Employee Benefit Plans:

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Change in Accounting Principle - Pension Accounting Asset Method

Effective January 1, 2020, the Company changed its method of accounting for net periodic benefit cost. Prior to the change, the Company used a calculated value for determining market-related value of plan assets which amortized the effects of gains and losses over a five-year period. Effective with the accounting change, the Company will use a calculated value for the return-seeking assets (equities) in the portfolio and fair value for the liability-hedging assets (fixed income). The Company considers the fair value method for determining market-related value of liability-hedging assets to be a preferable method of accounting because asset-related gains and losses are subject to amortization into pension cost immediately. Additionally, the fair value for liability-hedging assets allows for the impact of gains and losses on this portion of the asset portfolio to be reflected in tandem with changes in the liability which is linked to changes in the discount rate assumption for re-measurement.

We evaluated the effect of this change in accounting method and deemed it immaterial to the historical and current financial statements and therefore did not account for the change retrospectively. Accordingly, the Company calculated the cumulative difference using a calculated value versus fair value to determine market-related value for liability-hedging assets of the portfolio. The cumulative effect of this change, as of January 1, 2020, resulted in a decrease to prior service costs, as recorded in Other income (expense), net, of $0.6 million, an increase in Income tax expense of $0.2 million and an increase to Net income of $0.4 million within the accompanying Condensed Consolidated Statements of Income for the nine months ended September 30, 2020.

Funding Status of Employee Benefit Plans

Based on the fair value of assets and estimated discount rate used to value benefit obligations as of September 30, 2020, we estimate the unfunded status of our employee benefit plans to be approximately $51 million compared to $51 million at December 31, 2019. In 2012, we froze our pension plan and closed it to new participants. Since then, we have implemented various de-risking strategies including lump sum buyouts, the purchase of annuities and the reduction of return-seeking assets over time to a more liability-hedged portfolio. As a result, recent capital markets volatility driven by the COVID-19 pandemic has not materially affected our unfunded status and does not require interim re-measurement of our pension plan assets or defined benefit obligations.

Defined Benefit Pension Plan

The components of net periodic benefit cost for the Defined Benefit Pension Plan were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Service cost	$	1,352	$	1,346	$	4,058	$	4,037
Interest cost	3,356		4,344		10,069		13,031
Expected return on plan assets	(5,647)		(6,100)		(16,943)		(18,300)
Prior service cost (benefit)	—		6		—		19
Net loss (gain)	2,093		941		6,279		2,822
Net periodic benefit cost	$	1,154	$	537	$	3,463	$	1,609

Defined Benefit Postretirement Healthcare Plan

The components of net periodic benefit cost for the Defined Benefit Postretirement Healthcare Plan were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Service cost	$	514	$	454	$	1,542	$	1,362
Interest cost	412		560		1,237		1,683
Expected return on plan assets	(46)		(57)		(137)		(172)
Prior service cost (benefit)	(136)		(99)		(410)		(298)
Net loss (gain)	5		—		15		—
Net periodic benefit cost	$	749	$	858	$	2,247	$	2,575

Supplemental Non-qualified Defined Benefit and Defined Contribution Plans

The components of net periodic benefit cost for the Supplemental Non-qualified Defined Benefit and Defined Contribution Plans were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Service cost	$	1,035	$	429	$	1,482	$	2,406
Interest cost	274		324		824		972
Prior service cost (benefit)	1		—		1		1
Net loss (gain)	425		134		1,277		402
Net periodic benefit cost	$	1,735	$	887	$	3,584	$	3,781

Contributions

Contributions to the Defined Benefit Pension Plan are cash contributions made directly to the Pension Plan Trust account. Contributions to the Postretirement Healthcare and Supplemental Plans are made in the form of benefit payments. Contributions made in the first nine months of 2020 and anticipated contributions for 2020 and 2021 are as follows (in thousands):

	Contributions Made		Additional Contributions		Contributions
	Nine Months Ended September 30, 2020		Anticipated for 2020		Anticipated for 2021
Defined Benefit Pension Plan	$	12,700	$	—	$	12,700
Non-pension Defined Benefit Postretirement Healthcare Plans	$	4,006	$	1,335	$	5,227
Supplemental Non-qualified Defined Benefit and Defined Contribution Plans	$	1,065	$	355	$	1,964