Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Employee Benefit Plans

Employee Benefit Plans

14. Employee Benefit Plans

        Our consolidated statements of operations include expenses in connection with employee benefit plans, as follows for the years ended December 31 (in thousands):

	2012		2011		2010
Cloud Peak Energy defined contribution retirement plans	$	12,550	$	12,496	$	11,212
Cloud Peak Energy retiree medical plan		7,212		5,602		4,710
		19,762		18,098		15,922
Decker pension plan		889		672		626
Total	$	20,651	$	18,770	$	16,548

Cloud Peak Energy Defined Contribution Retirement Plans

        We sponsor two defined contribution plans to assist eligible employees in providing for retirement. Our employees may elect to contribute a portion of their salary on a pre- or post-tax basis to their accounts. We match all employee contributions up to 6% of eligible compensation. We also contribute an additional 6% of eligible compensation to employee accounts under one of the plans. All contributions are fully vested at the date of contribution. Total contributions for the years ended December 31 are as follows (in thousands):

	2012		2011		2010
Contributions	$	12,550	$	12,496	$	11,212

Cloud Peak Energy Retiree Medical Plan

        We provide certain postretirement medical coverage for eligible employees (the "Retiree Medical Plan"). Employees who are 55 years old and have completed ten years of service with us generally are entitled to receive benefits under the Retiree Medical Plan, except for employees who were eligible at the date of the IPO to receive benefits under the Rio Tinto retiree medical plan and elect to receive such benefits. Our retiree medical plan grants credit for service rendered by our employees to Rio Tinto prior to the IPO. This plan is unfunded.

        Net periodic postretirement benefit costs included the following components (in thousands):

	2012		2011		2010
Service cost	$	4,213	$	3,016	$	2,316
Interest cost		1,424		1,281		989
Amortization of prior service cost		1,575		1,305		1,406
Net periodic postretirement benefit cost	$	7,212	$	5,602	$	4,711

        Annually, we remeasure and adjust the liability for the accumulated postretirement benefit obligation ("APBO"). Changes in the APBO include the following components (in thousands):

	2012		2011		2010
Beginning Balance	$	33,166	$	23,271	$	16,379
Current period service costs		4,213		3,015		2,316
Interest costs		1,424		1,282		989
Change in actuarial assumptions		4,590		5,598		3,587
Ending Balance		43,393		33,166		23,271
Less current portion		231		37		37
Long-term APBO	$	43,162	$	33,129	$	23,234

        We used the following assumptions in the measurement of the APBO for the years ended December 31:

	2012			2011			2010
Discount rate		3.87	%		4.30	%		5.51	%
Health care cost trend rate assumed for next year		7.50	%		8.00	%		8.50	%
Ultimate health care cost trend rate		5.00	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2018			2018			2018

        To determine the discount rate, we matched our cash projections against the Citigroup Pension Discount Curve. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one-percentage-point increase in the assumed health care cost trend would increase net periodic postretirement benefit cost and the APBO by $878,000 and $8.1 million, respectively, and a one-percentage-point decrease in the rate would decrease net periodic postretirement benefit cost and the APBO by $718,000 and $6.5 million, respectively, as of December 31, 2012.

        Our estimated future benefit payments under the Retiree Medical Plan, which are net of estimated employee contributions and reflect expected future service, are as follows for the years ended December 31 (in thousands):

2013	$	231
2014		385
2015		578
2016		826
2017		1,149
2018 - 2022		11,519

Decker Pension Plan

        Decker's employees participate in a defined benefit retirement plan sponsored by Decker. This plan does not have a material impact on our consolidated financial position, results of operations or cash flows. Our share of the funded status of the plan is reported in noncurrent other liabilities and was $5.3 million and $5.4 million at December 31, 2012 and 2011, respectively. Other comprehensive income or loss includes certain actuarial gains and losses that are reflected in the funded status of the plan, but have not been recognized in periodic benefit cost.