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Employee Benefits | 9 Months Ended
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Sep. 30, 2015
Compensation and Retirement Disclosure [Abstract] |
Employee Benefits | Employee Benefits Pension and Similar Benefit Plans. We provide contributions to (i) multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO, CLC ("USW") and the International Association of Machinists and certain other unions at certain of our production facilities; (ii) defined contribution 401(k) savings plans for hourly bargaining unit employees and salaried and certain hourly non-bargaining unit employees; (iii) a defined benefit plan for salaried employees at our London, Ontario (Canada) facility; and (iv) a non-qualified, unfunded, unsecured plan of deferred compensation for key employees who would otherwise suffer a loss of benefits under our defined contribution plan. VEBA Postretirement Medical Obligations. Certain retirees, their surviving spouses and eligible dependents receive medical coverage through participation in a VEBA for the benefit of certain union retirees, their surviving spouses and eligible dependents ("Union VEBA") or a VEBA that provides benefits for certain other eligible retirees, their surviving spouses and eligible dependents ("Salaried VEBA" and, together with the Union VEBA, "VEBAs"). We have no claim to the assets of the VEBAs or any obligation to fund their liabilities. The benefits paid by the VEBAs to the plan participants are made at the sole discretion of the respective VEBA trustees and are outside our control. Our only financial obligations to the VEBAs are (i) an annual variable cash contribution (described in more detail below) and (ii) reimbursement of annual administrative expenses of the VEBAs up to $0.3 million in the aggregate. Nevertheless, we have historically accounted for each of the VEBAs, and continue to account for the Salaried VEBA, as a defined benefit postretirement plan with the maximum benefits payable capped at the aggregate of the current assets of the VEBAs and the estimated future variable contributions from us and earnings thereon. Under this accounting treatment, the funding status of the VEBAs resulted in a liability or asset position on our Consolidated Balance Sheets, even though such liability or asset has no impact on our cash flow or liquidity. The only impact that the VEBAs have on our cash flow or liquidity is with respect to our obligations to make annual variable cash contributions and to reimburse a portion of the VEBAs’ administrative expenses. The amount of annual variable cash contribution to be made by us is determined as follows: 10% of the first $20.0 million of annual cash flow (as defined; in general terms, the principal elements of cash flow are earnings before interest expense, provision for income taxes and depreciation and amortization less cash payments for, among other things, interest, income taxes and capital expenditures), plus 20% of annual cash flow (as defined) in excess of $20.0 million. Such payments may not exceed $20.0 million annually, and payments are allocated between the Union VEBA and the Salaried VEBA at 85.5% and 14.5%, respectively. Amounts owing by us to the VEBAs are recorded on our Consolidated Balance Sheets at the end of each year in Other accrued liabilities (until paid in cash), with corresponding adjustments reflecting an increase in Net assets of VEBAs, a decrease in Net liabilities of VEBAs, or a combination thereof. The annual variable contributions with respect to 2014 and 2013 totaled $13.7 million and $16.0 million at December 31, 2014 and December 31, 2013, respectively and these contributions were made during the subsequent first quarters. The variable cash contribution obligation to the Union VEBA expires in September 2017, while the obligation to the Salaried VEBA has no express termination. In January 2015, members of the USW at our Newark, Ohio ("Newark") and Spokane, Washington ("Trentwood") facilities ratified a new five-year collective bargaining agreement ("CBA"). The CBA did not extend our obligation to make annual variable contributions to the Union VEBA. As a result of our obligation to make annual variable contributions to the Union VEBA expiring for any period after September 2017, we no longer account for the Union VEBA as a defined benefit plan and have removed the Union VEBA net assets and related deferred tax liabilities from our Consolidated Balance Sheets as of January 1, 2015. As of September 30, 2015, the estimated liability for the remaining variable cash contributions through September 2017, of $44.1 million in the aggregate was recorded in Other accrued liabilities and Long-term liabilities (see Note 2). Such amounts will be adjusted quarterly based on our most current cash flow (as previously defined) projections with the changes reflected in our Operating income (loss). The projected benefit obligation and fair value of the plan assets of the Union VEBA as of December 31, 2014 were $391.5 million and $731.6 million, respectively. As a result of the termination of defined benefit plan accounting for the Union VEBA, the projected benefit obligation and fair value of the plan assets were removed from our consolidated financial statements, resulting in a non-cash loss of $307.8 million, net of a $184.4 million tax benefit, during the quarter ended March 31, 2015. Components of Net Periodic Postretirement Benefit (Income) Cost. Our results of operations included the following impacts associated with the VEBAs and the Canadian defined benefit plan: (a) charges for service rendered by employees; (b) a charge for accretion of interest; (c) a benefit for the return on plan assets; and (d) amortization of net gains or losses on assets, prior service costs associated with plan amendments and actuarial differences. Net periodic postretirement benefit cost related to the Canadian defined benefit plan was not material for the quarters and nine months ended September 30, 2015 and September 30, 2014. The following table presents the components of net periodic postretirement benefit cost (income) for the VEBAs and charges relating to all other employee benefit plans for the periods presented (in millions of dollars):
| Quarter Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
VEBAs: |  |  |  |  |  |  |
Service cost 1 | $ | — |  |  | $ | 0.6 |  |  | $ | — |  |  | $ | 1.7 |
Interest cost | 0.7 |  |  | 4.2 |  |  | 2.1 |  |  | 12.5 |
Expected return on plan assets | (1.1 | ) |  | (12.9 | ) |  | (3.3 | ) |  | (38.5 | )
Amortization of prior service cost | 0.7 |  |  | 2.6 |  |  | 2.2 |  |  | 8.0 |
Amortization of net actuarial loss (gain) | 0.3 |  |  | (0.5 | ) |  | 0.8 |  |  | (1.4 | )
Total net periodic postretirement benefit cost (income) relating to VEBAs | 0.6 |  |  | (6.0 | ) |  | 1.8 |  |  | (17.7 | )
(Gain) loss on removal of Union VEBA net assets 2 | (2.9 | ) |  | — |  |  | 490.9 |  |  | — |
Total VEBAs | (2.3 | ) |  | (6.0 | ) |  | 492.7 |  |  | (17.7 | )
Other employee benefit plans: |  |  |  |  |  |  |
Deferred compensation plan | (0.4 | ) |  | — |  |  | 0.1 |  |  | 0.6 |
Defined contribution plans | 1.4 |  |  | 1.3 |  |  | 7.1 |  |  | 6.8 |
Multiemployer pension plans | 1.1 |  |  | 0.8 |  |  | 2.9 |  |  | 2.6 |
Total other employee benefit plans | $ | 2.1 |  |  | $ | 2.1 |  |  | $ | 10.1 |  |  | $ | 10.0 |
Total | $ | (0.2 | ) |  | $ | (3.9 | ) |  | $ | 502.8 |  |  | $ | (7.7 | )
____________
1 | The service cost related to the Salaried VEBA was insignificant for all periods presented.
2 | Includes a $2.9 million adjustment during the quarter ended September 30, 2015 to decrease our contingent contribution accrual related to the Union VEBA settlement.
The following table presents the allocation of the charges (income) detailed above, by reportable segment and business unit (in millions of dollars – see Note 11):
| Quarter Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Fabricated Products | $ | 2.4 |  |  | $ | 2.0 |  |  | $ | 9.4 |  |  | $ | 8.9 |
All Other | (2.6 | ) |  | (5.9 | ) |  | 493.4 |  |  | (16.6 | )
Total | $ | (0.2 | ) |  | $ | (3.9 | ) |  | $ | 502.8 |  |  | $ | (7.7 | )
For all periods presented, Net periodic postretirement benefit cost (income) relating to VEBAs was included within All Other. Further, substantially all of the Fabricated Products segment’s employee benefits related charges are in Cost of products sold, excluding depreciation and amortization and other items with the remaining balance in Selling, general, administrative, research and development ("SG&A and R&D").

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