. EMPLOYEE BENEFIT AND RETIREMENT PLANS

The Company has

two

defined benefit pension plans,

one

for U.S. employees and another for U.K. employees. The UK plan was closed to new entrants in fiscal

2009.

The Company has a postretirement medical and life insurance benefit plan for U.S. employees. The Company also has defined contribution plans.

December 21, 2016,

the Company amended the U.S. defined benefit pension plan to freeze benefit accruals effective

December 31, 2016.

Consequently, the Plan is closed to new participants and current participants

longer earn additional benefits after

December 31, 2016.

The amendment of the U.S. defined benefit pension plan triggered a pension curtailment which required a re-measurement of the Plan's benefit obligation as of

December 31, 2016.

The re-measurement resulted in a decrease in the benefit obligation of approximately

$6.9

million primarily due to an increase in the discount rate from

3.77%

4.31%,

with an additional

$4.2

million decrease resulting from the impact of the curtailment. These reductions in the Plan’s benefit obligation were recorded as other comprehensive income, net of taxes

The Company amended its Postretirement Medical Plan effective

December 31, 2013

whereby the Company terminated eligibility for employees ages

64.

For retirees

and older, the Company’s contribution is fixed at

$28.50

$23.00

per month depending upon the plan the retiree has chosen.

The total cost of all such plans for fiscal

2019,

2018

and

2017

was

$2.8

million,

$2.7

million and

$3.9

million, respectively. Included in these amounts are the Company’s contributions to the defined contribution plans amounting to

$1.7

million,

$1.8

million and

$1.3

million in fiscal

2019,

2018

and

2017,

respectively.

Under both U.S and U.K. defined benefit plans, benefits are based on years of service and final average earnings. Plan assets consist primarily of investment grade debt obligations, marketable equity securities and shares of the Company’s common stock. The asset allocation of the Company’s domestic pension plan is diversified, consisting primarily of investments in equity and debt securities. The Company seeks a long-term investment return that is reasonable given prevailing capital market expectations. Target allocations are

40%

70%

in equities (including

10%

20%

in Company stock), and

30%

60%

in cash and debt securities.

In fiscal

2020,

the Company will use an expected long-term rate of return assumption of

5.0%

for the U.S. domestic pension plan, and

2.6%

for the U.K. plan. In determining these assumptions, the Company considers the historical returns and expectations for future returns for each asset class as well as the target asset allocation of the pension portfolio as a whole. In fiscal

2019

and

2018,

the Company used a discount rate assumption of

4.3%

and

3.9%

for the U.S. plan and

2.8%

and

2.7%

for the U.K. plan, respectively. In determining these assumptions, the Company considers published

third

party data appropriate for the plans.

Other than the discount rate, pension valuation assumptions are generally long-term and

not

subject to short-term market fluctuations, although they

may

be adjusted as warranted by structural shifts in economic or demographic outlooks. Long-term assumptions are reviewed annually to ensure they do

not

produce results inconsistent with current market conditions. The discount rate is adjusted annually based on corporate investment grade (rated AA or better) bond yields, the maturities of which are correlated with the expected timing of future benefit payments, as of the measurement date.

Based upon the actuarial valuations performed on the Company’s defined benefit plans as of

June 30, 2019,

the U.S. plans will require a

$6.7

million contribution in fiscal

2020

and the U.K. plan will require a

$1.0

million contribution in fiscal

2020.

The table below sets forth the actual asset allocation for the assets within the Company’s plans.

	201 9			201 8
Asset category:
Cash equivalents		2	%		1	%
Fixed income		31	%		27	%
Equities		35	%		34	%
Mutual and pooled funds		32	%		38	%
		100	%		100	%

The Company determines its investments strategies based upon the composition of the beneficiaries in its defined benefit plans and the relative time horizons that those beneficiaries are projected to receive payouts from the plans. The Company engages an independent investment firm to manage the U.S. pension assets.

Cash equivalents are held in money market funds.

The Company’s fixed income portfolio includes mutual funds that hold a combination of short-term, investment-grade fixed income securities and a diversified selection of investment-grade, fixed income securities, including corporate securities and U.S. government securities.

The Company invests in equity securities, which are diversified across a spectrum of value and growth in large, medium and small capitalization funds and companies, as appropriate to achieve the objective of a balanced portfolio, optimize the expected returns and minimize volatility in the various asset classes.

Other assets include pooled investment funds whose underlying assets consist primarily of property holdings as well as financial instruments designed to offset the long-term impact of inflation and interest rate fluctuations.

The Company has categorized its financial assets (including its pension plan assets), based on the priority of the inputs to the valuation technique, into a

three

-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets are categorized based on the inputs to the valuation techniques as follows:

Level

– Financial assets whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which the Company has the ability to access at the measurement date.

Level

– Financial assets whose value are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.

Level

– Financial assets whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own view about the assumptions a market participant would use in pricing the asset.

The tables below show the portfolio by valuation category as of

June 30, 2019

and

June 30, 2018 (

in thousands).

June 30, 201 9
Asset Category	Level 1		Level 2		Level 3		Total		%
Cash Equivalents	$	1,818	$	-	$	-	$	1,818		2	%
Fixed Income		-		38,232		-		38,232		31	%
Equities		41,629		1,482		-		43,111		35	%
Mutual & Pooled Funds		2,362		36,510		-		38,872		32	%
Total	$	45,809	$	76,224	$	-	$	122,033		100	%

June 30, 201 8
Asset Category	Level 1		Level 2		Level 3		Total		%
Cash Equivalents	$	945	$	-	$	-	$	945		1	%
Fixed Income		-		32,303		-		32,303		27	%
Equities		38,988		1,521		-		40,509		34	%
Mutual & Pooled Funds		8,880		36,056		-		44,936		38	%
Total	$	48,813	$	69,880	$	-	$	118,693		100	%

Included in equity securities at

June 30, 2019

and

2018

are shares of the Company’s common stock having a fair value of

$4.6

million and

$4.8

million, respectively.

U.S. and U.K. Plans Combined:

The status of these defined benefit plans is as follows (in thousands):

	201 9			201 8			201 7
Change in benefit obligation
Benefit obligation at beginning of year	$	159,213		$	169,696		$	175,233
Service cost		-			-			1,405
Interest cost		6,013			6,077			6,246
Plan curtailment		-			-			(4,170	)
Exchange rate changes		(1,697	)		707			(909	)
Benefits paid		(7,217	)		(6,489	)		(6,902	)
Actuarial (gain) loss		13,368			(10,778	)		(1,207	)
Benefit obligation at end of year	$	169,680		$	159,213		$	169,696

Change in plan assets
Fair value of plan assets at beginning of year		118,693			117,778			115,015
Actual return on plan assets		6,589			2,545			5,302
Employer contributions		5,413			4,366			5,000
Benefits paid		(7,217	)		(6,489	)		(6,902	)
Exchange rate changes		(1,445	)		493			(637	)
Fair value of plan assets at end of year		122,033			118,693			117,778
Funded status at end of year	$	(47,647	)	$	(40,520	)	$	(51,918	)
Amounts recognized in balance sheet
Current liability	$	(324	)	$	(67	)	$	(63	)
Noncurrent liability		(47,323	)		(40,453	)		(51,855	)
Net amount recognized in balance sheet	$	(47,647	)	$	(40,520	)	$	(51,918	)

Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Prior service cost	$	-		$	-		$	-
Accumulated loss		(15,590	)		(4,038	)		(12,131	)
Amounts not yet recognized as a component of net periodic benefit cost		(15,590	)		(4,038	)		(12,131	)
Accumulated net periodic benefit cost in excess of contributions		(32,057	)		(36,482	)		(39,787	)
Net amount recognized	$	(47,647	)	$	(40,520	)	$	(51,918	)

Components of net periodic benefit cost
Service cost	$	-		$	-		$	1,405
Interest cost		6,013			6,077			6,246
Expected return on plan assets		(5,129	)		(5,140	)		(5,173	)
Recognized actuarial loss		284			26			107
Net periodic benefit cost	$	1,168		$	963		$	2,585

Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service cost	$	-		$	-		$	-
Net loss		(38	)		(28	)		(26	)

Information for pension plans with accumulated benefits in excess of plan assets
Projected benefit obligation	$	169,680		$	159,213		$	169,696
Accumulated benefit obligation	$	169,680		$	159,213		$	169,696
Fair value of assets	$	122,033		$	118,693		$	117,778

U.S. Plan:

The status of the U.S. defined benefit plan is as follows (in thousands):

	201 9			201 8			201 7
Change in benefit obligation
Benefit obligation at beginning of year	$	116,277		$	124,138		$	130,863
Service cost		-			-			1,405
Interest cost		4,854			4,804			4,994
Plan curtailment		-			-			(4,170	)
Benefits paid		(5,565	)		(4,786	)		(5,106	)
Actuarial (gain) loss		10,814			(7,879	)		(3,848	)
Benefit obligation at end of year	$	126,380		$	116,277		$	124,138

Weighted average assumptions – benefit obligation
Discount rate		3.56	%		4.27	%		3.92	%
Rate of compensation increase		n/a			n/a		Varies

Change in plan assets
Fair value of plan assets at beginning of year	$	82,140		$	81,928		$	81,910
Actual return on plan assets		4,132			1,645			1,079
Employer contributions		4,443			3,353			4,045
Benefits paid		(5,565	)		(4,786	)		(5,106	)
Fair value of plan assets at end of year		85,150			82,140			81,928
Funded status at end of year	$	(41,230	)	$	(34,137	)	$	(42,210	)

Amounts recognized in balance sheet
Current liability	$	(324	)	$	(67	)	$	(63	)
Noncurrent liability		(40,906	)		(34,070	)		(42,147	)
Net amount recognized in balance sheet	$	(41,230	)	$	(34,137	)	$	(42,210	)

Weighted average assumptions – net periodic benefit cost
Discount rate		4.27	%		3.92	%		3.77	%
Rate of compensation increase	Varies			Varies			Varies
Return on plan assets		5.00	%		5.00	%		5.00	%

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
Prior service cost	$	-		$	-		$	-
Accumulated loss		(13,196	)		(2,731	)		(8,254	)
Amounts not yet recognized as a component of net periodic benefit cost		(13,196	)		(2,731	)		(8,254	)
Accumulated contributions less than net periodic benefit cost		(28,034	)		(31,406	)		(33,956	)
Net amount recognized	$	(41,230	)	$	(34,137	)	$	(42,210	)

Components of net periodic benefit cost
Service cost	$	-		$	-		$	1,405
Interest cost		4,854			4,804			4,994
Expected return on plan assets		(4,067	)		(4,026	)		(4,046	)
Recognized actuarial loss		284			26			107
Net periodic benefit cost	$	1,071		$	804		$	2,460

Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service cost	$	-		$	-		$	-
Net loss		(38	)		(28	)		(26	)

Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation	$	126,380		$	116,277		$	124,138
Accumulated benefit obligation	$	126,380		$	116,277		$	124,138
Fair value of assets	$	85,150		$	82,140		$	81,928

U.K. Plan:

The status of the U.K. defined benefit plan is as follows (in thousands):

	201 9			201 8			201 7
Change in benefit obligation
Benefit obligation at beginning of year	$	42,936		$	45,558		$	44,370
Interest cost		1,159			1,273			1,252
Exchange rate changes		(1,697	)		707			(909	)
Benefits paid		(1,652	)		(1,703	)		(1,796	)
Actuarial (gain) loss		2,554			(2,899	)		2,641
Benefit obligation at end of year	$	43,300		$	42,936		$	45,558

Weighted average assumptions - benefit obligation
Discount rate		2.39	%		2.80	%		2.73	%
Rate of compensation increase		n/a			n/a			n/a

Change in plan assets
Fair value of plan assets at beginning of year	$	36,553		$	35,850		$	33,105
Actual return on plan assets		2,457			900			4,223
Employer contributions		970			1,013			954
Benefits paid		(1,652	)		(1,703	)		(1,796	)
Exchange rate changes		(1,445	)		493			(636	)
Fair value of plan assets at end of year		36,883			36,553			35,850
Funded status at end of year	$	(6,417	)	$	(6,383	)		(9,708	)
Amounts recognized in balance sheet
Current liability	$	—		$	—		$	—
Noncurrent liability		(6,417	)		(6,383	)		(9,708	)
Net amount recognized in balance sheet	$	(6,417	)	$	(6,383	)	$	(9,708	)

Weighted average assumptions – net periodic benefit cost

Discount rate		2.80	%		2.73	%		3.00	%
Rate of compensation increase		n/a			n/a			n/a
Return on plan assets		2.98	%		3.01	%		3.59	%

Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Prior service cost	$	—		$	—		$	—
Accumulated loss		(2,394	)		(1,307	)		(3,877	)
Amounts not yet recognized as a component of net periodic benefit cost		(2,394	)		(1,307	)		(3,877	)
Accumulated net periodic benefit cost in excess of contributions		(4,023	)		(5,076	)		(5,831	)
Net amount recognized	$	(6,417	)	$	(6,383	)	$	(9,708	)

Components of net periodic benefit cost
Service cost	$	—		$	—		$	—
Interest cost		1,159			1,273			1,252
Expected return on plan assets		(1,062	)		(1,114	)		(1,127	)
Amortization of net loss		—			—			—
Net periodic benefit cost	$	97		$	159		$	125

Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year	$	—		$	—		$	—

Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation	$	43,300		$	42,936		$	45,558
Accumulated benefit obligation	$	43,300		$	42,936		$	45,558
Fair value of assets	$	36,883		$	36,553		$	35,850

Postretirement Medical and Life Insurance Benefits:

The status of the U.S. postretirement medical and life insurance benefit plan is as follows (in thousands):

	201 9			201 8			201 7
Change in benefit obligation:
Benefit obligation at beginning of year	$	6,385		$	7,086		$	7,381
Service cost		72			85			85
Interest cost		265			270			269
Benefits paid		(346	)		(388	)		(483	)
Actuarial (gain) loss		554			(668	)		(166	)
Benefit obligation at end of year	$	6,930		$	6,385		$	7,086

Weighted average assumptions: benefit obligations
Discount rate		3.56	%		4.27	%		3.92	%
Rate of compensation increase		2.64	%		2.64	%		2.64	%

Change in plan assets
Fair value of plan assets at beginning of year	$	—		$	—		$	—
Employer contributions		346			388			483
Benefits paid, net of employee contributions		(346	)		(388	)		(483	)
Fair value of plan assets at end of year		—			—			—

Amounts recognized in balance sheet
Current postretirement benefit obligation	$	(353	)	$	(339	)	$	(370	)
Non-current postretirement benefit obligation		(6,577	)		(6,046	)		(6,716	)
Net amount recognized in balance sheet	$	(6,930	)	$	(6,385	)	$	(7,086	)

Weighted average assumptions – net periodic benefit cost
Discount rate		4.27	%		3.92	%		3.77	%
Rate of compensation increase		2.64	%		2.64	%		2.64	%

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
Prior service credit	$	2,777		$	3,314		$	3,851
Accumulated gain (loss)		(1,452	)		(928	)		(1,696	)
Amounts not yet recognized as a component of net periodic benefit cost		1,325			2,386			2,155
Net periodic benefit cost in excess of accumulated contributions		(8,255	)		(8,771	)		(9,241	)
Net amount recognized	$	(6,930	)	$	(6,385	)	$	(7,086	)

Components of net periodic benefit cost
Service cost	$	72		$	85		$	85
Interest cost		265			270			269
Amortization of prior service credit		(537	)		(537	)		(673	)
Amortization of accumulated loss		30			99			121
Net periodic benefit cost	$	(170	)	$	(83	)	$	(198	)


Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service credit	$	537		$	537		$	537
Net loss		(83	)		(30	)		(99	)
	$	454		$	507		$	438


Healthcare cost trend rate assumed for next year		6.30	%		6.60	%		6.60	%
Rate to which the cost trend rate gradually declines		4.50	%		4.50	%		4.50	%
Year that the rate reaches the rate at which it is assumed to remain	2037			2037			2037

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A

one

percentage point change in assumed health care cost trend rates would have the following effects (in thousands):

	1% Increase
	201 9		201 8		201 7
Effect on total of service and interest cost	$	-	$	-	$	-
Effect on postretirement benefit obligation		1		1		2

	1% Decrease
	201 9			201 8			201 7
Effect on total of service and interest cost	$	-		$	-		$	-
Effect on postretirement benefit obligation		(1	)		(1	)		(2	)

Future pension and other benefit payments are as follows (in thousands):

Fiscal Year	Pension		Other Benefits
2020	$	8,006	$	354
2021		8,011		354
2022		8,134		358
2023		8,978		363
2024		8,373		353
2025-2029		53,635		2,228
	$	95,137	$	4,010