Windstream 2013 Annual Report Download - page 205

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-69
8. Employee Benefit Plans and Postretirement Benefits, Continued:
(b) Based on the value of the underlying contracts adjusted to market value, which recognizes that either long-term assets
would have to be sold before contract maturity or new contributions by other contract holders would have to be
exchanged for funds being transferred, precluding these contributions from being invested at their current rate of
return.
(c) Valued based on the net asset value of the fund as reported by the fund manager on the last business day of the Plan
year. The underlying assets are mostly comprised of publicly traded equity securities and fixed income securities.
These securities are valued at the official closing price of, or the last reported sale prices as of the close of business or,
in the absence of any sales, at the latest available bid price.
(d) Valued based on quoted market prices on the last day of the Plan year. Securities traded in markets that are not
considered active are valued based on quoted market prices, broker or dealer quotes or alternative pricing sources with
reasonable levels of price transparency. Securities that trade infrequently and therefore have little or no price
transparency are valued using best estimates, including unobservable input.
(e) Derivative financial instruments consist primarily of swaps and are valued at fair value based on models that reflect
the contractual terms of the instruments. Inputs include primarily observable market information, such as swap curves,
benchmark yields, rating updates and interdealer broker quotes at the end of the Plan year.
(f) Hedge funds of funds hold a portfolio of other investment funds instead of directly investing in specific securities,
commodities or other financial instruments. The funds are valued based on the net asset value of the fund as
determined by the fund manager on the last business day of the Plan year. The net asset value is derived from the fair
value of each underlying fund comprising the hedge fund of funds.
(g) The real estate fund is valued based on the net asset value of the fund on the last business day of the Plan year. The net
asset value is derived from the fair value of the underlying net assets of the fund. Private equity funds consist of
investments in limited partnerships and are valued based on the Plan's capital account balance at year end as reported
in the audited financial statements of the partnership.
(h) Other investments include warrants, interest bearing cash and investments in foreign currency. These investments are
valued at their quoted market price on the last day of the Plan year.
The following is a reconciliation of the beginning and ending balances of pension plan assets that are measured at fair value
using significant unobservable inputs:
(Millions) Domestic equities Hedge fund of funds
Real estate
and private
equity funds
Guaranteed
annuity
contract Total
Balance at December 31, 2011 $ 0.1 $ — $ 35.1 (a) $ 2.8 $ 38.0
Actual gain on plan assets still held at reporting date — — 2.7 0.1 2.8
Purchases and sales — — 6.6 (0.6) 6.0
Transfers in and/or out of level 3 — — — — —
Balance at December 31, 2012 0.1 — 44.4 2.3 46.8
Actual gain on plan assets still held at reporting date — 2.7 4.3 0.2 7.2
Purchases and sales — 57.5 4.1 (0.6) 61.0
Transfers in and/or out of level 3 — — — — —
Balance at December 31, 2013 $ 0.1 $ 60.2 $ 52.8 $ 1.9 $ 115.0
(a) Amount reflects the correction of an immaterial error for an investment previously reported as level 2 that should have
been reported as level 3.
Transfers between levels of the fair value hierarchy are recognized at the end of the reporting period. There were no transfers in
or out of levels 1, 2, or 3 for the years ended December 31, 2013 and 2012.