Pension Benefits

As part of the acquisition of Former SFEC, we assumed the obligations related to the SFTP Defined Benefit Plan (the "SFTP Benefit Plan"). The SFTP Benefit Plan covered substantially all of SFTP's employees. During 1999, the SFTP Benefit Plan was amended to cover substantially all of our domestic full-time employees. During 2004, the SFTP Benefit Plan was further amended to cover certain seasonal workers, retroactive to January 1, 2003. The SFTP Benefit Plan permits normal retirement at age 65, with early retirement at ages 55 through 64 upon attainment of 10 years of credited service. The early retirement benefit is reduced for benefits commencing before age 62. Plan benefits are calculated according to a benefit formula based on age, average compensation over the highest consecutive five-year period during the employee's last ten years of employment and years of service. The SFTP Benefit Plan assets are invested primarily in equity and fixed income securities, as well as alternative investments, such as hedge funds. The SFTP Benefit Plan does not have significant liabilities other than benefit obligations. Under our funding policy, contributions to the SFTP Benefit Plan are determined using the projected unit credit cost method. This funding policy meets the requirements under the Employee Retirement Income Security Act of 1974.

We froze our pension plan effective March 31, 2006, pursuant to which most participants no longer earned future pension benefits. Effective February 16, 2009, the remaining participants in the pension plan no longer earned future benefits.

Obligations and Funded Status

The following table sets forth the change in our benefit plan obligation and fair value of plan assets:



	Year Ended December 31,
(Amounts in thousands)	2015			2014			2013
Change in benefit obligation:
Beginning balance	$	246,653		$	211,813		$	235,502
Interest cost	9,116			9,686			8,836
Actuarial (gain) loss	(17,869		)	40,422			(25,368		)
Benefits paid	(14,511		)	(15,268		)	(7,157		)
Benefit obligation at end of period	$	223,389		$	246,653		$	211,813

Change in fair value of plan assets:
Beginning balance	$	186,131		$	176,706		$	164,048
Actual return on assets	(2,767		)	20,342			15,068
Employer contributions	6,000			6,000			6,000
Administrative fees	(1,730		)	(1,649		)	(1,253		)
Benefits paid	(14,511		)	(15,268		)	(7,157		)
Fair value of plan assets at end of period	$	173,123		$	186,131		$	176,706

Employer contributions and benefits paid in the above table include only those amounts contributed directly to, or paid directly from, plan assets. As of December 31, 2015 and 2014, the SFTP Benefit Plan's projected benefit obligation exceeded the fair value of SFTP Benefit Plan assets resulting in the SFTP Benefit Plan being underfunded by $50.3 million and $60.5 million, respectively. The underfunded amount is recognized in other long-term liabilities in our consolidated balance sheets.

We use December 31 as our measurement date. The weighted average assumptions used to determine benefit obligations are as follows:



	December 31,
	2015		2014
Discount rate	4.10	%	3.80	%
Rate of compensation increase	N/A		N/A

Net periodic benefit cost and other comprehensive income (loss)

The following table sets forth the components of net periodic benefit cost and other comprehensive income (loss):



	Year Ended December 31,
(Amounts in thousands)	2015			2014			2013
Net periodic benefit cost:
Service cost	$	2,000		$	1,600		$	1,200
Interest cost	9,116			9,687			8,836
Expected return on plan assets	(13,438		)	(12,752		)	(12,258		)
Amortization of net actuarial loss	879			—			761
Total net periodic benefit	$	(1,443	)	$	(1,465	)	$	(1,461	)

Other comprehensive income (loss):
Current year actuarial gain (loss)	$	1,934		$	(32,880	)	$	28,885
Recognized net actuarial loss	$	879		$	—		$	—
Total other comprehensive gain (loss)	$	2,813		$	(32,880	)	$	28,885

As of December 31, 2015 and 2014, we have recorded $47.2 million (net of tax benefit of $2.6 million) and $48.9 million (net of tax benefit of $3.6 million) in accumulated other comprehensive loss in our consolidated balance sheets, respectively.

We anticipate that $1.0 million will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2016.

The weighted average assumptions used to determine net costs are as follows:



	Year Ended December 31,
	2015		2014		2013
Discount rate	3.80	%	4.70	%	3.85	%
Rate of compensation increase	N/A		N/A		N/A
Expected return on plan assets	7.25	%	7.25	%	7.50	%
Corridor	10.00	%	10.00	%	10.00	%
Average future life expectancy (in years)	29.39		30.19		30.70

The discount rate assumption was developed based on high-quality corporate bond yields as of the measurement date. High quality corporate bond yield indices on over 500 AA high grade bonds are considered when selecting the discount rate.

The return on plan assets assumption was developed based on consideration of historical market returns, current market conditions, and the SFTP Benefit Plan's past experience. Estimates of future market returns by asset category are reflective of actual long-term historical returns. Overall, it was projected that the SFTP Benefit Plan could achieve a 7.25% net return over time based on a consistent application of the existing asset allocation strategy and a continuation of the SFTP Benefit Plan's policy of monitoring manager performance.

Description of Investment Committee and Strategy

The Committee is responsible for managing the investment of SFTP Benefit Plan assets and ensuring that the SFTP Benefit Plan's investment program is in compliance with all provisions of ERISA, other relevant legislation, related SFTP Benefit Plan documents and the Statement of Investment Policy. The Committee has retained several mutual funds, commingled funds and/or investment managers to manage SFTP Benefit Plan assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of the applicable prospectus or other investment manager agreements with the SFTP Benefit Plan.

The primary financial objective of the SFTP Benefit Plan is to secure participant retirement benefits. To achieve this, the key objective in the SFTP Benefit Plan's financial management is to promote stability and, to the extent appropriate, growth in funded status. Other related and supporting financial objectives are also considered in conjunction with a comprehensive review of current and projected SFTP Benefit Plan financial requirements.

The assets of the fund are invested to achieve the greatest reward for the SFTP Benefit Plan consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures in the SFTP Benefit Plan's long-term target asset allocation.

The SFTP Benefit Plan's portfolio may be allocated across several hedge fund styles and strategies.

Plan Assets

The target allocations for plan assets are 16% domestic equity securities, 51% fixed income securities, 11% international equity securities, and 22% alternative investments. Equity securities primarily include investments in large-cap companies located in the United States and abroad. Fixed income securities include bonds and debentures issued by domestic and foreign private and governmental issuers. Alternative investments are comprised of hedge fund of funds. The following table presents the categories of our plan assets and the related levels of inputs in the fair value hierarchy used to determine the fair value, as defined in Note 2(c):



	Fair Value Measurements as of December 31, 2015
(Amounts in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSET CATEGORY:
Equity Securities:
Large-Cap Disciplined Equity ^(a)	$	30,693	$	30,693	$	—	$	—
Small/Mid-Cap Equity ^(a)	4,515		4,515		—		—
International Equity ^(b)	19,902		19,902		—		—
Fixed Income:
Long Duration Fixed Income ^(c)	74,073		74,073		—		—
High Yield ^(d)	7,587		7,587		—		—
Emerging Markets Debt ^(e)	6,055		6,055		—		—
Alternatives:
Hedge Fund of Funds ^(f)	9,987		—		—		9,987
Other Investments ^(g)	20,311		—		20,311		—
Fair Value of Plan Assets	$	173,123	$	142,825	$	20,311	$	9,987



	Fair Value Measurements as of December 31, 2014
(Amounts in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSET CATEGORY:
Equity Securities:
Large-Cap Disciplined Equity ^(a)	$	36,286	$	36,286	$	—	$	—
Small/Mid-Cap Equity ^(a)	5,320		5,320		—		—
International Equity ^(b)	22,194		22,194		—		—
Fixed Income:
Long Duration Fixed Income ^(c)	78,300		78,300		—		—
High Yield ^(d)	8,353		8,353		—		—
Emerging Markets Debt ^(e)	6,080		6,080		—		—
Alternatives:
Hedge Fund of Funds ^(f)	10,174		—		—		10,174
Other Investments ^(g)	19,424		—		19,424		—
Fair Value of Plan Assets	$	186,131	$	156,533	$	19,424	$	10,174

________________________________________


(a)	These categories are comprised of mutual funds actively traded on the registered exchanges or over the counter markets. The mutual funds are invested in equity securities of U.S. issuers.


(b)	This category consists of mutual funds invested primarily in equity securities (common stocks, securities that are convertible into common stocks, preferred stocks, warrants and rights to subscribe to common stocks) of non-U.S. issuers purchased in foreign markets. The mutual funds are actively traded on U.S. or foreign registered exchanges, or the over-the-counter markets.

(c)

The assets are comprised of U.S. Treasury Separate Trading of Registered Interest and Principal of Securities ("U.S. Treasury STRIPS") and mutual funds which are actively traded on the registered exchanges. The mutual funds are invested primarily in high quality government and corporate fixed income securities, as well as synthetic instruments or derivatives having economic characteristics similar to fixed income securities.


(d)	The high yield portion of the fixed income portfolio consists of mutual funds invested primarily in fixed income securities that are rated below investment grade. The mutual funds are actively traded on the registered exchanges.


(e)	The emerging debt portion of the portfolio consists of mutual funds primarily invested in the debt securities of government, government-related and corporate issuers in emerging market countries and of entities organized to restructure outstanding debt of such issuers. The mutual funds are actively traded on the registered exchanges.


(f)	Hedge Fund of Funds consists primarily of investments in underlying hedge funds. Management of the hedge funds has the ability to choose and combine hedge funds in order to target the fund's return objectives. Individual hedge funds hold their assets primarily in investment funds and engage in investment strategies that include temporary or dedicated directional market exposures.


(g)	This category is comprised of investments in common collective trusts with the underlying assets invested in asset-backed securities, money market funds, corporate bonds and bank notes. The underlying assets are actively traded on the registered exchanges.

The following table represents a rollforward of the December 31, 2015 and 2014 balances of our plan assets that are valued using Level 3 inputs:



(Amounts in thousands)	Hedge Fund of Funds
Balance as of December 31, 2013	$	9,519
Actual return on plan assets:
Relating to assets still held at the reporting date	655
Relating to assets sold during the period	—
Purchases, sales and settlements, net	—
Balance as of December 31, 2014	10,174
Actual return on plan assets:
Relating to assets still held at the reporting date	(187		)
Relating to assets sold during the period	—
Purchases, sales and settlements, net	—
Balance as of December 31, 2015	$	9,987

Expected Cash Flows

The following table summarizes expected employer contributions and future benefit payments:



(Amounts in thousands)
Expected contributions to plan trusts
2016	$	6,000
Total expected contributions	$	6,000

Expected benefit payments:
2016	$	9,337
2017	9,728
2018	10,430
2019	10,901
2020	11,258
2021 through 2024	62,149
Total expected benefit payments	$	113,803