Windstream 2008 Annual Report Download - page 153
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
The following table reflects the components of pension expense for the years ended December 31, 2008 and 2007
and the period following spin off in 2006 (including provision for executive retirement agreements) and
postretirement expense for the years ended December 31:
Pension Benefits Postretirement Benefits
(Millions) 2008 2007 2006 (a) 2008 2007 2006
Benefits earned during the year $ 13.2 $ 16.3 $ 8.2 $ 0.3 $ 0.4 $ 0.2
Interest cost on benefit obligation 56.2 53.7 26.9 12.7 15.1 7.3
Amortization of transition obligation - - - 0.5 0.8 0.4
Recognition of net actuarial loss 6.1 24.1 14.3 1.1 6.1 3.3
Amortization of prior service cost (0.1) (0.2) - 0.2 1.9 0.9
(Gain) loss from plan curtailment - - (1.7) - 0.1 0.4
Expected return on plan assets (76.3) (79.0) (36.6) - - -
Net periodic benefit expense (income) $ (0.9) $ 14.9 $ 11.1 $ 14.8 $ 24.4 $ 12.5
(a) Amounts reflect pension expense for the period following the inception of the Windstream pension plan
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 was approximately 12 years for its
pension plan during 2008.
As a component of determining its annual postretirement cost, the Company amortizes unrecognized actuarial
gains and losses exceeding the 10.0 percent corridor over the lesser of 10 years or the average remaining service
life of active employees, which was approximately 14 years for its postretirement benefit plan during 2008.
Windstream does not amortize unrecognized actuarial gains and losses below the 10.0 percent corridor.
Actuarial assumptions used to calculate the pension and postretirement expense were as follows for the years
ended December 31:
Pension Benefits Postretirement Benefits
(Millions) 2008 2007 2006 2008 2007 2006
Discount rate 6.36% 5.92% 6.33% 6.38% 5.90% 6.28%
Expected return on plan assets 8.00% 8.50% 8.50% - - -
Rate of compensation increase 3.00% 3.50% 3.50% - - -
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