We sponsor a noncontributory defined benefit pension plan administered solely by us (the “pension plan”). Most of the participants in the plan are inactive, with the majority of the remaining active participants no longer accruing benefits; and the plan is closed to new entrants. Our funding policy for the pension plan is based on actuarial calculations and the applicable requirements of federal law. Benefits under the pension plan primarily are related to years of service.



	December 30, 2017			December 31, 2016
	(In thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of period	$	113,436		$	115,055
Service cost	633			996
Interest cost	4,663			4,901
Actuarial loss	5,808			2,094
Curtailment gain	(310		)	(181		)
Benefits paid	(5,418		)	(9,429		)
Projected benefit obligation at end of period	118,812			113,436
Change in plan assets:
Fair value of assets at beginning of period	79,087			78,264
Actual return on plan assets	11,109			4,868
Employer contributions	3,674			5,384
Benefits paid	(5,418		)	(9,429		)
Fair value of assets at end of period	88,452			79,087
Net unfunded status of plan	$	(30,360	)	$	(34,349	)

We recognize the unfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension plan in our Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of tax. On December 30, 2017, we measured the fair value of our plan assets and benefit obligations. As of December 30, 2017, and December 31, 2016, the net unfunded status of our benefit plan was $30.4 million and $34.3 million, respectively.

Historically, we estimated the service and interest cost components utilizing a single-weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. At the end of fiscal 2017, we changed the approach we use to determine the service and interest components of net periodic pension cost for our pension plan. This change is effective for pension (income)/expense that will be recognized during fiscal 2018 and future fiscal years. We have elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows. We have made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. We expect this to result in a decrease of expense of approximately $0.4 million for fiscal 2018 compared to the prior method. This change does not affect the measurement of our total benefit obligations.

Actuarial gains and losses occur when actual experience differs from the estimates used to determine the components of net periodic pension cost, and when certain assumptions used to determine the fair value of the plan assets or projected benefit obligation are updated; including but not limited to, changes in the discount rate, plan amendments, differences between actual and expected returns on plan assets, mortality assumptions, and plan re-measurement.

We amortize a portion of unrecognized actuarial gains and losses for the pension plan into our Consolidated Statements of Operations and Comprehensive Income (Loss). The amount recognized in the current year’s operations is based on amortizing the unrecognized gains or losses for the pension plan that exceed the larger of 10% of the projected benefit obligation or the fair value of plan assets, also known as the corridor. In the current fiscal year, the amount representing the unrecognized gain or loss that exceeds the corridor is amortized over the estimated average remaining life expectancy of participants, as almost all the participants in the plan are inactive.

The decrease in the unfunded obligation for the fiscal year was approximately $4.0 million and was comprised of $5.8 million of actuarial losses, $11.1 million of investment returns including an asset gain, $3.7 million of pension contributions, and a charge of $5.3 million due to current year service and interest cost. The net periodic pension cost decreased to a credit of $0.2 million in fiscal 2017, from expense of $0.8 million in fiscal 2016, driven primarily by a reduction in service cost due to pension curtailment activities.

In both fiscal 2017 and fiscal 2016, a freeze of certain unionized participants in the pension plan due to renegotiation of union contracts resulted in a reduction in future years of service for the remaining active participants in the plan, which triggered a curtailment. As a result, there was an immaterial curtailment gain from the event which resulted in an immaterial decrease to the projected benefit obligation in both fiscal 2017 and fiscal 2016.

In fiscal 2016, we offered a lump sum payment of accrued pension benefits to certain terminated vested participants who had accrued pension benefits under a certain threshold. In fiscal 2016, we paid approximately $4.3 million from pension plan assets to the participants who accepted the offer, which completed the fiscal 2016 lump sum offer. This offer did not result in a settlement of our benefit obligation. We may offer other or all terminated vested participants a lump sum offer in the future, and future lump sum amounts, when paid, may result in a settlement of our benefit obligation.



	December 30, 2017			December 31, 2016
	(In thousands)
Unfunded status	$	(30,360	)	$	(34,349	)
Unrecognized prior service cost	—			—
Unrecognized actuarial loss	33,884			34,014
Net amount recognized	$	3,524		$	(335	)
Amounts recognized on the balance sheet consist of:
Accrued pension liability	$	(30,360	)	$	(34,349	)
Accumulated other comprehensive loss (pre-tax)	33,884			34,014
Net amount recognized	$	3,524		$	(335	)



	Fiscal Year Ended December 30, 2017			Fiscal Year Ended December 31, 2016			Fiscal Year Ended January 2, 2016
	(In thousands)
Service cost	$	633		$	996		$	1,104
Interest cost on projected benefit obligation	4,663			4,901			5,099
Expected return on plan assets	(6,538		)	(6,224		)	(6,172		)
Amortization of unrecognized loss	1,056			1,126			699
Net periodic pension cost (credit)	$	(186	)	$	799		$	730



	December 30, 2017		December 31, 2016
Projected benefit obligation:
Discount rate	3.69	%	4.26	%
Average rate of increase in future compensation levels	Graded 5.5-2.5%		Graded 5.5-2.5%
Net periodic pension cost:
Discount rate	4.26	%	4.52	%
Average rate of increase in future compensation levels	Graded 5.5-2.5%		Graded 5.5-2.5%
Expected long-term rate of return on plan assets	8.10	%	7.82	%

Our estimates of the amount and timing of our future funding obligations for our defined benefit pension plan are based upon various assumptions specified above. These assumptions include, but are not limited to, the discount rate, projected return on plan assets, and mortality rates. The rate of increase in future compensation levels has a minimal effect on both the projected benefit obligation and net periodic pension cost, as almost all the participants in the plan are inactive, the majority of the remaining active participants are no longer accruing benefits, and the plan is closed to new entrants.

Projected return on plan assets. Historically, pension plan assets were managed under an investment strategy comprising two major components: equities, to generate long-term growth; and fixed income securities, to provide current income and stable periodic returns. As also discussed below, during fiscal 2017, the Investment Committee conducted a broad strategic review of its portfolio construction and investment allocation policies. Pension plan assets are now managed under a new balanced portfolio allocation policy comprised of two major components: a return-seeking portion and a liability-matching portion. The expected role of return-seeking investments is to achieve a reasonable long-term growth of pension assets with a prudent level of risk, while the role of liability-matching investments is to provide a partial hedge against liability performance associated with changes in interest rates. The objective within return-seeking investments is to achieve asset diversity in order to balance return and volatility.

The discount rate. Historically, we estimated the service and interest cost components utilizing a single-weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. At the end of fiscal 2017, we changed our approach, and elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows. We have made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates.

Mortality rates. The valuations and assumptions reflect adoption of the Society of Actuaries updated RP-2014 mortality tables, with a “blue collar employee” adjustment. Additionally, we use the most current generational projection scales, which were MP-2017 as of December 30, 2017 and MP-2016 as of December 31, 2016.

We base the asset return assumption on current and expected asset allocations, as well as historical and expected returns on the plan asset categories. The allocation of the plan’s assets impacts our expected return on plan assets. The expected return on plan assets is based on a targeted allocation consisting of return-seeking securities (including public equity, real assets and diversified credit investment strategies); liability-matching securities (fixed income); and cash and cash equivalents. Our net benefit cost increases as the expected return on plan assets decreases. We believe that our actual long-term asset allocations on average will approximate our targeted allocation. Our targeted allocation is driven by our investment strategy to earn a reasonable rate of return while maintaining risk at acceptable levels through the diversification of investments across and within various asset categories. For fiscal 2017, we used a 8.10% expected return on plan assets assumption which will decrease to 6.00% for fiscal 2018 with assets managed under a new balanced portfolio allocation.

During fiscal 2017, the Investment Committee conducted a broad strategic review of its portfolio construction and investment allocation policies. Pension assets are now managed under a new balanced portfolio allocation policy comprised of two major components: a return-seeking portion and a liability-matching portion. The expected role of return-seeking investments is to achieve a reasonable long-term growth of pension assets with a prudent level of risk, while the role of liability-matching investments is to provide a partial hedge against liability performance associated with changes in interest rates. The objective within return-seeking investments is to achieve asset diversity in order to balance return and volatility.



	Quoted prices in active markets of identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant other unobservable inputs (Level 3)		Total
	(In thousands)
Return-seeking securities
Corporate bonds ^(a)	$	10,393	$	—	$	—	$	10,393
Global equity securities ^(b)	25		—		—		25
Collective investment trust ^(c)	—		43,910		—		43,910
Liability-matching securities
Corporate bonds ^(d)	20,711		—		—		20,711
Collective investment trusts ^(e)	—		11,739		—		11,739
Cash and cash equivalents	1,674		—		—		1,674
Total	$	32,803	$	55,649	$	—	$	88,452

The fair value of the Level 1 assets was based on quoted prices in active markets for the identical assets. The fair value of the Level 2 assets was determined by management based on an assessment of valuations provided by asset management entities and was calculated by aggregating market prices for all underlying securities.

We believe that there are no significant concentrations of risk within our plan assets as of December 30, 2017. We comply with the rules and regulations promulgated under the Employee Retirement Income Security Act of 1974 (“ERISA”) and we prohibit investments and investment strategies not allowed by ERISA.

We fund the pension plan liability in accordance with the limits imposed by ERISA, federal income tax laws, and the funding requirements of the Pension Protection Act of 2006. We are required to make four quarterly cash contributions to the pension plan totaling approximately $4.3 million for fiscal funding year 2018.

We participate in several multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with certain CBAs. As one of many participating employers in these MEPPs, we are generally responsible with the other participating employers for any plan underfunding. Our contributions to a particular MEPP are established by the applicable CBAs; however, our required contributions may increase based on the funded status of an MEPP and legal requirements such as those of the Pension Protection Act of 2006 (“Pension Act”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions. A FIP or RP requires a particular MEPP to adopt measures to correct its underfunded status. These measures may include, but are not limited to: an increase in our contribution rate to the applicable CBA, a reallocation of the contributions already being made by participating employers for various benefits to individuals participating in the MEPP, and/or a reduction in the benefits to be paid to future and/or current retirees.

We could also be obligated to make future payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce our number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closures, assuming the MEPP has unfunded vested benefits. The amount of such payments (known as a complete or partial withdrawal liability) generally would equal our proportionate share of the plan’s unfunded vested benefits.



					Contributions (in millions)
Pension Fund:	EIN/Pension Plan Number	Pension Act Zone Status	FIP/RP Status	Surcharge	2017		2016		2015
Lumber Employees Local 786 Retirement Fund ⁽¹⁾	516067407	Green (September 1, 2015)	N/A	No	n/a		$	0.4	$	0.4
Central States, Southeast and Southwest Areas Pension Fund ⁽²⁾	366044243	Critical and Declining (January 1, 2017)	RP	No	0.7		0.6		0.7
Other					0.2		0.4		1.2
Total					$	0.9	$	1.4	$	2.3

⁽¹⁾ We withdrew from this plan in fiscal 2017, and recorded an estimated $5.0 million withdrawal liability on the Consolidated Balance Sheet in “other non-current liabilities,” and recorded an offsetting non-cash expense in the Consolidated Statement of Operations in “selling, general, and administrative” costs. We expect the liability to be paid over a 20-year period, with payments substantially similar on a total annual basis to those disclosed above.

⁽²⁾ Our contributions to this plan are approximately 0.13% of total contributions, which is less than the required disclosure threshold of 5% of total plan contributions. However, this plan is deemed significant for disclosure as it is severely underfunded, and we may, in the future, record a liability if required by an event of our withdrawal from the plan or a mass withdrawal. Our most recent contingent withdrawal liability was estimated at approximately $37.3 million, for a complete withdrawal occurring in fiscal 2018. In the case of both a complete withdrawal and a mass withdrawal, our payments to the Central States Plan would generally continue at approximately the current rate, which, even with potential rehabilitation increases, is less than $1.0 million per year. In a complete withdrawal, the payments would not amortize the liability fully; however, payments for a complete withdrawal are limited to a 20-year period. In the case of a mass withdrawal, the liability would never amortize, and payments would continue indefinitely.

Our employees also participate in two defined contribution plans: the “hourly savings plan” covering hourly employees, and the “salaried savings plan” covering salaried employees. Discretionary contributions to the plans are based on employee contributions and compensation; and, in certain cases, participants in the hourly savings plan also receive employer contributions based on union negotiated match amounts. Employer contributions to the hourly savings plan for fiscal 2017 and 2016 were $0.3 million and $0.2 million, respectively, and were $0.1 million for fiscal 2015.