Note 16 – Retirement Benefits

Plan Descriptions

Retirement savings plan

We provide a Retirement Savings Plan (the “Savings Plan”) for certain employees in the United States. Under the Savings Plan, and subject to certain limitations: (i) employees may contribute up to 50 percent of their pretax compensation; (ii) each business unit will make a safe harbor non-elective contribution in an amount equal to three percent of a participant’s pre-tax compensation; and (iii) each business unit may also make a matching contribution of 50 percent of an employee’s tax-deferred compensation, up to the first six percent of a participant’s pre-tax compensation. Prior to its elimination on December 28, 2010, and subject to approval from our Board of Directors, a profit sharing contribution could also have been made. Matching and profit sharing contributions vest at a rate of 25 percent for each year of service with the employer, beginning with the second year of service.

Effective January 1, 2009, we suspended the matching and safe harbor non-elective contributions for these plans. Effective January 1, 2010, the employer matching contribution and the safe harbor non-elective contribution were reinstated. Management eliminated the profit sharing contribution as of December 28, 2010. No amount was accrued for the profit sharing contribution for each of the fiscal years ended June 30, 2013, 2012 and 2011. Expenses related to the Savings Plan for the fiscal years ended June 30, 2013, 2012 and 2011, were $8.1 million, $8.0 million and $7.3 million, respectively.

Pension benefits

We provide defined pension benefits to certain eligible employees. The measurement date used for determining pension benefits is the last day of our fiscal year, June 30^th. We have certain business units in Europe and Asia that maintain defined benefit pension plans for many of our current and former employees. The coverage provided and the extent to which the retirees’ share in the cost of the program vary by business unit. Generally, plan benefits are based on age, years of service and average compensation during the final years of service. In the United States, we have a SERP that provides retirement, death and termination benefits, as defined in the SERP, to certain key executives designated by our Board of Directors. The majority of our defined benefit plans do not have contractual or statutory provisions which specify minimum funding requirements. We are in compliance with all existing contractual obligations and statutory provisions.

During fiscal year 2014, we expect to contribute amounts to the defined benefit pension plans necessary to cover required disbursements. The benefits that we expect to pay in each fiscal year from 2014 to 2018 are $9.0 million, $8.9 million, $9.3 million, $9.6 million and $9.7 million, respectively. The aggregate benefits we expect to pay in the five fiscal years from 2019 to 2023 are $46.1 million.

Plan Assets

For all but one of our Company’s plans, contributions are made from our current operating funds as required in the year of payout. For one foreign plan, we made annual contributions into a fund managed by a trustee who invests such funds, administers the plan and makes payouts to eligible employees as required.

Our primary objective in investing plan assets for this foreign plan is to achieve returns sufficient to meet future benefit obligations with minimal risk and to time the maturities of such investments to meet annual payout needs. Given this, fund assets are invested in a unitized publically traded fund which invests 100 percent of such investments in government bonds. For purposes of fair value, this investment has been determined to meet the characteristics of a Level 1 investment as quoted prices in an active market exist for these assets. As of June 30, 2013, 100 percent of these assets are invested in this unitized fund. Refer to Note 11 – Fair Value Measurements for more information.

Summary Plan Results

The following is a reconciliation of the benefit obligations, plan assets and funded status of the plans as well as the amounts recognized in our Consolidated Balance Sheets as of and for the fiscal years ended June 30, 2013 and 2012:


	Year Ended June 30,
	2013			2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	183,249		$	156,285
Benefit obligation of plans not previously reported⁽¹⁾		0			3,987
Service cost		2,169			1,635
Interest cost		7,085			8,106
Actuarial loss		2,530			31,484
Effects of settlements and curtailments		(3,805	)		(921	)
Plan amendments		0			216
Benefits paid		(9,125	)		(7,817	)
Foreign currency translation		1,269			(9,726	)

Benefit obligation at end of year	$	183,372		$	183,249

Change in plan assets:
Fair value of assets at beginning of year	$	7,011		$	5,258
Actual return on plan assets		(170	)		1,571
Employer contributions		12,900			9,049
Benefits paid		(9,125	)		(7,817	)
Settlement		(3,593	)		(921	)
Foreign currency translation		(222	)		(129	)

Fair value of assets at end of year	$	6,801		$	7,011

Reconciliation of funded status:
Funded status	$	(176,571	)	$	(176,238	)
Unrecognized prior service cost		6,463			8,301
Unrecognized net loss		48,279			49,561

Accrued pension cost	$	(121,829	)	$	(118,376	)

Non-current assets	$	0		$	704
Accrued liabilities		(8,884	)		(8,843	)
Other non-current liabilities		(167,687	)		(168,099	)
AOCI		54,742			57,862

Accrued pension cost	$	(121,829	)	$	(118,376	)

⁽¹⁾	Certain foreign defined benefit plans were not disclosed in prior years based on the immateriality of amounts involved in these plans. The above disclosures for fiscal year 2012 include amounts recorded for these plans as adjustments to the balances in the current year.

Amounts recognized in AOCI for the fiscal years ended June 30, 2013 and 2012 are presented below:


	Year Ended June 30,
	2013			2012
Amounts recorded in AOCI:
Prior service cost	$	6,463		$	8,301
Net actuarial loss		48,279			49,561

Total recognized in AOCI, before taxes		54,742			57,862
Income tax benefit		(18,023	)		(19,415	)

Total recognized in AOCI, net of income taxes	$	36,719		$	38,447

The estimated amount that will be amortized from AOCI into net periodic benefit cost in fiscal year 2014 is as follows:


Amounts expected to be recognized in net periodic benefit cost
Recognized net actuarial loss	$	2,998
Amortization of prior service cost		1,000

Total	$	3,998

A comparison of plans’ assets with plans’ projected benefit and accumulated benefit obligations as of June 30, 2013 and 2012 is presented below:


	Obligations Exceed Plan Assets Year Ended June 30,				Plan Assets Exceed Obligations Year Ended June 30,				Total All Plans Year Ended June 30,
	2013		2012		2013		2012		2013		2012
Plans where:
Projected benefit obligation	$	183,372	$	176,942	$	0	$	6,307	$	183,372	$	183,249
Accumulated benefit obligation		172,124		165,283		0		6,307		172,124		171,590
Fair value of plan assets		6,801		0		0		7,011		6,801		7,011

The components of net periodic benefit costs for the fiscal years ended June 30, 2013, 2012 and 2011 are presented below:


	Year Ended June 30,
	2013			2012			2011
Components of net periodic benefit cost:
Service cost	$	2,169		$	1,635		$	3,292
Interest cost		7,085			8,106			7,702
Expected return on plan assets		(284	)		(238	)		(221	)
Amortization of prior service cost		1,155			1,418			1,502
Amortization of net loss		3,873			1,793			1,899
Effect of settlements and curtailments		797			83			0

Net periodic benefit cost	$	14,795		$	12,797		$	14,174

Plan Assumptions

The assumptions used to determine our benefit obligations and net periodic pension and other postretirement benefit costs are presented below:

Year Ended June 30,

2013

2012

2011

Assumptions:

Weighted average rates used to determine benefit obligations at June 30:

Range of discount rates for pension plans

1.4% – 4.4%

0.6% – 5.0%

4.7% – 5.9%

Range of rates of compensation increase for pension plans

0.0% – 4.0%

2.5% – 4.0%

Weighted average rates used to determine net periodic benefit cost at June 30:

Range of discount rates for pension plans

0.6% – 5.0%

4.7% – 5.9%

4.1% – 5.6%

Range of rates of compensation increase for pension plans

0.0% – 4.0%

2.5% – 4.0%

We use a globally consistent method of setting the discount rates where yield curves are developed from yields on actual Aa-rated corporate bonds across the full maturity spectrum, referring to ratings provided by Moody’s, Standard & Poor’s, Fitch, and Dominion Bond Rating Service, supplemented with additional yield information where needed. We discount the expected future benefit payments of each plan using the appropriate yield curve based on the currency of payment of benefits, to develop a single-point discount rate matching each plan’s payout structure.