5. EMPLOYEE BENEFITS

We maintain a qualified defined benefit pension plan (“Pension Plan”), which covers certain eligible current and former employees and has been frozen since March 31, 2009. No new participants may enter the Pension Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

We also have a limited number of supplemental retirement plans to provide certain key current and former employees with additional retirement benefits. These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations.

The elements of retirement expense are as follows:


	Quarters Ended				Six Months Ended
	June 25,		June 26,		June 25,		June 26,
(in thousands)	2017		2016		2017		2016
Pension plans:
Service Cost	$	—	$	—	$	—	$	—
Interest Cost		21,367		22,167		42,734		44,334
Expected return on plan assets		(22,393)		(22,408)		(44,785)		(44,815)
Actuarial loss		5,084		4,595		10,168		9,191
Net pension expense		4,058		4,354		8,117		8,710
Net post-retirement benefit credit		(730)		(660)		(1,462)		(1,322)
Net retirement benefit expenses	$	3,328	$	3,694	$	6,655	$	7,388

Changes In Presentation

As discussed more fully in Note 1, we recently adopted ASU No. 2017-07, which provides guidance on presentation of service costs and the other components of net retirement expenses.

Service costs represent the annual growth in benefits earned by participants over the 12 months of the fiscal year. Since our Pension Plan is frozen and no benefits continue to accrue for our participants, we have determined in connection with the adoption of ASU 2017-07 that service costs are zero for all periods presented. Historically, we have included expenses paid from the Pension Plan trust (including Public Benefit Guaranty Corporation (PBGC)) audit, actuarial, legal and administrative fees as service costs in our footnote presentation of the components of net periodic pension cost. We have determined that the vast majority of these types of expenses reflect a reduction to the expected return on plan assets because they reduce the expected growth of the trust assets. As such, we have elected to reclassify the trust-paid expenses related to our Pension Plan as a reduction to expected return on plan assets for all periods presented. For the quarter and six months ended June 26, 2016, we have reclassified expenses of $4.7 million and $9.4 million, respectively, from service costs to expected return on plan assets in the table above. This change in presentation had no impact on net retirement expenses.

Contribution of Company-owned Real Property to Pension Plan

In February 2016, we voluntarily contributed certain of our real property appraised at $47.1 million to our Pension Plan, and we entered into lease-back arrangements for the contributed properties. We leased back the contributed facilities under 11-year leases with initial annual payments totaling approximately $3.5 million. A similar contribution of properties was made to the Pension Plan in 2011, and the accounting treatment for both contributions is described below.

The contributions and leasebacks of these properties are treated as financing transactions and, accordingly, we continue to depreciate the carrying value of the properties in our financial statements. No gain or loss will be recognized on the contributions of any property until the sale of the property by the Pension Plan. At the time of our contributions, our pension obligation was reduced and our financing obligations were recorded equal to the fair market value of the properties. The financing obligations are reduced by a portion of the lease payments made to the Pension Plan each month, and increased for imputed interest expense on the obligations to the extent imputed interest exceeds monthly payments. The long-term balance of this obligation at June 25, 2017, and December 25, 2016, was $52.3 million and $51.6 million, respectively, and relates to the contributions to the Pension Plan in 2016 and 2011.