Pension Plan and Other Postretirement Benefits

The Company assumed, through its acquisition of nTelos, a qualified pension plan and other postretirement benefit plans. The following tables provide the benefit obligations, fair value of assets and a statement of the funded status as of the acquisition date (in thousands):



	Defined Benefit Pension Plan			Other Postretirement Benefit Plans
Benefit obligations, at acquisition	$	37,443		$	4,568
Fair value of plan assets, at acquisition	22,813			—
Funded status:
Total liability, at acquisition	(14,630		)	(4,568		)
Net pension income (expense) since acquisition date	39			(79		)
Total liability as of September 30, 2016	$	(14,591	)	$	(4,647	)

The accumulated benefit obligation for the defined benefit pension plan at May 6, 2016 was $37.4 million. The accumulated benefit obligation represents the present value of pension benefits based on service and salary earned to date. The defined benefit plan was frozen for future benefit accruals as of December 31, 2012. Accordingly, the accumulated benefit obligation is equal to the projected benefit obligation.

The following table provides the components of net periodic benefit cost (income) for the plans for the period from acquisition date to December 31, 2016 (in thousands):



	Defined Benefit Pension Plan			Other Postretirement Benefit Plans
Components of net periodic benefit cost (income):
Service cost	$	—		$	18
Interest cost	956			108
Expected return on plan assets	(1,018		)	—
Net periodic cost (income)	$	(62	)	$	126

The assumptions used in the measurements of the Company’s benefit obligations at May 6, 2016 for the plans are shown in the following table:

The assumptions used in the measurements of the Company’s net periodic benefit cost (income) for the consolidated statement of operations for the period from acquisition date through December 31, 2016 are:



	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
Discount rate	3.85	%	3.85	%
Expected return on plan assets	6.75	%	—	%

The Company reviews the assumptions noted in the above tables annually or more frequently to reflect anticipated future changes in the underlying economic factors used to determine these assumptions. The discount rates assumed reflect the rate at which the Company could invest in high quality corporate bonds in order to settle future obligations.

The Company uses updated mortality tables published by the Society of Actuaries that predict increasing life expectancies in the United States.

For measurement purposes, an 8.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2016 for the obligation as of the acquisition date. The rate was assumed to decrease one-half percent per year to a rate of 5.0% for 2022 and remain at that level thereafter.

Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. The effect of a 1% change on the medical trend rate per future year, while holding all other assumptions constant, to the service and interest cost components of net periodic postretirement health care benefit costs and accumulated postretirement benefit obligation would be a $0.1 million increase and a $0.6 million increase, respectively, for a 1% increase in medical trend rate and a $0.1 million decrease and a $0.5 million decrease, respectively, for a 1% decrease in medical trend rate.

In developing the expected long-term rate of return assumption for the assets of the Defined Benefit Pension Plan, the Company evaluated input from its third-party pension plan administrator, including its review of asset class return expectations and long-term inflation assumptions.

The average actual asset allocations by asset category and the fair value by asset category as of May 6, 2016 were as follows (in thousands):



Asset Category	Actual Allocation		Fair Value
Large Cap Value	32	%	$	7,244
Mid Cap Blend	9	%	2,026
Small Cap Blend	5	%	1,151
Foreign Stock – Large Cap	30	%	6,867
Bond	20	%	4,611
Cash and cash equivalents	4	%	914
Total	100	%	$	22,813

The actual and target allocation for plan assets is broadly defined and measured as follows:



Asset Category	Actual Allocation		Target Allocation
Equity securities	76	%	65-75
Bond securities and cash equivalents	24	%	25-35
Total	100	%	100	%

It is the Company’s policy to invest pension plan assets in a diversified portfolio consisting of an array of asset classes. The investment risk of the assets is limited by appropriate diversification both within and between asset classes. The assets are primarily invested in investment funds that invest in a broad mix of publicly traded equities, bonds and cash equivalents (and fair value is based on quoted market prices (“Level 1” input)). The allocation between equity and bonds is reset quarterly to the target allocations. Updates to the allocation are considered in the normal course and changes may be made when appropriate. The bond holdings consist of two bond funds split relatively evenly between these funds at May 6, 2016. The maximum holdings of any one asset within these funds is under 4% of this fund and thus is well under 1% of the total portfolio. At May 6, 2016, the Company believes that there are no material concentrations of risk within the portfolio of plan assets.

The assumed long-term return noted above is the target long-term return. Overall return, risk adjusted return, and management fees are assessed against a peer group and benchmark indices. There are minimum performance standards that must be attained within the investment portfolio. Reporting on asset performance is provided quarterly and review meetings are held semi-annually. In addition to normal rebalancing to maintain an adequate cash reserve, projected cash flow needs of the plan are reviewed at least annually to ensure liquidity is properly managed.

The Company does not expect to contribute to the pension plan in 2016. The Company expects the net periodic benefit income for the defined benefit pension plan in 2016 to be $0.1 million and expects the periodic benefit cost for the other postretirement benefit plans in 2016 to be $0.1 million.

Defined
Benefit
Pension Plan

Other
Postretirement
Benefit Plans

Discount rate