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Pension Plans and Other Postretirement Benefits | 9 Months Ended
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Sep. 30, 2015
Compensation and Retirement Disclosure [Abstract] |
Pension Plans and Other Postretirement Benefits | Pension Plans and Other Postretirement Benefits: In connection with the acquisition of Rockwood, in the first quarter of 2015 we assumed the obligations of various defined benefit pension plans that were maintained by Rockwood which cover certain employees, primarily in the U.S., the United Kingdom and Germany. The majority of the plans’ assets are invested in diversified equity mutual funds, government and corporate bonds and other fixed income funds. The following table sets forth the benefit obligations, plan assets, funded status and weighted-average assumption percentages for the defined benefit pension plans acquired in the Rockwood acquisition, as of the Acquisition Closing Date (in thousands):
| U.S. |  | Foreign
Benefit obligation | $ | 39,125 |  |  | $ | 416,150 |
Fair value of plan assets | 29,314 |  |  | 109,875 |
Funded status | $ | (9,811 | ) |  | $ | (306,275 | )
Weighted-average assumption percentages: |  |  |
Discount rate | 4.09 | % |  | 2.35 | %
Expected return on plan assets | 6.03 | % |  | 5.78 | %
Rate of compensation increase | — | % |  | 3.15 | %
The current forecast of benefit payments related to the defined benefit pension plans acquired in the Rockwood acquisition, which reflect expected future service, amounts to (in millions):
| U.S. |  | Foreign
Remainder of 2015 | $ | 0.6 |  |  | $ | 3.9 |
2016 | $ | 1.6 |  |  | $ | 16.4 |
2017 | $ | 1.7 |  |  | $ | 16.0 |
2018 | $ | 1.9 |  |  | $ | 16.8 |
2019 | $ | 2.0 |  |  | $ | 16.9 |
2020-2024 | $ | 11.1 |  |  | $ | 89.8 |
For the remainder of 2015, contributions related to the defined benefit pension plans acquired in the Rockwood acquisition are expected to be approximately $1.5 million. The components of pension and postretirement benefits cost (credit) for the three-month and nine-month periods ended September 30, 2015 and 2014 are shown in the table below. The 2015 period includes results of the plans we acquired in the Rockwood acquisition.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
| (In thousands)
Pension Benefits Cost (Credit): |  |  |  |  |  |  |
Service cost | $ | 1,874 |  |  | $ | 2,678 |  |  | $ | 5,544 |  |  | $ | 8,245 |
Interest cost | 10,180 |  |  | 8,006 |  |  | 30,360 |  |  | 24,303 |
Expected return on assets | (11,834 | ) |  | (10,027 | ) |  | (35,367 | ) |  | (30,404 | )
Actuarial loss (gain)(a) | — |  |  | 2,786 |  |  | (51 | ) |  | 18,218 |
Amortization of prior service benefit | 30 |  |  | (119 | ) |  | 89 |  |  | (530 | )
Total net pension benefits cost | $ | 250 |  |  | $ | 3,324 |  |  | $ | 575 |  |  | $ | 19,832 |
Postretirement Benefits Cost (Credit): |  |  |  |  |  |  |
Service cost | $ | 36 |  |  | $ | 54 |  |  | $ | 107 |  |  | $ | 162 |
Interest cost | 643 |  |  | 760 |  |  | 1,930 |  |  | 2,280 |
Expected return on assets | (66 | ) |  | (85 | ) |  | (178 | ) |  | (256 | )
Amortization of prior service benefit | (24 | ) |  | (24 | ) |  | (72 | ) |  | (72 | )
Settlements/curtailments(b) | — |  |  | — |  |  | (2,594 | ) |  | — |
Total net postretirement benefits cost (credit) | $ | 589 |  |  | $ | 705 |  |  | $ | (807 | ) |  | $ | 2,114 |
Total net pension and postretirement benefits cost (credit) | $ | 839 |  |  | $ | 4,029 |  |  | $ | (232 | ) |  | $ | 21,946 |
(a) | In connection with a realignment of our operating segments effective January 1, 2014, in the fourth quarter of 2013 we initiated a workforce reduction plan which resulted in a reduction of approximately 230 employees worldwide. This workforce reduction triggered a net curtailment gain of approximately $0.8 million in the first quarter of 2014 for our U.S. defined benefit plan which covers non-represented employees and our supplemental executive retirement plan (“SERP”). In connection with the curtailment, we were required to remeasure the related assets and obligations for these two plans. As of the January 31, 2014 remeasurement date, the weighted-average discount rate for all of our domestic pension plans was 4.97% compared to 5.14% at December 31, 2013. Taking into account the discount rate reduction and actual return on plan assets through January 31, 2014, we recorded a mark-to-market actuarial loss (net of the curtailment gain) of $15.4 million in the first quarter of 2014 related to these two plans.
In connection with the sale of our antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. which closed on September 1, 2014, in the third quarter of 2014 we were required to remeasure the assets and obligations of one of our U.S. defined benefit plans for represented employees, which was part of the disposed group. As of the September 1, 2014 remeasurement date, the weighted-average discount rate for all of our domestic pension plans was 4.94% compared to 5.14% at December 31, 2013. Taking into account the discount rate reduction and actual return on plan assets through September 1, 2014, as well as changes to mortality assumptions, we recorded a mark-to-market actuarial loss of $2.8 million in the third quarter of 2014 related to this plan.
(b) | We assumed responsibility for one domestic OPEB plan in connection with the acquisition of Rockwood which covered a small number of active employees and retirees. This plan was terminated in the first quarter of 2015 and provisions were made for the affected employees and retirees to receive benefits under an existing plan. A gain of $2.6 million was recognized in the first quarter of 2015 related to the termination of this plan.
During the three-month and nine-month periods ended September 30, 2015, we made contributions of $4.8 million and $13.8 million, respectively, to our qualified and nonqualified pension plans. During the three-month and nine-month periods ended September 30, 2014, we made contributions of $5.2 million and $7.5 million, respectively, to our qualified and nonqualified pension plans. The 2014 amounts include a contribution of $4.3 million to one of our U.S. defined benefit plans for represented employees which was included in the sale of certain businesses and assets to SI Group, Inc. which closed on September 1, 2014. We paid $0.9 million and $2.9 million in premiums to the U.S. postretirement benefit plan during the three-month and nine-month periods ended September 30, 2015, respectively. During the three-month and nine-month periods ended September 30, 2014, we paid $0.8 million and $3.2 million, respectively, in premiums to the U.S. postretirement benefit plan. Multiemployer Plan Certain current and former employees of Rockwood participate in a multiemployer plan in Germany, the Pensionskasse Dynamit Nobel Versicherungsverein auf Gegenseitigkeit, Troisdorf (“DN Pensionskasse”), that provides monthly payments in the case of disability, death or retirement. The risks of participating in a multiemployer plan are different from single-employer plans in the following ways: (a) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, and (b) if a participating employer stops contributing to the plan, the unfunded obligation of the plan may be borne by remaining participating employers. Some participants in the plan are subject to collective bargaining arrangements, which have no fixed expiration date. The contribution and benefit levels are not negotiated or significantly influenced by these collective bargaining arrangements. Also, the benefit levels generally are not subject to reduction. Under German insurance law, the DN Pensionskasse must be fully funded at all times. The DN Pensionskasse was fully funded as of December 31, 2014, the most recent year-end date of the plan. This funding level would correspond to the highest funding zone status (at least 80% funded) under U.S. pension regulation. Since the plan liabilities need to be fully funded at all times according to local funding requirements, it is unlikely that the DN Pensionskasse plan will fail to fulfill its obligations, however, in such an event, the Company is liable for the benefits of its employees who participate in the plan. Additional information of the DN Pensionskasse is available in the public domain. The majority of the Company’s contributions are tied to employees’ contributions, which are generally calculated as a percentage of base compensation, up to a certain statutory ceiling. Our contributions to this plan were €0.5 million (approximately $0.6 million) during the three months ended September 30, 2015, and €1.2 million (approximately $1.4 million) during the nine months ended September 30, 2015. As of the most recent year-end date of the plan, Rockwood’s contributions in 2014 represented more than 5% of total contributions to the DN Pensionskasse in 2014. The DN Pensionskasse was subject to a financial improvement plan (“FIP”) which expired at the end of 2014. The solvency requirements of the FIP have been met as of December 31, 2014.

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