Employee Benefit Plans

The Company is the sponsor of three defined benefit plans that are frozen and no additional benefits are accruing thereunder. Two of the Company's defined benefit pension plans cover certain employees at designated repair facilities. The assets of these defined benefit pension plans are held by independent trustees and consist primarily of equity and fixed income securities. The Company also sponsors an unfunded, non-qualified supplemental executive retirement plan that covers several of the Company's current and former employees.

The Company provides postretirement life insurance benefits for certain of its union employees who retired after attaining specified age and service requirements. The Company also previously sponsored a postretirement medical benefit plan that provided access to healthcare for certain retired employees, however, this plan was terminated effective December 31, 2013.

The Company's measurement date is December 31 and costs of benefits relating to current service for those employees to whom the Company is responsible to provide benefits are currently expensed.

The change in benefit obligation, change in plan assets and the funded status is as follows:



	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
	(in thousands)
Change in benefit obligation
Benefit obligation at January 1	$	21,491		$	24,417		$	75		$	111
Service cost	227			198			—			1
Interest cost	970			882			3			4
Plan amendments	—			—			—			(31		)
Actuarial (gain) loss	4,451			(2,795		)	(1		)	(6		)
Assumed administrative expenses	(227		)	(198		)	—			—
Benefits paid	(1,049		)	(1,013		)	—			(4		)
Benefit obligation at December 31	$	25,863		$	21,491		$	77		$	75
Change in plan assets
Plan assets at January 1	$	16,731		$	14,894		$	—		$	—
Actual return on plan assets	888			2,313			—			—
Administrative expenses	(227		)	(198		)	—			—
Employer contributions	938			735			—			—
Benefits paid	(1,049		)	(1,013		)	—			—
Plan assets at fair value at December 31	$	17,281		$	16,731		$	—		$	—
Funded status
Benefit obligation in excess of plan assets at December 31	$	(8,582	)	$	(4,760	)	$	(77	)	$	(75	)

Amounts recognized in the consolidated balance sheets are as follows:



	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
	(in thousands)
Accrued benefit liability—short term	$	(112	)	$	(113	)	$	(4	)	$	(4	)
Accrued benefit liability—long term	(8,470		)	(4,647		)	(73		)	(71		)
Net liability recognized at December 31	$	(8,582	)	$	(4,760	)	$	(77	)	$	(75	)
Net actuarial (loss) gain	$	(8,902	)	$	(4,356	)	$	681		$	735
Net prior service (cost) credit	(25		)	(34		)	29			31
Accumulated other comprehensive (loss) income pre-tax at December 31	$	(8,927	)	$	(4,390	)	$	710		$	766

The short-term liability has been reported within 'Accrued compensation' on the consolidated balance sheets.

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



	Pension Benefits									Postretirement Benefits
	2014			2013			2012			2014			2013			2012
	(in thousands)
Components of net periodic benefit cost
Service cost	$	227		$	198		$	191		$	—		$	1		$	1
Interest cost	970			882			934			3			4			4
Expected return on plan assets	(1,251		)	(1,114		)	(1,010		)	—			—			—
Recognized actuarial loss (gain)	269			767			705			(55		)	(76		)	(80		)
Amortization of prior service cost (gain)	8			8			8			(3		)	(391		)	(391		)
Curtailment gain recognized	—			—			—			—			(1,698		)	—
Total net periodic benefit cost	$	223		$	741		$	828		$	(55	)	$	(2,160	)	$	(466	)

The Company amortizes actuarial loss and gain using a weighted average amortization period for all plans of 9 years. The net actuarial loss (gain) that is expected to be amortized from accumulated other comprehensive loss into net periodic benefit costs during the year ended December 31, 2015 is $0.8 million and less than $(0.1) million, respectively, for pension benefits and postretirement benefits.

Additional information

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:



	Pension Benefits		Postretirement Benefits
	(in thousands)
2015	$	1,119	$	4
2016	1,136		4
2017	1,178		4
2018	1,238		4
2019	1,276		4
2020 and thereafter	6,956		23
Total	$	12,903	$	43

The Company expects to contribute $0.8 million to its pension and postretirement plans in 2015.

Pension and other postretirement benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected return on plan assets, mortality rates and retirement rates, as discussed below:

Discount rates

The Company reviews these rates annually and adjusts them to reflect current yields on long-term, high-quality corporate bonds. The Company deemed these rates appropriate based on the Citigroup Pension Discount curve analysis along with expected payments to retirees.

Expected return on plan assets

The Company's expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return.

Mortality and retirement rates

Mortality and retirement rates are based on actual and anticipated plan experience. The Company's December 31, 2014 valuation of pension and other postretirement benefit costs and liabilities utilized the Society of Actuaries new mortality tables that were released in October 2014 and new mortality improvement scales, specifically the RP-2014 table with the MP-2014 projection scale.

The decrease in the discount rates and the use of the updated mortality tables and projection scales resulted in an increase in the benefit obligation, which will be amortized through actuarial losses. The assumptions used to determine end of year benefit obligations are shown in the following table:



	Pension Benefits				Postretirement Benefits
	2014		2013		2014		2013
Discount rate	3.75	%	4.64	%	3.60	%	4.39	%

The assumptions used in the measurement of net periodic cost are shown in the following table:



	Pension Benefits						Postretirement Benefits
	2014		2013		2012		2014		2013		2012
Discount rate	4.64	%	3.70	%	4.25	%	4.39	%	3.67	%	4.18	%
Expected return on plan assets	7.50	%	7.50	%	7.50	%	N/A		N/A		N/A

The Company's pension plans' asset valuation in the fair value hierarchy levels, discussed in detail in Note 5, along with the weighted average asset allocations as of December 31, 2014, by asset category, are as follows:



	Level 1		Level 2		Level 3		Total
	(in thousands)
Asset Category
Short-term investments	$	—	$	753	$	—	$	753
Corporate stocks - common	4,092		—		—		4,092
Mutual funds - equity	6,084		—		—		6,084
Debt securities
Exchange traded funds	5,698		—		—		5,698
Government	526		—		—		526
Asset backed	—		128		—		128
	$	16,400	$	881	$	—	$	17,281

The Company's pension plans' asset valuation in the fair value hierarchy levels, along with the weighted average asset allocations as of December 31, 2013, by asset category, are as follows:



	Level 1		Level 2		Level 3		Total
	(in thousands)
Asset Category
Short-term investments	$	—	$	574	$	—	$	574
Corporate stocks - common	4,054		—		—		4,054
Mutual funds - equity	5,918		—		—		5,918
Debt securities
Exchange traded funds	5,458		—		—		5,458
Government	454		—		—		454
Asset backed	—		273		—		273
	$	15,884	$	847	$	—	$	16,731

The overall objective of the pension plans' investments is to grow plan assets in relation to liabilities, while prudently managing the risk of a decrease in the pension plans' assets. The pension plans' investment committee has established a target investment mix with upper and lower limits for investments in equities, fixed-income and other appropriate investments. Assets will be re-allocated among asset classes from time-to-time to maintain an investment mix as established for each plan. The investment committee has established an average target investment mix of approximately 65% equities and approximately 35% fixed-income for the plans.

The Company invests in a balanced portfolio of individual equity securities, exchange traded funds, mutual funds and individual debt securities to maintain a diversified portfolio structure with distinguishable investment objectives. The objective of the total portfolio is long-term growth and appreciation along with capital preservation, to maintain the value of plan assets over time in real terms net of fees, distributions and liquidity obligations.

The pension plans' assets are valued at fair value. The following is a description of the valuation methodologies used in determining fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Short-term investments. The pension plans' assets are invested in short-term investments to manage liquidity. These investments consist of open-ended money market mutual funds that invest in first-tier securities and high quality, short-term obligations to earn income but maintain a high degree of liquidity and preserve capital. These money market funds are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the fund is not traded on a national securities exchange. Short-term investments are not subject to liquidity redemption restrictions.

Corporate stocks - common. The pension plans' assets are invested in separately managed accounts, each with a specific investment objective which invests solely in equity securities of small, mid, and large sized companies that are publicly traded for growth and diversification. As the fair value of the securities represent quoted prices available in active markets, these have been categorized as Level 1 of the fair value hierarchy. Equity securities are not subject to liquidity redemption restrictions.

Mutual funds - equities. Investment vehicles include mutual funds that invest in large-cap publicly traded common stocks. The mutual funds, which are traded on a national securities exchange in an active market, are valued using daily publicly available prices and accordingly classified within Level 1 of the valuation hierarchy.

Debt securities. The pension plans' assets are invested in debt securities for diversification and volatility reduction of equity securities. Investment vehicles include exchange traded funds (ETFs), U.S. government securities, and asset backed securities. Debt securities are not subject to liquidity redemption restrictions. The ETFs are invested in diversified portfolios of fixed-income instruments and are traded on a national securities exchange. As the fair value of the ETFs represent quoted prices available in active markets, they are classified within the Level 1 valuation hierarchy. U.S. government treasury bills are classified within the Level 1 valuation hierarchy since fair value is based on public price quotations in active markets. The asset backed securities are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets.

The Company also maintains qualified defined contribution plans, which provide benefits to its eligible employees based on employee contributions, years of service and employee earnings with discretionary contributions allowed. Expenses related to these plans were $1.0 million, $1.0 million and $0.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.