Employer Sponsored Benefit Plans

As of September 30, 2018, the Company maintains a defined benefit pension plan that covers certain domestic Lydall employees (“Lydall Pension Plan”) that is closed to new employees and benefits are no longer accruing. The Lydall Pension Plan is noncontributory and benefits are based on either years of service or eligible compensation paid while a participant is in the plan. The Company’s funding policy is to fund not less than the ERISA minimum funding standard and not more than the maximum amount that can be deducted for federal income tax purposes. Contributions of $3.0 million and $7.2 million were made during the quarter and nine months ended September 30, 2018, respectively. No further contributions are expected to the Lydall Pension Plan for the remainder of 2018. Contributions of $1.2 million and $3.6 million were made during the quarter and nine months ended September 30, 2017, respectively.

On August 31, 2018, the Company acquired the Interface business, and as part of this transaction the Company acquired two domestic pension plans ("Interface Pension Plans") and a multi-employer plan. The Interface Pension Plans cover Interface's union and non-union employees, the plans are closed to new employees and benefits are no longer accruing for the majority of participants. Certain union employees of Interface business participate in a multi-employer pension plan. Contributions to this multi-employer plan are required to be made monthly based upon the total monthly hours worked by the covered employees multiplied by the employer contribution rate published by the fund. Total contributions related to the multi-employer plan from the date of acquisition through September 30, 2018 were immaterial. As of the acquisition date, the Company remeasured the fair value of plan liabilities and funded status of the plans. An underfunded liability of $11.2 million was included in benefit plan liabilities within the Company’s Condensed Consolidated Balance Sheets. The Company made no contributions into the Interface Pension Plans for the quarter ended September 30, 2018. The Company expects to make a required contribution of approximately $0.3 million to the Interface Pension Plans during the fourth quarter of 2018.

The Company also acquired Interface's domestic post-retirement benefit plan and recorded a liability of $4.1 million and German pension plans and recorded a liability of $2.9 million included in benefit plan liabilities within the Company’s Condensed Consolidated Balance Sheets. The Interface post-retirement benefits include life insurance and medical benefits for certain domestic employees and these plans are closed to new employees. The Company acquired a German noncontributory plan closed to new employees and also participates in a government program.

As of January 1, 2018 the Company adopted ASU No. 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". This ASU required the other components of net benefit cost, which includes interest costs, expected return on plan assets, and amortization of actuarial loss be presented in the income statement outside a subtotal of income from operations for the quarter and nine months ended September 30, 2018. The retrospective adoption of this ASU resulted in the reclassification of net benefit costs of $0.1 million from cost of sales and $0.1 million from the selling, product development and administrative expenses to the other expense, net line in the Consolidated Statement of Operations for the quarter ended September 30, 2017. Net benefit costs of $0.2 million from cost of sales and $0.4 million from the selling, product development and administrative expenses were reclassified to the other expense, net line in the Consolidated Statement of Operations for the nine months ended September 30, 2017.

The following is a summary of the components of net periodic benefit cost for the Lydall and acquired Interface Pension Plans:



	Quarter Ended September 30,						Nine Months Ended September 30,
In thousands	2018			2017			2018			2017
Components of net periodic benefit cost
Service Cost	$	12		$	—		$	12		$	—
Interest cost	640			514			1,579			1,543
Expected return on assets	(893		)	(594		)	(2,193		)	(1,782		)
Amortization of actuarial loss	256			273			768			819
Net periodic benefit cost	$	15		$	193		$	166		$	580