. Employee Benefit Plans

Retirement Plans

The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. salaried employees was frozen as of

December 31, 2007,

and participants in the plan ceased accruing future benefits. The Company’s pension plan for U.S. hourly employees was frozen for substantially all participants as of

July 31, 2013,

and replaced with a defined contribution benefit plan.

Net periodic benefit cost for U.S. and non-U.S. plans included the following components (in thousands):

	U.S. Plans									Foreign Plans
	Year Ended June 30,									Year Ended June 30,
	2019			2018			2017			2019			2018			2017
Service Cost	$	3		$	3		$	3		$	189		$	187		$	37
Interest Cost		10,342			10,079			10,451			1,013			1,050			1,022
Expected return on plan assets		(13,541	)		(13,484	)		(13,761	)		(908	)		(947	)		(1,152	)
Recognized net actuarial loss		4,121			4,579			4,760			340			941			1,016
Amortization of prior service cost (benefit)		-			-			-			(3	)		(37	)		(48	)
Net periodic benefit cost (benefit)	$	925		$	1,177		$	1,453		$	631		$	1,194		$	875

The following table sets forth the funded status and amounts recognized as of

June 30,

2019

and

2018

for our U.S. and foreign defined benefit pension plans (in thousands):

	U.S. Plans						Foreign Plans
	Year Ended June 30,						Year Ended June 30,
	2019			2018			2019			2018
Change in benefit obligation
Benefit obligation at beginning of year	$	243,096		$	259,963		$	41,194		$	42,141
Service cost		3			3			189			187
Interest cost		10,342			10,079			1,013			1,050
Actuarial loss (gain)		16,268			(10,761	)		4,580			(2,701	)
Benefits paid		(16,169	)		(16,188	)		(1,545	)		(1,639	)
Foreign currency exchange rate & other changes		-			-			(1,448	)		2,156
Projected benefit obligation at end of year	$	253,540		$	243,096		$	43,983		$	41,194
Change in plan assets
Fair value of plan assets at beginning of year	$	190,960		$	195,328		$	38,117		$	36,921
Actual return on plan assets		11,190			6,070			3,464			1,113
Employer contribution		244			5,750			1,115			1,196
Benefits paid		(16,189	)		(16,188	)		(1,545	)		(1,638	)
Foreign currency exchange rate		-			-			(1,486	)		525
Fair value of plan assets at end of year	$	186,205		$	190,960		$	39,665		$	38,117

Funded Status	$	(67,335	)	$	(52,136	)	$	(4,318	)	$	(3,077	)
Amounts recognized in the consolidated balance sheets consist of:
Prepaid Benefit Cost	$	-		$	-		$	3,919		$	4,759
Current liabilities		(211	)		(219	)		(213	)		(1,926	)
Non-current liabilities		(67,124	)		(51,917	)		(8,024	)		(5,910	)
Net amount recognized	$	(67,335	)	$	(52,136	)	$	(4,318	)	$	(3,077	)

Unrecognized net actuarial loss	$	135,779		$	121,281		$	6,405		$	4,778
Unrecognized prior service cost		-			-			(42	)		(45	)
Accumulated other comprehensive income, pre-tax	$	135,779		$	121,281		$	6,363		$	4,733

The accumulated benefit obligation for all defined benefit pension plans was

$297.4

million and

$283.9

million at

June 30, 2019

and

2018

, respectively.

The estimated actuarial net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is

$5.8

million.

Plan Assets and Assumptions

The fair values of the Company’s pension plan assets at

June 30,

2019

and

2018

by asset category, as classified in the

three

levels of inputs described in Note

under the caption

Fair Value of Financial Instruments

, are as follows (in thousands):

	June 30, 2019
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	7,696	$	439	$	7,257	$	-
Common and preferred stocks		86,415		1,866		84,549		-
U.S. Government securities		9,161		-		9,161		-
Corporate bonds and other fixed income securities		97,627		7,163		90,464		-
Other		24,971		-		24,971		-
	$	225,870	$	9,468	$	216,402		-

	June 30, 2018
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	4,482	$	325	$	4,157		-
Common and preferred stocks		89,934		16,353		73,581		-
U.S. Government securities		14,461		-		14,461		-
Corporate bonds and other fixed income securities		102,105		6,711		95,394		-
Other		18,095		-		18,095		-
	$	229,077	$	23,389	$	205,688		-

Asset allocation at

June 30,

2019

and

2018

and target asset allocations for

2019

are as follows:

	U.S. Plans						Foreign Plans
	Year Ended June 30,						Year Ended June 30,
Asset Category	2019			2018			2019			2018
Equity securities		31	%		33	%		20	%		20	%
Debt securities		35	%		33	%		41	%		44	%
Global balanced securities		24	%		24	%		37	%		35	%
Other		10	%		10	%		2	%		1	%
Total		100	%		100	%		100	%		100	%

	2019
Asset Category – Target	U.S.			U.K.
Equity securities		32	%		17	%
Debt and market neutral securities		33	%		42	%
Global balanced securities		25	%		40	%
Other		10	%		1	%
Total		100	%		100	%

Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalances the portfolio periodically when the allocation is

not

within the desired range of exposure. The plan seeks to provide returns in excess of the various benchmarks. The benchmarks include the following indices: S&P

500;

Citigroup PMI EPAC; Citigroup World Government Bond and Barclays Aggregate Bond. A

third

-party investment consultant tracks the plan’s portfolio relative to the benchmarks and provides quarterly investment reviews which consist of a performance and risk assessment on all investment managers and on the portfolio.

Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, the creation of market exposures and management of country and asset allocation exposure. Currency speculation derivatives are strictly prohibited.

Year Ended June 30	2019		2018		2017
Plan assumptions - obligations
Discount rate		0.24 - 3.70%		0.38 - 4.40%		1.90 - 4.00%
Rate of compensation increase		3.20%		3.60%		3.70%

Plan assumption - cost
Discount rate		0.38 - 4.40%		0.43 - 4.00%		1.50 - 4.00%
Expected return on assets		2.45 - 7.00%		2.55 - 7.00%		3.75 - 7.10%
Rate of compensation increase		3.60%		3.70%		3.30%

Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in the United States at

June 30,

2019

; a discount rate of

3.7%

and expected return on assets of

7.0%.

The U.S. defined benefit pension plans represent the majority of our pension obligations. The expected return on plan assets assumption is based on our expectation of the long-term average rate of return on assets in the pension funds and is reflective of the current and projected asset mix of the funds. The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream of AA- or higher bonds available in the marketplace, adjusted to eliminate the effects of call provisions.

Expected benefit payments for all plans during the next

five

years are as follows:

2020,

$17.8

million;

2021,

$17.4

million;

2022,

$17.9

million;

2023,

$17.8

million;

2024,

$17.8

million and

five

years thereafter,

$87.5

million. The Company expects to make

$5.4

million of contributions to its pension plans in

2020

The Company operates defined benefit plans in Germany and Japan which are unfunded.

Multi-Employer Pension Plans

We contribute to

two

multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

●

Assets contributed to the multiemployer plan by

one

employer

may

be used to provide benefits to employees of other participating employers.

●

If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan

may

be borne by the remaining participating employers.

●

If we choose to stop participating in some of our multiemployer plans, we

may

be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.

The following table outlines the Company’s participation in multiemployer pension plans for the periods ended

June 30,

2019

2018

, and

2017

, and sets forth the yearly contributions into each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the

three

-digit plan number. The most recent Pension Protection Act zone status available in

2019

amd

2018

relates

to the plans’

two

most recent fiscal year-ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, plans certified in the red zone are generally less than

65%

funded, plans certified in the orange zone are both less than

80%

funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next

six

plan years, plans certified in the yellow zone are less than

80%

funded, and plans certified in the green zone are at least

80%

funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. For all plans, the Company’s contributions do

not

exceed

of the total contributions to the plan in the most recent year.

			Pension Protection Act											Expiration
			Zone Status				Contributions							Date of
														Collective
	EIN/Plan				FIP/RP								Surcharge	Bargaining
Pension Fund	Number		2019	2018	Status		2019		2018		2017		Imposed?	Agreement
New England Teamsters and Trucking Industry Pension Fund		04-6372430-001	Red	Red	Yes/ Implemented		$	461		482	$	530	No	Apr-21

IAM National Pension Fund, National Pension Plan		51-6031295-002	Green	Green		N/A		644		638		633	No	Oct. 2019 - May 2021
							$	1,105		1,120	$	1,163

Retirement Savings Plans

The Company has

two

primary employee savings plans,

one

for salaried employees and

one

for hourly employees. Substantially all of our full-time domestic employees are covered by these savings plans. Under the provisions of the plans, employees

may

contribute a portion of their compensation within certain limitations. The Company, at the discretion of the Board of Directors,

may

make contributions on behalf of our employees under the plans. Company contributions were

$4.0

million,

$3.7

million, and

$4.0

million for the years ended

June 30,

2019

2018

, and

2017

, respectively. At

June 30,

2019

, the salaried plan holds approximately

59,000

shares of Company common stock, representing approximately

3.86%

of the holdings of the plan.