(19) 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, 2018 and 2017:



	Fair Value Measurements at December 31, 2018
($ in millions)	Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	36	$	36	$	-	$	-
U.S. Government Obligations		46		-		46		-
Corporate and Other Obligations		425		-		425		-
Common Stock		420		420		-		-
Interest in Registered Investment Companies(1)		262		262		-		-
Interest in Limited Partnerships and
Limited Liability Companies		155		-		-		155
Total investments at fair value	$	1,344	$	718	$	471	$	155
Common/Collective Trusts(1)		1,031
Interest and Dividend Receivable		6
Due from Broker for Securities Sold		20
Receivable Associated with Insurance Contract		7
Due to Broker for Securities Purchased		(60)
Total Plan Assets, at Fair Value	$	2,348



	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		-		-
Interest in Registered Investment Companies(1)		324		324		-		-
Interest in Limited Partnerships and
Limited Liability Companies		115		-		-		115
Total investments at fair value	$	1,477	$	884	$	478	$	115
Common/Collective Trusts(1)		1,215
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

⁽¹⁾

Investments that are measured at fair value using the net asset value (“NAV”) practical expedient have not been classified in the fair value hierarchy. The fair value of common/collective trusts are estimated using the using the NAV per share multiplied by the number of shares of the trust investment held as of the measurement date. Additionally, the fair value of certain assets totaling $131 million and $167 million, as of December 31, 2018 and 2017, respectively, included in “Interest in Registered Investment Companies” were estimated using the NAV practical expedient. These balances are intended to permit reconciliation of the fair value hierarchy to the plan asset amounts presented in Note 18 - Retirement Plans.

There have been no reclassifications of investments between Levels 1, 2 or 3 assets during the years ended December 31, 2018 or 2017.

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, 2018 and 2017:



	Interest in Limited Partnerships and Limited Liability Companies
($ in millions)	2018		2017
Balance, beginning of year	$	115	$	118
Realized gains		11		12
Unrealized gains (losses)		3		(2)
Purchases		37		-
Sales and distributions		(11)		(13)
Balance, end of year	$	155	$	115

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, 2018:



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

MS IFHF SVP LP Cayman (a)	$	1		4 years		N/A
RII World Timberfund, LLC (b)		5		3 years		N/A
426 E. Casino Road, LLC (c)		16		N/A		7.00%
100 Comm Drive, LLC (c)		9		N/A		7.75%
100 CTE Drive, LLC (c)		11		N/A		9.50%
6430 Oakbrook Parkway, LLC (c)		26		N/A		7.75%
8001 West Jefferson, LLC (c)		27		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		7.25%
120 E. Lime Street, LLC (c)		8		N/A		9.00%
610 N. Morgan Street, LLC (c)		30		N/A		8.50%
Total Interest in Limited Partnerships and Limited
Liability Companies	$	155

^(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. In 2019, the fund entered into liquidation period of the partnerships and distributions are expected to be made over the next three years.

^(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 fair value of these properties is based on independent appraisals.

The following table summarizes the carrying amounts and estimated fair values for long-term debt at December 31, 2018 and 2017. 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.



	2018				2017
		Carrying				Carrying
($ in millions)		Amount		Fair Value		Amount		Fair Value

Long-term debt	$	16,358	$	11,942	$	16,970	$	13,994

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