NOTE 13 — RETIREMENT PLAN

On August 2, 2007, the committee then known as the Compensation, Nominating and Corporate Governance Committee (the “Committee”) approved a restated Supplemental Employee Retirement Plan (“SERP”) for certain executive officers and key employees, retroactively effective as of August 25, 2005. The restated SERP retroactively changed the plan adopted on August 25, 2005 to, among other things, clarify certain actuarial provisions and incorporate new Internal Revenue Service requirements. The SERP is an unfunded, non-qualified benefit plan that will provide eligible participants with monthly benefits upon retirement, disability or death, subject to certain conditions. Benefits paid to retirees are based on age at retirement, years of credited service, and average compensation. We use our fiscal year-end as the measurement date for the obligation calculation. Accounting guidance now codified in ASC Topic 715, Compensation – Retirement Benefits requires the recognition of the funded status of the SERP on the Consolidated Balance Sheet. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized are recorded as a component of “Accumulated Other Comprehensive Loss” (“AOCL”).

The following table presents the changes in the projected benefit obligation for the fiscal years ended:


	June 26, 2014			June 27, 2013
Change in projected benefit obligation
Benefit obligation at beginning of year	$	13,268		$	13,989
Service cost		323			343
Interest cost		634			570
Actuarial loss (gain)		1,454			(979	)
Benefits paid		(654	)		(655	)

Projected benefit obligation at end of year	$	15,025		$	13,268

Components of the actuarial loss (gain) portion of the change in projected benefit obligation are presented below for the fiscal years ended:


	June 26, 2014			June 27, 2013			June 28, 2012
Actuarial Loss (Gain)
Change in assumed pay increases	$	(85	)	$	423		$	(35	)
Change in discount rate		1,084			(1,555	)		2,494
Change in bonus assumption		474			—			—
Other		(19	)		153			120

Actuarial loss (gain)	$	1,454		$	(979	)	$	2,579

The components of the net periodic pension cost are as follows for the fiscal years ended:


	June 26, 2014			June 27, 2013		June 28, 2012
Service cost	$	323		$	343	$	243
Interest cost		634			570		600
Recognized gain amortization		(68	)		—		(185	)
Prior service cost amortization		957			957		957

Net periodic pension cost	$	1,846		$	1,870	$	1,615

Significant assumptions related to our SERP include the discount rate used to calculate the actuarial present value of benefit obligations to be paid in the future and the average rate of compensation expense increase by SERP participants.

We used the following assumptions to calculate the benefit obligations of our SERP as of the following dates:


	June 26, 2014	June 27, 2013
Discount rate	4.37%	4.90%
Rate of compensation increases	4.50%	4.50%
Bonus payment	60% - 85% of base, paid 3 of 5 years	60% - 70% of base, paid 3 of 5 years

We used the following assumptions to calculate the net periodic costs of our SERP as follows for the fiscal years ended:


	June 26, 2014	June 27, 2013	June 28, 2012
Discount rate	4.90%	4.17%	5.51%
Rate of compensation increases	4.50%	4.50%	4.50%
Bonus payment	60% - 70% of base, paid 3 of 5 years	60% - 70% of base, paid 3 of 5 years	60% - 70% of base, paid 3 of 5 years

The assumed discount rate is based, in part, upon a discount rate modeling process that considers both high quality long-term indices and the duration of the SERP plan relative to the durations implicit in the broader indices. The discount rate is utilized principally in calculating the actuarial present value of our obligation and periodic expense pursuant to the SERP. To the extent the discount rate increases or decreases, our SERP obligation is decreased or increased, accordingly.

The following table presents the benefits expected to be paid in the next ten fiscal years:


Fiscal year
2015	$	653
2016		650
2017		642
2018		629
2019		611
2020 — 2024		3,073

The following table presents the components of AOCL that have not yet been recognized in net pension expense:


	June 26, 2014			June 27, 2013
Unrecognized net gain	$	735		$	2,257
Unrecognized prior service cost		(6,220	)		(7,177	)
Tax effect		1,982			1,756

Net amount unrecognized	$	(3,503	)	$	(3,164	)

We expect to recognize $957 of the prior service cost into net periodic pension expense during the fiscal year ending June 25, 2015.