FairPoint Communications 2013 Annual Report Download - page 82

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80
Fair Value Measurements Using
Level 1 Level 2 Level 3
Long-term interest rate swap liability (a) $ — $ 1,005 $ —
(a) The fair value is determined using valuation models which rely on the expected LIBOR based yield curve and estimates
of counterparty and the Company’s non-performance risk. Because each of these inputs are directly observable or can
be corroborated by observable market data, we have categorized these interest rate swaps as Level 2 within the fair value
hierarchy.
Long-term debt is not carried at fair value, but measured on a recurring basis. The estimated fair values of the Company's
long-term debt as of December 31, 2013 and December 31, 2012 are as follows (in thousands):
December 31, 2013 December 31, 2012
Carrying Amount Fair Value (a) Carrying Amount Fair Value (a)
New Term Loan, due 2019 (b) $ 618,122 $ 655,844 $ — $ —
Notes, 8.75%, due 2019 300,000 318,000 — —
Old Term Loan, repaid February 2013 — — 957,000 929,500
Total $ 918,122 $ 973,844 $ 957,000 $ 929,500
(a) The Company estimated fair value based on market prices of the Company's debt securities at the balance sheet date,
which falls within Level 2 of the fair value hierarchy.
(b) The carrying amount of the New Term Loan is net of the unamortized discount of $17.1 million.
For a discussion of the fair value measurement of the Company's pension plan assets, see note (11) "Employee Benefit
Plans—Plan Assets, Obligations and Funded Status—Qualified Pension Plan Assets".
(11) Employee Benefit Plans
The Company sponsors noncontributory qualified defined benefit pension plans ("qualified pension plans") and post-
retirement healthcare plans which provide certain cash payments and medical and dental benefits to eligible retired employees
and their beneficiaries and covered dependents. These plans were assumed as part of the acquisition of the Northern New England
operations from Verizon. The qualified pension plan and the post-retirement healthcare plan which cover non-represented
employees are frozen. Therefore, no new benefits are being earned by participants and no new participants are becoming eligible
for benefits in these plans. Participants in the qualified pension plan and the post-retirement healthcare plan covering represented
employees continue to accrue benefits in accordance with the respective plan documents and contractual requirements in the
collective bargaining agreements. Eligibility to participate in the plans is based on an employee's age and years of service. The
Company makes contributions to the qualified pension plans to meet minimum ERISA funding requirements and has the ability
to elect to make additional discretionary contributions. The post-retirement healthcare plans are unfunded and the Company funds
the benefits that are paid.
Annually, the Company remeasures the net liabilities of its qualified pension and other post-retirement healthcare benefits
in accordance with the Compensation—Retirement Benefits Topic of the ASC.