Note 8—Retirement Benefits

Defined Benefit Plans

The Company has non-contributory defined benefit pension plans. These plans were amended as of April 30, 2005, no further benefits have been, or will be, earned under the plans, subsequent to the amendment date, and no additional participants will be added to the plans. The defined benefit plan for salaried employees provides pension benefits that are based on each employee’s years of service and average annual compensation during the last 10 consecutive calendar years of employment as of April 30, 2005. The benefit plan for hourly employees provides benefits at stated amounts based on years of service as of April 30, 2005. The Company uses an April 30 measurement date for its defined benefit plans. The change in projected benefit obligations and the change in fair value of plan assets for the non-contributory defined benefit pension plans for each of the years ended April 30 are summarized as follows:


$ in thousands	2015		2014
Accumulated Benefit Obligation, April 30	$	22,441	$	19,857


Change in Projected Benefit Obligations
Projected benefit obligations, beginning of year	$	19,857	$	20,683
Interest cost		893		857
Actuarial (gain) loss		2,688		(737)
Actual benefits paid		(997)		(946)

Projected benefit obligations, end of year		22,441		19,857


Change in Plan Assets
Fair value of plan assets, beginning of year		16,288		15,415
Actual return on plan assets		1,028		1,519
Employer contributions		775		300
Actual benefits paid		(997)		(946)

Fair value of plan assets, end of year		17,094		16,288

Funded status – under	$	(5,347)	$	(3,569)


Amounts Recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets	$	—	$	—
Noncurrent liabilities		(5,347)		(3,569)

Net amount recognized	$	(5,347)	$	(3,569)


Amounts recognized in accumulated other comprehensive income (loss) consist of:
Net actual loss	$	11,011	$	8,962
Deferred tax benefit		(4,206)		(3,486)

After-tax actuarial loss	$	6,805	$	5,476


Weighted-Average Assumptions Used to Determine Benefit Obligations at April 30
Discount rate		4.20%		4.60%
Rate of compensation increase		N/A		N/A
Mortality table		RP-2014		2013 IRS

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended April 30
Discount rate		4.60%		4.25%
Expected long-term return on plan assets		8.25%		8.50%
Rate of compensation increase		N/A		N/A

The components of the net periodic pension cost for each of the fiscal years ended April 30 are as follows:


$ in thousands	2015		2014		2013
Interest cost	$	893	$	857	$	906
Expected return on plan assets		(1,324)		(1,282)		(1,213)
Recognition of net loss		934		1,142		1,102

Net periodic pension cost	$	503	$	717	$	795

The estimated net actuarial loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the fiscal year 2016 is $1,180,000.

The Company’s funding policy is to contribute to the plans when pension laws and economics either require or encourage funding. Contributions are anticipated for fiscal year 2016 to be $60,000. Contributions of $775,000 and $300,000 were made to the plan in fiscal years 2015 and 2014, respectively.

The following benefit payments are expected to be paid from the benefit plans in the fiscal years ending April 30:


$ in thousands	Amount
2016	$	1,180
2017		1,230
2018		1,270
2019		1,290
2020		1,310
2021-2025		6,850

The expected long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long-term. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data and historical returns are also reviewed to check for reasonableness and appropriateness.

The Company uses a Yield Curve technique methodology to determine its GAAP discount rate. Under this approach, future benefit payment cash flows are projected from the pension plan on a projected benefit obligation basis. The payment stream is discounted to a present value using an interest rate applicable to the timing of each respective cash flow. The graph of these time-dependent interest rates is known as a yield curve. The interest rates comprising the Yield Curve are determined through a statistical analysis performed by the IRS and issued each month in the form of a pension discount curve. For this purpose, the universe of possible bonds consists of a set of bonds which are designated as corporate, have high quality ratings (AAA, AA, or A) from nationally recognized statistical rating organizations, and have at least $250 million in par amount outstanding on at least one day during the reporting period. A 1% increase/decrease in the discount rate for fiscal years 2015 and 2014 would decrease/increase pension expense by approximately $176,000 and $181,000, respectively.

The Company uses a total return investment approach, whereby a mix of equities and fixed-income investments are used to attempt to maximize the long-term return on plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. The target allocations based on the Company’s investment policy were 70% in equity securities and 30% in fixed-income securities at both April 30, 2015 and April 30, 2014. A 1% increase/decrease in the expected return on assets for fiscal years 2015 and 2014 would decrease/increase pension expense by approximately $160,000 and $151,000, respectively.

Plan assets by asset categories as of April 30 were as follows:


$ in thousands	2015				2014
Asset Category	Amount		%		Amount		%
Equity Securities	$	12,725		74	$	11,011		68
Fixed Income Securities		4,273		25		5,025		31
Cash and Cash Equivalents		96		1		252		1

Totals	$	17,094		100	$	16,288		100

The following tables present the fair value of the assets in our defined benefit pension plans at April 30:


	2015

Asset Category	Level 1		Level 2		Level 3
Large Cap	$	9,036	$	—	$	—
Small/Mid Cap		2,732		—		—
International		957		—		—
Fixed Income		4,273		—		—
Cash and Cash Equivalents		96		—		—

Totals	$	17,094	$	—	$	—


	2014

Asset Category	Level 1		Level 2		Level 3
Large Cap	$	8,034	$	—	$	—
Small/Mid Cap		2,030		—		—
International		947		—		—
Fixed Income		5,025		—		—
Cash and Cash Equivalents		252		—		—

Totals	$	16,288	$	—	$	—

Level 1 retirement plan assets include United States currency held by a designated trustee and equity funds of common and preferred securities issued by domestic and foreign corporations. These equity funds are traded actively on exchanges and price quotes for these shares are readily available.

Defined Contribution Plan

The Company has a defined contribution plan covering substantially all salaried and hourly employees. The plan provides benefits to all employees who have attained age 21, completed three months of service, and who elect to participate. The plan provides that the Company make matching contributions equal to 100% of the employee’s qualifying contribution up to 3% of the employee’s compensation, and make matching contributions equal to 50% of the employee’s contributions between 3% and 5% of the employee’s compensation, resulting in a maximum employer contribution equal to 4% of the employee’s compensation. Additionally, the plan provides that the Company may elect to make a non-matching contribution for participants employed by the Company on December 31 of each year up to 1% of the participant’s qualifying compensation for that calendar year. The Company’s contributions to the plan in fiscal years 2015, 2014 and 2013 were $834,000, $674,000 and $659,000, respectively.