18.	Benefit Plans

Executive Benefit Plans

The Company has four executive benefit plans: the Supplemental Savings Incentive Plan (“Supplemental Savings Plan”), the Long-Term Retention Plan (“LTRP”), the Officer Retention Plan (“Retention Plan”) and the Long-Term Performance Plan (“Performance Plan”).

Pursuant to the Supplemental Savings Plan, as amended, eligible participants may elect to defer a portion of their annual salary and bonus. Participants are immediately vested in all deferred contributions they make and become fully vested in Company contributions upon completion of five years of service, termination of employment due to death, retirement or a change in control. Participant deferrals and Company contributions made in years prior to 2006 are invested in either a fixed benefit option or certain investment funds specified by the Company. Beginning in 2010, the Company may elect at its discretion to match up to 50% of the first 6% of salary, excluding bonuses, deferred by the participant. During 2016, 2015 and 2014, the Company matched up to 50% of the first 6% of salary, excluding bonus, deferred by the participant. The Company may also make discretionary contributions to participants’ accounts. The liability under this plan was as follows:

(in thousands)	January 1, 2017		January 3, 2016
Current liabilities	$	7,339	$	6,425
Noncurrent liabilities		70,709		69,941
Total liability - Supplemental Savings Plan	$	78,048	$	76,366

Under the LTRP, the Company accrues a defined amount each year for an eligible participant based upon an award schedule. Amounts awarded may earn an investment return based on certain investment funds specified by the Company. Benefits under the LTRP are 50% vested until age 50. After age 50, the vesting percentage increases by 5% each year until the benefits are fully vested at age 60. Participants receive payments from the plan upon retirement or in certain instances upon termination of employment. Payments are made in the form of a monthly annuity over a period of ten, fifteen or twenty years. The liability under this plan was as follows:

(in thousands)	January 1, 2017		January 3, 2016
Current liabilities	$	2	$	1
Noncurrent liabilities		1,256		535
Total liability - LTRP	$	1,258	$	536

Under the Retention Plan, as amended effective January 1, 2007, eligible participants may elect to receive an annuity payable in equal monthly installments over a 10, 15 or 20-year period commencing at retirement or, in certain instances, upon termination of employment. The benefits under the Retention Plan increase with each year of participation as set forth in an agreement between the participant and the Company. Benefits under the Retention Plan are 50% vested until age 50. After age 50, the vesting percentage increases by an additional 5% each year until the benefits are fully vested at age 60. The liability under this plan was as follows:

(in thousands)	January 1, 2017		January 3, 2016
Current liabilities	$	3,359	$	2,395
Noncurrent liabilities		44,480		45,111
Total liability - Retention Plan	$	47,839	$	47,506

Under the Performance Plan, adopted as of January 1, 2007, the Compensation Committee of the Company’s Board of Directors establishes dollar amounts to which a participant shall be entitled upon attainment of the applicable performance measures. Bonus awards under the Performance Plan are made based on the relative achievement of performance measures in terms of the Company-sponsored objectives or objectives related to the performance of the individual participants or of the subsidiary, division, department, region or function in which the participant is employed. The liability under this plan was as follows:

(in thousands)	January 1, 2017		January 3, 2016
Current liabilities	$	5,282	$	5,025
Noncurrent liabilities		5,651		5,571
Total liability - Performance Plan	$	10,933	$	10,596

Pension Plans

There are two Company-sponsored pension plans. The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after this date. The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements. Benefits under the pension plan for collectively bargained employees are determined in accordance with negotiated formulas for the respective participants. Contributions to the plans are based on actuarial determined amounts and are limited to the amounts currently deductible for income tax purposes.

Each year, the Company updates its mortality assumptions used in the calculation of its pension liability using The Society of Actuaries’ latest mortality tables. In 2014, the mortality table reflected increased longevity in the United States, whereas in 2015 and 2016, the mortality table reflected a lower increase in longevity.

The following tables set forth pertinent information for the two Company-sponsored pension plans:

Changes in Projected Benefit Obligation

	Fiscal Year
(in thousands)	2016			2015
Projected benefit obligation at beginning of year	$	261,469		$	279,669
Service cost		461			116
Interest cost		12,182			11,875
Actuarial (gain)/loss		8,268			(21,883	)
Benefits paid		(9,232	)		(8,308	)
Projected benefit obligation at end of year	$	273,148		$	261,469

The discount rate for the Primary Plan and the Bargaining Plan decreased to 4.44% and 4.49%, respectively, in 2016 from 4.72% for both Company-sponsored pension plans in 2015, which was the primary driver of the actuarial loss in 2016. The discount rate increased to 4.72% for both Company-sponsored pension plans in 2015 from 4.32% and 4.31% for the Primary Plan and the Bargaining Plan, respectively, in 2014, which was the primary driver in the actuarial gain in 2015. The actuarial gain and losses, net of tax, were recorded in other comprehensive loss.

The projected benefit obligations and accumulated benefit obligations for both the Company’s pension plans were in excess of plan assets at January 1, 2017 and January 3, 2016. The accumulated benefit obligation was $273.1 million as of January 1, 2017 and $261.5 million as of January 3, 2016.

Change in Plan Assets

	Fiscal Year
(in thousands)	2016			2015
Fair value of plan assets at beginning of year	$	214,055		$	212,692
Actual return on plan assets		12,313			(829	)
Employer contributions		11,120			10,500
Benefits paid		(9,232	)		(8,308	)
Fair value of plan assets at end of year	$	228,256		$	214,055

Funded Status

(in thousands)	January 1, 2017			January 3, 2016
Projected benefit obligation	$	(273,148	)	$	(261,469	)
Plan assets at fair value		228,256			214,055
Net funded status	$	(44,892	)	$	(47,414	)

Amounts Recognized in the Consolidated Balance Sheets

(in thousands)	January 1, 2017			January 3, 2016
Current liabilities	$	-		$	-
Noncurrent liabilities		(44,892	)		(47,414	)
Total liability - pension plans	$	(44,892	)	$	(47,414	)

Net Periodic Pension Cost (Benefit)

	Fiscal Year
(in thousands)	2016			2015			2014
Service cost	$	461		$	116		$	109
Interest cost		12,182			11,875			11,603
Expected return on plan assets		(13,822	)		(13,541	)		(13,775	)
Amortization of prior service cost		28			35			36
Recognized net actuarial loss		3,031			3,230			1,743
Net periodic pension cost (benefit)	$	1,880		$	1,715		$	(284	)

Significant Assumptions

	Fiscal Year
	2016			2015			2014
Projected benefit obligation at the measurement date:
Discount rate - Primary Plan		4.44	%		4.72	%		4.32	%
Discount rate - Bargaining Plan		4.49	%		4.72	%		4.31	%
Weighted average rate of compensation increase	N/A			N/A			N/A
Net periodic pension cost for the fiscal year:
Discount rate		4.72	%		4.32	%		5.21	%
Weighted average expected long-term rate of return on plan assets		6.50	%		6.50	%		7.00	%
Weighted average rate of compensation increase	N/A			N/A			N/A

Cash Flows

(in thousands)	Anticipated Future Pension Benefit Payments for the Fiscal Years
2017	$	9,950
2018		10,605
2019		11,304
2020		11,980
2021		12,619
2022 – 2026		72,390

Anticipated contributions for the two Company-sponsored pension plans will be in the range of $10 million to $12 million in 2017.

Plan Assets

The Company’s pension plans target asset allocation for 2017, actual asset allocation at January 1, 2017 and January 3, 2016, and the expected weighted average long-term rate of return by asset category were as follows:

	Target			Percentage of Plan						Weighted Average Expected
	Allocation			Assets at Fiscal Year-End						Long-Term Rate of Return
	2017			2016			2015			2016
U.S. large capitalization equity securities		40	%		41	%		40	%		3.3	%
U.S. small/mid-capitalization equity securities		5	%		5	%		5	%		0.4	%
International equity securities		15	%		15	%		15	%		1.3	%
Debt securities		40	%		39	%		40	%		1.5	%
Total		100	%		100	%		100	%		6.5	%

All assets in the Company’s pension plans are invested in institutional investment funds managed by professional investment advisors which hold U.S. equities, international equities and debt securities. The objective of the Company’s investment philosophy is to earn the plans’ targeted rate of return over longer periods without assuming excess investment risk. The general guidelines for plan investments include 30% - 45% in large capitalization equity securities, 0% - 20% in U.S. small and mid-capitalization equity securities, 0% - 10% in international equity securities and 10% - 50% in debt securities. The Company currently has 61% of its plan investments in equity securities and 39% in debt securities.

U.S. large capitalization equity securities include domestic based companies that are generally included in common market indices such as the S&P 500™ and the Russell 1000™. U.S. small and mid-capitalization equity securities include small domestic equities as represented by the Russell 2000™ index. International equity securities include companies from developed markets outside the United States. Debt securities as of January 1, 2017 are comprised of investments in two institutional bond funds with a weighted average duration of approximately three years.

A weighted average expected long-term rate of return of plan assets of 6.5% was used to determine net periodic pension cost in both 2016 and 2015. The rate reflects an estimate of long-term future returns for the pension plan assets net of expenses. The estimate is primarily a function of the asset classes, equities versus fixed income, in which the pension plan assets are invested and the analysis of past performance of these asset classes over a long period of time. The analysis includes expected long-term inflation and the risk premiums associated with equity investments and fixed income investments.

The following table summarizes the Company’s common/collective trust fund pension plan assets. The underlying investments held in common/collective trust funds are actively managed equity securities and fixed income investment vehicles that are valued at the net asset value per share multiplied by the number of shares held as of the measurement date.

(in thousands)	January 1, 2017		January 3, 2016
Common/collective trust funds - equity securities	$	139,735	$	128,220
Common/collective trust funds - fixed income		87,814		85,158
Total common/collective trust funds	$	227,549	$	213,378

In addition, the Company had $0.7 million of other level 1 pension plan assets related to its equity securities in both 2016 and 2015. The level 1 assets had quoted market prices in active markets for identical assets available for fair value measurement.

The Company does not have any unobservable inputs (Level 3) pension plan assets.

401(k) Savings Plan

The Company provides a 401(k) Savings Plan for substantially all its employees who are not part of collective bargaining agreements. The Company’s matching contribution is discretionary, with the option to match contributions for eligible participants up to 5% based on the Company’s financial results for future years. During 2016, 2015, and 2014, the Company matched the maximum 5% of participants’ contributions, for a total expense of $14.9 million, $10.7 million and $8.8 million, respectively.

Postretirement Benefits

The Company provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these benefits in the future.

The following tables set forth pertinent information for the Company’s postretirement benefit plan:

Reconciliation of Activity

	Fiscal Year
(in thousands)	2016			2015
Benefit obligation at beginning of year	$	70,361		$	70,121
Service cost		1,567			1,118
Interest cost		3,094			2,878
Acquisition of benefits		3,458			-
Plan participants’ contributions		662			594
Actuarial (gain)/loss		9,152			(1,600	)
Benefits paid		(3,135	)		(2,886	)
Medicare Part D subsidy reimbursement		96			136
Benefit obligation at end of year	$	85,255		$	70,361

Reconciliation of Plan Assets Fair Value

	Fiscal Year
(in thousands)	2016			2015
Fair value of plan assets at beginning of year	$	-		$	-
Employer contributions		2,377			2,156
Plan participants’ contributions		662			594
Benefits paid		(3,135	)		(2,886	)
Medicare Part D subsidy reimbursement		96			136
Fair value of plan assets at end of year	$	-		$	-

Funded Status

(in thousands)	January 1, 2017		January 3, 2016
Current liabilities	$	3,468	$	3,401
Noncurrent liabilities		81,787		66,960
Total liability - postretirement benefits	$	85,255	$	70,361

Net Periodic Postretirement Benefit Cost

	Fiscal Year
(in thousands)	2016			2015			2014
Service cost	$	1,567		$	1,118		$	1,445
Interest cost		3,094			2,878			3,255
Recognized net actuarial loss		2,186			3,164			2,293
Amortization of prior service cost		(3,360	)		(3,360	)		(1,513	)
Net periodic postretirement benefit cost	$	3,487		$	3,800		$	5,480

Significant Assumptions

	Fiscal Year
	2016			2015			2014
Benefit obligation discount rate at measurement date		4.36	%		4.53	%		4.13	%
Net periodic postretirement benefit cost discount rate for fiscal year		4.53	%		4.13	%		4.96	%

Postretirement benefit expense - Pre-Medicare:
Weighted average health care cost trend rate		6.2	%		7.5	%		8.0	%
Trend rate graded down to ultimate rate		4.5	%		5.0	%		5.0	%
Ultimate rate year	2024			2021			2021

Postretirement benefit expense - Post-Medicare:
Weighted average health care cost trend rate		7.5	%		7.0	%		7.5	%
Trend rate graded down to ultimate rate		4.5	%		5.0	%		5.0	%
Ultimate rate year	2024			2021			2021

A 1% increase or decrease in the annual health care cost trend would have impacted the postretirement benefit obligation and service cost and interest cost of the Company’s postretirement benefit plan as follows:

(in thousands)	1% Increase		1% Decrease
Postretirement benefit obligation at January 1, 2017	$	10,441	$	(9,976	)
Service cost and interest cost in 2016		550		(521	)

Cash Flows

(in thousands)	Anticipated Future Postretirement Benefit Payments Reflecting Expected Future Service
2017	$	3,468
2018		3,878
2019		4,252
2020		4,495
2021		4,708
2022 – 2026		26,507

Anticipated future postretirement benefit payments are shown net of Medicare Part D subsidy reimbursements, which are not material.

A reconciliation of the amounts in accumulated other comprehensive loss not yet recognized as components of net periodic benefit cost is as follows:

(in thousands)	January 3, 2016			Actuarial Gain (Loss)			Reclassification Adjustments			January 1, 2017
Pension Plans:
Actuarial (loss)	$	(112,898	)	$	(9,777	)	$	3,031		$	(119,644	)
Prior service (cost) credit		(128	)		-			27			(101	)
Postretirement Medical:
Actuarial (loss)		(33,536	)		(9,152	)		2,186			(40,502	)
Prior service (cost) credit		9,483			-			(3,361	)		6,122
Total within accumulated other comprehensive loss	$	(137,079	)	$	(18,929	)	$	1,883		$	(154,125	)

The amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic cost during 2017 are as follows:

(in thousands)	Pension Plans		Postretirement Medical			Total
Actuarial loss	$	3,228	$	2,591		$	5,819
Prior service cost (credit)		28		(2,982	)		(2,954	)
Total expected to be recognized during 2017	$	3,256	$	(391	)	$	2,865

Multi-Employer Pension Plans

Certain employees of the Company, whose employment is covered under collective bargaining agreements, participate in a multi-employer pension plan, the Employers-Teamsters Local Union Nos. 175 and 505 Pension Fund (the “Teamsters Plan”). The collective bargaining agreements covering the Teamsters Plan will expire on April 29, 2017 and July 26, 2018.

The risks of participating in the Teamsters Plan are different from single-employer plans as contributed assets are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the Teamsters Plan, the unfunded obligations of the Teamsters Plan may be borne by the remaining participating employers. If the Company chooses to stop participating in the Teamsters Plan, the Company could be required to pay the Teamsters Plan a withdrawal liability based on the underfunded status of the Teamsters Plan. The Company does not anticipate withdrawing from the Teamsters Plan.

In 2015, the Company increased the contribution rates to the Teamsters Plan, with additional increases occurring annually, as part of a rehabilitation plan. This is a result of the Teamsters Plan being certified by its actuary as being in “critical” status for the plan year beginning January 1, 2013, which was incorporated into the renewal of collective bargaining agreements with the unions, effective April 28, 2014 and adopted by the Company as a rehabilitation plan, effective January 1, 2015.

The Company’s participation in the Teamsters Plan is outlined in the table below. A red zone represents less than 80% funding and requires a financial improvement plan (“FIP”) or rehabilitation plan (“RP”).

Fiscal Year

(in thousands)

2016

2015

2014

Pension Protection Act Zone Status

Red

FIP or RP pending or implemented

Yes

Surcharge imposed

Yes

Contribution

728

692

655

According to the Teamsters Plan’s Forms 5500, the Company was not listed as providing more than 5% of the total contributions for the plan years ending December 31, 2015 or December 31, 2014. At the date these financial statements were issued, Forms 5500 were not available for the plan year ending December 31, 2016.

The Company has a liability recorded for exiting a multi-employer pension plan in 2008 and is required to make payments of approximately $1 million to this multi-employer pension plan each year through 2028. As of January 1, 2017, the Company has $8.1 million remaining on this liability.