Windstream 2013 Annual Report Download - page 203

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-67
8. Employee Benefit Plans and Postretirement Benefits, Continued:
Plan Assets – Our pension plan assets are allocated to asset categories based on the specific strategy employed by the asset’s
investment manager. The asset allocation for our pension plan by asset category was as follows for the years ended December
31:
Target Allocation Percentage of Plan Assets
Asset Category 2014 2013 2012
Equity securities 17.7% - 29.7% 27.7% 44.2%
Fixed income securities 22.0% - 44.0% 52.4% 33.8%
Alternative investments 10.5% - 20.5% 15.0% 4.4%
Money market and other short-term interest bearing securities 0.0% - 4.0% 4.9% 17.6%
100.0% 100.0%
We utilize a third party to assist in evaluating the allocation of the total assets in the pension trust, taking into consideration the
pension liabilities and funded status of the pension plan. Assets are managed utilizing a Liability Driven Investment ("LDI")
approach, meaning that assets are managed within a risk management framework which addresses the need to generate
incremental returns in the context of an appropriate level of risk, based on plan liability profiles and changes in funded status.
The return objectives are to satisfy funding 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 our strong financial condition, the pension plan
can accept an average level of risk relative to other similar plans. The liquidity needs of the pension 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 pension plan’s
equity holdings 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 entities. These securities are expected to provide
diversification benefits, and are expected to reduce asset volatility and pension funding volatility, and a stable source of
income.
Alternative investments may include hedge funds and hedge fund of funds, commodities, both private and public real estate and
private equity investments. In addition to attractive diversification benefits, the alternative investments are expected to provide
both income and capital appreciation.
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.
The pension plan is permitted to make investments in our common stock. On September 13, 2013, we contributed 3.3 million
shares of our common stock to the pension plan to fund our remaining 2013 funding obligation and a portion of our expected
2014 funding obligation. At the time of this contribution, the shares had an appraised value of approximately $27.8 million, as
determined by a third party valuation firm. We made no contribution to the pension plan in 2012. During 2011, we contributed
10.8 million shares of our common stock to the pension plan to meet our 2011 and 2012 expected obligations. The shares had
an appraised value of approximately $135.8 million, and were subsequently sold by the pension plan for approximately $133.5
million.