(10) Retirement Plans

The Company sponsors a defined benefit plan for its inland vessel personnel and shore based tankermen. The plan benefits are based on an employee’s years of service and compensation. The plan assets consist primarily of equity and fixed income securities.

On April 12, 2017, the Company amended its pension plan to cease all benefit accruals for periods after May 31, 2017 for certain participants. Participants grandfathered and not impacted were those, as of the close of business on May 31, 2017, who either (a) had completed 15 years of pension service or (b) had attained age 50 and completed 10 years of pension service. Participants non-grandfathered are eligible to receive discretionary 401(k) plan contributions. The Company did not incur any one-time charges related to this amendment but the pension plan’s projected benefit obligation decreased by $33,433,000.

The fair value of plan assets was $294,995,000 and $257,517,000 at December 31, 2017 and 2016 respectively. As of December 31, 2017 and 2016, these assets were allocated among asset categories as follows:

Asset Category	2017			2016			Current Minimum, Target and Maximum Allocation Policy
U.S. equity securities		51	%		51	%		30% — 50%— 70	%
International equity securities		21	%		19	%		0% — 20%— 30	%
Debt securities		28	%		30	%		15% — 30%— 55	%
Cash and cash equivalents		—	%		—	%		0% — 0%— 5	%
		100	%		100	%

The plan assets are invested entirely in common collective trusts. These instruments are public investment vehicles valued using the net asset value provided by the administrator of the fund. The net asset value is classified within Level 2 of the valuation hierarchy as set forth in the accounting guidance for fair value measurements because the net asset value price is quoted on an inactive private market although the underlying investments are traded on an active market.

The Company’s investment strategy focuses on total return on invested assets (capital appreciation plus dividend and interest income). The primary objective in the investment management of assets is to achieve long-term growth of principal while avoiding excessive risk. Risk is managed through diversification of investments within and among asset classes, as well as by choosing securities that have an established trading and underlying operating history.

The Company makes various assumptions when determining defined benefit plan costs including, but not limited to, the current discount rate and the expected long-term return on plan assets. Discount rates are determined annually and are based on a yield curve that consists of a hypothetical portfolio of high quality corporate bonds with maturities matching the projected benefit cash flows. The Company assumed that plan assets would generate a long-term rate of return of 7.0% in 2017 and 2016. The Company developed its expected long-term rate of return assumption by evaluating input from investment consultants comparing historical returns for various asset classes with its actual and targeted plan investments. The Company believes that its long-term asset allocation, on average, will approximate the targeted allocation.

The Company’s pension plan funding strategy is to make annual contributions in amounts equal to or greater than amounts necessary to meet minimum government funding requirements. The plan's benefit obligations are based on a variety of demographic and economic assumptions, and the pension plan assets’ returns are subject to various risks, including market and interest rate risk, making an accurate prediction of the pension plan contribution difficult. The Company’s pension plan funding was 91% of the pension plan’s ABO at December 31, 2017.

The Company sponsors an unfunded defined benefit health care plan that provides limited postretirement medical benefits to employees who met minimum age and service requirements, and to eligible dependents. The plan limits cost increases in the Company’s contribution to 4% per year. The plan is contributory, with retiree contributions adjusted annually. The plan eliminated coverage for future retirees as of December 31, 2011. The Company also has an unfunded defined benefit supplemental executive retirement plan (“SERP”) that was assumed in an acquisition in 1999. That plan ceased to accrue additional benefits effective January 1, 2000.

The following table presents the change in benefit obligation and plan assets for the Company’s defined benefit plans and postretirement benefit plan (in thousands):

															Other Postretirement Benefits
	Pension Benefits														Postretirement
	Pension Plan								SERP						Welfare Plan
	2017				2016				2017			2016			2017			2016
Change in benefit obligation
Benefit obligation at beginning of year		$	337,176			$	297,325		$	1,457		$	1,526		$	675		$	891
Service cost			10,677				13,402			—			—			—			—
Interest cost			13,729				14,123			58			65			27			29
Actuarial loss (gain)			34,563				19,120			42			12			52			(198	)
Curtailments			(33,433	)			—			—			—			—			—
Gross benefits paid			(7,718	)			(6,794	)		(145	)		(146	)		(75	)		(47	)
Benefit obligation at end of year		$	354,994			$	337,176		$	1,412		$	1,457		$	679		$	675

Accumulated benefit obligation at end of year		$	324,904			$	272,591		$	1,412		$	1,457		$	679		$	675

Weighted-average assumption used to determine benefit obligation at end of year
Discount rate		3.7	%		4.2	%	3.7	%	4.2	%	3.7	%	4.2	%
Rate of compensation increase	Service-based table			Service- based table			—		—		—		—
Health care cost trend rate
Initial rate		—			—		—		—		7.0	%	7.0	%
Ultimate rate		—			—		—		—		5.0	%	5.0	%
Years to ultimate		—			—		—		—		2022		2021


Effect of one-percentage-point change in assumed health care cost trend rate on postretirement obligation
Increase	$	—	$	—	$	—	$	—	$	75		$	74
Decrease		—		—		—		—		(65	)		(64	)

Change in plan assets
Fair value of plan assets at beginning of year	$	257,517		$	243,588		$	—		$	—		$	—		$	—
Actual return on plan assets		45,196			20,723			—			—			—			—
Employer contribution		—			—			145			146			75			47
Gross benefits paid		(7,718	)		(6,794	)		(145	)		(146	)		(75	)		(47	)
Fair value of plan assets at end of year	$	294,995		$	257,517		$	—		$	—		$	—		$	—

The following table presents the funded status and amounts recognized in the Company’s consolidated balance sheet for the Company’s defined benefit plans and postretirement benefit plan at December 31, 2017 and 2016 (in thousands):

													Other Postretirement Benefits
	Pension Benefits												Postretirement Welfare Plan
	Pension Plan						SERP						Postretirement Welfare Plan
	2017			2016			2017			2016			2017			2016
Funded status at end of year
Fair value of plan assets	$	294,995		$	257,517		$	—		$	—		$	—		$	—
Benefit obligations		(354,994	)		(337,176	)		(1,412	)		(1,457	)		(679	)		(675	)
Funded status and amount recognized at end of year	$	(59,999	)	$	(79,659	)	$	(1,412	)	$	(1,457	)	$	(679	)	$	(675	)

Amounts recognized in the consolidated balance sheets
Noncurrent asset	$	—		$	—		$	—		$	—		$	—		$	—
Current liability		—			—			(159	)		(150	)		(54	)		(56	)
Long-term liability		(59,999	)		(79,659	)		(1,253	)		(1,307	)		(625	)		(619	)

Amounts recognized in accumulated other comprehensive income
Net actuarial loss (gain)	$	57,387	$	87,658	$	508	$	494	$	(5,053	)	$	(5,773	)
Prior service cost (credit)		—		—		—		—		—			—
Accumulated other compensation income	$	57,387	$	87,658	$	508	$	494	$	(5,053	)	$	(5,773	)

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets at December 31, 2017 and 2016 were as follows (in thousands):

	Pension Benefits
	Pension Plan				SERP
	2017		2016		2017		2016
Projected benefit obligation in excess of plan assets
Projected benefit obligation at end of year	$	354,994	$	337,176	$	1,412	$	1,457
Fair value of plan assets at end of year		294,995		257,517		—		—

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2017 and 2016 were as follows (in thousands):

	Pension Benefits
	Pension Plan				SERP
	2017		2016		2017		2016
Accumulated benefit obligation in excess of plan assets
Projected benefit obligation at end of year	$	354,994	$	337,176	$	1,412	$	1,457
Accumulated benefit obligation at end of year		324,904		272,591		1,412		1,457
Fair value of plan assets at end of year		294,995		257,517		—		—

The following tables presents the expected cash flows for the Company’s defined benefit plans and postretirement benefit plan at December 31, 2017 and 2016 (in thousands):

									Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
	2017		2016		2017		2016		2017		2016
Expected employer contributions
First year	$	—	$	—	$	162	$	153	$	48	$	50

									Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
	2017		2016		2017		2016		2017		2016
Expected benefit payments (gross)
Year one	$	9,483	$	8,032	$	162	$	153	$	55	$	58
Year two		10,131		8,835		159		157		56		58
Year three		10,818		9,646		156		155		58		58
Year four		11,608		10,400		152		151		58		58
Year five		12,377		11,201		149		148		46		57
Next five years		75,717		70,419		462		514		214		199

									Other Postretirement Benefits
	Pension Benefits								Postretirement
	Pension Plan				SERP				Welfare Plan
	2017		2016		2017		2016		2017			2016
Expected federal subsidy
Year one	$	—	$	—	$	—	$	—	$	(7	)	$	(7	)
Year two		—		—		—		—		(6	)		(7	)
Year three		—		—		—		—		(6	)		(7	)
Year four		—		—		—		—		(6	)		(7	)
Year five		—		—		—		—		(7	)		(7	)
Next five years		—		—		—		—		(30	)		(33	)

The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company’s defined benefit plans for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):

	Pension Benefits
	Pension Plan									SERP
	2017			2016			2015			2017		2016		2015
Components of net periodic benefit cost
Service cost	$	10,677		$	13,402		$	14,683		$	—	$	—	$	—
Interest cost		13,729			14,123			13,302			58		65		64
Expected return on plan assets		(18,195	)		(16,805	)		(17,921	)		—		—		—
Amortization:
Actuarial loss		4,400			5,484			7,728			28		26		28
Prior service credit		—			—			—			—		—		—
Net periodic benefit cost		10,611			16,204			17,792			86		91		92

Other changes in plan assets and benefit obligations recognized in other comprehensive income
Current year actuarial loss (gain)		7,562			15,203			(19,127	)		42			12			(30	)
Recognition of actuarial loss		(37,833	)		(5,484	)		(7,728	)		(28	)		(26	)		(28	)
Recognition of prior service credit		—			—			—			—			—			—
Total recognized in other comprehensive income		(30,271	)		9,719			(26,855	)		14			(14	)		(58	)

Total recognized in net periodic benefit cost and other comprehensive income	$	(19,660	)	$	25,923		$	(9,063	)	$	100		$	77		$	34

Weighted average assumptions used to determine net periodic benefit cost
Discount rate (1)		4.2/4.0	%		4.5	%	4.1	%	4.2	%	4.5	%	4.1	%
Expected long-term rate of return on plan assets		7.0	%		7.0	%	7.5	%	—		—		—
Rate of compensation increase	Service- based table			Service- based table			4.25	%	—		—		—

(1)

The 2017 benefit cost for the pension plan was determined using a discount rate of 4.2% for the period beginning January 1, 2017 and ending April 11, 2017 and 4.0% for the period beginning April 12, 2017 and ending December 31, 2017.

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2018 are as follows (in thousands):

	Pension Benefits
	Pension Plan		SERP
Actuarial loss	$	2,820	$	23
Prior service credit		—		—
	$	2,820	$	23

The components of net periodic benefit cost and other changes in benefit obligations recognized in other comprehensive income for the Company’s postretirement benefit plan for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):

	Other Postretirement Benefits
	Postretirement Welfare Plan
	2017			2016			2015
Components of net periodic benefit cost
Service cost	$	—		$	—		$	—
Interest cost		27			29			36
Amortization:
Actuarial gain		(668	)		(747	)		(793	)
Prior service cost		—			—			—
Net periodic benefit cost		(641	)		(718	)		(757	)

Other changes in benefit obligations recognized in other comprehensive income
Current year actuarial gain		52		(198	)		(322	)
Recognition of actuarial gain		668		747			793
Recognition of prior service cost		—		—			—
Adjustment for actual Medicare Part D reimbursement		—		(3	)		(3	)
Total recognized in other comprehensive income		720		546			468

Total recognized in net periodic benefit cost and other comprehensive income	$	79	$	(172	)	$	(289	)

Weighted average assumptions used to determine net periodic benefit cost
Discount rate	4.2	%	4.5	%	4.1	%
Health care cost trend rate:
Initial rate	7.0	%	6.5	%	7.0	%
Ultimate rate	5.0	%	5.0	%	5.0	%
Years to ultimate	2021		2019		2019

Effect of one-percentage-point change in assumed health care cost trend rate on aggregate service and interest cost
Increase	$	3		$	4		$	5
Decrease		(3	)		(3	)		(4	)

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2018 are as follows (in thousands):

	Other Postretirement Benefits
	Postretirement Welfare Plan
Actuarial gain	$	(596	)
Prior service cost		—
	$	(596	)

The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement which covers certain vessel crew members of its coastal operations and expires on April 30, 2018. The Company began participation in the Seafarers Pension Trust (“SPT”) with the Penn Maritime, Inc. acquisition on December 14, 2012.

Contributions to the SPT are made currently based on a per day worked basis and charged to expense as incurred and included in costs of sales and operating expenses in the consolidated statement of earnings. During 2017 and 2016, the Company made contributions of $896,000 and $877,000, respectively, to the SPT. The Company’s contributions to the SPT exceeded 5% of total contributions to the SPT in 2016. Total contributions for 2017 are not yet available. The Company did not pay any material surcharges in 2016 or 2017.

The federal identification number of the SPT is 13-6100329 and the Certified Zone Status is Green at December 31, 2016. The Company’s future minimum contribution requirements under the SPT are unavailable because actuarial reports for the 2017 plan year are not yet complete and such contributions are subject to negotiations between the employers and the unions. The SPT was not in endangered or critical status for the 2016 plan year, the latest period for which a report is available, as the funded status was in excess of 100%. Based on an actuarial valuation performed as of December 31, 2016, there would be no withdrawal liability if the Company chose to withdraw from the SPT although the Company currently has no intention of terminating its participation in the SPT.

The Company also contributes to a multiemployer pension plan pursuant to a collective bargaining agreement which covers certain employees of its distribution and services segment in New Jersey and expires on October 8, 2023. The Company began participation in the Central Pension Fund of the International Union of Operating Engineers and Participating Employers (“CPF”) with the S&S acquisition on September 13, 2017.

Contributions to the CPF are made currently based on a fixed hourly rate for each hour worked or paid basis (in some cases contributions are made as a percentage of gross pay) and charged to expense as incurred and included in costs of sales and operating expenses in the consolidated statement of earnings. During 2017, the Company made contributions of $238,000 to the CPF. Total contributions for the 2017 plan year are not yet available. The Company did not pay any material surcharges in 2017.

The federal identification number of the CPF is 36-6052390 and the Certified Zone Status is Green at January 31, 2017. The Company’s future minimum contribution requirements under the CPF are unavailable because actuarial reports for the 2017 plan year, which ended January 31, 2018, are not yet complete and such contributions are subject to negotiations between the employers and the unions. The CPF was not in endangered or critical status for the 2016 plan year, the latest period for which a report is available, as the funded status was 94%. Based on an actuarial valuation performed as of January 31, 2016, there would be no withdrawal liability if the Company chose to withdraw from the CPF although the Company currently has no intention of terminating its participation in the CPF.

In addition to the defined benefit plans, the Company sponsors various defined contribution plans for substantially all employees. The aggregate contributions to the plans were $17,247,000, $18,213,000 and $24,077,000 in 2017, 2016 and 2015, respectively.