AT&T Wireless 2012 Annual Report Download - page 90

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
88 | AT&T Inc.
Our match of employee contributions to the savings plans
is fulfilled with purchases of our stock on the open market
or company cash. Benefit cost is based on the cost of
shares or units allocated to participating employees’
accounts and was $634, $636 and $607 for the years
ended December 31, 2012, 2011 and 2010.
NOTE 12. SHARE-BASED PAYMENTS
We account for our share-based payment arrangements
based on the fair value of the awards on their respective
grant date, which may affect our ability to fully realize the
value shown on our consolidated balance sheets of deferred
tax assets associated with compensation expense. We record
a valuation allowance when our future taxable income is not
expected to be sufficient to recover the asset. Accordingly,
there can be no assurance that the current stock price of
our common shares will rise to levels sufficient to realize the
entire tax benefit currently reflected on our consolidated
balance sheets. However, to the extent we generate excess
tax benefits (i.e., that additional tax benefits in excess of
the deferred taxes associated with compensation expense
previously recognized) the potential future impact on income
would be reduced.
At December 31, 2012, we had various share-based payment
arrangements, which we describe in the following discussion.
The compensation cost recognized for those plans was
included in operating expenses in our consolidated
statements of income. The total income tax benefit
recognized in the consolidated statements of income for
share-based payment arrangements was $195 for 2012,
compared to $187 for 2011 and $196 for 2010.
Under our various plans, senior and other management
employees and nonemployee directors have received
nonvested stock and stock units. We grant performance stock
units, which are nonvested stock units, based upon our stock
price at the date of grant and award them in the form of
AT&T common stock and cash at the end of a three-year
period, subject to the achievement of certain performance
goals. We treat the cash portion of these awards as a liability.
We grant forfeitable restricted stock and stock units, which
are valued at the market price of our common stock at the
date of grant and vest typically over a two- to seven-year
The following table provides information for our supplemental
retirement plans with accumulated benefit obligations in
excess of plan assets:
2012 2011
Projected benefit obligation $(2,456) $(2,294)
Accumulated benefit obligation (2,392) (2,223)
Fair value of plan assets — —
The following tables present the components of net periodic
benefit cost and other changes in plan assets and benefit
obligations recognized in OCI:
Net Periodic Benefit Cost 2012 2011 2010
Service cost – benefits earned
during the period $ 10 $ 14 $ 12
Interest cost on projected
benefit obligation 116 126 134
Amortization of prior
service cost (credit) — 2 2
Actuarial (gain) loss 230 81 186
Net supplemental retirement
pension cost $356 $223 $334
Other Changes Recognized in
Other Comprehensive Income 2012 2011 2010
Prior service (cost) credit $(1) $6 $(5)
Amortization of prior
service cost (credit) — 1 (2)
Total recognized in other
comprehensive (income)
loss (net of tax) $(1) $7 $(7)
The estimated prior service credit for our supplemental
retirement plan benefits that will be amortized from
accumulated OCI into net periodic benefit cost over the
next fiscal year is $1.
Deferred compensation expense was $118 in 2012, $96 in
2011 and $96 in 2010. Our deferred compensation liability,
included in “Other noncurrent liabilities,” was $1,061 at
December 31, 2012, and $1,010 at December 31, 2011.
Contributory Savings Plans
We maintain contributory savings plans that cover
substantially all employees. Under the savings plans, we
match in cash or company stock a stated percentage of
eligible employee contributions, subject to a specified ceiling.
There are no debt-financed shares held by the Employee
Stock Ownership Plans, allocated or unallocated.