Retirement Benefits

Pensions - The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service. The Company also has arrangements for certain key employees which provide for supplemental retirement benefits. In general, the Company's policy is to fund these plans based on legal requirements, tax considerations, local practices and investment opportunities. The Company also sponsors defined contribution plans and participates in government-sponsored programs in certain foreign countries.

A summary of the Company's defined benefit pension plans follows:



	2014			2013			2012
Benefit cost
Service cost	$	99,929		$	107,519		$	84,663
Interest cost	190,999			174,152			185,550
Expected return on plan assets	(226,884		)	(211,694		)	(201,845		)
Amortization of prior service cost	14,644			14,472			14,016
Amortization of unrecognized actuarial loss	159,584			200,849			105,788
Amortization of initial net obligation (asset)	19			22			(60		)
Net periodic benefit cost	$	238,291		$	285,320		$	188,112



	2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	4,382,563		$	4,506,521
Service cost	99,929			107,519
Interest cost	190,999			174,152
Actuarial loss (gain)	277,098			(241,674		)
Benefits paid	(286,066		)	(157,838		)
Plan amendments	(3,503		)	11,236
Acquisitions	—			1,283
Foreign currency translation and other	88,427			(18,636		)
Benefit obligation at end of year	$	4,749,447		$	4,382,563

Change in plan assets
Fair value of plan assets at beginning of year	$	3,096,616		$	2,700,050
Actual gain on plan assets	469,984			278,862
Employer contributions	146,237			291,018
Benefits paid	(286,066		)	(157,838		)
Acquisitions	—			285
Foreign currency translation and other	72,503			(15,761		)
Fair value of plan assets at end of year	$	3,499,274		$	3,096,616
Funded status	$	(1,250,173	)	$	(1,285,947	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(11,333	)	$	(20,643	)
Pensions and other postretirement benefits	(1,238,840		)	(1,265,304		)
Net amount recognized	$	(1,250,173	)	$	(1,285,947	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	1,434,645		$	1,537,549
Prior service cost	37,137			54,630
Transition obligation	143			166
Net amount recognized	$	1,471,925		$	1,592,345

The presentation of the amounts recognized on the Consolidated Balance Sheet and in accumulated other comprehensive (loss) is on a debit (credit) basis and excludes the effect of income taxes.

During 2014, the Company offered a lump-sum distribution to certain participants in one of its U.S. defined benefit plans. Included in benefits paid in 2014 is $110,000 related to participants who elected to receive a lump-sum distribution. No settlement charge was required to be recognized.

The estimated amount of net actuarial loss, prior service cost and transition obligation that will be amortized from accumulated other comprehensive (loss) into net periodic benefit pension cost in 2015 is $158,471, $7,668 and $19, respectively.

The accumulated benefit obligation for all defined benefit plans was $4,258,743 and $3,944,921 at June 30, 2014 and 2013, respectively. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $4,691,350, $4,206,557 and $3,443,515, respectively, at June 30, 2014, and $4,351,955, $3,920,218 and $3,070,157, respectively, at June 30, 2013. The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $4,709,493 and $3,459,097, respectively, at June 30, 2014, and $4,381,914 and $3,095,942, respectively, at June 30, 2013.

The Company expects to make cash contributions of approximately $63 million to its defined benefit pension plans in 2015, the majority of which relates to non-U.S. defined benefit plans. Estimated future benefit payments in the five years ending June 30, 2015 through 2019 are $189,307, $235,993, $219,266, $225,421 and $251,678, respectively and $1,391,819 in the aggregate for the five years ending June 30, 2020 through June 30, 2024.

The assumptions used to measure net periodic benefit cost for the Company's significant defined benefit plans are:



	2014		2013		2012
U.S. defined benefit plans
Discount rate	4.52	%	3.91	%	5.45	%
Average increase in compensation	5.13	%	5.21	%	5.21	%
Expected return on plan assets	8.0	%	8.0	%	8.0	%
Non-U.S. defined benefit plans
Discount rate	1.5 to 4.59%		1.75 to 4.7%		2.0 to 5.87%
Average increase in compensation	2.0 to 6.0%		2.0 to 6.0%		2.0 to 5.0%
Expected return on plan assets	1.0 to 6.25%		1.0 to 6.4%		1.0 to 7.5%

The assumptions used to measure the benefit obligation for the Company's significant defined benefit plans are:



	2014		2013
U.S. defined benefit plans
Discount rate	4.05	%	4.52	%
Average increase in compensation	5.12	%	5.13	%
Non-U.S. defined benefit plans
Discount rate	0.9 to 4.2%		1.5 to 4.59%
Average increase in compensation	2.0 to 5.0%		2.0 to 6.0%

The discount rate assumption is based on current rates of high-quality long-term corporate bonds over the same estimated time period that benefit payments will be required to be made. The expected return on plan assets assumption is based on the weighted-average expected return of the various asset classes in the plans' portfolio. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.

The weighted-average allocation of the majority of the assets related to defined benefit plans is as follows:



	2014		2013
Equity securities	42	%	57	%
Debt securities	48	%	30	%
Other	10	%	13	%
	100	%	100	%

The weighted-average target asset allocation as of June 30, 2014 is 41 percent equity securities, 47 percent debt securities and 12 percent other investments. The investment strategy for the Company's worldwide defined benefit pension plan assets focuses on achieving prudent actuarial funding ratios while maintaining acceptable levels of risk in order to provide adequate liquidity to meet immediate and future benefit requirements. This strategy requires investment portfolios that are broadly diversified across various asset classes and external investment managers. Assets held in the U.S. defined benefit plans account for approximately 72 percent of the Company's total defined benefit plan assets. The Company's overall investment strategy with respect to the Company's U.S. defined benefit plans is to opportunistically migrate from its traditional mix between growth seeking assets (primarily consisting of global public equities in developed and emerging countries and hedge fund of fund strategies) and income generating assets (primarily consisting of high quality bonds, both domestic and global, emerging market bonds, high yield bonds and Treasury Inflation Protected Securities) to an allocation more heavily weighted toward income generating assets. Over time, long duration fixed income assets are being added to the portfolio. These securities are highly correlated with the Company's pension liabilities and will serve to hedge a portion of the Company's interest rate risk.

The fair values of pension plan assets at June 30, 2014 and at June 30, 2013, by asset class, are as follows.



	Total		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	46,297	$	45,976	$	321	$	—
Equity securities
U.S. based companies	346,145		346,145		—		—
Non-U.S. based companies	220,911		220,911		—		—
Fixed income securities
Corporate bonds	234,719		101,227		133,492		—
Government issued securities	161,131		101,083		60,048		—
Mutual funds
Equity funds	192,293		191,301		992		—
Fixed income funds	223,662		189,375		34,287		—
Common/Collective trusts
Equity funds	695,195		85,461		609,734		—
Fixed income funds	1,069,207		48,649		1,020,558		—
Limited Partnerships	289,013		777		288,236		—
Miscellaneous	20,701		—		20,701		—
Total at June 30, 2014	$	3,499,274	$	1,330,905	$	2,168,369	$	—



	Total		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	65,170	$	64,208	$	962	$	—
Equity securities
U.S. based companies	366,692		366,692		—		—
Non-U.S. based companies	223,764		223,764		—		—
Fixed income securities
Corporate bonds	191,266		80,959		110,307		—
Government issued securities	108,212		57,278		50,934		—
Mutual funds
Equity funds	334,370		333,695		675		—
Fixed income funds	57,109		32,926		24,183		—
Common/Collective trusts
Equity funds	826,654		2,743		823,911		—
Fixed income funds	587,023		2,979		584,044		—
Limited Partnerships	302,913		—		302,913		—
Miscellaneous	33,443		772		32,671		—
Total at June 30, 2013	$	3,096,616	$	1,166,016	$	1,930,600	$	—

Cash and cash equivalents, which include repurchase agreements and other short-term investments, are valued at cost, which approximates fair value.

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded. U.S. based companies include Company stock with a fair value of $167,157 as of June 30, 2014 and $126,834 as of June 30, 2013.

Fixed income securities are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.

Mutual funds are valued using both the closing market price reported on the active market on which the fund is traded and market observable inputs for similar assets that are traded on an active market and primarily consist of equity and fixed income funds. The equity funds primarily provide exposure to U.S. and international equities, real estate and commodities. The fixed income funds primarily provide exposure to high-yield securities and emerging market fixed income instruments.

Common/Collective trusts primarily consist of equity and fixed income funds and are valued using a net asset value per share. Common/Collective trust investments can be redeemed daily and without restriction. Redemption of the entire investment balance generally requires a 30-day notice period. The equity funds provide exposure to large, mid and small cap U.S. equities, international large and small cap equities and emerging market equities. The fixed income funds provide exposure to U.S., international and emerging market debt securities.

Limited Partnerships primarily consist of hedge funds valued using a net asset value per share and provide exposure to a variety of hedging strategies including long/short equity, relative value, event driven and global macro. Limited Partnership investments can be redeemed daily and without restriction. Redemption of the entire investment balance generally requires a 30-day notice period.

Miscellaneous primarily includes real estate funds, insurance contracts held in the asset portfolio of the Company's non-U.S. defined benefit pension plans, and net payables for securities purchased but not settled in the asset portfolio of the Company's U.S. defined benefit pension plans. Insurance contracts are valued at the present value of future cash flows promised under the terms of the insurance contracts.

The primary investment objective of equity securities and equity funds, within both the mutual fund and common/collective trust asset class, is to obtain capital appreciation in an amount that at least equals various market-based benchmarks. The primary investment objective of fixed income securities and fixed income funds, within both the mutual fund and common/collective trust asset class, is to provide for a constant stream of income while preserving capital. The primary investment objective of limited partnerships is to achieve capital appreciation through an investment program focused on specialized investment strategies. The primary investment objective of insurance contracts, included in the miscellaneous asset class, is to provide a stable rate of return over a specified period of time.

Employee Savings Plan - The Company sponsors an employee stock ownership plan (ESOP) as part of its existing savings and investment 401(k) plan. The ESOP is available to eligible domestic employees. Company stock is used to match contributions made by employees to the ESOP up to a maximum of 4.0 percent of an employee's annual compensation. Company contributions to the ESOP are generally made in the form of cash and are recorded as compensation expense.



	2014		2013		2012
Shares held by ESOP	8,944,697		9,686,238		10,216,738
Company contributions to ESOP	$	63,441	$	61,067	$	58,067

In addition to shares within the ESOP, as of June 30, 2014, employees have elected to invest in 2,510,535 shares of common stock within a company stock fund of the savings and investment 401(k) plan.

The Company has a retirement income account (RIA) within the employee savings plan. The Company makes a contribution to the participant's RIA each year, the amount of which is based on the participant's age and years of service. Participants do not contribute to the RIA. The Company recognized $25,247, $22,046 and $19,372 in expense related to the RIA in 2014, 2013 and 2012, respectively.

Other Postretirement Benefits - The Company provides postretirement medical and life insurance benefits to certain retirees and eligible dependents. Most plans are contributory, with retiree contributions adjusted annually. The plans are unfunded and pay stated percentages of covered medically necessary expenses incurred by retirees, after subtracting payments by Medicare or other providers and after stated deductibles have been met. For most plans, the Company has established cost maximums to more effectively control future medical costs. The Company has reserved the right to change these benefit plans.

Certain employees are covered under benefit provisions that include prescription drug coverage for Medicare eligible retirees. The impact of the subsidy received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 on the Company's other postretirement benefits was immaterial.

A summary of the Company's other postretirement benefit plans follows:



	2014		2013		2012
Benefit cost
Service cost	$	623	$	825	$	728
Interest cost	2,971		2,826		3,482
Net amortization and deferral	884		1,279		480
Net periodic benefit cost	$	4,478	$	4,930	$	4,690



	2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	75,544		$	83,654
Service cost	623			825
Interest cost	2,971			2,826
Actuarial loss (gain)	1,963			(6,752		)
Benefits paid	(4,894		)	(5,009		)
Benefit obligation at end of year	$	76,207		$	75,544
Funded status	$	(76,207	)	$	(75,544	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(5,874	)	$	(6,068	)
Pensions and other postretirement benefits	(70,333		)	(69,476		)
Net amount recognized	$	(76,207	)	$	(75,544	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	14,074		$	13,115
Prior service (credit)	(797		)	(920		)
Net amount recognized	$	13,277		$	12,195

The presentation of the amounts recognized on the Consolidated Balance Sheet and in accumulated other comprehensive (loss) is on a debit (credit) basis and is before the effect of income taxes. The amount of net actuarial loss and prior service (credit) that will be amortized from accumulated other comprehensive (loss) into net periodic postretirement cost in 2015 is $1,141 and $(121), respectively.

The assumptions used to measure the net periodic benefit cost for postretirement benefit obligations are:



	2014		2013		2012
Discount rate	4.1	%	3.62	%	5.0	%
Current medical cost trend rate	7.75	%	8.0	%	8.0	%
Ultimate medical cost trend rate	5.0	%	5.0	%	5.0	%
Medical cost trend rate decreases to ultimate in year	2021		2019		2019

The discount rate assumption used to measure the benefit obligation was 3.74 percent in 2014 and 4.1 percent in 2013.

Estimated future benefit payments for other postretirement benefits in the five years ending June 30, 2015 through 2019 are $5,903, $5,991, $6,076, $6,044 and $5,672, respectively, and $24,941 in the aggregate for the five years ending June 30, 2020 through June 30, 2024.

A one percentage point change in assumed health care cost trend rates would have the following effects:



	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	83	$	(72	)
Effect on postretirement benefit obligation	2,011		(1,753		)

Other - The Company has established nonqualified deferred compensation programs, which permit officers, directors and certain management employees annually to elect to defer a portion of their compensation, on a pre-tax basis, until their retirement. The retirement benefit to be provided is based on the amount of compensation deferred, Company matching contributions, and earnings on the deferrals. During 2014, 2013 and 2012, the Company recorded expense relating to deferred compensation of $24,549, $19,182 and $4,499, respectively.

The Company has invested in corporate-owned life insurance policies to assist in meeting the obligation under these programs. The policies are held in a rabbi trust and are recorded as assets of the Company.