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Employee Benefit Plans
12 Months Ended
May 31, 2014
Employee Benefit Plans [Abstract]  
Employee Benefit Plans

10.  Employee Benefit Plans

 

The Company maintains a medical plan that is qualified under Section 401(a) of the Internal Revenue Code and is not subject to tax under present income tax laws.  The plan is funded by contributions from the Company and its employees.  Under its plan, the Company self-insures its portion of medical claims for substantially all full-time employees.  The Company uses stop-loss insurance to limit its portion of medical claims to $225,000 per occurrence.  The Company's expenses including accruals for incurred but not reported claims were approximately $9.8 million, $7.4 million, and $7.3 million in fiscal years 2014,  2013 and 2012, respectively.  The liability recorded for incurred but not reported claims was $700,000 and $600,000 as of May 31, 2014 and June 1, 2013, respectively.

 

The Company had an employee stock ownership plan (“ESOP”) and a 401(k) plan that covered substantially all employees.  In April 2012, the Company combined the ESOP and 401(k) plans into a single plan known as a KSOP (“the Plan”).  The prior provisions of the Company’s 401(k) plan and ESOP remained substantially unchanged in the combined plan.  The Company makes cash contributions to the Plan at a rate of 3% of participants' compensation, plus an additional amount determined at the discretion of the Board of Directors.  Contributions can be made in cash or the Company's Common Stock, and vest immediately.   The Company's cash contributions to the Plan and predecessor ESOP were $3.0 million, $1.8 million, and $1.9 million in fiscal years 2014,  2013 and 2012, respectively. The Company did not make direct contributions of the Company’s common stock in fiscal years 2014,  2013, or 2012. Dividends on the Company’s common stock are paid to the Plan in cash.  The Plan acquires the Company’s common stock, which is listed on the NASDAQ, by using the dividends and the Company’s cash contribution to purchase shares in the public markets.  The Plan sold common stock on the NASDAQ to pay benefits to Plan participants.  Participants may make 401(k) contributions to the Plan up to the maximum allowed by the Internal Revenue Service regulations.  The Company does not match participant 401(k) contributions.

 

The Company has deferred compensation agreements with certain officers for payments to be made over specified periods beginning when the officers reach age 65 or over as specified in the agreements.  Amounts accrued for the agreements are based upon deferred compensation earned over the estimated remaining service period of each officer.  Payments made under the plan were $50,000 per year, in fiscal years 2014,  2013, and 2012.  The liability recorded related to these agreements was $1.7 million at May 31, 2014 and June 1, 2013

 

In December 2006, the Company adopted an additional deferred compensation plan to provide deferred compensation to named officers of the Company.  The awards issued under this plan were $202,000, $156,000, and $129,000 in fiscal 2014,  2013 and 2012, respectively.  Payments made under the plan were zero and $106,000 in fiscal 2014 and 2013, respectively.  The liability recorded related to these agreements was $1.5 million and $1.0 million at May 31, 2014 and June 1, 2013, respectively.

 

Deferred compensation expense for both plans totaled $425,000, $786,000 and $193,000 in fiscal 2014,  2013 and 2012, respectively.

 

Postretirement Medical Plan

 

The Company maintains an unfunded postretirement medical plan to provide limited health benefits to certain qualified retired employees and officers.  Retired non-officers and spouses are eligible for coverage until attainment of Medicare eligibility, at which time coverage ceases.  Retired officers and spouses are eligible for lifetime benefits under the plan.  Officers and their spouses, who retired prior to May 1, 2012, must participate in Medicare Plans A and B.  Officers, and their spouses, who retire on or after May 1, 2012 must participate in Medicare Plans A, B, and D. 

 

The plan is accounted for in accordance with ASC 715, “Compensation – Retirement Benefits”, under which an employer recognizes the funded status of a defined benefit postretirement plan as an asset or liability, and recognizes changes in that funded status in the year the change occurs through comprehensive income.  Additionally, pension expense is recognized on an accrual basis over the employees’ approximate period of employment. The liability associated with the plan was $683,000 and $819,000 as of May 31, 2014 and June 1, 2013, respectively.  The remaining disclosures associated with ASC 715 are immaterial to the company’s financial statements.