Employee Benefit Plans

5 Months Ended

Jun. 30, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

(9) Employee Benefit Plans

     The Company remeasured its pension and other post-employment benefit assets and liabilities as of December 31, 2010, in accordance with the Compensation—Retirement Benefits Topic of the ASC. This measurement was based on a weighted average discount rate of 5.61%, as well as certain other valuation assumption modifications. In conjunction with fresh start accounting, the Company remeasured its pension and other post-employment benefit assets and liabilities at the Effective Date. See note 2.

     Components of the net periodic benefit cost related to the Company’s pension and post-retirement healthcare plans for the three months ended June 30, 2011, the 157 days ended June 30, 2011, the 24 days ended January 24, 2011 and the three and six months ended June 30, 2010 are presented below (in thousands).

		Successor Company
								One Hundred Fifty-Seven Days
		Three Months Ended						Ended
		June 30, 2011						June 30, 2011
					Post-						Post-
		Qualified			retirement			Qualified			retirement
		Pension			Health			Pension			Health
Service cost	$		3,177	$		4,310	$		5,295	$		7,183
Interest cost			3,655			4,813			6,092			8,022
Expected return on plan assets			(3,634)			(3)			(6,056)			(5)
Net periodic benefit cost	$		3,198	$		9,120	$		5,331	$		15,200

		Predecessor Company
		Twenty-Four Days Ended
		January 24, 2011
					Post-
		Qualified			retirement
		Pension			Health
Service cost	$		849	$		1,167
Interest cost			934			1,252
Expected return on plan assets			(1,089)			(1)
Amortization of prior service cost			98			276
Amortization of actuarial (gain) loss			283			368
Net periodic benefit cost	$		1,075	$		3,062

		Predecessor Company
		Three Months Ended						Six Months Ended
		June 30, 2010						June 30, 2010
		(Restated)						(Restated)
					Post-						Post-
		Qualified			retirement			Qualified			retirement
		Pension			Health			Pension			Health
Service cost	$		2,881	$		3,453	$		5,762	$		6,906
Interest cost			3,011			3,980			6,023			7,961
Expected return on plan assets			(4,148)			—			(8,296)			—
Amortization of prior service cost			381			1,072			762			2,145
Amortization of actuarial (gain) loss			279			778			558			1,555
Net periodic benefit cost	$		2,404	$		9,283	$		4,809	$		18,567

     The Company expects to contribute approximately $6.8 million to its qualified pension plans during fiscal year 2011. The Company’s pension plan funding requirements are based on the Pension Protection Act of 2006 and subsequent funding relief passed by Congress and regulations published by the IRS.

     The Company expects to contribute approximately $2.3 million to its post-retirement healthcare plans in 2011 for benefit payments to current retirees.

     For the three and six months ended June 30, 2011, the actual gain on the pension plan assets was approximately 1.8% and 5.0%, respectively. Net periodic benefit cost for 2011 assumes a weighted average annualized expected return on plan assets of approximately 8.3%. Should the Company’s actual return on plan assets become significantly lower than the expected return assumption, the net periodic benefit cost may increase in future periods and the Company may be required to contribute additional funds to its pension plans.

     During the three months ended March 31, 2010, $33.3 million was transferred from Verizon’s defined benefit pension plans’ trusts to the Company’s pension plan trust. As of December 31, 2009, a disputed amount was pending final validation by a third-party actuary of the census information and related actuarial calculations in accordance with relevant statutory and regulatory guidelines and the Employee Matters Agreement, dated January 15, 2007 between Verizon and the Company (the “Employee Matters Agreement”). The disputed amount was not included in the Company’s pension plan assets at December 31, 2009. By letter dated July 29, 2010, the third-party actuary appointed to perform the review and validation determined that an additional $2.5 million, adjusted for gains or losses since the date of the original transfer, should be transferred from Verizon’s defined benefit plans’ trusts to the Company’s represented employees pension plan trust. This transfer was received in the amount of $2.4 million on September 1, 2010, at which time the Company’s net pension obligation was decreased by this amount.

     The Company and its subsidiaries sponsor four voluntary 401(k) savings plans that, in the aggregate, cover all eligible Legacy FairPoint employees, and two voluntary 401(k) savings plans that, in the aggregate, cover all eligible Northern New England operations employees (collectively, “the 401(k) Plans”). Each 401(k) Plan year, the Company contributes to the 401(k) Plans an amount of matching contributions determined by the Company at its discretion for management employees and based on the collective bargaining agreements for all other employees. For the six months ended June 30, 2011 and for the 401(k) Plan year ended December 31, 2010, the Company generally matched 100% of each employee’s contribution up to 5% of compensation. Total Company contributions to all 401(k) Plans were $2.5 million, $4.8 million, $0.7 million, $2.6 million and $5.0 million for the three months ended June 30, 2011, the 157 days ended June 30, 2011, the 24 days ended January 24, 2011 and the three and six months ended June 30, 2010, respectively.