Pension Benefits

Defined Benefit Pension Plans

We sponsor multiple defined benefit pension plans that covered certain workers under collective bargaining contracts. However, as a result of prior-years’ restructuring activities, for all periods presented, we no longer have any active employees continuing to accrue service cost or otherwise eligible to receive plan benefits. Benefits being paid under the plans are primarily based on negotiated rates and years of service. We contribute to these plans at least the minimum amount required by regulation.

At the end of the year, we discount our plan liabilities using an assumed discount rate. In estimating this rate, we, along with our third-party actuaries, review the timing of future benefit payments, bond indices, consider yield curve analysis results and the past history of discount rates.

The actuarial present value of benefit obligations summarized below was based on the following assumption:



	2015		2014
Weighted-average assumption as of June 30
Discount rate	4.12	%	4.02	%

The net periodic benefit costs were determined utilizing the following beginning-of-the-year assumptions:



	2015		2014		2013
Discount rate	4.02	%	4.57	%	3.78	%
Expected long-term return on plan assets	7.00	%	7.00	%	7.00	%

In determining the long-term expected return on plan assets, we consider our related investment guidelines, our expectations of long-term rates of return by asset category, our target asset allocation weighting and historical rates of return and volatility for equity and fixed income investments. The investment strategy for plan assets is to control and manage investment risk through diversification among asset classes, investment managers/funds and investment styles. The plans’ investment guidelines have been designed to meet the intended objective that plan assets earn at least nominal returns equal to or in excess of the plans’ liability growth rate. In consideration of the current average age of the plans’ participants, the investment guidelines are based upon an investment horizon of at least 10 years.

The target and actual asset allocations for our plans at June 30 by asset category were as follows:



	Target Percentage of Plan Assets at June 30	Actual Percentage of Plan Assets
	2015	2015		2014
Cash and equivalents	0%-10%	2	%	3	%
Equity securities	30%-70%	49		53
Fixed income	30%-70%	49		44
Total		100	%	100	%

Our target asset allocations are maintained through ongoing review and periodic rebalancing of equity and fixed income investments with assistance from an independent outside investment consultant. Also, the plan assets are diversified among asset classes, asset managers or funds and investment styles to avoid concentrations of risk. We expect that a modest allocation to cash will exist within the plans because each investment manager is likely to hold limited cash in a portfolio.

We categorize our plan assets within a three-level fair value hierarchy as follows:

Level 1 – Quoted market prices in active markets for identical assets.

Level 2 – Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 – Unobservable inputs that are not corroborated by market data.

The following table summarizes the fair values and levels, within the fair value hierarchy, for our plan assets at June 30:



	June 30, 2015
Asset Category	Level 1		Level 2		Level 3		Total
Cash and equivalents	$	522	$	—	$	—	$	522
Money market funds	181		—		—		181
U.S. government obligations	—		4,266		—		4,266
Municipal obligations	—		161		—		161
Corporate obligations	—		3,174		—		3,174
Mortgage obligations	—		1,857		—		1,857
Mutual funds fixed income	8,820		—		—		8,820
Mutual funds equity	18,165		—		—		18,165
Total	$	27,688	$	9,458	$	—	$	37,146

	June 30, 2014
Asset Category	Level 1		Level 2		Level 3		Total
Cash and equivalents	$	550	$	—	$	—	$	550
Money market funds	460		—		—		460
U.S. government obligations	—		3,821		—		3,821
Corporate obligations	—		2,921		—		2,921
Mortgage obligations	—		2,181		—		2,181
Mutual funds fixed income	8,300		—		—		8,300
Mutual funds equity	20,492		—		—		20,492
Total	$	29,802	$	8,923	$	—	$	38,725

The plan assets classified at Level 1 include money market funds and mutual funds. Quoted market prices in active markets for identical assets are available for investments in this category.

The plan assets classified at Level 2 include fixed income securities consisting of government securities, municipal obligations, corporate obligations and mortgage obligations. For these types of securities, market prices are observable for identical or similar investment securities but not readily accessible for each of those investments individually at the measurement date. For these assets, we obtain pricing information from an independent pricing service. The pricing service uses various pricing models for each asset class that are consistent with what other market participants would use. The inputs and assumptions to the model of the pricing service are derived from market observable sources including as applicable: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

Relevant information with respect to our pension benefits as of June 30 can be summarized as follows:



	2015			2014
Change in benefit obligation
Benefit obligation at beginning of year	$	41,233		$	39,519
Interest cost	1,612			1,754
Actuarial loss	1,414			2,241
Benefits paid	(2,217		)	(2,281		)
Benefit obligation at end of year	$	42,042		$	41,233



	2015			2014
Change in plan assets
Fair value of plan assets at beginning of year	$	38,725		$	36,243
Actual return on plan assets	638			4,763
Employer contributions	—			—
Benefits paid	(2,217		)	(2,281		)
Fair value of plan assets at end of year	$	37,146		$	38,725



	2015			2014
Reconciliation of funded status
Net accrued benefit cost	$	(4,896	)	$	(2,508	)



	2015			2014
Amounts recognized in the consolidated balance sheets consist of
Prepaid benefit cost (noncurrent assets)	$	174		$	438
Accrued benefit liability (noncurrent liabilities)	(5,070		)	(2,946		)
Net amount recognized	$	(4,896	)	$	(2,508	)



	2015		2014
Accumulated benefit obligation	$	42,042	$	41,233

The following table discloses, in the aggregate, those plans with benefit obligations in excess of the fair value of plan assets at the June 30 measurement date:



	2015		2014
Benefit obligations	$	38,980	$	38,170
Fair value of plan assets at end of year	$	33,910	$	35,224

Amounts recognized in accumulated other comprehensive loss at June 30 were as follows:



	2015			2014
Net actuarial loss	$	16,564		$	13,585
Income taxes	(6,120		)	(5,019		)
Total	$	10,444		$	8,566

The amount in accumulated other comprehensive loss expected to be recognized as a component of net periodic benefit cost during the next fiscal year is as follows:



	2016
Net actuarial loss	$	542

The following table summarizes the components of net periodic benefit income for our pension plans at June 30:



	2015			2014			2013
Components of net periodic benefit income
Interest cost	$	1,612		$	1,754		$	1,633
Expected return on plan assets	(2,632		)	(2,457		)	(2,380		)
Amortization of unrecognized net loss	429			460			687
Amortization of unrecognized net asset existing at transition	—			—			(1		)
Net periodic benefit income	$	(591	)	$	(243	)	$	(61	)

We have not yet finalized our anticipated funding level for 2016, but based on initial estimates, we do not expect to make any contributions to our pension plans during 2016.

Benefit payments estimated for future years are as follows:




2016	$	2,294
2017	$	2,304
2018	$	2,322
2019	$	2,354
2020	$	2,405
2021 - 2025	$	12,752