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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2018
EMPLOYEE BENEFIT PLANS |
EMPLOYEE BENEFIT PLANS | NOTE I – EMPLOYEE BENEFIT PLANS Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans The Company has a noncontributory defined benefit pension plan covering substantially all noncontractual employees hired before January 1, 2006. Benefits under the defined benefit pension plan are generally based on years of service and employee compensation. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The amendment resulted in a plan curtailment and eliminated the service cost of the plan. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits had not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion 401(k) and defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate (see Defined Contribution Plans section within this Note). In November 2017, an amendment was executed to terminate the nonunion defined benefit pension plan with a termination date of December 31, 2017. In September 2018, the plan received a favorable determination letter from the IRS regarding qualification of the plan termination. Following receipt of the determination letter, the plan’s actuarial assumptions were updated to remeasure the benefit obligation on a plan termination basis as of September 30, 2018 in connection with recognition of the quarterly pension settlement charge. The Company made assumptions for participant benefit elections, rate of return, and discount rates, including the annuity contract interest rate. Benefit election forms were provided to plan participants and they had an election window during the fourth quarter of 2018 in which they could choose any form of payment allowed by the plan for immediate commencement of payment or defer payment until a later date. The plan began distributing immediate lump sum benefit payments in the fourth quarter of 2018. The plan will settle the remaining obligation for deferred benefits with the purchase of nonparticipating annuity contracts from insurance companies in first quarter 2019. The Company will make a cash contribution to the plan for the amount, if any, required to fund benefit distributions and annuity contract purchases in excess of plan assets. As part of the strategy to become more focused on reducing investment, interest rate, and longevity risks in the nonunion defined benefit pension plan, the plan purchased a $7.6 million nonparticipating annuity contract from an insurance company during the first quarter of 2017 to settle the pension obligation related to the vested benefits of approximately 50 plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. The Company recognized pension settlement expense as a component of net periodic benefit cost related to the nonparticipating annuity contract purchase in 2017 and recognized pension settlement expense in 2018, 2017, and 2016 related to lump-sum benefit distributions from the plan. The pension settlement expense amounts are presented in the tables within this Note. Pension settlement charges related to the plan termination, including settlements for lump sum benefit distributions and annuity contract purchases, will occur in first quarter 2019. Based on estimates as of December 31, 2018 using available actuarial information, first quarter 2019 nonunion pension settlement expense is estimated to be approximately $4.0 million, or approximately $3.0 million after-tax, and cash funding could total approximately $7.0 million, although there can be no assurances in this regard. The final pension settlement charges and the actual amount the Company will be required to contribute to the plan to fund benefit distributions in excess of plan assets cannot be determined at this time, as the actual amounts are dependent on various factors, including the value of plan assets, the amount of lump-sum benefit distributions paid to participants, and the cost of the nonparticipating annuity contracts. Liquidation of plan assets and settlement of plan obligations is expected to be complete in first quarter 2019. The Company also has an unfunded supplemental benefit plan (“SBP”) for the purpose of supplementing benefits under the Company’s nonunion defined benefit pension plan for executive officers designated as participants in the SBP by the Company’s Board of Directors. The Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) elected to close the SBP to new entrants and to place a cap on the maximum payment per participant to existing participants in the SBP effective January 1, 2006. In place of the SBP, eligible officers of the Company appointed after 2005 participate in a long‑term cash incentive plan (see Cash Long‑Term Incentive Compensation Plan section within this Note). Effective December 31, 2009, the Compensation Committee elected to freeze the accrual of benefits for remaining participants under the SBP. With the exception of early retirement penalties that may apply in certain cases, the valuation inputs for calculating the frozen SBP benefits to be paid to participants, including final average salary and the interest rate, were frozen at December 31, 2009. The SBP did not incur pension settlement expense related to lump‑sum distributions in 2018 or 2017. As presented in the tables within this Note, pension settlement expense and a corresponding reduction in the net actuarial loss was recorded in 2016 related to lump-sum SBP benefit distributions. The Company sponsors an insured postretirement health benefit plan that provides supplemental medical benefits and dental and vision benefits primarily to certain officers of the Company and certain subsidiaries. Effective January 1, 2011, retirees began paying a portion of the premiums under the plan according to age and coverage levels. The amendment to the plan to implement retiree premiums resulted in an unrecognized prior service credit which was recorded in accumulated other comprehensive loss and is being amortized over approximately nine years. The following table discloses the changes in benefit obligations and plan assets of the Company’s nonunion defined benefit plans for years ended December 31, the measurement date of the plans:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
|  | (in thousands) |
Change in benefit obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligations at beginning of year |  | $ | 137,417 |  | $ | 152,006 |  | $ | 3,897 |  | $ | 4,794 |  | $ | 24,097 |  | $ | 25,532 |
Service cost |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 366 |  |  | 489 |
Interest cost |  |  | 4,269 |  |  | 4,514 |  |  | 108 |  |  | 102 |  |  | 837 |  |  | 1,060 |
Actuarial (gain) loss(1) |  |  | (3,685) |  |  | 6,448 |  |  | (57) |  |  | (10) |  |  | 4,957 |  |  | (2,251) |
Benefits paid |  |  | (105,522) |  |  | (26,491) |  |  | — |  |  | (989) |  |  | (769) |  |  | (733) |
Settlement loss |  |  | 894 |  |  | 940 |  |  | — |  |  | — |  |  | — |  |  | — |
Benefit obligations at end of year |  |  | 33,373 |  |  | 137,417 |  |  | 3,948 |  |  | 3,897 |  |  | 29,488 |  |  | 24,097 |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  |  | 124,831 |  |  | 144,805 |  |  | — |  |  | — |  |  | — |  |  | — |
Actual return on plan assets |  |  | 1,837 |  |  | 6,517 |  |  | — |  |  | — |  |  | — |  |  | — |
Employer contributions |  |  | 5,500 |  |  | — |  |  | — |  |  | 989 |  |  | 769 |  |  | 733 |
Benefits paid |  |  | (105,522) |  |  | (26,491) |  |  | — |  |  | (989) |  |  | (769) |  |  | (733) |
Fair value of plan assets at end of year |  |  | 26,646 |  |  | 124,831 |  |  | — |  |  | — |  |  | — |  |  | — |
Funded status at period end |  | $ | (6,727) |  | $ | (12,586) |  | $ | (3,948) |  | $ | (3,897) |  | $ | (29,488) |  | $ | (24,097) |
Accumulated benefit obligation |  | $ | 33,373 |  | $ | 137,417 |  | $ | 3,948 |  | $ | 3,897 |  | $ | 29,488 |  | $ | 24,097 |
| (1) |  | The actuarial gain on the nonunion defined benefit pension plan for 2018, compared to the actuarial loss for 2017, was primarily due to an increase in the discount rate used to remeasure the plan obligation at December 31, 2018 versus December 31, 2017. The actuarial loss on the postretirement health benefit plan for 2018, versus the actuarial gain for 2017, was primarily related to changes in the medical trend rate assumption used to measure the plan obligation at each year-end measurement date.
Amounts recognized in the consolidated balance sheets at December 31 consisted of the following:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
|  | (in thousands) |
Current liabilities (included in current portion of pension and postretirement liabilities) |  | $ | (6,727) |  | $ | — |  | $ | (937) |  | $ | — |  | $ | (995) |  | $ | (753) |
Noncurrent liabilities (included in pension and postretirement liabilities) |  |  | — |  |  | (12,586) |  |  | (3,011) |  |  | (3,897) |  |  | (28,493) |  |  | (23,344) |
Liabilities recognized |  | $ | (6,727) |  | $ | (12,586) |  | $ | (3,948) |  | $ | (3,897) |  | $ | (29,488) |  | $ | (24,097) |
The following is a summary of the components of net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |
|  | (in thousands) |  |  |  |
Service cost |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 366 |  | $ | 489 |  | $ | 429 |
Interest cost |  |  | 4,269 |  |  | 4,514 |  |  | 4,572 |  |  | 108 |  |  | 102 |  |  | 130 |  |  | 837 |  |  | 1,060 |  |  | 1,017 |
Expected return on plan assets |  |  | (1,582) |  |  | (5,712) |  |  | (8,607) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization of prior service credit |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (93) |  |  | (190) |  |  | (190) |
Pension settlement expense |  |  | 12,925 |  |  | 4,156 |  |  | 3,023 |  |  | — |  |  | — |  |  | 206 |  |  | — |  |  | — |  |  | — |
Amortization of net actuarial loss(1) |  |  | 2,583 |  |  | 3,132 |  |  | 4,087 |  |  | 81 |  |  | 82 |  |  | 152 |  |  | 304 |  |  | 694 |  |  | 705 |
Net periodic benefit cost |  | $ | 18,195 |  | $ | 6,090 |  | $ | 3,075 |  | $ | 189 |  | $ | 184 |  | $ | 488 |  | $ | 1,414 |  | $ | 2,053 |  | $ | 1,961 |
| (1) |  | The Company amortizes actuarial losses over the average remaining active service period of the plan participants and does not use a corridor approach.
The following is a summary of the pension settlement distributions and pension settlement expense for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |
|  | Benefit Pension Plan |  | Benefit Plan |
|  | 2018(1) |  | 2017(2) |  | 2016(1) |  | 2018 |  | 2017(3) |  | 2016 |
|  | (in thousands, except per share data) |
Pension settlement distributions |  | $ | 105,279 |  | $ | 26,261 |  | $ | 16,515 |  | $ | — |  | $ | 989 |  | $ | 246 |
Pension settlement expense, pre-tax |  | $ | 12,925 |  | $ | 4,156 |  | $ | 3,023 |  | $ | — |  | $ | — |  | $ | 206 |
Pension settlement expense per diluted share, net of taxes |  | $ | 0.36 |  | $ | 0.10 |  | $ | 0.07 |  | $ | — |  | $ | — |  | $ | 0.01 |
| (1) |  | Pension settlement distributions represent lump‑sum benefit distributions, including participant-elected distributions associated with the plan’s termination for 2018.
| (2) |  | Pension settlement distributions represent $18.7 million of lump‑sum benefit distributions and a $7.6 million nonparticipating annuity contract purchase.
| (3) |  | The 2017 SBP distribution represents the portion of a benefit related to an officer retirement that occurred in 2016 which was delayed for six months after retirement in accordance with IRC Section 409A. The pension settlement expense related to this distribution was recognized in 2016.
Included in accumulated other comprehensive loss at December 31 were the following pre‑tax amounts that have not yet been recognized in net periodic benefit cost:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
|  | (in thousands) |
Unrecognized net actuarial loss |  | $ | 4,034 |  | $ | 22,588 |  | $ | 405 |  | $ | 543 |  | $ | 7,416 |  | $ | 2,764 |
Unrecognized prior service credit |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (34) |  |  | (127) |
Total |  | $ | 4,034 |  | $ | 22,588 |  | $ | 405 |  | $ | 543 |  | $ | 7,382 |  | $ | 2,637 |
For ongoing plans, the discount rate is determined by matching projected cash distributions with appropriate high‑quality corporate bond yields in a yield curve analysis. Upon updating actuarial assumptions for the nonunion defined benefit pension plan on a termination basis (as presented for 2018 in the table below), a short-term discount rate which represents the Company’s current borrowing rate was utilized. Weighted‑average assumptions used to determine nonunion benefit obligations at December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017 |
Discount rate |  | 3.9 | % | 3.1 | % | 3.6 | % | 2.8 | % | 4.2 | % | 3.5 | %
Weighted‑average assumptions used to determine net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2018(1) |  | 2017(2) |  | 2016(3) |  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |
Discount rate |  | 3.1 | % | 3.4 | % | 3.5 | % | 2.8 | % | 2.7 | % | 2.6 | % | 3.5 | % | 4.0 | % | 4.2 | %
Expected return on plan assets |  | 1.4 | % | 6.5 | % | 6.5 | % | N/A |  | N/A |  | N/A |  | N/A |  | N/A |  | N/A |
| (1) |  | The discount rate presented was used to determine the first quarter 2018 credit, and the interim discount rate established upon each quarterly settlement in 2018 of 3.6%, 3.8%, and 3.6% was used to calculate the expense for the second, third, and fourth quarter of 2018, respectively.
| (2) |  | The discount rate presented was used to determine the first quarter 2017 credit, and the interim discount rate established upon each quarterly settlement in 2017 of 3.4%, 3.2%, and 3.1% was used to calculate the expense/credit for the second, third, and fourth quarter of 2017, respectively. The expected return on plan assets presented was used to determine the pension credit for the first half of 2017, and a 2.5% expected return on plan assets was used to determine pension expense for the second half of 2017, as further discussed in the following Nonunion Defined Benefit Pension Plan Assets section within this Note.
| (3) |  | The discount rate presented was used to determine the first quarter 2016 expense, and the interim discount rate established upon each quarterly settlement in 2016 of 3.0%, 2.7%, and 2.7% was used to calculate the expense/credit for the second, third, and fourth quarter of 2016, respectively.
The assumed health care cost trend rates for the Company’s postretirement health benefit plan at December 31 were as follows:
|  | 2018 |  |  | 2017 |
|  |  |  |  | Pre-65 |  | Post-65 |
Health care cost trend rate assumed for next year |  | 8.0 | % |  | 8.3 | % | 5.5 | %
Rate to which the cost trend rate is assumed to decline |  | 5.0 | % |  | 4.0 | % | 4.0 | %
Year that the rate reaches the cost trend assumed rate |  | 2026 |  |  | 2035 |  | 2024 |
Estimated future benefit payments from the Company’s nonunion defined benefit pension (paid from trust assets), SBP, and postretirement health benefit plans, which reflect expected future service as appropriate, as of December 31, 2018 are as follows:
|  | Nonunion |  | Supplemental |  | Postretirement |
|  | Defined Benefit |  | Benefit |  | Health |
|  | Pension Plan(1) |  | Plan |  | Benefit Plan |
|  | (in thousands) |
2019 |  | $ | 33,373 |  | $ | 938 |  | $ | 995 |
2020 |  | $ | — |  | $ | 2,169 |  | $ | 1,046 |
2021 |  | $ | — |  | $ | — |  | $ | 1,092 |
2022 |  | $ | — |  | $ | — |  | $ | 1,177 |
2023 |  | $ | — |  | $ | — |  | $ | 1,316 |
2024-2028 |  | $ | — |  | $ | 1,142 |  | $ | 7,031 |
| (1) |  | Estimated payments for 2019 represent the accumulated benefit obligation of the plan at December 31, 2018. The future benefit payments of the plan will depend on the amount of lump sum distributions and the cost to purchase nonparticipating annuity contracts to settle the remaining obligation for deferred benefits. The settlement of plan obligations is expected to be complete in first quarter 2019.
Prior to liquidation of the nonunion defined benefit pension plan, the Company’s contributions to the plan are based upon the minimum funding levels required under provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Pension Protection Act of 2006 (the “PPA”), with the maximum contributions not to exceed deductible limits under the IRC. The Company did not have a required minimum cash contribution to the plan in 2018. However, in anticipation of funding the nonunion pension plan for termination, the Company made a $5.5 million voluntary tax-deductible contribution to the plan in September 2018. The plan’s actuary certified the adjusted funding target attainment percentage (“AFTAP”) to be 109.3% as of the January 1, 2018 valuation date. The AFTAP is determined by measurements prescribed by the IRC, which differ from the funding measurements for financial statement reporting purposes. As previously discussed in this Note, the Company will be required to make a contribution to the plan to fund benefit distributions in excess of plan assets in first quarter 2019. Nonunion Defined Benefit Pension Plan Assets The Company establishes the expected rate of return on nonunion defined benefit pension plan assets, which are held in trust, by considering the historical and expected returns for the plan’s current mix of investments. In consideration of plan termination in recent years, the overall objectives of the investment strategy for the Company’s nonunion defined benefit pension plan became more focused on asset preservation, while continuing to ensure the plan would provide for required benefits under the plan in a manner that satisfies the fiduciary requirements of ERISA and limit the possibility of experiencing a substantial investment loss over a one‑year period. During the second half of 2017, a more conservative approach was taken to minimize the impact of market volatility by transferring the plan’s equity investments to short-duration debt instruments. The plan began liquidating its fixed income securities held in trust during fourth quarter 2018 to fund lump sum benefit distributions related to plan termination benefit elections of participants and in anticipation of distributing the remainder of nonunion defined benefit pension plan assets in first quarter 2019. As a result of the changes to the plan’s asset allocation, the plan’s investment rate of return assumption was lowered for the second half of 2017, from 6.5% as of January 1, 2017 to 2.5% as of July 1, 2017. The Company’s long‑term expected rate of return utilized in determining its 2018 nonunion defined benefit pension plan expense was 1.4%, net of estimated expenses expected to be paid from plan assets in 2018, and this rate was maintained as the short-term rate of return assumption under plan termination assumptions for the fourth quarter of 2018 and the first quarter of 2019. The weighted‑average target, acceptable ranges, and actual asset allocations of the Company’s nonunion defined benefit pension plan at December 31 are summarized in the following table:
|  | 2018 |  |  |
|  | Target |  |  | Acceptable |  |  | Weighted-Average Allocation |
|  | Allocation |  |  | Range |  |  | 2018 |  | 2017 |
Income Securities |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Instruments |  | 70.0 | % |  | 20.0 | % | - | 100.0 | % |  | — | % | 73.6 | %
Floating Rate Loan Fund |  | 10.0 |  |  | 3.0 | % | - | 100.0 | % |  | 25.5 |  | 13.1 |
Cash Equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents |  | 20.0 |  |  | 0.0 | % | - | 100.0 | % |  | 74.5 |  | 13.3 |
|  | 100.0 | % |  |  |  |  |  |  |  | 100.0 | % | 100.0 | %
Investment balances and results are reviewed quarterly. Investment performance is generally compared to the three‑to‑five year performance of recognized market indices as well as analyzed for periods shorter than three years for each investment fund and over five years for the total fund. Although investment allocations which fall outside the acceptable range at the end of any quarter are usually rebalanced based on the target allocation, the Company has the discretion to maintain cash or other short‑term investments during periods of market volatility or for other appropriate purposes. As previously discussed, the plan began liquidating its income securities in the fourth quarter of 2018 and is holding its investments primarily in cash equivalents as of December 31, 2018 as the plan advances towards plan termination. Certain types of investments and transactions are prohibited or restricted by the Company’s written pension investment policy, including, but not limited to, borrowing of money; purchase of securities on margin; short sales; pledging, mortgaging, or hypothecating securities except loans of securities that are fully‑collateralized; purchase or sale of futures, options, or derivatives for speculation or leverage; purchase or sale of commodities or illiquid interests in real estate or mortgages; or purchase of illiquid securities. The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2018, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  |  | Fair Value Measurements Using |
|  |  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 19,856 |  | $ | 19,856 |  | $ | — |  | $ | — |
Debt Instruments(2) |  |  | 10 |  |  | — |  |  | 10 |  |  | — |
Floating Rate Loans(3) |  |  | 6,780 |  |  | 6,780 |  |  | — |  |  | — |
|  | $ | 26,646 |  | $ | 26,636 |  | $ | 10 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes a debt income security which was liquidated subsequent to December 31, 2018. The sale price of the security was used to determine the fair value at December 31, 2018..
| (3) |  | Consists of a floating rate loan mutual fund.
The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2017, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  |  | Fair Value Measurements Using |
|  |  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 16,641 |  | $ | 16,641 |  | $ | — |  | $ | — |
Debt Instruments(2) |  |  | 91,778 |  |  | 10,087 |  |  | 81,691 |  |  | — |
Floating Rate Loans(3) |  |  | 16,412 |  |  | 16,412 |  |  | — |  |  | — |
|  | $ | 124,831 |  | $ | 43,140 |  | $ | 81,691 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes corporate debt instruments (80%), asset-backed instruments (16%), mortgage‑backed instruments (4%). The fair value measurements are provided by a pricing service which uses the market approach with inputs derived from observable market data.
| (3) |  | Consists of a floating rate loan mutual fund.
Deferred Compensation Plans The Company has deferred salary agreements with certain executives for which liabilities of $2.5 million and $2.9 million were recorded as of December 31, 2018 and 2017, respectively. The deferred salary agreements include a provision that immediately vests all benefits and provides for a lump‑sum payment upon a change in control of the Company that is followed by a termination of the executive. The Compensation Committee elected to close the deferred salary agreement program to new entrants effective January 1, 2006. In place of the deferred salary agreement program, officers appointed after 2005 participate in the Cash Long‑Term Incentive Plan (see Cash Long‑Term Incentive Compensation Plan section within this Note). The Company maintains a Voluntary Savings Plan (“VSP”), a nonqualified deferred compensation program for the benefit of certain executives of the Company and certain subsidiaries. Eligible employees may defer receipt of a portion of their salary and incentive compensation into the VSP by making an election prior to the beginning of the year in which the salary compensation is payable and, for incentive compensation, by making an election at least six months prior to the end of the performance period to which the incentive relates. The Company credits participants’ accounts with applicable rates of return based on a portfolio selected by the participants from the investments available in the plan. The Company match related to the VSP was suspended beginning January 1, 2010. All deferrals, Company match, and investment earnings are considered part of the general assets of the Company until paid. Accordingly, the consolidated balance sheets reflect the fair value of the aggregate participant balances, based on quoted prices of the mutual fund investments, as both an asset and a liability of the Company. As of December 31, 2018 and 2017, VSP balances of $2.3 million and $2.4 million, respectively, were included in other long‑term assets with a corresponding amount recorded in other long‑term liabilities. Defined Contribution Plans The Company and its subsidiaries have various defined contribution 401(k) plans that cover substantially all employees. The plans permit participants to defer a portion of their salary up to a maximum of 69% as determined under Section 401(k) of the IRC. For certain participating subsidiaries, the Company matches 50% of nonunion participant contributions up to the first 6% of annual compensation. The plans also allow for discretionary 401(k) Company contributions determined annually. The Company’s matching expense for the 401(k) plans totaled $6.1 million, $5.6 million, and $5.7 million for 2018, 2017, and 2016, respectively. Effective July 1, 2013, participants in the nonunion defined benefit pension plan who were active employees of the Company became eligible for the discretionary defined contribution feature of Company’s nonunion 401(k) and defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate. Participants are fully vested in their benefits under the defined contribution plan after three years of service. In 2018, 2017, and 2016, the Company recognized expense of $11.6 million, $8.3 million, and $5.0 million, respectively, related to its discretionary contributions to the defined contribution plan. Cash Long‑Term Incentive Compensation Plan The Company maintains a performance-based Cash Long-Term Incentive Compensation Plan (“LTIP”) for officers of the Company or its subsidiaries who are not active participants in the deferred salary agreement program. The LTIP incentive, which is earned over three years, is based, in part, upon a proportionate weighting of return on capital employed and shareholder returns compared to a peer group, as specifically defined in the plan document. As of December 31, 2018, 2017, and 2016, $18.3 million, $6.6 million, $3.9 million, respectively, were accrued for future payments under the plans. Other Plans Other long‑term assets include $49.3 million and $49.7 million at December 31, 2018 and 2017, respectively, in the cash surrender value of life insurance policies. These policies are intended to provide funding for long‑term nonunion benefit arrangements such as the Company’s SBP and deferred compensation plans. A portion of the Company’s cash surrender value of variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. The Company recognized a loss of less than $0.1 million during 2018 associated with changes in the cash surrender value and proceeds from life insurance policies and gains of $2.6 million, and $2.9 million during 2017, and 2016, respectively. Multiemployer Plans ABF Freight System, Inc. and certain other subsidiaries reported in the Company’s Asset-Based operating segment (“ABF Freight”) contribute to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the 2018 ABF NMFA and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid. The multiemployer plans to which ABF Freight segment primarily contributes are jointly‑trusteed (half of the trustees of each plan are selected by the participating employers, the other half by the IBT) and cover collectively-bargained employees of multiple unrelated employers. Due to the inherent nature of multiemployer plans, there are risks associated with participation in these plans that differ from single‑employer plans. Assets received by the plans are not segregated by employer, and contributions made by one employer can be and are used to provide benefits to current and former employees of other employers. If a participating employer in a multiemployer plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. If a participating employer in a multiemployer pension plan completely withdraws from the plan, it owes to the plan its proportionate share of the plan’s unfunded vested benefits, referred to as a withdrawal liability. A complete withdrawal generally occurs when the employer permanently ceases to have an obligation to contribute to the plan. Withdrawal liability is also owed in the event the employer withdraws from a plan in connection with a mass withdrawal, which generally occurs when all or substantially all employers withdraw from the plan pursuant to an agreement in a relatively short period of time. Were ABF Freight to completely withdraw from certain multiemployer pension plans, whether in connection with a mass withdrawal or otherwise, under current law, ABF Freight would have material liabilities for its share of the unfunded vested liabilities of each such plan. Pension Plans The 25 multiemployer pension plans to which ABF Freight contributes vary greatly in size and in funded status. Contribution obligations to these plans are generally specified in the 2018 ABF NMFA, which will remain in effect through June 30, 2023. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the PPA, which was permanently extended by the Multiemployer Pension Reform Act (the “Reform Act”) included in the Consolidated and Further Continuing Appropriations Act of 2015. Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for ABF Freight’s contractual employees. The PPA requires that “endangered” (generally less than 80% funded and commonly called “yellow zone”) plans adopt “funding improvement plans” and that “critical” (generally less than 65% funded and commonly called “red zone”) plans adopt “rehabilitation plans” that are intended to improve the plan’s funded status over time. The Reform Act includes provisions to address the funding of multiemployer pension plans in “critical and declining” status, including certain of those in which ABF Freight participates. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime within the next 14 plan years, or if the plan is projected to become insolvent within the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self‑correct funding issues, subject to various requirements and restrictions, including applying to the U.S. Department of Treasury (the “Treasury Department”) for the reduction of certain accrued benefits. Based on the most recent annual funding notices the Company has received, most of which are for plan years ended December 31, 2017, approximately 62% of the Asset-Based contributions to multiemployer pension plans were made to plans that are in “critical and declining” status, including the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”) discussed below, approximately 2% were made to plans that are in “critical status” but not “critical and declining” status, and approximately 4% were made to plans that are in “endangered status,” each as defined by the PPA. The Asset-Based segment’s participation in multiemployer pension plans is summarized in the table below. The multiemployer pension plans listed separately in the table represent plans that are individually significant to the Asset-Based segment based on the amount of plan contributions. The severity of a plan’s underfunded status was also considered in the analysis of individually significant funds to be separately disclosed. Significant multiemployer pension funds and key participation information were as follows:
|  |  |  | Pension |  | FIP/RP |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Protection Act |  | Status |  | Contributions (d) |  |
|  | EIN/Pension |  | Zone Status (b) |  | Pending/ |  | (in thousands) |  | Surcharge
Legal Name of Plan |  | Plan Number (a) |  | 2018 |  | 2017 |  | Implemented (c) |  | 2018 |  | 2017 |  | 2016 |  | Imposed (e)
Central States, Southeast and Southwest Areas Pension Plan(1)(2) |  | 36-6044243 |  | Critical and Declining |  | Critical and Declining |  | Implemented(3) |  | $ | 74,177 |  | $ | 78,230 |  | $ | 77,891 |  | No
Western Conference of Teamsters Pension Plan(2) |  | 91-6145047 |  | Green |  | Green |  | No |  |  | 25,268 |  |  | 26,320 |  |  | 25,075 |  | No
New England Teamsters Pension Fund(7)(8) |  | 04-6372430 |  | Critical and Declining(9) |  | Critical and Declining(9) |  | No |  |  | 20,090 |  |  | 5,026 |  |  | 4,404 |  | No
Central Pennsylvania Teamsters Defined Benefit Plan(1)(2) |  | 23-6262789 |  | Green |  | Green |  | No |  |  | 13,393 |  |  | 13,391 |  |  | 13,381 |  | No
I. B. of T. Union Local No. 710 Pension Fund(5)(6) |  | 36-2377656 |  | Green(4) |  | Green(4) |  | No |  |  | 9,929 |  |  | 10,054 |  |  | 9,670 |  | No
All other plans in the aggregate |  |  |  |  |  |  |  |  |  |  | 24,392 |  |  | 25,395 |  |  | 23,718 |  |
Total multiemployer pension contributions paid(10) |  |  |  |  |  |  |  |  |  | $ | 167,249 |  | $ | 158,416 |  | $ | 154,139 |  |
Table Heading Definitions
| (a) |  | The “EIN/Pension Plan Number” column provides the Federal Employer Identification Number (EIN) and the three‑digit plan number, if applicable.
| (b) |  | Unless otherwise noted, the most recent PPA zone status available in 2018 and 2017 is for the plan’s year‑end status at December 31, 2017 and 2016, respectively. The zone status is based on information received from the plan and was certified by the plan’s actuary. Green zone funds are those that are in neither endangered, critical, or critical and declining status and generally have a funded percentage of at least 80%.
| (c) |  | The “FIP/RP Status Pending/Implemented” column indicates if a funding improvement plan (FIP) or a rehabilitation plan (RP), if applicable, is pending or has been implemented.
| (d) |  | Amounts reflect contributions made in the respective year and differ from amounts expensed during the year.
| (e) |  | The surcharge column indicates if a surcharge was paid by ABF Freight to the plan.
| (1) |  | ABF Freight System, Inc. was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended December 31, 2017 and 2016.
| (2) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended December 31, 2017 and 2016.
| (3) |  | Adopted a rehabilitation plan effective March 25, 2008 as updated. Utilized amortization extension granted by the IRS effective December 31, 2003.
| (4) |  | PPA zone status relates to plan years February 1, 2017 – January 31, 2018 and February 1, 2016 – January 31, 2017.
| (5) |  | The Company was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended January 31, 2018 and 2017.
| (6) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended January 31, 2018 and 2017.
| (7) |  | Contributions for 2018 include $15.7 million related to the multiemployer pension fund withdrawal liability which is further discussed in this Note.
| (8) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended September 30, 2017 and 2016.
| (9) |  | PPA zone status relates to plan years October 1, 2017 – September 30, 2018 and October 1, 2016 – September 30, 2017.
| (10) |  | Contribution levels can be impacted by several factors such as changes in business levels and the related time worked by contractual employees, contractual rate increases for pension benefits, and the specific funding structure, which differs among funds. The 2018 ABF NMFA and the related supplemental agreements provided for contributions to multiemployer pension plans to be frozen at the current rates for each fund. The pension contribution rate for contractual employees increased an average of approximately 1.3% and 0.3% effective primarily on August 1, 2017 and 2016, respectively. The Supplemental Negotiating Committees for the Central States Pension Plan and the Western Conference of Teamsters Pension Plan approved no pension increase effective August 1, 2017 and 2016. The year‑over‑year changes in multiemployer pension plan contributions presented above were also influenced by the previously mentioned payments related to the New England Pension Fund and changes in Asset-Based business levels.
For 2018, 2017, and 2016, approximately one-half of Asset-Based multiemployer pension contributions were made to the Central States Pension Plan. The funded percentage of the Central States Pension Plan, as set forth in information provided by the Central States Pension Plan 37.8%, and 42.1% as of January 1, 2017 and 2016, respectively. ABF Freight received an Actuarial Certification of Plan Status for the Central States Pension Plan dated March 30, 2018, in which the plan’s actuary certified that, as of January 1, 2018, the plan is in critical and declining status, as defined by the Reform Act. Although the future of the Central States Pension Plan is impacted by a number of factors, without legislative action, the plan is currently projected to become insolvent within 10 years. On July 9, 2018, ABF Freight reached a tentative agreement with the IBT bargaining representatives for the Northern and Southern New England Supplemental Agreements on terms for new supplemental agreements to the 2018 ABF NMFA for 2018 to 2023 (the “New England Supplemental Agreements”). The New England Supplemental Agreements were ratified by the local unions in the region covered by the supplements on July 25, 2018. In accordance with the New England Supplemental Agreements, ABF Freight’s multiemployer pension plan obligation with the New England Teamsters and Trucking Industry Pension Fund (the “New England Pension Fund”) was restructured under a transition agreement effective on August 1, 2018. The New England Pension Fund was previously restructured to utilize a “two pool approach,” which effectively subdivides the plan assets and liabilities between two groups of beneficiaries. In accordance with ABF Freight’s transition agreement with the New England Pension Fund, ABF Freight agreed to withdraw from the original pool to which it has historically been a participant (the “Existing Employer Pool”) and transition to a new liability pool (the “New Employer Pool”), which does not have an associated unfunded liability. The terms of the transition are pursuant to the Second Chance Policy on Retroactive Withdrawal Liability, as adopted by the New England Pension Fund. ABF Freight’s transition agreement with the New England Pension Fund triggered a withdrawal liability settlement which satisfies ABF Freight’s existing potential withdrawal liability obligations to the Existing Employer Pool and minimizes the potential for future increases in withdrawal liability under the New Employer Pool. ABF Freight transitioned to the New Employer Pool at a lower pension contribution rate than its previous contribution rate under the Existing Employer Pool, and the new contribution rate will be frozen for a period of 10 years. ABF Freight recognized a one-time charge of $37.9 million (pre-tax) to record the withdrawal liability as of June 30, 2018 when the transition agreement was determined to be probable. The withdrawal liability was partially settled through the initial lump sum cash payment of $15.1 million made in third quarter 2018, and the remainder will be settled with monthly payments to the New England Pension Fund over a period of 23 years with an initial aggregate present value of $22.8 million. In accordance with current tax law, these payments are deductible for income taxes when paid. As of December 31, 2018, the outstanding withdrawal liability totaled $22.6 million, of which $0.6 million and $22.0 million was recorded in accrued expenses and other long-term liabilities, respectively. The fair value of the obligation was $23.4 million at December 31, 2018, which is equal to the present value of the future withdrawal liability payments, discounted at a 4.1% interest rate determined using the 20-year U.S. Treasury rate plus a spread (Level 2 of the fair value hierarchy). As certified by the plan's actuary, the New York State Teamsters Conference Pension and Retirement Fund (the “New York State Pension Fund”) was in critical and declining status for the plan years beginning January 1, 2018 and 2017. The New York State Pension Fund submitted an application for a reduction in benefits to the Treasury Department in May 2017. The Treasury Department reviewed the application for compliance with the applicable regulations and administered a vote of eligible participants and beneficiaries, of which a majority did not reject the proposed benefit reduction during the voting period which ended on September 6, 2017. In September 2017, the Treasury Department issued an authorization to reduce benefits under the New York State Pension Fund effective October 1, 2017. After the benefit reduction goes into effect, the plan sponsor of the New York State Pension Fund must make an annual determination that, despite all reasonable measures to avoid insolvency, the fund is projected to become insolvent unless a benefit reduction continues. Approximately 2% of ABF Freight’s total multiemployer pension contributions for the year ended December 31, 2018 were made to the New York State Pension Fund. ABF Freight received a Notice of Insolvency from the Road Carriers Local 707 Pension Fund (the “707 Pension Fund”) for the plan year beginning February 1, 2016. During the second quarter of 2016, the 707 Pension Fund received notice that the Treasury Department denied its proposal to suspend participant benefits in an effort to remain solvent. On March 1, 2017, the Pension Benefit Guaranty Corporation (“PBGC”) announced that beginning February 1, 2017 benefits to retirees were reduced to PBGC guarantee limits for insolvent multiemployer plans. The PBGC provides financial assistance to insolvent multiemployer plans to pay retiree benefits not to exceed guaranteed limits. The 707 Pension Fund will continue to administer the fund as the PBGC provides financial assistance. Approximately 1% of ABF Freight’s total multiemployer pension contributions for the year ended December 31, 2018 were made to the 707 Pension Fund. ABF Freight has not received any other notification of plan reorganization or plan insolvency with respect to any multiemployer pension plan to which it contributes. Health and Welfare Plans ABF Freight contributes to 38 multiemployer health and welfare plans which provide health care benefits for active employees and retirees covered under labor agreements. Contributions to multiemployer health and welfare plans totaled $162.1 million, $162.2 million, and $153.3 million, for the year ended December 31, 2018, 2017, and 2016, respectively. The benefit contribution rate for health and welfare benefits increased by an average of approximately 3.9%, 3.7%, and 3.5% primarily on August 1, 2018, 2017, and 2016, respectively, under the ABF Freight’s collective bargaining agreement with the IBT. Other than changes to benefit contribution rates and variances in rates and time worked, there have been no other significant items that affect the comparability of the Company’s 2018, 2017, and 2016 multiemployer health and welfare plan contributions.

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