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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
Employee Benefit Plans
The Company sponsors noncontributory qualified defined benefit pension plans ("qualified pension plans") and post-retirement healthcare plans which provide certain cash payments and medical and dental benefits to eligible retired employees and their beneficiaries and covered dependents. These plans were assumed as part of the acquisition of the Northern New England operations from Verizon. The qualified pension plan and the post-retirement healthcare plan which cover non-represented employees are frozen. Therefore, no new benefits are being earned by participants and no new participants are becoming eligible for benefits in these plans. Participants in the qualified pension plan and the post-retirement healthcare plan covering represented employees continue to accrue benefits in accordance with the respective plan documents and contractual requirements in the collective bargaining agreements. Eligibility to participate in the plans is based on an employee's age and years of service. The Company makes contributions to the qualified pension plans to meet minimum ERISA funding requirements and has the ability to elect to make additional discretionary contributions. The post-retirement healthcare plans are unfunded and the Company funds the benefits that are paid.
Annually, the Company remeasures the net liabilities of its qualified pension and other post-retirement healthcare benefits in accordance with the Compensation—Retirement Benefits Topic of the ASC.
Plan Assets, Obligations and Funded Status
A summary of plan assets, projected benefit obligation and funded status of the plans are as follows for the year ended December 31, 2013 and the year ended December 31, 2012 (in thousands): 
 
Qualified Pension Plans
 
 
 
 
 
Year Ended December 31, 2013
 
Year Ended December 31, 2012
Fair value of plan assets:
 
 
 
Beginning fair value of plan assets
$
166,304

 
$
160,293

Actual return on plan assets
18,883

 
13,931

Plan settlements
(7,931
)
 
(3,517
)
Employer contributions
21,800

 
19,842

Benefits paid
(23,814
)
 
(24,245
)
Ending fair value of plan assets
175,242

 
166,304

Projected benefit obligation:
 
 
 
Beginning projected benefit obligation
$
369,841

 
$
318,254

Service cost
18,543

 
15,489

Interest cost
14,934

 
14,565

Plan settlements
(7,931
)
 
(3,517
)
Benefits paid
(23,814
)
 
(24,245
)
Actuarial loss (gain)
(42,797
)
 
49,295

Ending projected benefit obligation
328,776

 
369,841

Funded status
$
(153,534
)
 
$
(203,537
)
 
 
 
 
Accumulated benefit obligation
$
290,910

 
$
323,432

 
 
 
 
Amounts recognized in the consolidated balance sheet:
 
 
 
Long-term liabilities
$
(153,534
)
 
$
(203,537
)
Net amount recognized in the consolidated balance sheet
$
(153,534
)
 
$
(203,537
)
 
 
 
 
Amounts recognized in accumulated other comprehensive loss:
 
 
 
Net actuarial loss
$
(60,349
)
 
$
(116,835
)
Net amount recognized in accumulated other comprehensive loss
$
(60,349
)
 
$
(116,835
)
 
Post-retirement Healthcare Plans
 
 
 
 
 
Year Ended December 31, 2013
 
Year Ended December 31, 2012
Fair value of plan assets:
 
 
 
Beginning fair value of plan assets
$
—

 
$
961

Employer contributions
3,704

 
2,530

Benefits paid
(3,704
)
 
(3,491
)
Ending fair value of plan assets
—

 
—

Projected benefit obligation:
 
 
 
Beginning projected benefit obligation
$
621,443

 
$
533,181

Service cost
26,712

 
25,423

Interest cost
24,555

 
23,958

Benefits paid
(3,704
)
 
(3,491
)
Actuarial loss (gain)
(78,571
)
 
42,372

Ending projected benefit obligation
590,435

 
621,443

Funded status
$
(590,435
)
 
$
(621,443
)
 
 
 
 
Amounts recognized in the consolidated balance sheet:
 
 
 
Current liabilities
$
(5,701
)
 
$
(5,064
)
Long-term liabilities
(584,734
)
 
(616,379
)
Net amount recognized in the consolidated balance sheet
$
(590,435
)
 
$
(621,443
)
 
 
 
 
Amounts recognized in accumulated other comprehensive loss:
 
 
 
Net actuarial loss
$
(111,960
)
 
$
(197,929
)
Net amount recognized in accumulated other comprehensive loss
$
(111,960
)
 
$
(197,929
)

Qualified Pension Plan Assets. The investment objective for the qualified pension plan assets is to achieve an attractive risk-adjusted return over time that will provide for the payment of benefits in the future while minimizing the risk of loss of principal. The Company's strategy emphasizes a long-term equity orientation, global diversification and financial and operating risk controls. Both active and passive management investment approaches are employed depending on perceived market efficiencies and various other factors. Diversification targets of 70% equity securities and 30% fixed income securities for the represented employees plan seeks to minimize the concentration of market risk. For the qualified pension plan for the non-represented employees plan, the diversification target is 20% equity securities and 80% fixed income securities and is invested using a liability driven investment strategy. The asset allocation at December 31, 2013 for the Company's qualified pension plan assets was as follows: 
 
Non-Represented
Employees Plan
 
Represented
Employees Plan
 
Total Qualified
Pension Plans
 
 
 
 
 
 
Cash and cash equivalents (a)
1.8
%
 
0.8
%
 
1.0
%
Equity securities (b)
16.9
%
 
70.6
%
 
61.4
%
Fixed income securities
81.3
%
 
28.6
%
 
37.6
%
Plan asset portfolio allocation at December 31, 2013
100.0
%
 
100.0
%
 
100.0
%
 
(a)
Cash and cash equivalents at December 31, 2013 include amounts pending settlement from the purchase or sale of equity or fixed income securities.
(b)
Equity securities at December 31, 2013 include amounts held in hedged equity funds which primarily invest using a "fund of funds" strategy in multiple other equity funds.
The fair values for the qualified pension plan assets by asset category at December 31, 2013 are as follows (in thousands): 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,677

 
$
1,677

 
$
—

 
$
—

Equity securities (a)
107,683

 
69,381

 
26,591

 
11,711

Fixed income securities
65,882

 
28,942

 
36,940

 
—

Fair value of plan assets at December 31, 2013
$
175,242

 
$
100,000

 
$
63,531

 
$
11,711

(a)
All Level 3 equity securities are amounts held in hedged equity funds.
The fair values for the qualified pension plan assets by asset category at December 31, 2012 were as follows (in thousands): 
 
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
8,480

 
$
8,480

 
$
—

 
$
—

Equity securities (a)
88,177

 
53,209

 
23,099

 
11,869

Fixed income securities
69,647

 
21,543

 
48,104

 
—

Fair value of plan assets at December 31, 2012
$
166,304

 
$
83,232

 
$
71,203

 
$
11,869

(a)
All Level 3 equity securities are amounts held in hedged equity funds.
Cash and cash equivalents include short-term investment funds, primarily in diversified portfolios of investment grade money market instruments and are valued using quoted market prices, and thus classified within Level 1 of the fair value hierarchy, as outlined in note (10) "Fair Value".
Equity securities include direct holdings of equity securities and units held in mutual funds that invest in equity securities of domestic and international corporations in a variety of industry sectors. The direct holdings and units held in publicly traded mutual funds are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Fair values for units held in mutual funds that invest in equity securities that are not publicly traded are based on observable prices and are classified within Level 2 of the fair value hierarchy. Hedged equity funds included within equity securities seek to maximize absolute returns using a broad range of strategies to enhance returns and provide diversification. The fair values of hedged equity funds are estimated using net asset value per share of the investments. The Company has the ability to redeem these investments at net asset value on a limited basis and thus has classified hedged equity funds within Level 3 of the fair value hierarchy.
Fixed income securities are investments in mutual funds that invest in corporate bonds and other debt instruments. These securities are expected to provide significant diversification benefits, in terms of asset volatility and pension funding volatility, in the portfolio and a stable source of income. Units held in publicly traded mutual funds that invest in fixed income securities are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Fair values of mutual funds that invest in fixed income securities that are not publicly traded are based on observable prices and are classified within Level 2 of the fair value hierarchy.
A reconciliation of the beginning and ending balance of plan assets that are measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2012 and the year ended December 31, 2013 is as follows (in thousands): 
 
Hedged Equity Funds
 
 
Balance at December 31, 2011
$
22,360

Actual gain on plan assets held
509

Transfers in and/or out of Level 3
(11,000
)
Balance at December 31, 2012
$
11,869

Actual gain on plan assets held
2,083

Transfers in and/or out of Level 3
(2,241
)
Balance at December 31, 2013
$
11,711


Post-retirement Healthcare Plan Assets. The post-retirement healthcare plan assets were returned to the Company during 2012 as the related trust was no longer required as a result of the New Hampshire deregulation legislation. The plan assets for the post-retirement healthcare plans were invested in short-term investment funds, primarily in diversified portfolios of investment grade money market instruments and were valued using quoted market prices and thus classified within Level 1 of the fair value hierarchy.
Net Periodic Benefit Cost. Components of the net periodic benefit cost related to the Company's qualified pension plans and post-retirement healthcare plans for the year ended December 31, 2013, the year ended December 31, 2012, the 341 days ended December 31, 2011 and the 24 days ended January 24, 2011 are as follows (in thousands):
 
 
Qualified Pension Plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Predecessor Company
 
 
Year Ended
December 31, 2013

Year Ended
December 31, 2012
 
Three Hundred
Forty-One
Days Ended
December 31, 2011

 
Twenty-Four
Days ended
January 24, 2011
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
18,543

 
$
15,489

 
$
11,885

 
 
$
849

 
Interest cost
14,934

 
14,565

 
12,882

 
 
934

 
Expected return on plan assets
(12,462
)
 
(13,268
)
 
(13,303
)
 
 
(1,089
)
 
Amortization of prior service cost
—

 
—

 
—

 
 
98

 
Amortization of actuarial loss
5,585

 
2,213

 
—

 
 
283

 
Plan settlement
1,683

 
445

 
712

 
 
—

 
Net periodic benefit cost
$
28,283


$
19,444

 
$
12,176

 
 
$
1,075

 
 
 
Post-retirement Healthcare Plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Predecessor Company
 
 
Year Ended
December 31, 2013

Year Ended
December 31, 2012

Three Hundred
Forty-One
Days Ended
December 31, 2011
 
 
Twenty-Four
Days ended
January 24, 2011
 
 
 
 
 
 

 
 
 
 
 
Service cost
$
26,712

 
$
25,423


$
18,944

 
 
$
1,167

 
Interest cost
24,555

 
23,958


19,859

 
 
1,252

 
Expected return on plan assets
—

 
(33
)

(13
)
 
 
(1
)
 
Amortization of prior service cost
—

 
—


—

 
 
276

 
Amortization of actuarial loss
7,398

 
6,194


303

 
 
368

 
Plan settlement
—

 
—


925

 
 
—

 
Net periodic benefit cost
$
58,665

 
$
55,542


$
40,018

 
 
$
3,062


Other Comprehensive Loss (Income). Other pre-tax changes in plan assets and benefit obligations recognized in other comprehensive loss (income) are as follows for the year ended December 31, 2013, the year ended December 31, 2012, the 341 days ended December 31, 2011 and the 24 days ended January 24, 2011 (in thousands): 
 
 
Qualified Pension Plans
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Predecessor Company
 
 
Year Ended
December 31, 2013
 
Year Ended
December 31, 2012
 
Three Hundred
Forty-One
Days Ended
December 31, 2011
 
 
Twenty-Four
Days ended
January 24, 2011
 
 
Amounts recognized in other comprehensive loss (income):
 
 
 
 
 
 
 
 
 
Net (gain) loss arising during the period
$
(49,218
)
 
$
48,632

 
$
71,573

 
 
$
—

 
Amortization or curtailment of prior service cost
—

 
—

 
—

 
 
(98
)
 
Amortization or settlement recognition of net loss
(7,268
)
 
(2,658
)
 
(712
)
 
 
(283
)
 
Total amount recognized in other comprehensive loss (income)
$
(56,486
)
 
$
45,974

 
$
70,861

 
 
$
(381
)
 
 
 
 
 
 
 
 
 
 
 
Estimated amounts that will be amortized from accumulated other comprehensive loss in the next fiscal year:
 
 
 
 
 
 
 
 
 
Net actuarial loss
$
(2,156
)
 
$
(4,870
)
 
$
(2,069
)
 
 
$
—

 
Total amount estimated to be amortized from accumulated other comprehensive loss in the next fiscal year
$
(2,156
)
 
$
(4,870
)
 
$
(2,069
)
 
 
$
—

 
 
Post-retirement Healthcare Plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Predecessor Company
 
 
Year Ended
December 31, 2013
 
Year Ended
December 31, 2012
 
Three Hundred
Forty-One
Days Ended
December 31, 2011
 
 
Twenty-Four
Days Ended
January 24, 2011
 
 
Amounts recognized in other comprehensive loss (income):
 
 
 
 
 
 
 
 
 
Net (gain) loss arising during the period
(78,571
)
 
42,405

 
162,021

 
 
—

 
Amortization or curtailment of prior service cost
—

 
—

 
—

 
 
(276
)
 
Amortization or settlement recognition of net loss
(7,398
)
 
(6,194
)
 
(303
)
 
 
(368
)
 
Total amount recognized in other comprehensive loss (income)
$
(85,969
)
 
$
36,211

 
$
161,718

 
 
$
(644
)
 
 
 
 
 
 
 
 
 
 
 
Estimated amounts that will be amortized from accumulated other comprehensive loss in the next fiscal year:
 
 
 
 
 
 
 
 
 
Net actuarial loss
$
(3,694
)
 
$
(8,941
)
 
$
(6,727
)
 
 
$
—

 
Total amount estimated to be amortized from accumulated other comprehensive loss in the next fiscal year
$
(3,694
)
 
$
(8,941
)
 
$
(6,727
)
 
 
$
—


Assumptions
The determination of the net liability and the net periodic benefit cost recognized for the qualified pension plans and post-retirement healthcare plans by the Company are, in part, based on assumptions made by management. These assumptions include, among others, the discount rate applied to estimated future cash flows of the plans, the expected return on assets held by the qualified pension plans, certain demographic characteristics of the participants, such as expected retirement and mortality rates, and future inflation in healthcare costs. Certain assumptions, which include, among others, assumptions regarding future benefit increases and increases in the amount of post-retirement healthcare expenditures to be paid by the Company, reflect the Company's past practice of providing such increases to participants and therefore are considered a substantive plan under the Compensation—Retirement Benefits Topic of the ASC.
Projected Benefit Obligation Assumptions. The weighted average assumptions used in determining projected benefit obligations are as follows:
 
 
 
 
 
 
December 31, 2013
 
December 31, 2012
Qualified Pension Plans:
 
 
 
Discount rate
4.92
%
 
4.08
%
Rate of compensation increase (a)
3.00
%
 
3.00
%
Post-retirement Healthcare Plans:
 
 
 
Discount rate
4.98
%
 
4.20
%
Rate of compensation increase (a)
4.00
%
 
4.00
%
 
(a)
The rate of future increases in compensation assumption only applies to the plans for represented employees as plans for non-represented employees are frozen.
Net Periodic Benefit Cost Assumptions. The weighted average assumptions used in determining net periodic cost are as follows:
 
 
 
 
 
 
 
 
 
Predecessor Company
 
Year Ended
December 31, 2013
 
Year Ended
December 31, 2012
 
Three Hundred
Forty-One
Days Ended
December 31, 2011
 
 
Twenty-Four
Days Ended
January 24, 2011
 
 
Qualified Pension Plans:
 
 
 
 
 
 
 
 
Discount rate
4.08
%
 
4.63
%
 
5.75
%
 
 
5.56
%
Expected return on plan assets (a)
7.54
%
 
7.52
%
 
8.32
%
 
 
8.32
%
Rate of compensation increase (b)
3.00
%
 
3.00
%
 
3.00
%
 
 
3.00
%
Post-retirement Healthcare Plans:
 
 
 
 
 
 
 
 
Discount rate
4.20
%
 
4.66
%
 
5.85
%
 
 
5.65
%
Rate of compensation increase (b)
4.00
%
 
4.00
%
 
4.00
%
 
 
4.00
%
Healthcare cost trend rate assumed for participants under 65 next year
8.10
%
 
8.40
%
 
8.40
%
 
 
7.50
%
Healthcare cost trend rate assumed for participants over 65 next year
8.10
%
 
8.40
%
 
8.40
%
 
 
7.90
%
Rate that the cost trend rates ultimately declines to
4.50
%
 
4.50
%
 
4.50
%
 
 
4.00
%
Year that the rates reach the terminal rate
2030

 
2030

 
2030

 
 
2029

 
(a)
The expected return on plan assets is the long-term rate-of-return the Company expects to earn on the plan assets. In developing the expected return on plan asset assumption, the Company evaluated historical investment performance, the plans' asset allocation strategies and return forecasts for each asset class and input from its advisors. Projected returns by such advisors were based on broad equity and fixed income indices. The expected return on plan assets is reviewed annually in conjunction with other plan assumptions and, if considered necessary, revised to reflect changes in the financial markets and the investment strategy. The investment strategy and target allocations of the qualified pension plans previously disclosed in "—Plan Assets, Obligations and Funded Status—Qualified Pension Plan Assets" herein were utilized.
(b)
The rate of future increases in compensation assumption only applies to the plans for represented employees as plans for non-represented employees are frozen.
Post-retirement Healthcare Plan Sensitivity. A 1% change in the medical trend rate assumed for post-retirement healthcare benefits at December 31, 2013 would have the following effects (in thousands): 
 
Increase (Decrease)
1% increase in the medical trend rate:
 
Effect on total service cost and interest cost components
$
13,875

Effect on benefit obligation
$
139,346

1% decrease in the medical trend rate:
 
Effect on total service cost and interest cost components
$
(10,368
)
Effect on benefit obligation
$
(106,622
)

The impact of the Medicare Drug Act of 2003 subsidy on the post-retirement healthcare benefits at December 31, 2013 is as follows (in thousands): 
 
Increase (Decrease)
 
 
Change in projected benefit obligation
$
(32,656
)
 
 
Change in each component of net periodic cost:
 
Service cost
$
(1,678
)
Interest cost
(1,542
)
Amortization of loss
(2,326
)
Total change in net periodic cost
$
(5,546
)

Estimated Future Contributions and Benefit Payments
Legislation enacted in 2012 changed the method in determining the discount rate used for calculating a qualified pension plan’s unfunded liability. This act contained a pension funding stabilization provision which allows pension plan sponsors to use higher interest rate assumptions when determining funded status and funding obligations. As a result, the Company's 2013 minimum required pension plan contribution is significantly lower than it would have been in the absence of this stabilization provision. On September 25, 2012, the Company elected to defer use of the higher segment rates under the act until the plan year beginning on January 1, 2013 solely for determination of the adjusted funding target attainment percentage ("AFTAP") used to determine benefit restrictions under Internal Revenue Code (the "Code") Section 436.
Estimated future employer contributions, benefit payments and Medicare prescription drug subsidies expected to offset the future post-retirement healthcare benefit payments as of December 31, 2013 are as follows (in thousands): 
 
Qualified
Pension Plans
 
Post-retirement
Healthcare Plans
 
 
 
 
Expected employer contributions for fiscal year 2014
$
30,000

 
$
5,701

Expected benefit payments for fiscal years:
 
 
 
2014
$
13,970

 
$
5,701

2015
3,698

 
6,964

2016
4,901

 
8,447

2017
6,173

 
10,091

2018
7,590

 
11,916

2019-2023
62,355

 
95,639

Expected subsidy for fiscal years:
 
 
 
2014
 
 
$
—

2015
 
 
72

2016
 
 
104

2017
 
 
154

2018
 
 
217

2019-2023
 
 
2,535


401(k) Savings Plans
The Company and its subsidiaries sponsor four voluntary 401(k) savings plans that, in the aggregate, cover all eligible Telecom Group employees and Northern New England management employees, and one voluntary 401(k) savings plan that covers all eligible Northern New England represented employees (collectively, "the 401(k) Plans"). Each 401(k) Plan year, the Company contributes an amount of matching contributions to the 401(k) Plans determined by the Company at its discretion for management employees and based on collective bargaining agreements for all other employees. For the 401(k) Plan years ended December 31, 2013, 2012 and 2011, the Company generally matched 100% of each employee's contribution up to 5% of compensation. Total Company contributions to all 401(k) Plans were $9.9 million, $9.8 million, $9.8 million, and $0.7 million for the year ended December 31, 2013, the year ended December 31, 2012, the 341 days ended December 31, 2011 and the 24 days ended January 24, 2011, respectively.