DMC Pension Plan

12 Months Ended

Jun. 30, 2013

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

DMC PENSION PLAN

DMC PENSION PLAN

The following table summarizes the funded status of the DMC Pension Plan based upon actuarial valuations prepared as of the most recent valuation dates as of June 30, 2012 and 2013, respectively (in millions).

	June 30, 2012			June 30, 2013
Reconciliation of projected benefit obligation:
Projected benefit obligation, beginning balance	$	956.6		$	1,089.4
Interest cost	52.1			46.9
Actuarial (gain) loss	120.6			(81.3		)
Benefits paid	(39.9		)	(42.5		)
Other plan administration adjustment	—			27.2
Projected benefit obligation and accumulated benefit obligation, ending balance	1,089.4			1,039.7
Reconciliation of fair value of plan assets:
Fair value of plan assets, beginning balance	768.6			819.5
Actual gain on plan assets	65.4			42.7
Employer contributions	25.4			32.3
Benefits paid	(39.9		)	(42.5		)
Fair value of plan assets, ending balance	819.5			852.0
Unfunded liability at June 30, 2012 and 2013, respectively	$	269.9		$	187.7

During the year ended June 30, 2013, the Company adjusted its estimate for the DMC pension benefit obligation from $228.0 million to $255.2 million as of the DMC acquisition date, based upon currently available information that became available in fiscal year 2013 relating to plan administration issues that are in process of being analyzed and resolved. The $27.2 million increase in the assumed pension benefit obligation resulted in a $16.9 million increase in goodwill and a $10.3 million increase in non-current deferred tax assets related to the DMC acquisition. The Company believes the adjustment to be immaterial for the restatement of prior period balance sheet amounts and has reflected the amount as an other plan administration adjustment to the projected benefit obligation during the year ended June 30, 2013.

The following table reflects the amounts included in the Company’s accompanying consolidated balance sheets related to the DMC Pension Plan as of the years ended June 30, 2012 and 2013, respectively (in millions):

	2012			2013
Accumulated other comprehensive income (loss), net of tax	$	(49.2	)	$	(11.5	)
Unfunded pension liability	269.9			187.7
	$	220.7		$	176.2
Assumptions used to determine the projected benefit obligation at June 30, 2012 and 2013, respectively:
Discount rate	4.40%			4.93%
Compensation increase rate	Frozen at 2003 level			Frozen at 2003 level

A summary of the components of net pension plan expense (credits) for the years ended June 30, 2011, 2012 and 2013, respectively, is as follows (in millions):

	2011			2012			2013
Interest cost on projected benefit obligation	$	25.5		$	52.1		$	46.9
Expected return on plan assets	(27.6		)	(57.2		)	(62.3		)
Total net pension plan expense (credits)	$	(2.1	)	$	(5.1	)	$	(15.4	)
Assumptions used to determine the net periodic pension plan expense (credits) for the years ended June 30, 2011, 2012 and 2013, respectively, were as follows:
Discount rate	5.35		%	5.57		%	4.40		%
Expected long-term rate of return on plan assets	7.50		%	7.50		%	7.50		%

The Company recognizes actuarial gain or losses, expected return on plan assets and actual return on plan assets related to the DMC Pension Plan as a direct increase or decrease to stockholders’ equity through accumulated other comprehensive income (loss). As of June 30, 2013, the Company recognized an increase in equity through accumulated other comprehensive income of $61.7 million ($37.7 million, net of taxes) based upon the net impact of these factors. The accumulated other comprehensive loss related to the DMC Pension Plan was $18.9 million ($11.5 million net of taxes) as of June 30, 2013.

To develop the expected long-term rate of return on plan assets assumption, the DMC Pension Plan considers the current level of expected returns on risk-free investments (primarily government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns on each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio. The DMC Pension Plan’s weighted-average asset allocations by asset category as of June 30, 2013, were as follows:

	Target		Actual
Asset category:
Cash and cash equivalents	2	%	2	%
United States government obligations	1	%	1	%
Equity securities	55	%	55	%
Debt securities	42	%	42	%

The DMC Pension Plan assets are invested in separately managed portfolios using investment management firms. The DMC Pension Plan’s objective for all asset categories is to maximize total return without assuming undue risk exposure. The DMC Pension Plan maintains a well-diversified asset allocation that best meets these objectives. The DMC Pension Plan assets are largely comprised of equity securities, which include companies with various market capitalization sizes in addition to international and convertible securities. Cash and cash equivalents are comprised of money market funds. Debt securities include domestic and foreign government obligations, corporate bonds, and mortgage-backed securities. Under the investment policy of the DMC Pension Plan, investments in derivative securities are not permitted for the sole purpose of speculating on the direction of market interest rates. Included in this prohibition are leveraging, shorting, swaps, futures, options, forwards, and similar strategies.

In each investment account, investment managers are responsible to monitor and react to economic indicators, such as gross domestic product, consumer price index and the Federal Monetary Policy, that may affect the performance of their account. The performance of all managers and the aggregate asset allocation are formally reviewed on a quarterly basis, with a rebalancing of the asset allocation occurring at least once a year. The current asset allocation objective is to maintain a certain percentage with each class allowing for a 10% deviation from the target.

The following tables summarize the plan assets measured at fair value on a recurring basis as of June 30, 2012 and June 30, 2013, aggregated by the level in the fair value hierarchy within which those measurements are determined as disclosed in Note 4 (in millions). Fair value methodologies for Level 1 and Level 2 are consistent with the inputs described in Note 4. Fair value for Level 3 inputs are unobservable data points for the asset, and include situations where there is little, if any, market activity for the asset.

	June 30, 2012		Level 1		Level 2		Level 3
Cash and cash equivalents	$	10.6	$	10.6	$	—	$	—
United States government obligations	58.7		—		58.7		—
Foreign obligations	0.1		—		0.1		—
Asset and mortgage-backed securities	22.0		—		22.0		—
Corporate bonds	34.1		—		34.1		—
Equity securities	524.7		90.6		434.1		—
Alternative investments	169.3		—		—		169.3
	$	819.5	$	101.2	$	549.0	$	169.3

	June 30, 2013		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	16.4	$	16.3	$	0.1	$	—
United States government obligations	7.0		7.0		—		—
Corporate bonds	361.7		361.7		—		—
Equity securities	463.8		463.8		—		—
Alternative investments	3.1		—		—		3.1
	$	852.0	$	848.8	$	0.1	$	3.1

The expected future minimum required funding contribution is $1.1 million for the Company’s year ending June 30, 2014. The estimated required funding contribution related to the 2013 plan year to be made in September 2014 is approximately $5.0 million. There is no expected amortization from the amounts included in other comprehensive income into net pension plan expense (credit) over the next fiscal year. Additionally, no plan assets are expected to be returned to the Company during the year ended June 30, 2014. The estimated pension credits for the year ended June 30, 2014 are $7.9 million based upon the excess of expected return on plan assets of 7.0% over the interest cost on the projected benefit obligation of 4.93%. The expected benefits payments from the DMC Pension Plan, which represent the total benefits expected to be paid from the plan assets held by the plan trust, for the next five fiscal years and the five fiscal years thereafter are as follows (in millions):

			Year ending June 30,
	Total		2014		2015		2016		2017		2018		Five years thereafter
Expected benefit payments	$	603.1	$	48.7	$	51.5	$	54.1	$	56.8	$	60.0	$	332.0