Pensions and Other Benefit Programs

6 Months Ended

Jun. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Pensions and Other Benefit Programs

NOTE 16. PENSIONS AND OTHER BENEFIT PROGRAMS

Following are the components of net periodic benefit costs (credits):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
U.S. defined benefit plans:
Pension benefits
Service cost of benefits earned during the period	$	1.4		$	1.2		$	2.8		$	2.4
Interest cost on projected benefit obligation		2.7			12.6			9.9			25.2
Expected return on plan assets		(6.5	)		(20.0	)		(21.4	)		(40.1	)
Amortization of net actuarial loss		0.8			4.8			4.7			9.6
Settlement		-			-			374.4			-
Net periodic pension cost (credit)	$	(1.6	)	$	(1.4	)	$	370.4		$	(2.9	)
Retiree health and life insurance benefits
Interest cost on projected benefit obligation		0.5			0.6			1.0			1.2
Amortization of prior service credit		-			(0.1	)		(0.1	)		(0.1	)
Amortization of net actuarial gain		(1.7	)		(2.0	)		(3.3	)		(4.2	)
Net periodic postretirement (credit)	$	(1.2	)	$	(1.5	)	$	(2.4	)	$	(3.1	)

We also have an unfunded defined benefit pension plan in Germany, which was not acquired by Knauf in connection with the Sale. This plan is reported as a component of our Unallocated Corporate segment.  Net periodic pension cost for this plan was immaterial for the three and six months ended June 30, 2020 and 2019.

The service cost component of net benefit cost has been presented in the Condensed Consolidated Statements of Operations and Comprehensive Income within cost of goods sold and selling, general and administrative (“SG&A”) expenses for all periods presented, which are the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are presented in the Condensed Consolidated Statements of Operations and Comprehensive Income separately from the service cost component within other non-operating expense (income), net.

During February 2020, we entered into agreements with Athene Annuity and Life Company (“AAIA”) and Athene Annuity & Life Assurance Company of New York (“AANY”) to transfer certain benefit obligations and assets of our U.S. Retirement Income Plan (“RIP”) to AAIA and AANY.  Under the agreements, we effectively settled $1,045.3 million of retiree defined benefit pension

obligations related to approximately 10,300 retirees and beneficiaries (the “Transferred Participants”), which were irrevocably transferred to AAIA and AANY and which guarantees the pension benefits of the Transferred Participants.

As a result of the transaction, we recorded a $374.4 million settlement loss in the first quarter of 2020, which was reflected as a component of other non-operating expense. The RIP’s assets and liabilities were remeasured as of the settlement date, resulting in a remaining projected benefit obligation of $387.5 million, which covered approximately 3,000 deferred vested and active participants, and fair value of plan assets of $499.6 million. The discount rate used to determine the projected benefit obligation at the settlement date was 3.07%, compared to 3.16% used as of December 31, 2019. The expected long-term return on plan assets remained at 5.25% and did not change as a result of the settlement.