Frontier Communications 2013 Annual Report Download - page 98

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($ in thousands)
Expected in
2014 2013 2012 2011
Components of net periodic postretirement benefit
Service cost ................................................ $12,533 $ 10,812 $ 8,958
Interest cost on projected benefit obligation .................. 17,241 17,842 17,722
Expected return on plan assets............................... (136) (172) (324)
Amortization of prior service cost/(credit) .................... $(3,560) (6,101) (10,068) (10,198)
Amortization of unrecognized loss ........................... 2,886 7,846 7,537 4,424
Net periodic postretirement benefit cost ...................... $31,383 $ 25,951 $ 20,582
Assumptions used in the computation of annual OPEB costs and valuation of the year-end OPEB
obligations were as follows:
2013 2012 2011
Discount rate—used at year end to value
obligation . . . .................................. 4.90%-5.20% 4.00%-4.20% 4.50%-4.75%
Discount rate—used to compute annual cost ....... 4.00%-4.20% 4.50%-4.75% 5.25%
Expected long-term rate of return on plan assets. . . 3.00%-4.00% 3.00%-4.00% 3.00%-6.00%
The OPEB plan’s expected benefit payments over the next 10 years are as follows:
($ in thousands)
Gross
Benefit
Medicare Part D
Subsidy Total
2014 $ 16,687 $ 489 $ 16,198
2015 18,004 585 17,419
2016 19,342 691 18,651
2017 20,575 825 19,750
2018 21,785 961 20,824
2019-2023 120,619 6,994 113,625
Total $217,012 $10,545 $206,467
For purposes of measuring year-end benefit obligations, we used, depending on medical plan coverage for
different retiree groups, a 7.50% annual rate of increase in the per-capita cost of covered medical benefits,
gradually decreasing to 5.00% in the year 2019 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 $1.1 million and the effect on the
accumulated postretirement benefit obligation for health benefits would be $14.8 million. 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 $(1.0) million and the effect on the
accumulated postretirement benefit obligation for health benefits would be $(13.8) million.
The amounts in accumulated other comprehensive loss that have not yet been recognized as components of
net periodic benefit cost at December 31, 2013 and 2012 are as follows:
($ in thousands) 2013 2012 2013 2012
Pension Plan OPEB
Net actuarial loss ................................. $411,076 $697,511 $ 30,835 $105,970
Prior service cost/(credit) . . ........................ 356 363 (25,605) (31,706)
Total......................................... $411,432 $697,874 $ 5,230 $ 74,264
F-36
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements