Retirement Plans (Tables)

12 Months Ended

Dec. 31, 2011

Projected Benefit Obligations, Fair Values of Plan Assets and Amounts Recognized in the Balance Sheet

The following tables set forth the pension plan's projected benefit obligations and fair values of plan assets as of December 31, 2011 and 2010 and the components of total periodic benefit cost for the years ended December 31, 2011, 2010 and 2009:

($ in thousands)	2011			2010

Change in projected benefit obligation (PBO)
PBO at beginning of year	$	1,644,657		$	890,576
PBO for plans of Acquired Business at contracted discount rate		-			581,256
Actuarial adjustment to PBO for plans of Acquired Business (1)		-			64,098
Service cost		38,879			21,169
Interest cost		84,228			67,735
Actuarial loss/(gain)		160,390			87,024
Benefits paid		(128,841	)		(67,270	)
Special termination benefits		-			69
PBO at end of year	$	1,799,313		$	1,644,657

Change in plan assets
Fair value of plan assets at beginning of year	$	1,290,274		$	608,625
Fair value of plan assets for Acquired Business as of
acquisition date		-			581,256
Actual return on plan assets		19,883			154,554
Employer contributions		76,674			13,109
Benefits paid		(128,841	)		(67,270	)
Fair value of plan assets at end of year	$	1,257,990		$	1,290,274

Funded status	$	(541,323	)	$	(354,383	)

Amounts recognized in the consolidated balance sheet
Pension and other postretirement benefits	$	(541,323	)	$	(354,383	)
Accumulated other comprehensive loss	$	575,163		$	349,264

(1) Represents the difference between the contracted discount rate agreed upon in the Transaction and the discount rate used by Frontier to value the liability on July 1, 2010 for financial reporting purposes.

The following tables set forth the OPEB plan's benefit obligations, fair values of plan assets and the postretirement benefit liability recognized on our consolidated balance sheets at December 31, 2011 and 2010 and the components of net periodic postretirement benefit costs for the years ended December 31, 2011, 2010 and 2009.

($ in thousands)	2011			2010

Change in benefit obligation

Benefit obligation at beginning of year	$	478,576		$	189,290
Benefit obligation for Acquired Business		-			285,451
Revision to the benefit obligation for Acquired Business		(125,445	)		-
Service cost		8,958			7,956
Interest cost		17,722			17,883
Plan participants' contributions		4,389			3,976
Actuarial loss		22,564			16,670
Benefits paid		(15,168	)		(14,719	)
Plan change		-			(27,931	)
Benefit obligation at end of year	$	391,596		$	478,576

Change in plan assets
Fair value of plan assets at beginning of year	$	6,240		$	8,028
Actual return on plan assets		219			600
Plan participants' contributions		4,389			3,976
Employer contribution		9,421			8,355
Benefits paid		(15,168	)		(14,719	)
Fair value of plan assets at end of year	$	5,101		$	6,240

Funded status	$	(386,495	)	$	(472,336	)


Amounts recognized in the consolidated balance sheet
Current liabilities	$	(9,117	)	$	(10,131	)
Pension and other postretirement benefits	$	(377,378	)	$	(462,205	)
Accumulated other comprehensive loss	$	41,811		$	13,369

Net Periodic Benefit Cost

	Expected
($ in thousands)	2012			2011			2010			2009

Components of total periodic benefit cost
Service cost				$	38,879		$	21,169		$	6,098
Interest cost on projected benefit obligation					84,228			67,735			52,127
Expected return on plan assets					(100,558	)		(69,831	)		(44,712	)
Amortization of prior service cost/(credit)	$	(199	)		(199	)		(199	)		(255	)
Amortization of unrecognized loss		31,147			15,364			27,393			27,144
Net periodic benefit cost					37,714			46,267			40,402
Special termination charge					-			69			1,567
Total periodic benefit cost				$	37,714		$	46,336		$	41,969

($ in thousands)	Expected
	2012			2011			2010			2009

Components of net periodic postretirement benefit cost
Service cost				$	8,958		$	7,956		$	361
Interest cost on projected benefit obligation					17,722			17,883			11,017
Expected return on plan assets					(324	)		(436	)		(439	)
Amortization of prior service cost/(credit)	$	(10,010	)		(10,198	)		(8,157	)		(7,751	)
Amortization of unrecognized loss		7,642			4,424			4,917			5,041
Net periodic postretirement benefit cost				$	20,582		$	22,163		$	8,229

Weighted Average Asset Allocations, By Asset Category

The plan's weighted average asset allocations at December 31, 2011 and 2010 by asset category are as follows:

	2011			2010
Asset category:
Equity securities		45	%		50	%
Debt securities		40	%		39	%
Alternative investments		14	%		10	%
Cash and other		1	%		1	%
Total		100	%		100	%

Expected Benefit Payments over the Next Ten Years

The plan's expected benefit payments over the next 10 years are as follows:

($ in thousands)

Year		Amount
2012		$	103,863
2013			110,058
2014			116,938
2015			125,617
2016			129,057
	2017 - 2021		687,871
Total		$	1,273,404

The OPEB plan's expected benefit payments over the next 10 years are as follows:

($ in thousands)
		Gross		Medicare Part D
Year		Benefits		Subsidy		Total
2012		$	13,211	$	372	$	12,839
2013			14,575		446		14,129
2014			15,955		537		15,418
2015			17,630		635		16,995
2016			19,412		737		18,675
	2017 - 2021		122,665		6,051		116,614
Total		$	203,448	$	8,778	$	194,670

Schedule of Assumptions Used

Assumptions used in the computation of annual pension costs and valuation of the year-end obligations were as follows:

	2011	2010	2009
Discount rate - used at year end to value obligation	4.50%	5.25%	5.75%
Discount rate - used to compute annual cost	5.25%	5.75%	6.50%
Expected long-term rate of return on plan assets	8.00%	8.00%	8.00%
Rate of increase in compensation levels	2.50%	3.00%	3.00%

Assumptions used in the computation of annual OPEB costs and valuation of the year-end OPEB obligations were as follows:

	2011	2010	2009
Discount rate - used at year end to value obligation	4.50% - 4.75%	5.25%	5.75%
Discount rate - used to compute annual cost	5.25%	5.75%	6.50%
Expected long-term rate of return on plan assets	6.00% - 3.00%	6.00%	6.00%

Net Periodic Benefit Cost Not yet Recognized

The amounts in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost at December 31, 2011 and 2010 are as follows:

($ in thousands)	Pension Plan					OPEB
	2011		2010			2011			2010
Net actuarial loss	$	574,998	$	349,298		$	82,841		$	64,598
Prior service cost/(credit)		165		(34	)		(41,030	)		(51,229	)
Total	$	575,163	$	349,264		$	41,811		$	13,369

Amounts Recognized As a Component of Accumulated Comprehensive Income

The amounts recognized as a component of accumulated comprehensive income for the years ended December 31, 2011 and 2010 are as follows:

	Pension Plan						OPEB
($ in thousands)	2011			2010			2011			2010

Accumulated other comprehensive income at
beginning of year	$	349,264		$	374,157		$	13,369		$	21,554

Net actuarial gain (loss) recognized during year		(15,364	)		(27,393	)		(4,424	)		(4,919	)
Prior service (cost)/credit recognized during year		199			199			10,198			8,158
Net actuarial loss (gain) occurring during year		241,064			2,301			22,668			16,506
Prior service cost (credit) occurring during year		-			-			-			(27,930	)
Net amount recognized in comprehensive income
for the year		225,899			(24,893	)		28,442			(8,185	)
Accumulated other comprehensive income at end
of year	$	575,163		$	349,264		$	41,811		$	13,369