POSTRETIREMENT MEDICAL BENEFITS AND PENSION

Postretirement Medical Benefits

The Company provides postretirement medical benefits to retired employees and their dependents as mandated by the Coal Industry Retiree Health Benefit Act of 1992 and pursuant to collective bargaining agreements. The Company also provides these benefits to qualified full-time employees pursuant to collective bargaining agreements.

The components of net periodic postretirement medical benefit cost are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Components of net periodic benefit cost:
Service cost	$	822	$	1,109	$	2,467	$	3,327
Interest cost	3,203		3,035		9,610		9,104
Amortization of deferred items	4		1,001		13		3,004
Total net periodic benefit cost	$	4,029	$	5,145	$	12,090	$	15,435

The following table shows the net periodic postretirement medical benefit costs that relate to current and former mining operations:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In thousands)				(In thousands)
Former mining operations	$	2,402	$	3,119	$	7,210	$	9,356
Current operations	1,627		2,026		4,880		6,079
Total net periodic benefit cost	$	4,029	$	5,145	$	12,090	$	15,435

The costs for the former mining operations are included in Heritage health benefit expenses and costs for current operations are included in Cost of sales and Selling and administrative expenses.

Pension

The Company provides pension benefits to qualified full-time employees pursuant to collective bargaining agreements.

The Company incurred net periodic benefit costs of providing these pension benefits as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)						(In thousands)
Components of net periodic benefit cost:
Service cost	$	500		$	587		$	1,500		$	1,760
Interest cost	1,747			1,590			5,240			4,771
Expected return on plan assets	(2,154		)	(2,192		)	(6,461		)	(6,577		)
Amortization of deferred items	359			872			1,078			2,617
Total net periodic pension cost	$	452		$	857		$	1,357		$	2,571

These costs are included in Cost of sales and Selling and administrative expenses.

In one of the Company’s pension plans, lump sum distributions through the third quarter of 2014 exceeded the sum of that plan’s service and interest costs. As a result, the Company recorded a $0.8 million loss on settlement accounting in the third quarter of 2014.

The Company contributed $4.1 million to its pension plans in the nine months ended September 30, 2014. Of these contributions, $2.2 million was made in cash and $1.9 million was made in Company stock. The Company does not expect to make any additional pension plan contributions during the remainder of 2014.