G. Employee Benefit Plans

We have a profit sharing plan pursuant to Section

401

(k) of the Code, whereby participants

may

contribute a percentage of compensation

not

in excess of the maximum allowed under the Code. All employees with

six

months or longer of continuous employment are eligible to participate in the plan. Under the

401

(k) plan, we match

100%

of the

first

and

50%

of the next

of a participant’s compensation contributed to the plan. The total contributions under the plan charged to income from operations totaled

$283,000

for fiscal

2019

and

$256,000

for fiscal

2018.

We have a “Cafeteria Plan” pursuant to Section

125

of the Code, whereby health care benefits are provided for active employees through insurance companies. Substantially all active full-time employees are eligible for these benefits. We recognize the cost of providing these benefits by expensing the annual premiums, which are based on benefits paid during the year. The premiums expensed to operating income for these benefits totaled

$1.3

million for the fiscal year ended

June

30,

2019

and

$1.1

million for the fiscal year ended

June 30, 2018.

We formerly sponsored a defined benefit pension plan, which provides retirement benefits to employees based generally on years of service and compensation during the last

five

years before retirement. Effective

June

21,

1999,

we adopted an amendment to freeze benefit accruals to the participants. Annually, we contribute an amount

not

less than the minimum funding requirements of the Employee Retirement Income Security Act of

1974

nor more than the maximum tax-deductible amount.

Disclosure of Funded Status

The following table sets forth the defined benefit pension plan’s funded status and amount recognized in our consolidated balance sheets at

June

(in thousands):

	201 9			201 8
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	1,498		$	1,804
Interest cost		57			57
Actuarial loss (gain)		173			(24	)
Benefits paid		(113	)		(339	)
Benefit obligation at end of year	$	1,615		$	1,498
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	1,453		$	1,247
Actual return on plan assets		69			83
Employer contributions		—			500
Benefits paid		(114	)		(339	)
Plan expenses		(39	)		(38	)
Fair value of plan assets at end of year	$	1,369		$	1,453
Reconciliation of Funded Status:
Difference between benefit obligation and fair value of plan assets	$	(246	)	$	(45	)
Unrecognized net actuarial loss in accumulated other comprehensive income		671			523
Net amount recognized	$	425		$	478

Projected benefit obligation	$	1,615		$	1,498
Accumulated benefit obligation	$	1,615		$	1,498
Fair value of plan assets	$	1,369		$	1,453

The weighted-average discount rate used for determining the projected benefit obligations for the defined benefit pension plan was

3.5%

for the year ended

June 30, 2019

and

4.1%

during the year ended

June

30,

2018.

Net Periodic Benefit Cost

The components included in the defined benefit pension plan’s net periodic benefit expense for the fiscal years ended

June

were as follows (in thousands):

	201 9			2018
Interest cost	$	57		$	57
Expected return on plan assets		(85	)		(89	)
Recognized actuarial loss		38			49
Settlement loss		43			119
Net periodic benefit expense	$	53		$	136

In the fiscal year ended

June 30, 2019,

we did

not

contribute to our defined benefit pension plan. In the fiscal year ended

June 30, 2018,

we contributed

$500,000

to our defined benefit pension plan. We do

not

expect to make any contributions in the fiscal year ended

June 30, 2020.

The following is a summary of changes in plan assets and benefit obligations recognized in other comprehensive income (in thousands):

	201 9			2018
Net gain (loss)	$	189		$	(18	)
Settlement loss		(50	)		(119	)
Amortization of net loss		(37	)		(49	)
Plan expenses		39			38
Total recognized in other comprehensive income (loss)	$	141		$	(148	)
Total recognized in net periodic benefit cost and other comprehensive income	$	194		$	(12	)

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

$21,000.

We do

not

have any transition obligations or prior service costs recorded in accumulated other comprehensive income.

The following benefit payments are expected to be paid (in thousands):

2020	$	67
2021		79
2022		78
2023		84
2024		83
2025-2029		551
Total benefit payments expected to be paid	$	942

The weighted-average rates used for the years ended

June

in determining the defined benefit pension plan’s net pension costs, were as follows:

	201 9			2018
Discount rate		3.51	%		4.14	%
Expected long-term rate of return		6.50	%		6.80	%
Compensation increase rate		N/A			N/A

Our expected rate of return is determined based on a methodology that considers historical returns of multiple classes analyzed to develop a risk free real rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk free real rate of return, and the associated risk premium. A weighted average rate was developed based on those overall rates and the target asset allocation of the plan.

Our defined benefit pension plan’s weighted average asset allocation at

June

and weighted average target allocation were as follows:

	2019			2018			Target Allocation
Equity securities		52	%		51	%		49	%
Debt securities		38	%		47	%		46	%
Commodities		2	%		0	%		2	%
Cash and money market funds		8	%		2	%		3	%
		100	%		100	%		100	%

The underlying basis of the investment strategy of our defined benefit pension plan is to ensure that pension funds are available to meet the plan’s benefit obligations when due. Our investment strategy is a long-term risk controlled approach using diversified investment options with relatively minimal exposure to volatile investment options like derivatives.

The fair values by asset category of our defined benefit pension plan at

June

30,

2019

were as follows (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and money market funds	$	105	$	105	$	—	$	—
Commodities and other	$	25	$	25	$	—	$	—
Equity securities (1)	$	712	$	712	$	—	$	—
Debt securities (2)	$	527	$	527	$	—	$	—
Total	$	1,369	$	1,369	$	—	$	—

(

)

This category is comprised of publicly traded funds, of which

34%

are large-cap funds,

27%

are mid-cap and small-cap,

13%

are developed market funds,

15%

are emerging markets equity funds, and

11%

are specialty funds.

(

)

This category is comprised of publicly traded funds, of which

16%

are REITs,

49%

are high-yield fixed income funds,

are U.S. fixed income funds,

are developed market fixed income funds, and

23%

are international/emerging markets funds.