PENSION PLANS

Company-Sponsored Pension Plans

The Company sponsors four defined benefit pension plans. Two are tax-qualified plans covering members of unions. Benefits under these two plans are based on a fixed amount for each year of service. One is a tax-qualified plan covering nonunion associates. Benefits under this plan are based upon percentages of annual compensation. Funding for these plans is based on an analysis of the specific requirements and an evaluation of the assets and liabilities of each plan. The fourth plan is an unfunded, nonqualified plan providing supplemental pension benefits to certain executives.

On November 29, 2016, the Company amended the Village Super Market Local 72 Retail Clerks Employees’ Retirement Plan, which covers union employees in the Stroudsburg store, to freeze all benefits effective January 31, 2017. As a result of this amendment, the Company recognized a pre-tax remeasurement gain totaling $629 in accumulated other comprehensive loss during fiscal 2017. The remeasurement had no impact on the consolidated statements of operations.

On February 15, 2016, the Company amended the Village Super Market Employees Retirement Plan, which covers nonunion employees and pharmacists, to freeze all benefits effective March 31, 2016. As a result of this amendment, the Company recognized a pre-tax curtailment gain totaling $17,904 in accumulated other comprehensive loss during fiscal 2016.

Net periodic pension cost for the four plans include the following components:



	2017			2016			2015
Service cost	$	388		$	3,099		$	3,642
Interest cost on projected benefit obligation	2,424			3,031			3,055
Expected return on plan assets	(3,684		)	(3,645		)	(3,719		)
Loss (gain) on settlement	965			—			(239		)
Amortization of gains and losses	1,343			1,504			1,295
Net periodic pension cost	$	1,436		$	3,989		$	4,034

The Company recognized a settlement loss (gain) of $965 and $(239) in fiscal 2017 and 2015, respectively, for plans where benefits paid exceeded the sum of the service cost and interest cost components of net periodic pension cost during the year.

The changes in benefit obligations and the reconciliation of the funded status of the Company’s plans to the consolidated balance sheets were as follows:



	2017			2016
Changes in Benefit Obligation:
Benefit obligation at beginning of year	$	80,021		$	83,961
Service cost	388			3,099
Interest cost	2,424			3,031
Benefits paid	(549		)	(3,440		)
Curtailment	—			(17,904		)
Settlement	(4,487		)	—
Actuarial loss	(6,096		)	11,274
Benefit obligation at end of year	$	71,701		$	80,021

Changes in Plan Assets:
Fair value of plan assets at beginning of year	$	53,281		$	51,729
Actual return on plan assets	5,262			1,468
Employer contributions	3,000			3,524
Benefits paid	(549		)	(3,440		)
Settlements paid	(4,487		)	—
Fair value of plan assets at end of year	56,507			53,281

Funded status at end of year	$	15,194		$	26,740

Amounts recognized in the consolidated balance sheets:
Pension liabilities	15,194			26,740
Accumulated other comprehensive loss, net of income taxes	7,406			13,339

Amounts included in Accumulated other comprehensive loss (pre-tax):
Net actuarial loss	$	12,521		$	22,502

The Company expects approximately $570 of the net actuarial loss to be recognized as a component of net periodic benefit costs in fiscal 2018.

The accumulated benefit obligations of the four plans were $71,701 and $80,021 at July 29, 2017 and July 30, 2016, respectively. The following information is presented for those plans with an accumulated benefit obligation in excess of plan assets:



	2017		2016
Projected benefit obligation	$	70,019	$	80,021
Accumulated benefit obligation	70,019		80,021
Fair value of plan assets	54,557		53,281

Weighted average assumptions used to determine benefit obligations and net periodic pension cost for the Company’s defined benefit plans were as follows:



	2017		2016		2015
Assumed discount rate — net periodic pension cost	3.08	%	4.02	%	3.95	%
Assumed discount rate — benefit obligation	3.60	%	3.08	%	4.02	%
Assumed rate of increase in compensation levels	4 - 4.5	%	4 - 4.5	%	4 - 4.5	%
Expected rate of return on plan assets	7.50	%	7.50	%	7.50	%

Investments in the pension trusts are overseen by the trustees of the plans, who are officers of Village. The Company’s overall investment strategy is to maintain a broadly diversified portfolio of stocks, bonds and money market instruments that, along with periodic plan contributions, provide the necessary funds for ongoing benefit obligations. Expected rates of return on plan assets are developed by determining projected stock and bond returns and then applying these returns to the target asset allocations of the trusts, resulting in a weighted-average rate of return on plan assets. Equity returns were based primarily on historical returns of the S&P 500 Index. Fixed-income projected returns were based primarily on historical returns for the broad U.S. bond market. The target allocations for plan assets are 50-70% equity securities, 25-40% fixed income securities and 0-10% cash. Asset allocations are reviewed periodically and appropriate rebalancing is performed.

Equity securities include investments in large-cap, small-cap and mid-cap companies located both in and outside the United States. Fixed income securities include U.S. treasuries, mortgage-backed securities and corporate bonds of companies from diversified industries. Investments in securities are made both directly and through mutual funds. In addition, one plan held Class A common stock of Village in the amount of $636 and $770 at July 29, 2017 and July 30, 2016, respectively.

Risk management is accomplished through diversification across asset classes and fund strategies, multiple investment portfolios and investment guidelines. The plans do not allow for investments in derivative instruments.

The fair value of the pension assets were as follows:



	July 29, 2017						July 30, 2016
Asset Category	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash	$	166	$	610	$	776	$	1,173	$	—	$	1,173

Equity securities:
Company stock	636		—		636		770		—		770
U.S large cap (1)	19,696		1,197		20,893		18,416		—		18,416
U.S. small/mid cap (2)	6,644		179		6,823		6,591		—		6,591
International (3)	7,187		421		7,608		6,752		—		6,752
Emerging markets (4)	1,277		—		1,277		1,219		—		1,219

Fixed income securities:
U.S treasuries (5)	9,520		356		9,876		10,560		—		10,560
Mortgage-backed (5)	1,783		106		1,889		—		1,918		1,918
Corporate bonds (5)	2,931		3,179		6,110		3,054		2,140		5,194
International (6)	619		—		619		688		—		688

Total	$	50,459	$	6,048	$	56,507	$	49,223	$	4,058	$	53,281


(1)	Includes directly owned securities and mutual funds, primarily low-cost equity index funds not actively managed that track the S&P 500.


(2)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded U.S. common stocks of small and medium cap companies.


(3)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded common stocks of large, non-U.S. companies.


(4)	Consists of mutual and exchange traded funds which invest in non-U.S. stocks in emerging markets.


(5)	Includes directly owned securities, mutual funds and exchange traded funds.


(6)	Consists of exchange traded funds which invest in non-U.S. bonds in emerging markets.

Based on actuarial assumptions, estimated future defined benefit payments, which may be significantly impacted by participant elections related to retirement dates and forms of payment, are as follows:



Fiscal Year
2018	$	3,670
2019	2,530
2020	3,130
2021	3,101
2022	12,750
2023 - 2027	17,830

The Company expects to contribute $3,500 in cash to all defined benefit pension plans in fiscal 2018.

Multi-Employer Plans

The Company contributes to three multi-employer pension plans under collective bargaining agreements covering union-represented employees. These plans provide benefits to participants that are generally based on a fixed amount for each year of service. Based on the most recent information available, certain of these multi-employer plans are underfunded. The amount of any increase or decrease in Village’s required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations and the actual return on assets held in the plans, among other factors.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects:


•	Assets contributed to a multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.


•	If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers.


•	If the Company stops participating in some of its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans is outlined in the following tables. The “EIN / Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent “Pension Protection Act Zone Status” available in 2016 and 2015 is for the plan’s year-end at December 31, 2016 and December 31, 2015, respectively, unless otherwise noted. Among other factors, generally, plans in the red zone are less than 65 percent funded, plans in the yellow zone are between 65 and 80 percent funded and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending / Implemented” column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented.



		Pension Protection Act Zone Status		FIP/RP Status Pending / Implemented	Contributions for the year ended (5)							Expiration date of Collective- Bargaining Agreement
Pension Fund	EIN / Pension Plan Number	2016	2015	FIP/RP Status Pending / Implemented	July 29, 2017		July 30, 2016		July 25, 2015		Surcharge Imposed (6)	Expiration date of Collective- Bargaining Agreement
Pension Plan of Local 464A (1)	22-6051600-001	Green	Green	N/A	$	762	$	679	$	665	N/A	October 2020
UFCW Local 1262 & Employers Pension Fund (2), (4)	22-6074414-001	Red	Red	Implemented	3,498		3,510		3,501		No	October 2018
UFCW Regional Pension Plan (3), (4)	16-6062287-074	Red	Red	Implemented	1,314		1,275		1,235		No	March 2019
Total Contributions					$	5,574	$	5,464	$	5,401


(1)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at December 31, 2016 and December 31, 2015.


(2)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at December 31, 2015 and December 31, 2014.


(3)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at September 30, 2016 and September 30, 2015.


(4)	This plan has elected to utilize special amortization provisions provided under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010. There were no changes to the plan’s zone status as a result of this election.


(5)	The Company’s contributions represent more than 5% of the total contributions received by each applicable pension fund for all periods presented.


(6)	Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is not in compliance with a rehabilitation plan. As of July 29, 2017, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by each applicable pension fund.

Other Multi-Employer Benefit Plans

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits to active and retired participants. Total contributions made by the Company to these other multi-employer benefit plans were approximately $28,137, $27,965 and $26,932 in fiscal 2017, 2016 and 2015, respectively.

Defined Contribution Plans

The Company sponsors a 401(k) savings plan for certain eligible associates. Company contributions under that plan, which are based on specified percentages of associate contributions, were $1,132, $641 and $392 in fiscal 2017, 2016 and 2015, respectively. The Company also contributes to union sponsored defined contribution plans for certain eligible associates. Company contributions under these plans were $783, $836 and $817 in fiscal 2017, 2016 and 2015, respectively.