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EMPLOYEE BENEFIT AND RETIREMENT PLANS
 12 Months Ended
Jun. 30, 2021
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT AND RETIREMENT PLANS EMPLOYEE BENEFIT AND RETIREMENT PLANSThe Company has two defined benefit pension plans, one for U.S. employees and another for U.K. employees, together referred to as the "Plans Combined". The U.K. plan was closed to new entrants in fiscal 2009. The Company has a postretirement medical and life insurance benefit plan for U.S. employees with a total benefit in fiscal 2021, 2020 and 2019 of $0.5 million, $0.1 million and $0.2 million. The Company also has defined contribution plans with a total cost in fiscal 2021, 2020 and 2019 of $1.4 million, $1.6 million and $1.7 million, respectively. The total Plans Combined cost for fiscal 2021,
2020 and 2019 was a benefit of $0.1 million, and a cost of $16.9 million and $1.2 million, respectively. The Net Periodic Benefit Cost for the U.S. Retirement Plan decreased significantly during the year due to the marked-to-market accounting methodology.
On December 21, 2016, the Company amended the U.S. defined benefit pension plan to freeze benefit accruals effective December 31, 2016. Consequently, the plan is closed to new participants and current participants no longer earn additional benefits after December 31, 2016.
The Company amended its Postretirement Medical Plan effective December 31, 2013 whereby the Company terminated eligibility for employees ages 55-64. For retirees 65 and older, the Company’s contribution is fixed at $28.50 or $23.00 per month depending upon the plan the retiree has chosen.
Both the funded status and the Net Periodic Benefit Cost for the Non-qualified Excess Plan remained stable from the prior year. Although the plan experienced a liability increase due to discount rate decreases as well as demographic experience, gains and losses for this plan are smoothed over a longer time period – average lifetime – rather than being recognized immediately.
The funded status for the U.K. Plan improved during the year as the plan experienced a liability decrease due to increase in discount rate from 1.59% at June 30, 2020 to 1.86% at June 30, 2021. Similar to the Retirement Plan, the Net Periodic Benefit Cost for the U.K. Plan also decreased significantly during the year due to the marked-to-market accounting for this plan.
The Net Periodic Benefit Cost for the Post Retirement Benefit Plan decreased significantly from the prior year due to re-measurement following the elimination of Life Insurance coverage effective February 1, 2021 referred to below as the "Plan amendment".
The funded status of the Plans Combined went from underfunded amount of $60.3 million in fiscal 2020 to $37.4 million in fiscal 2021, an improvement of $22.9 million as the benefit obligation decreased by $11.5 million and the assets increased by $11.4 million. The Plans Combined had a $19.6 million return on assets, the Company contributions were $8.0 million and the impact of foreign currency exchange increased the combined assets by $4.2 million. The Plans Combined assets as well as the benefit obligations were both reduced by benefits paid of $9.0 million and plan settlements of $11.4 million. The Plans Combined obligation also increased $5.2 million from foreign currency exchange, $4.5 million in service cost and was also reduced by $0.9 million due to an actuarial gain. In FY2020 the actuarial loss was $17.3 million.
A plan settlement "Settlement" occurred during fiscal 2021, in the U.S. Retirement Plan, as a result of the annuity purchased, which decreased both liabilities and assets. The plan was also amended during fiscal 2021 to the Postretirement Benefit Plan to eliminate Life Insurance coverage.
Settlement
ASC 715-30-35 (subsections 79 to 83) describes the treatment of a pension settlement. A settlement is defined as:
a transaction that (a) is an irrevocable action, (b) relieves the employer (or the plan) of primary responsibility for a pension benefit obligation, and (c) eliminates significant risks related to the obligation and the assets used to effect the settlement.
The Company purchased an annuity contract on behalf of participants in which an insurance company unconditionally undertook a legal obligation to provide specified benefits to specific individuals and is considered a settlement for GAAP purposes. As such, special settlement accounting is triggered requiring accelerated recognition of the unrecognized gain recorded in Other Income on the Consolidated Statement of Operations and in the Postretirement benefit and pension obligation on the Consolidated Balance Sheets. The settlement expense is recorded in the period of the purchase. Liabilities and assets were remeasured as of June 30, 2021 and the change as a result of the remeasurement in the asset and liability values as included in the existing unrecognized gain/loss. A fraction of the determined gain/loss was recognized immediately in Other Income on the Consolidated Statement of Operations, and was based on the ratio of the amount settled divided by the total liability.
The table below illustrates the funded status and unrecognized amounts before the remeasurement, after the remeasurement, as well as the effect of the settlement. These amounts are as of the remeasurement date of June 30, 2021, in thousands.
Before remeasurementEffect of remeasurementAfter remeasurementEffect of settlementAfter settlement
Benefit obligation$133,748 $75 $133,823 $(11,411)$122,412 
Market value of assets$107,259 $— $107,259 $(11,411)$95,848 
Funded status$26,489 $75 $26,564 $— $26,564 
Unrecognized (gain) loss$1,606 $(75)$1,531 $(130)$1,401 
Prepaid / (Accrued)$28,095 $— $28,095 $(130)$27,965 
The total annuity purchase amount released from the plan assets was $11.4 million and a settlement credit of $0.1 million (based on 8.53% of liability settled) was included in the net periodic benefit cost for fiscal year ending June 30, 2021.
Plan amendment
With a plan amendment that results in a change in liability, liabilities are remeasured as of the effective date of the change and a new prior service cost/(credit) base was created equal to the amount of the change in liability. This prior service cost/(credit) was recognized in Other Comprehensive Income at the date of the amendment and amortized as a component of the net periodic benefit cost in future periods.
Effective February 1, 2021, the Company amended the Postretirement Benefit Plan to eliminate Life Insurance coverage for current and future retirees. This amendment resulted in a decrease in liability of $5.6 million and triggered a remeasurement of the net periodic benefit cost for fiscal 2021. This change is amortized over 5.96 years, which results in a credit of $0.9 million per year. However, only $0.4 million (5/12 of the annual amortization amount) is recognized in fiscal 2021 based on the effective date of the plan change. The total net periodic benefit cost for fiscal 2021 is based on 7/12 of the original expense, plus 5/12 of the remeasured expense (including the plan amendment). The table below summarizes the total net periodic benefit cost for the Post Retirement Benefit plan for fiscal 2021, in thousands:
7/1/20 to 1/31/212/1/21 to 6/30/21Total expense
(before amendment)(after amendment)for fiscal 2021
Service cost$50 $15 $65 
Interest cost$120 $21 $141 
Amortization of prior service (credit)$(313)$(614)$(927)
Amortization of net (gain)$97 $97 $194 
Total expense$(46)$(481)$(527)
Measurement dateJune 30, 2020January 31, 2021n/a
Discount rate2.73 %2.57 %n/a
In fiscal 2021 the Plans Combined had a Net Periodic Benefit gain of $0.1 million as compared to an expense in fiscal 2020 of $17.0 million. In fiscal 2020 the financial markets had an adverse impact on the Company's earnings as an increased demand for bonds and the associated decrease in interest rates significantly contributed to a $16.8 million non-cash pension expense due to higher liabilities. The pension liability is based upon the ten-year Corporate Bond Rate and is set on the last day of the fiscal year. This generally accepted accounting principle coupled with the historically low interest rates are driven by financial markets, economic policy and financial conditions. The discount rate to determine net cost for the US pension liability was lowered from 4.27% in June 2019 to 3.56% in June 2020 and 2.73% in June 2021.
Under both U.S and U.K. defined benefit plans, benefits are based on years of service and final average earnings. Plan assets consist primarily of investment grade debt obligations, marketable equity securities and shares of the Company’s common stock. The asset allocation of the Company’s domestic pension plan is diversified, consisting primarily of investments in equity and debt securities. The Company seeks a long-term investment return that is given reasonable prevailing capital market expectations. Target allocations are 40% to 70% in equities (including 10% to 20% in Company stock), and 30% to 60% in cash and debt securities.
In fiscal 2022, the Company will use an expected long-term rate of return assumption of 3.6% for the U.S. domestic pension plan, and 1.9% for the U.K. plan. In determining these assumptions, the Company considers the historical returns and expectations for future returns for each asset class as well as the target asset allocation of the pension portfolio as a whole. In fiscal 2021 and 2020, the Company used a discount rate assumption of 2.7% and 3.6%, respectively for the U.S. plan and 1.6%
and 2.4%, respectively for the U.K. plan. In determining these assumptions, the Company considers published third party data appropriate for the plans.
Other than the discount rate, pension valuation assumptions are generally long-term and not subject to short-term market fluctuations, although they may be adjusted as warranted by structural shifts in economic or demographic outlooks. Long-term assumptions are reviewed annually to ensure they do not produce results inconsistent with current market conditions. The discount rate is adjusted annually based on corporate investment grade (rated AA or better) bond yields, the maturities of which are correlated with the expected timing of future benefit payments, as of the measurement date.

Based upon the actuarial valuations performed on the Company’s defined benefit plans as of June 30, 2021, the contribution for fiscal 2022 for the U.S. plans would require a contribution of $5.6 million and the U.K. plan would require one of $1.0 million However, as a result of the American Rescue Plan Act of 2021, the minimum required company contribution for the U.S. Plan in fiscal 2022 was reduced from $5.6 million to $0.6 million. The Company feels that government regulation is only a small part of deciding the pension funding, and as a result, intends to contribute more than the federal requirement.
The table below sets forth the actual asset allocation for the assets within the Company’s plans.
20212020
Asset category:
Cash equivalents2 %4 %
Fixed income28 %27 %
Equities39 %40 %
Mutual and pooled funds31 %29 %
100 %100 %
The Company determines its investments strategies based upon the composition of the beneficiaries in its defined benefit plans and the relative time horizons that those beneficiaries are projected to receive payouts from the plans. The Company engages an independent investment firm to manage the U.S. pension assets.
Cash equivalents are held in money market funds.
The Company’s fixed income portfolio includes mutual funds that hold a combination of short-term, investment-grade fixed income securities and a diversified selection of investment-grade, fixed income securities, including corporate securities and U.S. government securities.
The Company invests in equity securities, which are diversified across a spectrum of value and growth in large, medium and small capitalization funds and companies, as appropriate to achieve the objective of a balanced portfolio, optimize the expected returns and minimize volatility in the various asset classes.
Other assets include pooled investment funds whose underlying assets consist primarily of property holdings as well as financial instruments designed to offset the long-term impact of inflation and interest rate fluctuations.
The Company has categorized its financial assets (including its pension plan assets), based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Financial assets are categorized based on the inputs to the valuation techniques as follows:
◦Level 1 – Financial assets whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market which the Company has the ability to access at the measurement date.
◦Level 2 – Financial assets whose value are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets.
◦Level 3 – Financial assets whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own view about the assumptions a market participant would use in pricing the asset.
The tables below show the portfolio by valuation category as of June 30, 2021 and June 30, 2020 (in thousands):
June 30, 2021
Asset CategoryLevel 1Level 2Level 3Total%
Cash Equivalents$2,457 $— $— $2,457 2 %
Fixed Income— 38,155 — 38,155 28 %
Equities51,095 1,887 — 52,982 39 %
Mutual & Pooled Funds1,703 39,895 — 41,598 31 %
Total$55,255 $79,937 $— $135,192 100 %
Included in equity securities at June 30, 2021 and 2020 are shares of the Company’s common stock having a fair value of $5.6 million and $2.2 million, respectively.
June 30, 2020
Asset CategoryLevel 1Level 2Level 3Total%
Cash Equivalents$5,165 $— $— $5,165 4 %
Fixed Income— 32,740 — 32,740 27 %
Equities48,947 888 — 49,835 40 %
Mutual & Pooled Funds— 30,687 — 30,687 29 %
Total$54,112 $64,315 $— $118,427 100 %
At June 30, 2020 in the U.K. Pension plan a fund in the amount of $5.4 million was excluded from above and valued under NAV practical expedient. The value of the combined plan assets at June 30, 2020 was $123,826.
U.S. and U.K. Plans Combined: 
The status of these defined benefit plans is as follows (in thousands): 
202120202019
Change in benefit obligation
Benefit obligation at beginning of year$184,190 $169,680 $159,213 
Interest cost4,476 5,417 6,013 
Plan Settlement(11,411)— — 
Exchange rate changes5,238 (1,013)(1,697)
Benefits paid(9,019)(7,203)(7,217)
Actuarial (gain) loss(857)17,309 13,368 
Benefit obligation at end of year$172,617 $184,190 $169,680 
Change in plan assets
Fair value of plan assets at beginning of year123,826 122,033 118,693 
Actual return on plan assets19,616 2,163 6,589 
Employer contributions7,999 7,687 5,413 
   Plan Settlement(11,411)— — 
Benefits paid(9,019)(7,203)(7,217)
Exchange rate changes4,181 (854)(1,445)
Fair value of plan assets at end of year135,192 123,826 122,033 
Funded status at end of year$(37,425)$(60,364)$(47,647)
Amounts recognized in balance sheet
Current liability$(1,556)$(373)$(324)
Non-current liability(35,869)(59,991)(47,323)
Net amount recognized in balance sheet$(37,425)$(60,364)$(47,647)
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Accumulated loss$(3,685)$(19,115)$(15,590)
Amounts not yet recognized as a component of net periodic benefit cost(3,685)(19,115)(15,590)
Accumulated net periodic benefit cost in excess of contributions(33,740)(41,249)(32,057)
Net amount recognized$(37,425)$(60,364)$(47,647)
Components of net periodic benefit cost
Interest cost$4,476 $5,417 $6,013 
Expected return on plan assets(4,457)(5,193)(5,129)
Settlement (gain) recognized(130)— — 
Recognized actuarial loss53 16,753 284 
Net periodic (benefit)cost$(58)$16,977 $1,168 
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Net loss$(57)$(38)$(38)
Information for pension plans with accumulated benefits in excess of plan assets
Projected benefit obligation$172,617 $184,190 $169,680 
Accumulated benefit obligation$172,617 $184,190 $169,680 
Fair value of assets$135,192 $123,826 $122,033 
U.S. Plan:
The status of the U.S. defined benefit plan is as follows (in thousands):
202120202019
Change in benefit obligation
Benefit obligation at beginning of year$138,131 $126,380 $116,277 
Interest cost3,689 4,417 4,854 
Plan Settlement(11,411)— — 
Benefits paid(5,880)(5,682)(5,565)
Actuarial loss104 13,016 10,814 
Benefit obligation at end of year$124,633 $138,131 $126,380 
Weighted average assumptions – benefit obligation
Discount rate2.69 %2.73 %3.56 %
Rate of compensation increasen/an/an/a
Change in plan assets
Fair value of plan assets at beginning of year$87,292 $85,150 $82,140 
Actual return on plan assets18,864 1,071 4,132 
Employer contributions6,983 6,753 4,443 
   Plan Settlement(11,411)— — 
Benefits paid(5,880)(5,682)(5,565)
Fair value of plan assets at end of year95,848 87,292 85,150 
Funded status at end of year$(28,785)$(50,839)$(41,230)
Amounts recognized in balance sheet
Current liability$(1,556)$(373)$(324)
Noncurrent liability(27,229)(50,466)(40,906)
Net amount recognized in balance sheet$(28,785)$(50,839)$(41,230)
Weighted average assumptions – net periodic benefit cost
Discount rate2.73 %3.56 %4.27 %
Rate of compensation increaseVariesVariesVaries
Return on plan assets4.25 %5.00 %5.00 %
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
 Income (loss)$464 $(14,507)$(13,196)
Amounts not yet recognized as a component of net periodic benefit cost464 (14,507)(13,196)
Accumulated contributions less than net periodic benefit cost(29,249)(36,332)(28,034)
Net amount recognized$(28,785)$(50,839)$(41,230)
Components of net periodic benefit cost
Interest cost$3,689 $4,417 $4,854 
Expected return on plan assets(3,712)(4,249)(4,067)
Settlement (gain) recognized(130)— — 
Recognized actuarial loss53 14,883 284 
Net periodic (benefit) cost$(100)$15,051 $1,071 
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Net loss(57)(53)(38)
Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation$124,633 $138,131 $126,380 
Accumulated benefit obligation$124,633 $138,131 $126,380 
Fair value of assets$95,848 $87,292 $85,150 
U.K. Plan:
The status of the U.K. defined benefit plan is as follows (in thousands):
202120202019
Change in benefit obligation
Benefit obligation at beginning of year$46,059 $43,300 $42,936 
Interest cost787 1,000 1,159 
Exchange rate changes5,238 (1,013)(1,697)
Benefits paid(3,139)(1,521)(1,652)
Actuarial (gain) loss(961)4,293 2,554 
Benefit obligation at end of year$47,984 $46,059 $43,300 
Weighted average assumptions - benefit obligation
Discount rate1.86 %1.59 %2.39 %
Rate of compensation increasen/an/an/a
Change in plan assets
Fair value of plan assets at beginning of year$36,534 $36,883 $36,553 
Actual return on plan assets752 1,092 2,457 
Employer contributions1,016 934 970 
Benefits paid(3,139)(1,521)(1,652)
Exchange rate changes4,181 (854)(1,445)
Fair value of plan assets at end of year39,344 36,534 36,883 
Funded status at end of year$(8,640)$(9,525)$(6,417)
Amounts recognized in balance sheet
Noncurrent liability(8,640)(9,525)(6,417)
Net amount recognized in balance sheet(8,640)(9,525)(6,417)
Weighted average assumptions – net periodic benefit cost
Discount rate1.59 %2.39 %2.80 %
Rate of compensation increasen/an/an/a
Return on plan assets1.88 %2.62 %2.98 %
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Accumulated loss$(4,149)$(4,608)$(2,394)
Amounts not yet recognized as a component of net periodic benefit cost(4,149)(4,608)(2,394)
Accumulated net periodic benefit cost in excess of contributions(4,491)(4,917)(4,023)
Net amount recognized$(8,640)$(9,525)$(6,417)
Components of net periodic benefit cost
Interest cost787 1,000 1,159 
Expected return on plan assets(745)(944)(1,062)
Amortization of net loss— 1,870 — 
Net periodic benefit cost$42 $1,926 $97 
Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation$47,984 $46,059 $43,300 
Accumulated benefit obligation$47,984 $46,059 $43,300 
Fair value of assets$39,344 $36,534 $36,883 
Postretirement Medical and Life Insurance Benefits:
The status of the U.S. postretirement medical and life insurance benefit plan is as follows (in thousands):
202120202019
Change in benefit obligation:
Benefit obligation at beginning of year$7,705 $6,930 $6,385 
Service cost65 73 72 
Interest cost141 240 265 
   Plan amendments(5,585)— — 
Benefits paid(206)(329)(346)
Actuarial (gain) loss(230)791 554 
Benefit obligation at end of year$1,890 $7,705 $6,930 
Weighted average assumptions: benefit obligations
Discount rate2.69 %2.73 %3.56 %
Rate of compensation increasen/a2.64 %2.64 %
Change in plan assets
Employer contributions206 329 346 
Benefits paid, net of employee contributions(206)(329)(346)
Fair value of plan assets at end of year— — — 
Amounts recognized in balance sheet
Current postretirement benefit obligation$(107)$(358)$(353)
Non-current postretirement benefit obligation(1,783)(7,347)(6,577)
Net amount recognized in balance sheet$(1,890)$(7,705)$(6,930)
Weighted average assumptions – net periodic benefit cost
Discount rate2.73 %3.56 %4.27 %
Rate of compensation increasen/a2.64 %2.64 %
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
Prior service credit$6,898 $2,240 $2,777 
Accumulated gain (loss)(1,736)(2,160)(1,452)
Amounts not yet recognized as a component of net periodic benefit cost5,162 80 1,325 
Net periodic benefit cost in excess of accumulated contributions(7,052)(7,785)(8,255)
Net amount recognized$(1,890)$(7,705)$(6,930)
Components of net periodic benefit cost
Service cost$65 $73 $72 
Interest cost141 240 265 
Amortization of prior service credit(927)(537)(537)
Amortization of accumulated loss194 83 30 
Net periodic benefit $(527)$(141)$(170)
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service credit$(1,474)$537 $537 
Net loss189 (166)(83)
$(1,285)$371 $454 
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percentage point change in assumed health care cost trend rates would have the following effects (in thousands):
1% Increase
202120202019
Effect on postretirement benefit obligation$1 $1 $1 
1% Decrease
202120202019
Effect on postretirement benefit obligation$(1)$(1)$(1)
Future pension and other benefit payments are as follows (in thousands):
Fiscal YearPensionOther
Benefits
2022$9,476 $107 
20237,963 105 
20248,206 104 
20258,192 104 
20268,337 105 
After50,247 528 
$92,421 $1,053