Note 17—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. Matching contributions vest at a rate of 25 percent for each year of service with the employer, beginning with the second year of service. Expenses related to the Savings Plan for the fiscal years ended June 30, 2014, 2013 and 2012, were $9.3 million, $8.7 million and $7.8 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, Asia and Latin America 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.

The SERP is an unfunded plan for tax purposes and under the Employee Retirement Income Security Act of 1974 (“ERISA”) all obligations arising under the SERP are payable from our general assets. To assist in the funding of the benefits under the SERP, we maintain assets in an irrevocable trust whereby the use of these assets is restricted to funding our future benefit obligations under the SERP. These assets are not plan assets of the SERP, therefore, in the event of bankruptcy, the assets become unrestricted and the SERP would become a general creditor of our Company. The assets and liabilities, and earnings and expenses, of the irrevocable trust are consolidated in our consolidated financial statements. As of June 30, 2014 and 2013, there were $97.4 million and $54.5 million, respectively, of total assets included in the irrevocable trust of which $58.1 million and $16.3 million, respectively, consist of cash and $39.3 million and $38.2 million, respectively, consist of the cash surrender value of life insurance policies.

During fiscal year 2015, 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 2015 to 2019 are $9.9 million, $9.7 million, $10.1 million, $10.3 million and $9.4 million, respectively. The aggregate benefits we expect to pay in the five fiscal years from 2020 to 2024 are $54.4 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 publicly 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, 2014, 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, 2014 and 2013:


	Year Ended June 30,
	2014			2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	183,372		$	183,249
Benefit obligation of plans not previously reported⁽¹⁾		5,075			0
Service cost		2,507			2,169
Interest cost		7,201			7,085
Actuarial loss		11,066			2,530
Effects of settlements and curtailments		(2,801	)		(3,805	)
Plan amendments		(613	)		0
Benefits paid		(8,414	)		(9,125	)
Foreign currency translation		5,500			1,269

Benefit obligation at end of year	$	202,893		$	183,372

Change in plan assets:
Fair value of assets at beginning of year	$	6,801		$	7,011
Actual return on plan assets		114			(170	)
Employer contributions		10,018			12,900
Benefits paid		(8,414	)		(9,125	)
Settlement		(2,676	)		(3,593	)
Foreign currency translation		798			(222	)

Fair value of assets at end of year	$	6,641		$	6,801

Reconciliation of funded status:
Funded status	$	(196,252	)	$	(176,571	)
Unrecognized prior service cost		4,978			6,463
Unrecognized net loss		57,430			48,279

Accrued pension cost	$	(133,844	)	$	(121,829	)

Non-current assets	$	0		$	0
Accrued liabilities		(9,900	)		(8,884	)
Other non-current liabilities		(186,352	)		(167,687	)
AOCI		62,408			54,742

Accrued pension cost	$	(133,844	)	$	(121,829	)

⁽¹⁾	Certain foreign defined benefit plans were not disclosed in prior years based on the immateriality of amounts involved in these plans.

Amounts recognized in AOCI for the fiscal years ended June 30, 2014 and 2013 are presented below:


	Year Ended June 30,
	2014			2013
Amounts recorded in AOCI:
Prior service cost	$	4,978		$	6,463
Net actuarial loss		57,430			48,279

Total recognized in AOCI, before taxes		62,408			54,742
Income tax benefit		(19,872	)		(18,023	)

Total recognized in AOCI, net of income taxes	$	42,536		$	36,719

The estimated amount that will be amortized from AOCI into net periodic benefit cost in fiscal year 2015 is as follows:


Amounts expected to be recognized in net periodic benefit cost
Recognized net actuarial loss	$	3,842
Amortization of prior service cost		973

Total	$	4,815

A comparison of plans’ assets with plans’ projected benefit and accumulated benefit obligations as of June 30, 2014 and 2013 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,
	2014		2013		2014		2013		2014		2013
Plans where:
Projected benefit obligation	$	202,893	$	183,372	$	0	$	0	$	202,893	$	183,372
Accumulated benefit obligation		190,100		172,124		0		0		190,100		172,124
Fair value of plan assets		6,641		6,801		0		0		6,641		6,801

The components of net periodic benefit costs for the fiscal years ended June 30, 2014, 2013 and 2012 are presented below:


	Year Ended June 30,
	2014			2013			2012
Components of net periodic benefit cost:
Service cost	$	2,507		$	2,169		$	1,635
Interest cost		7,201			7,085			8,106
Expected return on plan assets		(259	)		(284	)		(238	)
Amortization of prior service cost		1,001			1,155			1,418
Amortization of net loss		3,038			3,873			1,793
Effect of settlements and curtailments		1,119			797			83

Net periodic benefit cost	$	14,607		$	14,795		$	12,797

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,
	2014		2013		2012
Assumptions:
Weighted average rates used to determine benefit obligations at June 30:
Range of discount rates for pension plans		1.4%—8.8%		1.4%—4.4%		0.6%—5.0%
Range of rates of compensation increase for pension plans		0.0%—10.0%		0.0%—4.0%		0.0%—4.0%
Weighted average rates used to determine net periodic benefit cost 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		2.0%—4.0%		0.0%—4.0%		0.0%—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.