Note 12—Employee Benefit Plans

Defined Contribution Plans

The Company maintains various defined contribution benefit plans (the “Plans”). The Plans cover substantially all North America non-union employees and substantially all the European work force of the Company and include provisions for the Company to match a percentage of the employees’ contributions at a rate determined by the Board of Directors each year.

Contributions to the Plans were approximately $7,301, $7,920, $3,927 and $295 for the fiscal years ended June 30, 2016 and 2015, the period from August 15, 2013 through June 30, 2014, and the period from July 1, 2013 through August 14, 2013, respectively. Contributions are recorded in cost of goods sold and selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).

Defined Benefit Plans

The Company maintains a number of defined benefit pension plans for the benefit of its employees throughout the world, which vary depending on the conditions and practices in the countries concerned. The principal defined benefit pension plan is the Field Group Pension Plan in the United Kingdom. The assets of the plan are held in an external trustee-administered fund. The Company also operates two further defined benefit pension plans in the United Kingdom (known as the Chesapeake pension plan and the GCM pension plan), as well as a number of defined benefit arrangements in France and Germany. The defined benefit pension plans in the United Kingdom are funded while the French and German plans are mainly unfunded. The benefits are based on a fixed rate of pay per year depending on the department worked in and function of the participant. Charges to expense are based upon costs computed by an independent actuary.

The following table presents, for the fiscal years noted, a summary of the changes in the projected benefit obligation, plan assets and funded status of the Company’s pension plans:


	Successor
	As of		As of
	June 30, 2016		June 30, 2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	585,783	$	579,708
Service cost		3,618		3,676
Interest cost		20,298		22,891
Foreign exchange impact		(95,960)		(42,855)
Actuarial loss		72,299		39,891
Employee contributions		1,304		1,394
Benefits paid		(19,954)		(18,922)
Benefit obligation at end of year	$	567,388	$	585,783

Change in plan assets:
Fair value of plan assets at beginning of year	$	594,769	$	557,271
Actual return on plan assets		92,936		81,813
Foreign exchange impact		(98,248)		(41,234)
Employer contributions		13,360		14,447
Employee contributions		1,304		1,394
Benefits paid		(19,954)		(18,922)
Fair value of plan assets at end of year	$	584,167	$	594,769

Net overfunded status at end of year	$	16,779	$	8,986

Components of the amounts recognized in the Consolidated Balance Sheet:
Other long-term assets	$	24,880	$	20,576
Other long-term liabilities		(8,101)		(11,590)
Net overfunded status	$	16,779	$	8,986

The accumulated benefit obligation totaled $549,311 and $562,230 as of June 30, 2016 and 2015, respectively.

The following table is a summary of the annual cost of the Company’s pension plans:


	Successor						Predecessor
	Fiscal Year Ended				Period from August		Period from July 1
	June 30,				15, 2013 through		2013 through
	2016		2015		June 30, 2014		August 14, 2013
Service cost	$	3,618	$	3,676	$	1,331	$	—
Interest cost		20,298		22,891		9,127		38
Expected return on plan assets		(24,044)		(25,730)		(9,905)		—
Curtailment gain		—		—		(75)		—
Net periodic benefit cost	$	(128)	$	837	$	478	$	38

The following table is a summary of the amounts recognized in other comprehensive income:


	Successor						Predecessor
	Fiscal Year Ended				Period from August		Period from July 1
	June 30,				15, 2013 through		2013 through
	2016		2015		June 30, 2014		August 14, 2013
Actuarial gain, net of tax	$	(13,807)	$	(12,758)	$	(6,861)	$	—
Effect of foreign exchange rates		—		(22)		(82)		—
Total recognized in other comprehensive (income)	$	(13,807)	$	(12,780)	$	(6,943)	$	—

The weighted average assumptions used to determine benefit for the Company’s pension plans as follows:


	Successor
	As of		As of
	June 30, 2016		June 30, 2015
Discount rate		1.0% - 2.9%		1.8% - 3.8%
Expected rate of return		1.0% - 3.6%		1.7% - 4.4%
Rate of compensation increase		2.0% - 2.8%		2.0% - 3.7%
Rate of price inflation		1.8% - 2.8%		1.8% - 3.2%

The Company’s employs a dynamic de-risking investment strategy where target investments are updated quarterly to match the funding status of the plan. As the funding status increases there is a gradual de-risking of the plan assets. At June 30, 2016, the plan asset investments are comparative to the current investment strategy.

The expected return on assets assumptions are derived by considering market expectations of the long-term rates of return on the plan investments. The overall expected return assumption is a weighted average of the expected returns on each asset class in which the schemes invest, reflecting the plan asset allocations.

The long-term rates of return on equities and real estate are derived by considering current risk free rates of return with the addition of an appropriate future risk premium. The long-term rate of return from gilt yields, bonds and cash investments are set in line with market yields at the balance sheet date. The return assumption is a net rate after expenses.

The following are the major categories of assets measured at fair value on a recurring basis as of June 30, 2016 and 2015, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):


	Successor
	Level 1		Level 2		Level 3		Total
As of June 30, 2016
Description:
Investment funds	$	1,238	$	577,038	$	—	$	578,276
Insurance contracts		2,862		288		—		3,150
Cash and cash equivalents		2,741		—		—		2,741
	$	6,841	$	577,326	$	—	$	584,167

As of June 30, 2015
Description:
Investment funds	$	1,307	$	587,743	$	—	$	589,050
Debt securities		113		—		—		113
Insurance contracts		3,254		284		—		3,538
Cash and cash equivalents		2,068		—		—		2,068
	$	6,742	$	588,027	$	—	$	594,769

Benefit payments of the defined benefit pension plans are expected to be paid as follows:


For the Fiscal Year Ending June 30,	Amount
2017	$	16,492
2018		16,748
2019		17,358
2020		17,671
2021		17,994
2022-2026		96,350
	$	182,613

Based on estimates as of June 30, 2016, the Company expects to make contributions to the pension plans during the year ended June 30, 2017 of $5,290.

The actuarial gain included in other comprehensive income is amortized through the net periodic benefit cost using a period of 30 years, which is the average life expectancy of deferred members.

Other Post-Employment Obligations

Shorewood Packaging Corporation of Canada operates a post-retirement medical plan (the “Shorewood Medical Plan”), which is unfunded. The unfunded benefit obligation as of June 30, 2016 and 2015 was $1,968 and $2,267. The net benefit cost recognized during the fiscal years ended June 30, 2016 and 2015 was $113 and $106. Based on estimates as of June 30, 2016, the Company expects to make contributions to the Shorewood Medical Plan during the fiscal year ended June 30, 2017 of $13.

The Company contributed to multiemployer pension plans covering employees under collective bargaining agreements that were assumed as part of the acquisition of certain assets and assumption of certain liabilities of Ivy Hill Corporation (“Ivy Hill”) in April 2009. In 2014, the Company triggered a complete withdrawal from each of these multiemployer plans, and as a result the Company is required to contribute its share of the respective plans’ unfunded benefit obligations as calculated by the funds’ actuaries. Based on those calculations, the Company was obligated to make 240 monthly payments of approximately $31, or approximately $378 per annum, to one of the pension funds and approximately $45, or approximately $539 per annum, to a second pension fund. As of June 30, 2016 and 2015, the total balance of these liabilities was $8,622 and $8,923, respectively, which represents the present value of the remaining payments at those dates. The portion of the amount to be paid within next 12 months ($323) is recorded in other current liabilities with the remainder recorded in other long-term liabilities in the consolidated balance sheets.