Employee Benefit Plans | Employee Benefit Plans The Company sponsors noncontributory qualified defined benefit pension plans ("qualified pension plans") and post-employment benefit plans which provide certain cash payments and medical, dental and life insurance benefits to eligible retired employees and their beneficiaries and covered dependents. The qualified pension plans and certain post-employment benefit plans were created as part of the acquisition of the Northern New England operations from Verizon and mirrored the prior Verizon plans. The qualified pension plan available to represented employees was closed to new participants and benefits under the prior formula were frozen as of October 14, 2014. For existing participants, future benefit accruals for service on and after February 22, 2015 are at 50% of prior rates and are capped at 30 years of total credited service. The qualified pension plan available to non-represented employees remains frozen. The post-employment benefit plan provides medical, dental and life insurance benefits to eligible non-represented employees and former represented employees and, in some instances, to their spouses and families. Effective August 28, 2014, active represented employees are no longer eligible for this post-employment benefit plan. Upon ratification of the collective bargaining agreements on February 22, 2015 and for 30 months thereafter, active represented employees who retire and meet the eligibility requirements and their spouses are eligible to receive certain monthly reimbursements of medical insurance premiums until the retired employee reaches age 65 or dies, at which time the benefit will cease for the spouse as well. The Company makes contributions to the qualified pension plans to meet minimum funding requirements under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and has the ability to elect to make additional discretionary contributions. The other post-employment benefit plans are unfunded and the Company funds the benefits that are paid. Annually, and as necessary, the Company remeasures the net liabilities of its qualified pension and other post-employment benefit plans. 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 years ended December 31, 2016 and 2015 (in thousands): Qualified Pension Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Fair value of plan assets: Beginning fair value of plan assets $ 197,062 $ 195,410 Actual return on plan assets 15,745 (3,677 ) Plan settlements (2,510 ) (4,472 ) Employer contributions 16,501 14,980 Benefits paid (3,898 ) (5,179 ) Ending fair value of plan assets 222,900 197,062 Projected benefit obligation: Beginning projected benefit obligation $ 347,624 $ 408,216 Service cost 6,880 8,391 Interest cost 15,079 14,879 Plan amendment (a) — (40,049 ) Plan settlements (2,510 ) (4,472 ) Plan curtailment — (2,426 ) Benefits paid (3,898 ) (5,179 ) Actuarial loss (6,358 ) (31,736 ) Ending projected benefit obligation 356,817 347,624 Funded status $ (133,917 ) $ (150,562 ) Accumulated benefit obligation $ 356,807 $ 347,619 Net amount recognized in long-term liabilities in the consolidated balance sheets $ (133,917 ) $ (150,562 ) Amounts recognized in accumulated other comprehensive income: Prior service credit $ 29,867 $ 32,909 Net actuarial loss (93,953 ) (106,704 ) Net amount recognized in accumulated other comprehensive income $ (64,086 ) $ (73,795 ) (a) In the first quarter of 2015, the Company recognized a prior service credit for a negative plan amendment at remeasurement of the represented employees pension plan related to the elimination of prospective future increase in pension bands that were reduced under the terms of the collective bargaining agreements. Post-employment Benefit Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Fair value of plan assets: Beginning fair value of plan assets $ — $ — Employer contributions 5,715 5,597 Benefits paid (5,715 ) (5,597 ) Ending fair value of plan assets — — Projected benefit obligation: Beginning projected benefit obligation $ 100,154 $ 741,372 Service cost 121 4,541 Interest cost 3,927 7,688 Plan amendments (a) — (609,619 ) Plan curtailment — (5,409 ) Benefits paid (5,715 ) (5,597 ) Actuarial loss (3,720 ) (32,822 ) Ending projected benefit obligation 94,767 100,154 Funded status $ (94,767 ) $ (100,154 ) Amounts recognized in the consolidated balance sheets: Current liabilities $ (7,138 ) $ (6,112 ) Long-term liabilities (87,629 ) (94,042 ) Net amount recognized in the consolidated balance sheets $ (94,767 ) $ (100,154 ) Amounts recognized in accumulated other comprehensive income: Net prior service credit $ 41,690 $ 350,322 Net actuarial loss $ (16,508 ) $ (102,085 ) Net amount recognized in accumulated other comprehensive income $ 25,182 $ 248,237 (a) In the first quarter of 2015, the Company recognized a net prior service credit for a negative plan amendment at remeasurement of the post-employment benefit plan for represented employees primarily related to the elimination of the post-employment benefits for active represented employees under the terms of the collective bargaining agreements. Qualified Pension Plan Assets. The investment objective for the qualified pension plan assets is to achieve a rate of return sufficient to match or exceed the long-term growth rate of the plan liability, using investment vehicles that are consistent with the duration of each plan's liability. The investment objective also targets 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 65% equity securities and 35% 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, the diversification target is 45% equity securities and 55% fixed income securities and is invested using primarily a liability driven investment strategy. The asset allocation at December 31, 2016 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) 3.5 % 5.4 % 5.2 % Equity securities 42.0 % 60.3 % 58.3 % Fixed income securities 54.5 % 34.3 % 36.5 % Plan asset portfolio allocation at December 31, 2016 100.0 % 100.0 % 100.0 % (a) Cash and cash equivalents at December 31, 2016 include amounts pending settlement from the purchase or sale of equity or fixed income securities. The fair values for the qualified pension plan assets by asset category at December 31, 2016 are as follows (in thousands): Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 11,619 $ 11,619 $ — $ — Equity securities 129,937 129,937 — — Fixed income securities 81,344 53,206 28,138 — Fair value of plan assets at December 31, 2016 $ 222,900 $ 194,762 $ 28,138 $ — The fair values for the qualified pension plan assets by asset category at December 31, 2015 were as follows (in thousands): Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 1,223 $ 1,223 $ — $ — Equity securities 138,684 79,512 59,172 — Fixed income securities 57,155 30,856 26,299 — Fair value of plan assets at December 31, 2015 $ 197,062 $ 111,591 $ 85,471 $ — 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. 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. The Company liquidated its positions in all its hedged equity funds per the terms of its investment agreements with such hedge equity funds in 2015. Fixed income securities are investments in corporate bonds, treasury securities, other debt instruments and mutual funds that invest in these 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 corporate bonds, treasury securities and 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, 2015 is as follows (in thousands): Hedged Equity Funds Balance at December 31, 2014 $ 351 Purchases, sales and settlements, net (351 ) Balance at December 31, 2015 $ — Net Periodic Benefit Cost. The Company capitalizes a portion of net periodic benefit cost in conjunction with its use of internal labor resources utilized on capital projects. During the years ended December 31, 2016 , 2015 and 2014 , the Company recognized settlement charges in the qualified pension plan that covers non-represented employees. The settlements were incurred when the cumulative amount of lump sums paid to participants in the respective years exceeded the expected service and interest cost for the respective years. Components of the net periodic benefit cost related to the Company's qualified pension plans and other post-employment benefit plans for the years ended December 31, 2016 , 2015 and 2014 are as follows (in thousands): Qualified Pension Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 Service cost $ 6,880 $ 8,391 $ 14,760 Interest cost 15,079 14,879 15,367 Expected return on plan assets (15,363 ) (14,635 ) (13,525 ) Amortization of prior service credit (3,042 ) (2,933 ) — Amortization of actuarial loss 5,383 6,718 2,054 Plan curtailment (a) — (4,207 ) — Plan settlement 629 1,022 671 Net periodic benefit cost 9,566 9,235 19,327 Less capitalized portion (599 ) (600 ) (1,184 ) Other post-employment benefit and pension (benefit)/expense $ 8,967 $ 8,635 $ 18,143 (a) The Company recognized a curtailment gain as the result of a workforce reduction in July 2015. Post-employment Benefit Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 Service cost $ 121 $ 4,541 $ 24,969 Interest cost 3,927 7,688 29,908 Amortization of prior service credit (308,632 ) (304,626 ) (948 ) Amortization of actuarial loss 81,857 113,424 6,654 Net periodic benefit cost (222,727 ) (178,973 ) 60,583 Less capitalized portion — — (3,444 ) Other post-employment benefit and pension (benefit)/expense $ (222,727 ) $ (178,973 ) $ 57,139 Other Comprehensive Income. Other pre-tax changes in plan assets and benefit obligations recognized in other comprehensive income are as follows for the years ended December 31, 2016 , 2015 and 2014 , respectively, (in thousands): Qualified Pension Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 Amounts recognized in other comprehensive income: Prior service credit $ — $ (40,049 ) $ — Net (gain)/loss arising during the period (6,739 ) (13,424 ) 72,670 Amortization of prior service credit 3,042 2,933 — Amortization of net actuarial loss (5,383 ) (6,718 ) (2,725 ) Plan curtailment — 1,781 — Plan settlement (629 ) (1,022 ) — Total amount recognized in other comprehensive income $ (9,709 ) $ (56,499 ) $ 69,945 Estimated amounts that will be amortized from accumulated other comprehensive income in the next fiscal year: Prior service credit $ 3,042 Net actuarial loss (4,772 ) Total amount estimated to be amortized from accumulated other comprehensive income in the next fiscal year $ (1,730 ) Post-employment Benefit Plans Year Ended December 31, 2016 Year Ended December 31, 2015 Year Ended December 31, 2014 Amounts recognized in other comprehensive income: Prior service credit $ — $ (619,454 ) $ (46,277 ) Prior service cost — 9,835 — Plan curtailment — (5,409 ) — Net (gain)/loss arising during the period (3,720 ) (32,822 ) 148,434 Amortization of prior service credit 308,632 304,626 948 Amortization of net actuarial loss (81,857 ) (113,424 ) (6,654 ) Total amount recognized in other comprehensive income $ 223,055 $ (456,648 ) $ 96,451 Estimated amounts that will be amortized from accumulated other comprehensive income in the next fiscal year: Net prior service credit $ 1,819 Net actuarial loss (1,083 ) Total amount estimated to be amortized from accumulated other comprehensive income in the next fiscal year $ 736 Assumptions The determination of the net liability and the net periodic benefit cost recognized for the qualified pension plans and post-employment benefit 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. The Company also has an assumption regarding increases in the amount of post-employment benefit plans expenditures to be paid by the Company, based upon the past practice of such increases being provided to participants. These assumptions are reviewed at least annually for changes with the Company's independent actuaries. Projected Benefit Obligation Assumptions. The weighted average assumptions used in determining projected benefit obligations are as follows: December 31, 2016 December 31, 2015 Qualified Pension Plans: Discount rate 4.49 % 4.44 % Rate of compensation increase (a) 3.00 % 3.00 % Post-employment Benefit Plans: Discount rate 4.20 % 4.15 % Rate of compensation increase (a) N/A N/A (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: Years Ended December 31, 2016 2015 2014 Qualified Pension Plans: Discount rate 4.48 % 4.39 % 4.92 % Expected return on plan assets (a) 7.34 % 7.31 % 7.66 % Rate of compensation increase (b) 3.00 % 3.00 % 3.00 % Post-employment Benefit Plans: Discount rate 4.18 % 3.54 % 4.98 % Rate of compensation increase (b) N/A N/A 4.00 % Healthcare cost trend rate (c) 7.40 % 7.70 % 7.90 % Rate that the cost trend rates ultimately declines to 4.50 % 4.50 % 4.50 % Year that the rates reach the terminal rate 2037 2030 2030 (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. (c) The rate of healthcare cost trend assumption for 2016 and 2015 applies to the other post-employment benefit plan for management and existing represented retirees. Post-employment Benefit Plans Sensitivity. A 1% change in the medical trend rate assumed for post-employment benefits at December 31, 2016 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 $ 420 Effect on benefit obligation $ 10,122 1% decrease in the medical trend rate: Effect on total service cost and interest cost components $ (349 ) Effect on benefit obligation $ (8,423 ) Estimated Future Contributions and Benefit Payments Legislation enacted in 2014 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 2016 and 2015 minimum required pension plan contributions are significantly lower than it would have been in the absence of this stabilization provision. Estimated future employer contributions and benefit payments as of December 31, 2016 are as follows (in thousands): Qualified Pension Plans Post-employment Benefit Plans Expected employer contributions for fiscal year 2017 $ 18,431 $ 7,138 Expected benefit payments for fiscal years: 2017 $ 8,558 $ 7,138 2018 9,919 6,686 2019 11,473 6,637 2020 11,846 6,455 2021 13,135 6,267 2022-2026 84,859 27,230 401(k) Savings Plans As of December 31, 2016 , the Company and its subsidiaries sponsor a voluntary 401(k) savings plans that cover all eligible Telecom Group employees and northern New England management employees, and a 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, 2016 , 2015 and 2014 , the Company generally matched 100% of each employee's contribution up to 5% of compensation. Total Company contributions to all 401(k) Plans were $8.9 million , $8.8 million and $9.5 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. |