Windstream 2010 Annual Report Download - page 161

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Employee Benefit Plans and Postretirement Benefits, Continued:
obligations when and as prescribed by law and to keep pace with the growth of the pension plan liabilities. Given
the long time horizon for paying out benefits, and the strong financial condition of the Company, the pension plan
can accept an average level of risk relative to other similar plans. The liquidity needs of the plan are manageable
given that lump sum payments are not available to most participants.
Equity securities include stocks of both large and small capitalization domestic and international companies.
Equity securities are expected to provide both diversification and long-term real asset growth. Domestic equities
may include modest holdings of non-U.S. equities, purchased by domestic equity managers as long as they are
traded in the U.S and denominated in U.S. dollars and both active and passive (index) investment strategies.
International equities provide a broad exposure to return opportunities and investment characteristics associated
with the world equity markets outside the U.S. The plan’s equity holding are diversified by investment style,
market capitalization, market or region, and economic sector.
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. These securities are
expected to provide significant diversification benefits, in terms of asset volatility and pension funding volatility,
and a stable source of income.
Alternative investments include both private and public real estate and private equity investments. In addition to
attractive diversification benefits, the real estate investments are expected to provide both income and capital
appreciation, while the private equity investments are expected to provide return enhancements.
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.
At its meeting on February 9, 2011, the board of directors approved a measure to allow the plan to make
investments in Windstream common stock. Previously, the plan prohibited investment in Windstream common
stock. This change allows for the expected 2011 pension contribution of $60.0 million to be made in Windstream
common stock.
The fair values of the Company’s pension and post retirement benefit plan assets were determined using the
following inputs as of December 31, 2010:
Quoted Price in
Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
(a)
Significant
Unobservable
Inputs
(Millions)
Fair
Value Level 1 Level 2 Level 3
Domestic equities (b) $ 366.8 $ 265.6 $ 101.0 $ 0.2
International equities (b) 161.4 84.2 77.2 -
Agency backed bonds (b) 29.4 - 29.4 -
Asset backed securities (b) 1.3 - 1.3 -
Corporate bonds (b) 121.3 - 121.3 -
Government and municipal bonds (b) 14.5 - 14.5 -
Mortgage backed securities (b) 3.5 - 3.5 -
Pooled funds (b) 21.3 - 21.3 -
Derivatives (c) 0.3 0.2 0.1 -
Treasuries (b) 72.2 - 72.2 -
Treasury inflation protected securities (c) 40.7 - 40.7 -
Cash equivalents and other 31.3 2.8 28.5 -
Guaranteed annuity contract (d) 3.3 - 3.3 -
Total investments $ 867.3 $ 352.8 $ 514.3 $ 0.2
Dividends and interest receivable 5.7
Pending trades (2.5)
Total plan assets $ 870.5
F-61