The Pension Plan is a qualified defined benefit pension plan funded by Company contributions. The Pension Plan was frozen in 2002. Benefits at normal retirement age (65) are based upon the employees’ years of service as of the date of the curtailment for employees not yet retired, and the employees’ compensation prior to the curtailment.

On January 7, 2013, the Company submitted a PBGC Form 600 Distress Termination, Notice of Intent to Terminate, to the PBGC. The notice filing initiated an application process by the Company with the Pension Benefit Guaranty Corporation (“PBGC”) for the distress termination of the Pension Plan. The Pension Plan benefits are guaranteed by the ERISA Title IV insurance fund, which is administered by the PBGC. The Company has proposed a termination date of March 8, 2013. Through the application process, the Company’s intent has been to demonstrate to the PBGC that it qualifies for a distress termination of the Pension Plan under either of two of the criteria of Section 4041(c)(2) of ERISA (inability to continue in business absent termination and unreasonably increased pension costs) and applicable PBGC regulations. To satisfy the criteria, the Company and its wholly owned subsidiary each must demonstrate to the satisfaction of the PBGC that, unless the termination occurs, the Company will be unable to pay its debts when they come due and will be unable to continue in business, or that the costs of the Pension Plan have become unreasonably burdensome solely as a result of a decline in the workforce covered by the Plan. A distress termination under Section 4041(c)(2) of ERISA would transfer the Pension Plan’s benefit obligations to the PBGC, up to ERISA guaranteed limits, without requiring reorganization under bankruptcy law. The Pension Plan’s actuary has informed the Company that following termination of the Plan and subject to the PBGC’s review of participant benefits, all of the benefits earned by participants as of the date of plan termination are expected to fall within ERISA guaranteed limits.

If the distress termination application is approved, the Company’s unfunded obligation of the Pension Plan would be replaced by a new Pension Plan termination liability to the PBGC, determined by the Pension Plan’s underfunding on a termination basis pursuant to ERISA, PBGC regulations, and other applicable legal authority, along with an ERISA special termination premium. The Company would also be liable for any unpaid contributions to the Pension Plan (which in substance is a subset of plan termination liability) and annual insurance premiums for the Pension Plan, along with any interest and penalties. While the full Pension Plan termination liability and other pension related liabilities due to the PBGC would likely be greater than the unfunded obligation of the Pension Plan as currently reported in the Company’s financial statements, the Company is in discussions with the PBGC to negotiate a settlement of such liabilities on terms that are feasible for the Company to continue in business as a going concern, which is consistent with the purposes of the statute.

The Company’s goal in seeking a distress termination of the Pension Plan is to ensure that the pension benefits of all Pension Plan participants are paid up to federally guaranteed limits and that the Company continues to operate as a going concern while avoiding the costly damage and disruption to the business which would result from bankruptcy reorganization. The Company has been pursuing a conclusion of the process and a settlement of the resulting liabilities. Based upon recent correspondence with the PBGC, the Company believes that the application process will likely result in a settlement of the Pension Plan liabilities on terms that will enable the Company to continue to operate as a going concern. However, as of the date of this filing, the Company is uncertain of the timing or the ultimate outcome.

The Company maintains an unfunded Supplemental Executive Retirement Plan (“SERP”). The SERP provides eligible executives defined pension benefits, outside the Pension Plan, based on average salary, years of service and age at retirement. The SERP was amended in 2002 to discontinue further SERP gains from future salary increases and close the SERP to new participants.

The Company has a deferred savings plan that qualifies under Section 401(k) of the Internal Revenue Code. The 401(k) plan covers all employees of the Company who have at least one year of service and who are age 18 or older. Matching contributions are made on employee contributions after the employee has achieved one year of service. Extra matching contributions can be made based on profitability and other financial and operational considerations. No extra matching contributions have been made to date. Contributions to the 401(k) plan for 2014 and 2013 were $197 and $175, respectively.

Information concerning the obligations, plan assets and funded status of employee retirement defined benefit plans are provided below:

	Pension Plan		SERP
	2014	2013	2014	2013
Changes in benefit obligation
Projected benefit obligation as of beginning of the year	$48,091	$53,075	$4,846	$5,571
Service cost	-	-	-	-
Interest cost	2,275	1,591	218	164
Actuarial (gain) loss	14,942	(6,000)	308	(389)
Benefits paid	(477)	(575)	(501)	(500)
Settlement payments	-	-	-	-
Projected benefit obligation as of end of the year	$64,831	$48,091	$4,871	$4,846

	Pension Plan		SERP
Changes in plan assets	2014	2013	2014	2013
Fair value of plan assets as of beginning of the year	$29,073	$24,760	$-	$-
Actual return on plan assets	1,125	4,785	-	-
Contributions	-	103	501	500
Benefits paid	(477)	(575)	(501)	(500)
Settlements payments	-	-	-	-
Fair value of plan assets as of end of the year	$29,721	$29,073	$-	$-

Pension expense was $1,147 for the year ended December 31, 2014, which included net periodic benefit expense of $383 for the pension, $219 for the SERP, $394 of insurance premiums due to the PBGC and $151 of federal excise tax related to non-payment of minimum pension funding requirements. Pension expense was $965 for the year ended December 31, 2013, which included net periodic benefit expense of $459 for the pension, $184 for the SERP, $234 of insurance premiums due to the PBGC and $88 of federal excise tax related to non-payment of minimum pension funding requirements.

There was an unrecognized net actuarial loss of $15,710 in 2014 due to a decrease in the discount rate used to remeasure the Pension Plan of 4.8% as of December 31, 2013 compared to 3.8% as of December 31, 2014. There was an unrecognized net actuarial gain of $9,653 in 2013 due to an increase in the discount rate used to remeasure the Pension Plan of 3.1% as of December 31, 2012 compared to 4.8% as of December 31, 2013. The discount rate is estimated based on an index of similar fixed income securities. During 2015, E&S expects to recognize $782 of accumulated other comprehensive loss as a component of 2015 net periodic benefit cost.

There was an increase to the SERP minimum liability recorded in other comprehensive income of $307 in 2014, compared to a decrease of $409 in 2013. The increase in 2014 reflected the decrease to the discount rate used to measure the SERP as of December 31, 2014 of 3.8% compared to 4.8% as of December 31, 2013.

The weighted average assumptions used to remeasure benefit obligations as of December 31, 2014 and 2013 included a discount rate of 4.8% and 3.1%, respectively, for the Pension Plan and SERP. The weighted average assumptions used to determine net periodic cost for the periods ended December 31, 2014 and 2013 included a discount rate of 4.8% and 3.1%, respectively, in each period for the Pension Plan and SERP. The weighted average assumption used to determine an expected long-term rate of return on Pension Plan assets was 8.0%.

The long-term rate of return on plan assets was estimated as the weighted average expected return of each of the asset classes in the target allocation of plan assets. The expected return of each asset class is based on historical market returns.

The Pension Plan’s weighted-average asset allocations and weighted-average targeted asset allocations for each of the years presented are as follows:

The asset allocation policy, consistent with the long-term growth objectives of the Pension Plan, is to invest on a diversified basis among various asset classes as determined by the Pension Plan Administrative Committee. Assets will be invested in a manner that will provide for long-term growth with a goal to achieve returns equal to or greater than applicable benchmarks. Investments will be managed by registered investment advisors.

No securities of the Company were part of the Pension Plan assets as of December 31, 2014 or 2013.

The Pension Plan assets include a significant amount of mutual funds invested in equity and debt securities that are classified within Level 1 because the underlying investments have readily available market prices. Fair values of real estate investments within the real estate investment trust are classified as Level 3 because they were valued using real estate valuation techniques and other methods that include reference to third-party sources and sales comparables where available. Hedge fund investments are classified in Level 2 and the fair values are generally calculated from pricing models with market input parameters from third-party sources. The Pension Plan assets fair value measurements are summarized below:

Through September 15, 2012, the Company’s funding policy was to contribute to the Pension Plan trust amounts sufficient to satisfy regulatory funding standards, based upon independent actuarial valuations. Beginning in October 2012, the Company discontinued this policy in order to preserve necessary liquidity. As a result, a lien in favor of the PBGC has arisen against the assets of the Company to secure aggregate unpaid contributions which amount to $6,979, including interest, as of January 15, 2015, which is the date the most recent contribution was due. Independent actuarial valuations have determined that additional contributions of approximately $4,009 will become due through January 15, 2016. The Company’s legal counsel has advised that the PBGC usually does not take enforcement action under its lien rights while it is still considering the application for the distress termination which is consistent with the Company’s dialog with the PBGC through the application process. Based upon recent correspondence with the PBGC, the Company believes that the application process will likely result in a settlement of the Pension Plan liabilities on terms that will enable the Company to continue to operate as a going concern, although there can be no assurance as to the timing and ultimate outcome of such settlement discussions.

The Company is not currently required to fund the SERP. All benefit payments are made by E&S directly to those who receive benefits from the SERP. As such, these payments are treated as both contributions and benefits paid for reporting purposes.

The Company expects to contribute and pay benefits of approximately $535 related to the SERP in 2015.

As of December 31, 2014, the following benefits are expected to be paid based on actuarial estimates and prior experience: