NOTE 11 – EMPLOYEE BENEFIT PLANS

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees in the U.S. who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first year of employment, or in a calendar year ending thereafter, and who were not covered by a collective bargaining agreement. The Company sponsors frozen defined benefit pension plans in the U.K. that were acquired from Odeon on November 30, 2016. The Company also offered eligible retirees the opportunity to participate in a health plan. Certain employees were eligible for subsidized postretirement medical benefits. The eligibility for these benefits was based upon a participant’s age and service as of January 1, 2009. The Company also sponsors a postretirement deferred compensation plan.

On December 31, 2013, the Company’s Board of Directors approved revisions to the Company’s Postretirement Medical and Life Insurance Plan effective April 1, 2014 and the changes were communicated to the plan participants. As a result of these revisions, the Company recorded a prior service credit of approximately $15,197,000 through other comprehensive income to be amortized over nine years starting in 2014, based on expected future service of the remaining participants.

On January 12, 2015, the Compensation Committee and the Board of Directors of Holdings, adopted resolutions to terminate the AMC Postretirement Medical Plan with an effective date of March 31, 2015. During the quarter ended March 31, 2015, the Company notified eligible associates that their retiree medical coverage under the plan will terminate after March 31, 2015. Payments to eligible associates were approximately $4,300,000 during the year ended December 31, 2015. The Company recorded net periodic benefit credits of $18,118,000, including curtailment gains, settlement gains, amortization of unrecognized prior service credits, and amortization of actuarial gains recorded in accumulated other comprehensive income related to the termination and settlement of the plan during the year ended December 31, 2015.

The measurement dates used to determine pension and other postretirement benefits were December 31, 2016, December 31, 2015, and December 31, 2014.

Net periodic benefit cost for the plans consists of the following:


	U.S. Pension Benefits
	Year		Year		Year
	Ended		Ended		Ended
(In thousands)	December 31, 2016		December 31, 2015		December 31, 2014
Components of net periodic benefit cost:
Interest cost	$	4,324	$	4,277	$	4,609
Expected return on plan assets		(3,555)		(4,666)		(5,230)
Amortization of net (gain) loss		27		45		(1,034)
Settlement (gain) loss		(5)		254		—
Net periodic benefit cost (credit)	$	791	$	(90)	$	(1,655)


	International Pension Benefits and Terminated U.S. Retiree Health Plan
	Year		Year		Year
	Ended		Ended		Ended
(In thousands)	December 31, 2016		December 31, 2015		December 31, 2014
Components of net periodic benefit cost:
Service cost	$	—	$	2	$	36
Interest cost		218		7		214
Expected return on plan assets		(283)		—		—
Amortization of net (gain) loss		4		(2,797)		(348)
Amortization of prior service credit		—		(2,888)		(1,665)
Curtailment gain		—		(11,867)		—
Settlement (gain) loss		—		(575)		—
Net periodic benefit cost (credit)	$	(61)	$	(18,118)	$	(1,763)

The following table summarizes the changes in other comprehensive income:


	U.S. Pension Benefits
	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
(In thousands)	2016		2015		2014
Net (gain) loss	$	598	$	(345)	$	21,641
Prior service credit		—		—		—
Amortization of net gain		(27)		(45)		1,034
Amortization of prior service credit		—		—		—
Curtailment		—		—		—
Settlement		5		(254)		—
Allocated tax expense (benefit)		—		251		(8,843)
Total recognized in other comprehensive (income) loss	$	576	$	(393)	$	13,832
Net periodic benefit cost (credit)		791		(90)		(1,655)
Total recognized in net periodic benefit cost (credit) and other comprehensive (income) loss	$	1,367	$	(483)	$	12,177


	International Pension Benefits and Terminated U.S. Retiree Health Plan
	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
(In thousands)	2016		2015		2014
Net (gain) loss	$	(71)	$	73	$	561
Prior service credit		—		(1,223)		—
Amortization of net gain		—		2,797		348
Amortization of prior service credit		—		2,888		1,665
Curtailment		—		11,867		—
Settlement		—		575		—
Allocated tax expense (benefit)		—		(6,620)		(1,003)
Total recognized in other comprehensive (income) loss	$	(71)	$	10,357	$	1,571
Net periodic benefit cost (credit)		(61)		(18,118)		(1,763)
Total recognized in net periodic benefit cost (credit) and other comprehensive (income) loss	$	(132)	$	(7,761)	$	(192)

The following tables set forth the plan’s change in benefit obligations and plan assets and the accrued liability for benefit costs included in the Consolidated Balance Sheets:


	U.S. Pension Benefits
	Year		Year
	Ended		Ended
	December 31,		December 31,
(In thousands)	2016		2015
Change in benefit obligation:
Benefit obligation at beginning of period	$	106,969	$	113,955
Service cost		—		—
Interest cost		4,324		4,277
Actuarial (gain) loss		2,049		(6,152)
Plan amendment		—		—
Benefits paid		(4,266)		(4,665)
Administrative expenses		(157)		(106)
Settlement paid		(52)		(296)
Settlement gain		(17)		(44)
Benefit obligation at end of period	$	108,850	$	106,969


	International Pension Benefits and Terminated U.S. Retiree Health Plan (1)
	Year		Year
	Ended		Ended
	December 31,		December 31,
(In thousands)	2016		2015
Change in benefit obligation:
Benefit obligation at beginning of period	$	—	$	5,686
Acquisition		90,936		—
Service cost		—		2
Interest cost		218		7
Plan participants’ contributions		—		101
Actuarial (gain) loss		3,453		73
Plan amendment		—		(1,223)
Benefits paid		(220)		(357)
Administrative expenses		—		—
Settlement paid		—		(4,289)
Currency translation adjustment		(1,073)		—
Benefit obligation at end of period	$	93,314	$	—

(1)

The Company terminated its Post Retirement Medical and Life Insurance Plan in 2015. Activity for the calendar years 2015 and 2014 reflect activity for the U.S. Retiree Health Plan only. Activity for calendar 2016 reflects activity only for the International Pension Benefits assumed from Odeon in November 2016.


	U.S. Pension Benefits
	Year		Year
	Ended		Ended
	December 31,		December 31,
(In thousands)	2016		2015
Change in plan assets:
Fair value of plan assets at beginning of period	$	64,621	$	70,424
Actual return on plan assets (loss) gain		4,990		(1,184)
Employer contribution		218		448
Plan participants’ contributions		—		—
Benefits paid		(4,266)		(4,665)
Administrative expense		(157)		(106)
Settlement paid		(52)		(296)
Fair value of plan assets at end of period	$	65,354	$	64,621
Net liability for benefit cost:
Funded status	$	(43,496)	$	(42,348)


	International Pension Benefits and Terminated U.S. Retiree Health Plan
	Year		Year
	Ended		Ended
	December 31,		December 31,
(In thousands)	2016		2015
Change in plan assets:
Fair value of plan assets at beginning of period	$	—	$	—
Acquisition		108,938		—
Actual return on plan assets(loss) gain		3,806		—
Employer contribution		—		4,545
Plan participants’ contributions		—		101
Benefits paid		(220)		(357)
Currency translation adjustment		(1,453)		(4,289)
Fair value of plan assets at end of period	$	111,071	$	—
Net asset for benefit cost:
Funded status	$	17,757	$	—


	U.S. Pension Benefits				International Pension Benefits and Terminated U.S. Retiree Health Plan
	December 31,		December 31,		December 31,		December 31,
(In thousands)	2016		2015		2016		2015
Amounts recognized in the Balance Sheet:
Other long-term assets	$	—	$	—	$	18,869	$	—
Accrued expenses and other liabilities		(152)		(152)		—		—
Other long-term liabilities		(43,344)		(42,196)		(1,112)		—
Net asset (liability) recognized	$	(43,496)	$	(42,348)	$	17,757	$	—

Aggregate accumulated benefit obligation	$	(108,850)	$	(106,969)	$	(93,314)	$	—

The following table summarizes pension plans with accumulated benefit obligations and projected benefit obligations in excess of plan assets:


	U.S. Pension Benefits				International Pension Benefits and Terminated U.S. Retiree Health Plan
	December 31,		December 31,		December 31,		December 31,
(In thousands)	2016		2015		2016		2015
Aggregated accumulated benefit obligation	$	(108,850)	$	(106,969)	$	(93,314)	$	—
Aggregated projected benefit obligation		(108,850)		(106,969)		(93,314)		—
Aggregated fair value of plan assets		65,354		64,621		111,071		—

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


	U.S. Pension Benefits				International Pension Benefits and Terminated U.S. Retiree Health Plan
	December 31,		December 31,		December 31,		December 31,
(In thousands)	2016		2015		2016		2015
Net actuarial (gain) loss	$	598	$	(345)	$	(71)	$	73
Prior service credit		—		—		—		(1,223)

Amounts in accumulated other comprehensive income expected to be recognized in components of net periodic pension cost during the calendar year 2017 are as follows:


	U.S. Pension
(In thousands)	Benefits
Net actuarial loss	$	36


	International
	Pension
(In thousands)	Benefits
Net actuarial (gain)	$	(75)

Actuarial Assumptions

The weighted-average assumptions used to determine benefit obligations are as follows:


	U.S. Pension Benefits		International Pension Benefits and Terminated U.S. Retiree Health Plan
	December 31,	December 31,	December 31,	December 31,
	2016	2015	2016	2015
Discount rate	3.92%	4.10%	2.70%	N/A
Rate of compensation increase	N/A	N/A	3.20%	N/A

The weighted-average assumptions used to determine net periodic benefit cost are as follows:

U.S. Pension Benefits

International Pension Benefits and Terminated U.S. Retiree Health Plan

Year

Ended

December 31,

2016

2015

2014

2016

2015

2014

Discount rate

3.92%

3.80%

4.73%

2.90%

3.37%

4.00%

Weighted average expected long-term return on plan assets

7.06%

7.81%

3.09%

N/A

Rate of compensation increase

N/A

3.20%

N/A

In developing the expected long-term rate of return on plan assets at each measurement date, the Company considers the plan assets’ historical returns, asset allocations, and the anticipated future economic environment and long-term performance of the asset classes. While appropriate consideration is given to recent and historical investment performance, the assumption represents management’s best estimate of the long-term prospective return.

Cash Flows

The Company expects to contribute $2,995 and $1,239 to the U.S. and International pension plans, respectfully during the calendar year 2017.

The following table provides the benefits expected to be paid (inclusive of benefits attributable to estimated future employee service) in each of the next five years, and in the aggregate for the five years thereafter:


(In thousands)	U.S. Pension Benefits		International Pension Benefits and Terminated U.S. Retiree Health Plan
2017	$	3,828	$	2,273
2018		3,510		2,318
2019		4,103		2,365
2020		3,874		2,413
2021		4,739		2,462
Years 2022 - 2026		33,886		13,088

Pension Plan Assets

The Company’s investment objectives for its U.S. defined benefit pension plan investments are: (1) to preserve the value of its principal; (2) to maximize a real long-term return with respect to the plan assets consistent with minimizing risk; (3) to achieve and maintain adequate asset coverage for accrued benefits under the plan; and (4) to maintain sufficient liquidity for payment of the plan obligations and expenses. The Company uses a diversified allocation of equity, debt, commodity and real estate exposures that are customized to the plan’s cash flow benefit needs. The target allocations for U.S. plan assets are as follows:



		U.S. Target
Asset Category		Allocation
Fixed(1)		15%
Equity Securities—U.S.		30%
Equity Securities—International		15%
Collective trust fund		25%
Private Real Estate		15%
		100%

(1)

Includes U.S. Treasury Securities and Bond market fund.

The international pension benefit plans do not have an established asset target allocation for 2016.

Valuation Techniques. The fair values classified within Level 1 of the valuation hierarchy were determined using quoted market prices from actively traded markets. The fair values classified within Level 2 of the valuation hierarchy included pooled separate accounts and collective trust funds, which valuations were based on market prices for the underlying instruments that were observable in the market or could be derived by observable market data from independent external valuation information.

The fair value of the U.S. pension plan assets at December 31, 2016, by asset class is as follows:


			Fair Value Measurements at December 31, 2016 Using
	Total Carrying		Quoted prices in		Significant other		Significant
	Value at		active market		observable inputs		unobservable inputs
(In thousands)	December 31, 2016		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	258	$	258	$	—	$	—
Equity securities:
U.S. companies		19,929		19,929		—		—
International companies		9,953		9,953		—		—
Bond market fund		10,116		10,116		—		—
Collective trust fund		15,866		—		15,866		—
Private real estate		9,232		—		9,232		—
Total assets at fair value	$	65,354	$	40,256	$	25,098	$	—

The fair value of the International Pension Benefits and Terminated U.S. Retiree Health Plan assets at December 31, 2016, by asset class is as follows:


			Fair Value Measurements at December 31, 2016 Using
	Total Carrying
	Value at		Quoted prices in		Significant other		Significant
	December 31,		active market		observable inputs		unobservable inputs
(In thousands)	2016		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	20	$	20	$	—	$	—
Equity securities:
U.S. companies		638		638		—		—
International companies		26,793		26,793		—		—
Bond market fund		77,936		77,936		—		—
Commodities broad basket fund		88		—		88		—
Private real estate		5,596		—		5,596		—
Total assets at fair value	$	111,071	$	105,387	$	5,684	$	—

The fair value of the U.S. pension plan assets at December 31, 2015, by asset class is as follows:



			Fair Value Measurements at December 31, 2015 Using
	Total Carrying
	Value at		Quoted prices in		Significant other		Significant
	December 31,		active market		observable inputs		unobservable inputs
(In thousands)	2015		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	289	$	289	$	—	$	—
U.S. treasury securities		1,452		1,452		—		—
Equity securities:
U.S. companies		16,884		16,884		—		—
International companies		9,888		9,888		—		—
Bond market fund		8,526		8,526		—		—
Collective trust fund		15,771		—		15,771		—
Commodities broad basket fund		2,823		2,823		—		—
Private real estate		8,988		—		8,988		—
Total assets at fair value	$	64,621	$	39,862	$	24,759	$	—

Defined Contribution Plan

The Company sponsors a voluntary 401(k) savings plan covering certain U.S. employees age 21 or older and who are not covered by a collective bargaining agreement. Under the Company’s 401(k) Savings Plan, the Company matches 100% of each eligible employee’s elective contributions up to 3% and 50% of contributions up to 5% of the employee’s eligible compensation. The Company’s expense under the 401(k) savings plan was $3,463,000, $3,353,000, and $2,696,000, for the years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively.

Union-Sponsored Plans

Certain theatre employees are covered by union-sponsored pension and health and welfare plans. Company contributions into these plans are determined in accordance with provisions of negotiated labor contracts. Contributions aggregated $0, $72,000, and $207,000, for the years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively.