PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS

Defined Benefit and Post-retirement Healthcare Plans

ABX sponsors a qualified defined benefit pension plan for ABX crewmembers and a qualified defined benefit pension plan for a major portion of its other ABX employees that meet minimum eligibility requirements. The plans are funded through Company contributions to an invested trust. ABX also sponsors non-qualified defined benefit pension plans for certain employees. These non-qualified plans are unfunded. Employees are no longer accruing benefits under any of the defined benefit pension plans. ABX also sponsors a post-retirement healthcare plan for its ABX crewmembers, which is unfunded. Benefits for covered individuals terminate upon reaching age 65 under the post-retirement healthcare plans.

The accounting and valuation for these post-retirement obligations are determined by prescribed accounting and actuarial methods that consider a number of assumptions and estimates. The selection of appropriate assumptions and estimates is significant due to the long time period over which benefits will be accrued and paid. The long term nature of these benefit payouts increases the sensitivity of certain estimates of our post-retirement costs. The assumptions considered most sensitive in actuarially valuing ABX’s pension obligations and determining related expense amounts are discount rates and expected long term investment returns on plan assets. Additionally, other assumptions concerning retirement ages, mortality and employee turnover also affect the valuations. Actual results and future changes in these assumptions could result in future costs significantly higher than those recorded in our results of operations. Effective December 31, 2016, ABX modified its unfunded, non-pilot retiree medical plan to terminate benefits to all participants. Retired participants were directed to public healthcare exchanges for more flexible and lower cost alternatives. As a result, ABX settled all retiree medical obligations.

On August 30, 2017, the Company transferred investment assets totaling $106.6 million from the pension plan trust to purchase a group annuity contract from Mutual of America Life Insurance Company ("MUA"). The group annuity contract transfers payment obligations for pension benefits owed to certain former, non-pilot retirees of ABX (or their beneficiaries) to MUA. As a result of the transaction, the Company recognized pre-tax settlement charges of $5.3 million to continued operations and $7.6 million to discontinued operations in the third quarter due to the reclassification of $12.9 million of pretax losses from accumulated other comprehensive loss.

The Company's net periodic benefit costs for its defined benefit pension plans and post-retirement healthcare plans for both continuing and discontinued operations are as follows (in thousands):



	Three Months Ended September 30,												Nine Months Ended September 30,
	Pension Plans						Post-Retirement Healthcare Plan						Pension Plans						Post-Retirement Healthcare Plan
	2017			2016			2017			2016			2017			2016			2017			2016
Service cost	$	—		$	—		$	39		$	31		$	—		$	—		$	117		$	93
Interest cost	8,396			8,968			36			42			25,946			26,904			108			126
Expected return on plan assets	(10,520		)	(10,264		)	—			—			(32,379		)	(30,792		)	—			—
Settlement charge	12,923			—			—			—			12,923			—			—			—
Amortization of prior service cost	—			—			(13		)	(26		)	—			—			(39		)	(78		)
Amortization of net loss	1,944			3,368			71			40			5,819			10,104			213			120
Net periodic benefit cost	$	12,743		$	2,072		$	133		$	87		$	12,309		$	6,216		$	399		$	261

During the nine month period ending September 30, 2017, the Company contributed $4.1 million to the pension plans. The Company expects to contribute an additional $0.4 million during the remainder of 2017.