EMPLOYEE POSTRETIREMENT BENEFITS

The Company provides postretirement medical and other benefits to senior executive officers and senior managers. These plan obligations are unfunded. On August 25, 2015 the Company amended the employment agreements with five of its senior executive officers eliminating the postretirement medical benefits to these individuals and their spouses. In consideration of eliminating this retiree benefit, the senior executive officers received lump sum payments in amounts ranging from $8 to $15 based on each officer’s years of service to the Company. The Company’s current senior executive officers that either already qualified for retirement or had twenty or more years of service to the Company are still eligible for benefits under their employment agreements.

The reduction in active plan participants was accounted for as a negative plan amendment and eliminated the accrual for defined benefits for future services from these individuals and resulted in the subsequent remeasurement of the Company's benefit obligation as of August 31, 2015. The effect of the August 31, 2015 remeasurement of the benefit obligation is as follows:



Benefit obligation at January 31, 2015	$	12,125
Service cost	252
Interest cost	244
Prior service (credit) due to plan amendment	(958		)
Actuarial (gain) due to assumption changes	(3,403		)
Retiree benefits paid	(89		)
Benefit obligation at August 31, 2015	$	8,171
Fair value of plan assets	—
Funded status at August 31, 2015	$	(8,171	)
Net actuarial loss in accumulated other comprehensive income	2,710
Unrecognized prior service (credit)	(958		)
Accrued postretirement benefit cost at August 31, 2015	$	(6,419	)

The actuarial gain from assumptions changes is primarily the result of an increase in the discount rate at the measurement date. The discount rate is based on matching rates of return on high-quality fixed-income investments with the timing and amount of expected benefit payments. Medical trend rates were developed using a combination of a trend survey and a trend rate model. For the years 2015 through 2017, the rates are based on survey data and client market expectations. The trend rate model was then used to determine the trend rates between the years 2017 through 2030, based on reasonable macro-economic assumptions for the growth of health care expenditures during this period relative to the general economy. The assumptions used to measure the benefit obligation were as follows:



Assumptions used to calculate benefit obligation:
Measurement date	August 31, 2015		January 31, 2015
Discount rate	4.25	%	3.50	%
Wage inflation rate	4.00	%	4.00	%
Average remaining years of service	15.14		16.05
Health care cost trend rates:
Health care cost trend rate assumed for next year	7.00	%	7.20	%
Ultimate health care cost trend rate	4.50	%	5.00	%
Year that the rate reaches the ultimate trend rate	2030		2025

The negative plan amendment and assumption changes will reduce the net periodic benefit cost for fiscal year 2016 by approximately $300 compared to the amount expected prior to the remeasurement. The components of the net periodic benefit cost for postretirement benefits are as follows:



	Three Months Ended				Nine Months Ended
	October 31, 2015		October 31, 2014		October 31, 2015		October 31, 2014
Service cost	$	49	$	49	$	265	$	147
Interest cost	92		91		302		274
Amortization of actuarial losses	38		38		206		114
Net periodic benefit cost	$	179	$	178	$	773	$	535

Postretirement benefit cost components are reclassified in their entirety from accumulated other comprehensive loss to net periodic benefit cost. Net periodic benefit costs are reported in net income as “Cost of sales” or “Selling, general, and administrative expenses” in a manner consistent with the classification of direct labor and personnel costs of the eligible employees.