Frontier Communications 2008 Annual Report Download - page 91

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Postretirement Benefits Other Than Pensions—“OPEB”
The following table sets forth the plans’ benefit obligations, fair values of plan assets and the
postretirement benefit liability recognized on our consolidated balance sheets at December 31, 2008 and 2007
and net periodic postretirement benefit costs for the years ended December 31, 2008, 2007 and 2006.
($ in thousands) 2008 2007
Change in benefit obligation
Benefit obligation at beginning of year.................................. $ 174,602 $ 159,931
Commonwealth plan as of date of acquisition ........................... — 996
Service cost ........................................................... 444 533
Interest cost ........................................................... 11,255 10,241
Plan participants’ contributions ......................................... 3,753 3,370
Actuarial loss. . . ....................................................... 3,917 15,620
Benefits paid . . . ....................................................... (15,261) (15,064)
Plan change ........................................................... (95) (1,025)
Benefit obligation at end of year . . . .................................... $ 178,615 $ 174,602
Change in plan assets
Fair value of plan assets at beginning of year ........................... $ 9,369 $ 11,869
Actual return on plan assets ............................................ 388 814
Plan participants’ contributions ......................................... 3,753 3,370
Employer contribution.................................................. 9,888 8,380
Benefits paid . . . ....................................................... (15,261) (15,064)
Fair value of plan assets at end of year ................................. $ 8,137 $ 9,369
Accrued benefit cost
Funded status . . . ....................................................... $(170,478) $(165,233)
Amounts recognized in the consolidated balance sheet
Current liabilities ...................................................... $ (8,916) $ (8,498)
Other long-term liabilities . ............................................. $(161,562) $(156,735)
Accumulated other comprehensive income............................... $ 8,045 $ 2,292
($ in thousands)
Expected
2009 2008 2007 2006
Components of net periodic postretirement benefit cost
Service cost .................................................... $ 444 $ 533 $ 664
Interest cost on projected benefit obligation ...................... 11,255 10,241 8,974
Expected return on plan assets . .................................. (514) (578) (889)
Amortization of prior service cost................................ (7,750) (7,751) (7,735) (7,589)
Amortization of unrecognized loss ............................... 5,514 5,946 6,099 4,678
Net periodic postretirement benefit cost . ......................... $ 9,380 $ 8,560 $ 5,838
Assumptions used in the computation of annual OPEB costs and valuation of the year-end OPEB
obligations were as follows:
2008 2007 2006
Discount rate—used at year end to value obligation ........................ 6.50% 6.50% 6.00%
Discount rate—used to compute annual cost ............................... 6.50% 6.00% 5.625%
Expected long-term rate of return on plan assets . .......................... 6.00% 6.00% 8.25%
F-40
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements