangibles (nonamortizable)
|
1,874 | 1,874 | ||||||
Employee benefits
|
(9,072 | ) | (13,350 | ) | ||||
Net operating loss and other carryforwards
|
(2,272 | ) | (2,167 | ) | ||||
Other – net
|
29 | (1,199 | ) | |||||
Subtotal
|
34,182 | 26,569 | ||||||
Deferred tax assets valuation allowance
|
927 | 886 | ||||||
Net deferred tax liabilities
|
$ | 35,109 | $ | 27,455 | ||||
|
||||||||
Net long-term deferred tax liabilities
|
$ | 36,308 | $ | 28,491 | ||||
Less: Net current deferred tax assets
|
(1,199 | ) | (1,036 | ) | ||||
Net deferred tax liabilities
|
$ | 35,109 | $ | 27,455 |
Federal, State and Foreign Tax
|
2013
|
2012
|
||||||
Balance at beginning of year
|
$ | 4,793 | $ | 4,541 | ||||
Increases for tax positions related to the current year
|
255 | 791 | ||||||
Increases for tax positions related to prior years
|
488 | 991 | ||||||
Decreases for tax positions related to prior years
|
(1,238 | ) | (1,426 | ) | ||||
Lapse of statute of limitations
|
(24 | ) | (29 | ) | ||||
Settlements
|
(47 | ) | (75 | ) | ||||
Balance at end of year
|
4,227 | 4,793 | ||||||
Accrued interest and penalties
|
1,034 | 977 | ||||||
Gross unrecognized income tax benefits
|
5,261 | 5,770 | ||||||
Less: Deferred federal and state income tax benefits
|
(481 | ) | (610 | ) | ||||
Less: Tax attributable to timing items included above
|
(2,121 | ) | (2,448 | ) | ||||
Total UTB that, if recognized, would impact the
|
||||||||
effective income tax rate as of the end of the year
|
$ | 2,659 | $ | 2,712 |
|
2013
|
2012
|
2011
|
|||||||||
Federal:
|
|
|
|
|||||||||
Current
|
$ | 3,043 | $ | 451 | $ | (420 | ) | |||||
Deferred – net
|
5,692 | 2,256 | 2,555 | |||||||||
|
8,735 | 2,707 | 2,135 | |||||||||
State, local and foreign:
|
||||||||||||
Current
|
(61 | ) | 702 | 23 | ||||||||
Deferred – net
|
550 | (509 | ) | 374 | ||||||||
|
489 | 193 | 397 | |||||||||
Total
|
$ | 9,224 | $ | 2,900 | $ | 2,532 |
|
2013
|
2012
|
2011
|
|||||||||
Taxes computed at federal statutory rate
|
$ | 9,722 | $ | 3,654 | $ | 2,351 | ||||||
Increases (decreases) in income taxes resulting from:
|
||||||||||||
State and local income taxes – net of federal income tax benefit
|
294 | 85 | 210 | |||||||||
Goodwill Impairment
|
- | - | 961 | |||||||||
Other – net
|
(792 | ) | (839 | ) | (990 | ) | ||||||
Total
|
$ | 9,224 | $ | 2,900 | $ | 2,532 | ||||||
Effective Tax Rate
|
33.2 | % | 27.8 | % | 37.7 | % |
NOTE 12. PENSION AND POSTRETIREMENT BENEFITS
|
|
Pension Benefits
|
Postretirement Benefits
|
||||||||||||||
|
2013
|
2012
|
2013
|
2012
|
||||||||||||
Benefit obligation at beginning of year
|
$ | 58,911 | $ | 56,110 | $ | 37,431 | $ | 34,953 | ||||||||
Service cost - benefits earned during the period
|
1,321 | 1,216 | 352 | 336 | ||||||||||||
Interest cost on projected benefit obligation
|
2,429 | 2,800 | 1,532 | 1,725 | ||||||||||||
Amendments
|
- | (905) | (4,460 | ) | (2,768 | ) | ||||||||||
Actuarial (gain) loss
|
(2,390 | ) | 6,707 | (2,098 | ) | 4,844 | ||||||||||
Special termination benefits
|
255 | 12 | 1 | 5 | ||||||||||||
Benefits paid
|
(3,966 | ) | (5,729) | (2,473 | ) | (2,608 | ) | |||||||||
Transfer for sale of Advertising Solutions segment
|
- | (149) | - | (207 | ) | |||||||||||
Plan transfers
|
- | (1,151) | - | 1,151 | ||||||||||||
Benefit obligation at end of year
|
$ | 56,560 | $ | 58,911 | $ | 30,285 | $ | 37,431 |
Pension Benefits | Postretirement Benefits | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Fair value of plan assets at beginning of year
|
$ | 45,060 | $ | 45,907 | $ | 9,295 | $ | 9,890 | ||||||||
Actual return on plan assets
|
5,935 | 5,041 | 1,347 | 1,266 | ||||||||||||
Benefits paid1
|
(3,966 | ) | (5,729) | (1,682 | ) | (1,842 | ) | |||||||||
Contributions
|
209 | 3 | - | - | ||||||||||||
Transfer for sale of Advertising Solutions segment
|
- | (165) | - | (19 | ) | |||||||||||
Other
|
- | 3 | - | - | ||||||||||||
Fair value of plan assets at end of year3
|
47,238 | 45,060 | 8,960 | 9,295 | ||||||||||||
Unfunded status at end of year2
|
$ | (9,322 | ) | $ | (13,851) | $ | (21,325 | ) | $ | (28,136 | ) | |||||
1 At our discretion, certain postretirement benefits may be paid from AT&T cash accounts, which does not reduce VEBA assets. Future benefit payments may be made from VEBA trusts and thus reduce those asset balances. | ||||||||||||||||
2 Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding is determined in accordance with ERISA regulations. | ||||||||||||||||
3 Net assets available for benefits at December 31, 2013 were $56,447 and include a $9,209 preferred equity interest in AT&T Mobility II LLC, as discussed below. |
|
2013
|
2012
|
||||||
Plan assets recognized in the consolidated financial statements
|
$ | 47,238 | $ | 45,060 | ||||
Preferred equity interest in Mobility
|
9,209 | - | ||||||
Net assets available for benefits
|
$ | 56,447 | $ | 45,060 |
Pension Benefits | Postretirement Benefits | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Current portion of employee benefit obligation1
|
$ | - | $ | - | $ | (1,949 | ) | $ | (2,116 | ) | ||||||
Employee benefit obligation2
|
(9,322 | ) | (13,851) | (19,376 | ) | (26,020 | ) | |||||||||
Net amount recognized
|
$ | (9,322 | ) | $ | (13,851) | $ | (21,325 | ) | $ | (28,136 | ) | |||||
1 Included in "Accounts payable and accrued liabilities." | ||||||||||||||||
2 Included in "Postemployment benefit obligation." |
|
Pension Benefits
|
Postretirement Benefits
|
||||||||||||||||||||||
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||||||||||||||
Service cost – benefits earned
during the period
|
$ | 1,321 | $ | 1,216 | $ | 1,186 | $ | 352 | $ | 336 | $ | 362 | ||||||||||||
Interest cost on projected benefit
obligation
|
2,429 | 2,800 | 2,958 | 1,532 | 1,725 | 2,051 | ||||||||||||||||||
Expected return on assets
|
(3,312 | ) | (3,520 | ) | (3,690) | (706 | ) | (811 | ) | (1,040 | ) | |||||||||||||
Amortization of prior service credit
|
(94 | ) | (15 | ) | (15) | (1,161 | ) | (927 | ) | (694 | ) | |||||||||||||
Actuarial (gain) loss
|
(5,013 | ) | 5,206 | 4,498 | (2,738 | ) | 4,247 | 1,672 | ||||||||||||||||
Net pension and postretirement
(credit) cost
|
$ | (4,669 | ) | $ | 5,687 | $ | 4,937 | $ | (2,721 | ) | $ | 4,570 | $ | 2,351 |
|
Pension Benefits
|
Postretirement Benefits
|
||||||||||||||||||||||
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
||||||||||||||||||
Balance at beginning of year
|
$ | 641 | $ | 92 | $ | 102 | $ | 4,766 | $ | 3,655 | $ | 2,951 | ||||||||||||
Prior service (cost) credit
|
- | 559 | - | 2,765 | 1,686 | 1,134 | ||||||||||||||||||
Amortization of prior service credit
|
(58 | ) | (10 | ) | (10) | (719 | ) | (575 | ) | (430 | ) | |||||||||||||
Total recognized in other
comprehensive (income) loss
|
(58 | ) | 549 | (10) | 2,046 | 1,111 | 704 | |||||||||||||||||
Balance at end of year
|
$ | 583 | $ | 641 | $ | 92 | $ | 6,812 | $ | 4,766 | $ | 3,655 |
|
2013
|
2012
|
2011
|
|||||||||
Discount rate for determining projected benefit obligation at December 31
|
5.00 | % | 4.30 | % | 5.30 | % | ||||||
Discount rate in effect for determining net cost
|
4.30 | % | 5.30 | % | 5.80 | % | ||||||
Long-term rate of return on plan assets
|
7.75 | % | 8.25 | % | 8.25 | % | ||||||
Composite rate of compensation increase for determining projected benefit
obligation
|
3.00 | % | 3.00 | % | 4.00 | % | ||||||
Composite rate of compensation increase for determining net pension
cost (benefit)
|
3.00 | % | 4.00 | % | 4.00 | % |
|
One Percentage-
|
One Percentage-
|
||||||
|
Point Increase
|
Point Decrease
|
||||||
Increase (decrease) in total of service and interest cost components
|
$ | 207 | $ | (179 | ) | |||
Increase (decrease) in accumulated postretirement benefit obligation
|
1,010 | (878 | ) |
|
Pension Assets
|
Postretirement (VEBA) Assets
|
|||||||||||||||||||||||||
|
Target
|
2013
|
2012
|
Target
|
2013
|
2012
|
|||||||||||||||||||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Domestic
|
25 | % | - | 35 | % | 25 | % | 26 | % | 20 | % | - | 30 | % | 25 | % | 37 | % | |||||||||
International
|
10 | % | - | 20 | % | 16 | 16 | 15 | % | - | 25 | % | 20 | 33 | |||||||||||||
Fixed income securities
|
30 | % | - | 40 | % | 33 | 34 | 19 | % | - | 29 | % | 24 | 24 | |||||||||||||
Real assets
|
6 | % | - | 16 | % | 11 | 11 | 0 | % | - | 6 | % | 1 | 1 | |||||||||||||
Private equity
|
4 | % | - | 14 | % | 12 | 13 | 0 | % | - | 9 | % | 4 | 4 | |||||||||||||
Other
|
0 | % | - | 5 | % | 3 | - | 21 | % | - | 31 | % | 26 | 1 | |||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % |
Pension Assets and Liabilities at Fair Value as of December 31, 2013
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Non-interest bearing cash
|
$ | 65 | $ | - | $ | - | $ | 65 | ||||||||
Interest bearing cash
|
- | 324 | - | 324 | ||||||||||||
Foreign currency contracts
|
- | 3 | - | 3 | ||||||||||||
Equity securities:
|
||||||||||||||||
Domestic equities
|
9,841 | 3 | - | 9,844 | ||||||||||||
International equities
|
6,431 | 7 | - | 6,438 | ||||||||||||
Fixed income securities:
|
||||||||||||||||
Asset-backed securities
|
- | 553 | 3 | 556 | ||||||||||||
Mortgage-backed securities
|
- | 2,470 | - | 2,470 | ||||||||||||
Collateralized mortgage-backed securities
|
- | 364 | - | 364 | ||||||||||||
Collateralized mortgage obligations/REMICS
|
- | 514 | - | 514 | ||||||||||||
Other Corporate and other bonds and notes
|
154 | 5,147 | 540 | 5,841 | ||||||||||||
Government and municipal bonds
|
15 | 4,566 | - | 4,581 | ||||||||||||
Private equity funds
|
- | - | 5,724 | 5,724 | ||||||||||||
Real estate and real assets
|
- | - | 5,194 | 5,194 | ||||||||||||
Commingled funds
|
- | 6,358 | 4 | 6,362 | ||||||||||||
Securities lending collateral
|
390 | 3,074 | - | 3,464 | ||||||||||||
Receivable for variation margin
|
12 | - | - | 12 | ||||||||||||
Assets at fair value
|
16,908 | 23,383 | 11,465 | 51,756 | ||||||||||||
Investments sold short and other liabilities at fair value
|
(619 | ) | (5 | ) | - | (624 | ) | |||||||||
Total plan net assets at fair value
|
$ | 16,289 | $ | 23,378 | $ | 11,465 | $ | 51,132 | ||||||||
Other assets (liabilities)1
|
(3,894 | ) | ||||||||||||||
Total Plan Net Assets
|
$ | 47,238 | ||||||||||||||
1 Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable. |
Postretirement Assets and Liabilities at Fair Value as of December 31, 2013
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Interest bearing cash
|
$ | 405 | $ | 2,073 | $ | - | $ | 2,478 | ||||||||
Equity securities:
|
||||||||||||||||
Domestic equities
|
1,609 | - | - | 1,609 | ||||||||||||
International equities
|
1,527 | - | - | 1,527 | ||||||||||||
Fixed income securities:
|
||||||||||||||||
Asset-backed securities
|
- | 35 | 2 | 37 | ||||||||||||
Collateralized mortgage-backed securities
|
- | 110 | - | 110 | ||||||||||||
Collateralized mortgage obligations
|
- | 53 | 3 | 56 | ||||||||||||
Other Corporate and other bonds and notes
|
- | 367 | 18 | 385 | ||||||||||||
Government and municipal bonds
|
- | 558 | 1 | 559 | ||||||||||||
Commingled funds
|
- | 1,899 | 2 | 1,901 | ||||||||||||
Private equity assets
|
- | - | 309 | 309 | ||||||||||||
Real assets
|
- | - | 111 | 111 | ||||||||||||
Securities lending collateral
|
19 | 372 | - | 391 | ||||||||||||
Foreign exchange contracts receivable
|
3 | - | - | 3 | ||||||||||||
Assets at fair value
|
3,563 | 5,467 | 446 | 9,476 | ||||||||||||
Foreign exchange contracts payable
|
3 | - | - | 3 | ||||||||||||
Liabilities at fair value
|
3 | - | - | 3 | ||||||||||||
Total plan net assets at fair value
|
$ | 3,560 | $ | 5,467 | $ | 446 | $ | 9,473 | ||||||||
Other assets (liabilities)1
|
(513 | ) | ||||||||||||||
Total Plan Net Assets
|
$ | 8,960 | ||||||||||||||
1 Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable. |
Pension Assets
|
Equities
|
Fixed
Income
Funds
|
Private
Equity
Funds
|
Real Estate
and Real
Assets
|
Total
|
|||||||||||||||
Balance at beginning of year
|
$ | - | $ | 1,042 | $ | 5,797 | $ | 4,766 | $ | 11,605 | ||||||||||
Realized gains (losses)
|
(3 | ) | 53 | 390 | 122 | 562 | ||||||||||||||
Unrealized gains (losses)
|
3 | (8 | ) | 546 | 525 | 1,066 | ||||||||||||||
Transfers in
|
- | 5 | - | - | 5 | |||||||||||||||
Transfers out
|
- | (442 | ) | - | - | (442 | ) | |||||||||||||
Purchases
|
- | 75 | 1,214 | 354 | 1,643 | |||||||||||||||
Sales
|
- | (178 | ) | (2,223 | ) | (573 | ) | (2,974 | ) | |||||||||||
Balance at end of year
|
$ | - | $ | 547 | $ | 5,724 | $ | 5,194 | $ | 11,465 |
Postretirement Assets
|
Fixed
Income
Funds
|
Private
Equity
Funds
|
Real Assets
|
Total
|
||||||||||||
Balance at beginning of year
|
$ | 21 | $ | 343 | $ | 110 | $ | 474 | ||||||||
Realized gains (losses)
|
- | 2 | 12 | 14 | ||||||||||||
Unrealized gains (losses)
|
1 | 58 | 4 | 63 | ||||||||||||
Transfers in
|
1 | - | - | 1 | ||||||||||||
Transfers out
|
(1 | ) | - | - | (1 | ) | ||||||||||
Purchases
|
5 | 89 | 27 | 121 | ||||||||||||
Sales
|
(1 | ) | (183 | ) | (42 | ) | (226 | ) | ||||||||
Balance at end of year
|
$ | 26 | $ | 309 | $ | 111 | $ | 446 |
Pension Assets and Liabilities at Fair Value as of December 31, 2012
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Non-interest bearing cash
|
$ | 144 | $ | - | $ | - | $ | 144 | ||||||||
Interest bearing cash
|
56 | 235 | - | 291 | ||||||||||||
Foreign currency contracts
|
- | 1 | - | 1 | ||||||||||||
Equity securities:
|
||||||||||||||||
Domestic equities
|
8,291 | - | - | 8,291 | ||||||||||||
International equities
|
6,361 | 29 | - | 6,390 | ||||||||||||
Fixed income securities:
|
||||||||||||||||
Asset-backed securities
|
- | 543 | 14 | 557 | ||||||||||||
Mortgage-backed securities
|
- | 2,324 | - | 2,324 | ||||||||||||
Collateralized mortgage-backed securities
|
- | 311 | - | 311 | ||||||||||||
Collateralized mortgage obligations/REMICS
|
- | 523 | 1 | 524 | ||||||||||||
Other Corporate and other bonds and notes
|
140 | 4,903 | 600 | 5,643 | ||||||||||||
Government and municipal bonds
|
50 | 5,301 | - | 5,351 | ||||||||||||
Private equity funds
|
- | - | 5,797 | 5,797 | ||||||||||||
Real estate and real assets
|
- | - | 4,766 | 4,766 | ||||||||||||
Commingled funds
|
- | 4,927 | 426 | 5,353 | ||||||||||||
Securities lending collateral
|
868 | 1,930 | 1 | 2,799 | ||||||||||||
Receivable for variation margin
|
72 | - | - | 72 | ||||||||||||
Assets at fair value
|
15,982 | 21,027 | 11,605 | 48,614 | ||||||||||||
Investments sold short and other liabilities at fair value
|
(563 | ) | (7 | ) | - | (570 | ) | |||||||||
Total plan net assets at fair value
|
$ | 15,419 | $ | 21,020 | $ | 11,605 | $ | 48,044 | ||||||||
Other assets (liabilities)1
|
(2,984 | ) | ||||||||||||||
Total Plan Net Assets
|
$ | 45,060 | ||||||||||||||
1 Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable. |
Postretirement Assets and Liabilities at Fair Value as of December 31, 2012
|
||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Interest bearing cash
|
$ | 169 | $ | 243 | $ | - | $ | 412 | ||||||||
Equity securities:
|
||||||||||||||||
Domestic equities
|
2,575 | - | - | 2,575 | ||||||||||||
International equities
|
2,685 | 1 | - | 2,686 | ||||||||||||
Fixed income securities:
|
||||||||||||||||
Asset-backed securities
|
- | 29 | - | 29 | ||||||||||||
Collateralized mortgage-backed securities
|
- | 79 | - | 79 | ||||||||||||
Collateralized mortgage obligations
|
- | 46 | - | 46 | ||||||||||||
Other Corporate and other bonds and notes
|
1 | 383 | 17 | 401 | ||||||||||||
Government and municipal bonds
|
22 | 598 | - | 620 | ||||||||||||
Commingled funds
|
82 | 2,038 | 4 | 2,124 | ||||||||||||
Private equity assets
|
- | - | 343 | 343 | ||||||||||||
Real assets
|
- | - | 110 | 110 | ||||||||||||
Securities lending collateral
|
544 | 81 | - | 625 | ||||||||||||
Assets at fair value
|
6,078 | 3,498 | 474 | 10,050 | ||||||||||||
Total plan net assets at fair value
|
$ | 6,078 | $ | 3,498 | $ | 474 | $ | 10,050 | ||||||||
Other assets (liabilities)1
|
(755 | ) | ||||||||||||||
Total Plan Net Assets
|
$ | 9,295 | ||||||||||||||
1 Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable. |
Pension Assets
|
Equities
|
Fixed Income
Funds
|
Private Equity
Funds
|
Real Estate and
Real Assets
|
Total
|
|||||||||||||||
Balance at beginning of year
|
$ | 4 | $ | 824 | $ | 5,931 | $ | 5,213 | $ | 11,972 | ||||||||||
Realized gains (losses)
|
(1 | ) | 16 | 459 | 165 | 639 | ||||||||||||||
Unrealized gains (losses)
|
1 | 33 | 32 | 10 | 76 | |||||||||||||||
Transfers in
|
- | 120 | 12 | 24 | 156 | |||||||||||||||
Transfers out
|
- | (2 | ) | - | - | (2 | ) | |||||||||||||
Purchases
|
- | 142 | 610 | 918 | 1,670 | |||||||||||||||
Sales
|
(4 | ) | (91 | ) | (1,247 | ) | (1,564 | ) | (2,906 | ) | ||||||||||
Balance at end of year
|
$ | - | $ | 1,042 | $ | 5,797 | $ | 4,766 | $ | 11,605 |
Postretirement Assets
|
Fixed Income
Funds
|
Private Equity
Funds
|
Real Assets
|
Total
|
||||||||||||
Balance at beginning of year
|
$ | 24 | $ | 437 | $ | 124 | $ | 585 | ||||||||
Realized gains (losses)
|
- | 58 | 16 | 74 | ||||||||||||
Unrealized gains (losses)
|
- | (39 | ) | (5 | ) | (44 | ) | |||||||||
Purchases
|
- | 20 | 33 | 53 | ||||||||||||
Sales
|
(3 | ) | (133 | ) | (58 | ) | (194 | ) | ||||||||
Balance at end of year
|
$ | 21 | $ | 343 | $ | 110 | $ | 474 |
|
Pension
Benefits
|
|
Postretirement
Benefits
|
|
Medicare
Subsidy
Receipts
|
||||
2014
|
$
|
7,376
|
|
$
|
2,265
|
|
$
|
(19)
|
|
2015
|
|
4,294
|
|
|
2,271
|
|
|
-
|
|
2016
|
|
4,197
|
|
|
2,222
|
|
|
-
|
|
2017
|
|
4,115
|
|
|
2,171
|
|
|
-
|
|
2018
|
|
4,029
|
|
|
2,129
|
|
|
-
|
|
Years 2019 - 2023
|
|
19,589
|
|
|
9,921
|
|
|
-
|
|
2013
|
2012
|
||||||
Projected benefit obligation
|
$ | (2,280 | ) | $ | (2,456 | ) | ||
Accumulated benefit obligation
|
(2,227 | ) | (2,392 | ) | ||||
Fair value of plan assets
|
- | - |
Net Periodic Benefit Cost
|
2013
|
2012
|
2011
|
|||||||||
Service cost – benefits earned during the period
|
$ | 9 | $ | 10 | $ | 14 | ||||||
Interest cost on projected benefit obligation
|
101 | 116 | 126 | |||||||||
Amortization of prior service cost (credit)
|
- | - | 2 | |||||||||
Actuarial (gain) loss
|
(106 | ) | 230 | 81 | ||||||||
Net supplemental retirement pension cost
|
$ | 4 | $ | 356 | $ | 223 |
Other Changes Recognized in
Other Comprehensive Income
|
2013
|
2012
|
2011
|
|||||||||
Prior service (cost) credit
|
$ | (1 | ) | $ | (1 | ) | $ | 6 | ||||
Amortization of prior service cost (credit)
|
- | - | 1 | |||||||||
Total recognized in other comprehensive (income) loss (net of tax)
|
$ | (1 | ) | $ | (1 | ) | $ | 7 |
|
2013
|
2012
|
2011
|
|||||||||
Performance stock units
|
$ | 381 | $ | 397 | $ | 388 | ||||||
Restricted stock and stock units
|
80 | 102 | 91 | |||||||||
Other nonvested stock units
|
(3 | ) | 12 | 4 | ||||||||
Other
|
- | - | 6 | |||||||||
Total
|
$ | 458 | $ | 511 | $ | 489 |
Nonvested Stock Units
|
Shares
|
Weighted-Average
Grant-Date Fair Value
|
||||||
Nonvested at January 1, 2013
|
26 | $ | 28.55 | |||||
Granted
|
11 | 35.36 | ||||||
Vested
|
(12 | ) | 27.99 | |||||
Forfeited
|
(1 | ) | 31.10 | |||||
Nonvested at December 31, 2013
|
24 | $ | 31.93 |
|
December 31,
|
|||||||
Consolidated Balance Sheets
|
2013
|
2012
|
||||||
Accounts payable and accrued liabilities:
|
|
|
||||||
Accounts payable
|
$ | 11,561 | $ | 12,076 | ||||
Accrued payroll and commissions
|
1,985 | 2,332 | ||||||
Current portion of employee benefit obligation
|
1,949 | 2,116 | ||||||
Accrued interest
|
1,559 | 1,588 | ||||||
Other
|
4,053 | 2,382 | ||||||
Total accounts payable and accrued liabilities
|
$ | 21,107 | $ | 20,494 |
Consolidated Statements of Income
|
2013
|
2012
|
2011
|
|||||||||
Advertising expense
|
$ | 3,268 | $ | 2,910 | $ | 3,135 | ||||||
Interest expense incurred
|
$ | 4,224 | $ | 3,707 | $ | 3,697 | ||||||
Capitalized interest
|
(284 | ) | (263 | ) | (162 | ) | ||||||
Total interest expense
|
$ | 3,940 | $ | 3,444 | $ | 3,535 |
Consolidated Statements of Cash Flows
|
2013
|
2012
|
2011
|
|||||||||
Cash paid during the year for:
|
|
|
|
|||||||||
Interest
|
$ | 4,302 | $ | 3,714 | $ | 3,691 | ||||||
Income taxes, net of refunds
|
1,985 | 458 | 32 |
|
2013 Calendar Quarter
|
|
||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth2
|
Annual
|
|||||||||||||||
Total Operating Revenues
|
$ | 31,356 | $ | 32,075 | $ | 32,158 | $ | 33,163 | $ | 128,752 | ||||||||||
Operating Income
|
5,940 | 6,113 | 6,188 | 12,238 | 30,479 | |||||||||||||||
Net Income
|
3,773 | 3,880 | 3,905 | 6,995 | 18,553 | |||||||||||||||
Net Income Attributable to AT&T
|
3,700 | 3,822 | 3,814 | 6,913 | 18,249 | |||||||||||||||
Basic Earnings Per Share Attributable
|
||||||||||||||||||||
to AT&T1
|
$ | 0.67 | $ | 0.71 | $ | 0.72 | $ | 1.31 | $ | 3.39 | ||||||||||
Diluted Earnings Per Share Attributable
|
||||||||||||||||||||
to AT&T1
|
$ | 0.67 | $ | 0.71 | $ | 0.72 | $ | 1.31 | $ | 3.39 | ||||||||||
Stock Price
|
||||||||||||||||||||
High
|
$ | 36.87 | $ | 39.00 | $ | 36.31 | $ | 36.80 | ||||||||||||
Low
|
32.76 | 34.10 | 33.19 | 33.09 | ||||||||||||||||
Close
|
36.69 | 35.40 | 33.82 | 35.16 | ||||||||||||||||
1 Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year. | ||||||||||||||||||||
2 Includes an actuarial gain on pension and postretirement benefit plans (Note 12), special termination charges (Note 12) and charges for employee separations (Note 1). |
|
2012 Calendar Quarter
|
|
||||||||||||||||||
|
First
|
Second
|
Third
|
Fourth2
|
Annual
|
|||||||||||||||
Total Operating Revenues
|
$ | 31,822 | $ | 31,575 | $ | 31,459 | $ | 32,578 | $ | 127,434 | ||||||||||
Operating Income (Loss)
|
6,101 | 6,817 | 6,037 | (5,958 | ) | 12,997 | ||||||||||||||
Net Income (Loss)
|
3,652 | 3,965 | 3,701 | (3,779 | ) | 7,539 | ||||||||||||||
Net Income (Loss) Attributable to AT&T
|
3,584 | 3,902 | 3,635 | (3,857 | ) | 7,264 | ||||||||||||||
Basic Earnings (Loss) Per Share
|
||||||||||||||||||||
Attributable to AT&T1
|
$ | 0.60 | $ | 0.67 | $ | 0.63 | $ | (0.68 | ) | $ | 1.25 | |||||||||
Diluted Earnings (Loss) Per Share
|
||||||||||||||||||||
Attributable to AT&T1
|
$ | 0.60 | $ | 0.66 | $ | 0.63 | $ | (0.68 | ) | $ | 1.25 | |||||||||
Stock Price
|
||||||||||||||||||||
High
|
$ | 31.97 | $ | 36.00 | $ | 38.58 | $ | 38.43 | ||||||||||||
Low
|
29.02 | 29.95 | 34.24 | 32.71 | ||||||||||||||||
Close
|
31.23 | 35.66 | 37.70 | 33.71 | ||||||||||||||||
1 Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year. | ||||||||||||||||||||
2 Includes an actuarial loss on pension and postretirement benefit plans (Note 12). |
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