11. Pension Plan

The Company and certain subsidiaries have a noncontributory defined benefit retirement plan (the “Pension Plan”), covering approximately 21% of aggregate employees. Benefits are based on years of service and the employee’s average compensation for the highest five compensation years preceding retirement or termination.

Pension expense is composed of the following components included in cost of goods sold and selling, general and administrative expenses in the Company’s consolidated statements of earnings (in thousands):

 

		Three months ended May 31,
		2016				2015
Components of net periodic benefit cost
Service cost		$	291			$	325
Interest cost			593				592
Expected return on plan assets			(916	)			(982	)
Amortization of:
Prior service cost			—				(21	)
Unrecognized net loss			671				638
Net periodic benefit cost		$	639			$	552

The Company is required to make contributions to the Pension Plan. These contributions are required under the minimum funding requirements of ERISA. Due to the enactment of the Highway and Transportation Funding Act (HATFA) in August 2014, plan sponsors can calculate the discount rate used to measure the Pension Plan liability using a 25-year average of interest rates plus or minus a corridor. The Company’s minimum required contribution to the Pension Plan is zero for the Pension Plan year ending February 28, 2017. However, the Company expects to make a cash contribution to the Pension Plan of between $2.0 million and $3.0 million during fiscal year 2017. The Company contributed $3.0 million to the Pension Plan during fiscal year 2016.