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Employee Benefit Plans

12 Months Ended

Jun. 30, 2017

Compensation and Retirement Disclosure [Abstract]

10. Employee Benefit Plans

The Company maintains a noncontributory defined benefit pension plan for all domestic nonunion employees employed on or prior to December 31, 2013, who meet certain requirements of age, length of service and hours worked per year. Plan benefits are based upon years of service and average compensation, as defined. The measurement dates for the pension plan were as of June 30, 2017, 2016 and 2015.

In July 2016, we amended the domestic noncontributory defined benefit pension plan to eliminate credit for future service and compensation increases, effective as of September 30, 2016. The amendment resulted in a curtailment of the pension plan. During the three months ended September 30, 2016, we recorded a pension curtailment gain of $6,822 in other comprehensive income and an offsetting reduction in the liability for pension benefits included in other liabilities.

Separately, we offered a lump sum payment option to certain pension plan participants. During the three months ended December 31, 2016, we recognized a partial settlement of the pension plan with respect to the lump sum settlement, which resulted in a charge to the consolidated statement of operations of $1,702, which we recorded as a component of selling, general and administrative expenses.

Changes in the projected benefit obligation, plan assets and funded status of the domestic noncontributory defined benefit plan were:

For the Years Ended June 30	2017			2016
Change in projected benefit obligation
Projected benefit obligation at beginning of year		$	75,664		$	62,605
Service cost			845			2,939
Interest cost			2,045			2,893
Benefits paid			(1,521)			(1,271)
Actuarial (gain) loss			(1,448)			8,498
Liability (gain) loss due to curtailment			(6,822)			—
Settlement payments			(5,503)			—
Projected benefit obligation at end of year		$	63,260		$	75,664

For the Years Ended June 30	2017			2016
Change in plan assets
Fair value of plan assets at beginning of year		$	54,293		$	44,032
Actual return on plan assets			5,647			(1,202)
Employer contributions			4,194			12,734
Benefits paid			(1,521)			(1,271)
Settlement payments			(5,503)			—
Fair value of plan assets at end of year		$	57,110		$	54,293
Funded status at end of year		$	(6,150)		$	(21,371)

The funded status is included in other liabilities in the consolidated balance sheets.

The Company expects to contribute approximately $4,109 to the pension plan during 2018. We seek to maintain an asset balance that meets the long-term funding requirements identified by actuarial projections while also satisfying ERISA fiduciary responsibilities.

Accumulated other comprehensive (income) loss related to the pension plan was:

For the Years Ended June 30	2017			2016
Accumulated Other Comprehensive (Income) Loss Related to Pension Plan
Balance at beginning of period		$	30,977		$	19,884
Amortization of net actuarial loss and prior service costs			(9,213)			(1,784)
Current period net actuarial (gain) loss			(3,705)			12,877
Net change			(12,918)			11,093
Balance at end of period		$	18,059		$	30,977

Amortization of unrecognized net actuarial loss and prior service costs will be approximately $407 during 2018.

Net pension expense was:

For the Years Ended June 30	2017			2016			2015
Service cost–benefits earned during the year		$	845		$	2,939		$	2,954
Interest cost on benefit obligation			2,045			2,893			2,618
Expected return on plan assets			(3,389)			(3,177)			(2,828)
Amortization of net actuarial loss and prior service costs			672			1,784			1,405
Curtailment expense			16			—			—
Settlement expense			1,702			—			—
Net pension expense		$	1,891		$	4,439		$	4,149

Significant actuarial assumptions for the plan were:

For the Years Ended June 30	2017		2016		2015
Discount rate for service cost		4.0%		4.6%		4.5%
Discount rate for interest cost		3.2%		4.6%		4.5%
Expected rate of return on plan assets		6.1%		6.1%		6.7%
Discount rate for year-end benefit obligation		3.9%		3.9%		4.6%

The plan used the Aon Hewitt AA Bond Universe as a benchmark for its discount rate as of June 30, 2017, 2016 and 2015. The discount rate is determined by matching the pension plan’s timing and amount of expected cash outflows to a bond yield curve constructed from a population of AA-rated corporate bond issues that are generally non-callable and have at least $250 million par value outstanding. From this, the discount rate that results in the same present value is calculated. During fiscal 2017, the plan was re-measured July 31 and October 31 to recognize a plan freeze and lump sum window, respectively. The discount rate for 2017 service cost and interest cost noted above was determined as the weighted average of the discount rates used for each portion of the fiscal year in effect.

Estimated future benefit payments, including benefits attributable to future service, are:

For the Years Ended June 30
2018	$	2,156
2019		2,388
2020		2,612
2021		2,815
2022		3,014
2023–2027		17,073

The plan’s target asset allocations for 2018 and the weighted-average asset allocation of plan assets as of June 30, 2017 and 2016 are:

	Target Allocation	Percentage of Plan Assets
For the years ended June 30	2018	2017		2016
Debt securities	48%–68%		33%		19%
Equity securities	20%–40%		38%		43%
Global asset allocation/risk parity(1)	2%–22%		17%		26%
Other	0%–10%		12%		12%

(1) The global asset allocation/risk parity category consists of a variety of asset classes including, but not limited to, global bonds, global equities, real estate and commodities.

The expected long-term rate of return for the plan’s total assets is generally based on the plan’s asset mix. In determining the rate to use, we consider the expected long-term real returns on asset categories, expectations for inflation, estimates of the effect of active management and actual historical returns.

The investment policy and strategy is to earn a long-term investment return sufficient to meet the obligations of the plans, while assuming a moderate amount of risk in order to maximize investment return. In order to achieve this goal, assets are invested in a diversified portfolio consisting of equity securities, debt securities, and other investments in a manner consistent with ERISA’s fiduciary requirements.

The fair values of the Company’s plan assets by asset category were:

	Fair Value Measurements Using
As of June 30, 2017	Level 1			Level 2			Level 3			Total
Cash and cash equivalents		$	3,023		$	—		$	—		$	3,023
Common-collective funds
Global large cap equities			—			12,385			7,132			19,517
Fixed income securities			—			16,850			1,136			17,986
Global asset allocations/risk parity			—			5,822			—			5,822
Mutual funds
Global Equities			1,972			—			—			1,972
Fixed income securities			1,099			—			—			1,099
Global asset allocations/risk parity			—			—			—			—
Other
Global asset allocations/risk parity			—			—			4,103			4,103
Other			—			—			3,588			3,588
		$	6,094		$	35,057		$	15,959		$	57,110

	Fair Value Measurements Using
As of June 30, 2016	Level 1			Level 2			Level 3			Total
Cash and cash equivalents		$	713		$	—		$	—		$	713
Common-collective funds
Global large cap equities			—			11,963			6,596			18,559
Fixed income securities			—			7,583			—			7,583
Global asset allocations/risk parity			—			4,878			—			4,878
Mutual funds
Global Equities			4,611			—			—			4,611
Fixed income securities			1,366			—			—			1,366
Global asset allocations/risk parity			2,667			—			—			2,667
Other
Fixed income securities			—			—			1,434			1,434
Global asset allocations/risk parity			—			—			6,554			6,554
Other			—			—			5,929			5,929
		$	9,357		$	24,424		$	20,513		$	54,294

The table below provides a summary of the changes in the fair value of Level 3 assets:

Change in Fair Value Level 3 assets	2017			2016
Balance at beginning of period		$	20,513		$	8,989
Redemptions			(9,353)			(3,656)
Purchases			2,533			15,695
Change in fair value			2,266			(515)
Balance at end of period		$	15,959		$	20,513

The following outlines the valuation methodologies used to estimate the fair value of our pension plan assets:

• Cash and cash equivalents are valued at $1 per unit;

• Common-collective funds are determined based on current market values of the underlying assets of the fund;

• Mutual funds and foreign currency deposits are valued using quoted market prices in active markets; and

• For Level 3 managed assets, business appraisers use a combination of valuations and appraisal methodologies, as well as a number of assumptions to create a price that brokers evaluate. For Level 3 non-managed assets, pricing is provided by various sources, such as issuer or investment manager.

Our consolidated balance sheets include other liabilities of $15,139 and $14,898 as of June 30, 2017 and 2016, respectively, for other employee benefits, including international retirement plans, supplemental retirement benefits and long term incentive arrangements. Expense under these plans was $4,304, $5,239, and $3,286 for 2017, 2016 and 2015, respectively.

We provide a 401(k) retirement savings plan, under which United States employees may make pre-tax and post-tax contributions. We make a matching contribution equal to 100% of the first 1% of an employee’s contribution and make a matching contribution equal to 50% of the next 5% of an employee’s contribution. Effective January 1, 2014, for domestic employees hired on or after that date and effective October 1, 2016, for all domestic employees, such employees receive a non-elective Company contribution of 3% of compensation and are eligible to receive an additional discretionary contribution of up to 4% of compensation, depending on the employee’s age and years of service, provided that such payments comply with mandatory non-discrimination testing. Participants are fully vested in employer contributions after two years of service. Our contribution expense was $4,154, $2,309, and $1,583, in 2017, 2016 and 2015, respectively.