NOTE 8 — Pension Plans

We maintain a non-contributory tax qualified defined benefit pension plan that has been frozen since July 2011. All of our full time employees were eligible to participate in the qualified plan. Benefits provided by our qualified pension plan were based on years of service and employees’ remuneration over their employment period. Pension costs are funded in accordance with the provisions of the Internal Revenue Code. We also maintain a non-qualified, non-contributory defined benefit pension plan, the excess plan, for certain employees that has been frozen since July 2011. This excess plan provided benefits that would otherwise be provided under the qualified pension plan but for maximum benefit and compensation limits applicable under federal tax law. The cost associated with the excess plan is determined using the same actuarial methods and assumptions as those used for our qualified pension plan. The assets for the excess plan aggregate $820,000 and $768,000 as of December 31, 2014 and 2013, respectively, and are recorded in other assets in our consolidated balance sheets (see NOTE 10 — Fair Value Measurements).

On June 15, 2011, we decided to freeze participation and benefit accruals under our pension plans, primarily to reduce some of the impact on earnings and volatility in cash flows that can accompany the maintenance of a defined benefit plan. The freeze was effective July 31, 2011. Compensation earned by employees up to July 31, 2011 is used for purposes of calculating benefits under our pension plan with no future benefit accruals after this date. Participants as of July 31, 2011 continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work.

The following table sets forth the defined benefit plans’ funded status and amounts recognized in our consolidated balance sheets as of December 31:

	2014			2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	9,982,000		$	10,736,000
Interest cost	491,000			443,000
Actuarial loss (gain)	3,002,000			(1,013,000		)
Benefits paid	(206,000		)	(182,000		)
Other	4,000			(2,000		)
Benefit obligation at end of year	13,273,000			9,982,000

Change in plan assets:
Fair value of plan assets at beginning of year	7,797,000			7,024,000
Actual gain on plan assets	583,000			951,000
Employer contribution	40,000			—
Benefits paid	(206,000		)	(182,000		)
Other	4,000			4,000
Fair value of plan assets at end of year	8,218,000			7,797,000

Unfunded status	$	(5,055,000	)	$	(2,185,000	)

The following table presents the amounts recognized in our consolidated balance sheets as of December 31:

	2014			2013
Accrued benefit cost	$	(897,000	)	$	(729,000	)
Liability for pension benefits	(4,158,000		)	(1,456,000		)
	$	(5,055,000	)	$	(2,185,000	)

Amounts recognized in accumulated other comprehensive loss that have not yet been recognized as components of net periodic (benefit) cost at December 31 are as follows:

		2014			2013
Net actuarial loss, pre-tax		$	5,710,000		$	2,743,000

The accumulated benefit obligation for our pension plans was $13,273,000 and $9,982,000, respectively, as of December 31, 2014 and 2013.

The change in the funded status and accumulated other comprehensive loss is primarily a result of implementing a new set of mortality tables issued by the Society of Actuaries in October 2014 and lower discount rates.

The components of net periodic pension (benefit) cost for the years ended December 31, 2014, 2013 and 2012 are as follows:

	2014			2013			2012
Interest cost	$	491,000		$	443,000		$	454,000
Expected return on plan assets	(612,000		)	(552,000		)	(508,000		)
Recognized net actuarial loss	64,000			100,000			80,000
	$	(57,000	)	$	(9,000	)	$	26,000

For the year ending December 31, 2015, we expect to recognize the following amounts as components of net periodic (benefit) cost which are included in accumulated other comprehensive loss as of December 31, 2014:

Actuarial loss

123,000

The principal assumptions used to determine the net periodic pension cost for the years ended December 31, 2014, 2013 and 2012, and the actuarial value of the benefit obligation at December 31, 2014 and 2013 (the measurement dates) for our pension plans are as follows:

	Net Periodic Pension Cost						Benefit Obligation
	2014		2013		2012		2014		2013
Weighted-average discount rate	5.0	%	4.4	%	5.0	%	4.1	%	5.0	%
Weighted-average rate of compensation increase	n/a		n/a		n/a		n/a		n/a
Expected long-term rate of return on plan assets	8.0	%	8.0	%	8.0	%	n/a		n/a

The weighted-average discount rates were determined by matching estimated benefit cash flows to a yield curve derived from long-term, high-quality corporate bond curves.

For 2014, we assumed a long-term rate of return on plan assets of 8.0%. In developing the 8.0% expected long-term rate of return assumption, we considered our historical compounded return and reviewed asset class return expectations and long-term inflation assumptions.

Our investment goals are to achieve a combination of moderate growth of capital and income with moderate risk. Acceptable investment vehicles will include mutual funds, exchange-traded funds (ETFs), limited partnerships, and individual securities. Our target allocations for plan assets are 60% equities and 40% fixed income. Of the equity portion, 50% will be invested in passively managed securities using ETFs and the other 50% will be invested in actively managed investment vehicles. We address diversification by investing in mutual funds and ETFs which hold large, mid and small capitalization U.S. stocks, international (non-U.S.) equity, REITS, and real assets (consisting of inflation-linked bonds, real estate and natural resources). A sufficient percentage of investments will be readily marketable in order to be sold to fund benefit payment obligations as they become payable.

The fair values of our pension assets as of December 31, 2014 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories):

Asset Category	Total		Level 1		Level 2		Level 3
Corporate common stocks	$	838,000	$	838,000	$	—	$	—
Mutual funds/ETFs:
Equity-large cap	1,695,000		1,695,000		—		—
Equity-mid cap	774,000		774,000		—		—
Equity-small cap	165,000		165,000		—		—
Equity-international	1,046,000		1,046,000		—		—
Fixed income	3,065,000		3,065,000		—		—
Real estate	439,000		439,000		—		—
Money market	196,000		196,000		—		—
Total mutual funds/ETFs	7,380,000		7,380,000		—		—
Grand total	$	8,218,000	$	8,218,000	$	—	$	—

The fair values of our pension assets as of December 31, 2013 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories):

Asset Category	Total		Level 1		Level 2		Level 3
Corporate common stocks	$	779,000	$	779,000	$	—	$	—
Mutual funds/ETFs:
Equity-large cap	1,583,000		1,583,000		—		—
Equity-mid cap	721,000		721,000		—		—
Equity-small cap	158,000		158,000		—		—
Equity-international	1,086,000		1,086,000		—		—
Fixed income	2,831,000		2,831,000		—		—
Real estate	346,000		346,000		—		—
Money market	293,000		293,000		—		—
Total mutual funds/ETFs	7,018,000		7,018,000		—		—
Grand total	$	7,797,000	$	7,797,000	$	—	$	—

We do not expect to contribute to our defined benefit pension plans in 2015.

Estimated future benefit payments are as follows:

2015	$	1,250,000
2016	$	400,000
2017	$	412,000
2018	$	460,000
2019	$	497,000
2020-2024	$	2,669,000

Effective December 1, 2012, we created a new non-elective, non-qualified supplemental executive retirement plan (“SERP”) in connection with the freezing of our pension plan. Its purpose is to provide deferred compensation to certain highly compensated employees that approximates the value of benefits lost by the freezing of the pension plan which are not offset by our enhanced matching contributions in our 401(k) plan. The SERP is a discretionary defined contribution plan and contributions made to the SERP in any given year are not guaranteed and will be at the sole discretion of our Compensation and Stock Incentive Committee. In 2014, 2013 and 2012, we recorded expenses of $73,000, $60,000 and $60,000, respectively, related to the SERP. During 2014, 2013 and 2012, we contributed $65,000, $55,000 and $0 to the plan, respectively. The liability for pension benefits was $73,000 and $65,000 as of December 31, 2014 and 2013, respectively.

We also maintain a defined contribution 401(k) plan that permits participation by substantially all employees. Our matching contributions to the 401(k) plan were $119,000, $110,000 and $108,000 in 2014, 2013 and 2012, respectively.