Windstream 2008 Annual Report Download - page 156

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
Estimated future employer contributions, benefit payments and Medicare prescription drug subsidies expected to
offset future postretirement benefit payments are as follows as of December 31, 2008:
(Millions)
Pension
Benefits
Postretirement
Benefits
Expected employer contributions in 2009 $ 0.7 $ 15.4
Expected benefit payments:
2009 $ 59.7 $ 16.3
2010 60.9 16.2
2011 62.6 16.0
2012 65.1 15.6
2013 67.2 15.2
2014 – 2018 364.5 66.3
Expected Medicare prescription drug subsidies:
2009 $ 0.9
2010 0.9
2011 1.0
2012 1.1
2013 1.0
2014 – 2018 5.9
The expected employer contribution for pension benefits consists of $0.7 million necessary to fund the expected
benefit payments related to the unfunded supplemental retirement pension plans. Future contributions to the plan
will depend on various factors, including future investment performance, changes in future discount rates and
changes in the demographics of the population participating in the Company’s pension plan. Expected benefit
payments include amounts to be paid from the plans or directly from the Company’s assets, and exclude amounts
that will be funded by participant contributions to the plans.
Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, beginning in 2006, a
prescription drug benefit is provided under Medicare Part D, as well as a federal subsidy to plan sponsors of
retiree healthcare plans that provide a prescription drug benefit to their participants that is at least actuarially
equivalent to the benefit that will be available under Medicare. The amount of the federal subsidy is based on
28 percent of an individual beneficiary’s annual eligible prescription drug costs ranging between $250 and $5,000.
The Company determined that a substantial portion of the prescription drug benefits provided under its
postretirement benefit plan are deemed actuarially equivalent to the benefits provided under Medicare Part D.
The Company sponsors an employee savings plan under section 401(k) of the Internal Revenue Code, which
covers substantially all salaried employees and certain bargaining unit employees. Employees may elect to
contribute to the plans a portion of their eligible pretax compensation up to certain limits as specified by the plans
and by the Internal Revenue Service. Effective January 2009, the Company decreased its matching contribution to
employee savings accounts from a maximum of 6 percent to a maximum of 4 percent of employee pretax
contributions for employees contributing at least 5 percent. The Company’s matching contribution will be
calculated and made annually. During 2007 and 2008, the Company made matching contributions of 6 percent of
employee pretax contributions. During 2006, the plan provided for an employer matching contribution of up to 4
percent of a participant’s pretax contributions to the plan. The Company recorded $13.2 million, $13.3 million and
$8.8 million in 2008, 2007 and 2006, respectively, related to the employee savings plan, which was included in
cost of services and selling, general, administrative and other expenses in the consolidated statements of income.
On December 31, 2006, the Company terminated its profit sharing plan, a non-contributory defined contribution
plan for eligible employees, except bargaining unit employees, and merged the plan assets into its employee
savings plan. Prior to the spin off from Alltel, Windstream employees participated in the Alltel-sponsored plan
and the amount of profit sharing contributions to the plan was determined by Alltel’s Board of Directors.
Following the spin off and merger, the amount of profit sharing contributions to the plan were determined
annually by Windstream’s Board of Directors. No profit sharing expense was incurred by Windstream during
2008 or 2007. Profit sharing expense included in cost of services and selling, general, administrative and other
expenses in the consolidated statements of income amounted to $5.5 million in 2006.
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