Note G – Pensions and Other Postretirement Benefits

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective

January

2008.

Employees hired after this date, in eligible locations, participate in an enhanced

401(k)

plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. Total contributions to the plans were

$1.6

million in each of the years

2016,

2015

and

2014.

The Company also sponsors a non-contributory defined benefit postretirement health care plan that provides health benefits to certain domestic and Canadian retirees and their spouses. The Company funds the cost of these benefits as incurred. For measurement purposes, and based on maximum benefits as defined by the plan, a

zero

percent annual rate of increase in the per capita cost of covered health care benefits for domestic retirees age

and over was assumed for

2016

and is expected to remain constant going forward. A

rate of increase for all employees under age

and Canadian retirees over age

was assumed.

The Company recognizes the obligations associated with its defined benefit pension plan and defined benefit postretirement health care plan in its consolidated financial statements. The following table presents the plans’ funded status as of the measurement date reconciled with amounts recognized in the Company’s consolidated balance sheets:

	Pension Plan						Postretirement Plan
	2016			2015			2016			2015
Accumulated benefit obligation at end of year	$	64,033		$	63,830		$	22,340		$	22,430
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	77,600		$	80,069		$	22,430		$	22,813
Service cost		2,837			3,064			1,192			1,194
Interest cost		2,643			2,640			842			790
Settlement		-			1,431			-			–
Benefits paid		(5,510	)		(10,069	)		(1,637	)		(1,094	)
Effect of foreign exchange		-			–			7			(94	)
Actuarial (gain) loss		(463	)		465			(494	)		(1,179	)
Benefit obligation at end of year	$	77,107		$	77,600		$	22,340		$	22,430

Change in plan assets:
Plan assets at beginning of year	$	68,291		$	75,573		$	-		$	-
Actual return on plan assets		4,537			(1,213	)		-			–
Employer contributions		16,000			4,000			1,637			1,094
Benefits paid		(5,510	)		(10,069	)		(1,637	)		(1,094	)
Plan assets at end of year		83,318			68,291			-			–
Funded status at end of year	$	6,211		$	(9,309	)	$	(22,340	)	$	(22,430	)


Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets	$	6,211		$	-		$	-		$	-
Current liabilities		-			-			(1,631	)		(1,646	)
Noncurrent liabilities		-			(9,309	)		(20,709	)		(20,784	)
Total assets (liabilities)	$	6,211		$	(9,309	)	$	(22,340	)	$	(22,430	)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss (gain)	$	27,041		$	29,992		$	(7,890	)	$	(8,082	)
Deferred tax (benefit) expense		(10,506	)		(11,590	)		2,978			3,038
After tax actuarial loss (gain)	$	16,535		$	18,402		$	(4,912	)	$	(5,044	)

Components of net periodic benefit cost :
	2016			2015			2014
Pension Plan
Service cost	$	2,837		$	3,064		$	2,904
Interest cost		2,643			2,640			2,895
Expected return on plan assets		(4,150	)		(4,060	)		(4,755	)
Recognized actuarial loss		2,101			2,230			1,664
Settlement loss		-			3,783			-
Net periodic benefit cost	$	3,431		$	7,657		$	2,708

	2016			2015			2014
Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss:
Net (gain) loss	$	(2,952	)	$	1,156		$	4,541
Total expense recognized in net periodic benefit cost and other comprehensive income	$	479		$	8,813		$	7,249

Postretirement Plan
Service cost	$	1,192		$	1,194		$	907
Interest cost		842			790			845
Recognized actuarial gain		(699	)		(649	)		(1,181	)
Net periodic benefit cost	$	1,335		$	1,335		$	571

Other changes in postretirement plan assets and benefit obligations recognized in other comprehensive loss:
Net gain (loss)	$	205		$	(529	)	$	4,233
Total expense recognized in net periodic benefit cost and other comprehensive income		1,540		$	806		$	4,804

During

2015,

the Company recorded a settlement loss relating to retirees that received lump-sum distributions from the Company’s defined benefit pension plan totaling

$3.8

million. This charge was the result of lump-sum payments to retirees which exceeded the Plan’s actuarial service and interest cost thresholds in

2015.

settlement loss was incurred in

2016

2014.

The prior service cost is amortized on a straight-line basis over the average estimated remaining service period of active participants. The unrecognized actuarial gain or loss in excess of the greater of

10%

of the benefit obligation or the market value of plan assets is also amortized on a straight-line basis over the average estimated remaining service period of active participants.

	Pension Plan						Postretirement Plan
	2016			2015			2016			2015
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate		3.60	%		3.70	%		3.77	%		3.90	%
Rate of compensation increase		3.50	%		3.50	%		–			–
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate		3.70	%		3.67	%		3.90	%		3.60	%
Expected long-term rate of return on plan assets		6.00	%		6.00	%		–			–
Rate of compensation increase		3.50	%		3.50	%		–			–

To enhance the Company’s efforts to mitigate the impact of the defined benefit pension plan on its financial statements, in

2014

the Company moved towards a liability driven investing model to more closely align assets with liabilities based on when the liabilities are expected to come due. Currently, based on

2016

funding levels, equities

may

comprise between

14%

and

34%

of the Plan’s market value. Fixed income investments

may

comprise between

60%

and

80%

of the Plan’s market value. Alternative investments

may

comprise between

and

12%

of the Plan’s market value. Cash and cash equivalents (including all senior debt securities with less than

one

year to maturity)

may

comprise between

and

10%

of the Plan’s market value.

Financial instruments included in pension plan assets are categorized into a fair value hierarchy of

three

levels, based on the degree of subjectivity inherent in the valuation methodology. Level

assets are based on unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets. Level

assets are valued at inputs other than quoted prices in active markets for identical assets that are observable either directly or indirectly for substantially the full term of the assets. Level

assets are valued based on unobservable inputs for the asset (i.e., supported by little or no market activity). These inputs include management’s own assessments about the assumptions that market participants would use in pricing assets (including assumptions about risk). The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety.

All of the Plan’s assets in the following table sets forth by asset class the Plan’s fair value of assets.

Plan fair value asset allocation by category:

2016		$	%
Level 1:
Equity	$	19,752		24	%

Fixed income		11,805		14	%
Mutual funds		-		-
Money funds and cash		11,134		13	%
Total Level 1		42,691		51	%
Level 2:
Fixed income		40,597		49	%
Money fund		-		-
Total Level 2		40,597		49	%
Level 3:
Equity		30		-
Total Level 3		30		-
Total fair value of Plan assets	$	83,318		100	%

2015		$	%
Level 1:
Equity	$	16,908		25	%
Fixed income		1,468		2	%
Mutual funds		3,476		5	%
Money funds and cash		1,011		1	%
Total Level 1		22,863		33	%
Level 2:
Fixed income		41,984		62	%
Money fund		3,428		5	%
Total Level 2		45,412		67	%
Level 3:
Total Level 3		-		-
Total fair value of Plan assets	$	68,275		100	%

Contributions

The Company

may

contribute

million to

million to its defined benefit pension plan in

2017.

Expected future benefit payments

The following benefit payments are expected to be paid as follows based on actuarial calculations:

	2017		2018		2019		2020		2021		Thereafter
Pension	$	6,611	$	5,420	$	6,029	$	6,617	$	6,345	$	29,054
Postretirement		1,660		1,678		1,662		1,690		1,694		8,878

one

percentage point increase in the assumed health care trend rate would increase postretirement expense by approximately

$270,000,

changing the benefit obligation by approximately

$2.0

million; while a

one

percentage point decrease in the assumed health care trend rate would decrease postretirement health care expense by approximately

$231,000,

changing the benefit obligation by approximately

$1.7

million. The assumed trend rates for healthcare costs are a

increase per year for retirees prior to the age

and

for retirees post age

65.

rate of increase for all employees under age

and Canadian retirees over age

was assumed.

one

percentage point change in the assumed rate of return on the defined benefit pension plan assets is estimated to have an approximate

$692,000

effect on pension expense. Additionally, a

one

percentage point increase in the discount rate is estimated to have a

$1.4

million decrease in pension expense, while a

one

percentage point decrease in the discount rate is estimated to have a

$1.7

million increase in pension expense.