Employee Benefit Plans

Defined Benefit Pension and Other Postretirement Benefit Plans

The Company provides funded and unfunded non-contributory defined benefit pension plans covering certain of its salaried and hourly employees. Benefits are generally based on the employee’s age and compensation. The Company funds the plans in an amount not less than the minimum statutory funding requirements or more than the maximum amount that can be deducted for U.S. federal income tax purposes.

The Company also currently provides certain postretirement medical and life insurance coverage for eligible employees. Generally, covered employees who terminate employment after meeting eligibility requirements are eligible for postretirement coverage for themselves and their dependents. The salaried employee postretirement benefit plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance. The Company’s current funding policy is to fund the cost of all postretirement benefits as they are paid.

The idling of the Cumberland River mining operations in Appalachia in the third quarter of 2014 reduced the estimated years of future service for the CRCC Scotia Employee Association Pension Plan. On January 1, 2015, the Company’s cash balance and excess plans were amended to freeze new service credits for any new or active employee. These two events triggered curtailment accounting, resulting in an immediate recognition of any unamortized gain or loss and the reduction in the projected benefit obligation which were recorded in the third and fourth quarter of 2014, respectively.

Obligations and Funded Status.

Summaries of the changes in the benefit obligations, plan assets and funded status of the plans are as follows:



	Pension Benefits									Other Postretirement Benefits
	Successor			Predecessor						Successor			Predecessor
	October 2 through December 31, 2016			January 1 through October 1, 2016			Year Ended December 31, 2015			October 2 through December 31, 2016			January 1 through October 1, 2016			Year Ended December 31, 2015
(In thousands)
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligations at beginning of period	$	341,427		$	301,292		$	353,736		$	120,311		$	103,460		$	36,098
Service cost	—			—			9			180			393			866
Interest cost	2,768			9,338			14,604			978			3,223			1,904
Re-entry of former Magnum employees	—			—			—			—			—			85,843
Settlements	(135		)	—			—			—			—			—
Curtailments	—			454			—			—			714			—
Benefits paid	(11,009		)	(8,699		)	(61,955		)	(1,962		)	(8,273		)	(3,646		)
Other-primarily actuarial gain	(19,422		)	—			(5,102		)	(7,640		)	—			(17,605		)
Fresh start accounting adjustments	—			39,042			—			—			20,794
Benefit obligations at end of period	$	313,629		$	341,427		$	301,292		$	111,867		$	120,311		$	103,460
CHANGE IN PLAN ASSETS
Value of plan assets at beginning of period	$	292,726		$	273,499		$	336,709		$	—		$	—		$	—
Actual return on plan assets	(7,899		)	27,811			(1,679		)				—			—
Employer contributions	407			115			424			1,962			8,273			3,646
Benefits paid	(11,009		)	(8,699		)	(61,955		)	(1,962		)	(8,273		)	(3,646		)
Value of plan assets at end of period	$	274,225		$	292,726		$	273,499		$	—		$	—		$	—
Accrued benefit cost	$	(39,404	)	$	(48,701	)	$	(27,793	)	$	(111,867	)	$	(120,311	)	$	(103,460	)
ITEMS NOT YET RECOGNIZED AS A COMPONENT OF NET PERIODIC BENEFIT COST
Prior service credit (cost)	$	—		$	—		$	—		$	—		$	—		$	26,944
Accumulated gain (loss)	6,751			—			(16,769		)	7,640			—			11,313
	$	6,751		$	—		$	(16,769	)	$	7,640		$	—		$	38,257
BALANCE SHEET AMOUNTS
Current liability	$	(520	)	$	(420	)	$	(420	)	$	(10,422	)	$	(8,352	)	$	(3,650	)
Noncurrent liability	(38,884		)	(48,281		)	$	(27,373	)	(101,445		)	(111,959		)	(99,810		)
	$	(39,404	)	$	(48,701	)	$	(27,793	)	$	(111,867	)	$	(120,311	)	$	(103,460	)

Pension Benefits

The accumulated benefit obligation for all pension plans was $313.6 million and $301.3 million at December 31, 2016 and 2015, respectively.

Due to the Company adopting the corridor method of amortizing actuarial gains (losses) during fresh start accounting, it is anticipated there will be no amortization recorded into net periodic benefit cost during 2017.

Other Postretirement Benefits

Components of Net Periodic Benefit Cost. The following table details the components of pension and postretirement benefit costs (credits):



				Pension Benefits									Other Postretirement Benefits
	Successor			Predecessor									Successor		Predecessor
	October 2 through December 31, 2016			January 1 through October 1, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014			October 2 through December 31, 2016		January 1 through October 1, 2016			Year Ended December 31, 2015			Year Ended December 31, 2014
(In thousands)
Service cost	$	—		$	—		$	9		$	21,478		$	180	$	393		$	866		$	1,649
Interest cost	2,768			9,338			14,604			17,070			978		3,223			1,904			1,841
Curtailments	—			454			—			(25,368		)	—		(970		)	—			—
Settlements	(135		)	—			2,656			646			—		—			—			—
Expected return on plan assets	(4,770		)	(13,623		)	(20,367		)	(23,756		)	—		—			—			—
Amortization of prior service credits	—			—			—			(257		)	—		(7,854		)	(8,335		)	(10,003		)
Amortization of other actuarial losses (gains)	—			3,973			8,850			3,128			—		(849		)	(2,109		)	(761		)
Net benefit cost (credit)	$	(2,137	)	$	142		$	5,752		$	(7,059	)	$	1,158	$	(6,057	)	$	(7,674	)	$	(7,274	)

The differences generated from changes in assumed discount rates and returns on plan assets are amortized into earnings over the remaining service attribution periods of the employees using the corridor method.

Assumptions. The following table provides the weighted average assumptions used to determine the actuarial present value of projected benefit obligations for the respective periods.



	Successor	Predecessor
	October 2 through December 31, 2016	January 1 through October 1, 2016	Year Ended December 31, 2015
(Percentages)
Pension Benefits
Discount rate	3.95	3.39	4.59
Rate of compensation increase	N/A	N/A	N/A

Other Postretirement Benefits
Discount rate	3.93	3.37	4.57
Rate of compensation increase	N/A	N/A	N/A

The following table provides the weighted average assumptions used to determine net periodic benefit cost for the respective periods.



	Successor	Predecessor
	October 2 through December 31, 2016	January 1 through October 1, 2016	Year Ended December 31, 2015	Year Ended December 31, 2014
(Percentages)
Pension Benefits
Discount rate	3.39/3.95	4.59/3.80	4.15/4.61/4.41/4.60	5.08/4.23/4.14
Rate of compensation increase	N/A	N/A	N/A	N/A
Expected return on plan assets	6.85	6.85	7.00	7.75

Other Postretirement Benefits
Discount rate	3.37	4.57/3.80	3.91	4.58
Rate of compensation increase	N/A	N/A	N/A	N/A
Expected return on plan assets	N/A	N/A	N/A	N/A

The discount rates used in 2016, 2015 and 2014 were reevaluated during the year for settlements and curtailments. The obligations are remeasured at an updated discount rate that impacts the benefit cost recognized subsequent to the remeasurement.

The Company establishes the expected long-term rate of return at the beginning of each fiscal year based upon historical returns and projected returns on the underlying mix of invested assets. The Company utilizes modern portfolio theory modeling techniques in the development of its return assumptions. This technique projects rates of return that can be generated through various asset allocations that lie within the risk tolerance set forth by members of the Company’s pension committee (the “Pension Committee”). The risk assessment provides a link between a pension plan’s risk capacity, management’s willingness to accept investment risk and the asset allocation process, which ultimately leads to the return generated by the invested assets.

The health care cost trend rate assumed for 2017 is 6.7% and is expected to reach an ultimate trend rate of 4.5% by 2038. A one-percentage-point increase in the health care cost trend rate would increase the postretirement benefit obligation at December 31, 2016 by $11.1 million and the net periodic postretirement benefit cost for the year ended December 31, 2016 by $0.1 million.

Plan Assets

The Pension Committee is responsible for overseeing the investment of pension plan assets. The Pension Committee is responsible for determining and monitoring appropriate asset allocations and for selecting or replacing investment managers, trustees and custodians. The pension plan’s current investment targets are 55% equity and 45% fixed income securities. The Pension Committee reviews the actual asset allocation in light of these targets on a periodic basis and rebalances among investments as necessary. The Pension Committee evaluates the performance of investment managers as compared to the performance of specified benchmarks and peers and monitors the investment managers to ensure adherence to their stated investment style and to the plan’s investment guidelines.

The Company’s pension plan assets at December 31, 2016 and 2015, respectively, are categorized below according to the fair value hierarchy as defined in Note 16, “Fair Value Measurements”:



	Total					Level 1				Level 2				Level 3
	2016			2015		2016		2015		2016		2015		2016		2015
	(In thousands)
Equity Securities:^(A)
U.S. small-cap	$	13,520		$	11,640	$	13,520	$	11,640	$	—	$	—	$	—	$	—
U.S. mid-cap	29,687			28,524		9,422		10,979		20,265		17,545		—		—
U.S. large-cap	70,226			67,244		34,107		33,249		36,119		33,995		—		—
Non-U.S.	18,937			18,785		—		—		18,937		18,785		—		—
Fixed income securities:																—
U.S. government securities^(B)	26,519			18,844		19,973		18,183		6,546		661		—		—
Non-U.S. government securities^(C)	1,567			766		—		—		1,567		766		—		—
U.S. government asset and mortgage backed securities^(D)	1,074			1,056		—		—		1,074		1,056		—		—
Corporate fixed income^(E)	58,191			39,939		—		—		58,191		39,939		—		—
State and local government securities^(F)	6,406			5,725		—		—		6,406		5,725		—		—
Other investments^(I)	26,151			19,869		—		—		6,910		1,234		19,241		18,635
Total	$	252,278		$	212,392	$	77,022	$	74,051	$	156,015	$	119,706	$	19,241	$	18,635
Other fixed income^(G)	35,519
Short-term investments^(H)	8,598
Other liabilities^(J)	(22,170		)
	$	274,225

^(A) Equity securities includes investments in 1) common stock, 2) preferred stock and 3) mutual funds. Investments in common and preferred stocks are valued using quoted market prices multiplied by the number of shares owned. Investments in mutual funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date and are traded on listed exchanges.

^(B)U.S. government securities includes agency and treasury debt. These investments are valued using dealer quotes in an active market.

^(C) Non-U.S. government securities includes debt securities issued by foreign governments and are valued utilizing a price spread basis valuation technique with observable sources from investment dealers and research vendors.

^(D) U.S. government asset and mortgage backed securities includes government-backed mortgage funds which are valued utilizing an income approach that includes various valuation techniques and sources such as discounted cash flows models, benchmark yields and securities, reported trades, issuer trades and/or other applicable data.

^(E) Corporate fixed income is primarily comprised of corporate bonds and certain corporate asset-backed securities that are denominated in the U.S. dollar and are investment-grade securities. These investments are valued using dealer quotes.

^(F) State and local government securities include different U.S. state and local municipal bonds and asset backed securities, these investments are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes, benchmark yields and securities, reported trades, issuer trades and/or other applicable data.

^(G) Other fixed income investments are actively managed fixed income vehicles that are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

^(H) Short-term investments include governmental agency funds, government repurchase agreements, commingled funds, and pooled funds and mutual funds. Governmental agency funds are valued utilizing an option adjusted spread valuation technique and sources such as interest rate generation processes, benchmark yields and broker quotes. Investments in governmental repurchase agreements, commingled funds and pooled funds and mutual funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

^(I)Other investments include cash, forward contracts, derivative instruments, credit default swaps, interest rate swaps and mutual funds. Investments in interest rate swaps are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer trades and/or other applicable data. Forward contracts and derivative instruments are valued at their exchange listed price or broker quote in an active market. The mutual funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date and are traded on listed exchanges.

^(J)Net payable amount due for pending securities purchased and sold due to broker/dealer.

Cash Flows. The Company expects to make contributions of $0.4 million to the pension plans in 2017, which is impacted by the Moving Ahead for Progress in the 21st Century Act (MAP-21). MAP-21 does not reduce the Company’s obligations under the plan, but redistributes the timing of required payments by providing near term funding relief for sponsors under the Pension Protection Act.

The following represents expected future benefit payments from the plan, which reflect expected future service, as appropriate:



			Other
	Pension		Postretirement
	Benefits		Benefits
	(In thousands)
2017	$	19,403	$	12,300
2018	21,117		12,716
2019	20,763		13,033
2020	21,209		13,408
2021	21,917		13,763
Next 5 years	102,619		64,920
	$	207,028	$	130,140

Other Plans

The Company sponsors savings plans which were established to assist eligible employees in providing for their future retirement needs. The Company’s expense, representing its contributions to the plans, was $3.5 million for the period October 2 through December 31, 2016, $13.8 million for the period January 1 through October 1, 2016 and $20.5 million and $22.9 million for the years ended December 31, 2015 and 2014, respectively.