Employee Benefit Costs:

Retirement Plan and Other Postretirement Benefits

The Company has noncontributory, defined benefit retirement plans and other postretirement benefit plans covering certain employees. The Company uses a June 30 measurement date for all of its plans. The following provides a reconciliation of obligations, plan assets and funded status of the plans for the two years indicated (in thousands):



	Pension Benefits						Other Postretirement Benefits
Actuarial Assumptions:	2014			2013			2014			2013
Discounted Rate Used to Determine Present Value of Projected Benefit Obligation	4.40		%	5.00		%	3.95		%	4.40		%
Expected Rate of Future Compensation Level Increases	3.0-4.0%			3.0-4.0%			n/a			n/a
Expected Long-Term Rate of Return on Plan Assets	8.00		%	8.25		%	n/a			n/a
Change in Benefit Obligations:
Projected Benefit Obligation at Beginning of Year	$	1,115,855		$	1,236,747		$	111,506		$	136,854
Service Cost	7,645			13,222			333			358
Interest Cost	53,743			50,154			4,566			4,754
Plan Curtailments	—			(52,236		)	—			—
Plan Participant Contributions	—			—			1,513			1,347
Actuarial (Gain) Loss	71,288			(56,239		)	(5,447		)	(13,309		)
Benefits Paid	(75,384		)	(75,793		)	(16,014		)	(18,498		)
Projected Benefit Obligation at End of Year	$	1,173,147		$	1,115,855		$	96,457		$	111,506
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year	$	962,633		$	937,745		$	—		$	—
Actual Return on Plan Assets	153,306			68,296			—			—
Plan Participant Contributions	—			—			1,512			1,347
Employer Contributions	2,911			32,385			14,502			17,151
Benefits Paid	(75,384		)	(75,793		)	(16,014		)	(18,498		)
Fair Value of Plan Assets at End of Year	$	1,043,466		$	962,633		$	—		$	—
Funded Status:
Plan Assets (Less Than) in Excess of Projected Benefit Obligation	$	(129,681	)	$	(153,222	)	$	(96,457	)	$	(111,506	)
Amounts Recognized on the Balance Sheets:
Accrued Pension Cost	$	(126,529	)	$	(150,131	)	$	—		$	—
Accrued Wages and Salaries	(3,152		)	(3,091		)	—			—
Accrued Postretirement Health Care Obligation	—			—			(59,290		)	(72,695		)
Accrued Liabilities	—			—			(13,624		)	(16,113		)
Accrued Employee Benefits	—			—			(23,543		)	(22,698		)
Net Amount Recognized at End of Year	$	(129,681	)	$	(153,222	)	$	(96,457	)	$	(111,506	)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss):
Transition Assets (Obligation)	$	—		$	—		$	—		$	—
Net Actuarial Loss	(190,756		)	(211,444		)	(21,962		)	(28,668		)
Prior Service Credit (Cost)	(550		)	(660		)	6,243			8,008
Net Amount Recognized at End of Year	$	(191,306	)	$	(212,104	)	$	(15,719	)	$	(20,660	)

The accumulated benefit obligation for all defined benefit pension plans was $1,173 million and $1,115 million at June 29, 2014 and June 30, 2013, respectively.

The following table summarizes the plans’ income and expense for the three years indicated (in thousands):



	Pension Benefits									Other Postretirement Benefits
	2014			2013			2012			2014			2013			2012
Components of Net Periodic (Income) Expense:
Service Cost-Benefits Earned During the Year	$	7,645		$	13,222		$	13,764		$	333		$	358		$	407
Interest Cost on Projected Benefit Obligation	53,743			50,154			56,762			4,565			4,754			6,468
Expected Return on Plan Assets	(74,152		)	(75,832		)	(76,445		)	—			—			—
Amortization of:
Transition Obligation	—			7			8			—			—			—
Prior Service Cost (Credit)	180			366			2,856			(2,895		)	(3,589		)	(3,800		)
Actuarial Loss	25,105			34,821			20,230			5,527			7,624			8,942
Net Curtailment Loss	—			1,914			375			—			—			359
Net Periodic Expense	$	12,521		$	24,652		$	17,550		$	7,530		$	9,147		$	12,376

Significant assumptions used in determining net periodic expense for the fiscal years indicated are as follows:



	Pension Benefits			Other Postretirement Benefits
	2014	2013	2012	2014	2013	2012
Discount Rate	5.00%	4.45%	5.35%	4.40%	3.75%	4.45%
Expected Return on Plan Assets	8.25%	8.50%	8.50%	n/a	n/a	n/a
Compensation Increase Rate	3.0-4.0%	3.0-4.0%	3.0-4.0%	n/a	n/a	n/a

The amounts in Accumulated Other Comprehensive Income (Loss) that are expected to be recognized as components of net periodic (income) expense during the next fiscal year are as follows (in thousands):



	Pension Plans		Other Postretirement Plans
Prior Service Cost (Credit)	$	180	$	(2,758	)
Net Actuarial Loss	13,190		4,255

The “Other Postretirement Benefit” plans are unfunded.

On May 14, 2010, the Company notified retirees and certain retirement eligible employees of various amendments to the Company-sponsored retiree medical plans intended to better align the plans offered to both hourly and salaried retirees. On August 16, 2010, a putative class of retirees who retired prior to August 1, 2006 and the United Steel Workers filed a complaint in the U.S. District Court for the Eastern District of Wisconsin (Merrill, Weber, Carpenter, et al.; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC v. Briggs & Stratton Corporation; Group Insurance Plan of Briggs & Stratton Corporation; and Does 1 through 20, Docket No. 10-C-0700) contesting the Company's right to make these changes. The complaint seeks an injunction preventing the alleged unilateral termination or reduction in insurance coverage to the class of retirees, a permanent injunction preventing defendants from ever making changes to the retirees' insurance coverage, restitution with interest (if applicable) and attorneys' fees and costs. A class has been certified, and discovery has been concluded. Briefing on the Company’s and the retirees’ summary judgment motions will occur soon. If the court denies the motions, a jury trial will be scheduled.

For measurement purposes an 7.8% annual rate of increase in the per capita cost of covered health care claims was assumed for the Company for the fiscal year 2014 decreasing gradually to 4.5% for the fiscal year 2028. The health care cost trend rate assumptions have a significant effect on the amounts reported. An increase of one percentage point, would increase the accumulated postretirement benefit by $1.9 million and would increase the service and interest cost by $0.1 million for fiscal 2014. A corresponding decrease of one percentage point, would decrease the accumulated postretirement benefit by $2.1 million and decrease the service and interest cost by $0.1 million for the fiscal year 2014.

In October 2012, the Board of Directors of the Company authorized an amendment to the Company's defined benefit retirement plans for U.S., non-bargaining employees. The amendment freezes accruals for all non-bargaining employees within the pension plan effective January 1, 2014. The Company recorded a pre-tax curtailment charge of $1.9 million in fiscal 2013 related to the defined benefit plan change.

As discussed in Note 18, the Company reduced its salaried headcount by approximately 10% in fiscal 2012. The termination of the employees associated with this restructuring action, and the related impact on unrecognized prior service costs, unrecognized losses and the projected benefit obligation resulted in a net curtailment loss of $0.7 million in fiscal 2012.

In fiscal 2012, as a result of the non-discrimination testing results of the qualified pension plan, approximately 90 employees were moved to the non-qualified pension plan. Benefits accrued prior to July 1, 2012 were unaffected; only benefits accruing for those affected employees after July 1, 2012 are being covered by the non-qualified plan.

Plan Assets

A Board of Directors appointed Investment Committee (“Committee”) manages the investment of the pension plan assets. The Committee has established and operates under an Investment Policy. It determines the asset allocation and target ranges based upon periodic asset/liability studies and capital market projections. The Committee retains external investment managers to invest the assets. The Investment Policy prohibits certain investment transactions, such as lettered stock, commodity contracts, margin transactions and short selling, unless the Committee gives prior approval. The Company’s pension plan’s current target and asset allocations at June 29, 2014 and June 30, 2013, by asset category are as follows:



		Plan Assets at Year-end
Asset Category	Target %	2014	2013
Domestic Equities	17%-25%	20%	22%
International Equities	5%-15%	10%	10%
Alternative & Absolute Return	10%-20%	16%	26%
Fixed Income	45%-55%	52%	39%
Cash Equivalents	1%	2%	3%
		100%	100%

The plan’s investment strategy is based on an expectation that, over time, equity securities will provide higher total returns than debt securities, but with greater risk. The plan primarily minimizes the risk of large losses through diversification of investments by asset class, by investing in different types of styles within the classes and by using a number of different managers. The Committee monitors the asset allocation and investment performance monthly, with a more comprehensive quarterly review with its consultant. During fiscal 2014, the Committee revised the target asset allocation to shift to more fixed income and less alternative investments as a percentage of total plan assets. This revision to the target asset allocation was made to better match future cash flows from plan assets with the future cash flows of the projected benefit obligation.

The plan’s expected return on assets is based on management’s and the Committee’s expectations of long-term average rates of return to be achieved by the plan’s investments. These expectations are based on the plan’s historical returns and expected returns for the asset classes in which the plan is invested.

The Company has adopted the fair value provisions for the plan assets of its pension plans. The Company categorizes plan assets within a three level fair value hierarchy, as described in Note 6.

Investments stated at fair value as determined by quoted market prices (Level 1) include:

Short-Term Investments: Short-Term Investments include cash and money market mutual funds that invest in short-term securities and are valued based on cost, which approximates fair value;

Equity Securities: U.S. Common Stocks and International Mutual Funds are valued at the last reported sales price on the last business day of the fiscal year.

Investments stated at estimated fair value using significant observable inputs (Level 2) include:

Fixed Income Securities: Fixed Income Securities include investments in domestic bond collective trusts that are not traded publicly, but the underlying assets held in these funds are traded on active markets and the prices are readily observable. The investment in the trusts is valued at the last quoted price on the last business day of the fiscal year. Fixed Income Securities also include corporate and government bonds that are valued using a bid evaluation process with data provided by independent pricing sources.

Investments stated at estimated fair value using significant unobservable inputs (Level 3) include:

Other Investments: Other Investments include investments in limited partnerships and are valued at estimated fair value, as determined with the assistance of each respective limited partnership, based on the net asset value of the investment as of the balance sheet date, which is subject to judgment.

The fair value of the major categories of the pension plans’ investments are presented below (in thousands):



		June 29, 2014
Category		Total		Level 1		Level 2		Level 3
Short-Term Investments:		$	21,534	$	21,534	$	—	$	—
Fixed Income Securities:		542,381		—		542,381		—
Equity Securities:
U.S. common stocks		204,578		204,578		—		—
International mutual funds		106,990		106,990		—		—
Other Investments:
Venture capital funds	(A)	82,776		—		—		82,776
Debt funds	(B)	19,907		—		—		19,907
Real estate funds	(C)	10,445		—		—		10,445
Private equity funds	(D)	54,855		—		—		54,855
Fair Value of Plan Assets at End of Year		$	1,043,466	$	333,102	$	542,381	$	167,983



		June 30, 2013
Category		Total		Level 1		Level 2		Level 3
Short-Term Investments:		$	26,714	$	26,714	$	—	$	—
Fixed Income Securities:		369,744		—		369,744		—
Equity Securities:
U.S. common stocks		211,767		211,767		—		—
International mutual funds		100,392		100,392		—		—
Other Investments:
Venture capital funds	(A)	153,645		—		—		153,645
Debt funds	(B)	27,299		—		—		27,299
Real estate funds	(C)	11,506		—		—		11,506
Private equity funds	(D)	61,566		—		—		61,566
Fair Value of Plan Assets at End of Year		$	962,633	$	338,873	$	369,744	$	254,016


(A)	This category invests in a combination of public and private securities of companies in financial distress, spin-offs, or new projects focused on technology and manufacturing.


(B)	This fund primarily invests in the debt of various entities including corporations and governments in emerging markets, mezzanine financing, or entities that are undergoing, are considered likely to undergo or have undergone a reorganization.


(C)	This category invests primarily in real estate related investments, including real estate properties, securities of real estate companies and other companies with significant real estate assets as well as real estate related debt and equity securities.


(D)	Primarily represents investments in all sizes of mostly privately held operating companies in the following core industry sectors: healthcare, energy, financial services, technology-media-telecommunications and industrial and consumer.

The following tables present the changes in Level 3 investments for the pension plan (in thousands).

Changes to Level 3 investments for the year ended June 29, 2014:



Category	June 30, 2013 Fair Value		Purchases, Sales, Issuances, and Settlements			Realized and Unrealized Gain (Loss)			June 29, 2014 Fair Value (a)
Venture capital funds	$	153,645	$	(98,738	)	$	27,869		$	82,776
Debt funds	27,299		(6,109		)	(1,283		)	19,907
Real estate funds	11,506		(1,179		)	118			10,445
Private equity funds	61,566		(8,821		)	2,110			54,855
	$	254,016	$	(114,847	)	$	28,814		$	167,983

Changes to Level 3 investments for the year ended June 30, 2013:



Category	June 30, 2012 Fair Value		Purchases, Sales, Issuances, and Settlements			Realized and Unrealized Gain (Loss)			June 30, 2013 Fair Value (a)
Venture capital funds	$	152,093	$	(16,360	)	$	17,912		$	153,645
Debt funds	36,211		(7,258		)	(1,654		)	27,299
Real estate funds	13,888		(3,272		)	890			11,506
Private equity funds	71,185		(10,094		)	475			61,566
Global balanced funds	23,178		(20,000		)	(3,178		)	—
	$	296,555	$	(56,984	)	$	14,445		$	254,016

(a) There were no transfers in or out of Level 3 during the years ended June 29, 2014 or June 30, 2013.

Contributions

On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (MAP-21 Act) was signed into law. The MAP-21 Act included certain pension-related provisions which included changes to the methodology used to determine discount rates for ERISA funding purposes for qualified defined benefit pension plans. Based on historical interest rates, the MAP-21 Act allows plan sponsors to utilize a higher discount rate to value pension liabilities, which results in lower required pension plan contributions under ERISA. During fiscal 2014, the Company made no cash contributions to the qualified pension plan. Based upon current regulations and actuarial studies the Company is required to make no minimum contributions to the qualified pension plan in fiscal 2015. The Company may be required to make further contributions in future years depending on the actual return on plan assets and the funded status of the plan in future periods.

Estimated Future Benefit Payments

Projected benefit payments from the plans as of June 29, 2014 are estimated as follows (in thousands):



	Pension Benefits				Other Postretirement Benefits
Year Ending	Qualified		Non-Qualified		Retiree Medical		Retiree Life
2015	$	75,150	$	3,152	$	12,280	$	1,418
2016	75,183		3,195		11,408		1,443
2017	75,352		3,234		9,468		1,465
2018	75,333		3,259		8,811		1,484
2019	75,550		3,410		7,137		1,500
2020-2024	370,510		17,749		21,822		7,601

Defined Contribution Plans

Employees of the Company may participate in a defined contribution savings plan that allows participants to contribute a portion of their earnings in accordance with plan specifications. Prior to January 1, 2014, a maximum of 1.5% to 3.5% of each participant’s salary, depending upon the participant’s group, was matched by the Company. Additionally, certain employees may have received Company nonelective contributions equal to 2.0% of the employee’s salary.

Simultaneously with the aforementioned amendments to freeze the Company's defined benefit retirement plans for U.S., non-bargaining employees, effective January 1, 2014, amendments were also made to increase benefits under the defined contribution plans effective January 1, 2014. These amendments increased the Company's maximum matching contribution from 3.5% to 4.0% of pay and offer all domestic non-bargaining employees a Company non-elective contribution of 3.0% of the employee's pay.

The Company contributions totaled $10.8 million in 2014, $7.9 million in 2013 and $8.3 million in 2012.

Postemployment Benefits

The Company accrues the expected cost of postemployment benefits over the years that the employees render service. These benefits apply only to employees who become disabled while actively employed, or who terminate with at least thirty years of service and retire prior to age sixty-five. The items include disability payments, life insurance and medical benefits. These amounts were discounted using a 3.95% interest rate for fiscal 2014 and 4.40% interest rate for fiscal 2013. Amounts are included in Accrued Employee Benefits in the Consolidated Balance Sheets.