NOTE 15—EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

The Company’s defined contribution plans cover substantially all U.S. employees. The plans provide for employer contributions and, in some cases, an age and salary based contribution. The match of employee contributions under defined contribution plans and supplemental employer contributions for the years ended December 31, 2015, 2014 and 2013 were as follows:

	Year Ended December 31,
(In millions)	2015		2014		2013
Company match of employee contributions	$	1.1	$	0.2	$	0.2
Supplemental employer contribution		0.4		—		—

Defined Benefit Pension Plans

Real Alloy sponsors three defined benefit pension plans for its German employees. The plans are based on final pay and service, but some senior employees are entitled to receive enhanced pension benefits. Benefit payments are financed, in part, by contributions to a relief fund that establishes a life insurance contract to secure future pension payments (which represents a Level 2 measurement within the fair value hierarchy). The plans, however, are substantially underfunded under German law. The unfunded accrued pension benefits are covered under a pension insurance association under German law, should Real Alloy be unable to fulfill its obligations under the plans.

The following table presents the components of the net periodic benefit expense under the German defined benefit pension plans for the year ended December 31, 2015:

	Year Ended December 31,
(In millions)	2015
Service cost	$	0.9
Interest cost		0.7
Expected return on plan assets		(0.1	)
Net periodic benefit expense	$	1.5

The following table reflects changes in projected benefit obligations and plan assets during the year ended December 31, 2015:

	Year Ended December 31,
(In millions)	2015
Changes in projected benefit obligations:
Projected benefit obligations, beginning of period	$	—
Projected benefit obligations assumed in business combination		49.8
Service cost		0.9
Interest cost		0.7
Actuarial gain		(7.2	)
Benefits paid		(0.8	)
Currency translation and other		(1.2	)
Projected benefit obligations, end of period		42.2
Changes in plan assets:
Fair value of plan assets, beginning of period		—
Fair value of plan assets acquired in business combination		3.8
Employer contributions		0.5
Actual return on plan assets		0.1
Currency translation and other		(0.2	)
Fair value of plan assets, end of period		4.2
Net amount recognized	$	38.0

The following table provides additional information about amounts recognized in the consolidated balance sheet as of December 31, 2015:

	Year Ended December 31,
(In millions)	2015
Pension benefit obligations	$	38.0
Net actuarial gain recognized in accumulated other comprehensive income (before tax)		7.1
Amortization of net actuarial gain expected to be recognized during the next fiscal year (before tax)		0.3
Accumulated benefit obligation		37.5
Projected employer contribution for 2016		0.6

Plan Assumptions. The Company makes assumptions regarding such variables as the expected long-term rate of return on plan assets and the discount rate applied to determine service and interest cost. The discount rate is selected to provide management’s best estimate of the rate at which the benefit obligation could effectively be settled. In making this estimate, projected cash flows are developed and matched with a yield curve based on an appropriate universe of high-quality corporate bonds.

Assumptions for long-term rates of return on plan assets are based upon historical returns, future expectations for returns for each asset class and the effect of periodic target asset allocation rebalancing. We believe these assumptions are appropriate based upon the mix of the investments and the long-term nature of the plans’ investments. The following table provides assumptions used to determine benefit obligations as of December 31, 2015:

	December 31,
	2015
Discount rate		2.4	%
Rate of compensation increase		2.8	%
Pension increase		1.6	%
Turnover		2.0	%

The following table reflects the assumptions used to determine the net periodic benefit cost for the year ended December 31, 2015:

	Year Ended December 31,
	2015
Discount rate		1.7	%
Expected return on plan assets		1.5	%
Rate of compensation increase		3.0	%

Expected Future Benefit Payments. The following table provides estimated benefit payments for the Company’s pension plans, which reflect expected future service:

	Years Ended December 31,
(In millions)	2016		2017		2018		2019		2020		2021 - 2025
Expected future benefit payments	$	0.9	$	1.0	$	1.1	$	1.2	$	1.3	$	7.5