10. Employee Benefit Plans

The Company maintains a noncontributory defined benefit pension plan for all domestic nonunion employees employed on or prior to December 31, 2013, who meet certain requirements of age, length of service and hours worked per year. Plan benefits are based upon years of service and average compensation, as defined. The measurement dates for the pension plan were as of June 30, 2016, 2015 and 2014.

Changes in the projected benefit obligation, plan assets and funded status were:

For the Years Ended June 30	2016			2015
Change in projected benefit obligation
Projected benefit obligation at beginning of year		$	62,605		$	57,599
Service cost			2,939			2,954
Interest cost			2,893			2,618
Benefits paid			(1,271)			(1,116)
Actuarial (gain) loss			8,498			550
Projected benefit obligation at end of year		$	75,664		$	62,605

For the Years Ended June 30	2016			2015
Change in plan assets
Fair value of plan assets at beginning of year		$	44,032		$	39,581
Actual return on plan assets			(1,202)			(1,248)
Employer contributions			12,734			6,815
Benefits paid			(1,271)			(1,116)
Fair value of plan assets at end of year		$	54,293		$	44,032
Funded status at end of year		$	(21,371)		$	(18,573)

The funded status is included in other liabilities in the consolidated balance sheets. At June 30, 2016 and 2015, the accumulated benefit obligation was $68,403 and $56,904, respectively.

The Company expects to contribute approximately $5,851 to the pension plan during 2017. We seek to maintain an asset balance that meets the long-term funding requirements identified by actuarial projections while also satisfying ERISA fiduciary responsibilities.

Accumulated other comprehensive (income) loss related to the pension plan was:

For the Years Ended June 30	2016			2015
Accumulated Other Comprehensive (Income) Loss Related to Pension Plan
Balance at beginning of period		$	19,884		$	16,663
Amortization of net actuarial loss and prior service costs			(1,784)			(1,405)
Current period net actuarial loss			12,877			4,626
Net change			11,093			3,221
Balance at end of period		$	30,977		$	19,884

Amortization of unrecognized net actuarial loss and prior service costs will be approximately $2,862 during 2017.

Net periodic pension expense was:

For the Years Ended June 30	2016			2015			2014
Service cost−benefits earned during the year		$	2,939		$	2,954		$	2,457
Interest cost on benefit obligation			2,893			2,618			2,333
Expected return on plan assets			(3,177)			(2,828)			(2,334)
Amortization of net actuarial loss and prior service costs			1,784			1,405			904
Net periodic pension expense		$	4,439		$	4,149		$	3,360

Significant actuarial assumptions for the plan were:

For the Years Ended June 30	2016	2015	2014
Discount rate for service and interest	4.6%	4.5%	5.0%
Expected rate of return on plan assets	6.1%	6.7%	7.0%
Rate of compensation increase	3.0%–6.0%	3.0%–6.0%	3.0%–4.5%
Discount rate for year-end benefit obligation	3.9%	4.6%	4.5%

The plan used the Aon Hewitt AA Bond Universe as a benchmark for its discount rate as of June 30, 2016, 2015 and 2014. The discount rate is determined by matching the pension plan’s timing and amount of expected cash outflows to a bond yield curve constructed from a population of AA-rated corporate bond issues that are generally non-callable and have at least $250 million par value outstanding. From this, the discount rate that results in the same present value is calculated.

Estimated future benefit payments, including benefits attributable to future service, are:

For the Years Ended June 30
2017	$	1,934
2018		2,196
2019		2,480
2020		2,780
2021		3,081
2022–2026		19,684

The plan’s target asset allocations for 2017 and the weighted-average asset allocation of plan assets as of June 30, 2016 and 2015 are:

	Target Allocation	Percentage of Plan Assets
For the years ended June 30	2017	2016		2015
Debt securities	10%–35%		19%		19%
Equity securities	25%–55%		43%		35%
Global asset allocation/risk parity(1)	15%–35%		26%		35%
Other	0%–25%		12%		11%

(1) The global asset allocation/risk parity category consists of a variety of asset classes including, but not limited to, global bonds, global equities, real estate and commodities.

The expected long-term rate of return for the plan’s total assets is generally based on the plan’s asset mix. In determining the rate to use, we consider the expected long-term real returns on asset categories, expectations for inflation, estimates of the effect of active management and actual historical returns.

The investment policy and strategy is to earn a long term investment return sufficient to meet the obligations of the plans, while assuming a moderate amount of risk in order to maximize investment return. In order to achieve this goal, assets are invested in a diversified portfolio consisting of equity securities, debt securities, and other investments in a manner consistent with ERISA’s fiduciary requirements.

The fair values of the Company’s plan assets by asset category were:

	Fair Value Measurements Using
As of June 30, 2016	Level 1			Level 2			Level 3			Total
Cash and cash equivalents		$	713		$	—		$	—		$	713
Common-collective funds
Global large cap equities			—			11,963			6,596			18,559
Fixed income securities			—			7,583			—			7,583
Global asset allocations/risk parity			—			4,878			—			4,878
Mutual funds
Global Equities			4,611			—			—			4,611
Fixed income securities			1,366			—			—			1,366
Global asset allocations/risk parity			2,667			—			—			2,667
Other
Fixed income securities			—			—			1,434			1,434
Global asset allocations/risk parity			—			—			6,554			6,554
Other			—			—			5,929			5,929
		$	9,357		$	24,424		$	20,513		$	54,294

	Fair Value Measurements Using
As of June 30, 2015	Level 1			Level 2			Level 3			Total
Cash and cash equivalents		$	129		$	—		$	—		$	129
Common-collective funds
Global large cap equities			—			10,995			—			10,995
Fixed income securities			—			8,565			—			8,565
Global asset allocations/risk parity			—			6,685			—			6,685
Mutual funds
Global equities			4,366			—			—			4,366
Global asset allocations/risk parity			4,303			—			—			4,303
Other
Global asset allocations/risk parity			—			—			4,251			4,251
Other			—			—			4,738			4,738
		$	8,798		$	26,245		$	8,989		$	44,032

The table below provides a summary of the changes in the fair value of Level 3 assets:

Change in Fair Value Level 3 assets	2016			2015
Balance at beginning of period		$	8,989		$	10,031
Redemptions			(3,656)			(2,026)
Purchases			15,695			1,280
Change in fair value			(515)			(296)
Balance at end of period		$	20,513		$	8,989

The following outlines the valuation methodologies used to estimate the fair value of our pension plan assets:

• Cash and cash equivalents are valued at $1 per unit;

• Common-collective funds are determined based on current market values of the underlying assets of the fund;

• Mutual funds and foreign currency deposits are valued using quoted market prices in active markets; and

• For Level 3 managed assets, business appraisers use a combination of valuations and appraisal methodologies, as well as a number of assumptions to create a price that brokers evaluate. For Level 3 non-managed assets, pricing is provided by various sources, such as issuer or investment manager.

Our consolidated balance sheets include other liabilities of $14,898 and $12,438 as of June 30, 2016 and 2015, respectively, for other retirement benefits, including international retirement plans, supplemental retirement benefits and other employee benefit plans. Expense under these plans was $5,239, $3,286, and $3,832 for 2016, 2015 and 2014, respectively.

We provide a 401(k) retirement savings plan, under which United States employees may make pre-tax contributions. We make a matching contribution equal to 100% of the first 1% of an employee’s contribution and make a matching contribution equal to 50% of the next 5% of an employee’s contribution. Employees hired on or after January 1, 2014, receive a non-elective Company contribution of 3% of compensation and are eligible to receive an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service, provided that such payments comply with mandatory non-discrimination testing. Participants are fully vested in employer contributions after two years of service. Our contribution expense was $2,309, $1,583, and $1,281 in 2016, 2015 and 2014, respectively.

Subsequent Events

In July 2016, we amended the domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective as of September 30, 2016. The amendment will result in an estimated $6,700 pension curtailment gain. The consolidated financial statements for the quarter ended September 30, 2016, will include the gain in other comprehensive income with an offsetting reduction in the liability for pension benefits included in other liabilities. Effective October 1, 2016, the 401(k) retirement savings plan will include, for all domestic employees, a non-elective Company contribution of 3% of compensation and an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service.

In August 2016, we offered a lump sum payment option to certain pension plan participants who are no longer active employees and who do not currently receive benefits. We expect to recognize a partial settlement of the pension plan that will result in a charge to the consolidated statement of operations for the quarter ending December 31, 2016. Depending on the participants who elect the option, we estimate the expense will be up to $3,000.