Cincinnati Bell 2012 Annual Report Download - page 137

Form 10-K Part II Cincinnati Bell Inc.
we amortize the excess over the average remaining service period of active employees for the pension and
bargained postretirement plans (approximately 10-14 years) and average life expectancy of retirees for the
management postretirement plan (approximately 17 years).
Accounting for Termination Benefits — The Company has written severance plans covering both its
management and union employees and, as such, accrues probable and estimable employee separation liabilities in
accordance with ASC 712, “Compensation — Nonretirement Postemployment Benefits”. These liabilities are
based on our historical termination rates, historical severance costs, as well as management’s expectation of
future severance events. As of December 31, 2012 and 2011, accrued employee separation liabilities were $7.8
million and $14.2 million, respectively, resulting largely from projected headcount reductions primarily in our
Wireline segment. Further headcount reductions are anticipated in the next few years as we continue to manage
our payroll costs to lower levels.
When employee terminations occur, management also considers the guidance in ASC 715 to determine if
employee terminations give rise to a pension and postretirement curtailment charge. Our accounting policy is that
terminations in a calendar year involving 10% or more of the plan future service years are deemed to be a plan
curtailment.
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Form 10-K