Pension and Other Post-retirement Benefit Plans

The Company sponsors defined benefit pension plans which include six in Europe, one in Singapore and two in Mexico. The Company funds the pension liabilities in accordance with laws and regulations applicable to those plans.

In July 2012, Film and Electrolytic paid out retirement benefits which represented more than 20% of a plan's pension obligation. As a result, the Company recognized a settlement gain of $1.7 million. In the second half of fiscal year 2013, the Company recognized a curtailment loss of $2.0 million as a result of headcount reductions within a sales office, this curtailment was allocated equally to each business group.

The Company has two post-retirement benefit plans: health care and life insurance benefits for certain retired United States employees who reached retirement age while working for the Company. The health care plan is contributory, with participants' contributions adjusted annually. The life insurance plan is non-contributory. A summary of the changes in benefit obligations and plan assets is as follows (amounts in thousands):



	Pension						Other Benefits
	2014			2013			2014			2013
Change in Benefit Obligation
Benefit obligation at beginning of the year	$	39,096		$	47,892		$	799		$	1,057
Service cost	1,308			1,583			—			—
Interest cost	1,734			1,903			23			27
Plan participants' contributions	—			73			555			503
Plan amendments	285			—			—			—
Actuarial (gain) loss	(377		)	4,108			94			(145		)
Foreign currency exchange rate change	2,009			(1,391		)	—			—
Gross benefits paid	(1,302		)	(1,300		)	(686		)	(643		)
Curtailments and settlements	(38		)	(13,772		)	—			—
Benefit obligation at end of year	$	42,715		$	39,096		$	785		$	799
Change in Plan Assets
Fair value of plan assets at beginning of year	$	8,806		$	17,156		$	—		$	—
Actual return on plan assets	260			1,097			—			—
Foreign currency exchange rate changes	874			(799		)	—			—
Employer contributions	1,346			2,490			131			140
Settlements	(38		)	(9,911		)	—			—
Plan participants' contributions	—			73			555			503
Gross benefits paid	(1,302		)	(1,300		)	(686		)	(643		)
Fair value of plan assets at end of year	$	9,946		$	8,806		$	—		$	—
Funded status at end of year
Fair value of plan assets	$	9,946		$	8,806		$	—		$	—
Benefit obligations	(42,715		)	(39,096		)	(785		)	(799		)
Amount recognized at end of year	$	(32,769	)	$	(30,290	)	$	(785	)	$	(799	)

The Company expects to contribute $1.6 million to the pension plans in fiscal year 2015, which includes direct contributions to be made for funded plans and benefit payments to be made for unfunded plans.

The Company does not prefund its post-retirement health care and life insurance benefit plans. As a result, the Company is responsible annually for the payment of benefits as incurred by the plans. The Company anticipates making payments of $88 thousand during fiscal year 2015. Amounts recognized in the Consolidated Balance Sheets consist of the following (amounts in thousands):



	Pension						Other Benefits
	2014			2013			2014			2013
Current liability	$	(615	)	$	(644	)	$	(88	)	$	(90	)
Noncurrent liability	(32,154		)	(29,646		)	(697		)	(709		)
Amount recognized, end of year	$	(32,769	)	$	(30,290	)	$	(785	)	$	(799	)

Amounts recognized in Accumulated other comprehensive income (loss) consist of the following (amounts in thousands):



	Pension				Other Benefits
	2014		2013		2014			2013
Net actuarial loss (gain)	$	9,269	$	9,742	$	(1,464	)	$	(1,818	)
Prior service cost	310		32		—			—
Accumulated other comprehensive income	$	9,579	$	9,774	$	(1,464	)	$	(1,818	)

The tax effect on the above balances was $2.2 million and $2.1 million as of March 31, 2014 and 2013, respectively.

Components of benefit costs (credit) consist of the following (amounts in thousands):



	Pension									Other Benefits
	2014			2013			2012			2014			2013			2012
Net service cost	$	1,308		$	1,583		$	1,310		$	—		$	—		$	—
Interest cost	1,734			1,903			2,111			23			27			44
Expected return on plan assets	(454		)	(656		)	(712		)	—			—			—
Amortization:
Actuarial (gain) loss	318			544			392			(259		)	(322		)	(323		)
Prior service cost	4			20			25			—			—			—
Recurring activity	2,910			3,394			3,126			(236		)	(295		)	(279		)
Curtailment expense	(32		)	266			—			—			—			—
Net periodic benefit cost (credit)	$	2,878		$	3,660		$	3,126		$	(236	)	$	(295	)	$	(279	)

The estimated amounts that will be amortized from accumulated other comprehensive income into net periodic benefit costs in fiscal year 2015 are actuarial losses of $88 thousand, and prior service costs of $18 thousand.

The asset allocation for the Company's defined benefit pension plans at March 31, 2014 and the target allocation for 2014, by asset category, are as follows:



Asset Category	Target Allocation (%)	Plan Assets at March 31, 2014 (%)
Insurance(1)	10	7
International equities	30	35
International bonds	50	57
Other	10	1
Total	100	100

_______________________________________________________________________________


(1)	Comprised of assets held by the defined benefit pension plan in Germany.

The Company's investment strategy for its defined benefit pension plans is to maximize long-term rate of return on plan assets within an acceptable level of risk in order to minimize the cost of providing pension benefits. The investment policy establishes a target allocation range for each asset class and the fund is managed within those ranges. The plans use a number of investment approaches including insurance products, equity and fixed income funds in which the underlying securities are marketable in order to achieve this target allocation. Certain plans invest solely in insurance products. The Company continuously monitors the performance of the overall pension asset portfolio, asset allocation policies, and the performance of individual pension asset managers and makes adjustments and changes, as required. The Company does not manage any assets internally, does not have any passive investments in index funds, and does not directly utilize futures, options, or other derivative instruments or hedging strategies with regard to the pension plans; however, the investment mandate of some pension asset managers allows the use of the foregoing as components of their portfolio management strategies.

The expected rate of return was determined by modeling the expected long-term rates of return for broad categories of investments held by the plan against a number of various potential economic scenarios.

Other changes in plan assets and benefit obligations recognized in Accumulated other comprehensive income (loss) are as follows (amounts in thousands):



	Pension									Other Benefits
	2014			2013			2012			2014		2013			2012
Current year actuarial (gain) loss	$	(190	)	$	3,669		$	2,845		$	95	$	(145	)	$	(206	)
Foreign currency exchange rate changes	—			(238		)	(218		)	259		322			323
Amortization of actuarial gain (loss)	(286		)	(4,582		)	(392		)	—		—			—
Current year prior service cost	285			—			—			—		—			—
Amortization of prior service cost	(4		)	(101		)	(25		)	—		—			—
Total recognized in other comprehensive income	$	(195	)	$	(1,252	)	$	2,210		$	354	$	177		$	117
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	2,683		$	2,408		$	5,336		$	118	$	(118	)	$	(162	)

Each of these changes has been factored into the following benefit payments schedule for the next ten fiscal years. The Company expects to have benefit payments in the future as follows (amounts in thousands):



	Expected benefit payments
	2015		2016		2017		2018		2019		2020 - 2024
Pension benefits	$	1,476	$	1,575	$	1,680	$	1,615	$	1,959	$	10,765
Other benefits	89		87		83		79		75		297
Total	$	1,565	$	1,662	$	1,763	$	1,694	$	2,034	$	11,062

The following weighted-average assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic cost for the pension and post-retirement plan (amounts in thousands except percentages):



	Pension				Other Benefits
	2014		2013		2014			2013
Projected benefit obligation:
Discount rate	4.5	%	4.5	%	3.4		%	2.8		%
Rate of compensation increase	3.4	%	3.5	%	—			—
Health care cost trend on covered charges	—		—		7.0% decreasing to ultimate trend of 5% in 2018			7.0% decreasing to ultimate trend of 5% in 2017
Net periodic benefit cost:
Discount rate	4.5	%	4.2	%	2.8		%	3.5		%
Rate of compensation increase	3.5	%	2.9	%	—			—
Expected return on plan assets	4.9	%	4.0	%	—			—
Health care cost trend on covered charges	—		—		7.0% decreasing to ultimate trend of 5% in 2017			7.5% decreasing to ultimate trend of 5% in 2017
Sensitivity of retiree welfare results
Effect of a one percentage point increase in assumed health care cost trend:
—On total service and interest costs components					$	—		$	—
—On post-retirement benefits obligation					15			11
Effect of a one percentage point decrease in assumed health care cost trend:
—On total service and interest costs components					—			—
—On post-retirement benefits obligation					(13		)	(10		)

The measurement date used to determine pension and post-retirement benefits is March 31.

The Company evaluated input from its third-party actuary to determine the appropriate discount rate. The determination of the discount rate is based on various factors such as the rate on bonds, term of the expected payouts, and long-term inflation factors.

The following table sets forth by level, within the fair value hierarchy as described in Note 1, the pension plan's assets, required to be carried at fair value on a recurring basis as of March 31, 2014 and March 31, 2013 (amounts in thousands):



	Fair Value March 31, 2014		Fair Value Measurement Using						Fair Value March 31, 2013		Fair Value Measurement Using
	Fair Value March 31, 2014		Level 1		Level 2		Level 3		Fair Value March 31, 2013		Level 1		Level 2		Level 3
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Equity securities:
International equities	3,512		3,512		—		—		2,884		2,884		—		—
Fixed income securities:
International bonds	5,636		5,636		—		—		5,098		5,098		—		—
Insurance contracts	706		—		—		706		636		—		—		636
Other	92		92		—		—		188		188		—		—
	$	9,946	$	9,240	$	—	$	706	$	8,806	$	8,170	$	—	$	636

The table below sets forth a summary of changes in the fair value of the defined benefit pension plan's Level 3 assets for the fiscal year ended March 31, 2014 (amounts in thousands):



Balance at March 31, 2013	$	636
Actual return on plan assets	29
Employer contributions	247
Settlements	—
Benefits paid	(255		)
Foreign currency exchange rate change	49
Balance at March 31, 2014	$	706

The Company also sponsors a deferred compensation plan for highly compensated employees. The plan is non-qualified and allows certain employees to contribute to the plan. Gains net of the Company matches related to the deferred compensation plan were $189 thousand in fiscal year 2014, $141 thousand in fiscal year 2013, and $26 thousand in fiscal year 2012. Total benefits accrued under this plan were $1.6 million and $1.9 million at March 31, 2014 and March 31, 2013, respectively.

In addition, the Company has a defined contribution retirement plan (the "Savings Plan") in which all United States employees who meet certain eligibility requirements may participate. A participant may direct the Company to contribute amounts, based on a percentage of the participant's compensation, to the Savings Plan through the execution of salary reduction agreements. In addition, the participants may elect to make after-tax contributions. The Company matches contributions to the Savings Plan up to 6% of the employee's salary. The Company made matching contributions of $2.2 million, $2.5 million and $2.2 million in fiscal years 2014, 2013, and 2012, respectively.