Benefit Plans

We have a non-contributory defined benefit pension plan covering substantially all domestic employees, as well as a supplemental executive retirement plan. We also offer both medical and dental benefits for retired domestic employees, their eligible spouses and dependents under a postretirement benefit plan. The following tables 11.1, 11.2, and 11.3 provide the components of aggregate annual net periodic benefit cost for each of the years ended December 31, 2017, 2016, and 2015 and changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheets as of December 31, 2017 and 2016.



	Table	11.1
Components of net periodic benefit cost			Pension and Supplemental Executive Retirement Plans									Other Postretirement Benefits
Components of net periodic benefit cost	(in thousands)		12/31/2017			12/31/2016			12/31/2015			12/31/2017			12/31/2016			12/31/2015
	1. Company Service Cost		$	9,556		$	9,130		$	10,256		$	813		$	751		$	833
	2. Interest Cost		15,475			15,906			15,847			706			704			697
	3. Expected Return on Assets		(20,099		)	(19,508		)	(21,109		)	(5,248		)	(4,886		)	(4,991		)
	4. Other Adjustments		—			—			—			—			—			—
	Subtotal		4,932			5,528			4,994			(3,729		)	(3,431		)	(3,461		)
	5. Amortization of:
	a. Net Transition Obligation/(Asset)		—			—			—			—			—			—
	b. Net Prior Service Cost/(Credit)		(426		)	(687		)	(845		)	(6,649		)	(6,649		)	(6,649		)
	c. Net Losses/(Gains)		6,169			5,856			5,485			—			—			(175		)
	Total Amortization		5,743			5,169			4,640			(6,649		)	(6,649		)	(6,824		)
	6. Net Periodic Benefit Cost		10,675			10,697			9,634			(10,378		)	(10,080		)	(10,285		)
	7. Cost of settlements		—			1,277			3,172			—			—			—
	8. Total Expense for Year		$	10,675		$	11,974		$	12,806		$	(10,378	)	$	(10,080	)	$	(10,285	)



	Table	11.2
Development of funded status			Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
	(in thousands)		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	Actuarial Value of Benefit Obligations
	1. Measurement Date		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	2. Accumulated Benefit Obligation		$	411,996		$	360,423		$	24,716		$	17,378

	Funded Status/Asset (Liability) on the Consolidated Balance Sheet
	1. Projected Benefit Obligation		$	(417,770	)	$	(369,808	)	$	(24,716	)	$	(17,378	)
	2. Plan Assets at Fair Value		401,142			360,900			85,303			70,408
	3. Funded Status - Overfunded/Asset		N/A			N/A			$	60,587		$	53,030
	4. Funded Status - Underfunded/Liability		(16,628		)	(8,908		)	N/A			N/A



	Table	11.3
Accumulated other comprehensive income (loss)			Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
	(in thousands)		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	1. Net Actuarial (Gain)/Loss		$	109,904		$	103,861		$	(10,234	)	$	(6,088	)
	2. Net Prior Service Cost/(Credit)		(1,850		)	(2,286		)	(5,342		)	(11,991		)
	3. Net Transition Obligation/(Asset)		—			—			—			—
	4. Total at Year End		$	108,054		$	101,575		$	(15,576	)	$	(18,079	)

The amortization of gains and losses resulting from actual experience different from assumed experience or changes in assumptions including discount rates is included as a component of Net Periodic Benefit Cost/(Income) for the year. The gain or loss in excess of a 10% corridor is amortized by the average remaining service period of participating employees expected to receive benefits under the plan.

Table 11.4 shows the changes in the projected benefit obligation for 2017 and 2016.



	Table	11.4
Change in projected benefit / accumulated benefit obligation			Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
	(in thousands)		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	1. Benefit Obligation at Beginning of Year		$	369,808		$	349,483		$	17,378		$	16,423
	2. Company Service Cost		9,556			9,130			813			751
	3. Interest Cost		15,475			15,906			706			704
	4. Plan Participants' Contributions		—			—			395			408
	5. Net Actuarial (Gain)/Loss due to Assumption Changes		38,496			14,450			5,981			497
	6. Net Actuarial (Gain)/Loss due to Plan Experience		2,338			5,428			924			357
	7. Benefit Payments from Fund ⁽¹⁾		(17,578		)	(21,831		)	(1,404		)	(1,678		)
	8. Benefit Payments Directly by Company		(335		)	(2,669		)	—			—
	9. Plan Amendments		10			16			—			—
	10. Other Adjustment		—			(105		)	(77		)	(84		)
	11. Benefit Obligation at End of Year		$	417,770		$	369,808		$	24,716		$	17,378


⁽¹⁾	Includes lump sum payments of $6.3 million and $11.2 million in 2017 and 2016, respectively, from our pension plan to eligible participants, which were former employees with vested benefits.

The increase in our pension and supplemental executive retirement plans obligation in 2017 compared to 2016 was primarily due to a decrease in the discount rate used to calculate the obligation and a lower amount of benefits paid from the fund. The increase in our other postretirement plan obligation was primarily due a decrease in the discount rate used to calculate the obligation. Table 11.8 below includes the actuarial assumptions used to calculate the benefit obligations of our plans for 2017 and 2016.

Tables 11.5 and 11.6 shows the changes in the fair value of the net assets available for plan benefits, and changes in other comprehensive income (loss) during 2017 and 2016.



	Table	11.5
Change in plan assets			Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
	(in thousands)		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	1. Fair Value of Plan Assets at Beginning of Year		$	360,900		$	350,107		$	70,408		$	65,568
	2. Company Contributions		9,435			11,369			—			—
	3. Plan Participants' Contributions		—			—			395			408
	4. Benefit Payments from Fund		(17,578		)	(21,831		)	(1,404		)	(1,678		)
	5. Benefit Payments paid directly by Company		(335		)	(2,669		)	—			—
	6. Actual Return on Assets		48,720			23,924			16,299			6,518
	7. Other Adjustment		—			—			(395		)	(408		)
	8. Fair Value of Plan Assets at End of Year		$	401,142		$	360,900		$	85,303		$	70,408



	Table	11.6
Change in accumulated other comprehensive income (loss) ("AOCI")			Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
	(in thousands)		12/31/2017			12/31/2016			12/31/2017			12/31/2016
	1. AOCI in Prior Year		$	101,575		$	92,647		$	(18,079	)	$	(23,951	)
	2. Increase/(Decrease) in AOCI
	a. Recognized during year - Prior Service (Cost)/Credit		426			687			6,649			6,649
	b. Recognized during year - Net Actuarial (Losses)/Gains		(6,169		)	(5,856		)	—			—
	c. Occurring during year - Prior Service Cost		10			16			—			—
	d. Occurring during year - Net Actuarial Losses/(Gains)		12,212			15,358			(4,146		)	(777		)
	e. Occurring during year - Net Settlement Losses/(Gains)		—			(1,277		)	—			—
	f. Other adjustments		—			—			—			—
	3. AOCI in Current Year		$	108,054		$	101,575		$	(15,576	)	$	(18,079	)

Table 11.7 shows the amount of amortization on components of net periodic benefit costs expected to be recognized during the year ending December 31, 2018.



	Table	11.7
Amortization expected to be recognized during next fiscal year ending			Pension and Supplemental Executive Retirement Plans			Other Postretirement Benefits
	(In thousands)		12/31/2018			12/31/2018
	1. Amortization of Net Transition Obligation/(Asset)		$	—		$	—
	2. Amortization of Prior Service Cost/(Credit)		(349		)	(4,104		)
	3. Amortization of Net Losses/(Gains)		7,140			(183		)

The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions.



	Table	11.8
Actuarial assumptions			Pension and Supplemental Executive Retirement Plans				Other Postretirement Benefits
			12/31/2017		12/31/2016		12/31/2017		12/31/2016
	Weighted-Average Assumptions Used to Determine
	Benefit Obligations at year end
	1. Discount Rate		3.75	%	4.30	%	3.55	%	3.95	%
	2. Rate of Compensation Increase		3.00	%	3.00	%	N/A		N/A

	Weighted-Average Assumptions Used to Determine
	Net Periodic Benefit Cost for Year
	1. Discount Rate		4.30	%	4.65	%	3.95	%	4.30	%
	2. Expected Long-term Return on Plan Assets		5.75	%	5.75	%	7.50	%	7.50	%
	3. Rate of Compensation Increase		3.00	%	3.00	%	N/A		N/A

	Assumed Health Care Cost Trend Rates at year end
	1. Health Care Cost Trend Rate Assumed for Next Year		N/A		N/A		6.50	%	6.50	%
	2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate)		N/A		N/A		5.00	%	5.00	%
	3. Year That the Rate Reaches the Ultimate Trend Rate		N/A		N/A		2024		2020

In selecting a discount rate, we performed a hypothetical cash flow bond matching exercise, matching our expected pension plan and postretirement medical plan cash flows, respectively, against a selected portfolio of high quality corporate bonds. The modeling was performed using a bond portfolio of noncallable bonds with at least $50 million outstanding. The average yield of these hypothetical bond portfolios was used as the benchmark for determining the discount rate. In selecting the expected long-term rate of return on assets, we considered the average rate of earnings expected on the classes of funds invested or to be invested to provide for the benefits of these plans. This included considering the trusts' targeted asset allocation for the year and the expected returns likely to be earned over the next 20 years.

The year-end asset allocations of the plans are shown in table 11.9 below.



	Table	11.9
Plan assets			Pension Plan				Other Postretirement Benefits
			12/31/2017		12/31/2016		12/31/2017		12/31/2016
	1. Equity Securities		21	%	23	%	100	%	100	%
	2. Debt Securities		79	%	77	%	—	%	—	%
	3. Total		100	%	100	%	100	%	100	%

In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value of our benefit plan assets:

Level 1 – Quoted prices for identical instruments in active markets that we can access. Financial assets utilizing Level 1 inputs include equity securities, mutual funds, money market funds, certain U.S. Treasury securities and exchange traded funds ("ETFs").

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and inputs, other than quoted prices, that are observable in the marketplace for the instrument. The observable inputs are used in valuation models to calculate the fair value of the instruments. Financial assets utilizing Level 2 inputs include certain municipal, corporate and foreign bonds, obligations of U.S. government corporations and agencies, and pooled equity accounts.

To determine the fair value of securities in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. In addition, on a quarterly basis, we perform quality controls over values received from the pricing source (the “Trustee”) which include comparing values to other independent pricing sources. In addition, we review annually the Trustee’s auditor’s report on internal controls in order to determine that their controls around valuing securities are operating effectively. We have not made any adjustments to the prices obtained from the independent sources.

Tables 11.10a and 11.10b set forth by level, within the fair value hierarchy, the pension plan assets and related accrued investment income at fair value as of December 31, 2017 and 2016. There were no securities that utilized Level 3 inputs.



	Table	11.10a
Pension plan - current year	Assets at fair value as of December 31, 2017
Pension plan - current year	(in thousands)		Level 1		Level 2		Total
	Domestic Mutual Funds		$	1,006	$	—	$	1,006
	Corporate Bonds		—		202,840		202,840
	U.S. Government Securities		17,996		1,400		19,396
	Municipal Bonds		—		62,293		62,293
	Foreign Bonds		—		32,949		32,949
	ETFs		5,734		—		5,734
	Pooled Equity Accounts		—		76,924		76,924
	Total Assets at fair value		$	24,736	$	376,406	$	401,142



	Table	11.10b
Pension plan - prior year	Assets at fair value as of December 31, 2016
Pension plan - prior year	(in thousands)		Level 1		Level 2		Total
	Domestic Mutual Funds		$	11,805	$	—	$	11,805
	Corporate Bonds		—		178,412		178,412
	U.S. Government Securities		6,761		354		7,115
	Municipal Bonds		—		63,492		63,492
	Foreign Bonds		—		27,917		27,917
	ETFs		5,694		—		5,694
	Pooled Equity Accounts		—		66,465		66,465
	Total Assets at fair value		$	24,260	$	336,640	$	360,900

The pension plan has implemented a strategy to reduce risk through the use of a targeted funded ratio. The liability driven component is key to the asset allocation. The liability driven component seeks to align the duration of the fixed income asset allocation with the expected duration of the plan liabilities or benefit payments. Overall asset allocation is dynamic and specifies target allocation weights and ranges based on the funded status.

An improvement in funded status results in the de-risking of the portfolio, allocating more funds to fixed income and less to equity. A decline in funded status would result in a higher allocation to equity. The maximum equity allocation is 40%.

The equity investments utilize combinations of mutual funds, ETFs, and pooled equity account structures focused on the following strategies:



Strategy	Objective	Investment types
Return seeking growth	Funded ratio improvement over the long term	●	Global quality growth
Return seeking growth	Funded ratio improvement over the long term	●	Global low volatility
Return seeking bridge	Downside protection in the event of a declining equity market	●	Enduring asset
Return seeking bridge		●	Durable company

The fixed income objective is to preserve capital and to provide monthly cash flows for the payment of plan liabilities. Fixed income investments can include government, government agency, corporate, mortgage-backed, asset-backed, and municipal securities, and other classes of bonds. The duration of the fixed income portfolio has an objective of being within one year of the duration of the accumulated benefit obligation. The fixed income investments have an objective of a weighted average credit of A3/A-/A- by Moody’s, S&P, and Fitch, respectively.

Tables 11.11a and 11.11b set forth the other postretirement benefits plan assets at fair value as of December 31, 2017 and 2016. All are Level 1 assets.



	Table	11.11a
Other postretirement benefits plan - current year	Assets at fair value as of December 31, 2017
	(in thousands)		Level 1		Total
	Domestic Mutual Funds		$	64,489	$	64,489
	International Mutual Funds		20,814		20,814
	Total Assets at fair value		$	85,303	$	85,303



	Table	11.11b
Other postretirement benefits plan - prior year	Assets at fair value as of December 31, 2016
	(in thousands)		Level 1		Total
	Domestic Mutual Funds		$	54,426	$	54,426
	International Mutual Funds		15,982		15,982
	Total Assets at fair value		$	70,408	$	70,408

Our postretirement plan portfolio is designed to achieve the following objectives over each market cycle and for at least 5 years:


•	Total return should exceed growth in the Consumer Price Index by 5.75% annually


•	Achieve competitive investment results

The primary focus in developing asset allocation ranges for the portfolio is the assessment of the portfolio's investment objectives and the level of risk that is acceptable to obtain those objectives. To achieve these objectives the minimum and maximum allocation ranges for fixed income securities and equity securities are:



	Minimum		Maximum
Equities (long only)	70	%	100	%
Real estate	0	%	15	%
Commodities	0	%	10	%
Fixed income/Cash	0	%	10	%

Given the long term nature of this portfolio and the lack of any immediate need for significant cash flow, it is anticipated that the equity investments will consist of growth stocks and will typically be at the higher end of the allocation ranges above.

Investment in international mutual funds is limited to a maximum of 30% of the equity range. The allocation as of December 31, 2017 included 3% that was primarily invested in equity securities of emerging market countries and another 21% was invested in securities of companies primarily based in Europe and the Pacific Basin.

Tables 11.12 and 11.13 show the current and estimated future contributions and benefit payments.



	Table	11.12
Company contributions			Pension and Supplemental Executive Retirement Plans		Other Postretirement Benefits
	(in thousands)		12/31/2017		12/31/2017
	Company Contributions for the Year Ending:
	1. Current		$	9,435	$	—
	2. Current + 1		10,950		—



	Table	11.13
Benefit payments - total			Pension and Supplemental Executive Retirement Plans		Other Postretirement Benefits
	(in thousands)		12/31/2017		12/31/2017
	Actual Benefit Payments for the Year Ending:
	1. Current		$	17,913	$	1,086
	Expected Benefit Payments for the Year Ending:
	2. Current + 1		28,639		1,174
	3. Current + 2		33,127		1,368
	4. Current + 3		29,669		1,689
	5. Current + 4		31,085		1,944
	6. Current + 5		31,899		2,044
	7. Current + 6 - 10		151,512		11,914

Health care sensitivities

For measurement purposes for the other post retirement benefits plan, the increase in health care costs is estimated to be 6.5% for 2017 and 2018, decreasing to 5.0% by 2024 and remaining at this level beyond.

Assumed health care cost trend rates have a significant effect on the amounts reported for the other postretirement benefits plan. A 1 percentage point change in the health care trend rate assumption would have the following effects on other postretirement benefits:



	Table	11.14
Health care trend rate assumption	(in thousands)		1-Percentage Point Increase		1-Percentage Point Decrease
	Effect on total service and interest cost components		$	252	$	(217	)
	Effect on postretirement benefit obligation		3,093		(2,748		)

Profit sharing and 401(k)

We have a profit sharing and 401(k) savings plan for employees. At the discretion of the Board of Directors, we may make a contribution to the plan of up to 5% of each participant's eligible compensation. We provide a matching 401(k) savings contribution for employees on their before-tax contributions at a rate of 80% of the first $1,000 contributed and 40% of the next $2,000 contributed. For employees hired after January 1, 2014, the match is 100% up to 4% contributed. We recognized expenses related to these plans of $6.0 million, $5.9 million and $5.1 million in 2017, 2016 and 2015, respectively.