POSTRETIREMENT MEDICAL BENEFITS AND PENSION

9 Months Ended

Sep. 30, 2016

Compensation and Retirement Disclosure [Abstract]

POSTRETIREMENT MEDICAL BENEFITS AND PENSION

7. 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,
	2016		2015		2016		2015
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	763	$	1,054	$	2,507	$	3,163
Interest cost	3,075		2,907		9,278		8,722
Amortization of deferred items	368		327		891		981
Total net periodic benefit cost	$	4,206	$	4,288	$	12,676	$	12,866

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,
	2016		2015		2016		2015
	(In thousands)
Former mining operations	$	2,135	$	2,034	$	6,405	$	6,103
Current operations	2,071		2,254		6,271		6,763
Total net periodic benefit cost	$	4,206	$	4,288	$	12,676	$	12,866

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,
	2016			2015			2016			2015
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	373		$	436		$	1,242		$	1,318
Interest cost	2,564			1,831			7,926			5,780
Expected return on plan assets	(3,349		)	(2,435		)	(10,390		)	(7,744		)
Settlements	247			(1,529		)	247			(1,874		)
Amortization of deferred items	1,294			1,059			3,884			3,301
Total net periodic pension cost	$	1,129		$	(638	)	$	2,909		$	781

These costs are included in Cost of sales and Selling and administrative expenses. The Company made $0.6 million and $3.5 million of contributions to its pension plans in the nine months ended September 30, 2016 and 2015, respectively. The Company expects to make $0.1 million of contributions to its pension plans during the remainder of 2016.