Cincinnati Bell 2008 Annual Report Download - page 182

As a result of the 2007-2008 restructuring plan, the Company determined curtailment charges were required
due to the significant decrease in the expected future service years. In 2008, the curtailment charge for the union
pension plan and union postretirement plan consisted of an increase in the benefit obligation of $2.2 million and
$12.5 million, and the acceleration of unrecognized prior service cost of $0.9 million and a benefit of $0.1
million, respectively. In 2007, the curtailment charge for the management pension plan and management
postretirement plan consisted of an increase in the benefit obligation of $1.9 million and $4.3 million, and the
acceleration of an unrecognized prior service cost and transition obligation of a benefit of $1.0 million and a cost
of $1.2 million, respectively. See Note 3 for further discussion.
Also related to the 2007-2008 restructuring plan, the Company incurred special termination benefit charges
of $8.2 million in the fourth quarter of 2007 due to 105 management employees accepting these benefits. In the
first quarter of 2008, the Company incurred an additional $22.1 million related to 284 union employees accepting
special termination benefits. The Company also recorded an additional $4.9 million of special termination
benefits during 2008 related to remaining special termination benefits being amortized over the future service
period for both the management and union employees. The Company will also amortize the remaining $2 million
of special termination benefits in 2009. See Note 3 for further discussion.
Due to the credit and financial market crisis, the Company’s pension plan assets incurred investment losses
of approximately 23% for the year ended December 31, 2008. As a result, the Company recorded an increase to
its unfunded pension and postretirement obligations of $123 million, increased deferred tax assets by $45
million, and reduced equity by $78 million.
Subsequent Event
In February 2009, the Company announced significant changes to its management pension and
postretirement plans. The Company announced that it will freeze pension benefits for certain management
employees below 50 years of age and provide a 10-year transition period for those employees over the age of 50
after which the pension benefit will be frozen. Additionally, the Company announced it will phase out the retiree
healthcare plan for all management employees and certain retirees in 10 years.
Components of Net Periodic Cost
The following information relates to all Company noncontributory defined benefit pension plans,
postretirement health care, and life insurance benefit plans. Approximately 9% in 2008 and 2007, and 10% in
2006 of these costs were capitalized to property, plant and equipment related to network construction in the
Wireline segment. Pension and postretirement benefit costs for these plans were comprised of:
Pension Benefits
Postretirement and
Other Benefits
(dollars in millions) 2008 2007 2006 2008 2007 2006
Service cost ........................................ $ 9.0 $ 8.3 $ 8.8 $ 1.8 $ 3.4 $ 3.5
Interest cost on projected benefit obligation ............... 28.8 28.0 27.7 18.3 20.1 19.9
Expected return on plan assets ......................... (34.8) (34.6) (34.9) (1.9) (3.6) (4.8)
Amortization of:
Transition obligation .............................———2.04.14.2
Prior service cost ................................ 0.4 2.2 3.4 0.4 5.4 7.7
Actuarial loss ................................... 2.8 3.6 3.9 3.5 3.7 4.8
Special termination benefit ............................ 26.2 8.1 — 0.8 0.1 —
Curtailment charge .................................. 3.1 0.9 — 12.4 5.5 —
Benefit costs ....................................... $35.5 $ 16.5 $ 8.9 $37.3 $38.7 $35.3
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