FairPoint Communications 2009 Annual Report Download - page 147

Table of Contents
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In developing the expected long-term rate of return assumption, the Company evaluated historical investment performance and input from its
investment advisors. Projected returns by such advisors were based on broad equity and bond indices. The expected long-term rate of return on
qualified pension plan assets is based on target allocations of 50% equity and 50% fixed income securities for the management plan and 70% equity and
30% fixed income securities for the associate plan. The asset allocation at December 31, 2009 for the Company's qualified pension plan assets,
excluding amounts receivable from Verizon, was as follows:
For the year ended December 31, 2009, the actual gain on the pension plan assets was approximately 17.3%. Net periodic benefit cost for 2009
assumes a weighted average annualized expected return on plan assets of approximately 8.3%. Should the Company's actual return on plan assets
become significantly lower than the expected return assumption, the net periodic benefit cost may increase in future periods and the Company may be
required to contribute additional funds to its pension plans after 2010.
A 1% change in the medical trend rate assumed for post-retirement health benefits would have the following effects at December 31, 2009:
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Cash and cash equivalents(1) 1.0% 0.4% 0.6%
Equity securities 42.8% 66.2% 59.1%
Fixed income securities 56.2% 33.4% 40.3%
100.0% 100.0% 100.0%
(1) Cash and cash equivalents includes only those amounts that are held in the respective plans' trusts as cash and
cash equivalent instruments. Amounts pending purchase or settlement of equity or fixed income securities are
classified within equity securities or fixed income securities, as appropriate.
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1% increase in the medical trend rate:
Effect on total service cost and interest cost components $ 6,428
Effect on benefit obligation 58,242
1% decrease in the medical trend rate:
Effect on total service cost and interest cost components $ (4,940)
Effect on benefit obligation (45,188)