Note 7 - Employee Retirement Benefit Plans

12 Months Ended

Dec. 31, 2019

Disclosure Text Block [Abstract]

Note 7 - Employee Retirement Benefit Plans

Note 7 - Employee Retirement Benefit Plans

Settlement of Pension Plan Liabilities

On April 21, 2015, the Company, as the administrator of its qualified defined benefit pension plan (“Pension Plan”), and the Pension Benefit Guaranty Corporation (“PBGC”) entered into an Agreement for Appointment of Trustee and Termination of Plan (the “Termination Agreement”) (a) terminating the Pension Plan, (b) establishing March 9, 2013 as the Plan’s termination date and (c) appointing the PBGC as statutory trustee of the Pension Plan.

In connection with the Termination Agreement, on April 21, 2015, the Company entered into the Pension Settlement Agreement with the PBGC to settle all liabilities of the Pension Plan including any termination premium resulting from the Pension Plan termination (the “Settled ERISA Liabilities”). Pursuant to the Pension Settlement Agreement, the Company agreed to (a) pay to the PBGC a total of $10,500, with $1,500 due within ten days following the effective date of the Pension Settlement Agreement and the remainder paid in twelve annual installments of $750 beginning on October 31, 2015 (the “Pension Settlement Obligation”) and (b) issue within ten days following the effective date of the Pension Settlement Agreement 88,117 shares of the Company’s treasury stock in the name of the PBGC. The Pension Settlement Agreement further provides that the PBGC will be deemed to have released the Company from all Settled ERISA Liabilities upon payment of the Pension Settlement Obligation. In the event of a default by the Company of its obligations under the Pension Settlement Agreement or the underlying agreements which secure the Pension Settlement Obligation, the PBGC may enforce payment of the Settled ERISA Liabilities, which would accrue interest at various rates until payment is made and be reduced by any payments made by the Company pursuant to the Pension Settlement Agreement. The estimated total Settled ERISA Liabilities as of the settlement date is $46,000.

To secure the Company’s obligations under the Pension Settlement Agreement, on April 21, 2015, the Company also entered into a Security Agreement with the PBGC (the “Security Agreement”), and executed an Open-End Mortgage in favor of the PBGC (the “Mortgage”) on certain real property owned by the Company’s subsidiary, Spitz, Inc. (“Spitz”). The Security Agreement and Mortgage grant to the PBGC a security interest on all the Company’s presently owned and after-acquired property and proceeds thereof, free and clear of all liens and other encumbrances, except those described therein (the “Senior Liens”). The PBGC’s security interest in the Company’s property is subordinate to the Company’s two senior lenders pursuant to the Security Agreement and agreements between the PBGC and the lenders (the “Intercreditor Agreements”). The Intercreditor Agreements provide for the lenders to extend credit to the Company, secured by the Senior Liens, up to specified limits. The Intercreditor Agreement between the lender of the mortgage notes and line of credit (see Note 8) and the PBGC provides for total aggregate loans of up to $6,500 secured by Senior Liens on Spitz assets. The second Intercreditor Agreement between another lender and the PBGC provides for up to $3,000 of letter of credit indebtedness secured by Senior Liens on cash deposits.

The balance of the Pension Settlement Obligation is recorded on the balance sheet as of December 31, 2019 and 2018 as follows:

	2019	2018
Current portion of pension settlement obligation	$    468	$    438
Pension settlement obligation, net of current portion	3,575	4,042
Total Pension Settlement Obligation	$ 4,043	$ 4,480

Supplemental Executive Retirement Plan (SERP)

The SERP provides eligible former executives, employed by the Company prior to 2002, defined pension benefits 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.

Obligations and Funded Status for SERP

E&S uses a December 31 measurement date for the SERP.

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

Changes in benefit obligation	2019	2018
Projected benefit obligation - beginning of year	$ 4,222	$ 4,650
Interest cost	148	136
Actuarial loss (gain)	284	(119)
Benefits paid	(387)	(445)
Projected benefit obligation - end of year	$ 4,267	$ 4,222
Changes in plan assets	2019	2018
Contributions	$ 386	$ 445
Benefits paid	(386)	(445)
Fair value of plan assets - end of year	$ -	$ -
Net amount recognized	2019	2018
Unfunded status	$ (4,267)	$ (4,222)
Unrecognized net actuarial loss	2,182	1,976
Net amount recognized	$ (2,085)

Amounts recognized in the consolidated balance sheets consisted of:

	2019	2018
Accrued liability	$ (4,267)	$ (4,222)
Accumulated other comprehensive loss	2,182	1,976
Net amount recognized	$ (2,085)	$ (2,246)

Components of net periodic benefit cost:

	2019	2018
Interest cost	$ 148	$ 136
Amortization of actuarial loss	78	81
Amortization of prior year service cost	-	-
Net periodic benefit expense	$ 226	$ 217

Additional information

Pension expense was $226 and $217 for the years ended December 31, 2019 and 2018, respectively, which consisted of net periodic benefit expense for the SERP.

The SERP minimum liability recorded in other comprehensive loss increased $206 in 2019 compared to a decrease of $200 in 2018. The increase in 2019 was primarily due to a decrease in the discount rate. The decrease in 2018 was primarily due to an increase in the discount rate and change to the mortality table offset by an increase due to the change to payout assumption.

Assumptions

The weighted average assumptions used to remeasure benefit obligations as of December 31, 2019 and 2018 included a discount rate of 2.6% and 3.8%, respectively, for the SERP. The weighted average assumptions used to determine net periodic cost for the years ended December 31, 2019 and 2018 included a discount rate of 2.6% and 3.8%, respectively, in each year for the SERP.

In prior years, for persons who have not yet commenced benefits, it was assumed that installment payments would commence on the valuation date and continue for 10 years.  That assumption was changed such that if an individual has not yet commenced benefit payments, the first payment would be a one-time lump sum equal to installments in arrears plus future installments commencing on the valuation date and continuing through the original end date assuming payments had commenced on the expected start date.

Cash Flows

Employer contributions

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 $682 related to the SERP in 2020.

Estimated future benefit payments

As of December 31, 2019, the following benefits are expected to be paid based on actuarial estimates and prior experience:

Years Ending
December 31,	SERP
2020	$ 682
2021	$ 419
2022	$ 412
2023	$ 396
2024	$ 387
2025-2029	$ 1,336

401(k) Deferred Savings Plan

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 of 50% are made on the first 6% of 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. The Company makes a 3% contribution in addition to the matching contribution. Contributions to the 401(k) plan for 2019 and 2018 were $482 and $444, respectively.