Cincinnati Bell 2006 Annual Report Download - page 193

Assumptions
The following are the weighted average assumptions used in accounting for the pension and postretirement
benefit cost:
Pension Benefits
Postretirement and
Other Benefits
2006 2005 2004 2006 2005 2004
Discount rate ......................................... 5.50% 5.50% 6.00% 5.50% 5.46% 6.00%
Expected long-term rate of return on pension and health
plan assets ......................................... 8.25% 8.25% 8.25% 8.25% 8.25% 8.25%
Expected long-term rate of return on group life plan assets ..... n/a n/a n/a 8.25% 8.25% 8.00%
Future compensation growth rate ......................... 4.10% 4.10% 4.50% 4.10% 4.10% 4.50%
The following are the weighted average assumptions used in accounting for and measuring the pension and
postretirement benefit obligation:
Pension Benefits
Postretirement and
Other Benefits
December 31, December 31,
2006 2005 2006 2005
Discount rate ................................... 5.75% 5.50% 5.75% 5.50%
Future compensation growth rate ................... 4.10% 4.10% 4.10% 4.10%
The expected long-term rate of return on plan assets, developed using the building block approach, is based
on the participants’ benefit horizons, the mix of investments held directly by the plans, and the current view of
expected future returns, which is influenced by historical averages.
Changes in actual asset return experience and discount rate assumptions can impact the Company’s
operating results, financial position and cash flows. Actual asset return experience results in an increase or
decrease in the asset base and this effect, in conjunction with a decrease in the pension discount rate, may result
in a plan’s assets being less than a plan’s benefit obligation.
The assumed health care cost trend rate used to measure the postretirement health benefit obligation at
December 31, 2006, was 10.0% and is assumed to decrease gradually to 4.5% by the year 2013. In addition, a
one-percentage point change in assumed health care cost trend rates would have the following effect on the
postretirement benefit costs and obligation:
(dollars in millions) 1% Increase 1% Decrease
2006 service and interest costs ........................... $ 2.9 $ (2.3)
Postretirement benefit obligation at December 31, 2006 ....... $34.6 $(29.1)
10. Minority Interest
For the periods presented in these Consolidated Financial Statements through February 14, 2006, Cingular
maintained a 19.9% ownership in CBW. The minority interest balance was adjusted as a function of Cingular’s
19.9% share of the net income (loss) of CBW, with an offsetting amount being reflected in the Consolidated
Statements of Operations under the caption “Minority interest income.” On February 14, 2006, the Company
purchased Cingular’s 19.9% membership interest in CBW for $83.2 million. As a result, CBW is now a wholly-
owned subsidiary of the Company, and for periods after the acquisition date, no further CBW minority interest
was recorded. Refer to Note 5 for discussion of the transaction.
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