NOTE

– Benefit Plans:

Defined Benefit Plans

The Company is the sponsor of

two

noncontributory qualified defined benefit pension plans, providing for normal retirement at age

65,

covering all eligible employees (as defined). Periodic benefit payments on retirement are determined based on a fixed amount applied to service or determined as a percentage of earnings prior to retirement. The Company is also the sponsor of an unfunded supplemental executive retirement plan (SERP) in which several of its employees are participants. Pension plan assets for retirement benefits consist primarily of fixed income securities and common stock equities.

Effective

June

30,

2013,

the Company no longer accrues additional benefits for future service or for future increases in compensation levels for the company’s primary defined benefit pension plan.

Effective

December

31,

2014,

the Company no longer accrues additional benefits for future service for the Company’s hourly defined benefit plan.

The Company recognizes the funded status of its defined benefit post retirement plans in the Company’s consolidated balance sheets.

December

31,

2016,

the Company’s projected benefit obligation under its pension plans exceeded the fair value of the plans’ assets by

$9,467,000

and thus the plans are underfunded.

It is our policy to make contributions to the various plans in accordance with statutory funding requirements and any additional funding that

may

be deemed appropriate.

The following tables present the changes in the benefit obligations and the various plan assets, the funded status of the plans, and the amounts recognized in the Company's consolidated balance sheets

December

31,

2016

and

2015:

	December 31,
	2016			2015

Changes in benefit obligation
Benefit obligation at beginning of year	$	24,790,000		$	25,470,000
Service cost		57,000			48,000
Interest cost		988,000			951,000
Actuarial loss		1,288,000			327,000
Benefits paid		(1,865,000	)		(2,006,000	)
Benefit obligation at end of year		25,258,000			24,790,000

Changes in plan assets
Fair value of plan assets at beginning of year		15,865,000			17,386,000
Actual return on assets		1,291,000			(515,000	)
Employer contributions		500,000			1,000,000
Benefits paid		(1,865,000	)		(2,006,000	)
Fair value of plan assets at end of year		15,791,000			15,865,000

Funded status at end of year	$	(9,467,000	)	$	(8,925,000	)

Amounts recognized in consolidated balance sheet
Long-term pension liability	$	(9,467,000	)	$	(8,925,000	)


Amounts recognized in accumulated other comprehensive income consist of:
Net actuarial loss	$	9,819,000		$	10,106,000

Information for pension plans with projected benefit obligation in excess of plan assets

	December 31,
	2016			2015
Projected benefit obligation	$	25,258,000		$	24,790,000
Fair value of plan assets		(15,791,000	)		(15,865,000	)
	$	9,467,000		$	8,925,000

Components of net periodic benefit cost:

	2016			2015			2014
Service cost - benefits earned during the period	$	57,000		$	48,000		$	81,000
Interest cost on projected benefit obligation		988,000			951,000			1,001,000
Expected return on plan assets		(1,188,000	)		(1,343,000	)		(1,395,000	)
Recognized actuarial loss		1,027,000			772,000			322,000
Settlement loss		445,000			460,000			208,000
Net periodic pension cost after settlements	$	1,329,000		$	888,000		$	217,000

The pension settlement losses included in the table above relates to lump sum payments made to various employees upon their retirement or termination each year.

The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is

$1,108,000.

The table below presents various assumptions used in determining the benefit obligation for each year and reflects the percentages for the various plans.

Weighted-average assumptions used to determine benefit obligations at

December

31,

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corp.			Plants			Corp.			Plants			Corp.		Plants
2015		4.19	%		4.09	%		8.00	%		8.00	%		N/A		N/A
2016		4.04	%		3.91	%		8.00	%		8.00	%		N/A		N/A

Weighted-average assumptions used to determine net periodic benefit cost for years ending

December

31,

							Long Term Rate
	Discount Rate						of Return						Salary Scale
	Corp.			Plants			Corp.			Plants			Corp.		Plants
2014		4.82	%		4.66	%		8.00	%		8.00	%		N/A		N/A
2015		3.86	%		3.74	%		8.00	%		8.00	%		N/A		N/A
2016		4.19	%		4.09	%		8.00	%		8.00	%		N/A		N/A

The methodology used to determine the expected rate of return on the pension plan assets was based on a review of actual returns in the past and consideration of projected returns based upon our projected asset allocation. Our strategy with respect to our investments in pension plan assets is to be invested with a long-term outlook. Therefore, the risk and return balance of our asset portfolio should reflect a long-term horizon. Our pension plan asset allocation at

December

31,

2016,

2015

and target allocation for

2017

are as follows:

	Percentage of Plan
	Assets at				Target
	December 31,				Allocation
Investment description	2016		2015		2017
Equity securities		68%		64%		68%
Fixed income		13%		15%		13%
Other		19%		21%		19%
Total		100%		100%		100%

The Company plans to contribute

$1,500,000

to our defined benefit pension plans in

2017.

The following table includes projected benefit payments for the years indicated:

Year			Projected Benefit Payments

	2017		$	2,259,000
	2018		$	1,369,000
	2019		$	1,489,000
	2020		$	2,127,000
	2021		$	1,691,000
2022	-	2026	$	8,059,000

Rabbi Trust

In connection with the Company’s unfunded SERP, we have life insurance contracts on the lives of designated individuals. The insurance contracts associated with the SERP are held in a Rabbi trust.

The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the SERP. The cash surrender value of the life insurance contracts was

$972,000

December

31,

2016.

We recognized an investment gain on the cash surrender value of these life insurance contracts of

$78,000

2016.

The cash surrender value of these policies is included in other assets in the Consolidated Balance Sheets as of

December

31,

2016

and

2015.

2013

we initiated a Non-Qualified Deferred Compensation Plan, and we have purchased life insurance contracts on the lives of designated individuals during

2016.

The insurance contracts associated with the Non-Qualified Deferred Compensation Plan are also held in a Rabbi trust. The trust is the owner and beneficiary of such insurance contracts. The policies are being utilized to help offset the costs and liabilities of the Non-Qualified Deferred Compensation Plan. The cash surrender value of the life insurance contracts was

$960,000

December

31,

2016.

The cash surrender value of these policies is included in other assets in the Consolidated Balance Sheet as of

December

31,

2016.

The liability for participant deferrals of

$962,000

is included in other long-term liabilities in the Consolidated Balance Sheet as of

December

31,

2016.

Defined Contribution Plan

The Company provides a defined contribution plan covering qualified employees. The plan includes a provision that allows employees to make pre-tax contributions under Section

401(k)

of the Internal Revenue Code. The plan provides for the Company to make a guaranteed match equal to

25%

of each employee’s eligible contributions. The plan also provides the Company with the option of making an additional discretionary contribution to the plan each year. Currently the discretionary contribution is set at

of eligible employees’ payroll. The Company contributions for the years ended

December

31,

2016,

2015

and

2014

were approximately

$1,069,000,

$903,000

and

$782,000

respectively.