Frontier Communications 2010 Annual Report Download - page 92

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($ in thousands)
Expected
2011 2010 2009 2008
Components of net periodic benefit cost
Service cost......................................... $ 21,169 $ 6,098 $ 6,005
Interest cost on projected benefit obligation. . . . . . . . . . . 67,735 52,127 52,851
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . (69,831) (44,712) (65,256)
Amortization of prior service cost/(credit) . . . . . . . . . . . . (199) (199) (255) (255)
Amortization of unrecognized loss . . . . . . . . . . . . . . . . . . . 17,741 27,393 27,144 6,855
Net periodic benefit cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,267 40,402 200
Special termination charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 1,567 1,662
Total periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,336 $ 41,969 $ 1,862
We capitalized $8.3 million, $7.5 million and $0.0 million of pension expense into the cost of our capital
expenditures during the years ended December 31, 2010, 2009 and 2008, respectively, as the costs relate to our
engineering and plant construction activities.
The plan’s weighted average asset allocations at December 31, 2010 and 2009 by asset category are as
follows:
2010 2009
Asset category:
Equity securities ........................................................ 50% 38%
Debt securities.......................................................... 39% 51%
Alternative investments.................................................. 10% 10%
Cash and other.......................................................... 1% 1%
Total................................................................. 100% 100%
The plan’s expected benefit payments over the next 10 years are as follows:
($ in thousands)
Year Amount
2011 $ 63,105
2012 65,747
2013 67,194
2014 67,643
2015 69,518
2016-2020 343,008
Total $676,215
We made cash contributions of $13.1 million to the Plan during 2010. No contributions were made to the
Plan during 2008 and 2009. We expect that we will make a cash contribution to the Plan of approximately $50
million in 2011.
The accumulated benefit obligation for the Plan was $1,372.6 million and $876.5 million at December 31,
2010 and 2009, respectively.
Assumptions used in the computation of annual pension costs and valuation of the year-end obligations
were as follows:
2010 2009 2008
Discount rate—used at year end to value obligation. . . . . . . . . . . . . . . . . . . . . . . 5.25% 5.75% 6.50%
Discount rate—used to compute annual cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.75% 6.50% 6.50%
Expected long-term rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00% 8.00% 8.25%
Rate of increase in compensation levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.00% 3.00% 3.00%
F-33
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements