Windstream 2011 Annual Report Download - page 167

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-59
8. Employee Benefit Plans and Postretirement Benefits:
We maintain a non-contributory qualified defined benefit pension plan. Prior to establishing the pension plan pursuant to the
spin off in 2006, our employees participated in a substantially equivalent plan maintained by Alltel. Future benefit accruals for
all eligible nonbargaining employees covered by the pension plan ceased 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). We also maintain supplemental
executive retirement plans that provide unfunded, non-qualified supplemental retirement benefits to a select group of
management employees. Additionally, we provide postretirement healthcare and life insurance benefits for eligible employees.
Employees share in, and we fund, the costs of these plans as benefits are paid.
Effective during the fourth quarter of 2011, we changed our method of recognizing actuarial gains and losses for pension
benefits to recognize actuarial gains and losses in our operating results in the year in which the gains and losses occur.
Historically, we have recognized actuarial gains and losses as a component of accumulated other comprehensive income in our
consolidated balance sheets on an annual basis and amortized 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 were amortized into operating results over the average
future service life of active employees in these plans. These gains and losses are measured annually as of December 31st and
accordingly will be recorded during the fourth quarter or whenever a remeasurement of the pension benefit obligation occurs.
While our historical policy of recognizing pension benefits is considered acceptable under U.S. GAAP, we believe the new
policy is preferable as it eliminates the delay in recognizing gains and losses within operating results. This change will improve
transparency in our financial results by more quickly recognizing the effects of economic and interest rate trends on plan
investments and assumptions. We have applied these changes retrospectively, adjusting all prior periods presented (see Note 2).
The following table reflects the components of pension expense for the years ended December 31, 2011, 2010 and 2009,
including provision for executive retirement agreements and postretirement benefits expense for the years ended December 31:
(Millions)
Benefits earned during the year
Interest cost on benefit obligation
Net actuarial loss (gain)
Amortization of net actuarial loss
Amortization of prior service credit
Gain from postretirement plan termination
Expected return on plan assets
Net periodic benefit expense (income)
Pension Benefits
2011
$ 9.3
60.7
167.9
—
(0.1)
—
(71.0)
$ 166.8
2010
$ 15.7
60.6
38.0
—
(0.1)
—
(60.1)
$ 54.1
2009
$ 13.6
57.8
(44.5)
—
(0.1)
—
(50.6)
$(23.8)
Postretirement Benefits
2011
$ 0.2
3.4
—
1.0
(10.7)
(14.7)
—
$(20.8)
2010
$ 0.2
5.2
—
0.6
(8.3)
—
—
$(2.3)
2009
$ 0.1
8.4
—
—
(3.2)
—
—
$ 5.3
As a component of determining our annual postretirement benefits cost, we amortize unrecognized actuarial gains and losses
exceeding 10.0 percent of the projected benefit obligation over the lesser of 10 years or the average remaining service life of
active employees, which was approximately 10 years for our postretirement benefit plan during 2011. We do not amortize
unrecognized actuarial gains and losses below the 10.0 percent corridor.