Verizon Communications Inc., New York, reported earnings of 78 cents per share in the second quarter, helped in part by a favorable interim actuarial remeasurement associated with one of the pension plans due to settlement accounting.
The earnings-per-share number includes a 5-cent boost from increasing the discount rate from year-end 2012. Spokesman Raymond McConville said the company is not disclosing the discount rate change. According to the company's 2012 10-K filing, the discount rate used to determine the net periodic cost was 5% as of Dec. 31, down from 5.75% in 2011.
Settlement accounting is required when a threshold is crossed, which happens when Verizon pays lump-sum pension benefits in excess of service cost plus interest cost on a pension plan, Mr. McConville said. The threshold was crossed in the second quarter and triggered the remeasurement.
The change in interest rate assumption resulted in a $147 million after-tax non-cash gain. Remeasurement will also occur in the third quarter to recognize any change in the discount rate from June 30 to Sept. 30.
The adjustments are non-cash and have no impact on cash flow.
