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:



	2018			2017			2016
Benefit cost
Service cost	$	82,993		$	94,356		$	94,650
Interest cost	144,339			126,131			181,469
Special termination cost	—			—			7,088
Settlement cost	—			—			5,102
Expected return on plan assets	(258,490		)	(239,537		)	(221,629		)
Amortization of prior service cost	6,570			8,116			7,470
Amortization of unrecognized actuarial loss	147,387			212,433			170,407
Amortization of initial net obligation	18			18			17
Net periodic benefit cost	$	122,817		$	201,517		$	244,574



	2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	5,217,857		$	5,315,655
Service cost	82,993			94,356
Interest cost	144,339			126,131
Acquisition	—			201,283
Plan amendments	2,932			3,265
Divestiture	(9,535		)	(851		)
Actuarial gain	(182,588		)	(268,370		)
Benefits paid	(216,169		)	(250,289		)
Foreign currency translation and other	(5,832		)	(3,323		)
Benefit obligation at end of year	$	5,033,997		$	5,217,857

Change in plan assets
Fair value of plan assets at beginning of year	$	3,896,001		$	3,307,047
Actual gain on plan assets	174,951			341,344
Acquisition	—			168,264
Divestiture	(12,231		)	—
Employer contributions	81,518			330,932
Benefits paid	(216,169		)	(250,289		)
Foreign currency translation and other	(8,181		)	(1,297		)
Fair value of plan assets at end of year	$	3,915,889		$	3,896,001
Funded status	$	(1,118,108	)	$	(1,321,856	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(11,333	)	$	(12,793	)
Pensions and other postretirement benefits	(1,106,775		)	(1,309,063		)
Net amount recognized	$	(1,118,108	)	$	(1,321,856	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	1,216,612		$	1,461,017
Prior service cost	18,900			22,761
Transition obligation	61			77
Net amount recognized	$	1,235,573		$	1,483,855

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 from the single-weighted average discount rate to the spot yield curve approach. The change does not affect the measurement of the Company's benefit obligations. The new method provides a more precise measure of these components 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. 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.

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 2019 is $114,825, $6,286 and $18, respectively.

The accumulated benefit obligation for all defined benefit plans was $4,751,111 and $4,890,058 at June 30, 2018 and 2017, 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 $4,933,863, $4,665,272 and $3,807,859, respectively, at June 30, 2018, and $5,120,268, $4,805,485 and $3,793,696, respectively, at June 30, 2017. The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were $4,970,120 and $3,842,539, respectively, at June 30, 2018, and $5,142,881 and $3,815,815, respectively, at June 30, 2017.

The Company expects to make cash contributions of approximately $70 million to its defined benefit pension plans in 2019, the majority of which relate to its non-U.S. defined benefit plans. Estimated future benefit payments in the five years ending June 30, 2019 through 2023 are $240,163, $242,051, $259,402, $305,553 and $267,258, respectively and $1,454,646 in the aggregate for the five years ending June 30, 2024 through June 30, 2028.

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



	2018		2017		2016
U.S. defined benefit plans
Discount rate	3.64	%	3.33	%	4.19	%
Average increase in compensation	3.89	%	5.02	%	5.14	%
Expected return on plan assets	7.5	%	7.5	%	7.5	%
Non-U.S. defined benefit plans
Discount rate	0.30 to 7.57%		0.23 to 7.75%		0.7 to 6.0%
Average increase in compensation	2.0 to 5.5%		2.0 to 5.5%		2.0 to 5.5%
Expected return on plan assets	1.0 to 5.75%		1.0 to 5.75%		1.0 to 5.75%

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



	2018		2017
U.S. defined benefit plans
Discount rate	4.01	%	3.64	%
Average increase in compensation	3.65	%	3.89	%
Non-U.S. defined benefit plans
Discount rate	0.30 to 3.37%		0.30 to 7.57%
Average increase in compensation	1.75 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:



	2018		2017
Equity securities	44	%	45	%
Debt securities	49	%	47	%
Other investments	7	%	8	%
	100	%	100	%

The weighted-average target asset allocation as of June 30, 2018 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 74 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, 2018 and at June 30, 2017, by asset class, are as follows:



	June 30, 2018			Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	57,307		$	54,322	$	2,985		$	—
Equity securities
U.S. based companies	447,553			447,553		—			—
Non-U.S. based companies	243,253			243,253		—			—
Fixed income securities
Corporate bonds	225,929			115,534		110,395			—
Government issued securities	272,604			184,636		87,968			—
Mutual funds
Equity funds	176,846			176,846		—			—
Fixed income funds	179,562			179,562		—			—
Mutual funds measured at net asset value	232,050
Common/Collective trusts
Equity funds	89,578			89,578		—			—
Fixed income funds	46,620			46,620		—			—
Common/Collective trusts measured at net asset value	1,737,543
Limited Partnerships measured at net asset value	243,536
Miscellaneous	(36,492		)	—		(36,492		)	—
Total at June 30, 2018	$	3,915,889		$	1,537,904	$	164,856		$	—



	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		$	—

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 $207,202 and $212,480 as of June 30, 2018 and 2017, respectively.

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.



	2018		2017		2016
Shares held by ESOP	6,476,154		6,911,436		7,728,332
Company matching contributions	$	65,262	$	57,766	$	58,922

In addition to shares within the ESOP, as of June 30, 2018, employees have elected to invest in 1,870,286 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 $29,023, $29,309 and $25,780 in expense related to the RIA in 2018, 2017 and 2016, respectively.

During 2017, the Company assumed various defined contribution plans previously sponsored by Clarcor. The Company recognized expense of $4,481 and $2,199 in 2018 and 2017, respectively, related to these defined contribution plans. In January 2018, the former employees of Clarcor became eligible to participate in the savings and investment 401(k) plan.

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 $2,755, $4,357 and $8,754 in expense related to other postretirement benefits in 2018, 2017 and 2016, 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.



	2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	79,933		$	89,785
Service cost	320			469
Interest cost	2,003			1,922
Acquisition	—			291
Actuarial gain	(11,259		)	(8,235		)
Benefits paid	(4,476		)	(4,299		)
Benefit obligation at end of year	$	66,521		$	79,933
Funded status	$	(66,521	)	$	(79,933	)



Amounts recognized on the Consolidated Balance Sheet
Other accrued liabilities	$	(6,180	)	$	(6,532	)
Pensions and other postretirement benefits	(60,341		)	(73,401		)
Net amount recognized	$	(66,521	)	$	(79,933	)

Amounts recognized in Accumulated Other Comprehensive (Loss)
Net actuarial loss	$	1,232		$	12,828
Prior service credit	(314		)	(435		)
Net amount recognized	$	918		$	12,393

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 2019 is $14 and $(121), respectively.

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



	2018		2017		2016
Discount rate	3.46	%	3.15	%	3.96	%
Current medical cost trend rate (Pre-65 participants)	8.19	%	7.35	%	7.61	%
Current medical cost trend rate (Post-65 participants)	9.79	%	8.68	%	9.00	%
Ultimate medical cost trend rate	4.50	%	4.50	%	4.50	%
Medical cost trend rate decreases to ultimate in year	2025		2025		2025

The discount rate assumption used to measure the benefit obligation was 3.92 percent in 2018 and 3.46 percent in 2017.

Estimated future benefit payments for other postretirement benefits in the five years ending June 30, 2019 through 2023 are $6,463, $6,358, $5,967, $5,804 and $5,564, respectively, and $24,842 in the aggregate for the five years ending June 30, 2024 through June 30, 2028.

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 2018, 2017 and 2016, the Company recorded expense (income) relating to these programs of $13,420, $20,400 and $(2,917), 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.