M. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company has non-contributory, qualified defined benefit pension plans covering substantially all domestic employees hired prior to October 1, 2003, and certain foreign employees. Domestic plan benefits are based on years of service, and, for salaried employees, on average compensation for benefits earned prior to January 1, 1997, and on a cash balance plan for benefits earned after January 1, 1997. The Company's funding policy for the plans covering domestic employees is to contribute an actuarially determined amount which falls between the minimum and maximum amount that can be deducted for federal income tax purposes.

On June 3, 2009, the Company announced it would freeze future accruals under the domestic defined benefit pension plans effective August 1, 2009.

In addition, the Company has unfunded, non-qualified retirement plans for certain management employees and Directors. In the case of management employees, benefits are based either on final average compensation or on an annual credit to a bookkeeping account, intended to restore the benefits that would have been earned under the qualified plans, but for the earnings limitations under the Internal Revenue Code. In the case of Directors, benefits are based on years of service on the Board. All benefits vest upon retirement from the Company.

In addition to providing pension benefits, the Company provides other postretirement benefits, including healthcare and life insurance benefits for certain domestic retirees. All employees retiring after December 31, 1992, and electing to continue healthcare coverage through the Company's group plan, are required to pay 100% of the premium cost.

The measurement date for the Company's pension and postretirement benefit plans in fiscal 2014 and 2013 was June 30.

Obligations and Funded Status

The following table sets forth the Company's defined benefit pension plans' and other postretirement benefit plans' funded status and the amounts recognized in the Company's balance sheets and statement of operations and comprehensive income as of June 30 (in thousands):

	Pension Benefits						Other Postretirement Benefits
	2014			2013			2014			2013
Change in benefit obligation:
Benefit obligation, beginning of year	$	125,846		$	133,261		$	17,739		$	19,645
Service cost		536			367			37			34
Interest cost		5,425			5,399			659			766
Actuarial loss (gain)		1,221			(4,123	)		(60	)		(938	)
Contributions by plan participants		174			162			581			677
Settlements		(121	)
Benefits paid		(9,249	)		(9,220	)		(2,372	)		(2,445	)

Benefit obligation, end of year	$	123,832		$	125,846		$	16,584		$	17,739

Change in plan assets:
Fair value of assets, beginning of year	$	94,723		$	88,775		$	-		$	-

Actual return on plan assets		14,031			10,500			-
Employer contribution		2,816			4,506			1,791			1,768
Contributions by plan participants		174			162			581			677
Benefits paid		(9,249	)		(9,220	)		(2,372	)		(2,445	)

Fair value of assets, end of year	$	102,495		$	94,723		$	-		$	-

Funded status	$	(21,337	)	$	(31,123	)	$	(16,584	)	$	(17,739	)

Amounts recognized in the balance sheet consist of:
Other assets - noncurrent	$	680		$	566		$	-		$	-
Accrued liabilities - current		(1,189	)		(389	)		(2,418	)		(2,470	)
Accrued retirement benefits - noncurrent		(20,828	)		(31,300	)		(14,166	)		(15,269	)

Net amount recognized	$	(21,337	)	$	(31,123	)	$	(16,584	)	$	(17,739	)

Amounts recognized in accumulated other comprehensive loss consist of (net of tax):
Net transition obligation	$	340	$	345	$	-	$	-
Actuarial net loss		33,220		38,933		3,163		3,570

Net amount recognized	$	33,560	$	39,278	$	3,163	$	3,570

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year for the qualified domestic defined benefit and other postretirement benefit plans are as follows (in thousands):

	Pension Benefits		Other Postretirement Benefits
Net transition obligation	$	38	$	-
Actuarial net loss		2,437		638

Net amount to be recognized	$	2,475	$	638

The accumulated benefit obligation for all defined benefit pension plans was approximately $123,832,000 and $125,846,000 at June 30, 2014 and 2013, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets (in thousands):

	June30
	2014		2013
Projected and accumulated benefit obligation	$	122,045	$	123,933
Fair value of plan assets		100,028		92,244

Components of Net Periodic Benefit Cost (in thousands):

	Pension Benefits
	2014			2013			2012
Service cost	$	536		$	367		$	292
Interest cost		5,425			5,399			6,231
Expected return on plan assets		(6,591	)		(6,382	)		(7,766	)
Settlement loss		-			5			11
Amortization of transition obligation		32			35			34
Amortization of actuarial net loss		2,894			3,357			2,319

Net periodic benefit cost	$	2,296		$	2,781		$	1,121

	Other Postretirement Benefits
	2014		2013		2012
Service cost	$	37	$	34	$	41
Interest cost		659		766		985
Amortization of prior service cost		-		-		(508	)
Amortization of actuarial net loss		602		792		929

Net periodic benefit cost	$	1,298	$	1,592	$	1,447

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income for Fiscal 2014 (Pre-tax, in thousands):

	Pension			Other Postretirement Benefits
Net gain	$	(6,303	)	$	(59	)
Amortization of prior service benefit		7			-
Amortization of transition asset		(38	)		-
Amortization of net (loss) gain		(2,894	)		(602	)
Total recognized in other comprehensive income		(9,228	)		(661	)
Net periodic benefit cost		2,296			1,298
Total recognized in net periodic benefit cost andother comprehensive income	$	(6,932	)	$	637

Additional Information

Assumptions (as of June 30, 2014 and 2013)

	Pension Benefits						OtherPostretirement Benefits
Weighted average assumptions used to determine benefit obligations at June 30
	2014			2013			2014			2013
Discount rate		4.06	%		4.35	%		3.76	%		3.99	%
Expected return on plan assets		7.39	%		7.41	%

Weighted average assumptions used to determine net periodic benefit cost for years ended June 30

	Pension Benefits									Other Postretirement Benefits
	2014			2013			2012			2014			2013			2012
Discount rate		4.35	%		4.20	%		5.16	%		3.99	%		4.20	%		5.16	%
Expected return on plan assets		7.41	%		7.50	%		8.50	%

The assumed weighted-average healthcare cost trend rate was 8.0% in 2014, grading down to 5% in 2023. A 1% increase in the assumed health care cost trend would increase the accumulated postretirement benefit obligation by approximately $351,000 and the service and interest cost by approximately $13,000. A 1% decrease in the assumed health care cost trend would decrease the accumulated postretirement benefit obligation by approximately $316,000 and the service and interest cost by approximately $12,000.

Plan Assets

The Company's Pension Committee ("Committee") oversees investment matters related to the Company's funded benefit plans. The Committee works with external actuaries and investment consultants on an ongoing basis to establish and monitor investment strategies and target asset allocations. The overall objective of the Committee's investment strategy is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and address other cash requirements of the pension plans. The Committee has established an Investment Policy Statement which provides written documentation of the Company's expectations regarding its investment programs for the pension plans, establishes objectives and guidelines for the investment of the plan assets consistent with the Company's financial and benefit-related goals, and outlines criteria and procedures for the ongoing evaluation of the investment program. The Company employs a total return on investment approach whereby a mix of investments among several asset classes are used to maximize long-term return of plan assets while avoiding excessive risk. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, and annual liability measurements.

The Company's pension plan weighted-average asset allocations at June 30, 2014 and 2013 by asset category are as follows:

	June30
Asset Category	Target Allocation			2014			2013
Equity securities		65	%		65	%		64	%
Debt securities		25	%		23	%		26	%
Real estate		10	%		12	%		10	%

		100	%		100	%		100	%

Due to market conditions and other factors, actual asset allocation may vary from the target allocation outlined above. The domestic pension plans held 98,211 shares of Company stock with a fair market value of $3,245,874 (3.2 percent of total plan assets) at June 30, 2014 and 98,211 shares with a fair market value of $2,327,601 (2.5 percent of total plan assets) at June 30, 2013.

The plans have a long-term return assumption of 7.50%. This rate was derived based upon historical experience and forward-looking return expectations for major asset class categories.

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are classified into the following hierarchy:

Level I

Unadjusted quoted prices in active markets for identical instruments

Leve lII

Unadjusted quoted prices in active markets for similar instruments, or

Unadjusted quoted prices for identical or similar instruments in markets that are not active, or

Other inputs that are observable in the market or can be corroborated by observable market data

Level III

Use of one or more significant unobservable inputs

The following table presents plan assets using the fair value hierarchy as of June 30, 2014(in thousands):

	Total		Level I		Level II		Level III
Cash and cash equivalents	$	965	$	965	$	-	$	-
Equity securities:
U.S. (a)		30,727		30,727		-		-
International (b)		16,676		10,785		5,891		-
Fixed income (c)		21,892		7,603		14,289		-
Annuity contracts (d)		6,340		-		-		6,340
Real estate (e)		11,206		-		11,206		-
Other (f)		14,689		-		-		14,689
Total	$	102,495	$	50,080	$	31,386	$	21,029

The following table presents plan assets using the fair value hierarchy as of June 30, 2013 (in thousands):

	Total		Level I		Level II		Level III
Cash and cash equivalents	$	2,376	$	2,376	$	-	$	-
Equity securities:
U.S. (a)		28,334		28,334		-		-
International (b)		15,409		9,315		6,094		-
Fixed income (c)		20,935		7,240		13,695		-
Annuity contracts (d)		5,819		-		-		5,819
Real estate (e)		8,697		-		5,685		3,012
Other (f)		13,153		-		-		13,153
Total	$	94,723	$	47,265	$	25,474	$	21,984

(a) U.S. equity securities include companies that are well diversified by industry sector and equity style (i.e., growth and value strategies). Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks. These securities are valued at the closing price reported on the active market on which the individual securities are traded.

(b) International equities are invested in companies that are traded on exchanges outside the U.S. and are well diversified by industry sector, country, capitalization and equity style (i.e., growth and value strategies). Certain assets are invested in international commingled equity funds. The vast majority of the investments are made in companies in developed markets with a smaller percentage in emerging markets. Securities traded on exchanges are valued at the closing price reported on the active market on which the individual securities are traded. International commingled funds are valued at the net asset value ("NAV") as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding.

(c) Fixed income consists of corporate bonds with investment grade BBB or better from diversified industries, as well as government debt securities. Corporate and government debt investments are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes in active and inactive markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data.

(d) Annuity contracts represent contractual agreements in which payments are made to an insurance company, which agrees to pay out an income or lump sum amount at a later date. Annuity contracts are valued at the net present value of future cash flows.

(e) Real estate investments invested in common collective trusts and other mutual funds holding real estate investments. They are valued at the net asset value ("NAV") as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding. Level 2 investments represent funds where regular opportunities exist for the Company to sell the holdings, whereas Level 3 investments represent funds where less frequent opportunities exist during the year for the Company to sell it's holding in the funds.

(f) Other consists of hedged equity mutual funds. These investments are valued at the net asset value ("NAV") as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding.

The following tables present a reconciliation of the fair value measurements using significant unobservable inputs (Level III) as of June 30, 2014 and 2013 (in thousands):

	Annuity Contracts		Real Estate			Other
Balance – June 30, 2013	$	5,819	$	3,012		$	13,153
Actual return on plan assets:
Relating to assets still held at reporting date		433		-			1,536
Relating to assets sold during the period		-		257			-
Purchases, sales and settlements, net		88		(3,269	)		-
Transfers in and/or out of Level III		-		-			-

Balance – June 30, 2014	$	6,340	$	-		$	14,689

	Annuity Contracts		Real Estate			Other
Balance – June 30, 2012	$	5,333	$	5,324		$	11,988
Actual return on plan assets:
Relating to assets still held at reporting date		298		391			1,165
Relating to assets sold during the period		-
Purchases, sales and settlements, net		188		(2,518	)		-
Transfers in and/or out of Level III		-		(185	)

Balance – June 30, 2013	$	5,819	$	3,012		$	13,153

Cash Flows

Contributions

The Company expects to contribute $7,218,000 to its defined benefit pension plans in fiscal 2015.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):

	Other Postretirement Benefits
					Part D		Net Benefit
	Pension Benefits		Gross Benefits		Reimbursement		Payments
2015	$	10,926	$	2,418	$	-	$	2,418
2016		10,167		2,109		-		2,109
2017		9,902		1,774		-		1,774
2018		11,206		1,621		-		1,621
2019		9,772		1,453		-		1,453
Years 2020- 2024		42,184		5,486				5,486

The Company sponsors defined contribution plans covering substantially all domestic employees and certain foreign employees. These plans provide for employer contributions based primarily on employee participation. The total expense under the plans was $2,218,000, $2,074,000 and $2,411,000 in fiscal 2014, 2013 and 2012, respectively.