Pension and Postretirement Plans

9 Months Ended

Sep. 30, 2022

Compensation And Retirement Disclosure [Abstract]

Pension and Postretirement Plans

8.    Pension and Postretirement Plans

As of September 30, 2022, the Company sponsors three noncontributory defined benefit plans and a postretirement health and life insurance plan in Cincinnati (collectively the "Cincinnati Plans"), and one noncontributory defined benefit plan for union employees, one cash balance pension plan for nonunion employees, and two postretirement health and life insurance plans for Hawaiian Telcom employees (collectively the "Hawaii Plans").

In the three and nine months ended September 30, 2022, Hawaiian Telcom’s pension plans made lump sum payments of $1.4 million and $6.8 million, respectively, resulting in a reduction of the benefit obligation of $6.8 million. The lump sum payments to the plan participants exceeded the sum of the service cost and the interest cost component of the net pension cost resulting in a nominal pension settlement cost for the nine months ended September 30, 2022. In the periods July 1, 2021 to September 7, 2021 and January 1, 2021 to September 7, 2021, the Hawaii defined benefit plan for union employees made lump sum payments of $0.8 million and $7.4 million, respectively, resulting in a reduction of the benefit obligation of $7.4 million. The lump sum payments to the plan participants exceeded the sum of the service cost and the interest cost component of the net pension cost resulting in a nominal pension settlement cost for the period January 1, 2021 to September 7, 2021.

In the third quarter of 2022, the Company identified a correction related to the Hawaiian Telcom postretirement health and life insurance plans liability. The adjustment resulted in an increase to the “Postretirement and Other Benefits liability” of $45.9 million, an increase to “Goodwill” of $35.0 million and reduction to “Deferred income tax liabilities” of $10.9 million on the Condensed Consolidated Balance Sheets. The impact of the correction is immaterial to current and prior period financial statements.

In accordance with ASC 715, only the service cost component of net benefit cost is eligible for capitalization, which was immaterial for the nine months ended September 30, 2022 and 2021.

Pension and postretirement (benefits) costs are as follows:

	Pension Benefits									Postretirement and Other Benefits
	Successor			Successor			Predecessor			Successor		Successor		Predecessor
(dollars in millions)	Three Months Ended September 30, 2022			September 8, 2021 to September 30, 2021			July 1, 2021 to September 7, 2021			Three Months Ended September 30, 2022		September 8, 2021 to September 30, 2021		July 1, 2021 to September 7, 2021
Service cost	$	—		$	—		$	—		$	0.4	$	—	$	0.1
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation		4.2			0.9			2.7			1.7		0.1		0.5
Expected return on plan assets		(6.6	)		(2.1	)		(5.2	)		—		—		—
Amortization of:
Prior service benefit		—			—			—			—		—		(0.4	)
Actuarial loss		—			—			4.5			—		—		—
Pension / postretirement (benefit) cost	$	(2.4	)	$	(1.2	)	$	2.0		$	2.1	$	0.1	$	0.2

	Pension Benefits									Postretirement and Other Benefits
	Successor			Successor			Predecessor			Successor		Successor		Predecessor
(dollars in millions)	Nine Months Ended September 30, 2022			September 8, 2021 to September 30, 2021			January 1, 2021 to September 7, 2021			Nine Months Ended September 30, 2022		September 8, 2021 to September 30, 2021		January 1, 2021 to September 7, 2021
Service cost	$	—		$	—		$	—		$	0.6	$	—	$	0.3
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation		11.9			0.9			10.2			3.1		0.1		1.8
Expected return on plan assets		(20.9	)		(2.1	)		(19.9	)		—		—		—
Amortization of:
Prior service benefit		—			—			—			—		—		(1.7	)
Actuarial loss		—			—			16.0			—		—		—
Pension / postretirement (benefit) cost	$	(9.0	)	$	(1.2	)	$	6.3		$	3.7	$	0.1	$	0.4

Amortizations of prior service benefit and actuarial loss in the Predecessor periods represent reclassifications from accumulated other comprehensive income.

For the nine months ended September 30, 2022, there were no contributions to the qualified pension plans, and contributions to the non-qualified pension plans were $1.6 million. Contributions to the qualified and non-qualified pension plans in the Predecessor period in 2021 were $0.9 million and $1.8 million, respectively. In the Successor period in 2021, there were no contributions to the qualified pension plans and contributions to the non-qualified pension plans were $0.2 million. Based on current assumptions, no contributions are expected to be made to the qualified pension plans in 2022. Contributions to the non-qualified pension plans in 2022 are expected to be approximately $3 million.

For the nine months ended September 30, 2022, contributions to our postretirement plans were $5.3 million. For the Predecessor and Successor periods in 2021, contributions to our postretirement plans were $4.3 million and $0.5 million, respectively. Management expects to make total cash payments of approximately $8.0 million related to its postretirement health plans in 2022.