8. Employee Benefit Plans

Pension and Other Postretirement Benefits

The Company sponsors a defined benefit pension plan, with benefits frozen as of March 1, 2012, and postretirement health and life insurance benefits for union employees. The Company also sponsors a cash balance pension plan for nonunion employees, with benefits frozen as of April 1, 2007, and certain management employees receive postretirement health and life insurance under grandfathered provisions of a terminated plan. In January 2017, the Company amended the postretirement health benefits plan for certain management employees by implementing a cap on the amount of the premium subsidy at 2017 levels. This curtailment of benefits will be recognized for financial reporting purposes in 2017.

The change in projected benefit obligation, change in plan assets, funded status and weighted average actuarial assumptions were as follows (dollars in thousands):


	Pension Benefits						Other Postretirement Benefits
	December 31,						December 31,
	2016			2015			2016			2015
Change in projected benefit obligation:
Obligation at beginning of period	$	203,455		$	248,505		$	60,749		$	59,830
Service cost		—			—			1,104			1,088
Interest cost		7,347			8,073			2,637			2,355
Actuarial (gain) loss		3,686			6,699			11,036			(765)
Benefits paid		(11,172)			(59,822)			(1,737)			(1,759)
Obligation at end of period		203,316			203,455			73,789			60,749
Change in plan assets:
Fair value of plan assets at beginning of period		156,678			206,309			—			—
Actual return on plan assets		13,032			852			—			—
Employer contributions		9,305			9,339			1,737			1,759
Benefits paid		(11,172)			(59,822)			(1,737)			(1,759)
Fair value of plan assets at end of period		167,843			156,678			—			—
Funded status:
Plan assets less than projected benefit obligation	$	(35,473)		$	(46,777)		$	(73,789)		$	(60,749)
Amounts recognized on balance sheet:
Other current liabilities	$	—		$	—		$	(3,332)		$	(2,929)
Employee benefit obligation, noncurrent		(35,473)			(46,777)			(70,457)			(57,820)
Net amount recognized	$	(35,473)		$	(46,777)		$	(73,789)		$	(60,749)
Actuarial loss recognized in accumulated other comprehensive income (loss)	$	(36,919)		$	(37,945)		$	(20,040)		$	(9,577)
Actuarial assumptions:
Measurement date		12/31/2016			12/31/2015			12/31/2016			12/31/2015
Discount rate ranges from a low of		3.81	%		4.09	%		4.03	%		4.32	%
Discount rate ranges to a high of		3.85	%		4.10	%		4.25	%		4.56	%
Assumed health care cost trend rate, current		NA			NA			7.25	%		7.50	%
Assumed health care cost trend rate, ultimate		NA			NA			5.00	%		5.00	%
Assumed health care cost trend rate, ultimate year		NA			NA			2026			2026

During the year ended December 31, 2016, the Company’s union pension plan paid lump-sum benefits to plan participants in full settlement of obligations due amounting to $7.1 million. This resulted in the recognition of a loss amounting to $1.3 million for the year ended December 31, 2016. During the year ended December 31, 2015, the Company’s pension plans paid lump-sum benefits to plan participants in full settlement of obligations due amounting to $55.9 million. This resulted in the recognition of a loss amounting to $8.1 million for the year ended December 31, 2015.

The estimated amount of the actuarial loss to be amortized from accumulated other comprehensive income (loss) during 2017 is $0.5 million for pension benefits and $1.5 million for other postretirement benefits.

The Company accrues the service costs of pension and postretirement benefits over the period from the date of hire until the date the employee becomes fully eligible for benefits. The following provides the components of benefit costs and weighted average actuarial assumptions for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands):

Pension Benefits


	For the For the Year Ended
	December 31,
	2016			2015			2014
Interest cost	$	7,347		$	7,994		$	8,844
Expected asset return		(10,172)			(12,565)			(12,664)
Amortization of loss		574			186			135
Net periodic benefit income		(2,251)			(4,385)			(3,685)
Settlement loss		1,277			8,088			—
Total benefit (income) expense	$	(974)		$	3,703		$	(3,685)
Actuarial assumptions:
Discount rate ranges from a low of		3.28	%		3.54	%		4.40	%
Discount rate ranges to a high of		4.10	%		4.09	%		4.62	%
Expected return on plan assets		7.00	%		7.25	%		7.25	%

Other Postretirement Benefits


	For the For the Year Ended
	December 31,
	2016			2015			2014
Service cost	$	1,104		$	1,088		$	897
Interest cost		2,637			2,355			2,384
Amortization of loss		573			588			60
Total benefit expense	$	4,314		$	4,031		$	3,341
Actuarial assumptions:
Discount rate range from a low of		4.32	%		3.97	%		4.75	%
Discount rate range to a high of		4.56	%		4.15	%		5.01	%
Assumed health care cost trend rate, current		7.50	%		6.75	%		7.00	%
Assumed health care cost trend rate, ultimate		5.00	%		5.00	%		5.00	%
Assumed health care cost trend rate, ultimate year		2026			2022			2022

The measurement date for all plans was December 31, 2016, 2015 and 2014. At December 31, 2016 and 2015, the accumulated benefit obligation was the same as the projected benefit obligation.

The Company based its selection of an assumed discount rate for 2017 net periodic benefit cost and December 31, 2016 disclosure on a cash flow matching analysis that utilized bond information provided from a bond index for all non-callable, high quality bonds (i.e., rated AA- or better) as of December 31, 2016. The matching of bond income to anticipated benefit cash flows and the basic methods of selecting the assumed discount rate and expected return on plan assets at December 31, 2016 did not change from December 31, 2015.

In selecting the expected rate of return on plan assets of 7.00% for 2017 net periodic benefit cost, the Company considered economic forecasts for the types of investments held by the plans (primarily equity and fixed income investments), the plans’ asset allocations and the past performance of the plans’ assets. The expected rate of return on plan assets was based on various factors including historical experience and long-term inflation assumptions. The Company’s expected long-term rate of return on plan assets is determined using the target allocation of assets which is based on the goal of earning the highest rate of return while maintaining risk at acceptable levels. The plan strives to have assets sufficiently diversified so that adverse or unexpected results from a security class will not have a significant adverse impact on the entire portfolio.

The Company’s overall investment strategy is to primarily invest for long‑term growth with sufficient investments available to fund near‑term benefit payments. The Company aims for diversification of asset types, fund strategies and fund managers. The target allocations for plan assets are 65 percent equity securities and 35 percent fixed income securities. Equity securities primarily include investments in equity funds and common stock of individual companies. Together these investments are diversified in both large and small cap companies located in the United States and internationally. Fixed income securities are in funds that invest in bonds of companies from diversified industries, mortgage‑backed securities and U.S. Treasuries.

Accounting standards establish a fair value hierarchy when measuring the fair value of pension plan assets. The three levels of inputs within the hierarchy are defined as follows. Level 1 is quoted prices for identical assets or liabilities in active markets. Level 2 is significant other observable inputs other than level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 is significant unobservable inputs that reflect the Company’s own assumptions as to how market participants would price an asset.

The fair values of the Company’s pension plan assets at December 31, 2016 and 2015, based on trading values or fund net asset value, by asset category and basis of valuation, are as follows (dollars in thousands):


	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
2016
Common stocks - domestic large cap	$	10,201	$	—	$	—	$	10,201
Equity funds - large cap index		—		93,576		—		93,576
Fixed income funds - diversified bond		—		63,613		—		63,613
Short term investment funds		—		453		—		453
	$	10,201	$	157,642	$	—	$	167,843
2015
Common stocks - domestic large cap	$	8,954	$	—	$	—	$	8,954
Equity funds - large cap index		—		85,874		—		85,874
Fixed income funds - diversified bond		—		61,300		—		61,300
Short term investment funds		—		550		—		550
	$	8,954	$	147,724	$	—	$	156,678

The fair values of the financial instruments shown in the table above represent the Company’s best estimates of the amounts that would be received upon sale of those assets in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset at the measurement date, the fair value measurement reflects the Company’s judgments about the assumptions that market participants would use in pricing the asset. Those judgments are developed by the Company based on the best information available in the circumstances.

The Company used the following valuation methodologies for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015.

Common stocks (Level 1) were valued at the closing price reported on the active market on which the individual securities are traded.

Fixed income funds, equity funds, and short term investment funds (Level 2) were valued as follows. Fixed income funds are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Equity funds and short term investment funds include commingled equity funds that are not open to public investment and are valued at the net asset value per share.

All contributions made were as required by law. The Company expects to contribute $4.8 million to its defined benefit pension plans in 2017. The Company expects to contribute $3.3 million to its other postretirement benefit plans in 2017.

The Company projects that its plans will make the following benefit payments for the years ended December 31 (dollars in thousands):


			Other
	Pension Plans		Postretirement
	Benefits Paid		Benefits Paid
2017	$	36,396	$	3,332
2018		16,592		3,637
2019		13,013		3,749
2020		13,261		3,872
2021		12,470		3,938
2022 through 2026		59,733		19,560
	$	151,465	$	38,088

Assumed health care costs trend rates have a significant impact on the amounts reported for other postretirement benefits. A one‑percentage point change in the assumed health care cost trend rates would have the following annual effects (dollars in thousands):


	1-Percentage		1-Percentage
	Point Increase		Point Decrease
Effect on total of service and interest costs components	$	335	$	(264)
Effect on postretirement benefit obligation		7,012		(5,524)

401(k) Plan

The Company participates in two 401(k) employee savings plans that allow for voluntary contributions into designated investment funds by eligible employees with the Company matching employee contributions, up to a maximum of 10% of compensation for union employees and 6% of compensation for non-union employees. Company contributions were $5.1 million, $5.0 million and $5.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.