Retirement Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Retirement Benefits

Retirement Benefits

The Company has defined contribution retirement plans or defined benefit pension plans covering substantially all employees. Company contributions to defined contribution retirement plans are generally based on a percentage of eligible pay or based on hours worked. Benefits under the defined benefit pension plans are generally based on years of service and/or final average pay. The Company also sponsors several postretirement plans covering certain collectively-bargained salaried and hourly employees. The plans provide health care and life insurance benefits for eligible retirees. In most retiree health care plans, Company contributions towards premiums are capped based on the cost as of a certain date, thereby creating a defined contribution.

In the fourth quarter of fiscal year 2023, the Company voluntarily changed the method of accounting for recognizing actuarial gains and losses for the defined benefit pension plans. See Note 1 for amounts recognized related to this change. The information within this Note has been revised to reflect the change in accounting principle for current and prior periods.

ATI instituted several initiatives over a multi-year period as part of its retirement benefit liability derisking strategy. Future benefit accruals for all participants in the U.S. defined benefit pension plans other than those subject to a CBA were frozen at the end of fiscal year 2014, and subsequently CBAs were negotiated to close these plans to new entrants. As a result of these actions, the Company has completely closed all defined benefit pension plans to new entrants, and has substantially limited the number of employees still accruing benefit service to less than 800 participants. Additionally, all of ATI’s remaining collectively-bargained, capped defined benefit retiree health care plans are closed to new entrants. These liability management actions have transitioned ATI’s retirement benefit and other postretirement benefit programs largely to a defined contribution structure. From fiscal years 2013 to 2022, five annuity buyouts of retired participants and two voluntary cash out programs of deferred participants during this period helped to reduce the total participants in ATI’s U.S. qualified defined benefit pension plans by more than 60%. During the fourth quarter of fiscal year 2023, the Company purchased group annuity contracts from an insurer covering approximately 85% of the Company’s U.S. qualified defined benefit pension plan obligations. Under these contracts, the Company transferred the pension obligations and associated assets for approximately 8,200 plan participants to the selected insurance company. To facilitate this pension derisking strategy, the Company completed a voluntary cash out for term vested employees and contributed $222 million to its pension plan in the third quarter of fiscal year 2023, to fully fund remaining pension liabilities ahead of this annuity transaction. After these actions, the Company’s U.S. qualified defined benefit pension plan includes approximately 1,980 participants.

Costs for defined contribution retirement plans were $38.8 million in fiscal year 2023, $31.1 million in fiscal year 2022, and $20.4 million in fiscal year 2021. Company contributions to these defined contribution plans are funded with cash. In fiscal year 2022, the Company implemented certain plan design changes to the ATI 401(k) Savings Plan which decreased the qualified non-elective contribution percentage and increased the Company match contribution percentage. Other postretirement benefit costs for a defined contribution plan under the terms of a CBA were $1.0 million for both the fiscal years ended December 31, 2023 and January 1, 2023. There were no costs for this plan in fiscal year 2021.

The components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following:

	Pension Benefits						Other Postretirement Benefits
	Fiscal Year
(In millions)	2023		2022 Revised		2021 Revised		2023		2022		2021
Service cost—benefits earned during the year	$	6.0	$	11.9	$	15.1	$	0.6	$	1.1	$	1.5
Interest cost on benefits earned in prior years	79.7		69.7		68.4		10.9		7.7		8.0
Expected return on plan assets	(84.8)		(128.2)		(136.4)		—		—		—
Amortization of prior service cost (credit)	0.3		0.4		0.6		(0.9)		(0.9)		(2.4)
Amortization of net actuarial loss	—		—		—		6.0		13.2		13.9
Recognized actuarial loss (gain)- mark to market	26.8		(100.3)		(147.2)		—		—		—
Settlement loss (gain)	41.7		0.7		—		—		—		(64.9)
Total retirement benefit expense (income)	$	69.7	$	(145.8)	$	(199.5)	$	16.6	$	21.1	$	(43.9)

In the fourth quarter of fiscal year 2023, the Company voluntarily changed the method of accounting for recognizing actuarial gains and losses for its defined benefit pension plans. Under the accounting method change, remeasurement of projected benefit obligation and plan assets for defined benefit pension plans are immediately recognized in earnings through net periodic pension benefit cost from remeasurements annually in the fourth quarter and on an interim basis due to triggering events that require remeasurement. This resulted in an actuarial loss of $26.8 million in fiscal year 2023 and actuarial gains of $100.3 million and $147.2 million in fiscal years 2022 and 2021, respectively, within nonoperating retirement benefit income/expense on the consolidated statements of operations.

On October 17, 2023, the Company completed a voluntary cash out for term vested employees and a large annuity buyout related to approximately 8,200 U.S. qualified defined benefit pension plan participants. As a result of the annuity buyout, ATI recognized a $41.7 million pretax settlement loss, which is recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations.

On May 12, 2022, the Company completed the sale of its Sheffield, UK operations (see Note 6). As a result of this sale, ATI recognized a $0.7 million settlement loss, which is recorded in loss on asset sales and sales of businesses, net, on the

consolidated statement of operations, related to the amount in accumulated other comprehensive loss for the UK defined benefit pension plan that transferred as part of the sale. Pension liabilities and assets for this UK defined benefit pension plan that were removed as a result of this divestiture are included below in the tables of changes in benefit obligations and changes in plan assets, respectively.

On July 14, 2021, ATI announced that a new four-year labor agreement with the USW was ratified (see Note 1 for further discussion). As a result of this new CBA, ATI recognized a $64.9 million pretax settlement gain, which is recorded in nonoperating retirement benefit income/expense on the consolidated statement of operations, related to a plan termination that eliminated certain postretirement medical benefit liabilities, comprised of $43.0 million of long-term postretirement benefit liabilities as of July 2021 and $21.9 million of amounts recorded in accumulated other comprehensive income at that date. Discrete tax effects related to this event were $15.5 million of income tax expense (see Note 17 for further discussion).

Actuarial assumptions used to develop the components of defined benefit pension expense and other postretirement benefit expense were as follows:

	Pension Benefits					Other Postretirement Benefits
	Fiscal Year
	2023	2022		2021		2023		2022		2021
Discount rate (a)	5.55% - 6.40%	2.95	%	2.60	%	5.45	%	2.80	%	2.45	%
Rate of increase in future compensation levels	3.00%	2.00% - 3.00%		1.00	%	—		—		—
Weighted average expected long-term rate of return on assets (a)	5.80% - 6.57%	6.43	%	6.71	%	—	%	—	%	—	%

(a) Pension expense for fiscal year 2023 was initially measured at a 5.55% discount rate and 6.57% weighted average expected long-term rate of return on assets. The U.S. qualified pension plans were remeasured using a 6.40% weighted average discount rate and 5.80% weighted average expected long-term rate of return on assets as of October 17, 2023, following the large annuity buyout of retirees.

Actuarial assumptions used for the valuation of defined benefit pension and other postretirement benefit obligations at the end of the respective periods were as follows:

	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
	2023		2022		2023		2022
Discount rate	5.60	%	5.55	%	5.40	%	5.45	%
Rate of increase in future compensation levels	3.00	%	3.00	%	—		—

A reconciliation of the funded status for the Company’s defined benefit pension and other postretirement benefit plans at December 31, 2023 and January 1, 2023 was as follows:

	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
(In millions)	2023		2022		2023		2022
Change in benefit obligations:
Benefit obligation at beginning of fiscal year	$	1,818.3	$	2,517.0	$	212.7	$	287.3
Service cost	6.0		11.9		0.6		1.1
Interest cost	79.7		69.7		10.9		7.7
Benefits paid	(153.9)		(155.6)		(26.4)		(29.7)
Subsidy received	—		—		—		0.3
Divestiture	—		(75.8)		—		—
Effect of currency rates	—		(3.2)		—		—
Net actuarial (gains) losses – discount rate change	(95.8)		(556.8)		0.7		(48.2)
– other	(5.3)		11.1		3.1		(5.8)
Plan settlement	(1,350.6)		—		—		—
Benefit obligation at end of fiscal year	$	298.4	$	1,818.3	$	201.6	$	212.7

Actuarial effects of changes in discount rates are separately identified in the preceding table.

	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
(In millions)	2023		2022		2023		2022
Change in plan assets:
Fair value of plan assets at beginning of fiscal year	$	1,599.5	$	2,120.9	$	—	$	—
Actual returns on plan assets and plan expenses	(83.9)		(317.0)		—		—
Employer contributions	278.0		57.4		—		—
Divestiture	—		(101.8)		—		—
Effect of currency rates	—		(4.4)		—		—
Plan settlement	(1,350.6)		—		—		—
Benefits paid	(153.9)		(155.6)		—		—
Fair value of plan assets at end of fiscal year	$	289.1	$	1,599.5	$	—	$	—

On October 17, 2023, the Company completed a voluntary cash out for term vested employees and a large annuity buyout related to approximately 8,200 U.S. qualified defined benefit pension plan participants. These actions resulted in a reduction in the benefit obligations and plan assets of $1.35 billion.

Assets (liabilities) recognized in the consolidated balance sheets:
	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
	2023		2022		2023		2022
Current assets	$	2.4	$	—	$	—	$	—
Noncurrent assets	33.6		12.5		—		—
Current liabilities	(5.6)		(5.7)		(26.4)		(27.8)
Noncurrent liabilities	(39.7)		(225.6)		(175.2)		(184.9)
Total amount recognized	$	(9.3)	$	(218.8)	$	(201.6)	$	(212.7)

Changes to accumulated other comprehensive loss related to pension and other postretirement benefit plans in fiscal years 2023 and 2022 were as follows:

	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
(In millions)	2023		2022 Revised		2023		2022
Beginning of year accumulated other comprehensive loss	$	(8.8)	$	(9.9)	$	(55.8)	$	(121.2)
Amortization of net actuarial loss	—		—		6.0		13.2
Amortization of prior service cost (credit)	0.3		0.4		(0.9)		(0.9)
Settlement loss	1.1		0.7		—		—
Remeasurements	—		—		(3.8)		53.1
End of year accumulated other comprehensive loss	$	(7.4)	$	(8.8)	$	(54.5)	$	(55.8)
Net change in accumulated other comprehensive loss	$	1.4	$	1.1	$	1.3	$	65.4

Amounts included in accumulated other comprehensive loss at December 31, 2023 and January 1, 2023 were as follows:

	Pension Benefits				Other Postretirement Benefits
	Fiscal Year
(In millions)	2023		2022 Revised		2023		2022
Prior service (cost) credit	$	(7.4)	$	(8.8)	$	1.7	$	2.5
Net actuarial loss	—		—		(56.2)		(58.3)
Accumulated other comprehensive loss	(7.4)		(8.8)		(54.5)		(55.8)
Deferred tax effect	1.9		2.1		27.5		27.8
Accumulated other comprehensive loss, net of tax	$	(5.5)	$	(6.7)	$	(27.0)	$	(28.0)

Amounts in accumulated other comprehensive loss presented above do not include any effects of deferred tax asset valuation allowances. See Note 15 for further discussion on deferred tax asset valuation allowances.

Retirement benefit expense for fiscal year 2024 for defined benefit plans is estimated to be approximately $21 million, comprised of $6 million for pension expense and $15 million of expense for other postretirement benefits. For other postretirement benefits, the net actuarial loss is recognized in the consolidated statement of operations using a corridor method. For both pension and other postretirement benefits, prior service cost (credit) amortization is recognized in level amounts over the expected service of the active membership as of the amendment effective date. Amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost in fiscal year 2024 are:

(In millions)	Pension Benefits		Other Postretirement Benefits		Total
Amortization of prior service cost (credit)	$	0.4	$	(0.9)	$	(0.5)
Amortization of net actuarial loss	—		5.3		5.3
Amortization of accumulated other comprehensive loss	$	0.4	$	4.4	$	4.8

The accumulated benefit obligation for all defined benefit pension plans was $283.1 million and $1,716.8 million at December 31, 2023 and January 1, 2023, respectively. Additional information for pension plans with accumulated benefit obligations and projected benefit obligations in excess of plan assets:

	Pension Benefits
	Fiscal Year
(In millions)	2023		2022
Projected benefit obligation	$	45.3	$	1,727.3
Accumulated benefit obligation	$	45.3	$	1,716.8
Fair value of plan assets	$	—	$	1,496.0

Cash contributions to ATI’s U.S. qualified defined benefit pension plans were $272 million in fiscal year 2023, $50 million in fiscal year 2022 and $67 million in fiscal year 2021. The Company funds the U.S. defined benefit pension plans in accordance with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code. The Company has no required cash contributions to its U.S. qualified defined benefit pension plan in fiscal year 2024. In addition, for fiscal year 2024, the Company expects approximately $6 million of payments for U.S. nonqualified pension benefits.

The following table summarizes expected benefit payments from the Company’s various pension and other postretirement defined benefit plans through fiscal year 2033, and also includes estimated Medicare Part D subsidies projected to be received during this period based on currently available information. Pension benefit payments for the U.S. qualified defined benefit pension plan are made from pension plan assets.

(In millions)
Fiscal Year	Pension Benefits		Other Postretirement Benefits		Medicare Part D Subsidy
2024	$	12.1	$	26.5	$	—
2025	13.3		24.2		—
2026	14.6		22.3		—
2027	16.0		20.6		—
2028	17.0		18.9		—
2029-2033	96.7		71.6		—

The annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) for health care plans was 7.2% in 2024 and is assumed to gradually decrease to 4.0% in the year 2048 and remain at that level thereafter. Assumed health care cost trend rates can have a significant effect on the amounts reported for the health care plans, however, the Company’s contributions for most of its retiree health plans are capped based on a fixed premium amount, which limits the impact of future health care cost increases.

The fair values of the Company’s pension plan assets are determined using net asset value (NAV) as a practical expedient, or by information categorized in the fair value hierarchy level based on the inputs used to determine fair value, as further discussed in Note 13. The fair values at December 31, 2023 were as follows:

(In millions)					Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable  Inputs
Asset category	Total		NAV		(Level 1)		(Level 2)		(Level 3)
Equity securities:
U.S. equities	$	0.1	$	—	$	0.1	$	—	$	—
International equities	0.1		—		0.1		—		—
Fixed income and cash equivalents	130.3		8.3		122.0		—		—
Private equity	60.8		60.8		—		—		—
Alternative investments- hedge funds, real estate and other	97.8		97.8		—		—		—
Total assets	$	289.1	$	166.9	$	122.2	$	—	$	—

The fair values of the Company’s pension plan assets at January 1, 2023 were as follows:

(In millions)					Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable  Inputs
Asset category	Total		NAV		(Level 1)		(Level 2)		(Level 3)
Equity securities:
U.S. equities	$	363.1	$	202.6	$	160.5	$	—	$	—
International equities	299.7		284.8		14.9		—		—
Fixed income and cash equivalents	455.4		330.8		13.8		110.8		—
Private equity	224.3		224.3		—		—		—
Alternative investments- hedge funds, real estate and other	257.0		257.0		—		—		—
Total assets	$	1,599.5	$	1,299.5	$	189.2	$	110.8	$	—

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in U.S. and International equities, and Fixed Income are predominantly held in common/collective trust funds and registered investment companies. Some of these investments are publicly traded securities and are classified as Level 1, while others are public investment vehicles valued using the NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. These investments are not classified in the fair value hierarchy. In addition, some fixed income instruments are investments in debt instruments that are valued using external pricing vendors and are classified within Level 2 of the fair value hierarchy.

Private equity investments include both Direct Funds and Fund-of-Funds. Direct Funds are investments in Limited Partnership (LP) interests. Fund-of-Funds are investments in private equity funds that invest in other private equity funds or LPs. Fair value of these investments is determined utilizing net asset values, and are not classified in the fair value hierarchy.

Alternative investments include hedge fund and real estate investments that are made as a limited partner in funds managed by a general partner. Fair value of these investments is determined utilizing net asset values, and are not classified in the fair value hierarchy.

For certain investments which have formal financial valuations reported on a one-quarter lag, fair value is determined utilizing net asset values adjusted for subsequent cash flows, estimated financial performance and other significant events.

For fiscal year 2024, the expected long-term rate of return on defined benefit pension assets is 5.80%. In developing expected long-term rate of return assumptions, the Company evaluated input from its third party pension plan asset managers and actuaries, including reviews of their asset class return expectations and long-term inflation assumptions. An expected long-term rate of return is based on expected asset allocations within ranges for each investment category and projected annual compound returns. The Company’s actual, weighted average returns on pension assets for the last five fiscal years have been 2.0% for 2023, (14.5)% for 2022, 12.4% for 2021, 15.2% for 2020, and 15.1% for 2019.

The ATI Pension Plan (the Plan), the Company’s remaining U.S. qualified defined benefit pension plan, continues to invest in a diversified portfolio consisting of an array of asset classes that attempts to maintain the Plan’s funded status while maximizing returns and minimizing volatility. These asset classes may include U.S. domestic equities, non-U.S. developed market equities, emerging market equities, hedge funds, private equity, traditional fixed income consisting of long government/credit and alternative credit, and real estate. The Company continually monitors the investment results of these asset classes and its fund managers, and explores other potential asset classes for possible future investment.

The ability to redeem investments at year-end are based on the type of investment and the agreements with fund managers. Generally, the Company’s fixed income and equity investments are readily redeemable with limited restrictions. The ability to redeem investments in hedge funds can vary significantly. Managers may require longer notice periods and may limit the amount able to be redeemed in a period (e.g., month or quarter) to a percent of the overall investment. Investments in private equity are not redeemable at ATI’s option. Distributions are based on the sale of the underlying investments in the fund, subject to the terms in each fund agreement.

The target asset allocations for ATI Pension Plan for fiscal year 2024, by major investment category, are:

Asset category	Target asset allocation range
Equities	0% - 20%
Fixed income and cash equivalents	50% - 100%
Private equity and other	0% - 40%

As of December 31, 2023, the Company’s pension plan had outstanding commitments to invest up to $7 million in global debt securities and $33 million in private equity investments. These commitments are expected to be satisfied through the reallocation of pension trust assets while maintaining investments within the target asset allocation ranges.

The Company contributes to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of its union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:

a.Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b.If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c.If the Company ceases to have an obligation to contribute to the multiemployer plan in which it had been a contributing employer, it may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company’s participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability.

The Company’s participation in multiemployer plans for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022 is reported in the following table.

		Pension Protection Act Zone Status (1)		FIP / RP Status Pending / Implemented (2)	in millions							Expiration Dates of Collective Bargaining Agreements
	EIN / Pension Plan Number				Company Contributions						Surcharge Imposed (3)
		Fiscal Year			Fiscal Year
Pension Fund		2023	2022		2023		2022		2021
Steelworkers Western Independent Shops Pension Plan	90-0169564 / 001	Green	Green	N/A	$	0.7	$	0.1	$	0.1	No	2/28/2025
Boilermakers-Blacksmiths National Pension Trust	48-6168020 / 001	Red	Green	Yes	2.6		2.3		2.0		No	9/30/2026
IAM National Pension Fund	51-6031295 / 002	Red	Red	Yes	1.9		1.9		1.9		Yes	Various between 2024-2028 (4)
Total contributions					$	5.2	$	4.3	$	4.0

(1)The most recent Pension Protection Act Zone Status is based on information provided to ATI and other participating employers by each plan, as certified by the plan’s actuary. A plan in the “deep red” zone had been determined to be in “critical and declining status”, based on criteria established by the Internal Revenue Code (Code), and is in critical status (as defined by the “red” zone) and is projected to become insolvent (run out of money to pay benefits) within 15 years (or within 20 years if a special rule applies). A plan in the “red” zone had been determined to be in “critical status”, based on criteria established by the Code, and is generally less than 65% funded. A plan in the “yellow” zone has been determined to be in “endangered status”, based on criteria established under the Code, and is generally less than 80% funded. A plan in the “green” zone has been determined to be neither in “critical status” nor in “endangered status”, and is generally at least 80% funded. Additionally, a plan may voluntarily place itself into a rehabilitation plan.

In April 2019, the Company received notification from the IAM National Pension Fund (IAM Fund) that its’ actuary certified the IAM Fund as “endangered status” for the plan year beginning January 1, 2019, and that the IAM Fund was voluntarily placing itself in “red” zone status and implementing a rehabilitation plan. In April 2020, 2021, 2022, and 2023 the Company received notification from the IAM Fund that it was certified by its actuary as being in “red” zone status for the plan years beginning January 1, 2020, 2021 and 2022. A contribution surcharge was imposed as of June 1, 2019 in addition to the contribution rate specified in the applicable collective bargaining agreements. The contribution surcharge remains in effect, and ends when an employer begins contributing under a collective bargaining agreement that includes terms consistent with the rehabilitation plan.

In April 2019, the Company received notifications from the Boilermakers-Blacksmiths National Pension Trust (Blacksmiths Trust) that it was certified by its actuary as being in “red” zone status for the plan year beginning January 1, 2019. A rehabilitation plan was adopted for the Blacksmiths Trust, and the Company and the Blacksmiths union agreed to adopt the rehabilitation plan in 2019 prior to a contribution surcharge being imposed. In April 2020 and 2021, the funding status improved for the Blacksmiths Trust as it was certified by its actuary as being in the “yellow” zone for the plan years beginning January 1, 2020 and 2021. In April 2022, the funding status further improved to being in the “green” zone for the plan year beginning January 1, 2022. In April 2023, the Blacksmiths Trust was certified by its actuary as being in “red” zone status for the plan years beginning January 1, 2023. A rehabilitation plan has been adopted for the Blacksmiths Trust, and the Company and the Blacksmiths union agreed to adopt the rehabilitation plan in 2023 prior to a contribution surcharge being imposed.

(2)The “FIP / RP Status Pending / Implemented” column indicates whether a Funding Improvement Plan, as required under the Code by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” or “deep red” zones, is pending or has been implemented as of the end of the plan year that ended in 2023.

(3)The “Surcharge Imposed” column indicates whether ATI’s contribution rate for 2023 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status” or “critical and declining status”, in accordance with the requirements of the Code.

(4)The Company is party to five separate bargaining agreements that require contributions to this plan. Expiration dates of these collective bargaining agreements range between April 26, 2024 and July 14, 2028.