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SEC Filings

10-Q
ARCH COAL INC filed this Form 10-Q on 10/31/2017
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16. Workers Compensation Expense

The Company is liable under the Federal Mine Safety and Health Act of 1969, as subsequently amended, to provide for pneumoconiosis (occupational disease) benefits to eligible employees, former employees and dependents. The Company currently provides for federal claims principally through a self-insurance program. The Company is also liable under various state workers’ compensation statutes for occupational disease benefits. The occupational disease benefit obligation represents the present value of the of the actuarially computed present and future liabilities for such benefits over the employees’ applicable years of service.

In addition, the Company is liable for workers’ compensation benefits for traumatic injuries which are calculated using actuarially-based loss rates, loss development factors and discounted based on a risk free rate. Traumatic workers’ compensation claims are insured with varying retentions/deductibles, or through state-sponsored workers’ compensation programs.

Workers’ compensation expense consists of the following components:
 
Successor
Predecessor
 
Successor
Predecessor
 
Three Months Ended September 30, 2017
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2017
Nine Months Ended September 30, 2016
(In thousands)
 
 
 
 
 
Self-insured occupational disease benefits:
 
 
 
 
 
Service cost
$
1,558

$
1,051

 
$
4,675

$
3,466

Interest cost
1,169

1,098

 
3,506

3,184

Net amortization

2,178

 

4,325

Curtailments
$
(4,660
)
$

 
$
(4,660
)
$
4,156

Total occupational disease
$
(1,933
)
$
4,327

 
$
3,521

$
15,131

Traumatic injury claims and assessments
3,077

2,415

 
8,487

6,628

Total workers’ compensation expense
$
1,144

$
6,742

 
$
12,008

$
21,759


The curtailment reflected in three and nine months ended September 30, 2017 was related to the divestiture during the quarter and therefore was included in the line item, “Gain on sale of Lone Mountain Processing, Inc.,” within the Condensed Consolidated Statement of Operations. For additional information on the sale, please see Note 4, “Divestitures,” to the Condensed Consolidated Financial Statements.

Additionally, due to the curtailment discussed above, the Company revalued the occupational disease liability which increased the liability by approximately $10.0 million with the offset to accumulated other comprehensive income. The discount rate used for the revaluation was 3.86%.

17. Employee Benefit Plans
The following table details the components of pension benefit costs (credits):
 
Successor
Predecessor
 
Successor
Predecessor
 
Three Months Ended September 30, 2017
Three Months Ended September 30, 2016
 
Nine Months Ended September 30, 2017
Nine Months Ended September 30, 2016
(In thousands)
 
 
 
 
 
Interest cost
$
2,736

$
2,803

 
$
8,718

$
9,338

Expected return on plan assets
(3,913
)
(4,641
)
 
(12,909
)
(13,623
)
Pension settlement
(229
)

 
(716
)
454

Amortization of other actuarial losses

2,292

 

3,973

Net benefit cost (credit)
$
(1,406
)
$
454

 
$
(4,907
)
$
142

 

21

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