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Note M - Pension and Other Postretirement Benefit Plans | 12 Months Ended
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Jun. 30, 2021
Notes to Financial Statements |
Retirement Benefits [Text Block] | M. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS The Company has non-contributory, qualified defined benefit pension plans covering substantially all domestic employees hired prior to October 1, 2003, and certain foreign employees. Domestic plan benefits are based on years of service, and, for salaried employees, on average compensation for benefits earned prior to January 1, 1997, and on a cash balance plan for benefits earned from January 1, 1997 through July 31, 2009, at which time the Company froze future accruals under domestic defined benefit pension plans. The Company's funding policy for the plans covering domestic employees is to contribute an actuarially determined amount which falls between the minimum required contribution and maximum amount that can be deducted for federal income tax purposes. In addition, the Company has unfunded, non-qualified retirement plans for certain management employees and Directors. In the case of management employees, benefits are based on an annual credit to a bookkeeping account, intended to restore the benefits that would have been earned under the qualified plans, but for the earnings limitations under the Internal Revenue Code. In the case of Directors, benefits are based on years of service on the Board. All benefits vest upon retirement from the Company. In addition to providing pension benefits, the Company provides other postretirement benefits, including healthcare and life insurance benefits for certain domestic retirees. All employees retiring after December 31, 1992, and electing to continue healthcare coverage through the Company's group plan, are required to pay 100% of the premium cost. The measurement date for the Company’s pension and postretirement benefit plans in fiscal 2021 and 2020 was June 30. Obligations and Funded Status The following table sets forth the Company's defined benefit pension plans’ and other postretirement benefit plans’ funded status and the amounts recognized in the Company's balance sheets and statement of operations and comprehensive loss as of June 30:
|  |  |  |  |  |  |  |  |  | Other |
|  | Pension |  |  | Postretirement |
|  | Benefits |  |  | Benefits |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation, beginning of year |  | $ | 105,520 |  |  | $ | 107,322 |  |  | $ | 7,059 |  |  | $ | 7,451 |
Service cost |  |  | 608 |  |  |  | 653 |  |  |  | 16 |  |  |  | 17 |
Interest cost |  |  | 2,516 |  |  |  | 3,305 |  |  |  | 154 |  |  |  | 219 |
Prior service cost |  |  | 65 |  |  |  | - |  |  |  | - |  |  |  | - |
Actuarial (gain) loss |  |  | (1,577 | ) |  |  | 3,161 |  |  |  | (395 | ) |  |  | 211 |
Contributions by plan participants |  |  | 114 |  |  |  | 93 |  |  |  | 269 |  |  |  | 352 |
Benefits paid |  |  | (8,546 | ) |  |  | (9,014 | ) |  |  | (1,001 | ) |  |  | (1,191 | )
Benefit obligation, end of year |  | $ | 98,700 |  |  | $ | 105,520 |  |  | $ | 6,102 |  |  | $ | 7,059 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of assets, beginning of year |  | $ | 83,284 |  |  | $ | 87,291 |  |  | $ | - |  |  | $ | - |
Actual return on plan assets |  |  | 15,325 |  |  |  | 3,541 |  |  |  | - |  |  |  | - |
Employer contribution |  |  | 2,253 |  |  |  | 1,373 |  |  |  | 732 |  |  |  | 839 |
Contributions by plan participants |  |  | 114 |  |  |  | 93 |  |  |  | 269 |  |  |  | 352 |
Benefits paid |  |  | (8,546 | ) |  |  | (9,014 | ) |  |  | (1,001 | ) |  |  | (1,191 | )
Fair value of assets, end of year |  | $ | 92,430 |  |  | $ | 83,284 |  |  | $ | - |  |  | $ | - |
Funded status |  | $ | (6,270 | ) |  | $ | (22,236 | ) |  | $ | (6,102 | ) |  | $ | (7,059 | )
Amounts recognized in the balance sheet consist of: |  |  |  |  |  |  |  |  |  |  |  |  |
Other assets - noncurrent |  | $ | 60 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Accrued liabilities - current |  |  | (423 | ) |  |  | (276 | ) |  |  | (833 | ) |  |  | (1,081 | )
Accrued retirement benefits - noncurrent |  |  | (5,907 | ) |  |  | (21,960 | ) |  |  | (5,269 | ) |  |  | (5,978 | )
Net amount recognized |  | $ | (6,270 | ) |  | $ | (22,236 | ) |  | $ | (6,102 | ) |  | $ | (7,059 | )
Amounts recognized in accumulated other comprehensive loss consist of (net of tax): |  |  |  |  |  |  |  |  |
Net transition obligation |  | $ | 133 |  |  | $ | 158 |  |  | $ | - |  |  | $ | - |
Prior service cost |  |  | 94 |  |  |  | 104 |  |  |  | (487 | ) |  |  | (697 | )
Actuarial net loss |  |  | 31,563 |  |  |  | 43,548 |  |  |  | 160 |  |  |  | 463 |
Net amount recognized |  | $ | 31,790 |  |  | $ | 43,810 |  |  | $ | (327 | ) |  | $ | (234 | )
The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year for the qualified defined benefit and other postretirement benefit plans are as follows:
|  |  |  |  |  | Other |
|  | Pension |  |  | Postretirement |
|  | Benefits |  |  | Benefits |
Net transition obligation |  | $ | 37 |  |  | $ | - |
Prior service cost |  |  | 44 |  |  |  | (275 | )
Actuarial net loss |  |  | 2,254 |  |  |  | - |
Net amount to be recognized |  | $ | 2,335 |  |  | $ | (275 | )
The accumulated benefit obligation for all defined benefit pension plans was approximately $98,700 and $105,520 at June 30, 2021 and 2020, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets:
|  | June 30 |
|  | 2021 |  |  | 2020 |
Projected and accumulated benefit obligation |  | $ | 53,780 |  |  | $ | 105,520 |
Fair value of plan assets |  |  | 47,450 |  |  |  | 83,284 |
Components of Net Periodic Benefit Cost:
|  | Pension Benefits |
|  | 2021 |  |  | 2020 |
Service cost |  | $ | 615 |  |  | $ | 648 |
Interest cost |  |  | 2,516 |  |  |  | 3,304 |
Prior service cost |  |  | 65 |  |  |  | - |
Expected return on plan assets |  |  | (4,552 | ) |  |  | (4,894 | )
Amortization of transition obligation |  |  | 40 |  |  |  | 35 |
Amortization of prior service cost |  |  | 47 |  |  |  | 45 |
Amortization of actuarial net loss |  |  | 3,246 |  |  |  | 2,982 |
Net periodic benefit cost |  | $ | 1,977 |  |  | $ | 2,120 |
|  | Other Postretirement Benefits |
|  | 2021 |  |  | 2020 |
Service cost |  | $ | 16 |  |  | $ | 17 |
Interest cost |  |  | 154 |  |  |  | 219 |
Amortization of prior service cost |  |  | (274 | ) |  |  | (274 | )
Net periodic benefit cost |  | $ | (104 | ) |  | $ | (38 | )
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss for Fiscal 2021 (Pre-tax):
|  |  |  |  |  | Other |
|  |  |  |  |  | Postretirement |
|  | Pension |  |  | Benefits |
Net loss |  | $ | (12,464 | ) |  | $ | (397 | )
Amortization of transition asset |  |  | (40 | ) |  |  | - |
Amortization of prior service (cost) benefit |  |  | (43 | ) |  |  | 275 |
Amortization of net loss |  |  | (3,246 | ) |  |  | - |
Total recognized in other comprehensive income |  |  | (15,793 | ) |  |  | (122 | )
Net periodic benefit cost (benefit) |  |  | 1,977 |  |  |  | (104 | )
Total recognized in net periodic benefit cost and other comprehensive income |  | $ | (13,816 | ) |  | $ | (226 | )
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss for Fiscal 2020 (Pre-tax):
|  |  |  |  |  | Other |
|  |  |  |  |  | Postretirement |
|  | Pension |  |  | Benefits |
Net loss |  | $ | 4,770 |  |  | $ | 211 |
Amortization of transition asset |  |  | (35 | ) |  |  | - |
Amortization of prior service (cost) benefit |  |  | (45 | ) |  |  | 275 |
Amortization of net loss |  |  | (2,978 | ) |  |  | - |
Total recognized in other comprehensive income |  |  | 1,712 |  |  |  | 486 |
Net periodic benefit cost (benefit) |  |  | 2,120 |  |  |  | (38 | )
Total recognized in net periodic benefit cost and other comprehensive income |  | $ | 3,832 |  |  | $ | 448 |
Additional Information Assumptions
|  |  |  |  |  |  |  |  |  | Other |
|  | Pension Benefits |  |  | Postretirement Benefits |
Weighted average assumptions used to determine benefit obligations at June 30 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Discount rate |  |  | 2.63 | % |  |  | 2.49 | % |  |  | 2.47 | % |  |  | 2.37 | %
Expected return on plan assets |  |  | 5.69 | % |  |  | 5.89 | % |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Other |
|  | Pension Benefits |  |  | Postretirement Benefits |
Weighted average assumptions used to determine net periodic benefit costs for years ended June 30 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Discount rate |  |  | 2.49 | % |  |  | 3.22 | % |  |  | 2.37 | % |  |  | 3.15 | %
Expected return on plan assets |  |  | 5.89 | % |  |  | 6.04 | % |  |  |  |  |  |  |  |
The assumed weighted-average healthcare cost trend rate was 6.00% in 2021, grading down to 5% in 2025. A 1% increase in the assumed health care cost trend would increase the accumulated postretirement benefit obligation by approximately $81 and the service and interest cost by approximately $2. A 1% decrease in the assumed health care cost trend would decrease the accumulated postretirement benefit obligation by approximately $71 and the service and interest cost by approximately $2. Plan Assets The Company’s Benefits Committee (“Committee”), a non-board management committee, oversees investment matters related to the Company’s funded benefit plans. The Committee works with external actuaries and investment consultants on an ongoing basis to establish and monitor investment strategies and target asset allocations. The overall objective of the Committee’s investment strategy is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and address other cash requirements of the pension plans. The Committee has established an Investment Policy Statement which provides written documentation of the Company’s expectations regarding its investment programs for the pension plans, establishes objectives and guidelines for the investment of the plan assets consistent with the Company’s financial and benefit-related goals, and outlines criteria and procedures for the ongoing evaluation of the investment program. The Company employs a total return on investment approach whereby a mix of investments among several asset classes are used to maximize long-term return of plan assets while avoiding excessive risk. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, and annual liability measurements. The Company’s pension plan weighted-average asset allocations at June 30, 2021 and 2020 by asset category were as follows:
|  | Target |  |  | June 30 |
Asset Category |  | Allocation |  |  | 2021 |  |  | 2020 |
Equity securities |  |  | 51 | % |  |  | 53 | % |  |  | 47 | %
Debt securities |  |  | 40 | % |  |  | 38 | % |  |  | 44 | %
Real estate |  |  | 9 | % |  |  | 9 | % |  |  | 9 | %
|  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
Due to market conditions and other factors, actual asset allocation may vary from the target allocation outlined above. The U.S. pension plans held 98,211 shares of Company stock with a fair market value of $1,398 (1.5% of total plan assets) at June 30, 2021 and 98,211 shares with a fair market value of $544 (0.7% of total plan assets) at June 30, 2020. The U.S. plans have a long-term return assumption of 5.90%. This rate was derived based upon historical experience and forward-looking return expectations for major asset class categories. The weighted average long-term return across all plans is 5.69%. Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are classified into the following hierarchy:
Level I | Unadjusted quoted prices in active markets for identical instruments
Level II | Unadjusted quoted prices in active markets for similar instruments, or
| Unadjusted quoted prices for identical or similar instruments in markets that are not active, or
| Other inputs that are observable in the market or can be corroborated by observable market data
Level III | Use of one or more significant unobservable inputs
The following table presents plan assets using the fair value hierarchy as of June 30, 2021:
|  | Total |  |  | Level I |  |  | Level II |  |  | Level III |
Cash and cash equivalents |  | $ | 1,043 |  |  | $ | 1,043 |  |  | $ | - |  |  | $ | - |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company common stock (a) |  |  | 1,398 |  |  |  | 1,398 |  |  |  | - |  |  |  | - |
Common stock (a) |  |  | 18,201 |  |  |  | 18,201 |  |  |  | - |  |  |  | - |
Mutual funds (b) |  |  | 9,366 |  |  |  | 9,366 |  |  |  | - |  |  |  | - |
Annuity contracts (c) |  |  | 6,646 |  |  |  | - |  |  |  | - |  |  |  | 6,646 |
Total |  | $ | 36,654 |  |  | $ | 30,008 |  |  | $ | - |  |  | $ | 6,646 |
Investments Measured at Net Asset Value (d) |  |  | 55,776 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 92,430 |  |  |  |  |  |  |  |  |  |  |  |  |
The following table presents plan assets using the fair value hierarchy as of June 30, 2020:
|  | Total |  |  | Level I |  |  | Level II |  |  | Level III |
Cash and cash equivalents |  | $ | 920 |  |  | $ | 920 |  |  | $ | - |  |  | $ | - |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company common stock (a) |  |  | 544 |  |  |  | 544 |  |  |  | - |  |  |  | - |
Common stock (a) |  |  | 14,551 |  |  |  | 14,551 |  |  |  | - |  |  |  | - |
Mutual funds (b) |  |  | 7,916 |  |  |  | 7,916 |  |  |  | - |  |  |  | - |
Annuity contracts (c) |  |  | 6,095 |  |  |  | - |  |  |  | - |  |  |  | 6,095 |
Total |  | $ | 30,026 |  |  | $ | 23,931 |  |  | $ | - |  |  | $ | 6,095 |
Investments Measured at Net Asset Value (d) |  |  | 53,258 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 83,284 |  |  |  |  |  |  |  |  |  |  |  |  |
(a) Common stock is valued at the closing price reported on the active market on which the individual securities are traded. These securities include U.S. equity securities invested in companies that are traded on exchanges inside the U.S. and international equity securities invested in companies that are traded on exchanges outside the U.S. (b) Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held by the Company’s funded benefit plans are open-end mutual funds that are registered with the Securities Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Company’s funded benefit plans are deemed to be actively traded. (c) Annuity contracts represent contractual agreements in which payments are made to an insurance company, which agrees to pay out an income or lump sum amount at a later date. Annuity contracts are valued at fair value using the net present value of future cash flows. (d) In accordance with ASC 820-10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets at the end of the year. The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plan assets that calculate fair value based on NAV per share practical expedient as of June 30, 2021 and June 30, 2020:
|  | 2021 |  |  | 2020 |
Fixed income funds |  | $ | 31,627 |  |  | $ | 33,032 |
International equity securities |  |  | 4,282 |  |  |  | 2,840 |
Real estate |  |  | 7,747 |  |  |  | 7,186 |
Hedged equity mutual funds |  |  | 12,120 |  |  |  | 10,200 |
Total |  | $ | 55,776 |  |  | $ | 53,258 |
The following tables present a reconciliation of the fair value measurements using significant unobservable inputs (Level III) as of June 30, 2021 and 2020:
|  | 2021 |  |  | 2020 |
Beginning balance |  | $ | 6,095 |  |  | $ | 6,171 |
Actual return on plan assets: |  |  |  |  |  |  |  |
Relating to assets still held at reporting date |  |  | 600 |  |  |  | 75 |
Purchases, sales and settlements, net |  |  | (49 | ) |  |  | (151 | )
Ending balance |  | $ | 6,646 |  |  | $ | 6,095 |
Cash Flows Contributions The Company expects to contribute $733 to its defined benefit pension plans in fiscal 2021. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
|  |  |  |  |  | Other |
|  | Pension |  |  | Postretirement |
|  | Benefits |  |  | Benefits |
2022 |  | $ | 8,535 |  |  | $ | 843 |
2023 |  |  | 7,794 |  |  |  | 769 |
2024 |  |  | 7,433 |  |  |  | 693 |
2025 |  |  | 7,095 |  |  |  | 608 |
2026 |  |  | 6,865 |  |  |  | 544 |
Years 2027 - 2031 |  |  | 31,435 |  |  |  | 2,042 |
The Company does not expect to make any Part D reimbursements for the periods presented. The Company sponsors defined contribution plans covering substantially all domestic employees and certain foreign employees. These plans provide for employer contributions based primarily on employee participation. The total expense under the plans was $2,162 and $1,949 in fiscal 2021 and 2020, respectively.

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