Pension Plans and Other Postretirement Benefits

3 Months Ended

Mar. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension Plans and Other Postretirement Benefits

The Company has defined benefit pension plans or defined contribution retirement plans covering substantially all employees. Benefits under the defined benefit pension plans are generally based on years of service and/or final average pay. The Company funds the U.S. pension plans in accordance with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code.

The Company also sponsors several postretirement plans covering certain salaried and hourly employees. The plans provide health care and life insurance benefits for eligible retirees. In most retiree health care plans, Company contributions towards premiums are capped based on the cost as of a certain date, thereby creating a defined contribution. For the non-collectively bargained plans, the Company maintains the right to amend or terminate the plans at its discretion.

For the three month periods ended March 31, 2016 and 2015, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):



	Pension Benefits						Other Postretirement Benefits
	Three months ended March 31,						Three months ended March 31,
	2016			2015			2016		2015
Service cost - benefits earned during the year	$	5.2		$	5.7		$	0.6	$	0.7
Interest cost on benefits earned in prior years	31.4			30.3			4.1		4.5
Expected return on plan assets	(37.2		)	(42.1		)	—		—
Amortization of prior service cost	0.3			0.3			0.6		1.2
Amortization of net actuarial loss	16.3			15.1			2.4		3.6
Total retirement benefit expense	$	16.0		$	9.3		$	7.7	$	10.0

On March 4, 2016, the Company announced that it had reached a four-year labor agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) covering USW-represented employees of its ATI Flat Rolled Products business unit and at two locations in the High Performance Materials & Components business segment. The new labor agreement included changes to several retirement benefit programs, including a freeze to new entrants to ATI’s defined benefit pension plan, the elimination of defined benefit retiree healthcare for new employees, and changes in the levels of profit-based contributions for retiree medical benefits. The Company remeasured its other postretirement benefit obligation as of the March 1, 2016 contract effective date using a 4.05% discount rate, compared to a 4.50% discount rate as of December 31, 2015. Based on the remeasurement, other postretirement benefit liabilities decreased $22.5 million, and other postretirement benefit expense will decrease by $7.5 million in the March through December 2016 period.

Based on updated actuarial estimates in the first quarter of 2016, minimum funding requirements for ATI’s defined benefit pension plan through March 2017 are currently projected to be $31 million and have therefore been reclassified as a current liability on the March 31, 2016 consolidated balance sheet.