Frontier Communications 2013 Annual Report Download - page 95

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Pension Benefits
The following tables set forth the pension plan’s projected benefit obligations, fair values of plan assets
and the pension benefit liability recognized on our consolidated balance sheets as of December 31, 2013 and
2012 and the components of total periodic pension benefit cost for the years ended December 31, 2013, 2012
and 2011:
($ in thousands) 2013 2012
Change in projected benefit obligation (PBO)
PBO at beginning of year . . . ......................................... $1,944,731 $1,799,313
Service cost ......................................................... 47,651 43,688
Interest cost ......................................................... 75,812 78,027
Actuarial (gain)/loss.................................................. (180,709) 196,304
Benefits paid ........................................................ (54,151) (172,601)
Settlements .......................................................... (164,608) —
PBO at end of year .................................................. $1,668,726 $1,944,731
Change in plan assets
Fair value of plan assets at beginning of year . . ....................... $1,253,666 $1,257,990
Actual return on plan assets . ......................................... 119,328 139,679
Employer contributions, net of transfers ............................... 62,290 28,598
Benefits paid ........................................................ (54,151) (172,601)
Settlements .......................................................... (164,608) —
Fair value of plan assets at end of year ............................... $1,216,525 $1,253,666
Funded status ........................................................ $ (452,201) $ (691,065)
Amounts recognized in the consolidated balance sheet
Other current liabilities ............................................... $ (100,205) $ (60,386)
Pension and other postretirement benefits.............................. $ (351,996) $ (630,679)
Accumulated other comprehensive loss ................................ $ 411,432 $ 697,874
($ in thousands) Expected in 2014 2013 2012 2011
Components of total periodic pension benefit
cost
Service cost .................................. $ 47,651 $ 43,688 $ 38,879
Interest cost on projected benefit obligation .... 75,812 78,027 84,228
Expected return on plan assets ................. (94,695) (95,777) (100,558)
Amortization of prior service cost /(credit) ..... $ 45 8 (199) (199)
Amortization of unrecognized loss ............. 19,274 36,930 29,890 15,364
Net periodic pension benefit cost .............. 65,706 55,629 37,714
Pension settlement costs ....................... 44,163 — —
Total periodic pension benefit cost ............. $109,869 $ 55,629 $ 37,714
Our pension plan contains provisions that provide certain employees with the option of receiving lump
sum payment upon retirement. The Company’s accounting policy is to record these payments as a settlement
only if, in the aggregate, they exceed the sum of the annual service and interest costs for the plan’s net periodic
pension benefit cost. During 2013, lump sum pension settlement payments to terminated or retired individuals
amounted to $164.6 million, which exceeded the settlement threshold of $125.4 million, and as a result, the
Company was required to recognize a non-cash settlement charge of $44.2 million during 2013. The non-cash
charge was required to accelerate the recognition of a portion of the previously unrecognized actuarial losses in
the pension plan. This non-cash charge reduced our recorded net income and retained earnings, with an offset
to accumulated other comprehensive loss in shareholders’ equity of Frontier.
F-33
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements