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Employee Retirement Benefit Plans
 12 Months Ended
Jun. 30, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Retirement Benefit Plans
EMPLOYEE RETIREMENT BENEFIT PLANS
The Company sponsors various retirement plans, including defined benefit pension plans and defined contribution plans. Substantially all of the Company’s domestic non-union employees are eligible to participate in employer-sponsored retirement savings plans, which include plans covered under Section 401(k) of the Internal Revenue Code, and provide for company matching contributions. The Company’s contributions to the plans are discretionary but are subject to certain minimum requirements as specified in the plans under law. The Company uses a measurement date of June 30 for all of its retirement and postretirement benefit plans.
In addition, the Company has recorded obligations related to its withdrawal from a multi-employer pension plan related to a former commercial packaging site, a clinical services site and a former printed components operation. The Company’s withdrawal from these multi-employer pension plans has been classified as a mass withdrawal under the Multiemployer Pension Plan Amendments Act of 1980, and, as amended, under the Pension Protection Act of 2006. The withdrawal from the plan resulted in the recognition of liabilities associated with the Company’s long-term obligations in prior year periods not presented, which were primarily recorded as an expense within discontinued operations. The estimated discounted value of the projected contributions related to these plans is $39.3 million and $39.5 million as of June 30, 2016 and June 30, 2015, respectively. The annual cash impact associated with the Company’s long-term obligation approximates $1.7 million per year.
The following table provides a reconciliation of the change in projected benefit obligation and fair value of plan assets for the defined benefit retirement and other retirement plans, excluding the multi-employer pension plan liability:

At June 30,
Retirement Benefits
 
Other Post-Retirement Benefits
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Accumulated Benefit Obligation
$
328.1

 
$
316.0

 
$
3.6

 
$
3.7

 
 
 
 
 
 
 
 
Change in Benefit Obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of year
323.7

 
333.8

 
3.7

 
4.4

Company service cost
2.8

 
2.7

 
—

 
—

Interest cost
10.4

 
11.4

 
0.1

 
0.2

Employee contributions
—

 
—

 
—

 
—

Plan amendments
(0.7
)
 
—

 
—

 
—

Curtailments
—

 
(1.6
)
 
—

 
—

Settlements
—

 
—

 
—

 
—

Special termination benefits
—

 
—

 
—

 
—

Divestitures
—

 
—

 
—

 
—

Business combinations
—

 
—

 
—

 
—

Benefits paid
(11.6
)
 
(9.6
)
 
(0.2
)
 
(0.2
)
Actual expenses
—

 
—

 
—

 
—

Actuarial (gain)/loss
40.5

 
20.8

 
—

 
(0.7
)
Exchange rate gain/(loss)
(28.5
)
 
(33.8
)
 
—

 
—

Benefit obligation at end of year
336.6

 
323.7

 
3.6

 
3.7

 
 
 
 
 
 
 
 
Change in Plan Assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
222.0

 
222.2

 
—

 
—

Actual return on plan assets
33.8

 
18.4

 
—

 
—

Company contributions
9.2

 
9.0

 
0.2

 
0.2

Employee contributions
—

 
—

 
—

 
—

Settlements
—

 
—

 
—

 
—

Special company contributions to fund termination benefits
—

 
—

 
—

 
—

Divestitures
—

 
—

 
—

 
—

Business combinations
—

 
—

 
—

 
—

Benefits paid
(11.6
)
 
(9.6
)
 
(0.2
)
 
(0.2
)
Actual expenses
—

 
—

 
—

 
—

Exchange rate gain/(loss)
(25.8
)
 
(18.0
)
 
—

 
—

Fair value of plan assets at end of year
227.6

 
222.0

 
—

 
—

 
 
 
 
 
 
 
 
Funded Status
 
 
 
 
 
 
 
Funded status at end of year
(109.0
)
 
(101.7
)
 
(3.6
)
 
(3.7
)
Employer contributions between measurement date and reporting date
—

 
—

 
—

 
—

Net pension asset (liability)
(109.0
)
 
(101.7
)
 
(3.6
)
 
(3.7
)

    
The following table provides a reconciliation of the net amount recognized in the Consolidated Balance Sheets:
 
At June 30,
Retirement Benefits
 
Other Post-Retirement Benefits
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Amounts Recognized in Statement of Financial Position
 
 
 
 
 
 
 
Noncurrent assets
$
—

 
$
0.6

 
$
—

 
$
—

Current liabilities
(0.8
)
 
(0.9
)
 
—

 
(0.8
)
Noncurrent liabilities
(108.2
)
 
(101.4
)
 
(3.6
)
 
(2.9
)
Total asset/(liability)
(109.0
)
 
(101.7
)
 
(3.6
)
 
(3.7
)
 
 
 
 
 
 
 
 
Amounts Recognized in Accumulated Other Comprehensive Income
 
 
 
 
 
 
 
Transition (asset)/obligation
—

 
—

 
—

 
—

Prior service cost
(0.5
)
 
0.1

 
—

 
—

Net (gain)/loss
76.9

 
63.2

 
(1.5
)
 
(1.6
)
Total accumulated other comprehensive income at the end of the year
76.4

 
63.3

 
(1.5
)
 
(1.6
)
 
 
 
 
 
 
 
 
Additional Information for Plan with ABO in Excess of Plan Assets
 
 
 
 
 
 
 
Projected benefit obligation
321.0

 
309.6

 
3.6

 
3.7

Accumulated benefit obligation
315.7

 
304.1

 
3.6

 
3.7

Fair value of plan assets
213.3

 
207.3

 
—

 
—

 
 
 
 
 
 
 
 
Additional Information for Plan with PBO in Excess of Plan Assets
 
 
 
 
 
 
 
Projected benefit obligation
336.6

 
309.6

 
3.6

 
3.7

Accumulated benefit obligation
328.1

 
304.1

 
3.6

 
3.7

Fair value of plan assets
227.6

 
207.3

 
—

 
—

 
 
 
 
 
 
 
 
Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
Service Cost
2.8

 
2.7

 
—

 
—

Interest Cost
10.4

 
11.4

 
0.1

 
0.2

Expected return on plan assets
(9.8
)
 
(10.5
)
 
—

 
—

Amortization of unrecognized:

 
 
 
 
 
 
Transition (asset)/obligation
—

 
—

 
—

 
—

Prior service cost
—

 
—

 
—

 
—

Net (gain)/loss
2.9

 
1.8

 
(0.1
)
 
(0.1
)
Ongoing periodic cost
6.3

 
5.4

 
—

 
0.1

Settlement/curtailment expense/(income)
—

 
(0.2
)
 
—

 
—

Net periodic benefit cost
6.3

 
5.2

 
—

 
0.1


 
At June 30,
Retirement Benefits
 
Other Post-Retirement Benefits
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
 
 
 
 
 
 
 
Net (gain)/loss arising during the year
$
16.4

 
$
13.0

 
—

 
(0.7
)
Prior service cost (credit) during the year
(0.7
)
 
—

 
—

 
—

Transition asset/(obligation) recognized during the year
—

 
—

 
—

 
—

Prior service cost recognized during the year
—

 
—

 
—

 
—

Net gain/(loss) recognized during the year
(2.8
)
 
(3.2
)
 
0.1

 
0.1

Exchange rate gain/(loss) recognized during the year
0.2

 
(0.6
)
 
—

 
—

Total recognized in other comprehensive income
$
13.1

 
$
9.2

 
$
0.1

 
$
(0.6
)
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
 
 
 
 
 
 
 
Total recognized in net periodic benefit cost and other comprehensive income
$
19.3

 
$
14.4

 
$
0.1

 
$
(0.5
)
Estimated Amounts to be Amortized from Accumulated Other Comprehensive Income into Net Periodic Benefit Cost
 
 
 
 
 
 
 
Amortization of:
 
 
 
 
 
 
 
Transition (asset)/obligation
$
—

 
$
—

 
$
—

 
$
—

Prior service cost/(credit)
—

 
—

 
—

 
—

Net (gain)/loss
4.5

 
2.9

 
(0.1
)
 
(0.1
)
Financial Assumptions Used to Determine Benefit Obligations at the Balance Sheet Date
 
 
 
 
 
 
 
Discount rate (%)
2.33
%
 
3.38
%
 
2.89
%
 
3.69
%
Rate of compensation increases (%)
2.10
%
 
2.06
%
 
n/a

 
n/a

Financial Assumptions Used to Determine Net Periodic Benefit Cost for Financial Year
 
 
 
 
 
 
 
Discount rate (%)
3.38
%
 
3.73
%
 
3.69
%
 
3.67
%
Rate of compensation increases (%)
2.10
%
 
2.10
%
 
n/a

 
n/a

Expected long-term rate of return (%)
4.93
%
 
5.11
%
 
n/a

 
n/a

Expected Future Contributions
 
 
 
 
 
 
 
Financial Year
 
 
 
 
 
 
 
2017
$
8.4

 

 
$
0.3

 


At June 30,
Retirement Benefits
 
Other Post-Retirement Benefits
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Expected Future Benefit Payments
 
 
 
 
 
 
 
Financial Year
 
 
 
 
 
 
 
2017
9.0

 
10.5

 
0.8

 
0.8

2018
9.4

 
9.5

 
0.3

 
0.3

2019
10.8

 
11.1

 
0.3

 
0.3

2020
11.1

 
11.2

 
0.2

 
0.3

2021
12.0

 
13.9

 
0.2

 
0.3

2022-2026
67.4

 
72.0

 
1.0

 
1.1

 
 
 
 
 
 
 
 
Actual Asset Allocation (%)
 
 
 
 
 
 
 
Equities
23.6
%
 
34.2
%
 
—
%
 
—
%
Government Bonds
29.9
%
 
28.2
%
 
—
%
 
—
%
Corporate Bonds
12.3
%
 
17.3
%
 
—
%
 
—
%
Property
2.5
%
 
3.1
%
 
—
%
 
—
%
Insurance Contracts
9.0
%
 
8.5
%
 
—
%
 
—
%
Other
22.7
%
 
8.7
%
 
—
%
 
—
%
Total
100.0
%
 
100.0
%
 
—
%
 
—
%
 
 
 
 
 
 
 
 
Actual Asset Allocation (Amount)
 
 
 
 
 
 
 
Equities
53.7

 
75.7

 
—

 
—

Government Bonds
68.1

 
62.7

 
—

 
—

Corporate Bonds
28.0

 
38.5

 
—

 
—

Property
5.8

 
6.9

 
—

 
—

Insurance Contracts
20.4

 
18.9

 
—

 
—

Other
51.6

 
19.3

 
—

 
—

Total
227.6

 
222.0

 
—

 
—

 
 
 
 
 
 
 
 
Target Asset Allocation (%)
 
 
 
 
 
 
 
Equities
24.1
%
 
34.5
%
 
—
%
 
—
%
Government Bonds
29.8
%
 
24.8
%
 
—
%
 
—
%
Corporate Bonds
12.3
%
 
22.1
%
 
—
%
 
—
%
Property
2.7
%
 
3.5
%
 
—
%
 
—
%
Insurance Contracts
8.9
%
 
6.3
%
 
—
%
 
—
%
Other
22.2
%
 
8.8
%
 
—
%
 
—
%
Total
100.0
%
 
100.0
%
 
—
%
 
—
%

The Company employs a building block approach in determining the long-term rate of return for plan assets, with proper consideration of diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data are reviewed to check for reasonability and appropriateness.
Plan assets are recognized and measured at fair value in accordance with the accounting standards regarding fair value measurements. The following are valuation techniques used to determine the fair value of each major category of assets:
•
Short-term investments, equity securities, fixed-income securities, and real estate are valued using quoted market prices or other valuation methods, and thus are classified within Level 1 or Level 2.
•
Insurance contracts and other types of investments include investments with some observable and unobservable prices that are adjusted by cash contributions and distributions, and thus are classified within Level 2 or Level 3.
•
Other assets as of June 30, 2016 include $28.0 million of investments in hedge funds related to our U.K. pension plan and are classified as Level 2.

The following table provides a summary of plan assets that are measured in fair value as of June 30, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall:
 
 
(Dollars in millions)
Total Assets
 
Level 1
 
Level 2
 
Level 3
 
 
Equity Securities
$
53.7

 
$
—

 
$
53.7

 
—

 
Debt Securities
96.1

 
—

 
96.1

 
—

 
Real Estate
5.8

 
—

 
5.8

 
—

 
Other
72.0

 
—

 
52.4

 
19.6

 
Total
$
227.6

 
$
—

 
$
208.0

 
$
19.6



Level 3 other assets consist of an insurance contract in the UK to fulfill the benefit obligations for a portion of the participant benefits. The value of this commitment is determined using the same assumptions and methods used to value the UK Retirement & Death Benefit Plan pension liability. Level 3 other assets also include the partial funding of a pension liability relating to current and former employees of the Company’s Eberbach facility through a Company promissory note or loan with an annual rate of interest of 5%. The value of this commitment fluctuates due to contributions and benefit payments in addition to loan interest.
The following table provides a summary of plan assets that are measured in fair value as of June 30, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall:  
 
(Dollars in millions)
Total Assets
 
Level 1
 
Level 2
 
Level 3
 
 
Equity Securities
$
75.7

 
$
—

 
$
75.7

 
—

 
Debt Securities
101.2

 
—

 
101.2

 
—

 
Real Estate
6.9

 
—

 
0.3

 
6.6

 
Other
38.2

 
—

 
17.3

 
20.9

 
Total
$
222.0

 
$
—

 
$
194.5

 
$
27.5


Level 3 real estate assets consist of a U.K. Property fund ("UBS Life Triton Property Fund") that directly invests in properties that are held in the U.K. The funds are priced using the Net Asset Value ("NAV") of the fund and investors also get Bid and Offer prices on a monthly basis. Investment properties are measured at fair value as determined by third-party independent appraisers. Their value is ascertained by reference to the market value, having regard to whether they are let or un-let at the date of valuation, in accordance with the Appraisal and Valuation Manual issued by the Royal Institution of Chartered Surveyors.

The following table provides a reconciliation of the beginning and ending balances of level 3 assets as well as the changes during the period attributable to assets held and those purchases, sales, settlements, contributions and benefits that were paid:
Asset Category Allocations - June 30, 2016
Total (Level 3)
Fair Value Measurement
 
Fair Value Measurement
 
Fair Value Measurement
(Dollars in millions)
Using Significant
 
Using Significant
 
Using Significant
 
Unobservable Inputs
 
Unobservable Inputs
 
Unobservable Inputs
 
Total (Level 3)
 
Insurance Contracts
 
Other
Beginning Balance at June 30, 2015
$
27.5

 
$
4.7

 
$
22.8

Actual return on plan assets:
 
 
 
 
 
Relating to assets still held at the reporting date
(0.9
)
 
(1.3
)
 
0.4

Relating to assets sold during the period
—

 
—

 
—

Purchases, sales, settlements, contributions and benefits paid
(7.0
)
 
(0.2
)
 
(6.8
)
Transfers in and/or out of Level 3
—

 
—

 
—

Ending Balance at June 30, 2016
$
19.6

 
$
3.2

 
$
16.4


The investment policy reflects the long-term nature of the plans’ funding obligations. The assets are invested to provide the opportunity for both income and growth of principal. This objective is pursued as a long-term goal designed to provide required benefits for participants without undue risk. It is expected that this objective can be achieved through a well-diversified asset portfolio. All equity investments are made within the guidelines of quality, marketability and diversification mandated by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (for plans subject to ERISA) and other relevant legal requirements. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio. Assets invested in fixed income securities and pooled fixed-income portfolios are managed actively to pursue opportunities presented by changes in interest rates, credit ratings or maturity premiums.
At June 30,
Other Post-Retirement Benefits
(Actual dollar amounts)
2016
 
2015
 
 
 
 
Assumed Healthcare Cost Trend Rates at the Balance Sheet Date
 
 
 
Healthcare cost trend rate – initial (%)
 
 
 
Pre-65
n/a

 
n/a

Post-65
10.35
%
 
11.35
%
Healthcare cost trend rate – ultimate (%)
 
 
 
Pre-65
n/a

 
n/a

Post-65
4.84
%
 
4.64
%
Year in which ultimate rates are reached
 
 
 
Pre-65
n/a

 
n/a

Post-65
2022

 
2022

Effect of 1% Change in Healthcare Cost Trend Rate
 
 
 
Healthcare cost trend rate up 1%
 
 
 
on APBO at balance sheet date
$
169,433

 
$
171,309

on total service and interest cost
5,721

 
8,181

Effect of 1% Change in Healthcare Cost Trend Rate
 
 
 
Healthcare cost trend rate down 1%
 
 
 
on APBO at balance sheet date
$
(151,184
)
 
$
(152,189
)
on total service and interest cost
(5,106
)
 
(7,282
)
Expected Future Contributions
 
 
 
Financial Year
 
 
 
2017
$
259,942