Note 11 - Employee Benefit and Retirement Plans

12 Months Ended

Jun. 30, 2012

Pension and Other Postretirement Benefits Disclosure [Text Block]

11. EMPLOYEE BENEFIT AND RETIREMENT PLANS

The Company has two defined benefit pension plans, one for U.S. employees and another for U.K. employees.   The UK plan was closed to new entrants in fiscal 2009.  The Company also has defined contribution plans.  The Company has a postretirement medical and life insurance benefit plan for U.S. employees.  In addition, certain U.S. employees participate in an Employee Stock Ownership Plan (ESOP).

The Company’s contribution toward medical benefits for qualified retirees between ages 55 and 64 is based on a sliding scale ranging from 15% to 75% of the current annual premium rates.  For retirees 65 and older, the Company’s contribution is fixed at $28.50 or $23 per month depending upon the plan the retiree has chosen.

The Company makes periodic contributions to the ESOP in the form of Company stock or in cash to be invested in Company stock. Employees are not required or permitted to make contributions to the ESOP. Ninety percent of the actuarially determined annuity value of their ESOP shares is used to offset benefits otherwise due under the domestic defined benefit pension plan.

The total cost of all such plans for fiscal 2012, 2011 and 2010, considering the combined projected benefits and funds of the ESOP as well as the other plans, was $18.0 million, $1.9 million and $11.5 million, respectively. Included in these amounts are the Company’s contributions to the defined contribution plans amounting to $0.2 million, $0.2 million and $0.1 million in fiscal 2012, 2011 and 2010, respectively.

Under both U.S and U.K. defined benefit plans, benefits are based on years of service and final average earnings. Plan assets, including those of the ESOP, 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 reasonable given 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.

The Company uses an expected long-term rate of return assumption of 6.0% for the U.S. domestic pension plan, and 6.4% 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 2012, the Company used a discount rate assumption of 3.9% for the U.S. plan and 4.4% 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 as of the measurement date.

Based upon the actuarial valuations performed on the Company’s defined benefit plans as of June 30, 2012, the U.S. plan will require a $1.5 million contribution in fiscal 2013 and the U.K. plan will require a $1.5 million contribution in fiscal 2013.

The Company’s overall investment strategy had been to achieve a long-term rate of return of 8.0%, with a wide diversification of asset types.  Based upon the Company’s current accounting policy, management began to adjust its portfolio and return in fiscal 2012 to realize a 60% fixed – 40% equity asset allocation and a 6% long-term rate return in fiscal 2013.  This policy change is intended to minimize the market volatility in the future.

The table below sets forth the actual asset allocation for the assets within the Company’s plans.

	2012		2011
Asset category:
Cash equivalent		0%		3%
Fixed income		12%		6%
Equities		27%		41%
Mutual and pooled funds (balanced funds)		60%		49%
Other		1%		1%
		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 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 as appropriate to achieve the objective of a balanced portfolio and optimize the expected returns and volatility in the various asset classes.

In accordance with ASC 820, 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:

o   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.

o   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.

o   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, 2012 and June 30, 2011 (in thousands).

June 30, 2012
Asset Category	Level 1		Level 2		Level 3		Total		%
Cash Equivalent	$	79	$	—	$	—	$	79		0%
Fixed Income		—		12,617		—		12,617		12%
Equities		25,212		3,379		—		28,591		27%
Mutual & Pooled Funds		34,627		30,462		—		65,089		60%
Other		—		992		—		992		1%
Total	$	59,918	$	47,450	$	—	$	107,368		100%

June 30, 2011
Asset Category	Level 1		Level 2		Level 3		Total		%
Cash Equivalent	$	2,950	$	—	$	—	$	2,950		3%
Fixed Income		—		6,619		—		6,619		6%
Equities		41,657		2,542		—		44,199		41%
Mutual & Pooled Funds		23,821		29,758		—		53,579		49%
Other		—		1,200		—		1,200		1%
Total	$	68,428	$	40,119	$	—	$	108,547		100%

Included in equity securities at June 30, 2012 and 2011 are shares of the Company’s common stock having a fair value of $10.4 million and $9.2 million, respectively.

U.S. and U.K. Plans Combined:

The status of these defined benefit plans, including the ESOP, is as follows (in thousands):

	2012			2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	119,892		$	117,974		$	96,167
Service cost		2,168			2,278			1,707
Interest cost		6,538			6,541			6,532
Participant contributions		249			202			231
Exchange rate changes		(852	)		2,683			(2,740	)
Benefits paid		(5,803	)		(5,307	)		(5,349	)
Actuarial (gain) loss		23,403			(4,480	)		21,426
Benefit obligation at end of year	$	145,595		$	119,891		$	117,974
Change in plan assets
Fair value of plan assets at beginning of year	$	108,547		$	98,867		$	90,864
Actual return on plan assets		3,770			12,271			14,628
Employer contributions		1,268			625			483
Participant contributions		249			202			231
Benefits paid		(5,803	)		(5,307	)		(5,349	)
Exchange rate changes		(663	)		1,889			(1,990	)
Fair value of plan assets at end of year	$	107,368		$	108,547		$	98,867

	2012			2011			2010
Funded status at end of year
Funded status	$	(38,227	)	$	(11,344	)	$	(19,107	)
Net amount recognized	$	(38,227	)	$	(11,344	)	$	(19,107	)

	2012			2011			2010
Amounts recognized in balance sheet
Current liability	$	(23	)	$	(23	)	$	(24	)
Noncurrent liability		(38,204	)		(11,321	)		(19,083	)
Net amount recognized in balance sheet	$	(38,227	)	$	(11,344	)	$	(19,107	)
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Prior service cost	$	(349	)	$	(585	)	$	(834	)
Accumulated loss		(13,248	)		(2,450	)		(11,668	)
Amounts not yet recognized as a component of net periodic benefit cost		(13,597	)		(3,035	)		(12,502	)
Accumulated net periodic benefit cost in excess of contributions	$	(24,630	)	$	(8,309	)	$	(6,605	)
Net amount recognized	$	(38,227	)	$	(11,344	)	$	(19,107	)
Components of net periodic benefit cost
Service cost	$	2,168		$	2,278		$	1,707
Interest cost		6,538			6,541			6,532
Expected return on plan assets		(6,473	)		(7,305	)		(6,672	)
Amortization of prior service cost		234			249			381
Recognized actuarial (gain) loss		15,298			(2	)		9,370
Net periodic benefit cost	$	17,765		$	1,761		$	11,318
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service cost	$	(234	)	$	(234	)	$	-
Information for pension plans with accumulated benefits in excess of plan assets
Projected benefit obligation	$	145,595			119,891			117,974
Accumulated benefit obligation		138,587			115,306			113,511
Fair value of assets		107,368			108,547			98,867

U.S. Plan:

The status of the U.S. defined benefit plan  is as follows (in thousands):

	2012			2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	83,491		$	81,678		$	68,414
Service cost		1,763			1,787			1,429
Interest cost		4,530			4,498			4,518
Benefits paid		(4,170	)		(3,821	)		(3,674	)
Actuarial (gain) loss		18,923			(651	)		10,991
Benefit obligation at end of year	$	104,537		$	83,491		$	81,678
Weighted average assumptions - benefit obligation
Discount rate		3.92	%		5.44	%		5.37	%
Rate of compensation increase		2.64	%		2.64	%		2.64	%
Change in plan assets
Fair value of plan assets at beginning of year	$	78,577		$	73,832		$	67,126
Actual return on plan assets		2,348			8,543			10,357
Employer contributions		23			23			23
Benefits paid		(4,170	)		(3,821	)		(3,674	)
Fair value of plan assets at end of year	$	76,778		$	78,577		$	73,832
Funded status at end of year
Funded status	$	(27,759	)	$	(4,914	)	$	(7,846	)
Net amount recognized	$	(27,759	)	$	(4,914	)	$	(7,846	)

	2012			2011			2010
Amounts recognized in balance sheet
Current liability	$	(23)		$	(23	)	$	(24	)
Noncurrent liability		(27,736)			(4,891	)		(7,822	)
Net amount recognized in balance sheet	$	(27,759)		$	(4,914	)	$	(7,846	)
Weighted average assumptions – net periodic benefit cost
Discount rate		5.44	%		5.37	%		6.50	%
Rate of compensation increase		2.64	%		2.64	%		2.64	%
Return on plan assets		6.00	%		8.00	%		8.00	%
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
Prior service cost	$	(349	)	$	(585	)	$	(834	)
Accumulated loss		(10,420	)		(4,572	)		(8,038	)
Amounts not yet recognized as a component of net periodic benefit cost		(10,770	)		(5,157	)		(8,872	)
Accumulated contributions in excess of (less than) net periodic benefit cost	$	(16,990	)	$	243		$	1,026
Net amount recognized	$	(27,759	)	$	(4,914	)	$	(7,846	)
Components of net periodic benefit cost
Service cost	$	1,763		$	1,787		$	1,429
Interest cost		4,530			4,498			4,518
Expected return on plan assets		(4,570	)		(5,724	)		(5,195	)
Amortization of prior service cost		234			249			273
Recognized actuarial (gain) or loss		15,298			(2	)		4,405
Net periodic benefit cost	$	17,255		$	808		$	5,430
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service cost	$	(234	)	$	(234	)	$	-
Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation	$	104,537			83,491			81,678
Accumulated benefit obligation		97,529			78,905			77,215
Fair value of assets		76,778			78,577			73,832

U.K. Plan:

The status of the U.K. defined benefit plan is as follows (in thousands):
	2012			2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	36,400		$	36,296		$	27,753
Service cost		405			491			278
Interest cost		2,008			2,043			2,014
Participant contributions		249			202			231
Exchange rate changes		(851	)		2,683			(2,740	)
Benefits paid		(1,633	)		(1,486	)		(1,675	)
Actuarial (gain) loss		4,480			(3,829	)		10,435
Benefit obligation at end of year	$	41,058		$	36,400		$	36,296
Weighted average assumptions - benefit obligation
Discount rate		4.40%			5.70%			5.40%
Rate of compensation increase		2.60%			3.30%			3.10%
Change in plan assets
Fair value of plan assets at beginning of year	$	29,971		$	25,035		$	23,738
Actual return on plan assets		1,422			3,728			4,271
Employer contributions		1,245			602			460
Participant contributions		249			202			231
Benefits paid		(1,633	)		(1,486	)		(1,675	)
Exchange rate changes		(664	)		1,889			(1,990	)
Fair value of plan assets at end of year	$	30,590		$	29,970		$	25,035

		2012			2011			2010
Funded status at end of year
Funded status	$	(10,468	)	$	(6,430	)	$	(11,261	)
Net amount recognized	$	(10,468	)	$	(6,430	)	$	(11,261	)

	2012			2011			2010
Amounts recognized in balance sheet
Current liability	$	-		$	-		$	-
Noncurrent liability		(10,468	)		(6,430	)		(11,261	)
Net amount recognized in balance sheet	$	(10,468	)	$	(6,430	)	$	(11,261	)
Weighted average assumptions – net periodic benefit cost
Discount rate		5.70%			5.40%			7.10%
Rate of compensation increase		3.30%			3.10%			3.00%
Return on plan assets		6.40%			6.00%			6.50%
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
Prior service credit (cost)	$	—		$	—		$	—
Accumulated gain (loss)		(2,828	)		2,122			(3,630	)
Amounts not yet recognized as a component of net periodic benefit cost		(2,828	)		2,122			(3,630	)
Accumulated net periodic benefit cost in excess of contributions	$	(7,640	)	$	(8,552	)	$	(7,631	)
Net amount recognized	$	(10,468	)	$	(6,430	)	$	(11,261	)
Components of net periodic benefit cost
Service cost	$	405		$	491		$	278
Interest cost		2,008			2,043			2,014
Expected return on plan assets		(1,903	)		(1,581	)		(1,477	)
Amortization of prior service cost		-			-			108
Recognized actuarial loss		-			-			4,965
Net periodic benefit cost	$	510		$	953		$	5,888
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year	$	-		$	-		$	-
Information for plan with accumulated benefits in excess of plan assets
Projected benefit obligation	$	41,058		$	36,400		$	36,296
Accumulated benefit obligation		41,058			36,400			36,296
Fair value of assets		30,590			29,970			25,035

Postretirement Medical and Life Insurance Benefits:		2012			2011			2010
Change in benefit obligation:
Benefit obligation at beginning of year	$	11,804		$	11,603		$	10,817
Service cost		386			353			287
Interest cost		611			591			646
Benefits paid		(552	)		(662	)		(977	)
Actuarial (gain) loss		1,981			(81	)		830
Benefit obligation at end of year	$	14,230		$	11,804		$	11,603
Weighted average assumptions: benefit obligations
Discount rate		3.92%			5.44%			5.37%
Rate of compensation increase		2.64%			2.64%			2.64%
Change in plan assets
Fair value of plan assets at beginning of year	$	-		$	-		$	-
Employer contributions		552			662			977
Benefits paid		(552	)		(662	)		(977	)
Fair value of plan assets at end of year	$	-		$	-		$	-
Amounts recognized in balance sheet
Current postretirement benefit obligation	$	(623	)	$	(657	)	$	(681	)
Non-current postretirement benefit obligation		(13,606	)		(11,147	)		(10,922	)
Net amount recognized in balance sheet	$	(14,230	)	$	(11,804	)	$	(11,603	)
Weighted average assumptions – net periodic benefit cost
Discount rate		5.44%			5.37%			6.50%
Rate of compensation increase		2.64%			2.64%			2.64%
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
Prior service credit	$	1,888		$	2,793		$	3,699
Accumulated loss		(3,400	)		(1,422	)		(1,511	)
Amounts not yet recognized as a component of net periodic benefit cost		(1,512	)		1,371			2,188
Net periodic benefit cost in excess of accumulated contributions	$	(12,718	)	$	(13,175	)	$	(13,791	)
Net amount recognized	$	(14,230	)	$	(11,804	)	$	(11,603	)
Components of net periodic benefit cost
Service cost	$	386		$	353		$	287
Interest cost		611			591			646
Amortization of prior service credit		(905	)		(905	)		(905	)
Amortization of accumulated loss		2			10			-
Net periodic benefit cost	$	94		$	49		$	28

Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
Prior service credit (cost)	$	905		$	905		$	905
Net gain (loss)		(158	)		(19	)		(28	)
	$	747		$	886		$	877
Healthcare cost trend rate assumed for next year		8.80	%		9.70	%		7.66	%
Rate to which the cost trend rate gradually declines		4.50	%		4.50	%		4.50	%
Year that the rate reaches the rate at which it is assumed to remain		2027			2027			2027

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
	2012		2011		2010
Effect on total of service and interest cost	$	111	$	104	$	105
Effect on postretirement benefit obligation		1,430		1,067		1,079

	1% Decrease
		2012			2011			2010
Effect on total of service and interest cost	$	(93	)	$	(87	)	$	(89	)
Effect on postretirement benefit obligation		(1,028	)		(915	)		(923	)

For fiscal 2013, the Company expects to make a contribution of $1.5 million to the qualified domestic pension plan, $23 thousand to the nonqualified domestic pension plan, $1.3 million to the U.K. pension plan, and $623 thousand to the postretirement medical and life insurance plan.

Future pension and other benefit payments are as follows (in thousands):

Fiscal Year	Pension		Other Benefits
2013	$	6,121	$	623
2014		6,308		623
2015		6,487		676
2016		6,635		702
2017		6,841		750
2018-2022		36,689		4,955