Employee Benefits

Retirement Plans

The Company’s Retirement Income Plan (the "Retirement Plan") is a qualified noncontributory defined benefit plan. Upon retirement or death of a vested plan participant, assets of the Retirement Plan are used to pay benefit obligations under the Retirement Plan. Contributions from the Company are at least the minimum funding amounts required by the IRS, as actuarially calculated. The assets of the Retirement Plan are primarily invested in common collective trusts which hold equity securities, debt securities and cash equivalents and are managed by a professional investment manager appointed by the Company.

The Company has two non-qualified retirement plans that are non-funded defined benefit plans. The Company's Supplemental Retirement Plan covers certain former employees and directors of the Company. The Excess Benefit Plan, was adopted in 2004 and covers certain active and former employees of the Company. The benefit cost for the non-qualified retirement plans are based on substantially the same actuarial methods and economic assumptions as those used for the Retirement Plan.

During the quarter ended March 31, 2014, the Company implemented certain amendments to the Retirement Plan and Excess Benefit Plan. In the first quarter of 2014, the Company offered a cash balance pension plan as an alternative to its current final average pay pension plan for employees hired prior to January 1, 2014. The cash balance pension plan also included an enhanced employer matching contribution to the employee’s respective 401(k) Defined Contribution Plan (discussed below). For employees that elected the new cash balance feature of the plans, the pension benefit earned under the existing final average pay feature of the plans was frozen as of March 31, 2014. Employees hired after January 1, 2014 were automatically enrolled in the cash balance pension plan. The amendments to the plans were effective April 1, 2014. As a result of these actions, the Company remeasured the assets and liabilities of the plans, based on actuarially determined estimates, using the close of the alternative choice election period of February 28, 2014, as the remeasurement date.

Prior to December 31, 2013, employees who completed one year of service with the Company and worked at least a minimum number of hours each year were covered by the final average pay formula of the plan. For participants that continue to be covered by the final average pay formula, retirement benefits are based on the employee’s final average pay and years of service. The cash balance pension plan covers employees beginning on their employment commencement date or re-employment commencement date in any plan year in which the employee completes at least a minimum number of hours of service. Retirement benefits under the cash balance pension plan are based on the employee’s cash balance account, consisting of pay credits and interest credits.

The Company complies with the FASB guidance on disclosure for pension and other post-retirement plans that requires disclosure of investment policies and strategies, categories of investment and fair value measurements of plan assets, and significant concentrations of risk.

The obligations and funded status of the plans are presented below (in thousands):



	December 31,
	2015						2014
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Change in projected benefit obligation:
Benefit obligation at end of prior year	$	341,133		$	28,397		$	317,815		$	25,898
Service cost	8,530			262			8,284			303
Interest cost	13,477			1,018			14,001			1,041
Amendments (a)	—			—			(33,700		)	(500		)
Actuarial (gain) loss	(19,290		)	(810		)	50,741			3,508
Benefits paid	(18,144		)	(1,909		)	(16,008		)	(1,853		)
Benefit obligation at end of year	325,706			26,958			341,133			28,397
Change in plan assets:
Fair value of plan assets at end of prior year	272,939			—			257,831			—
Actual return (loss) on plan assets	(3,760		)	—			22,116			—
Employer contribution	9,000			1,909			9,000			1,853
Benefits paid	(18,144		)	(1,909		)	(16,008		)	(1,853		)
Fair value of plan assets at end of year	260,035			—			272,939			—
Funded status at end of year	$	(65,671	)	$	(26,958	)	$	(68,194	)	$	(28,397	)

_____________________

(a)Amendments relate to the modification of the Company’s Retirement Plan and Excess Benefit Plan discussed above.

Amounts recognized in the Company's balance sheets consist of the following (in thousands):



	December 31,
	2015						2014
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Current liabilities	$	—		$	(2,102	)	$	—		$	(2,319	)
Noncurrent liabilities	(65,671		)	(24,856		)	(68,194		)	(26,078		)
Total	$	(65,671	)	$	(26,958	)	$	(68,194	)	$	(28,397	)

The accumulated benefit obligation in excess of plan assets is as follows (in thousands):



	December 31,
	2015						2014
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Projected benefit obligation	$	(325,706	)	$	(26,958	)	$	(341,133	)	$	(28,397	)
Accumulated benefit obligation	(302,446		)	(25,785		)	(312,762		)	(27,603		)
Fair value of plan assets	260,035			—			272,939			—

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):



	Years Ended December 31,
	2015						2014
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Net loss	$	118,963		$	9,592		$	124,407		$	11,341
Prior service benefit	(27,344		)	(224		)	(30,811		)	(264		)
Total	$	91,619		$	9,368		$	93,596		$	11,077

The following are the weighted-average actuarial assumptions used to determine the benefit obligations:



	December 31,
	2015						2014
			Non-Qualified						Non-Qualified
	Retirement Income Plan		Supplemental Retirement Plan		Excess Benefit Plan		Retirement Income Plan		Supplemental Retirement Plan		Excess Benefit Plan
Discount rate	4.57	%	3.99	%	4.59	%	4.0	%	3.4	%	4.1	%
Rate of compensation increase	4.5	%	N/A		4.5	%	4.5	%	N/A		4.5	%

The Company reassesses various actuarial assumptions at least on an annual basis. The discount rate is reviewed at each measurement date. For 2015, the discount rate used to measure the fiscal year end obligation is based on a segmented spot rate yield curve that matches projected future payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. A 1% increase in the discount rate would decrease the December 31, 2015 retirement plans' projected benefit obligation by 11.4%. A 1% decrease in the discount rate would increase the December 31, 2015 retirement plans' projected benefit obligation by 14%.

The components of net periodic benefit cost are presented below (in thousands):



	Years Ended December 31,
	2015						2014						2013
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Service cost	$	8,530		$	262		$	8,284		$	303		$	9,137		$	190
Interest cost	13,477			1,018			14,001			1,041			12,742			872
Expected return on plan assets	(19,795		)	—			(18,699		)	—			(17,108		)	—
Amortization of:
Net loss	9,710			937			8,178			675			10,437			661
Prior service cost (benefit)	(3,467		)	(39		)	(2,889		)	(17		)	3			94
Net periodic benefit cost	$	8,455		$	2,178		$	8,875		$	2,002		$	15,211		$	1,817

In fiscal 2016, the Company expects to change the method used to estimate the service and interest components of net periodic benefit cost for pension benefits. This change compared to the previous method will result in a decrease in the service and interest components in future periods. Historically, the Company estimated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. For fiscal 2016, the Company has elected to utilize a full yield curve approach to estimate these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plan’s liability cash flows to the corresponding spot rates on the yield curve. The Company will account for this change as a change in accounting estimate and accordingly will account for this prospectively. The change in estimate is anticipated to decrease the service and interest components of net periodic benefit cost starting in 2016 by $2.9 million.

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):



	Years Ended December 31,
	2015						2014						2013
	Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans			Retirement Income Plan			Non-Qualified Retirement Plans
Net (gain) loss	$	4,266		$	(811	)	$	47,324		$	3,508		$	(30,065	)	$	(533	)
Prior service benefit	—			—			(33,700		)	(500		)	—			—
Amortization of:
Net loss	(9,710		)	(937		)	(8,178		)	(675		)	(10,437		)	(661		)
Prior service (cost) benefit	3,467			39			2,889			17			(3		)	(94		)
Total recognized in other comprehensive income	$	(1,977	)	$	(1,709	)	$	8,335		$	2,350		$	(40,505	)	$	(1,288	)

The total amount recognized in net periodic benefit costs and other comprehensive income are presented below (in thousands):



	Years Ended December 31,
	2015				2014				2013
	Retirement Income Plan		Non-Qualified Retirement Plans		Retirement Income Plan		Non-Qualified Retirement Plans		Retirement Income Plan			Non-Qualified Retirement Plans
Total recognized in net periodic benefit cost and other comprehensive income	$	6,478	$	469	$	17,210	$	4,352	$	(25,294	)	$	529

The following are amounts in accumulated other comprehensive income that are expected to be recognized as components of net periodic benefit cost during 2016 (in thousands):



	Retirement Income Plan			Non-Qualified Retirement Plans
Net loss	$	6,830		$	715
Prior service benefit	(3,470		)	(40		)

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelve months ended December 31:



	2015						2014 (a)						2013
			Non-Qualified						Non-Qualified						Non-Qualified
	Retirement Income Plan		Supplemental Retirement Plan		Excess Benefit Plan		Retirement Income Plan		Supplemental Retirement Plan		Excess Benefit Plan		Retirement Income Plan		Supplemental Retirement Plan		Excess Benefit Plan
Discount rate	4.0	%	3.4	%	4.1	%	4.9	%	3.9	%	4.9	%	4.0	%	3.1	%	4.0	%
Expected long-term return on plan assets	7.5	%	N/A		N/A		7.5	%	N/A		N/A		7.5	%	N/A		N/A
Rate of compensation increase	4.5	%	N/A		4.5	%	4.75	%	N/A		4.75	%	4.75	%	N/A		4.75	%

_____________________


(a)	The Retirement Plan and the Excess Benefit Plan were remeasured on February 28, 2014 due to the above mentioned plan amendment. The discount rate used to remeasure the benefit obligation was 4.6% for the Retirement Plan and 4.5% for the Excess Benefit Plan, compared to 4.9% for both plans as of January 1, 2014. All other assumptions remained consistent with assumptions used at January 1, 2014.

The Company’s overall expected long-term rate of return on assets is 7.5% effective January 1, 2015, and 7.0% effective January 1, 2016, which is both a pre-tax and after-tax rate as pension funds are generally not subject to income tax. The expected long-term rate of return is based on the weighted average of the expected returns on investments based upon the target asset allocation of the pension fund. The Company’s target allocations for the plan’s assets are presented below:



	December 31, 2015
Equity securities	50	%
Fixed income	40	%
Alternative investments	10	%
Total	100	%

The Retirement Plan invests the majority of its plan assets in common collective trusts which includes a diversified portfolio of domestic and international equity securities and fixed income securities. Alternative investments of the Retirement Plan are comprised of a real estate limited partnership and equity securities of real estate companies. The expected rate of returns for the funds are assessed annually and are based on long-term relationships among major asset classes and the level of incremental returns that can be earned by the successful implementation of different active investment management strategies. Equity and real estate equity returns are based on estimates of long-term inflation rate, real rate of return, 10-year Treasury bond premium over cash, an expected equity risk premium, as well as other economic factors. Fixed income returns are based on maturity, long-term inflation, real rate of return and credit spreads. These assumptions also capture the expected correlation of returns between these asset classes over the long term.

The FASB guidance on disclosure for pension plans requires disclosure of fair value measurements of plan assets. To increase consistency and comparability in fair value measurements, the FASB guidance on fair value measurements established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:


•	Level 1 – Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices of securities held in the mutual funds and underlying portfolios of the Retirement Plan are primarily obtained from independent pricing services. These prices are based on observable market data.


•	Level 2 – Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability either directly or indirectly. The Common Collective Trusts are valued using the net asset value ("NAV") provided by the administrator of the fund. The NAV price is quoted on a restrictive market although the underlying investments are traded on active markets.


•	Level 3 – Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limited partnership is reported at the NAV of the investment.

The fair value of the Company’s Retirement Plan assets at December 31, 2015 and 2014, and the level within the three levels of the fair value hierarchy defined by the FASB guidance on fair value measurements are presented in the table below (in thousands):



Description of Securities	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and Cash Equivalents	$	1,266	$	1,266	$	—	$	—
Common Collective Trusts (a)
Equity funds	144,279		—		144,279		—
Fixed income funds	103,877		—		103,877		—
Real Estate Funds	2,025		—		2,025		—
Total Common Collective Trusts	250,181		—		250,181		—
Limited Partnership Interest in Real Estate (b)	8,588		—		—		8,588
Total Plan Investments	$	260,035	$	1,266	$	250,181	$	8,588



Description of Securities	Fair Value as of December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and Cash Equivalents	$	1,237	$	1,237	$	—	$	—
Common Collective Trust (a)
Equity funds	149,839		—		149,839		—
Fixed income funds	113,115		—		113,115		—
Total Common Collective Trusts	262,954		—		262,954		—
Limited Partnership Interest in Real Estate (b)	8,748		—		—		8,748
Total Plan Investments	$	272,939	$	1,237	$	262,954	$	8,748

_____________________


(a)	The Common Collective Trusts are invested in equity and fixed income securities, or a combination thereof. The investment objective of each trust is to produce returns in excess of, or commensurate with, its predefined index.

(b)

This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it for commercial development. The Company is restricted from selling its partnership interest during the life of the partnership which is generally 5-7 years. Return on investment is realized as land is sold. The fair value of the limited partnership interest in real estate is based on the NAV of the partnership which reflects the appraised value of the land.

The table below reflects the changes in the fair value of investments in the real estate limited partnership during the period (in thousands):



	Fair Value of Investments in Real Estate
Balances at December 31, 2013	$	8,857
Sale of land	(357		)
Unrealized gain in fair value	248
Balances at December 31, 2014	8,748
Unrealized loss in fair value	(160		)
Balances at December 31, 2015	$	8,588

There were no transfers in or out of Level 1 and Level 2 fair value measurements categories due to changes in observable inputs during the twelve month periods ending December 31, 2015 and 2014. Except as noted in the above table, there were no purchases, issuances, and settlements related to the assets in the Level 3 fair value measurement category during the twelve month periods ending December 31, 2015 and 2014.

The Company adheres to the traditional capital market pricing theory which maintains that over the long term, the risk of owning equities should be rewarded with a greater return than available from fixed income investments. The Company seeks to minimize the risk of owning equity securities by investing in funds that pursue risk minimization strategies and by diversifying its investments to limit its risks during falling markets. The investment manager has full discretionary authority to direct the investment of plan assets held in trust within the guidelines prescribed by the Company through the plan’s investment policy statement including the ability to hold cash equivalents. The investment guidelines of the investment policy statement are in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA") and Department of Labor ("DOL") regulations.

The Company contributes at least the minimum funding amounts required by the IRS for the Retirement Plan, as actuarially calculated. The Company expects to contribute at least $6.2 million to its retirement plans in 2016.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):



	Retirement Income Plan		Non-Qualified Retirement Plans
2016	$	12,502	$	2,102
2017	13,752		2,069
2018	14,973		2,059
2019	16,141		2,024
2020	17,210		1,985
2021-2025	100,358		9,151

401(k) Defined Contribution Plans

The Company sponsors 401(k) defined contribution plans covering substantially all employees. Annual matching contributions made to the savings plans for the years 2015, 2014 and 2013 were $3.9 million, $3.0 million, and $1.9 million, respectively. Historically, the Company had provided a 50 percent matching contribution up to 6 percent of the employee’s compensation subject to certain other limits and exclusions. Effective April 1, 2014, for employees who enrolled in the cash balance pension plan (discussed above), the Company provided a 100 percent matching contribution up to 6 percent of the employee's compensation subject to certain other limits and exclusions.

Other Post-retirement Benefits

The Company provides certain health care benefits for retired employees and their eligible dependents and life insurance benefits for retired employees only. Substantially all of the Company’s employees may become eligible for those benefits if they retire while working for the Company. Contributions from the Company are generally no more than the IRS tax deductible limit, as actuarially calculated. The assets of the plan are primarily invested in institutional funds which hold equity securities, debt securities, and cash equivalents and are managed by a professional investment manager appointed by the Company.

The following table contains a reconciliation of the change in the benefit obligation, the fair value of plan assets, and the funded status of the plan (in thousands):



	December 31,
	2015			2014
Change in benefit obligation:
Benefit obligation at end of prior year	$	100,700		$	92,847
Service cost	3,454			2,845
Interest cost	4,035			4,463
Actuarial loss (gain)	(11,423		)	3,465
Amendment (a)	(824		)	—
Benefits paid	(4,544		)	(4,031		)
Retiree contributions	1,245			1,111
Benefit obligation at end of year	92,643			100,700
Change in plan assets:
Fair value of plan assets at end of prior year	41,358			42,192
Actual return (loss) on plan assets	(469		)	2,086
Employer contribution	500			—
Benefits paid	(4,544		)	(4,031		)
Retiree contributions	1,245			1,111
Fair value of plan assets at end of year	38,090			41,358
Funded status at end of year	$	(54,553	)	$	(59,342	)

_____________________


(a)	Amendment relates to modification of the Company's Other Post-retirement Benefit Plan which increased mail order co-payments for post age 65 medications. The plan change was approved in 2015. The amendment became effective January 1, 2016.

Amounts recognized in the Company's balance sheets consist of the following (in thousands):



	December 31,
	2015			2014
Current liabilities	$	—		$	—
Noncurrent liabilities	(54,553		)	(59,342		)
Total	$	(54,553	)	$	(59,342	)

Amounts recognized in accumulated other comprehensive income consist of the following (in thousands):



	December 31,
	2015			2014
Net gain	$	(38,802	)	$	(31,943	)
Prior service benefit	(12,213		)	(14,457		)
Total	$	(51,015	)	$	(46,400	)

The following are the weighted-average actuarial assumptions used to determine the accrued post-retirement benefit obligations:



	December 31,
	2015		2014
Discount rate at end of year	4.59	%	4.10	%
Health care cost trend rates:
Initial	7.00	%	7.25	%
Ultimate	4.50	%	4.50	%
Year ultimate reached	2026		2026

The discount rate is reviewed at each measurement date. For 2015, the discount rate used to measure the fiscal year end obligation is based on a segmented spot rate yield curve that matches projected future payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. A 1% increase in the discount rate would decrease the December 31, 2015 accumulated post-retirement benefit obligation by 12.7%. A 1% decrease in the discount rate would increase the December 31, 2015 accumulated post-retirement benefit obligation by 15.7%.

Net periodic benefit cost is made up of the components listed below (in thousands):



	Years Ended December 31,
	2015			2014			2013
Service cost	$	3,454		$	2,845		$	3,843
Interest cost	4,035			4,463			5,156
Expected return on plan assets	(2,070		)	(2,116		)	(1,951		)
Amortization of:
Prior service benefit	(3,068		)	(4,753		)	(5,657		)
Net gain	(2,025		)	(2,671		)	(626		)
Net periodic benefit cost	$	326		$	(2,232	)	$	765

In fiscal 2016, the Company expects to change the method used to estimate the service and interest components of net periodic benefit cost for other postretirement benefits. This change compared to the previous method will result in a decrease in the service and interest components in future periods. Historically, the Company estimated service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. For fiscal 2016, the Company has elected to utilize a full yield curve approach to estimate these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company believes the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plan’s liability cash flows to the corresponding spot rates on the yield curve. The Company will account for this change as a change in accounting estimate and accordingly will account for this prospectively. The change in estimate is anticipated to decrease the service and interest components of net periodic benefit costs starting in 2016 by $0.9 million.

The changes in benefit obligations recognized in other comprehensive income are presented below (in thousands):



	Years Ended December 31,
	2015			2014		2013
Net (gain) loss	$	(8,884	)	$	3,496	$	(52,366	)
Prior service benefit	(824		)	—		(97		)
Amortization of:
Prior service benefit	3,068			4,753		5,657
Net gain	2,025			2,671		626
Total recognized in other comprehensive income	$	(4,615	)	$	10,920	$	(46,180	)

The total amount recognized in net periodic benefit cost and other comprehensive income are presented below (in thousands):



	Years Ended December 31,
	2015			2014		2013
Total recognized in net periodic benefit cost and other comprehensive income	$	(4,289	)	$	8,688	$	(45,415	)

The amount in accumulated other comprehensive income that is expected to be recognized as a component of net periodic benefit cost during 2016 is a prior service benefit of $3.2 million and a net gain of $2.7 million.

The following are the weighted-average actuarial assumptions used to determine the net periodic benefit cost for the twelve months ended December 31:



	2015		2014		2013 (a)
Discount rate at beginning of year	4.1	%	4.9	%	4.1	%
Expected long-term return on plan assets	5.2	%	5.2	%	5.2	%
Health care cost trend rates:
Initial	7.25	%	7.5	%	7.75	%
Ultimate	4.5	%	4.5	%	4.5	%
Year ultimate reached	2026		2026		2026

_____________________

(a) The Other Post-retirement Benefits Plan was remeasured at October 3, 2013 due to a plan amendment. The discount rate increased from 4.1% as of January 1, 2013 to 4.9% at the remeasurement date. All other assumptions remained consistent with assumptions used at January 1, 2013.

For measurement purposes, a 7.25% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2015. The rate was assumed to decrease gradually to 4.5% for 2026 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. The effect of a 1% change in these assumed health care cost trend rates would increase or decrease the December 31, 2015 benefit obligation by $13.0 million or $11.7 million, respectively. In addition, a 1% change in said rate would increase or decrease the aggregate 2015 service and interest cost components of the net periodic benefit cost by $1.6 million or $1.2 million, respectively.

The Company’s overall expected long-term rate of return on assets, on an after-tax basis, is 5.2% effective January 1, 2015, and 4.875% effective January 1, 2016. The expected long-term rate of return is based on the after-tax weighted average of the expected returns on investments based upon the target asset allocation. The Company’s target allocations for the plan’s assets are presented below:



	December 31, 2015
Equity securities	65	%
Fixed income	30	%
Alternative investments	5	%
Total	100	%

The Other Post-retirement Benefit Plan invests the majority of its plan assets in institutional funds which includes a diversified portfolio of domestic and international equity securities and fixed income securities. The asset portfolio also includes cash equivalents and a real estate limited partnership. The expected rates of return for the funds are assessed annually and are based on long-term relationships among major asset classes and the level of incremental returns that can be earned by the successful implementation of different active investment management strategies. Equity returns are based on estimates of long-term inflation rate, real rate of return, 10-year Treasury bond premium over cash, an expected equity risk premium, as well as other economic factors. Fixed income returns are based on maturity, long-term inflation, real rate of return and credit spreads. These assumptions also capture the expected correlation of returns between these asset classes over the long term.

The FASB guidance on disclosure for other post-retirement benefit plans requires disclosure of fair value measurements of plan assets. To increase consistency and comparability in fair value measurements, the FASB guidance on fair value measurements established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:


•	Level 1 – Observable inputs that reflect quoted market prices for identical assets and liabilities in active markets. Prices of securities held in the mutual funds and underlying portfolios of the Other Post-retirement Benefits Plan are primarily obtained from independent pricing services. These prices are based on observable market data.

•

Level 2 – Inputs other than quoted market prices included in Level 1 that are observable for the asset or liability either directly or indirectly. The fair value of municipal securities-tax-exempt are reported at fair value based on evaluated prices that reflect observable market information, such as actual trade information of similar securities, adjusted for observable differences. The institutional funds are valued using the NAV provided by the administrator of the fund. The NAV price is quoted on a restrictive market although the underlying investments are traded on active markets.


•	Level 3 – Unobservable inputs using data that is not corroborated by market data. The fair value of the real estate limited partnership is reported at the NAV of the investment.

The fair value of the Company’s Other Post-retirement Benefits Plan assets at December 31, 2015 and 2014, and the level within the three levels of the fair value hierarchy defined by the FASB guidance on fair value measurements are presented in the table below (in thousands):



Description of Securities	Fair Value as of December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Institutional Funds (a)
Equity funds	24,881		—		24,881		—
Fixed income funds	11,599		—		11,599		—
Total Institutional Funds	36,480		—		36,480		—
Limited Partnership Interest in Real Estate (b)	1,610		—		—		1,610
Total Plan Investments	$	38,090	$	—	$	36,480	$	1,610

Description of Securities	Fair Value as of December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and Cash Equivalents	$	1,100	$	1,100	$	—	$	—
Institutional Funds (a)
Equity funds	26,399		—		26,399		—
Fixed income funds	12,219		—		12,219		—
Total Institutional Funds	38,618		—		38,618		—
Limited Partnership Interest in Real Estate (b)	1,640		—		—		1,640
Total Plan Investments	$	41,358	$	1,100	$	38,618	$	1,640

___________________


(a)	The institutional funds are invested in equity or fixed income securities, or a combination thereof. The investment objective of each trust is to produce returns in excess of, or commensurate with, its predefined index.

(b)

This investment is a commercial real estate partnership that purchases land, develops limited infrastructure, and sells it for commercial development. The Company is restricted from selling its partnership interest during the life of the partnership which is generally 5-7 years. Return of investment is realized as land is sold. The fair value of the limited partnership interest in real estate is based on the NAV of the partnership which reflects the appraised value of the land.

The table below reflects the changes in the fair value of the investments in real estate during the period (in thousands):



	Fair Value of Investments in Real Estate
Balance at December 31, 2013	$	1,661
Sale of land	(67		)
Unrealized gain in fair value	46
Balance at December 31, 2014	1,640
Unrealized gain in fair value	(30		)
Balance at December 31, 2015	$	1,610

The Company expects to contribute $1.7 million to its other post-retirement benefits plan in 2016. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):



2016	$	3,426
2017	3,814
2018	4,178
2019	4,449
2020	4,807
2021-2025	27,761

Annual Short-Term Incentive Plan

The Annual Short-Term Incentive Plan (the "Incentive Plan") provides for the payment of cash awards to eligible Company employees, including each of its named executive officers. Payment of awards is based on the achievement of performance measures reviewed and approved by the Company’s Board of Directors’ Compensation Committee. Generally, these performance measures are based on meeting certain financial, operational and individual performance criteria. The financial performance goals are based on earnings per share and the operational performance goals are based on compliance, customer satisfaction, and reliability. If a specified level of earnings per share is not attained, no amounts will be paid under the Incentive Plan, unless the Compensation Committee determines otherwise. In 2015, the Company reached the required levels of earnings per share, compliance, and customer satisfaction goals for an incentive payment of $10.5 million. In 2014 and 2013, the Company reached the required levels of earnings per share, safety, compliance, and customer satisfaction goals for an incentive payment of $7.4 million and $4.0 million, respectively. The Company has renewed the Incentive Plan in 2016 with similar goals.