7. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost (credit) are as follows:



	Pension Benefits
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
	(in millions)

Service cost	$	0.8		$	0.7		$	2.6		$	2.3
Interest cost	8.5			8.9			25.5			26.5
Expected asset return	(11.5		)	(8.0		)	(34.5		)	(24.0		)
Amortized loss	2.2			1.9			7.0			5.5
Amortized prior service cost	4.8			0.1			5.4			0.1
Net periodic benefit cost	$	4.8		$	3.6		$	6.0		$	10.4

	Other Postretirement Benefits
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
	(in millions)

Service cost	$	0.1		$	0.1		$	0.3		$	0.3
Interest cost	3.3			3.8			9.9			11.6
Amortized loss	0.2			0.1			0.6			0.5
Amortized prior service credit	(0.4		)	(0.3		)	(1.3		)	(1.3		)
Curtailment gain	—			—			—			(21.8		)
Settlement	—			—			—			(5.2		)
Net periodic benefit cost (credit)	$	3.2		$	3.7		$	9.5		$	(15.9	)

In the third quarter of 2013, we remeasured our AAM Supplemental Executive Retirement Plan (SERP) due to the passing of our Co-Founder and Executive Chairman of the Board of Directors. As a result of this remeasurement, we recorded $4.7 million in selling, general & administrative expense related to the acceleration of prior service cost. This SERP remeasurement also resulted in a decrease in postretirement benefits and other long-term liabilities of $16.4 million and a decrease in our accumulated other comprehensive loss of $13.7 million on our Condensed Consolidated Balance Sheet.

In the first quarter of 2012, we recorded a gain of $21.8 million to cost of goods sold for the curtailment of certain other postretirement benefits (OPEB). This resulted primarily from the reduction in the expected future OPEB related to the DMC and CKMF hourly associates who terminated employment from AAM as a result of our plant closures. These curtailment gains resulted in an increase in our accumulated other comprehensive loss of $21.8 million.

In the second quarter of 2012, we notified hourly associates of the termination of a benefit plan, which provided legal services to certain eligible hourly associates represented by the International UAW. As a result of terminating this plan, we recorded a settlement gain of $5.2 million in cost of goods sold in the second quarter of 2012. Recognition of this settlement gain reduced our postretirement benefits and other long-term liabilities by $4.7 million and also reduced our accumulated other comprehensive loss by $0.5 million.

As a result of our election to apply the provisions of Moving Ahead for Progress in the 21st Century Act (MAP-21), in addition to certain actions we took during the third quarter of 2012, we agreed to provide pension and postretirement benefits to certain eligible UAW associates whose employment had been terminated in connection with the DMC and CKMF plant closures. In the nine months ended September 30, 2012, we recorded $28.7 million in cost of goods sold for these pension and postretirement benefits.

Due to our significant pension contributions made in 2012, we will not make any cash payments in 2013 to satisfy our regulatory funding requirements. We expect our cash outlay for other postretirement benefit obligations in 2013, net of GM cost sharing, to be approximately $15 million.

Deferred Compensation Plan Certain of our U.S. associates are eligible to participate in a non-qualified deferred compensation plan. As of September 30, 2013 and December 31, 2012, our deferred compensation liability was $5.9 million and $11.3 million, respectively. Upon the passing of our Co-Founder and Executive Chairman of the Board of Directors, we made a deferred compensation payment of $5.6 million to the beneficiary of the plan in the third quarter of 2013. This payment resulted in a $5.6 million reduction in postretirement benefits and other long-term liabilities on our Condensed Consolidated Balance Sheet. This payment was partially offset by proceeds of $5.0 million, which AAM received as the beneficiary of a key man life insurance policy in the third quarter of 2013.