Frontier Communications 2005 Annual Report Download - page 88

F-39
CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The plan’s weighted average asset allocations at December 31, 2005 and 2004 by asset category are as
follows:
2005 2004
Asset category:
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . 0% 0%
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100%
Cash and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0% 0%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% 100%
The plan’s expected benefit payments by year are as follows:
Year
Gross
Benefits
Medicare
D Subsidy Total
($ in thousands)
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,847 $ 676 $ 9,171
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,375 712 9,663
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,843 742 10,101
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,282 770 10,512
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,656 793 10,863
2011 - 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,619 4,049 56,570
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114,622 $ 7,742 $ 106,880
Our expected contribution to the plan in 2006 is $9,847,000.
For purposes of measuring year-end benefit obligations, we used, depending on medical plan coverage for
different retiree groups, a 9.5% annual rate of increase in the per-capita cost of covered medical benefits, gradually
decreasing to 5% in the year 2015 and remaining at that level thereafter. The effect of a 1% increase in the assumed
medical cost trend rates for each future year on the aggregate of the service and interest cost components of the total
postretirement benefit cost would be $1,306,000 and the effect on the accumulated postretirement benefit obligation
for health benefits would be $13,397,000. The effect of a 1% decrease in the assumed medical cost trend rates for
each future year on the aggregate of the service and interest cost components of the total postretirement benefit cost
would be $(1,068,000) and the effect on the accumulated postretirement benefit obligation for health benefits would
be $(11,480,000).
In December 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 (the Act)
became law. The Act introduces a prescription drug benefit under Medicare. It includes a federal subsidy to sponsors
of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to the Medicare Part D
benefit. The amount of the federal subsidy will be based on 28% of an individual beneficiary’s annual eligible
prescription drug costs ranging between $250 and $5,000. We have determined that the Company-sponsored
postretirement healthcare plans that provide prescription drug benefits are actuarially equivalent to the Medicare
Prescription Drug benefit. The impact of the federal subsidy has been incorporated in the December 31, 2005
measurement date.
401(k) Savings Plans
We sponsor an employee retirement savings plan under section 401(k) of the Internal Revenue Code. The Plan
covers substantially all full-time employees. Under the Plan, we provide matching and certain profit-sharing
contributions. Employer contributions were $7,181,000, $8,403,000 and $9,724,000 for 2005, 2004 and 2003,
respectively.