EMPLOYEE BENEFIT PLANS

Pension Benefits

We maintain the Pension Plan and Supplemental Pension Plan covering certain employees whose hire date was on or before April 1, 1994. Benefits under each plan are based on credited years of service and the employee’s compensation during the last five years of employment. The Supplemental Pension Plan is maintained for certain highly compensated executives whose benefits were frozen in the Pension Plan in 1996. The Supplemental Pension Plan is designed to pay benefits in the same amount as if the participants continued to accrue benefits under the Pension Plan. We have no obligation to fund the Supplemental Pension Plan, and all assets and amounts payable under the Supplemental Pension Plan are subject to the claims of our general creditors.

On October 31, 2015, our Board of Directors approved amendments to freeze benefits and terminate the Pension Plan. The Pension Plan discontinued accruing benefits on December 31, 2015 and the termination was effective January 31, 2016. On December 2, 2015, our Board of Directors approved amendments to freeze benefits and terminate the Supplemental Pension Plan. The Supplemental Pension Plan discontinued accruing benefits on December 31, 2015 and the termination was effective December 31, 2015.

It is expected to take 15 to 24 months from the date of the approved amendment to complete the termination of the Pension Plan and Supplemental Pension Plan. The pension liability will be settled through either lump sum payments or purchased annuities. At January 30, 2016, there were approximately 800 active participants in the Pension Plan and approximately 650 terminated vested participants. The terminated vested participants can elect to begin to receive benefits at any point in the future, while the active participants will be given the opportunity to receive a lump sum at some point during 2016. All remaining participants after the lump sum distributions are completed will have their benefits placed with an annuity provider at the termination distribution date.

In addition, in the fourth quarter of 2015, when we communicated the approved amendments to the participants of the Pension Plan, we informed Pension Plan participants that we would provide for a one-time transition benefit to participants who were actively employed on December 31, 2015. We recorded a charge in selling and administrative expenses for this one-time transition benefit of $7.0 million, which will be contributed to participants’ savings plan accounts in 2016.

The components of net periodic pension expense were comprised of the following:



(In thousands)	2015			2014			2013
Service cost - benefits earned in the period	$	1,923		$	1,951		$	2,086
Interest cost on projected benefit obligation	2,444			3,218			3,041
Expected investment return on plan assets	(2,628		)	(3,219		)	(2,893		)
Amortization of prior service cost	4			(34		)	(34		)
Amortization of transition obligation	—			—			12
Amortization of actuarial loss	1,817			1,497			1,692
Curtailment loss	191			—			—
Settlement loss	1,912			1,868			83
Net periodic pension cost	$	5,663		$	5,281		$	3,987

In 2015, 2014, and 2013, we incurred pretax non-cash settlement charges of $1.9 million, $1.9 million and $0.1 million, respectively. The settlement charges were caused by lump sum benefit payments made to plan participants in excess of combined annual service cost and interest cost for each year. As a result of executing the plan termination amendments, we recorded a curtailment loss, in our income statement, of $0.2 million to immediately recognize all unrecognized past service credits.

The weighted-average assumptions used to determine net periodic pension expense were:



	2015		2014		2013
Discount rate	3.3	%	5.0	%	4.6	%
Rate of increase in compensation levels	2.8	%	3.0	%	3.5	%
Expected long-term rate of return	5.2	%	6.0	%	5.1	%

The weighted-average assumptions used to determine benefit obligations were:



	2015		2014
Discount rate	1.2	%	3.3	%
Rate of increase in compensation levels	0.0	%	2.8	%

As a result of executing the plan termination amendments, we eliminated the assumption of future compensation increases.

The following schedule provides a reconciliation of projected benefit obligations, plan assets, funded status, and amounts recognized for the Pension Plan and Supplemental Pension Plan at January 30, 2016 and January 31, 2015:



(In thousands)	January 30, 2016			January 31, 2015
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	78,187		$	64,878
Service cost	1,923			1,951
Interest cost	2,444			3,218
Plan amendments	—			217
Plan curtailments	(7,291		)	—
Benefits and settlements paid	(7,564		)	(7,857		)
Actuarial loss	7,712			15,780
Projected benefit obligation at end of year	$	75,411		$	78,187

Change in plan assets:
Fair market value at beginning of year	$	55,292		$	56,329
Actual return on plan assets	(3,025		)	5,685
Employer contributions	10,933			1,135
Benefits and settlements paid	(7,564		)	(7,857		)
Fair market value at end of year	$	55,636		$	55,292

Under funded and net amount recognized	$	(19,774	)	$	(22,895	)

Amounts recognized in the consolidated balance sheets consist of:
Current liabilities	$	(19,774	)	$	(372	)
Noncurrent liabilities	—			(22,523		)
Net amount recognized	$	(19,774	)	$	(22,895	)

As a result of executing the plan termination amendments, the pension liability and other comprehensive loss were recalculated to reflect the elimination of future compensation increases, which resulted in a decrease of $7.3 million, before tax.

The following are components of accumulated other comprehensive income and, as such, are not yet reflected in net periodic pension expense:



(In thousands)	2015			2014
Unrecognized past service credit	$	—		$	(195	)
Unrecognized actuarial loss	(26,418		)	(24,074		)
Accumulated other comprehensive loss, pretax	$	(26,418	)	$	(24,269	)

We expect to reclassify $2.5 million of the actuarial loss into net periodic pension expense during 2016. Additionally, if we are able to complete the distribution of the pension plans during 2016, we will recognize the remaining unrecognized actuarial loss into income through settlement charges.

The following table sets forth certain information for the Pension Plan and the Supplemental Pension Plan at January 30, 2016 and January 31, 2015:



	Pension Plan				Supplemental Pension Plan
(In thousands)	January 30, 2016		January 31, 2015		January 30, 2016		January 31, 2015
Projected benefit obligation	$	70,046	$	72,659	$	5,365	$	5,528
Accumulated benefit obligation	70,046		65,627		5,365		4,667
Fair market value of plan assets	$	55,636	$	55,292	$	—	$	—

During 2015, we elected to make a $10.7 million contribution to the Pension Plan. During 2014, we elected not to make a discretionary contribution to the Pension Plan. Historically, our funding policy of the Pension Plan is to make annual contributions based on advice from our actuaries and the evaluation of our cash position, but not less than the minimum required by applicable regulations. As a result of executing the plan termination amendments, we expect to make a required contribution to the Pension Plan during 2016, in order to fund the payout of the final plan termination liability.

Using the same assumptions as those used to measure our benefit obligations, the Pension Plan and the Supplemental Pension Plan benefits expected to be paid in each of the following fiscal years are as follows:



Fiscal Year	(In thousands)
2016	$	76,186
2017	—
2018	—
2019	—
2020	—
2021 - 2025	$	—

Given the amendments to terminate the pension plans, we reclassified our benefit obligations as current and have reflected all of our benefits expected to be paid in 2016, though the distribution process may extend into 2017, as mentioned above.

Historically, our overall investment strategy was to earn a long-term rate of return sufficient to meet the liability needs of the Pension Plan, within prudent risk constraints. As a result of executing the plan termination amendments, we modified our investment strategy to appropriately reduce our exposure to short-term risks, as we intend to complete the payout of the final plan termination liability within the next year.

Historically, our assets were classified as filling either a liability-hedging or a return-seeking role within our strategy. As a result of executing the plan termination amendments, assets can generally be considered as filling one of the following roles within our new strategy: (1) liability-hedging assets, which are designed to approximate the cash payment needs of the plan’s obligation and provide downside protection, primarily invested in long maturity investment grade bonds and U.S. treasury STRIPs; or (2) cash and cash equivalents, which are maintained to meet our expectations of near-term lump sum distributions and significantly reduce our exposure to the market risks associated with bond and equity instruments. Our current target allocation is approximately 30% liability-hedging assets and 70% cash and cash equivalents. Target allocations may change over time in response to changes in plan or market conditions. All assets must have readily ascertainable market values and be easily marketable. The portfolio of assets maintains a high degree of liquidity.

The investment managers have the discretion to invest within sub-classes of assets within the parameters of their investment guidelines. Fixed income managers can adjust duration exposure as deemed appropriate given current or expected market conditions. Additionally, the investment managers have the authority to invest in financial futures contracts and financial options contracts for the purposes of implementing hedging strategies. There were no futures contracts owned directly by the Pension Plan at January 30, 2016 and January 31, 2015. The primary benchmark for assessing the effectiveness of the Pension Plan investments is that of the plan’s liabilities themselves. Asset class returns are also judged relative to common benchmark indices such as the Russell 3000 and Barclay's Capital Long Credit Bond. Investment results and plan funded status are monitored daily, with a detailed performance review completed on a quarterly basis.

The fair value of our Pension Plan assets at January 30, 2016 and January 31, 2015 by asset category was comprised of the following:



	January 30, 2016								January 31, 2015
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and Cash Equivalents	$	25,035	$	25,035	$	—	$	—	$	1,096	$	1,096	$	—	$	—
Common / Collective Trusts
Long Credit	19,463		—		19,463		—		25,317		—		25,317		—
Intermediate Credit	7,380		—		7,380		—		17,972		—		17,972		—
U.S. Treasury Strips	2,778		—		2,778		—		—		—		—		—
High Yield	266		—		266		—		2,674		—		2,674		—
Global Real Estate	241		—		241		—		2,894		—		2,894		—
U.S. Equity Index	196		—		196		—		2,183		—		2,183		—
International Equities	182		—		182		—		2,034		—		2,034		—
U.S. Small Cap	95		—		95		—		1,122		—		1,122		—
Total	$	55,636	$	25,035	$	30,601	$	—	$	55,292	$	1,096	$	54,196	$	—

Savings Plans

We have a savings plan with a 401(k) deferral feature and a nonqualified deferred compensation plan with a similar deferral feature for eligible employees. We contribute a matching percentage of employee contributions. Our matching contributions are subject to Internal Revenue Service (“IRS”) regulations. For 2015, 2014, and 2013, we expensed $6.3 million, $5.9 million, and $5.7 million, respectively, related to our matching contributions. In connection with our nonqualified deferred compensation plan, we had liabilities of $17.5 million and $17.2 million at January 30, 2016 and January 31, 2015, respectively.