Note M - Pension and Other Postretirement Benefit Plans

12 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

M

. P

ENSION

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 from

January 1, 1997

through

July 31, 2009,

at which time the Company froze future accruals under domestic defined benefit pension plans. The Company's funding policy for the plans covering domestic employees is to contribute an actuarially determined amount which falls between the minimum required contribution and maximum amount that can be deducted for federal income tax purposes.

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 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

2018

and

2017

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:

							Other
	Pension						Postretirement
	Benefits						Benefits
	2018			2017			2018			2017
Change in benefit obligation:
Benefit obligation, beginning of year	$	118,170		$	129,056		$	11,574		$	15,933
Service cost		861			1,009			20			20
Interest cost		3,979			4,213			325			420
Actuarial (gain) loss		(8,690	)		(6,980	)		(2,608	)		(3,380	)
Contributions by plan participants		105			139			440			472
Benefits paid		(9,413	)		(9,267	)		(1,674	)		(1,891	)
Benefit obligation, end of year	$	105,012		$	118,170		$	8,077		$	11,574
Change in plan assets:
Fair value of assets, beginning of year	$	94,372		$	94,164		$	-		$	-
Actual return on plan assets		2,894			7,967			-			-
Employer contribution		2,300			1,369			1,234			1,419
Contributions by plan participants		105			139			440			472
Benefits paid		(9,413	)		(9,267	)		(1,674	)		(1,891	)
Fair value of assets, end of year	$	90,258		$	94,372		$	-		$	-
Funded status	$	(14,754	)	$	(23,798	)	$	(8,077	)	$	(11,574	)
Amounts recognized in the balance sheet consist of:
Other assets - noncurrent	$	157		$	694		$	-		$	-
Accrued liabilities - current		(679	)		(706	)		(1,241	)		(1,654	)
Accrued retirement benefits - noncurrent		(14,232	)		(23,786	)		(6,836	)		(9,920	)
Net amount recognized	$	(14,754	)	$	(23,798	)	$	(8,077	)	$	(11,574	)
Amounts recognized in accumulated other comprehensive loss consist of (net of tax):
Net transition obligation	$	564		$	790		$	-		$	-
Actuarial net loss		31,146			37,140			(833	)		871
Net amount recognized	$	31,710		$	37,930		$	(833	)	$	871

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:

			Other
	Pension		Postretirement
	Benefits		Benefits
Net transition obligation	$	101	$	(275	)
Actuarial net loss		2,711		-
Net amount to be recognized	$	2,812	$	(275	)

The accumulated benefit obligation for all defined benefit pension plans was approximately

$105,012

and

$118,170

at

June 30, 2018

and

2017,

respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets

:

	June 30
	2018		2017
Projected and accumulated benefit obligation	$	100,699	$	117,250
Fair value of plan assets		85,788		92,758

Components of Net Periodic Benefit Cost

:

	Pension Benefits
	2018			2017			2016
Service cost	$	868		$	1,009		$	770
Interest cost		3,981			4,213			4,968
Expected return on plan assets		(6,041	)		(5,902	)		(6,874	)
Amortization of transition obligation		36			35			33
Amortization of prior service cost		67			66			59
Amortization of actuarial net loss		3,021			3,591			3,627
Net periodic benefit cost	$	1,932		$	3,012		$	2,583

	Other Postretirement Benefits
	2018			2017		2016
Service cost	$	20		$	21	$	28
Interest cost		325			420		604
Amortization of prior service cost		(206	)		-		-
Amortization of actuarial net loss		32			230		728
Net periodic benefit cost	$	171		$	671	$	1,360

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

for Fiscal

201

8

(Pre-tax):

				Other
				Postretirement
	Pension			Benefits
Net gain	$	(5,643	)	$	(940	)
Prior service cost		-			(1,668	)
Amortization of transition asset		(34	)		-
Amortization of prior service (cost) benefit		(67	)		206
Amortization of net (loss) gain		(2,952	)		(32	)
Total recognized in other comprehensive income		(8,696	)		(2,434	)
Net periodic benefit cost		1,932			171
Total recognized in net periodic benefit cost and other comprehensive income	$	(6,764	)	$	(2,263	)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income for Fiscal

201

7

(Pre-tax):

 

				Other
				Postretirement
	Pension			Benefits
Net gain	$	(9,057	)	$	(3,380	)
Prior service cost		(10	)		-
Amortization of transition asset		(35	)		-
Amortization of prior service cost		(66	)		-
Amortization of net (loss) gain		(3,613	)		(230	)
Total recognized in other comprehensive income		(12,781	)		(3,610	)
Net periodic benefit cost		3,012			671
Total recognized in net periodic benefit cost and other comprehensive income	$	(9,769	)	$	(2,939	)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income for Fiscal

201

6

(Pre-tax):

				Other
				Postretirement
	Pension			Benefits
Net loss	$	15,514		$	496
Prior service cost		58			-
Amortization of transition asset		(33	)		-
Amortization of prior service cost		(59	)		-
Amortization of net (loss) gain		(3,627	)		(728	)
Total recognized in other comprehensive income		11,853			(232	)
Net periodic benefit cost		2,583			1,360
Total recognized in net periodic benefit cost and other comprehensive income	$	14,436		$	1,128

Additional Information

Assumptions

	Pension Benefits						Other Postretirement Benefits
Weighted average assumptions used to determine benefit obligations at June 30
	2018			2017			2018			2017
Discount rate		4.01	%		3.51	%		4.09	%		3.41	%
Expected return on plan assets		6.74	%		6.68	%

										Other
	Pension Benefits									Postretirement Benefits
Weighted average assumptions used to determine net periodic benefit costs for years ended June 30
	2018			2017			2016			2018			2017			2016
Discount rate		3.51	%		3.35	%		4.05	%		3.41	%		3.27	%		3.93	%
Expected return on plan assets		6.68	%		6.57	%		7.11	%

The assumed weighted-average healthcare cost trend rate was

7.00%

in

2018,

grading down to

5%

in

2022.

A

1%

increase in the assumed health care cost trend would increase the accumulated postretirement benefit obligation by approximately

$107

and the service and interest cost by approximately

$5.

A

1%

decrease in the assumed health care cost trend would decrease the accumulated postretirement benefit obligation by approximately

$91

and the service and interest cost by approximately

$4.

Plan Assets

The Company’s Benefits Committee (“Committee”), a non-board management 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, 2018

and

2017

by asset category were as follows:

	Target			June 30
Asset Category	Allocation			2018			2017
Equity securities		51	%		51	%		65	%
Debt securities		40	%		39	%		25	%
Real estate		9	%		10	%		10	%
		100	%		100	%		100	%

Due to market conditions and other factors, actual asset allocation

may

vary from the target allocation outlined above. The U.S. pension plans held

98,211

shares of Company stock with a fair market value of

$2,437.6

(

2.7%

of total plan assets) at

June 30, 2018

and

98,211

shares with a fair market value of

$1,585.1

(

1.7%

of total plan assets) at

June 30, 2017.

The plans have a long-term return assumption of

7.0%.

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
Level II	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, 2018:

	Total		Level I		Level II		Level III
Cash and cash equivalents	$	1,156	$	1,156	$	-	$	-
Equity securities:
Company common stock (a)		2,438		2,438		-		-
Common stock (a)		17,373		17,373		-		-
Mutual funds (b)		8,554		8,554		-		-
Annuity contracts (c)		6,113		-		-		6,113
Total	$	35,634	$	29,521	$	-	$	6,113
Investments Measured at Net Asset Value (d)		54,624
Total	$	90,258

The following table presents plan assets using the fair value hierarchy as of

June 30, 2017:

	Total		Level I		Level II		Level III
Cash and cash equivalents	$	1,203	$	1,203	$	-	$	-
Equity securities:
Company common stock (a)		1,585		1,585		-		-
Common stock (a)		23,263		23,263		-		-
Mutual funds (b)		11,259		11,259		-		-
Annuity contracts (c)		7,779		-		-		7,779
Total	$	45,089	$	37,310	$	-	$	7,779
Investments Measured at Net Asset Value (d)		49,283
Total	$	94,372

(a) Common stock is valued at the closing price reported on the active market on which the individual securities are traded. These securities include U.S. equity securities invested in companies that are traded on exchanges inside the U.S. and international equity securities invested in companies that are traded on exchanges outside the U.S.

(b) Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held by the Company’s funded benefit plans are open-end mutual funds that are registered with the Securities Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Company’s funded benefit plans are deemed to be actively traded.

(c) 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.

(d) In accordance with ASC

820

-

10,

certain investments that were measured at net asset value per share (or its equivalent) have

not

been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets at the end of the year.

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plan assets that calculate fair value based on NAV per share practical expedient as of

June 30, 2018

and

June 30, 2017:

	2018		2017
Fixed income funds	$	31,852	$	20,819
International equity securities		3,294		4,760
Real estate		8,218		8,566
Hedged equity mutual funds		11,260		15,138
Total	$	54,624	$	49,283

The following tables present a reconciliation of the fair value measurements using significant unobservable inputs (Level III) as of

June 30, 2018

and

2017:

    

	2018			2017
Beginning balance	$	7,779		$	9,031
Actual return on plan assets:
Relating to assets still held at reporting date		(58	)		659
Purchases, sales and settlements, net		(1,608	)		(1,911	)
Ending balance	$	6,113		$	7,779

Cash Flows

Contributions

The Company expects to contribute

$2,382

to its defined benefit pension plans in fiscal

2019.

Estimated Future Benefit Payments

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

			Other
	Pension		Postretirement
	Benefits		Benefits
2019	$	9,684	$	1,267
2020		8,886		989
2021		8,211		917
2022		8,027		835
2023		7,648		762
Years 2024 - 2028		33,917		2,837

The Company does

not

expect to make any Part D reimbursements for the periods presented.

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

$1,935,

$1,658

and

$2,058

in fiscal

2018,

2017

and

2016,

respectively.