Defined Benefit Pension Plans and Other Postretirement Benefit Plans

Defined Benefit Pension Plans

The Company previously sponsored a non-contributory, defined benefit pension plan. As of January 1, 1996, the Company amended the plan to change the pension benefit formula to a cash balance formula from the then existing benefit calculation based upon years of service and final average pay. The benefits accrued under the old formula were frozen as of December 31, 1995. Upon retirement, the participant will receive this accrued benefit payable as an annuity. In addition, the participant will receive as a lump sum (or annuity if desired) the amount credited to the participant’s cash balance account under the new formula. Effective January 1, 2005, the Company froze the defined benefit cash balance plan which prevents any new entrants into the plan as of that date as well as affects the amounts credited to the participants’ accounts as discussed below.

Under the cash balance formula, beginning January 1, 1996, the Company credits each participants’ account annually with an amount equal to 4% of the participant’s compensation plus 4% of the participant’s compensation in excess of the Social Security taxable wage base. Beginning December 31, 1996 and annually thereafter, the account balance of each active participant was credited with 7% interest calculated on the sum of the balance as of the beginning of the plan year and 50% of the amounts credited to the account, other than interest, for the plan year. The account balance of each participant who was inactive would be credited with interest at the lesser of 7% or the 30 year Treasury rate. Under the frozen plan, each participants’ cash balance plan account will be credited annually only with interest at the 30 year Treasury rate, not to exceed 7%, until the participant retires. The amount credited each year will be based on the rate at the end of the prior year.

In June 2016, the Company's board of directors authorized an offer to vested former employees and active employees over the age of 62 in the Company's defined benefits pension plan to buy out their future benefits under the plan for a lump sum cash payment. The Company made the buyout offer in the third quarter of Fiscal 2017, and completed it in the fourth quarter of Fiscal 2017. The Company incurred a one-time charge to earnings of $2.5 million in the fourth quarter of Fiscal 2017 in connection with the pension plan buyout.

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

Other Postretirement Benefit Plans

The Company provides health care benefits for early retirees and life insurance benefits for certain retirees not covered by collective bargaining agreements. Under the health care plan, early retirees are eligible for benefits until age 65. Employees who meet certain requirements are eligible for life insurance benefits upon retirement. The Company accrues such benefits during the period in which the employee renders service.

Obligations and Funded Status

The measurement date of the assets and liabilities for the defined benefit pension plan and postretirement medical and life insurance plans is the month-end date that is closest to the Company's fiscal year end.

Change in Benefit Obligation



	Pension Benefits						Other Benefits
In thousands	2017			2016			2017			2016
Benefit obligation at beginning of year	$	100,290		$	125,764		$	6,826		$	6,886
Service cost	550			450			704			821
Interest cost	4,118			4,263			286			245
Plan participants’ contributions	—			—			158			124
Plan settlements	(13,862		)	—			—			—
Curtailment gain	—			—			—			(755		)
Benefits paid	(8,308		)	(8,841		)	(257		)	(341		)
Actuarial (gain) loss	4,159			(21,346		)	1,226			(154		)
Benefit Obligation at End of Year	$	86,947		$	100,290		$	8,943		$	6,826

Change in Plan Assets



	Pension Benefits						Other Benefits
In thousands	2017			2016			2017			2016
Fair value of plan assets at beginning of year	$	90,333		$	103,580		$	—		$	—
Actual gain (loss) on plan assets	12,531			(4,406		)	—			—
Plan settlements	(13,874		)	—			—			—
Employer contributions	—			—			99			217
Plan participants’ contributions	—			—			158			124
Benefits paid	(8,308		)	(8,841		)	(257		)	(341		)
Fair Value of Plan Assets at End of Year	$	80,682		$	90,333		—			—
Funded Status at End of Year	$	(6,265	)	$	(9,957	)	$	(8,943	)	$	(6,826	)

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

Amounts recognized in the Consolidated Balance Sheets consist of:



	Pension Benefits						Other Benefits
In thousands	2017			2016			2017			2016
Current liabilities	$	—		$	—		$	(343	)	$	(274	)
Noncurrent liabilities	(6,265		)	(9,957		)	(8,600		)	(6,552		)
Net Amount Recognized	$	(6,265	)	$	(9,957	)	$	(8,943	)	$	(6,826	)

Amounts recognized in accumulated other comprehensive income consist of:



	Pension Benefits				Other Benefits
In thousands	2017		2016		2017		2016
Net loss	$	15,430	$	21,415	$	2,518	$	1,417
Total Recognized in Accumulated Other Comprehensive Loss	$	15,430	$	21,415	$	2,518	$	1,417

Amounts for projected and accumulated benefit obligation and fair value of plan assets are as follows:



In thousands	January 28, 2017		January 30, 2016
Projected benefit obligation	$	86,947	$	100,290
Accumulated benefit obligation	86,947		100,290
Fair value of plan assets	80,682		90,333

Components of Net Periodic Benefit Cost

Net Periodic Benefit Cost



	Pension Benefits									Other Benefits
In thousands	2017			2016			2015			2017		2016		2015
Service cost	$	550		$	450		$	450		$	704	$	821	$	526
Interest cost	4,118			4,263			4,664			286		245		226
Expected return on plan assets	(5,641		)	(5,785		)	(6,069		)	—		—		—
Settlement loss recognized	2,456			—			—			—		—		—
Amortization:
Prior service cost	—			—			—			—		—		—
Losses	810			4,948			3,546			125		189		102
Net amortization	$	810		$	4,948		$	3,546		$	125	$	189	$	102
Net Periodic Benefit Cost	$	2,293		$	3,876		$	2,591		$	1,115	$	1,255	$	854

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

Reconciliation of Accumulated Other Comprehensive Income



	Pension Benefits			Other Benefits
In thousands	2017			2017
Net (gain) loss	$	(2,729	)	$	1,226
Amortization of net actuarial loss	(3,256		)	(125		)
Total Recognized in Other Comprehensive Income	$	(5,985	)	$	1,101
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	(3,692	)	$	2,216

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year

are $0.9 million and $0.0 million, respectively. The estimated net loss for the other postretirement benefit plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.2 million.

Weighted-average assumptions used to determine benefit obligations



	Pension Benefits				Other Benefits
	2017		2016		2017		2016
Discount rate	3.95	%	4.30	%	3.98	%	4.04	%
Rate of compensation increase	NA		NA		—		—

For Fiscal 2017 and 2016, the discount rate was based on a yield curve of high quality corporate bonds with cash flows matching the Company’s planned expected benefit payments.

The decrease in the discount rate for Fiscal 2017 increased the accumulated benefit obligation by $3.2 million and increased the projected benefit obligation by $3.2 million. The increase in the discount rate for Fiscal 2016 decreased the accumulated benefit obligation by $7.5 million and decreased the projected benefit obligation by $7.5 million.

Weighted-average assumptions used to determine net periodic benefit costs



	Pension Benefits						Other Benefits
	2017		2016		2015		2017		2016		2015
Discount rate	4.30	%	3.55	%	4.40	%	4.04	%	3.31	%	4.40	%
Expected long-term rate of return on plan assets	6.35	%	6.35	%	6.75	%	—		—		—
Rate of compensation increase	NA		NA		NA		—		—		—

To develop the expected long-term rate of return on assets assumption, the Company considered historical asset returns, the current asset allocation and future expectations. Considering this information, the Company selected a 6.35% long-term rate of return on assets assumption.

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

Assumed health care cost trend rates



	2017		2016
Health care cost trend rate assumed for next year	8.0	%	7.5	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5	%	5	%
Year that the rate reaches the ultimate trend rate	2027		2021

The effect on disclosed information of one percentage point change in the assumed health care cost trend rate for each future year is shown below.



In thousands	1% Increase in Rates		1% Decrease in Rates
Aggregated service and interest cost	$	142	$	237
Accumulated postretirement benefit obligation	$	1,427	$	1,169

Plan Assets

The Company’s pension plan weighted average asset allocations as of January 28, 2017 and January 30, 2016, by asset category are as follows:



	Plan Assets
	January 28, 2017		January 30, 2016
Asset Category
Equity securities	65	%	64	%
Debt securities	35	%	36	%
Total	100	%	100	%

The investment strategy of the trust is to ensure over the long-term an asset pool, that when combined with Company contributions, will support benefit obligations to participants, retirees and beneficiaries. Investment management responsibilities of plan assets are delegated to outside investment advisers and overseen by an Investment Committee comprised of members of the Company’s senior management that are appointed by the Board of Directors. The Company has an investment policy that provides direction on the implementation of this strategy.

The investment policy establishes a target allocation for each asset class and investment manager. The actual asset allocation versus the established target is reviewed at least quarterly and is maintained within a +/- 5% range of the target asset allocation. Target allocations are 50% domestic equity, 13% international equity, 35% fixed income and 2% cash investments.

All investments are made solely in the interest of the participants and beneficiaries for the exclusive purposes of providing benefits to such participants and their beneficiaries and defraying the expenses related to administering the trust as determined by the Investment Committee. All assets shall be properly

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

diversified to reduce the potential of a single security or single sector of securities having a disproportionate impact on the portfolio.

The Committee utilizes an outside investment consultant and investment managers to implement its various investment strategies. Performance of the managers is reviewed quarterly and the investment objectives are consistently evaluated.

At January 28, 2017 and January 30, 2016, there were no Company related assets in the plan.

Generally, quoted market prices are used to value pension plan assets. Equities, some fixed income securities, publicly traded investment funds and U.S. government obligations are valued at the closing price reported on the active market on which the individual security is traded.

The following tables present the pension plan assets by level within the fair value hierarchy as of January 28, 2017 and January 30, 2016.



January 28, 2017 (In thousands)	Level 1			Level 2		Level 3		Total
Equity Securities:
International securities	$	10,367		$	—	$	—	$	10,367
U.S. securities	42,041			—		—		42,041
Fixed Income Securities	27,987			—		—		27,987
Other:
Cash Equivalents	426			—		—		426
Other (includes receivables and payables)	(139		)	—		—		(139		)
Total Pension Plan Assets	$	80,682		$	—	$	—	$	80,682



January 30, 2016 (In thousands)	Level 1			Level 2		Level 3		Total
Equity Securities:
International securities	$	11,464		$	—	$	—	$	11,464
U.S. securities	46,012			—		—		46,012
Fixed Income Securities	32,573			—		—		32,573
Other:
Cash Equivalents	291			—		—		291
Other (includes receivables and payables)	(7		)	—		—		(7		)
Total Pension Plan Assets	$	90,333		$	—	$	—	$	90,333

Cash Flows

Return of Assets

There was no return of assets from the plan to the Company in Fiscal 2017 and no plan assets are projected to be returned to the Company in Fiscal 2018.

Note 10

Defined Benefit Pension Plans and Other Postretirement Benefit Plans, Continued

Contributions

There was no Employee Retirement Income Security Act of 1974, as amended ("ERISA") cash requirement for the plan in 2016 and none is projected to be required in 2017. It is the Company’s policy to contribute enough cash to maintain at least an 80% funding level.

Estimated Future Benefit Payments

Expected benefit payments from the trust, including future service and pay, are as follows:



Estimated future payments	Pension Benefits ($ in millions)		Other Benefits ($ in millions)
2017	$	7.3	$	0.3
2018	7.2		0.4
2019	7.0		0.4
2020	6.8		0.4
2021	6.6		0.5
2022 – 2026	30.0		2.4

Section 401(k) Savings Plan

The Company has a Section 401(k) Savings Plan available to employees who have completed one full year of service and are age 21 or older.

Since January 1, 2005, the Company has matched 100% of each employee’s contribution of up to 3% of salary and 50% of the next 2% of salary. In addition, for those employees hired before December 31, 2004, who were eligible for the Company’s cash balance retirement plan before it was frozen, the Company annually makes an additional contribution of 2 1/2 % of salary to each employee’s account. In calendar 2005 and future years, participants are immediately vested in their contributions and the Company’s matching contribution plus actual earnings thereon. The contribution expense to the Company for the matching program was approximately $5.5 million for Fiscal 2017, $6.0 million for Fiscal 2016 and $5.5 million for Fiscal 2015.