Windstream 2007 Annual Report Download - page 148

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
The estimated net actuarial loss and prior service costs for the pension plan, including executive retirement
agreements, that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit
cost in 2008 are $4.1 million and $(0.2) million, respectively. The estimated net actuarial loss for the
postretirement benefit plan that will be amortized from accumulated other comprehensive income (loss) into net
periodic benefit cost in 2008 is $0.7 million. Amortization of the prior service costs and transition obligation from
accumulated other comprehensive income (loss) into net periodic benefit cost for the postretirement benefit plan
are $1.9 million and $0.8 million, respectively, in 2008.
The total accumulated benefit obligation for the pension plan was $868.6 million and $855.0 million at
December 31, 2007 and 2006, respectively.
Actuarial assumptions used to calculate the projected benefit obligations were as follows for the years ended
December 31:
Pension Benefits Postretirement Benefits
2007 2006 2007 2006
Discount rate 6.36% 5.92% 6.38% 5.90%
Expected return on plan assets 8.00% 8.50% - -
Rate of compensation increase 3.50% 3.50% - -
In developing the expected long-term rate of return assumption, Windstream evaluated historical investment
performance and input from its investment advisors. Projected returns by such advisors were based on broad
equity and bond indices. The expected long-term rate of return on qualified pension plan assets is based on a
targeted asset allocation of 50.0 percent to equities, with an expected long-term rate of return of 9.0 percent,
40.0 percent to fixed income securities, with an expected long-term rate of return of 6.0 percent, and 10.0 percent
to alternative investments, with an expected long-term rate of return of 11.0 percent. The asset allocation at
December 31, 2007 and 2006 for the Company’s pension plan by asset category were as follows:
Target Allocation Percentage of Plan Assets
Asset Category 2008 2007 2006
Equity securities 45%-60% 73.0% 73.4%
Fixed income securities 31%-44% 23.6% 25.1%
Alternative investments 0%-17% - -
Money market and other short-term interest bearing
securities 0%-3% 3.4% 1.5%
100.0% 100.0%
None of the qualified pension plan assets are invested in Windstream common stock. The Company’s investment
strategy is to maintain a diversified asset portfolio expected to provide long-term asset growth. Investments are
generally restricted to marketable securities. Equity securities include stocks of both large and small capitalization
domestic and international companies. Fixed income securities include securities issued by the U.S. Government
and other governmental agencies, asset-backed securities and debt securities issued by domestic and international
companies. Alternative investments include real estate and private equity investments. Investments in money
market and other short-term interest bearing securities are maintained to provide liquidity for benefit payments
with protection of principal being the primary objective. Given the cessation of future benefit accruals for all
eligible nonbargaining employees covered by the pension plan as of December 31, 2005 (December 31, 2010 for
employees who had attained age 40 with two years of service as of December 31, 2005), in December 2007, the
Company revised its asset allocation targets to lower overall risk resulting in a lower target allocation for equity
securities and a higher target allocation for fixed income assets.
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