Retirement Plans

9 Months Ended

Sep. 30, 2012

Retirement Plans [Abstract]

Retirement Plans

(16) Retirement Plans:

The following tables provide the components of net periodic benefit cost:

	Pension Benefits				Pension Benefits
	For the three months ended				For the nine months ended
	September 30,				September 30,
		2012		2011		2012		2011
($ in thousands)
Components of net periodic pension benefit cost
Service cost	$	11,782	$	9,615	$	32,766	$	28,844
Interest cost on projected benefit obligation		19,204		21,172		58,520		63,516
Expected return on plan assets		(23,655)		(25,589)		(71,833)		(76,766)
Amortization of prior service cost /(credit)		(50)		(50)		(150)		(150)
Amortization of unrecognized loss		6,845		4,435		22,419		13,306
Net periodic pension benefit cost	$	14,126	$	9,583	$	41,722	$	28,750
	Postretirement Benefits				Postretirement Benefits
	Other Than Pensions (OPEB)				Other Than Pensions (OPEB)
	For the three months ended				For the nine months ended
	September 30,					September 30,
		2012		2011		2012		2011
($ in thousands)
Components of net periodic postretirement benefit cost
Service cost	$	2,999	$	4,206	$	8,109	$	12,662
Interest cost on projected benefit obligation		4,462		5,986		13,382		18,642
Expected return on plan assets		(19)		(79)		(129)		(242)
Amortization of prior service cost/(credit)		(2,545)		(2,552)		(7,551)		(7,651)
Amortization of unrecognized loss		1,830		607		5,652		3,604
Net periodic postretirement benefit cost	$	6,727	$	8,168	$	19,463	$	27,015

During the first nine months of 2012 and 2011, we capitalized $11.7 million and $9.8 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities. Based on current assumptions and plan asset values, we estimate that our 2012 pension and OPEB expenses will be between $80 million and $85 million before amounts capitalized into the cost of capital expenditures (they were $58.3 million in 2011 before amounts capitalized into the cost of capital expenditures). We made total net contributions to our pension plan for 2012 of $28.5 million, which reflects the positive impact of funding rate changes contained in the Highway Investment Act of 2012 and guidance from the IRS on August 16, 2012 related to valuation rates, and on September 11, 2012 related to lump sum methodologies. Net contributions totaling $18.2 million were made during the third quarter of 2012 and $10.3 million was made in October 2012. There are no further contributions to be made in 2012.

In connection with the completion of the Transaction on July 1, 2010, certain employees were transferred from various Verizon pension plans into 12 pension plans that were then merged with the Frontier Communications Pension Plan (the Plan) effective August 31, 2010. Assets of $438.8 million were transferred into the Plan during the second half of 2010 and assets of $106.9 million were transferred into the Plan in August 2011. Additionally, $74.0 million of assets were transferred into the Plan during the first nine months of 2012. The asset transfers from Verizon to the Plan have been completed.

The Plan's assets have increased from $1,258.0 million at December 31, 2011 to $1,282.2 million at September 30, 2012, an increase of $24.2 million, or 2%. This increase is a result of positive investment returns, cash contributions, and additional asset transfers from Verizon for a combined total of $147.5 million, less benefit payments of $123.3 million during the first nine months of 2012.