Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Jun. 30, 2019

Funded Status of Pension Plans and Amount recognized in the Consolidated Balance Sheet

The funded status of our pension plans and amounts recognized in the consolidated balance sheets as of June 30 were as follows:



(in thousands)	2019			2018
Change in benefit obligation:
Benefit obligation, beginning of year	$	902,711		$	941,094
Service cost	1,627			1,635
Interest cost	31,901			30,751
Participant contributions	—			3
Actuarial losses (gains)	64,648			(24,501		)
Benefits and expenses paid	(49,510		)	(47,212		)
Currency translation adjustments	(6,208		)	3,876
Plan amendments	1,465			—
New plans	18,107			—
Plan settlements	—			(2,935		)
Benefit obligation, end of year	$	964,741		$	902,711
Change in plans' assets:
Fair value of plans' assets, beginning of year	$	792,758		$	808,635
Actual return on plans' assets	68,981			24,931
Company contributions	7,905			7,999
Participant contributions	—			3
New plans	9,480			—
Plan settlements	—			(2,935		)
Benefits and expenses paid	(49,510		)	(47,212		)
Currency translation adjustments	(3,745		)	1,337
Fair value of plans' assets, end of year	$	825,869		$	792,758
Funded status of plans	$	(138,872	)	$	(109,953	)
Amounts recognized in the balance sheet consist of:
Long-term prepaid benefit	$	31,581		$	42,543
Short-term accrued benefit obligation	(7,624		)	(6,699		)
Accrued pension benefits	(162,829		)	(145,797		)
Net amount recognized	$	(138,872	)	$	(109,953	)

Defined Benefit Pension Plans Recognized in Accumulated Other Comprehensive (Loss) Income

The pre-tax amounts related to our defined benefit pension plans recognized in accumulated other comprehensive loss were as follows at June 30:



(in thousands)	2019		2018
Unrecognized net actuarial losses	$	292,992	$	247,230
Unrecognized net prior service costs	2,229		723
Unrecognized transition obligations	432		539
Total	$	295,653	$	248,492

The pre-tax amounts related to our other postretirement benefit plans which were recognized in accumulated other comprehensive loss were as follows at June 30:



(in thousands)	2019			2018
Unrecognized net actuarial losses	$	4,150		$	4,662
Unrecognized net prior service credits	(2,476		)	(1,041		)
Total	$	1,674		$	3,621

Accumulated Benefit Obligations Exceeding Plan Assets Fair Value

Included in the above information are plans with accumulated benefit obligations exceeding the fair value of plan assets as of June 30 as follows:



(in thousands)	2019		2018
Projected benefit obligation	$	179,921	$	152,485
Accumulated benefit obligation	178,039		151,871
Fair value of plan assets	9,480		—

Net Periodic Pension (Income) Cost

The components of net periodic pension income include the following as of June 30:



(in thousands)	2019			2018			2017
Service cost	$	1,627		$	1,635		$	2,908
Interest cost	31,901			30,751			31,113
Expected return on plans' assets	(53,789		)	(56,579		)	(58,781		)
Amortization of transition obligation	91			94			89
Amortization of prior service cost	(19		)	48			(452		)
Special termination benefit charge	—			—			98
Settlement loss	—			626			379
Recognition of actuarial losses	6,723			6,907			8,356
Net periodic pension income	$	(13,466	)	$	(16,518	)	$	(16,290	)

Funded Status of Other Postretirement Benefit Plans and Amount Recognized in the Consolidated Balance Sheet

The funded status of our other postretirement benefit plans and the related amounts recognized in the consolidated balance sheets were as follows:



(in thousands)	2019			2018
Change in benefit obligation:
Benefit obligation, beginning of year	$	15,323		$	18,160
Interest cost	613			629
Actuarial losses	(264		)	(323		)
Benefits paid	(1,505		)	(2,208		)
Plan amendments	(1,525		)	(935		)
Benefit obligation, end of year	$	12,642		$	15,323
Funded status of plan	$	(12,642	)	$	(15,323	)
Amounts recognized in the balance sheet consist of:
Short-term accrued benefit obligation	$	(1,468	)	$	(1,598	)
Accrued postretirement benefits	(11,174		)	(13,725		)
Net amount recognized	$	(12,642	)	$	(15,323	)

Net Periodic Other Postretirement Costs (Benefit)

The components of net periodic other postretirement benefit cost include the following for the years ended June 30:



(in thousands)	2019			2018			2017
Interest cost	$	613		$	629		$	673
Amortization of prior service credit	(90		)	(22		)	(22		)
Recognition of actuarial loss	248			280			355
Net periodic other postretirement benefit cost	$	771		$	887		$	1,006

Significant Actuarial Assumptions Used to Determine the Present Value of Net Benefit Obligations

The significant actuarial assumptions used to determine the present value of net benefit obligations for our defined benefit pension plans and other postretirement benefit plans were as follows:



	2019	2018	2017
Discount Rate:
U.S. plans	2.7-3.6%	4.0-4.3%	3.3-3.9%
International plans	0.4-2.9%	1.8-3.3%	2.0-3.3%
Rates of future salary increases:
U.S. plans	4.0%	4.0%	4.0%
International plans	1.8-3.0%	2.5-3.0%	2.5-3.0%

The significant assumptions used to determine the net periodic (income) cost for our pension and other postretirement benefit plans were as follows:



	2019	2018	2017
Discount Rate:
U.S. plans	4.0-4.3%	3.3-3.9%	2.4-3.7%
International plans	1.8-3.3%	2.0-3.3%	0.9-3.2%
Rates of future salary increases:
U.S. plans	4.0%	4.0%	3.0-4.0%
International plans	2.5-3.0%	2.5-3.0%	2.5-3.0%
Rate of return on plans assets:
U.S. plans	7.0%	7.3%	7.5%
International plans	5.0-5.3%	5.3%	5.3-5.5%

Annual Assumed Rate of Increase in Per Capita Cost of Covered Benefits for Postretirement Benefit Plans

The annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) for our postretirement benefit plans was as follows:



	2019		2018		2017
Health care costs trend rate assumed for next year	7.0	%	7.5	%	8.0	%
Rate to which the cost trend rate gradually declines	5.0	%	5.0	%	5.0	%
Year that the rate reaches the rate at which it is assumed to remain	2027		2027		2027

Asset Allocations and Target Allocations by Asset Class

The following table presents the fair value of the benefit plan assets by asset category as of June 30, 2019:



(in thousands)	Level 1		Level 2		Level 3		NAV⁽³⁾		Total
Common / collective trusts ⁽³⁾:
Value funds	$	—	$	—	$	—	$	66,950	$	66,950
Growth funds	—		—		—		38,119		38,119
Balanced funds	—		—		—		10,921		10,921
Corporate fixed income securities	—		407,008		—		—		407,008
Common stock	74,448		—		—		—		74,448
Government securities:
U.S. government securities	—		61,770		—		—		61,770
Foreign government securities	—		48,011		—		—		48,011
Other fixed income securities	—		32,971		—		—		32,971
Other	3,888		81,783		—		—		85,671
Total investments	$	78,336	$	631,543	$	—	$	115,990	$	825,869

The following table presents the fair value of the benefit plan assets by asset category as of June 30, 2018:



(in thousands)	Level 1		Level 2		Level 3		NAV⁽³⁾		Total
Common / collective trusts ⁽³⁾:
Value funds	$	—	$	—	$	—	$	74,070	$	74,070
Growth funds	—		—		—		49,438		49,438
Balanced funds	—		—		—		11,854		11,854
Corporate fixed income securities	—		350,394		—		—		350,394
Common stock	83,361		—		—		—		83,361
Government securities:
U.S. government securities	—		62,381		—		—		62,381
Foreign government securities	—		46,286		—		—		46,286
Other fixed income securities	—		31,630		—		—		31,630
Other	3,898		79,446		—		—		83,344
Total investments	$	87,259	$	570,137	$	—	$	135,362	$	792,758

⁽³⁾Investments in common / collective trusts invest primarily in publicly traded securities and are valued using net asset value (NAV) of units of a bank collective trust. Therefore, these amounts have not been classified in the fair value hierarchy and are presented in the tables to reconcile the fair value hierarchy to the total fair value of plan assets.

Our defined benefit pension plans’ asset allocations as of June 30, 2019 and 2018 and target allocations for 2020, by asset class, were as follows:



	2019		2018		Target %
Equity	23	%	28	%	23	%
Fixed Income	67		62		70
Other	10		11		7