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The Company and its ventures
sponsor defined benefit pension plans covering substantially
all employees. The plans are largely noncontributory,
and benefits are generally based on employees’
years of service and average earnings for a defined
period prior to retirement. In addition, the Company
and its ventures currently provide retirement health
care and life insurance benefits (“Other Benefits”)
to most full-time employees who meet certain length
of service and age requirements (a portion of which
are pursuant to collective bargaining agreements).
Other Benefits are provided through programs administered
by insurance companies whose charges are based on
benefits paid. The following table presents a reconciliation
of funded status of the Company’s plans, including
its proportionate share of plans of its ventures,
at December 31, 2000 and 1999:
| |
(In
Millions)
|
| |
Pension
Benefits |
Other
Benefits |
| |
|
|
| |
2000 |
1999 |
2000 |
1999 |
|
|
|
|
|
| Change in plan
assets |
|
|
|
|
| Fair
value of plan assets at beginning of year |
$335.9 |
$316.2 |
$21.5 |
$19.9 |
| Actual
return on plan assets |
17.3 |
34.9 |
1.2 |
1.8 |
| Contributions |
1.7 |
1.1 |
1.4 |
1.5 |
| Effect
of change in Empire ownership |
18.0 |
|
2.7 |
|
| Benefits
paid |
(20.2) |
(16.3) |
(2.3) |
(1.7) |
|
|
|
|
|
| Fair
value of plan assets at end of year |
352.7 |
335.9 |
24.5 |
21.5 |
| |
|
|
|
|
| Change in benefit
obligation |
|
|
|
|
| Benefit
obligation at beginning of year |
249.3 |
238.1 |
84.6 |
97.7 |
| Service
cost |
5.9 |
4.6 |
1.7 |
1.8 |
| Interest
cost |
22.6 |
17.2 |
9.1 |
6.3 |
| Amendments |
|
24.5 |
.2 |
|
| Actuarial
losses (gains) |
25.0 |
(18.8) |
47.1 |
(15.2) |
| Effect
of change in Empire ownership |
20.9 |
|
7.1 |
|
| Benefits
paid |
(20.2) |
(16.3) |
(7.8) |
(6.0) |
|
|
|
|
|
| Benefit
obligation at end of year |
303.5 |
249.3 |
142.0 |
84.6 |
|
|
|
|
|
| Funded
status of the plan (underfunded) |
49.2 |
86.6 |
(117.5) |
(63.1) |
| Unrecognized
prior service cost |
28.4 |
29.5 |
1.5 |
1.5 |
| Unrecognized
net actuarial (gain) loss |
(36.1) |
(65.7) |
37.8 |
(13.4) |
| Unrecognized
net asset at date of adoption |
(15.2) |
(17.1) |
|
|
|
|
|
|
|
| Prepaid
(accrued) benefit cost – net |
$26.3 |
$33.3 |
$(78.2) |
$(75.0) |
|
|
|
|
|
| Assumptions
as of December 31 |
|
|
|
|
| Discount
rate |
7.75% |
8.00% |
7.75% |
8.00% |
| Expected
long-term return on plan assets |
9.00% |
9.00% |
8.26% |
7.62% |
| Rate
of compensation increase – average |
4.26% |
4.26% |
|
|
| |
(In
Millions)
|
| |
Pension
Benefits |
Other
Benefits |
| |
|
|
| |
2000 |
1999 |
1998 |
2000 |
1999 |
1998 |
|
|
|
|
|
|
|
| Components of
net periodic benefit cost |
|
|
|
|
|
|
| Service
cost |
$5.9 |
$4.6 |
$4.5 |
$1.7 |
$1.8 |
$1.6 |
| Interest
cost |
22.6 |
17.2 |
15.6 |
9.1 |
6.3 |
6.3 |
| Expected
return on plan assets |
(29.0) |
(24.9) |
(22.5) |
(2.1) |
(1.5) |
(1.3) |
| Amortization
and other |
6.4
|
6.2 |
4.6 |
1.2 |
.1 |
.1 |
|
|
|
|
|
|
|
| Net
periodic benefit cost (credit) |
$5.9
|
$3.1 |
$2.2 |
$9.9 |
$6.7 |
$6.7 |
Annual contributions
to the pension plans are made within income
tax deductibility restrictions in accordance
with statutory regulations. In the event
of termination, the sponsors could be
required to fund shutdown and early retirement
obligations which are not included in
the pension benefit obligations.
Assets for Other Benefits
include deposits relating to insurance
contracts and Voluntary Employee Benefit
Association (“VEBA”) Trusts
for certain mining ventures that are available
to fund retired employees’ life insurance
obligations and medical benefits. The
Company’s estimated annual contribution
to the VEBAs will approximate $1.6 million
based on its share of tons produced.
As a result of recent
experience, the Company increased its
medical trend rate assumption effective
December 31, 2000. An annual rate of increase
in the per capita cost of covered health
care benefits of 8.0 percent was assumed
for 2001, (6.5 percent in 2000) decreasing
.25 to .5 percent per year to an annual
rate of 5.0 percent for 2008 and annually
thereafter. A one percentage point change
in this assumption would have the following
effects:
| |
(In
Millions)
|
| |
Increase |
Decrease |
|
|
|
| Effect on total service and interest cost components in 2000 |
$1.3 |
$(1.1) |
| Effect on Other Benefits obligation as of December 31, 2000 |
15.5 |
(13.0) |
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