Benefit Plans

We have a non-contributory defined benefit pension plan covering substantially all domestic employees, as well as a supplemental executive retirement plan. We also offer both medical and dental benefits for retired domestic employees and their eligible spouses under a postretirement benefit plan. The following tables provide the components of aggregate annual net periodic benefit cost for each of the years ended December 31, 2016, 2015, and 2014 and changes in the benefit obligation and the funded status of the pension, supplemental executive retirement and other postretirement benefit plans as recognized in the consolidated balance sheets as of December 31, 2016 and 2015.

Components of Net Periodic Benefit Cost

	Pension and Supplemental Executive Retirement Plans									Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2014			12/31/2016			12/31/2015			12/31/2014
1. Company Service Cost	$	9,130		$	10,256		$	8,565		$	751		$	833		$	659
2. Interest Cost	15,906			15,847			15,987			704			697			653
3. Expected Return on Assets	(19,508		)	(21,109		)	(21,030		)	(4,886		)	(4,991		)	(4,648		)
4. Other Adjustments	—			—			—			—			—			—
Subtotal	5,528			4,994			3,522			(3,431		)	(3,461		)	(3,336		)
5. Amortization of :
a. Net Transition Obligation/(Asset)	—			—			—			—			—			—
b. Net Prior Service Cost/(Credit)	(687		)	(845		)	(930		)	(6,649		)	(6,649		)	(6,649		)
c. Net Losses/(Gains)	5,856			5,485			1,083			—			(175		)	(435		)
Total Amortization	5,169			4,640			153			(6,649		)	(6,824		)	(7,084		)
6. Net Periodic Benefit Cost	10,697			9,634			3,675			(10,080		)	(10,285		)	(10,420		)
7. Cost of settlements or curtailments	1,277			3,172			302			—			—			—
8. Total Expense for Year	$	11,974		$	12,806		$	3,977		$	(10,080	)	$	(10,285	)	$	(10,420	)

Development of Funded Status

	Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2016			12/31/2015
Actuarial Value of Benefit Obligations
1. Measurement Date	12/31/2016			12/31/2015			12/31/2016			12/31/2015
2. Accumulated Benefit Obligation	$	360,423		$	338,450		$	17,378		$	16,423

Funded Status/Asset (Liability) on the Consolidated Balance Sheet
1. Projected Benefit Obligation	$	(369,808	)	$	(349,483	)	$	(17,378	)	$	(16,423	)
2. Plan Assets at Fair Value	360,900			350,107			70,408			65,568
3. Funded Status - Overfunded/Asset	N/A			$	624		$	53,030		$	49,145
4. Funded Status - Underfunded/Liability	(8,908		)	N/A			N/A			N/A

Accumulated Other Comprehensive Income (Loss)

	Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2016			12/31/2015
1. Net Actuarial (Gain)/Loss	$	103,861		$	95,636		$	(6,088	)	$	(5,311	)
2. Net Prior Service Cost/(Credit)	(2,286		)	(2,989		)	(11,991		)	(18,640		)
3. Net Transition Obligation/(Asset)	—			—			—			—
4. Total at Year End	$	101,575		$	92,647		$	(18,079	)	$	(23,951	)

The amortization of gains and losses resulting from actual experience different from assumed experience or changes in assumptions including discount rates is included as a component of Net Periodic Benefit Cost/(Income) for the year. The gain or loss in excess of a 10% corridor is amortized by the average remaining service period of participating employees expected to receive benefits under the plan.

The changes in the projected benefit obligation are as follows:

Change in Projected Benefit/Accumulated Benefit Obligation

	Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2016			12/31/2015
1. Benefit Obligation at Beginning of Year	$	349,483		$	379,324		$	16,423		$	18,225
2. Company Service Cost	9,130			10,256			751			833
3. Interest Cost	15,906			15,847			704			697
4. Plan Participants' Contributions	—			—			408			361
5. Net Actuarial (Gain)/Loss due to Assumption Changes	14,450			(24,118		)	497			(2,083		)
6. Net Actuarial (Gain)/Loss due to Plan Experience	5,428			7,155			357			(397		)
7. Benefit Payments from Fund ⁽¹⁾	(21,831		)	(32,646		)	(1,678		)	(1,147		)
8. Benefit Payments Directly by Company	(2,669		)	(7,661		)	—			—
9. Plan Amendments	16			19			—			—
10. Other Adjustment	(105		)	1,307			(84		)	(66		)
11. Benefit Obligation at End of Year	$	369,808		$	349,483		$	17,378		$	16,423


⁽¹⁾	Includes lump sum payments of $11.2 million and $22.4 million in 2016 and 2015, respectively, from our pension plan to eligible participants, which were former employees with vested benefits.

The increase in our pension and supplemental executive retirement plans obligation in 2016 compare to 2015 was primarily due to a decrease in the discount rate used to calculate the obligation and a lower amount of benefits paid from the fund. The increase in our other postretirement plan obligation was primarily due a decrease in the discount rate used to calculate the obligation.

The changes in the fair value of the net assets available for plan benefits are as follows:

Change in Plan Assets

	Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2016			12/31/2015
1. Fair Value of Plan Assets at Beginning of Year	$	350,107		$	378,701		$	65,568		$	66,940
2. Company Contributions	11,369			17,311			—			—
3. Plan Participants' Contributions	—			—			408			361
4. Benefit Payments from Fund	(21,831		)	(32,646		)	(1,678		)	(1,147		)
5. Benefit Payments paid directly by Company	(2,669		)	(7,661		)	—			—
6. Actual Return on Assets	23,924			(5,094		)	6,518			(225		)
7. Other Adjustment	—			(504		)	(408		)	(361		)
8. Fair Value of Plan Assets at End of Year	$	360,900		$	350,107		$	70,408		$	65,568

Change in Accumulated Other Comprehensive Income (Loss) ("AOCI")

	Pension and Supplemental Executive Retirement Plans						Other Postretirement Benefits
(In thousands)	12/31/2016			12/31/2015			12/31/2016			12/31/2015
1. AOCI in Prior Year	$	92,647		$	89,390		$	(23,951	)	$	(33,511	)
2. Increase/(Decrease) in AOCI
a. Recognized during year - Prior Service (Cost)/Credit	687			845			6,649			6,649
b. Recognized during year - Net Actuarial (Losses)/Gains	(5,856		)	(5,485		)	—			175
c. Occurring during year - Prior Service Cost	16			19			—			—
d. Occurring during year - Net Actuarial Losses/(Gains)	15,358			11,050			(777		)	2,736
e. Occurring during year - Net Settlement Losses/(Gains)	(1,277		)	(3,172		)	—			—
f. Other adjustments	—			—			—			—
3. AOCI in Current Year	$	101,575		$	92,647		$	(18,079	)	$	(23,951	)

Amortizations Expected to be Recognized During Next Fiscal Year Ending

	Pension and Supplemental Executive Retirement Plans			Other Postretirement Benefits
(In thousands)	12/31/2017			12/31/2017
1. Amortization of Net Transition Obligation/(Asset)	$	—		$	—
2. Amortization of Prior Service Cost/(Credit)	(428		)	(6,649		)
3. Amortization of Net Losses/(Gains)	6,141			—

The projected benefit obligations, net periodic benefit costs and accumulated postretirement benefit obligation for the plans were determined using the following weighted average assumptions.

Actuarial Assumptions

	Pension and Supplemental Executive Retirement Plans				Other Postretirement Benefits
	12/31/2016		12/31/2015		12/31/2016		12/31/2015
Weighted-Average Assumptions Used to Determine
Benefit Obligations at year end
1. Discount Rate	4.30	%	4.65	%	3.95	%	4.30	%
2. Rate of Compensation Increase	3.00	%	3.00	%	N/A		N/A

Weighted-Average Assumptions Used to Determine
Net Periodic Benefit Cost for Year
1. Discount Rate	4.65	%	4.25	%	4.30	%	4.00	%
2. Expected Long-term Return on Plan Assets	5.75	%	5.75	%	7.50	%	7.50	%
3. Rate of Compensation Increase	3.00	%	3.00	%	N/A		N/A

Assumed Health Care Cost Trend Rates at year end
1. Health Care Cost Trend Rate Assumed for Next Year	N/A		N/A		6.50	%	7.00	%
2. Rate to Which the Cost Trend Rate is Assumed to Decline (Ultimate Trend Rate)	N/A		N/A		5.00	%	5.00	%
3. Year That the Rate Reaches the Ultimate Trend Rate	N/A		N/A		2020		2020

In selecting a discount rate, we performed a hypothetical cash flow bond matching exercise, matching our expected pension plan and postretirement medical plan cash flows, respectively, against a selected portfolio of high quality corporate bonds. The modeling was performed using a bond portfolio of noncallable bonds with at least $50 million outstanding. The average yield of these hypothetical bond portfolios was used as the benchmark for determining the discount rate. In selecting the expected long-term rate of return on assets, we considered the average rate of earnings expected on the classes of funds invested or to be invested to provide for the benefits of these plans. This included considering the trusts' targeted asset allocation for the year and the expected returns likely to be earned over the next 20 years.

The year-end asset allocations of the plans are as follows:

Plan Assets

	Pension Plan				Other Postretirement Benefits
	12/31/2016		12/31/2015		12/31/2016		12/31/2015
1. Equity Securities	23	%	20	%	100	%	100	%
2. Debt Securities	77	%	80	%	—	%	—	%
3. Total	100	%	100	%	100	%	100	%

In accordance with fair value guidance, we applied the following fair value hierarchy in order to measure fair value of our benefit plan assets:

Level 1 – Quoted prices for identical instruments in active markets that we can access. Financial assets utilizing Level 1 inputs include equity securities, mutual funds, money market funds, certain U.S. Treasury securities and exchange traded funds ("ETFs").

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and inputs, other than quoted prices, that are observable in the marketplace for the instrument. The observable inputs are used in valuation models to calculate the fair value of the instruments. Financial assets utilizing Level 2 inputs include certain municipal, corporate and foreign bonds, obligations of U.S. government corporations and agencies, and pooled equity accounts.

To determine the fair value of securities in Level 1 and Level 2 of the fair value hierarchy, independent pricing sources have been utilized. One price is provided per security based on observable market data. To ensure securities are appropriately classified in the fair value hierarchy, we review the pricing techniques and methodologies of the independent pricing sources and believe that their policies adequately consider market activity, either based on specific transactions for the issue valued or based on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. A variety of inputs are utilized by the independent pricing sources including benchmark yields, reported trades, non-binding broker/dealer quotes, issuer spreads, two sided markets, benchmark securities, bids, offers and reference data including market research publications. Inputs may be weighted differently for any security, and not all inputs are used for each security evaluation. Market indicators, industry and economic events are also considered. This information is evaluated using a multidimensional pricing model. In addition, on a quarterly basis, we perform quality controls over values received from the pricing source (the “Trustee”) which include comparing values to other independent pricing sources. In addition, we review annually the Trustee’s auditor’s report on internal controls in order to determine that their controls around valuing securities are operating effectively. We have not made any adjustments to the prices obtained from the independent sources.

The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of December 31, 2016 and 2015. There were no securities that utilized Level 3 inputs.

Pension Plan

Assets at Fair Value as of December 31, 2016
(In thousands)	Level 1		Level 2		Total
Domestic Mutual Funds	$	11,805	$	—	$	11,805
Corporate Bonds	—		178,412		178,412
U.S. Government Securities	6,761		354		7,115
Municipal Bonds	—		63,492		63,492
Foreign Bonds	—		27,917		27,917
ETFs	5,694		—		5,694
Pooled Equity Accounts	—		66,465		66,465
Total Assets at fair value	$	24,260	$	336,640	$	360,900

Pension Plan

Assets at Fair Value as of December 31, 2015
(In thousands)	Level 1		Level 2		Total
Domestic Mutual Funds	$	1,442	$	—	$	1,442
Corporate Bonds	—		188,332		188,332
U.S. Government Securities	3,133		497		3,630
Municipal Bonds	—		61,206		61,206
Foreign Bonds	—		25,251		25,251
ETFs	5,676		—		5,676
Pooled Equity Accounts	—		64,570		64,570
Total Assets at fair value	$	10,251	$	339,856	$	350,107

The pension plan has implemented a strategy to reduce risk through the use of a targeted funded ratio. The liability driven component is key to the asset allocation. The liability driven component seeks to align the duration of the fixed income asset allocation with the expected duration of the plan liabilities or benefit payments. Overall asset allocation is dynamic and specifies target allocation weights and ranges based on the funded status.

An improvement in funded status results in the de-risking of the portfolio, allocating more funds to fixed income and less to equity. A decline in funded status would result in a higher allocation to equity. The maximum equity allocation is 40%.

The equity investments utilize combinations of mutual funds, ETFs, and pooled equity account structures focused on the following strategies:



Strategy	Objective	Investment types
Return seeking growth	Funded ratio improvement over the long term	●	Global quality growth
Return seeking growth	Funded ratio improvement over the long term	●	Global low volatility
Return seeking bridge	Downside protection in the event of a declining equity market	●	Enduring asset
Return seeking bridge		●	Durable company

The fixed income objective is to preserve capital and to provide monthly cash flows for the payment of plan liabilities. Fixed income investments can include government, government agency, corporate, mortgage-backed, asset-backed, and municipal securities, and other classes of bonds. The duration of the fixed income portfolio has an objective of being within one year of the duration of the accumulated benefit obligation. The fixed income investments have an objective of a weighted average credit of A3/A-/A- by Moody’s, S&P, and Fitch, respectively.

The following table sets forth the other postretirement benefits plan assets at fair value as of December 31, 2016 and 2015. All are Level 1 assets.

Other Postretirement Benefits Plan

Assets at Fair Value as of December 31, 2016
(In thousands)	Level 1		Total
Domestic Mutual Funds	$	54,426	$	54,426
International Mutual Funds	15,982		15,982
Total Assets at fair value	$	70,408	$	70,408

Other Postretirement Benefits Plan

Assets at Fair Value as of December 31, 2015
(In thousands)	Level 1		Total
Domestic Mutual Funds	$	49,887	$	49,887
International Mutual Funds	15,681		15,681
Total Assets at fair value	$	65,568	$	65,568

Our postretirement plan portfolio is designed to achieve the following objectives over each market cycle and for at least 5 years:


•	Total return should exceed growth in the Consumer Price Index by 5.75% annually


•	Achieve competitive investment results

The primary focus in developing asset allocation ranges for the portfolio is the assessment of the portfolio's investment objectives and the level of risk that is acceptable to obtain those objectives. To achieve these goals the minimum and maximum allocation ranges for fixed income securities and equity securities are:



	Minimum		Maximum
Equities (long only)	70	%	100	%
Real estate	0	%	15	%
Commodities	0	%	10	%
Fixed income/Cash	0	%	10	%

Given the long term nature of this portfolio and the lack of any immediate need for significant cash flow, it is anticipated that the equity investments will consist of growth stocks and will typically be at the higher end of the allocation ranges above.

Investment in international mutual funds is limited to a maximum of 30% of the equity range. The allocation as of December 31, 2016 included 3% that was primarily invested in equity securities of emerging market countries and another 20% was invested in securities of companies primarily based in Europe and the Pacific Basin.

The following tables show the current and estimated future contributions and benefit payments.

Company Contributions

	Pension and Supplemental Executive Retirement Plans		Other Postretirement Benefits
(In thousands)	12/31/2016		12/31/2016
Company Contributions for the Year Ending:
1. Current	$	11,369	$	—
2. Current + 1	9,500		—

Benefit Payments (Total)

	Pension and Supplemental Executive Retirement Plans		Other Postretirement Benefits
(In thousands)	12/31/2016		12/31/2016
Actual Benefit Payments for the Year Ending:
1. Current	$	24,500	$	1,355
Expected Benefit Payments for the Year Ending:
2. Current + 1	21,831		847
3. Current + 2	23,439		978
4. Current + 3	26,927		1,068
5. Current + 4	27,199		1,257
6. Current + 5	27,151		1,410
7. Current + 6 - 10	146,471		8,574

Health care sensitivities

For measurement purposes, a 7.0% health care trend rate was used for benefits for retirees before they reach age 65 years for 2016. In 2017, the rate is assumed to be 6.5%, decreasing to 5.0% by 2020 and remaining at this level beyond.

Assumed health care cost trend rates have a significant effect on the amounts reported for the other postretirement benefits plan. A 1 percentage point change in the health care trend rate assumption would have the following effects on other postretirement benefits:



(In thousands)	1-Percentage Point Increase		1-Percentage Point Decrease
Effect on total service and interest cost components	$	237	$	(205	)
Effect on postretirement benefit obligation	2,382		(2,102		)

Profit sharing and 401(k)

We have a profit sharing and 401(k) savings plan for employees. At the discretion of the Board of Directors, we may make a contribution of up to 5% of each participant's eligible compensation. We provide a matching 401(k) savings contribution for employees on their before-tax contributions at a rate of 80% of the first $1,000 contributed and 40% of the next $2,000 contributed. For employees hired after January 1, 2014, the match is 100% up to 4% contributed. We recognized expenses related to these plans of $5.9 million, $5.1 million and $5.0 million in 2016, 2015 and 2014, respectively.