12.

EMPLOYEE BENEFITS

Defined Benefit Plans—No defined benefit plan is maintained for employees of either the Healthcare Facilities Segment or the Specialty Pharmacy Segment. Prior to 1997, SunLink had maintained defined benefit retirement plans covering substantially all of its domestic employees. Effective February 28, 1997, SunLink amended its domestic retirement plan to freeze participant benefits and close the plan to new participants. Benefits under the frozen plan are based on years of service and level of earnings. SunLink funds the frozen plan, which is noncontributory, at a rate that meets or exceeds the minimum amounts required by the Employee Retirement Income Security Act of 1974.

Since the sale of SunLink’s life sciences and engineering segment businesses in the fiscal year ended March 31, 1999, net pension expense has been classified as an expense of discontinued operations.

At June 30, 2013, the plan’s assets were invested 61% in cash and short term investments, 23% in equity investments and 16% in fixed income investments. The plan’s current investment policy of primarily investing in cash and short term investments is in response to the poor returns on investment of the past 5 years in the equity markets, the returns available in the fixed income markets and the possible need for immediate liquidity as participants retire or withdraw from the plan. The expected return on investment of 4% is based upon the plan’s historical return on assets. The plan expects to pay $71, $57, $60, $62, and $66 in pension benefits in the years ending June 30, 2014 though 2018, respectively. The plan expects to pay $321 in pension benefits for the years June 30, 2019 through 2023, in the aggregate. This assumes the plan participants elect to take monthly pension benefits as opposed to a lump sum payout when they reach age 65. The Company made a contribution of $43 to the plan for the year ended June 30, 2013.

The components of net pension expense for all plans (comprised solely of one domestic plan) were as follows:


	Years Ended June 30,
	2013			2012			2011
Service cost	$	0		$	0		$	0
Interest cost		68			74			73
Expected return on assets		(40	)		(41	)		(43	)
Amortization of prior service cost		108			55			53
Settlement cost		118			0			0

Net pension expense	$	254		$	88		$	83

Weighted-average assumptions:
Discount rate		4.50	%		6.50	%		6.50	%
Expected return on plan assets		4.00	%		4.00	%		4.00	%

Summary information for the plans (comprised solely of one domestic plan) is as follows:


	2013			2012
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	1,536		$	1,157
Interest cost		68			73
Actuarial loss		41			350
Benefits paid		(292	)		(44	)

Benefit obligation end of year	$	1,353		$	1,536

Change in Fair Value of Plan Assets:
Beginning fair value	$	985		$	1,045
Actual return on plan assets		1			(16	)
Employer contribution		43			0
Benefits paid		(292	)		(44	)

Plan assets at end of year	$	737		$	985

Funded status of the plans		(616	)		(551	)
Unrecognized actuarial loss		652			798

Prepaid benefit cost	$	36		$	247

Amounts Recognized in Consolidated Balance Sheets
Prepaid benefit cost		36			247
Accumulated other comprehensive loss*		652			798

Net amount recognized	$	(616	)	$	(551	)

*	Accumulated other comprehensive income represents pretax minimum pension liability adjustments.

Defined Contribution Plan—SunLink has a defined contribution plan pursuant to IRS Section 401(k) covering substantially all domestic employees. SunLink matches a specified percentage of the employee’s contribution as determined periodically by its management. No match was provided for the fiscal years ended June 30, 2013, 2012 and 2011. Plan expense for the defined contribution plan was $0 for the years ended June 30, 2013, 2012 and 2011.