COAL WORKERS’ PNEUMOCONIOSIS (CWP) AND WORKERS’ COMPENSATION:

CONSOL Energy is responsible under the Federal Coal Mine Health and Safety Act of 1969, as amended, for medical and disability benefits to employees and their dependents resulting from occurrences of coal workers' pneumoconiosis disease. CONSOL Energy is also responsible under various state statutes for pneumoconiosis benefits. CONSOL Energy primarily provides for these claims through a self-insurance program. The calculation of the actuarial present value of the estimated pneumoconiosis obligation is based on an annual actuarial study by independent actuaries and uses assumptions regarding disability incidence, medical costs, indemnity levels, mortality, death benefits, dependents and interest rates which are derived from actual company experience and outside sources. Recent legislative changes have not been favorable for CWP. Although these changes have not had a significant impact on the liability, CONSOL has noticed an increase in claims. Actuarial gains or losses can result from differences in incident rates and severity of claims filed as compared to original assumptions.

CONSOL Energy must also compensate individuals who sustain employment-related physical injuries or some types of occupational diseases and, on some occasions, for costs of their rehabilitation. Workers' compensation laws will also compensate survivors of workers who suffer employment-related deaths. Workers' compensation laws are administered by state agencies with each state having its own set of rules and regulations regarding compensation that is owed to an employee that is injured in the course of employment. CONSOL Energy primarily provides for these claims through a self-insurance program. CONSOL Energy recognizes an actuarial present value of the estimated workers' compensation obligation calculated by independent actuaries. The calculation is based on claims filed and an estimate of claims incurred but not yet reported as well as various assumptions, including discount rate, future healthcare trend rate, benefit duration and recurrence of injuries. Actuarial losses associated with workers' compensation have resulted from discount rate changes and differences in claims experience and incident rates as compared to prior assumptions.

On December 5, 2013, CONSOL Energy completed the CCC Sale, in connection with which the obligations for certain participants of the CWP and Workers' Compensation plans were transferred to Murray Energy. These plan settlements reduced CONSOL Energy's CWP and Workers' Compensation liabilities by $49,652 and $105,308, respectively at December 31, 2013 and resulted in adjustments of $43,892 and $13,768 in Other Comprehensive Income, net of $26,337 and $8,262 in deferred taxes for CWP and Workers' Compensation, respectively, at December 31, 2013. The settlements were included in the results of discontinued operations.



	CWP						Workers' Compensation
	at December 31,						at December 31,
	2014			2013			2014			2013
Change in benefit obligation:
Benefit obligation at beginning of period	$	121,183		$	184,079		$	85,096		$	179,589
State administrative fees and insurance bond premiums	—			—			3,352			5,324
Service, legal and administrative cost	5,674			8,168			9,781			15,943
Interest cost	5,537			7,031			3,577			6,401
Actuarial loss (gain)	5,578			(18,020		)	3,805			11,806
Benefits paid	(11,874		)	(10,423		)	(15,523		)	(28,659		)
Settlements	—			(49,652		)	(347		)	(105,308		)
Benefit obligation at end of period	$	126,098		$	121,183		$	89,741		$	85,096

Current assets	$	—		$	—		$	1,327		$	1,386
Current liabilities	(9,156		)	(9,211		)	(15,122		)	(15,014		)
Noncurrent liabilities	(116,942		)	(111,972		)	(75,946		)	(71,468		)
Net obligation recognized	$	(126,098	)	$	(121,183	)	$	(89,741	)	$	(85,096	)

Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial gain	$	(68,588	)	$	(80,363	)	$	(9,382	)	$	(13,569	)
Net amount recognized (before tax effect)	$	(68,588	)	$	(80,363	)	$	(9,382	)	$	(13,569	)

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



	CWP									Workers’ Compensation
	For the Years Ended									For the Years Ended
	December 31,									December 31,
	2014			2013			2012			2014			2013			2012
Service cost	$	5,674		$	8,168		$	7,711		$	9,781		$	15,943		$	17,126
Interest cost	5,537			7,031			7,964			3,577			6,401			7,113
Amortization of prior service cost	—			—			(395		)	—			—			—
Recognized net actuarial gain	(6,196		)	(16,384		)	(19,338		)	(382		)	(2,630		)	(3,944		)
State administrative fees and insurance bond premiums	—			—			—			3,352			5,324			6,727
Settlement gain	—			(119,881		)	—			—			(121,838		)	—
Net periodic cost (credit)	$	5,015		$	(121,066	)	$	(4,058	)	$	16,328		$	(96,800	)	$	27,022

Including settlements and curtailments associated with the CCC Sale, expenses (income) attributable to discontinued operations included in the net periodic cost (credit) were $(120,496), and $(2,374), respectively, for CWP and $(113,097) and $10,132, respectively, for Workers' Compensation for the years ended December 31, 2013, and 2012. No amounts were included in discontinued operations for the year ended December 31, 2014.

Following are amounts included in accumulated other comprehensive income that are expected to be recognized in 2015 net periodic benefit costs:



				Workers'
	CWP			Compensation
	Benefits			Benefits
Actuarial gain recognition	$	(5,576	)	$	(30	)

CONSOL Energy utilizes a corridor approach to amortize actuarial gains and losses that have been accumulated under the Workers’ Compensation and CWP plans. Cumulative gains and losses that are in excess of 10% of the greater of either the estimated liability or the market-related value of plan assets are amortized over the expected average remaining future service of the current active membership of the Workers’ Compensation and CWP plans.

Assumptions:

The weighted-average discount rates used to determine benefit obligations and net periodic cost (benefit) are as follows:



	CWP						Workers' Compensation
	For the Years Ended						For the Years Ended
	December 31,						December 31,
	2014		2013		2012		2014		2013		2012
Benefit obligations	4.21	%	4.75	%	4.03	%	3.84	%	4.57	%	3.95	%
Net periodic cost (benefit)	4.75	%	4.03	%	4.46	%	4.57	%	3.95	%	4.40	%

Discount rates are determined using a Company-specific yield curve model (above-mean) developed with the assistance of an external actuary. The Company-specific yield curve models (above-mean) use a subset of the expanded bond universe to determine the Company-specific discount rate. Bonds used in the yield curve are rated AA by Moody's or Standard & Poor's as of the measurement date. The yield curve models parallel the plans' projected cash flows, and the underlying cash flows of the bonds included in the models exceed the cash flows needed to satisfy the Company's plans.

Assumed discount rates have a significant effect on the amounts reported for both CWP costs and Workers' Compensation costs. A one-quarter percentage point change in assumed discount rate would have the following effect on benefit costs:



	0.25 Percentage			0.25 Percentage
	Point Increase			Point Decrease
CWP costs (decrease) increase	$	(134	)	$	138
Workers' compensation costs (decrease) increase	$	(95	)	$	102

Cash Flows:

CONSOL Energy does not intend to make contributions to the CWP or Workers' Compensation plans in 2015, but it intends to pay benefit claims as they become due.

The following benefit payments, which reflect expected future claims as appropriate, are expected to be paid:



			Workers' Compensation
	CWP		Total		Actuarial		Other
	Benefits		Benefits		Benefits		Benefits
2015	$	9,156	$	17,101	$	13,795	$	3,306
2016	$	7,483	$	17,027	$	13,639	$	3,388
2017	$	6,802	$	17,123	$	13,650	$	3,473
2018	$	6,402	$	17,287	$	13,727	$	3,560
2019	$	6,207	$	17,443	$	13,794	$	3,649
Year 2020-2024	$	29,376	$	91,222	$	71,563	$	19,659