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Note 11 - Employee Benefit and Retirement Plans
 12 Months Ended
Jun. 30, 2015
Notes to Financial Statements  
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 has a postretirement medical and life insurance benefit plan for U.S. employees. The Company also has defined contribution plans.  
 
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.
 
The total cost of all such plans for fiscal 2015, 2014 and 2013 $4.6 million, $5.0 million and $4.4 million, respectively. Included in these amounts are the Company’s contributions to the defined contribution plans amounting to $0.8 million, $1.2 million and $1.0 million in fiscal 2015, 2014 and 2013, respectively.
  
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 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.
 
In fiscal 2016 the Company will use an expected long-term rate of return assumption of 5.5% for the U.S. domestic pension plan, and 4.8% 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 2015 and 2014, the Company used a discount rate assumption of 4.49% and 4.29% for the U.S. plan and 3.90% and 4.30% for the U.K. plan, respectively. 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, 2015, the U.S. plan will require a $3.3 million contribution in fiscal 2016 and the U.K. plan will require a $1.1 million contribution in fiscal 2016.
 
The table below sets forth the actual asset allocation for the assets within the Company’s plans.
 
 
 
2015
 
 
2014
 
Asset category:
                
Cash equivalents
     1
%
     1
%
Fixed income
     17
%
     14
%
Equities
     25
%
     24
%
Mutual and pooled funds
    57
%
     61
%
      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 as appropriate to achieve the objective of a balanced portfolio and optimize the expected returns and 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.
 
In accordance with “ASC 820 Fair Value Measurement”, 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 date.
 
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, 2015 and June 30, 2014 (in thousands).
 
June 30,
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Category
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
%
 
Cash Equivalent
   $ 1,064                     $ 1,064       1
%
Fixed Income
             21,058               21,058       17
%
Equities
     27,960       3,210               31,170       25
%
Mutual & Pooled Funds
     31,873       33,538       4,084       69,495       57
%
Total
   $ 60,897     $ 57,806     $ 4,084     $ 122,787       100
%
 
June 30,
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Category
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
%
 
Cash Equivalent
   $ 1,105                     $ 1,105       1
%
Fixed Income
             16,791               16,791       14
%
Equities
     26,210       3,428               29,638       24
%
Mutual & Pooled Funds
     37,563       33,932       3,895       75,390       61
%
Total
   $ 64,878     $ 54,151     $ 3,895     $ 122,924       100
%
 
Included in equity securities at June 30, 2015 and 2014 are shares of the Company’s common stock having a fair value of $12.5 million and $13.2 million, respectively.
 
A reconciliation of the beginning and ending balances of Level 3 assets is as follows (in thousands):
 
 
 
Fair Value Measurement Using
Significant Unobservable Inputs
(Level 3)
 
 
 
2015
 
 
2014
 
                 
Beginning balance
   $ 3,895     $ 3,008  
Actual returns on assets
     507       490  
Translation gain (loss)
     (318
)
     397  
                 
Ending balance
   $ 4,084     $ 3,895  
 
The Level 3 assets consist of units of a pooled investment fund which invests in a mix of properties selected from across retail, office, industrial and other sectors predominantly located in the U.K. In addition to direct investments, the fund may also invest indirectly in property through investment vehicles such as quoted and unquoted property companies or collective investment trusts. Redemptions from the fund are not readily available given the illiquid nature of its assets.
 
U.S. and U.K. Plans Combined:
 
The status of these defined benefit plans is as follows (in thousands):
 
 
 
2015
 
 
2014
 
 
2013
 
Change in benefit obligation
                        
Benefit obligation at beginning of year
   $ 161,062     $ 141,316     $ 145,595  
Service cost
     2,663       2,709       3,017  
Interest cost
     6,818       6,922       6,057  
Participant contributions
     0       183       242  
Exchange rate changes
     (4,167
)
     5,359       (1,344
)
Benefits paid
     (6,524
)
     (5,956
)
     (5,918
)
Actuarial (gain) loss
     6,337       10,529       (6,333
)
Benefit obligation at end of year
     166,189       161,062       141,316  
                         
Change in plan assets
                        
Fair value of plan assets at beginning of year
     122,924       109,326       107,368  
Actual return on plan assets
     3,466       14,105       6,878  
Employer contributions
     6,049       1,171       1,795  
Participant contributions
     0       183       242  
Benefits paid
     (6,524
)
     (5,956
)
     (5,918
)
Exchange rate changes
     (3,128
)
     4,095       (1,039
)
Fair value of plan assets at end of year
     122,787       122,924       109,326  
                         
Funded status at end of year   $ (43,402 )   $ (38,138 )   $ (31,990 )
Amounts recognized in balance sheet
                        
Current liability
   $ (37
)
   $ (37
)
   $ (33
)
Noncurrent liability
     (43,365
)
     (38,101
)
     (31,957
)
Net amount recognized in balance sheet
   $ (43,402
)
   $ (38,138
)
   $ (31,990
)
                         
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
                        
Prior service cost
   $ 0     $ 0     $ (116
)
Accumulated loss
     (16,795
)
     (8,686
)
     (5,919
)
Amounts not yet recognized as a component of net periodic benefit cost
     (16,795
)
     (8,686
)
     (6,035
)
Accumulated net periodic benefit cost in excess of contributions
     (26,607
)
     (29,452
)
     (25,955
)
Net amount recognized
   $ (43,402
)
   $ (38,138
)
   $ (31,990
)
                         
Components of net periodic benefit cost
                        
Service cost
   $ 2,663     $ 2,709     $ 3,017  
Interest cost
     6,818       6,922       6,057  
Expected return on plan assets
     (6,966
)
     (6,332
)
     (5,961
)
Amortization of prior service cost
     0       116       234  
Recognized actuarial loss
     1,309       398       0  
Net periodic benefit cost
   $ 3,824     $ 3,813     $ 3,347  
                         
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
                        
Prior service cost
   $ 0     $ (30
)
   $ (127
)
Net loss
     (53
)
     0       0  
                         
Information for pension plans with accumulated benefits in excess of plan assets
                        
Projected benefit obligation
   $ 166,189     $ 161,062     $ 141,316  
Accumulated benefit obligation
     159,174       154,163       134,594  
Fair value of assets
     122,787       122,924       109,326  
 
U.S. Plan:
 
The status of the U.S. defined benefit plan is as follows (in thousands):
 
 
 
2015
 
 
2014
 
 
2013
 
Change in benefit obligation
                        
Benefit obligation at beginning of year
   $ 110,054     $ 99,788     $ 104,537  
Service cost
     2,663       2,326       2,562  
Interest cost
     4,839       4,868       4,289  
Benefits paid
     (4,372
)
     (4,263
)
     (4,101
)
Actuarial (gain) loss
     3,214       7,335       (7,499
)
Benefit obligation at end of year
     116,398       110,054       99,788  
                         
Weighted average assumptions – benefit obligation
                        
Discount rate
     4.49
%
     4.29
%
     4.96
%
Rate of compensation increase
     2.64
%
     2.64
%
     2.64
%
                         
Change in plan assets
                        
Fair value of plan assets at beginning of year
   $ 84,629     $ 77,208     $ 76,778  
Actual return on plan assets
     (274
)
     11,661       3,958  
Employer contributions
     4,870       23       573  
Benefits paid
     (4,372
)
     (4,263
)
     (4,101
)
Fair value of plan assets at end of year
     84,853       84,629       77,208  
Funded status at end of year
   $ (31,545
)
   $ (25,425
)
   $ (22,580
)
                         
Amounts recognized in balance sheet
                        
Current liability
   $ (37
)
   $ (37
)
   $ (33
)
Noncurrent liability
     (31,508
)
     (25,388
)
     (22,547
)
Net amount recognized in balance sheet
   $ (31,545
)
   $ (25,425
)
   $ (22,580
)
                         
Weighted average assumptions – net periodic benefit cost
                        
Discount rate
     4.29
%
     4.96
%
     3.92
%
Rate of compensation increase
     2.64
%
     2.64
%
     2.64
%
Return on plan assets
     6.00
%
     6.00
%
     6.00
%
                         
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss
                        
Prior service cost
   $ 0     $ 0     $ (116
)
Accumulated loss
     (11,817
)
     (3,585
)
     (3,438
)
Amounts not yet recognized as a component of net periodic benefit cost
     (11,817
)
     (3,585
)
     (3,554
)
Accumulated contributions less than net periodic benefit cost
     (19,728
)
     (21,840
)
     (19,026
)
Net amount recognized
   $ (31,545
)
   $ (25,425
)
   $ (22,580
)
                         
Components of net periodic benefit cost
                        
Service cost
   $ 2,663     $ 2,326     $ 2,562  
Interest cost
     4,839       4,868       4,289  
Expected return on plan assets
     (5,063
)
     (4,484
)
     (4,474
)
Amortization of prior service cost
     0       116       234  
Recognized actuarial loss
     319       12       -  
Net periodic benefit cost
   $ 2,758     $ 2,838     $ 2,611  
                         
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
                        
Prior service cost
   $ 0     $ (30
)
   $ (127
)
Net loss
     (53
)
     0       0  
                         
Information for plan with accumulated benefits in excess of plan assets
                        
Projected benefit obligation
   $ 116,398     $ 110,054     $ 99,788  
Accumulated benefit obligation
     109,383       103,155       93,066  
Fair value of assets
     84,853       84,629       77,208  
 
 
U.K. Plan:
 
The status of the U.K. defined benefit plan is as follows (in thousands):
 
 
 
2015
 
 
2014
 
 
2013
 
Change in benefit obligation
                        
Benefit obligation at beginning of year
   $ 51,008     $ 41,528     $ 41,058  
Service cost
     0       383       455  
Interest cost
     1,979       2,054       1,768  
Participant contributions
     0       183       242  
Exchange rate changes
     (4,167
)
     5,359       (1,344
)
Benefits paid
     (2,152
)
     (1,693
)
     (1,817
)
Actuarial loss
     3,123       3,194       1,166  
Benefit obligation at end of year
   $ 49,791     $ 51,008     $ 41,528  
                         
Weighted average assumptions - benefit obligation
                        
Discount rate
     3.90
%
     4.30
%
     4.70
%
Rate of compensation increase
  
n/a
    
n/a
       3.10
%
                         
Change in plan assets
                        
Fair value of plan assets at beginning of year
   $ 38,295     $ 32,118     $ 30,590  
Actual return on plan assets
     3,740       2,444       2,920  
Employer contributions
     1,179       1,148       1,222  
Participant contributions
     0       183       242  
Benefits paid
     (2,152
)
     (1,693
)
     (1,817
)
Exchange rate changes
     (3,128
)
     4,095       (1,039
)
Fair value of plan assets at end of year
     37,934       38,295       32,118  
Funded status at end of year   $ (11,857 )   $ (12,713 )     (9,410 )
Amounts recognized in balance sheet
                        
Current liability
                   $ —  
Noncurrent liability
     (11,857
)
     (12,713
)
     (9,410
)
Net amount recognized in balance sheet
   $ (11,857
)
   $ (12,713
)
   $ (9,410
)
                         
Weighted average assumptions – net periodic benefit cost
                        
                         
Discount rate
     4.30
%
     4.70
%
     4.40
%
Rate of compensation increase
  
n/a
       3.10
%
     2.60
%
Return on plan assets
     5.45
%
     5.40
%
     4.90
%
                         
Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss
                        
Prior service cost
   $ —     $ —     $ —  
Accumulated loss
     (4,978
)
     (5,101
)
     (2,481
)
Amounts not yet recognized as a component of net periodic benefit cost
     (4,978
)
     (5,101
)
     (2,481
)
Accumulated net periodic benefit cost in excess of contributions
     (6,879
)
     (7,612
)
     (6,929
)
Net amount recognized
   $ (11,857
)
   $ (12,713
)
   $ (9,410
)
                         
Components of net periodic benefit cost
                        
Service cost
   $ -     $ 383     $ 455  
Interest cost
     1,979       2,054       1,768  
Expected return on plan assets
     (1,903
)
     (1,848
)
     (1,487
)
Amortization of net loss
     990       386          
Net periodic benefit cost
   $ 1,066     $ 975     $ 736  
                         
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
   $ 49,791     $ 51,008     $ 41,528  
Accumulated benefit obligation
     49,791       51,008       41,528  
Fair value of assets
     37,934       38,295       32,118  
 
Postretirement Medical and Life Insurance Benefits:
 
The status of the U.S. postretirement medical and life insurance benefit plan is as follows (in thousands):
 
 
 
2015
 
 
2014
 
 
2013
 
Change in benefit obligation:
                        
Benefit obligation at beginning of year
   $ 5,867     $ 10,964     $ 14,230  
Service cost
     113       225       484  
Interest cost
     244       396       518  
Plan amendments
     —       (5,730
)
     —  
Benefits paid
     (647
)
     (429
)
     (351
)
Actuarial (gain) loss
     1,034       441       (3,917
)
Benefit obligation at end of year
   $ 6,611     $ 5,867     $ 10,964  
                         
Weighted average assumptions: benefit obligations
                        
Discount rate
     4.49
%
     4.29
%
     4.96
%
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
     647       429       351  
Benefits paid, net of employee contributions
     (647
)
     (429
)
     (351
)
Fair value of plan assets at end of year
     —       —       —  
                         
Amounts recognized in balance sheet
                        
Current postretirement benefit obligation
   $ (441
)
   $ (379
)
   $ (536
)
Non-current postretirement benefit obligation
     (6,170
)
     (5,488
)
     (10,428
)
Net amount recognized in balance sheet
   $ (6,611
)
   $ (5,867
)
   $ (10,964
)
                         
Weighted average assumptions – net periodic benefit cost
                        
Discount rate
     4.29
%
     4.96
%
     3.92
%
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
   $ 5,305     $ 6,104     $ 1,145  
Accumulated gain (loss)
     (850
)
     185       627  
Amounts not yet recognized as a component of net periodic benefit cost
     4,455       6,289       1,772  
Net periodic benefit cost in excess of accumulated contributions
     (11,066
)
     (12,156
)
     (12,736
)
Net amount recognized
   $ (6,611
)
   $ (5,867
)
   $ (10,964
)
                         
Components of net periodic benefit cost
                        
Service cost
   $ 113     $ 225     $ 484  
Interest cost
     244       396       518  
Amortization of prior service credit
     (799
)
     (771
)
     (743
)
Amortization of accumulated loss
     —       (1 )     111  
Net periodic benefit cost
   $ (442
)
   $ (151
)
   $ 370  
Estimated amounts that will be amortized from accumulated other comprehensive loss over the next year
                        
Prior service credit
  $ 781     $ 799     $ 502  
Net loss
     (15
)
     —       —  
    $ 766     $ 799     $ 502  
                         
                         
Healthcare cost trend rate assumed for next year
     8.50
%
     8.30
%
     7.80
%
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
  
2026
    
2026
    
2026
  
 
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
 
 
 
2015
 
 
2014
 
 
2012
 
Effect on total of service and interest cost
   $ 0     $ 35     $ 91  
Effect on postretirement benefit obligation
     4       7       1,041  
 
 
 
1% Decrease
 
 
 
2015
 
 
2014
 
 
2013
 
Effect on total of service and interest cost
   $ 0
)
   $ (30
)
   $ (77
)
Effect on postretirement benefit obligation
     (4
)
     (7
)
     (881
)
 
For fiscal 2016, the Company expects to make a $3.3 million contribution to the qualified domestic pension plan, $37,000 to the nonqualified domestic pension plan, $1.1 million to the U.K. pension plan, and $441,000 to the postretirement medical and life insurance plan.
 
Future pension and other benefit payments are as follows (in thousands):
 
Fiscal Year
Pension
 
 
Other
Benefits
 
2016
       $ 6,647     $ 441  
2017
         7,008       370  
2018
         7,328       340  
2019
         7,685       336  
2020
         8,033       340  
2021
 - 2025     45,429       1,786