Windstream 2006 Annual Report Download - page 154
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
For the period of 2006 following inception of the Windstream benefit plans, pension expense totaled $11.1 million.
These expenses are included in cost of services and selling, general, administrative and other expenses in the
consolidated statements of income.
The Company provides postretirement healthcare and life insurance benefits for eligible employees. Employees
share in, and the Company funds, the costs of these plans as benefits are paid. After adopting the provisions of
SFAS No. 158, Windstream recognized unfunded postretirement benefit obligations totaling $262.4 million as of
December 31, 2006, which is included in other liabilities in the accompanying consolidated balance sheet.
The following table reflects the components of pension expense for the period following the inception of the plan
(including provision for executive retirement agreements) and postretirement expense for the years ended
December 31:
Pension Benefits Postretirement Benefits
(Millions) 2006 (a) 2006 2005 2004
Benefits earned during the year $8.2 $0.2 $ - $ -
Interest cost on benefit obligation 26.9 7.3 9.6 11.2
Amortization of transition obligation - 0.4 - -
Amortization of prior service cost - 0.9 1.8 1.5
Recognized net actuarial loss 14.3 3.3 5.3 4.0
Gain from plan curtailments (1.7) 0.4 - -
Effects of Medicare subsidy - - - (2.2)
Expected return on plan assets (36.6) - - -
Total net periodic benefit expense $11.1 $12.5 $16.7 $ 14.5
(a) Reflects results following the inception of Windstream plans pursuant to the spin-off from Alltel
As a component of determining its annual pension cost, Windstream amortizes unrecognized gains or losses that
exceed 17.5 percent of the greater of the projected benefit obligation or market-related value of plan assets on a
straight-line basis over five years. Unrecognized actuarial gains and losses below the 17.5 percent corridor are
amortized over the average remaining service life of active employees, which is approximately 14 years for each of
the postretirement plans. The Company uses a December 31 measurement date for its employee benefit plans.
Actuarial assumptions used to calculate the pension and postretirement expense were as follows for the years
ended December 31:
Pension Benefits Postretirement Benefits
2006 2006 2005 2004
Discount rate 6.33% 6.28% 6.00% 6.40%
Expected return on plan assets 8.50% - - -
Rate of compensation increase 3.50% - - -
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