Pensions And Other Postretirement Benefits

12 Months Ended

Jun. 30, 2014

Pensions And Other Postretirement Benefits [Abstract]

Pensions And Other Postretirement Benefits

9. Pensions and Other Postretirement Benefits

We maintain a retirement savings plan (the “Plan”), available to U.S. employees, that qualifies as a defined contribution plan under Section 401(k) of the Internal Revenue Code.  From July 1, 2012 through August 20, 2013, the Company was matching 25% of the first 5% of the participants’ compensation.   Effective August 21, 2013, the Company matches 50% of the first 5% of the participants’ compensation.  For fiscal years 2014, 2013 and 2012, we made matching contributions of $388,000, $183,000 and $0, respectively.

We also maintain a defined contribution plan (the “Stakeholder Plan”) for our U.K. based employees.  The Stakeholder Plan provides for discretionary matching contributions of between 4% and 7% of the employee’s salary.  For fiscal years 2014, 2013 and 2012, we made total contributions to the Stakeholder Plan of $70,000, $60,000 and $63,000, respectively.

As of June 30, 2014, we maintained defined benefit pension plans covering former employees in Germany.  The measurement date used to determine fiscal years’ 2014 and 2013 benefit information for the plans was June 30, 2014 and 2013, respectively.  Our German defined benefit plans have been closed to new employees since 1998 and no employees have been added to the plan since this time.

A reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets over the two-year period ended June 30, 2014, and a statement of the funded status at June 30, 2014 for these years for our pension plans is as follows:

Obligations and Funded Status

	June 30,
	2014			2013
	(Dollars in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	4,967		$	4,652
Service cost		-			3
Interest cost		174			189
Actuarial (gain) loss		460			136
Foreign currency exchange rate change		238			212
Benefits paid		(272	)		(225	)
Benefit obligation at end of year	$	5,567		$	4,967
Change in plan assets:
Fair value of plan assets at beginning of year	$	2,052		$	2,097
Actual return on plan assets		67			37
Employer contributions		24			32
Benefits paid		(255	)		(209	)
Foreign currency exchange rate change		96			95
Fair value of plan assets at end of year	$	1,984		$	2,052
Funded status at end of year	$	(3,583	)	$	(2,915	)

Amounts Recognized in the Consolidated Balance Sheets

		June 30,
		2014			2013
	(Dollars in thousands)
Pension liability - current liabilities		$	(17	)	$	(14	)
Pension liability - non-current liabilities			(3,566	)		(2,901	)
Total pension liability		$	(3,583	)	$	(2,915	)
Accumulated other comprehensive loss		$	1,246		$	773

Items not yet recognized as a component of net periodic pension cost (dollars in thousands):

	June 30,
	2014		2013
Net loss	$	1,246	$	773
	$	1,246	$	773

Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets

	June 30,
	2014		2013
	(Dollars in thousands)
Projected benefit obligation	$	5,567	$	4,967
Accumulated benefit obligation		5,567		4,967
Fair value of plan assets		1,984		2,052

The following tables provide the components of net periodic pension cost recognized in earnings for the fiscal years ended June 30, 2014, 2013 and 2012:

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

	Year ended June 30,
	2014			2013			2012
	(Dollars in thousands)
Net Periodic Benefit Cost
Service cost	$	-		$	3		$	13
Interest cost		174			189			221
Expected return on plan assets		(61	)		(73	)		(93	)
Recognized actuarial loss		19			8			-
Amortization of unrecognized net transition amount		-			-			(1	)
Net periodic benefit cost	$	132		$	127		$	140

We estimate that $44,000 of the net loss for the defined benefit pension plans will be amortized from accumulated other comprehensive income into net period benefit cost over the next fiscal year.

Assumptions

The following table sets forth the assumptions used to determine benefit obligations:

	June 30,
	2014			2013
Discount rate		2.65	%		3.43	%
Expected return on plan assets		3.50	%		3.00	%
Compensation increase rate		0.00	%		0.00	%

The following table sets forth the assumptions used to determine net periodic benefit cost:

	Year Ended June 30,
	2014			2013			2012
Discount rate		3.43	%		4.00	%		5.10	%
Expected return on plan assets		3.00	%		3.50	%		4.00	%
Compensation increase rate		0.00	%		0.00	%		1.00	%

On an annual basis, we adjust the discount rate used to determine the projected benefit obligation to approximate rates on high-quality, long-term obligations.

Plan Assets

The following table sets forth, by level within the fair value hierarchy, a summary of the defined benefit plan’s assets measured at fair value, as well as the percentage of total plan assets for each category at June 30, 2014:

									Percentage of
							Total		Plan Assets
	Level 1		Level 2		Level 3		Assets		2014
Asset Category:
Cash and cash equivalents	$	136	$	-	$	-	$	136		6.9	%
Equity securities		-		734		-		734		37.1	%
Debt securities		-		409		-		409		20.6	%
Cash surrender value insurance contracts		-		701		-		701		35.4	%
Other		4		-		-		4		0.1	%
Totals	$	140	$	1,844	$	-	$	1,984		100.0	%

The following table sets forth, by level within the fair value hierarchy, a summary of the defined benefit plan’s assets measured at fair value, as well as the percentage of total plan assets for each category at June 30, 2013:

									Percentage of
	Level 1		Level 2		Level 3		Total Assets		Plan Assets 2013
Asset Category:
Cash and cash equivalents	$	73	$	-	$	-	$	73		3.5	%
Equity securities		-		611		-		611		29.8	%
Debt securities				541		-		541		26.4	%
Cash surrender value insurance contracts		-		818		-		818		39.9	%
Other		9		-		-		9		0.4	%
Totals	$	82	$	1,970	$	-	$	2,052		100.0	%

Pension assets utilizing Level 1 inputs include fair values of equity investments and debt securities, and related dividends, which were determined by closing prices for those securities traded actively on national stock exchanges.   All cash equivalents are carried at cost, which approximates fair value.  Level 2 assets include fair values of equity investments and debt securities with limited trading activity and related dividends that were determined by closing prices for those securities traded on national stock exchanges and cash surrender life insurance contracts that are valued based on contractually stated settlement value.  In estimating the expected return on plan assets, we consider past performance and future expectations for the fund.  Plan assets are heavily weighted toward equity investments that yield consistent, dependable dividends.

Our investment strategy with respect to pension assets is to invest the assets in accordance with applicable laws and regulations.  The long-term primary objectives for our pension assets are to:  (1) provide for a reasonable amount of long-term growth of capital, with prudent exposure to risk and protect the assets from erosion of purchasing power; (2) provide investment results that meet or exceed the plans’ actuarially assumed long-term rate of return; and (3) match the duration of the liabilities and assets of the plans to reduce the potential risk of large employer contributions being necessary in the future.

Contributions

We expect to contribute $24,000 to our defined benefit pension plans in fiscal year 2015.

Estimated Future Benefit Payments

The benefit payments, which reflect expected future service, as appropriate, are expected to be paid (dollars in thousands) for each of the following years:

	Pension
	Benefits
2015	$	289
2016		316
2017		314
2018		318
2019		315
2020 - 2024		1,529