(18) Fair Value of Financial Instruments:

Fair value is defined under GAAP as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value under GAAP must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The three input levels in the hierarchy of fair value measurements are defined by the FASB generally as follows:

Input Level Description of Input

Level 1 Observable inputs such as quoted prices in active markets for identical assets.

Level 2 Inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 Unobservable inputs in which little or no market data exists.

The following tables represent Frontier’s pension plan assets measured at fair value on a recurring basis as of December 31, 2017 and 2016:



	Fair Value Measurements at December 31, 2017
($ in millions)	Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	37	$	37	$	-	$	-
U.S. Government Obligations		30		-		30		-
Corporate and Other Obligations		448		-		448		-
Common Stock		523		523		-		-
Common/Collective Trusts		1,215		-		1,215		-
Interest in Registered Investment Companies		324		324		-		-
Interest in Limited Partnerships and
Limited Liability Companies		115		-		-		115
Total investments at fair value	$	2,692	$	884	$	1,693	$	115
Interest and Dividend Receivable		6
Due from Broker for Securities Sold		40
Receivable Associated with Insurance Contract		7
Due to Broker for Securities Purchased		(71)
Total Plan Assets, at Fair Value	$	2,674



	Fair Value Measurements at December 31, 2016
($ in millions)	Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	42	$	42	$	-	$	-
U.S. Government Obligations		29		-		29		-
Corporate and Other Obligations		400		-		400		-
Common Stock		487		487		-		-
Common/Collective Trusts		1,104		-		1,104		-
Interest in Registered Investment Companies		334		334		-		-
Interest in Limited Partnerships and
Limited Liability Companies		118		-		-		118
Total investments at fair value	$	2,514	$	863	$	1,533	$	118
Receivable for plan assets of the CTF Operations		258
Interest and Dividend Receivable		6
Due from Broker for Securities Sold		27
Receivable Associated with Insurance Contract		7
Due to Broker for Securities Purchased		(46)
Total Plan Assets, at Fair Value	$	2,766

There have been no reclassifications of investments between Levels 1, 2 or 3 assets during the years ended December 31, 2017 or 2016.

The tables below set forth a summary of changes in the fair value of the Plan’s Level 3 assets for the years ended December 31, 2017 and 2016:



	Interest in Limited Partnerships and Limited Liability Companies
($ in millions)	2017		2016
Balance, beginning of year	$	118	$	92
Realized gains		12		7
Unrealized gains/(losses)		(2)		13
Purchases		-		15
Sales and distributions		(13)		(9)
Balance, end of year	$	115	$	118

The following table provides further information regarding the redemption of the Plan’s Level 3 investments as well as information related to significant unobservable inputs and the range of values for those inputs for the Plan’s interest in certain limited partnerships and limited liability companies as of December 31, 2017:




($ in millions)	Fair Value		Liquidation Period		Capitalization Rate
Interest in Limited Partnerships and Limited
Liability Companies (d)

MS IFHF SVP LP Cayman (a)	$	1		5 years		N/A
MS IFHF SVP LP Alpha (a)		1		5 years		N/A
RII World Timberfund, LLC (b)		5		10 years		N/A
426 E Casino Road, LLC (c)		15		N/A		7.00%
100 Comm Drive, LLC (c)		9		N/A		8.00%
100 CTE Drive, LLC (c)		10		N/A		9.50%
6430 Oakbrook Parkway, LLC (c)		26		N/A		7.75%
8001 West Jefferson, LLC (c)		26		N/A		8.75%
1500 MacCorkle Ave SE, LLC (c)		14		N/A		8.50%
400 S. Pike Road West, LLC (c)		1		N/A		8.50%
601 N US 131, LLC (c)		1		N/A		9.50%
9260 E. Stockton Blvd., LLC (c)		6		N/A		7.50%
Total Interest in Limited Partnerships and Limited
Liability Companies	$	115

(a)

The partnerships’ investment objective is to seek capital appreciation principally through investing in investment funds managed by third party investment managers who employ a variety of alternative investment strategies. These instruments are subject to certain withdrawal restrictions. The Plan is in the process of liquidating its interest in the partnerships and distributions are expected to be made over the next four years.

(b)

The fund’s objective is to realize substantial long-term capital appreciation by investing in timberland properties primarily in South America and Australia. This investment is subject to certain withdrawal restrictions.

(c)

The entity invests in commercial real estate properties that are leased to Frontier. The leases are triple net, whereby Frontier is responsible for all expenses, including but not limited to, insurance, repairs and maintenance and payment of property taxes.

(d)

All Level 3 investments have the same redemption frequency (through the liquidation of underlying investments) and redemption notice period (none).

The following table summarizes the carrying amounts and estimated fair values for long-term debt at December 31, 2017 and 2016. For the other financial instruments including cash, accounts receivable, restricted cash, long-term debt due within one year, accounts payable and other current liabilities, the carrying amounts approximate fair value due to the relatively short maturities of those instruments.



	2017				2016

		Carrying				Carrying
($ in millions)		Amount		Fair Value		Amount		Fair Value

Long-term debt	$	16,970	$	13,994	$	17,560	$	17,539

The fair value of our long-term debt is estimated based upon quoted market prices at the reporting date for those financial instruments.