Note I – Retirement Benefit Plans

The Company has non-contributory defined benefit pension plans covering certain U.S. employees. Plan benefits are generally based upon age at retirement, years of service and, for its salaried plan, the level of compensation. The Company also sponsors unfunded nonqualified supplemental retirement plans that provide certain current and former officers with benefits in excess of limits imposed by federal tax law.

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Effective for the Fiscal 2017 year expense, the Company changed the method used to measure Service Cost and Interest Cost for pension and other postretirement benefits for our plans. Previously, we measured interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligations. For 2017, interest costs will be measured by applying the specific spot rates along the yield curve to the plans’ corresponding discounted cash flows that comprise the obligation (i.e., the Spot Rate approach). The new method provides a more precise measurement of interest costs by aligning the timing of the plans’ discounted cash flows to the corresponding spot rates on the yield curve; the measurement of our pension and other postretirement benefit obligations is not affected. We have accounted for this change as a change in accounting estimate, which is applied prospectively. Consequently, combined pension expense for the Company’s pension plans and other postretirement plan under the Spot Rate approach for the three-month period ended April 1, 2017 is approximately $135,000 lower when compared to the prior approach.

Significant disclosures relating to these benefit plans for the first quarter of fiscal 2017 and 2016 follow:

	Pension Benefits						Postretirement Benefits
	Three Months Ended						Three Months Ended
	April 1, 2017			April 2, 2016			April 1, 2017			April 2, 2016
Service cost	$	317,360		$	813,005		$	6,847		$	10,750
Interest cost		791,057			766,580			20,207			20,500
Expected return on plan assets		(1,195,895	)		(1,243,941	)		(12,874	)		(11,750	)
Amortization of prior service cost		36,438			50,143			(5,361	)		(6,000	)
Amortization of the net loss		307,870			627,055			(19,400	)		(13,500	)
Net periodic benefit cost	$	256,830		$	1,012,842		$	(10,581	)	$	--

The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations. In 2017, the Company expects to contribute $700,000 into its pension plans and $103,000 into its postretirement plan. As of April 1, 2017, the Company has not made contributions into its pension plans and has contributed $45,000 to its postretirement plan and will make the remaining contributions as required during the remainder of the year.

The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code covering substantially all U.S. non-union employees. The plan allows participants to make voluntary contributions of up to 100% of their annual compensation on a pretax basis, subject to IRS limitations. The plan provides for contributions by the Company at its discretion. This contribution rate is currently 50% of the first 6% of contributions by eligible participants. The plan also provides for a transitional credit ranging from 0% to 4% to certain eligible emplyees who were active participants of the Salaried Retirement Plan at the time that benefits under the plan were frozen in Fiscal 2016, and a non-discretionary 3% of contributions to all eligible employees.

The Company made contributions to the plan as follows:

	For the Three Months Ended
	April 1, 2017		April 2, 2016
Regular matching contribution	$	116,475	$	56,231
Transitional credit contribution		135,370		--
Non-discretionary contribution		307,568		51,470
Total contributions made for the period	$	559,413	$	107,701

The non-discretionary contributions made in each of the periods disclosed above were expensed in the prior fiscal year.