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:



	2017			2016			2015
Benefit cost
Service cost	$	94,356		$	94,650		$	97,960
Interest cost	126,131			181,469			176,556
Special termination cost	—			7,088			21,174
Settlement cost	—			5,102			—
Expected return on plan assets	(239,537		)	(221,629		)	(218,938		)
Amortization of prior service cost	8,116			7,470			9,437
Amortization of unrecognized actuarial loss	212,433			170,407			152,664
Amortization of initial net obligation	18			17			17
Net periodic benefit cost	$	201,517		$	244,574		$	238,870



	2017			2016
Change in benefit obligation
Benefit obligation at beginning of year	$	5,315,655		$	4,867,703
Service cost	94,356			94,650
Interest cost	126,131			181,469
Acquisition	201,283			—
Special termination cost	—			7,088
Plan amendments	3,265			2,992
Divestiture	(851		)	—
Actuarial (gain) loss	(268,370		)	487,523
Benefits paid	(250,289		)	(230,551		)
Foreign currency translation and other	(3,323		)	(95,219		)
Benefit obligation at end of year	$	5,217,857		$	5,315,655

Change in plan assets
Fair value of plan assets at beginning of year	$	3,307,047		$	3,238,307
Actual gain on plan assets	341,344			97,165
Acquisition	168,264			—
Employer contributions	330,932			279,140
Benefits paid	(250,289		)	(230,551		)
Foreign currency translation and other	(1,297		)	(77,014		)
Fair value of plan assets at end of year	$	3,896,001		$	3,307,047
Funded status	$	(1,321,856	)	$	(2,008,608	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(12,793	)	$	(42,763	)
Pensions and other postretirement benefits	(1,309,063		)	(1,965,845		)
Net amount recognized	$	(1,321,856	)	$	(2,008,608	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	1,461,017		$	2,047,103
Prior service cost	22,761			27,723
Transition obligation	77			103
Net amount recognized	$	1,483,855		$	2,074,929

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.

Beginning in 2017, the Company changed the method used to estimate the service and interest cost components of net periodic pension and other postretirement benefit costs. The new method uses the spot yield curve approach to estimate the service and interest costs by applying the specific spot rates along the yield curve used to determine the benefit obligations to relevant cash outflows. Previously, these costs were determined using a single-weighted average discount rate. The change does not affect the measurement of the Company's benefit obligations. The new method provides a more precise measure of service and interest costs by improving the correlation between projected benefit cash flows and the discrete spot yield curve rates and is accounted for as a change in estimate prospectively beginning the first quarter of fiscal 2017. As a result of the method change, net pension benefit cost for 2017 is lower than the net pension benefit cost for 2016 by $29,777.

During 2016, the Company provided enhanced retirement benefits in connection with a plant closure, which resulted in an increase in net pension benefit cost of $7,088. During 2015, the Company initiated a voluntary retirement program under which certain participants in its U.S. qualified defined benefit pension plan were offered enhanced retirement benefits, which resulted in an increase in net pension benefit cost of $21,174.

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 2018 is $141,399, $6,055 and $17, respectively.

The accumulated benefit obligation for all defined benefit plans was $4,890,058 and $4,884,985 at June 30, 2017 and 2016, 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 $5,120,268, $4,805,485 and $3,793,696, respectively, at June 30, 2017, and $5,211,768, $4,796,860 and $3,206,287, respectively, at June 30, 2016. The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $5,142,881 and $3,815,815, respectively, at June 30, 2017, and $5,310,979 and $3,302,370, respectively, at June 30, 2016.

The Company expects to make cash contributions of approximately $68 million to its defined benefit pension plans in 2018, the majority of which relate to its non-U.S. defined benefit plans. Estimated future benefit payments in the five years ending June 30, 2018 through 2022 are $231,732, $236,968, $243,956, $260,645 and $296,949, respectively and $1,448,318 in the aggregate for the five years ending June 30, 2023 through June 30, 2027.

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



	2017		2016		2015
U.S. defined benefit plans
Discount rate	3.33	%	4.19	%	4.05	%
Average increase in compensation	5.02	%	5.14	%	5.12	%
Expected return on plan assets	7.5	%	7.5	%	7.5	%
Non-U.S. defined benefit plans
Discount rate	0.23 to 7.75%		0.7 to 6.0%		0.9 to 4.2%
Average increase in compensation	2.0 to 5.5%		2.0 to 5.5%		2.0 to 5.0%
Expected return on plan assets	1.0 to 5.75%		1.0 to 5.75%		1.0 to 6.25%

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



	2017		2016
U.S. defined benefit plans
Discount rate	3.64	%	3.33	%
Average increase in compensation	3.89	%	5.02	%
Non-U.S. defined benefit plans
Discount rate	0.30 to 7.57%		0.23 to 7.75%
Average increase in compensation	2.0 to 5.5%		2.0 to 5.5%

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:



	2017		2016
Equity securities	45	%	39	%
Debt securities	47	%	51	%
Other investments	8	%	10	%
	100	%	100	%

The weighted-average target asset allocation as of June 30, 2017 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 75 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, 2017 and at June 30, 2016, by asset class, are as follows:



	June 30, 2017			Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	76,057		$	75,370	$	687		$	—
Equity securities
U.S. based companies	416,830			416,830		—			—
Non-U.S. based companies	236,134			236,134		—			—
Fixed income securities
Corporate bonds	176,135			91,982		84,153			—
Government issued securities	199,389			144,616		54,773			—
Mutual funds
Equity funds	306,168			306,168		—			—
Fixed income funds	204,628			204,628		—			—
Mutual funds measured at net asset value	233,234
Common/Collective trusts
Equity funds	70,389			70,389		—			—
Fixed income funds	46,003			46,003		—			—
Common/Collective trusts measured at net asset value	1,677,942
Limited Partnerships measured at net asset value	262,092
Miscellaneous	(9,000		)	—		(9,000		)	—
Total at June 30, 2017	$	3,896,001		$	1,592,120	$	130,613		$	—



	June 30, 2016		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	46,052	$	45,474	$	578	$	—
Equity securities
U.S. based companies	292,138		292,138		—		—
Non-U.S. based companies	191,647		191,647		—		—
Fixed income securities
Corporate bonds	141,549		73,685		67,864		—
Government issued securities	203,000		141,935		61,065		—
Mutual funds
Equity funds	149,807		149,807		—		—
Fixed income funds	151,649		151,649		—		—
Mutual funds measured at net asset value	246,075
Common/Collective trusts
Equity funds	65,404		65,404		—		—
Fixed income funds	43,981		43,981		—		—
Common/Collective trusts measured at net asset value	1,487,170
Limited Partnerships measured at net asset value	280,248
Miscellaneous	8,327		—		8,327		—
Total at June 30, 2016	$	3,307,047	$	1,155,720	$	137,834	$	—

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 $212,480 as of June 30, 2017 and $143,652 as of June 30, 2016.

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 the closing market price reported on the active market on which the fund is traded or at net asset value per share 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. Mutual funds measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the Consolidated Balance Sheet.

Common/Collective trusts primarily consist of equity and fixed income funds and are valued using the closing market price reported on the active market on which the fund is traded or at net asset value per share. Common/Collective trust investments can be redeemed without restriction after giving appropriate notice to the issuer. Generally, redemption of the entire investment balance requires a 60-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. Common/Collective trusts measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the Consolidated Balance Sheet.

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 either monthly or quarterly and without restriction after giving appropriate notice to the issuer. Redemption of the entire investment balance generally requires no more than a 95-day notice period. Limited Partnerships measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the Consolidated Balance Sheet.

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 matching contributions, up to a maximum of four percent of an employee's annual compensation, are recorded as compensation expense. Participants may direct company matching contributions to any investment option within the savings and investment 401(k) plan.



	2017		2016		2015
Shares held by ESOP	6,911,436		7,728,332		8,407,858
Company matching contributions	$	57,766	$	58,922	$	63,914

In addition to shares within the ESOP, as of June 30, 2017, employees have elected to invest in 1,883,024 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 cash 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 $29,309, $25,780 and $29,570 in expense related to the RIA in 2017, 2016 and 2015, respectively.

During 2017, the Company assumed various defined contribution plans previously sponsored by Clarcor. The Company recognized expense of $2,199 in 2017 related to these defined contribution plans.

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.

The Company recognized $4,357, $8,754 and $4,340 in expense related to other postretirement benefits in 2017, 2016 and 2015, respectively. During 2016, the Company provided enhanced retirement benefits in connection with a plant closure, which resulted in an increase in expense related to other postretirement benefits of $4,521.



	2017			2016
Change in benefit obligation
Benefit obligation at beginning of year	$	89,785		$	75,953
Service cost	469			591
Interest cost	1,922			2,834
Acquisition	291			—
Special termination cost	—			4,521
Actuarial (gain) loss	(8,235		)	10,217
Benefits paid	(4,299		)	(4,331		)
Benefit obligation at end of year	$	79,933		$	89,785
Funded status	$	(79,933	)	$	(89,785	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(6,532	)	$	(6,216	)
Pensions and other postretirement benefits	(73,401		)	(83,569		)
Net amount recognized	$	(79,933	)	$	(89,785	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	12,828		$	22,914
Prior service credit	(435		)	(556		)
Net amount recognized	$	12,393		$	22,358

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 2018 is $1,095 and $(121), respectively.

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



	2017		2016		2015
Discount rate	3.15	%	3.96	%	3.74	%
Current medical cost trend rate (Pre-65 participants)	7.35	%	7.61	%	7.75	%
Current medical cost trend rate (Post-65 participants)	8.68	%	9.00	%	7.75	%
Ultimate medical cost trend rate	4.50	%	4.50	%	5.00	%
Medical cost trend rate decreases to ultimate in year	2025		2025		2021

The discount rate assumption used to measure the benefit obligation was 3.46 percent in 2017 and 3.15 percent in 2016.

Estimated future benefit payments for other postretirement benefits in the five years ending June 30, 2018 through 2022 are $6,532, $6,426, $6,034, $5,870 and $5,629, respectively, and $25,142 in the aggregate for the five years ending June 30, 2023 through June 30, 2027.

A one percentage point change in assumed health care cost trend rates would not have a material effect on the benefit cost or benefit obligation.

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. In addition, the Company maintains a defined contribution nonqualified supplemental executive pension plan in which the Company is the only contributor. During 2017, 2016 and 2015, the Company recorded expense (income) relating to these programs of $20,400, $(2,917) and $5,676, 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.