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Note 17 - Employee Benefit Plans

12 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

17. Employee Benefit Plans

Retirement Plans

The Company has defined benefit pension plans covering certain current and former employees both inside and outside of the U.S. The Company’s pension plan for U.S. salaried employees was frozen as of December 31, 2007, and participants in the plan ceased accruing future benefits. The Company’s pension plan for U.S. hourly employees was frozen for substantially all participants as of July 31, 2013, and replaced with a defined contribution benefit plan. Based on changes to the plan, the Company expects to record a reduction in U.S. non-cash pension plan expense of $2.6 million as compared to 2013, which will be partially offset by increased expenses associated with the implementation of the defined contribution benefit program.

Net periodic benefit cost for U.S. and non-U.S. plans included the following components (in thousands):

Components of Net Periodic Benefit Cost	Pension Benefits
	U.S. Plans									Foreign Plans
	Year Ended June 30,									Year Ended June 30,
	2013			2012			2011			2013			2012			2011
Service Cost	$	702		$	447		$	444		$	40		$	34		$	41
Interest Cost		10,941			11,975			12,151			1,667			1,758			1,683
Expected return on plan assets		(14,790	)		(15,333	)		(15,777	)		(1,339	)		(1,527	)		(1,495	)
Recognized net actuarial loss		7,577			4,814			4,342			901			527			604
Amortization of prior service cost (benefit)		98			111			139			(57	)		(59	)		(60	)
Amortization of transition obligation (asset)		2			2			2			-			-			-
Curtailment		52			-			-			-			-			-
Net periodic benefit cost (benefit)	$	4,582		$	2,016		$	1,301		$	1,212		$	733		$	773

The following table sets forth the funded status and amounts recognized as of June 30, 2013 and 2012 for our U.S. and foreign defined benefit pension plans (in thousands):

	U.S. Plans						Foreign Plans
	Year Ended June 30,						Year Ended June 30,
	2013			2012			2013			2012
Change in benefit obligation
Benefit obligation at beginning of year	$	245,212		$	213,637		$	37,527		$	33,141
Service cost		702			447			40			34
Interest cost		10,941			11,975			1,667			1,758
Actuarial loss (gain)		(12,366	)		33,766			705			5,596
Benefits paid		(14,776	)		(14,613	)		(1,361	)		(1,306	)
Curtailment		(1,839	)		-			-			-
Foreign currency exchange rate		-			-			(681	)		(1,696	)
Projected benefit obligation at end of year	$	227,874		$	245,212		$	37,897		$	37,527

Change in plan assets
Fair value of plan assets at beginning of year	$	198,718		$	191,179		$	29,138		$	28,241
Actual return on plan assets		12,825			15,966			2,805			1,937
Employer contribution		3,407			6,186			1,171			1,147
Benefits paid		(14,776	)		(14,613	)		(1,361	)		(1,306	)
Foreign currency exchange rate		-			-			(864	)		(881	)
Fair value of plan assets at end of year	$	200,174		$	198,718		$	30,889		$	29,138

Funded Status	$	(27,700	)	$	(46,494	)	$	(7,008	)	$	(8,389	)

Amounts recognized in the consolidated balance sheets consist of:
Prepaid Benefit Cost	$	-		$	-		$	99		$	-
Current liabilities		(149	)		(179	)		(1,120	)		(1,154	)
Non-current liabilities		(27,551	)		(46,315	)		(5,987	)		(7,235	)
Net amount recognized	$	(27,700	)	$	(46,494	)	$	(7,008	)	$	(8,389	)

Unrecognized net actuarial loss		97,103			116,920			9,651			11,511
Unrecognized prior service cost		370			522			(267	)		(315	)
Accumulated other comprehensive income, pre-tax	$	97,473		$	117,442		$	9,384		$	11,196

The accumulated benefit obligation for all defined benefit pension plans was $264.9 million and $279.8 million at June 30, 2013 and 2012, respectively.

The estimated actuarial net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $4.7 million and less than $0.1 million, respectively.

Plan Assets and Assumptions

The fair values of the Company’s pension plan assets at June 30, 2013 and 2012 by asset category, as classified in the three levels of inputs described in Note 1 under the caption Fair Value of Financial Instruments, are as follows (in thousands):

	June 30, 2013
	Total		Level 1		Level 2		Level 3

Cash and cash equivalents	$	726	$	439	$	287	$	-
Common and preferred stocks		107,130		18,824		88,306		-
U.S. Government securities		13,018		-		13,018		-
Corporate bonds and other fixed income securities		101,990		775		101,215		-
Other		8,196		-		8,196		-
	$	231,060	$	23,608	$	207,452	$	-

	June 30, 2012
	Total		Level 1		Level 2		Level 3

Cash and cash equivalents	$	9,547	$	222	$	9,325	$	-
Common and preferred stocks		89,495		16,585		72,910		-
U.S. Government securities		18,159		-		18,159		-
Corporate bonds and other fixed income securities		90,052		641		89,411		-
Other		20,603		-		20,603		-
	$	227,856	$	17,448	$	210,408	$	-

Asset allocation at June 30, 2013 and 2012 and target asset allocations for 2013 are as follows:

	U.S. Plans						Foreign Plans
	Year Ended June 30,						Year Ended June 30,
	2013			2012			2013			2012
Asset Category
Equity securities		38	%		32	%		35	%		34	%
Debt securities		25	%		31	%		64	%		65	%
Global balanced securities		27	%		24	%		-			-
Other		10	%		13	%		1	%		1	%
Total		100	%		100	%		100	%		100	%

	2013
Asset Category – Target	U.S.			U.K.			Ireland
Equity securities		35	%		33	%		70	%
Debt and market neutral securities		30	%		67	%		20	%
Global balanced securities		25	%		0	%		0	%
Other		10	%		0	%		10	%
Total		100	%		100	%		100	%

Our investment policy for the U.S. pension plans targets a range of exposure to the various asset classes. Standex rebalances the portfolio periodically when the allocation is not within the desired range of exposure. The plan seeks to provide returns in excess of the various benchmarks. The benchmarks include the following indices: S&P 500; Citigroup PMI EPAC; Citigroup World Government Bond and Barclays Aggregate Bond. A third party investment consultant tracks the plan’s portfolio relative to the benchmarks and provides quarterly investment reviews which consist of a performance and risk assessment on all investment managers and on the portfolio.

Certain managers within the plan use, or have authorization to use, derivative financial instruments for hedging purposes, the creation of market exposures and management of country and asset allocation exposure. Currency speculation derivatives are strictly prohibited.

Year Ended June 30	2013			2012			2011
Plan assumptions - obligation
Discount rate	3.50 -	-	5.10%	4.00 -	-	4.60%	5.60 -	-	6.00%
Rate of compensation increase	3.50 -	-	3.90%	3.40 -	-	3.50%	3.50 -	-	4.00%

Plan assumptions - cost
Discount rate	4.00 -	-	4.60%	5.50 -	-	6.00%	4.40 -	-	5.90%
Expected return on assets	4.80 -	-	7.80%	5.40 -	-	8.10%	5.70 -	-	8.10%
Rate of compensation increase	3.40 -	-	3.50%	3.50 -	-	4.00%	3.50 -	-	3.80%

Included in the above are the following assumptions relating to the obligations for defined benefit pension plans in the United States at June 30, 2013; a discount rate of 5.1% and a rate of compensation increase of 3.5%. At June 30, 2012, the assumptions were a discount rate of 4.6% and rate of compensation increase of 3.5%. The U.S. defined benefit pension plans represent the majority of our pension obligations. The expected return on plan assets assumption is based on our expectation of the long-term average rate of return on assets in the pension funds and is reflective of the current and projected asset mix of the funds. The discount rate reflects the current rate at which pension liabilities could be effectively settled at the end of the year. The discount rate is determined by matching our expected benefit payments from a stream of AA- or higher bonds available in the marketplace, adjusted to eliminate the effects of call provisions.

Expected benefit payments for the next five years are as follows: 2014, $16.2 million; 2015, $16.0 million; 2016, $16.1 million; 2017, $16.4 million; 2018, $16.6 million and thereafter, $85.0 million. The Company expects to make $1.5 million of contributions to its pension plans in 2014.

The Company operates a defined benefit plan in Germany which is unfunded.

Multi-Employer Pension Plans

We contribute to a number of multiemployer defined benefit plans under the terms of collective bargaining agreements that cover our union-represented employees. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods and benefit formulas. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

●

Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

●

If a participating employer stops contributing to the multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

●

If we choose to stop participating in some of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process.

The following table outlines the Company’s participation in multiemployer pension plans for the periods ended June 30, 2013, 2012, and 2011, and sets forth the yearly contributions into each plan. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection Act zone status available in 2013 and 2012 relates to the plans’ two most recent fiscal year-ends. The zone status is based on information that we received from the plans’ administrators and is certified by each plan’s actuary. Among other factors, plans certified in the red zone are generally less than 65% funded, plans certified in the orange zone are both less than 80% funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans certified in the yellow zone are less than 80% funded, and plans certified in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan (“FIP”) for yellow/orange zone plans, or a rehabilitation plan (“RP”) for red zone plans, is either pending or has been implemented. For all plans, the Company’s contributions do not exceed 5% of the total contributions to the plan in the most recent year.

			Pension Protection Act Zone Status			Contributions
Pension Fund	EIN/Plan Number		2013	2012	FIP/RP Status	2013		2012		2011		Surcharge Imposed?	Expiration Date of Collective Bargaining Agreement

New England Teamsters and Trucking Industry Pension Fund		04-6372430-001	Red	Red	Yes/ Implemented	$	427	$	367	$	391	No	4/15/2015

Laborers' Local 57 Industrial Pension Fund of Philadelphia, PA		23-1627410-003	Green	Green	No		-		39		89	No		-

Sheet Metal Workers' National Pension Fund		52-6112463-001	Red	Red	Yes/ Implemented		-		36		38	No		-

IAM National Pension Fund, National Pension Plan		51-6031295-002	Green	Green	No		623		584		599	No	10/14/2013 -5/31/2015
						$	1,050	$	1,026	$	1,117

Retirement Savings Plans

The Company has two primary employee savings plans, one for salaried employees and one for hourly employees. Substantially all of our full-time domestic employees are covered by these savings plans. Under the provisions of the plans, employees may contribute a portion of their compensation within certain limitations. The Company, at the discretion of the Board of Directors, may make contributions on behalf of our employees under the plans. Company contributions were $4.1 million, $4.1 million, and $4.0 million for the years ended June 30, 2013, 2012, and 2011, respectively. At June 30, 2013, the salaried plan holds approximately 138,000 shares of Company common stock, representing approximately 9% of the holdings of the plan.

Other Plans

Certain retired executives are covered by an Executive Life Insurance Program. During 2003, two executives retired and the Board of Directors approved benefits under this plan of approximately $5.6 million. The aggregate present value of current vested and outstanding benefits to all participants was approximately $0.0 million, and $0.2 million at June 30, 2013 and 2012, respectively. As the term of this benefit program is 10 years, all benefits have been paid under this program as of June 30, 2013.

Key Employee Share Option Plan (KEYSOP)

In fiscal 2002, we created a Key Employee Share Option Plan (the “KEYSOP”). The purpose of the KEYSOP is to provide alternate forms of compensation to certain key employees of the Company commensurate with their contributions to the success of our activities. Under the KEYSOP, certain employees are granted options by the Compensation Committee and designated property is purchased by the Company and placed in a Rabbi trust. The option price set at the date of the grant is 25% of the fair value of the underlying assets. During fiscal 2003, the Company granted options with a 10 year vesting period to two key employees prior to their retirement. Assets associated with the plan were $0.0 million and $1.8 million at June 30, 2013 and 2012, respectively. As of June 30, 2013 and 2012, the Company has recorded a liability in other long term liabilities of approximately $0.0 million and $1.5 million respectively associated with the grants made.

Postretirement Benefits Other Than Pensions

The Company sponsors an unfunded postretirement medical plan covering certain full-time employees who retire and have attained the requisite age and years of service. Retired employees are required to contribute toward the cost of coverage according to various established rules.

Effective January 1, 2013, the Company terminated its life insurance benefit provided to certain current and future retirees, resulting in a curtailment and settlement of the plan’s obligations. The Company recorded a $2.3 million benefit of the settlement and curtailment as a component of selling general and administrative expenses during the third quarter of 2013.

The following table sets forth the funded status of the postretirement benefit plans and accrued postretirement benefit cost reflected in the consolidated balance sheet at year end (in thousands):

	Year Ended June 30,
	2013			2012
Change in benefit obligation
Benefit obligation at beginning of year	$	2,002		$	1,808
Service cost		13			19
Interest cost		49			101
Plan participants' contributions		34			36
Actuarial loss (gain)		4			188
Curtailment		(78	)		-
Settlement		(1,712	)		-
Benefits paid		(120	)		(150	)
Accumulated benefit obligation at end of year	$	192		$	2,002

Change in plan assets
Fair value of plan assets at beginning of year	$	-		$	-
Employer contribution		86			114
Plan participants' contribution		34			36
Benefits paid		(120	)		(150	)
Foreign currency exchange rate		-			-
Fair value of plan assets at end of year	$	-		$	-

Funded Status	$	(192	)	$	(2,002	)

Amounts recognized in the consolidated balance sheets
consist of:
Current liabilities	$	(36	)	$	(135	)
Non-current liabilities		(156	)		(1,867	)
Net amount recognized	$	(192	)	$	(2,002	)

Accumulated other comprehensive income, pre-tax
Unrecognized net actuarial loss		(65	)		(710	)
Unrecognized transition obligation		-			240
Net amount recognized	$	(65	)	$	(470	)

Components of Net Periodic Benefit Cost (in thousands)

	Year Ended June 30,
	2013			2012			2011
Service Cost		13		$	19		$	12
Interest Cost		49			101			106
Recognized net actuarial gain		(24	)		(55	)		(57	)
Curtailment		51			-			-
Plan Settlement		(2,329	)		-			-
Amortization of transition obligation		112			223			223
Net periodic benefit cost	$	(2,128	)	$	288		$	284

The estimated net actual loss (gain) and transition obligation for the postretirement benefits that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $(0.0) million and $0.2 million, respectively.

The assumed weighted average discount rate was 5.1% and 4.60% as of June 30, 2013 and 2012, respectively. A 1% increase in the assumed health care cost trend rate does not impact either the accumulated benefit obligation or the net postretirement cost, as the employer contribution for each participant is a fixed amount.