21.	Benefit Plans

Executive Benefit Plans

The Company has four executive benefit plans: the Supplemental Savings Incentive Plan (“Supplemental Savings Plan”), the Long-Term Retention Plan (“LTRP”), the Officer Retention Plan (“Retention Plan”) and the Long-Term Performance Plan (“Performance Plan”).

Pursuant to the Supplemental Savings Plan, as amended, eligible participants may elect to defer a portion of their annual salary and bonus. Participants are immediately vested in all deferred contributions they make and become fully vested in Company contributions upon completion of five years of service, termination of employment due to death or retirement or a change in control. Participant deferrals and Company contributions made in years prior to 2006 are invested in either a fixed benefit option or certain investment funds specified by the Company. Beginning in 2010, the Company may elect at its discretion to match up to 50% of the first 6% of salary, excluding bonuses, deferred by the participant. During 2017, 2016 and 2015, the Company matched up to 50% of the first 6% of salary, excluding bonus, deferred by the participant. The Company may also make discretionary contributions to participants’ accounts. The liability under this plan was as follows:

(in thousands)	December 31, 2017		January 1, 2017
Current liabilities	$	8,205	$	7,339
Noncurrent liabilities		74,958		70,709
Total liability - Supplemental Savings Plan	$	83,163	$	78,048

Under the LTRP, the Company accrues a defined amount each year for an eligible participant based upon an award schedule. Amounts awarded may earn an investment return based on certain investment funds specified by the Company. Benefits under the LTRP are 50% vested until age 50. After age 50, the vesting percentage increases by 5% each year until the benefits are fully vested at age 60. Participants receive payments from the plan upon retirement or in certain instances upon termination of employment. Payments are made in the form of monthly installments over a period of ten, fifteen or twenty years. The liability under this plan was as follows:

(in thousands)	December 31, 2017		January 1, 2017
Current liabilities	$	3	$	2
Noncurrent liabilities		2,563		1,256
Total liability - LTRP	$	2,566	$	1,258

Under the Retention Plan, as amended effective January 1, 2007, eligible participants may elect to receive an annuity payable in equal monthly installments over a 10, 15 or 20-year period commencing at retirement or, in certain instances, upon termination of employment. The benefits under the Retention Plan increase with each year of participation as set forth in an agreement between the participant and the Company. Benefits under the Retention Plan are 50% vested until age 50. After age 50, the vesting percentage increases by an additional 5% each year until the benefits are fully vested at age 60. The liability under this plan was as follows:

(in thousands)	December 31, 2017		January 1, 2017
Current liabilities	$	2,949	$	3,359
Noncurrent liabilities		42,694		44,480
Total liability - Retention Plan	$	45,643	$	47,839

Under the Performance Plan, adopted as of January 1, 2007, the Compensation Committee of the Company’s Board of Directors establishes dollar amounts to which a participant shall be entitled upon attainment of the applicable performance measures. Bonus awards under the Performance Plan are made based on the relative achievement of performance measures in terms of the Company-sponsored objectives or objectives related to the performance of the individual participants or of the subsidiary, division, department, region or function in which the participant is employed. The liability under this plan was as follows:

(in thousands)	December 31, 2017		January 1, 2017
Current liabilities	$	5,561	$	5,282
Noncurrent liabilities		4,527		5,651
Total liability - Performance Plan	$	10,088	$	10,933

Pension Plans

There are two Company-sponsored pension plans. The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after this date. The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements. Benefits under the Bargaining Plan are determined in accordance with negotiated formulas for the respective participants. Contributions to the plans are based on actuarially determined amounts and are limited to the amounts currently deductible for income tax purposes.

Each year, the Company updates its mortality assumptions used in the calculation of its pension liability using The Society of Actuaries’ latest mortality tables. In 2017, 2016 and 2015, the mortality table reflected a lower increase in longevity.

The following tables set forth pertinent information for the two Company-sponsored pension plans:

Changes in Projected Benefit Obligation

	Fiscal Year
(in thousands)	2017			2016
Projected benefit obligation at beginning of year	$	273,148		$	261,469
Service cost		2,553			461
Interest cost		11,938			12,182
Actuarial loss		27,388			8,268
Benefits paid		(11,109	)		(9,232	)
Projected benefit obligation at end of year	$	303,918		$	273,148

The discount rate for the Primary Plan and the Bargaining Plan decreased to 3.80% and 3.90%, respectively, in 2017 from 4.44% and 4.49%, respectively, in 2016, which was the primary driver of the actuarial loss in 2017. The discount rate decreased to 4.44% and 4.49% for the Primary Plan and the Bargaining Plan, respectively, in 2016, from 4.72% for both Company-sponsored pension plans in 2015, which was the primary driver in the actuarial loss in 2016. The actuarial gain and losses, net of tax, were recorded in other comprehensive loss.

The projected benefit obligations and accumulated benefit obligations for both the Company’s pension plans were in excess of plan assets at December 31, 2017 and January 1, 2017. The accumulated benefit obligation was $303.9 million on December 31, 2017 and $273.1 million on January 1, 2017.

Change in Plan Assets

	Fiscal Year
(in thousands)	2017			2016
Fair value of plan assets at beginning of year	$	228,256		$	214,055
Actual return on plan assets		29,766			12,313
Employer contributions		11,600			11,120
Benefits paid		(11,109	)		(9,232	)
Fair value of plan assets at end of year	$	258,513		$	228,256

Funded Status

(in thousands)	December 31, 2017			January 1, 2017
Projected benefit obligation	$	(303,918	)	$	(273,148	)
Plan assets at fair value		258,513			228,256
Net funded status	$	(45,405	)	$	(44,892	)

Amounts Recognized in the Consolidated Balance Sheets

(in thousands)	December 31, 2017			January 1, 2017
Current liabilities	$	-		$	-
Noncurrent liabilities		(45,405	)		(44,892	)
Total liability - pension plans	$	(45,405	)	$	(44,892	)

Net Periodic Pension Cost (Benefit)

	Fiscal Year
(in thousands)	2017			2016			2015
Service cost	$	2,553		$	461		$	116
Interest cost		11,938			12,182			11,875
Expected return on plan assets		(13,597	)		(13,822	)		(13,541	)
Recognized net actuarial loss		3,402			3,031			3,230
Amortization of prior service cost		28			28			35
Net periodic pension cost (benefit)	$	4,324		$	1,880		$	1,715

Significant Assumptions

	Fiscal Year
	2017			2016			2015
Projected benefit obligation at the measurement date:
Discount rate - Primary Plan		3.80	%		4.44	%		4.72	%
Discount rate - Bargaining Plan		3.90	%		4.49	%		4.72	%
Weighted average rate of compensation increase	N/A			N/A			N/A
Net periodic pension cost for the fiscal year:
Discount rate - Primary Plan and Bargaining Plan		4.44	%		4.72	%		4.32	%
Weighted average expected long-term rate of return on plan assets		6.00	%		6.50	%		6.50	%
Weighted average rate of compensation increase	N/A			N/A			N/A

Cash Flows

(in thousands)	Anticipated Future Pension Benefit Payments for the Fiscal Years
2018	$	10,726
2019		11,350
2020		12,063
2021		12,815
2022		13,523
2023 – 2027		78,179

Contributions to the two Company-sponsored pension plans are expected to be in the range of $10 million to $20 million in 2018.

Plan Assets

The Company’s pension plans target asset allocation for 2018, actual asset allocation at December 31, 2017 and January 1, 2017, and the expected weighted average long-term rate of return by asset category were as follows:

	Target			Percentage of Plan						Weighted Average Expected
	Allocation			Assets at Fiscal Year-End						Long-Term Rate of Return
	2018			2017			2016			2017
U.S. large capitalization equity securities		40	%		41	%		41	%		3.0	%
U.S. small/mid-capitalization equity securities		5	%		5	%		5	%		0.5	%
International equity securities		15	%		15	%		15	%		1.2	%
Debt securities		40	%		39	%		39	%		1.3	%
Total		100	%		100	%		100	%		6.0	%

All assets in the Company’s pension plans are invested in institutional investment funds managed by professional investment advisors which hold U.S. equities, international equities and debt securities. The objective of the Company’s investment philosophy is to earn the plans’ targeted rate of return over longer periods without assuming excess investment risk. The general guidelines for plan investments include 30% - 45% in large capitalization equity securities, 0% - 20% in U.S. small and mid-capitalization equity securities, 0% - 10% in international equity securities and 10% - 50% in debt securities. The Company currently has 61% of its plan investments in equity securities and 39% in debt securities.

U.S. large capitalization equity securities include domestic based companies that are generally included in common market indices such as the S&P 500™ and the Russell 1000™. U.S. small and mid-capitalization equity securities include small domestic equities as represented by the Russell 2000™ index. International equity securities include companies from developed markets outside the United States. Debt securities as of December 31, 2017 are comprised of investments in two institutional bond funds with a weighted average duration of approximately three years.

A weighted average expected long-term rate of return of plan assets of 6.0% in 2017 and 6.5% in 2016 was used to determine net periodic pension cost. The rate reflects an estimate of long-term future returns for the pension plan assets net of expenses. The estimate is primarily a function of the asset classes, equities versus fixed income, in which the pension plan assets are invested and the analysis of past performance of these asset classes over a long period of time. The analysis includes expected long-term inflation and the risk premiums associated with equity investments and fixed income investments.

The following table summarizes the Company’s common/collective trust fund pension plan assets. The underlying investments held in common/collective trust funds are actively managed equity securities and fixed income investment vehicles that are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

(in thousands)	December 31, 2017		January 1, 2017
Common/collective trust funds - equity securities	$	157,290	$	139,735
Common/collective trust funds - fixed income		100,500		87,814
Total common/collective trust funds	$	257,790	$	227,549

In addition, the Company had other level 1 pension plan assets related to its equity securities of $0.7 million in both 2017 and 2016. The level 1 assets had quoted market prices in active markets for identical assets available for fair value measurement.

The Company does not have any unobservable inputs (Level 3) pension plan assets.

401(k) Savings Plan

The Company provides a 401(k) Savings Plan for substantially all its employees who are not part of collective bargaining agreements and for certain employees under collective bargaining agreements. The Company’s matching contribution for employees who are not part of collective bargaining agreements is discretionary, with the option to match contributions for eligible participants up to 5% based on the Company’s financial results. For all years presented, the Company matched the maximum 5% of participants’ contributions. The Company’s matching contributions for employees who are part of collective bargaining agreements are determined in accordance with negotiated formulas for the respective employees. The total expense for the Company’s matching contributions to the 401(k) Savings Plan was $18.4 million in 2017, $14.9 million in 2016 and $10.7 million in 2015.

Postretirement Benefits

The Company provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these benefits in the future.

The following tables set forth pertinent information for the Company’s postretirement benefit plan:

Reconciliation of Activity

	Fiscal Year
(in thousands)	2017			2016
Benefit obligation at beginning of year	$	85,255		$	70,361
Service cost		2,232			1,567
Interest cost		3,636			3,094
Acquisition of benefits		3,291			3,458
Plan participants’ contributions		752			662
Actuarial (gain)/loss		1,796			9,152
Benefits paid		(2,994	)		(3,135	)
Medicare Part D subsidy reimbursement		37			96
Divestiture of benefits related to the Deep South and Somerset Exchange Business and the Florence and Laurel Distribution Business		(17,340	)		-
Benefit obligation at end of year	$	76,665		$	85,255

Reconciliation of Plan Assets Fair Value

	Fiscal Year
(in thousands)	2017			2016
Fair value of plan assets at beginning of year	$	-		$	-
Employer contributions		2,205			2,377
Plan participants’ contributions		752			662
Benefits paid		(2,994	)		(3,135	)
Medicare Part D subsidy reimbursement		37			96
Fair value of plan assets at end of year	$	-		$	-

Funded Status

(in thousands)	December 31, 2017		January 1, 2017
Current liabilities	$	3,678	$	3,468
Noncurrent liabilities		72,987		81,787
Total liability - postretirement benefits	$	76,665	$	85,255

Net Periodic Postretirement Benefit Cost

	Fiscal Year
(in thousands)	2017			2016			2015
Service cost	$	2,232		$	1,567		$	1,118
Interest cost		3,636			3,094			2,878
Recognized net actuarial loss		2,942			2,186			3,164
Amortization of prior service cost		(2,982	)		(3,360	)		(3,360	)
Net periodic postretirement benefit cost	$	5,828		$	3,487		$	3,800

Significant Assumptions

	Fiscal Year
	2017			2016			2015
Benefit obligation discount rate at measurement date		3.72	%		4.36	%		4.53	%
Net periodic postretirement benefit cost discount rate for fiscal year		4.36	%		4.53	%		4.13	%

Postretirement benefit expense - Pre-Medicare:
Weighted average health care cost trend rate		6.94	%		6.20	%		7.50	%
Trend rate graded down to ultimate rate		4.50	%		4.50	%		5.00	%
Ultimate rate year	2025			2024			2021

Postretirement benefit expense - Post-Medicare:
Weighted average health care cost trend rate		8.07	%		7.50	%		7.00	%
Trend rate graded down to ultimate rate		4.50	%		4.50	%		5.00	%
Ultimate rate year	2025			2024			2021

A 1% increase or decrease in the annual health care cost trend would have impacted the postretirement benefit obligation and service cost and interest cost of the Company’s postretirement benefit plan as follows:

(in thousands)	1% Increase		1% Decrease
Postretirement benefit obligation at December 31, 2017	$	9,389	$	(8,323	)
Service cost and interest cost in 2017		668		(593	)

Cash Flows

(in thousands)	Anticipated Future Postretirement Benefit Payments Reflecting Expected Future Service
2018	$	3,678
2019		3,834
2020		4,063
2021		4,253
2022		4,603
2023 – 2027		25,204

Anticipated future postretirement benefit payments are shown net of Medicare Part D subsidy reimbursements, which are not material.

A reconciliation of the amounts in accumulated other comprehensive loss not yet recognized as components of net periodic benefit cost is as follows:

(in thousands)	January 1, 2017			Actuarial Gain (Loss)			Reclassification Adjustments			December 31, 2017
Pension Plans:
Actuarial (loss)	$	(119,644	)	$	(11,219	)	$	3,402		$	(127,461	)
Prior service (cost) credit		(101	)		-			28			(73	)
Postretirement Medical:
Actuarial (loss)		(40,502	)		(1,796	)		2,942			(39,356	)
Prior service (cost) credit		6,122			-			(2,982	)		3,140
Recognized loss due to the divestiture of the Deep South and Somerset Exchange Business and the Florence and Laurel Distribution Business		-			-			8,257			8,257
Total within accumulated other comprehensive loss	$	(154,125	)	$	(13,015	)	$	11,647		$	(155,493	)

The amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic cost during 2018 are as follows:

(in thousands)	Pension Plans		Postretirement Medical			Total
Actuarial loss	$	3,681	$	1,238		$	4,919
Prior service cost (credit)		25		(1,734	)		(1,709	)
Total expected to be recognized during 2018	$	3,706	$	(496	)	$	3,210

Multi-Employer Pension Plans

Certain employees of the Company whose employment is covered under collective bargaining agreements participate in a multi-employer pension plan, the Employers-Teamsters Local Union Nos. 175 and 505 Pension Fund (the “Teamsters Plan”). The Company makes monthly contributions to the Teamsters Plan on behalf of such employees. Certain collective bargaining agreements covering the Teamsters Plan expired on April 29, 2017. These agreements were renewed and will now expire in April 2020. The remainder of these agreements will expire on July 26, 2018.

The risks of participating in the Teamsters Plan are different from single-employer plans as contributed assets are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the Teamsters Plan, the unfunded obligations of the Teamsters Plan may be borne by the remaining participating employers. If the Company chooses to stop participating in the Teamsters Plan, the Company could be required to pay the Teamsters Plan a withdrawal liability based on the underfunded status of the Teamsters Plan. The Company does not anticipate withdrawing from the Teamsters Plan.

In 2015, the Company increased its contribution rates to the Teamsters Plan, with additional increases occurring annually, as part of a rehabilitation plan, which was incorporated into the renewal of collective bargaining agreements with the unions effective April 28, 2014 and adopted by the Company as a rehabilitation plan effective January 1, 2015. This is a result of the Teamsters Plan being certified by its actuary as being in “critical” status for the plan year beginning January 1, 2013.

The Company’s participation in the Teamsters Plan is outlined in the table below. A red zone represents less than 80% funding and requires a financial improvement plan (“FIP”) or rehabilitation plan (“RP”).

Fiscal Year

(in thousands)

2017

2016

2015

Pension Protection Act Zone Status

Red

FIP or RP pending or implemented

Yes

Surcharge imposed

Yes

Contribution

800

728

692

According to the Teamsters Plan’s Forms 5500, the Company was not listed as providing more than 5% of the total contributions for the plan years ending December 31, 2016 or December 31, 2015. At the date these financial statements were issued, Forms 5500 were not available for the plan year ending December 31, 2017.

The Company has a liability recorded for exiting a multi-employer pension plan in 2008 and is required to make payments of approximately $1 million to this multi-employer pension plan each year through 2028. As of December 31, 2017 the Company has $7.7 million remaining on this liability.