Frontier Communications 2010 Annual Report Download - page 93

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Postretirement Benefits Other Than Pensions—“OPEB”
The following tables set forth the OPEB plan’s benefit obligations, fair values of plan assets and the
postretirement benefit liability recognized on our consolidated balance sheets at December 31, 2010 and 2009
and the components of net periodic postretirement benefit costs for the years ended December 31, 2010, 2009
and 2008.
($ in thousands) 2010 2009
Change in benefit obligation
Benefit obligation at beginning of year for Frontier Legacy operations. . . . $ 189,290 $ 178,615
Benefit obligation for Acquired Business as of acquisition date. . . . . . . . . . . 285,451 —
Service cost ........................................................... 7,956 361
Interest cost ........................................................... 17,883 11,017
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976 4,086
Actuarial loss.......................................................... 16,670 11,378
Benefits paid .......................................................... (14,720) (16,167)
Plan change ........................................................... (27,930) —
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 478,576 $ 189,290
Change in plan assets
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,028 $ 8,137
Actual return on plan assets............................................ 600 1,018
Plan participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976 4,086
Employer contribution.................................................. 8,355 10,954
Benefits paid .......................................................... (14,719) (16,167)
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,240 $ 8,028
Funded status.......................................................... $(472,336) $(181,262)
Amounts recognized in the consolidated balance sheet
Current liabilities ...................................................... $ (10,131) $ (9,052)
Pension and other postretirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(462,205) $(172,210)
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,369 $ 21,554
($ in thousands)
Expected
2011 2010 2009 2008
Components of net periodic postretirement benefit cost
Service cost.................................................... $ 7,956 $ 361 $ 444
Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . 17,883 11,017 11,255
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (436) (439) (514)
Amortization of prior service cost/(credit) . . . . . . . . . . . . . . . . . . . . . . . . (10,198) (8,157) (7,751) (7,751)
Amortization of unrecognized loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,994 4,917 5,041 5,946
Net periodic postretirement benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . $22,163 $ 8,229 $ 9,380
Assumptions used in the computation of annual OPEB costs and valuation of the year-end OPEB
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00% 6.00% 6.00%
F-34
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements