PENSION PLANS

12 Months Ended

Dec. 31, 2018

NOTE 8 – PENSION PLANS

Defined Benefit Pension Plan

Our predecessor, Syms, sponsored a defined benefit pension plan for certain eligible employees not covered under a collective bargaining agreement. The pension plan was frozen effective December 31, 2006. As of December 31, 2018 and 2017, we had a recorded liability of $2.8 million and $2.5 million, respectively, which is included in pension liabilities on the accompanying consolidated balance sheets. This liability represents the estimated cost to us of terminating the plan in a standard termination, which would require us to make additional contributions to the plan so that the assets of the plan are sufficient to satisfy all benefit liabilities.

We had contemplated other courses of action, including a distress termination, whereby the Pension Benefits Guaranty Corporation (“PBGC”) would take over the plan. On February 27, 2012, Syms notified the PBGC and other affected parties of its consideration to terminate the plan in a distress termination. However, the estimated total cost associated with a distress termination was approximately $15 million. As a result of the cost savings associated with the standard termination approach, Syms elected not to terminate the plan in a distress termination and formally notified the PBGC of this decision. We will maintain the Syms pension plan and make all contributions required under applicable minimum funding rules; provided, however, that we may terminate the Syms pension plan at any time. In the event that we terminate the Syms pension plan, we intend that any such termination shall be a standard termination. Although we have accrued the liability associated with a standard termination, we have not taken any steps to commence such a termination and have made no commitment to do so by a certain date. In accordance with minimum funding requirements and court ordered allowed claims distributions, we paid approximately $4.5 million to the Syms sponsored plan from September 17, 2012 through December 31, 2018, of which approximately $470,000 was funded during the year ended December 31, 2018. Historically, we have funded this plan in the third quarter of the calendar year.

Presented below is financial information relating to this plan for the periods indicated (dollars in thousands):

	Year Ended December 31, 2018			Year Ended December 31, 2017

CHANGE IN BENEFIT OBLIGATION:
Net benefit obligation - beginning of period	$	14,620		$	14,278
Interest cost		666			697
Actuarial (gain) loss		(630	)		295
Gross benefits paid		(988	)		(650	)
Net benefit obligation - end of period	$	13,668		$	14,620

CHANGE IN PLAN ASSETS:
Fair value of plan assets - beginning of period	$	12,120		$	10,889
Employer contributions		470			460
Gross benefits paid		(988	)		(650	)
Actual return on plan assets		(750	)		1,421
Fair value of plan assets - end of period	$	10,852		$	12,120

Un-funded status at end of period	$	(2,816	)	$	(2,500	)

The pension expense includes the following components (dollars in thousands):

	Year Ended December 31, 2018			Year Ended December 31, 2017

COMPONENTS OF NET PERIODIC COST:
Interest cost	$	666		$	697
Loss (gain) on assets		750			(1,421	)
Amortization of (gain) loss		(990	)		1,241
Net periodic cost	$	426		$	517

WEIGHTED-AVERAGE ASSUMPTION USED:
Discount rate		5.0	%		5.0	%
Rate of compensation increase		0.0	%		0.0	%

The expected long-term rate of return on plan assets was 6% for both the years ended December 31, 2018 and 2017.

As of December 31, 2018 the benefits expected to be paid in the next five fiscal years and then in the aggregate for the five fiscal years thereafter are as follows (dollars in thousands):

Year	Amount

2019	$	859
2020		867
2021		896
2022		917
2023		931
2024-2029		5,872

The fair values and asset allocation of our plan assets as of December 31, 2018 and 2017 and the target allocation for fiscal 2018, by asset category, are presented in the following table. All fair values are based on quoted prices in active markets for identical assets (Level 1 in the fair value hierarchy) (dollars in thousands):

		December 31, 2018					December 31, 2017
				% of Plan					% of Plan
Asset Category	Asset Allocation	Fair Value (1)		Assets			Fair Value		Assets

Cash and equivalents	0% to 10%	$	557		5	%	$	768		6	%
Equity securities	40% to 57%		6,460		58	%		6,848		57	%
Fixed income securities	35% to 50%		4,121		37	%		4,369		36	%
Alternative investments	1% to 10%		-		0	%		135		1	%
Total		$	11,138		100	%	$	12,120		100	%

(1)	The fair value balance includes a $286,000 past due payable to be distributed in the first half of 2019.

Under the provisions of ASC 715, we are required to recognize in our consolidated balance sheets the unfunded status of the benefit plan. This is measured as the difference between plan assets at fair value and the projected benefit obligation. For the pension plan, this is equal to the accumulated benefit obligation.

Multiemployer Pension Plans

Certain employees covered by collective bargaining agreements participated in multiemployer pension plans. Syms ceased to have an obligation to contribute to these plans in 2012, thereby triggering a complete withdrawal from the plans within the meaning of section 4203 of the Employee Retirement Income Security Act of 1974. Consequently, we are subject to the payment of a withdrawal liability to one of these pension funds. We have a liability of $922,000 and $1.7 million which is included in pension liabilities on the accompanying consolidated balance sheets as of December 31, 2018 and 2017, respectively, related to this plan. We are required to make quarterly distributions in the amount of approximately $203,000 until this liability is completely paid to the multiemployer plan by the end of the first quarter of 2020. In accordance with minimum funding requirements and court ordered allowed claims distributions, we paid approximately $6.0 million to the multiemployer plans from September 17, 2012 through December 31, 2018 of which $813,000 was funded to the multiemployer plan during each of the years ended December 31, 2018 and 2017.

401(k) Plan –

We have established a 401(k) plan for all of our employees. Eligible employees are able to contribute a percentage of their salary to the plan subject to statutory limits. We paid approximately $65,000, $55,000 and $54,000 in matching contributions to this plan during the years ended December 31, 2018, 2017 and 2016, respectively.