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Employee Benefit Plans | 12 Months Ended
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Jun. 30, 2014
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans | Employee Benefit Plans The Company provides pension plans for most full-time employees. Generally the plans provide benefits based on years of service and/or a combination of years of service and earnings. In addition, the Company contributes to two multiemployer defined benefit pension plans, one multiemployer defined contribution pension plan and eight multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. In addition, the Company sponsors a postretirement defined benefit plan that covers qualified non-union retirees and certain qualified union retirees and provides retiree medical coverage and, depending on the age of the retiree, dental and vision coverage. The Company also provides a postretirement death benefit to certain of its employees and retirees. The Company is required to recognize the funded status of a benefit plan in its consolidated balance sheet. The Company is also required to recognize in other comprehensive income (loss) ("OCI") certain gains and losses that arise during the period but are deferred under pension accounting rules. Single Employer Pension Plans The Company has a defined benefit pension plan, the Farmer Bros. Co. Pension Plan for Salaried Employees (the “Farmer Bros. Plan”), for the majority of its employees who are not covered under a collective bargaining agreement. The Company amended the Farmer Bros. Plan, freezing the benefit for all participants effective June 30, 2011. After the plan freeze, participants do not accrue any benefits under the Farmer Bros. Plan, and new hires are not eligible to participate in the Farmer Bros. Plan. As all plan participants became inactive following this pension curtailment, net (gain) loss is now amortized based on the remaining life expectancy of these participants instead of the remaining service period of these participants. The Company also has two defined benefit pension plans for certain hourly employees covered under collective bargaining agreements (the “Brewmatic Plan” and the “Hourly Employees' Plan”). In the fourth quarter of fiscal 2013, the Company determined that it would shut down its equipment refurbishment operations in Los Angeles, California and move them to its Oklahoma City distribution center effective August 30, 2013. Due to this shut down, all hourly employees responsible for these operations in Los Angeles were terminated and their pension benefits in the Brewmatic Plan were frozen effective August 30, 2013. As a result, the Company recorded a pension curtailment expense of $34,000 in the fourth quarter of fiscal 2013. Obligations and Funded Status
|  | Farmer Bros. Plan June 30, | Brewmatic Plan June 30, | Hourly Employees’ Plan June 30,
($ in thousands) |  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Change in projected benefit obligation |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at the beginning of the year |  | $ | 126,205 |  |  | $ | 124,828 |  |  | $ | 3,946 |  |  | $ | 4,022 |  |  | $ | 2,056 |  |  | $ | 1,520 |  |
Service cost |  | — |  |  | — |  |  | — |  |  | 59 |  |  | 401 |  |  | 418 |  |
Interest cost |  | 5,545 |  |  | 5,550 |  |  | 171 |  |  | 176 |  |  | 92 |  |  | 69 |  |
Actuarial (gain) loss |  | 7,069 |  |  | 1,333 |  |  | 153 |  |  | (24 | ) |  | 81 |  |  | 56 |  |
Benefits paid |  | (5,683 | ) |  | (5,506 | ) |  | (279 | ) |  | (287 | ) |  | (11 | ) |  | (7 | ) |
Projected benefit obligation at the end of the year |  | $ | 133,136 |  |  | $ | 126,205 |  |  | $ | 3,991 |  |  | $ | 3,946 |  |  | $ | 2,619 |  |  | $ | 2,056 |  |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at the beginning of the year |  | $ | 88,097 |  |  | $ | 82,110 |  |  | $ | 3,063 |  |  | $ | 2,718 |  |  | $ | 1,248 |  |  | $ | 1,013 |  |
Actual return on plan assets |  | 15,046 |  |  | 10,145 |  |  | 521 |  |  | 322 |  |  | 207 |  |  | 125 |  |
Employer contributions |  | 966 |  |  | 1,348 |  |  | 130 |  |  | 310 |  |  | 185 |  |  | 117 |  |
Benefits paid |  | (5,683 | ) |  | (5,506 | ) |  | (279 | ) |  | (287 | ) |  | (11 | ) |  | (7 | ) |
Fair value of plan assets at the end of the year |  | $ | 98,426 |  |  | $ | 88,097 |  |  | $ | 3,435 |  |  | $ | 3,063 |  |  | $ | 1,629 |  |  | $ | 1,248 |  |
Funded status at end of year (underfunded) overfunded |  | $ | (34,710 | ) |  | $ | (38,108 | ) |  | $ | (556 | ) |  | $ | (883 | ) |  | $ | (990 | ) |  | $ | (808 | ) |
Amounts recognized in consolidated balance sheets |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current liabilities |  | (34,710 | ) |  | (38,108 | ) |  | (556 | ) |  | (883 | ) |  | (990 | ) |  | (808 | ) |
Total |  | $ | (34,710 | ) |  | $ | (38,108 | ) |  | $ | (556 | ) |  | $ | (883 | ) |  | $ | (990 | ) |  | $ | (808 | ) |
Amounts recognized in consolidated statements of operations |  |  |  |  |  |  |  |  |  |  |  |  |
Total net (gain) loss |  | $ | 42,093 |  |  | $ | 44,841 |  |  | $ | 1,665 |  |  | $ | 1,878 |  |  | $ | 73 |  |  | $ | 108 |  |
Total accumulated OCI (not adjusted for applicable tax) |  | $ | 42,093 |  |  | $ | 44,841 |  |  | $ | 1,665 |  |  | $ | 1,878 |  |  | $ | 73 |  |  | $ | 108 |  |
Weighted average assumptions used to determine benefit obligations |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.15 | % |  | 4.50 | % |  | 4.15 | % |  | 4.50 | % |  | 4.15 | % |  | 4.50 | % |
Rate of compensation increase |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |
Components of Net Periodic Benefit Cost and Other Changes Recognized in Other Comprehensive Income (Loss) (OCI)
|  | Farmer Bros. Plan June 30, |  | Brewmatic Plan June 30, |  | Hourly Employees’ Plan June 30,
($ in thousands) |  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013
Components of net periodic benefit cost |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 59 |  |  | $ | 401 |  |  | $ | 418 |
Interest cost |  | 5,545 |  |  | 5,550 |  |  | 171 |  |  | 176 |  |  | 92 |  |  | 69 |
Expected return on plan assets |  | (6,508 | ) |  | (6,355 | ) |  | (221 | ) |  | (196 | ) |  | (90 | ) |  | (87 | )
Amortization of net (gain) loss |  | 1,279 |  |  | 1,422 |  |  | 65 |  |  | 126 |  |  | — |  |  | — |
Amortization of prior service cost (credit) |  | — |  |  | — |  |  | — |  |  | 19 |  |  | — |  |  | — |
Amount recognized due to special event (curtailment) |  | — |  |  | — |  |  | — |  |  | 34 |  |  | — |  |  | — |
Net periodic benefit cost |  | $ | 316 |  |  | $ | 617 |  |  | $ | 15 |  |  | $ | 218 |  |  | $ | 403 |  |  | $ | 400 |
Other changes recognized in OCI |  |  |  |  |  |  |  |  |  |  |  |
Net (gain) loss |  | $ | (1,469 | ) |  | $ | (2,456 | ) |  | $ | (147 | ) |  | $ | (150 | ) |  | $ | (35 | ) |  | $ | 18 |
Prior service cost (credit) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization of net gain (loss) |  | (1,279 | ) |  | (1,422 | ) |  | (65 | ) |  | (126 | ) |  | — |  |  | — |
Amortization of prior service (cost) credit |  | — |  |  | — |  |  | — |  |  | (19 | ) |  | — |  |  | — |
Amount recognized due to special event (curtailment) |  | — |  |  | — |  |  | — |  |  | (34 | ) |  | — |  |  | — |
Total recognized in OCI |  | $ | (2,748 | ) |  | $ | (3,878 | ) |  | $ | (212 | ) |  | $ | (329 | ) |  | $ | (35 | ) |  | $ | 18 |
Total recognized in net periodic benefit cost and OCI |  | $ | (2,432 | ) |  | $ | (3,261 | ) |  | $ | (197 | ) |  | $ | (111 | ) |  | $ | 368 |  |  | $ | 418 |
Weighted-average assumptions used to determine net periodic benefit cost |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.50 | % |  | 4.55 | % |  | 4.50 | % |  | 4.55 | % |  | 4.50 | % |  | 4.55 | %
Expected long-term return on plan assets |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | % |  | 8.00 | %
Rate of compensation increase |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |
Basis Used to Determine Expected Long-term Return on Plan Assets The expected long-term return on plan assets assumption was developed as a weighted average rate based on the target asset allocation of the plan and the long-term capital market assumptions. The overall rate for each asset class was developed by combining a long-term inflation component and the associated expected real rates. The development of the capital market assumptions utilized a variety of methodologies, including, but not limited to, historical analysis, stock valuation models such as dividend discount models and earnigs yields' models, expected economic growth outlook and market yields analysis. Description of Investment Policy The Company’s investment strategy is to build an efficient, well-diversified portfolio based on a long-term, strategic outlook of the investment markets. The investment markets outlook utilizes both the historical-based and forward-looking return forecasts to establish future return expectations for various asset classes. These return expectations are used to develop a core asset allocation based on the specific needs of each plan. The core asset allocation utilizes investment portfolios of various asset classes and multiple investment managers in order to maximize the plan’s return while providing multiple layers of diversification to help minimize risk. Additional Disclosures
|  | Farmer Bros. Plan June 30, |  | Brewmatic Plan June 30, |  | Hourly Employees’ Plan June 30,
($ in thousands) |  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013
Comparison of obligations to plan assets |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation |  | $ | 133,136 |  |  | $ | 126,205 |  |  | $ | 3,991 |  |  | $ | 3,946 |  |  | $ | 2,619 |  |  | $ | 2,056 |
Accumulated benefit obligation |  | $ | 133,136 |  |  | $ | 126,205 |  |  | $ | 3,991 |  |  | $ | 3,946 |  |  | $ | 2,619 |  |  | $ | 2,056 |
Fair value of plan assets at measurement date |  | $ | 98,426 |  |  | $ | 88,097 |  |  | $ | 3,435 |  |  | $ | 3,063 |  |  | $ | 1,629 |  |  | $ | 1,248 |
Plan assets by category |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | $ | 53,355 |  |  | $ | 58,681 |  |  | $ | 1,861 |  |  | $ | 2,059 |  |  | $ | 884 |  |  | $ | 811 |
Debt securities |  | 35,035 |  |  | 24,822 |  |  | 1,223 |  |  | 843 |  |  | 579 |  |  | 375 |
Real estate |  | 10,036 |  |  | 4,594 |  |  | 351 |  |  | 161 |  |  | 166 |  |  | 62 |
Total |  | $ | 98,426 |  |  | $ | 88,097 |  |  | $ | 3,435 |  |  | $ | 3,063 |  |  | $ | 1,629 |  |  | $ | 1,248 |
Plan assets by category |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  | 54 | % |  | 67 | % |  | 54 | % |  | 67 | % |  | 54 | % |  | 65 | %
Debt securities |  | 36 | % |  | 28 | % |  | 36 | % |  | 28 | % |  | 36 | % |  | 30 | %
Real estate |  | 10 | % |  | 5 | % |  | 10 | % |  | 5 | % |  | 10 | % |  | 5 | %
Total |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
Fair values of plan assets were as follows:
|  | June 30, 2014
(In thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Farmer Bros. Plan |  | $ | 98,426 |  |  | $ | — |  |  | $ | 98,426 |  |  | $ | — |
Brewmatic Plan |  | $ | 3,435 |  |  | $ | — |  |  | $ | 3,435 |  |  | $ | — |
Hourly Employees’ Plan |  | $ | 1,629 |  |  | $ | — |  |  | $ | 1,629 |  |  | $ | — |
|  | June 30, 2013
(In thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Farmer Bros. Plan |  | $ | 88,097 |  |  | $ | — |  |  | $ | 88,097 |  |  | $ | — |
Brewmatic Plan |  | $ | 3,063 |  |  | $ | — |  |  | $ | 3,063 |  |  | $ | — |
Hourly Employees’ Plan |  | $ | 1,248 |  |  | $ | — |  |  | $ | 1,248 |  |  | $ | — |
As of June 30, 2014, approximately 5.0% of the assets of the Farmer Bros. Plan, the Brewmatic Plan and the Hourly Employees’ Plan were invested in pooled separate accounts ("PSA's") which invested mainly in commercial real estate and included mortgage loans which were backed by the associated properties. These underlying real estate investments are able to be redeemed at net asset value per share ("NAV"), and therefore, are considered Level 2 assets. The amounts and types of investments within plan assets did not change significantly from June 30, 2012. The following is a reconciliation of asset balances with Level 3 input pricing:
(In thousands) |  | Beginning Balance at 7/1/2012 |  | Total Gains |  | Settlements |  | Transfers |  | Ending Balance at 6/30/2013
Farmer Bros. Plan |  | $ | 4,104 |  |  | $ | — |  |  | $ | — |  |  | $ | (4,104 | ) |  | $ | — |
Brewmatic Plan |  | $ | 136 |  |  | $ | — |  |  | $ | — |  |  | $ | (136 | ) |  | $ | — |
Hourly Employees’ Plan |  | $ | 66 |  |  | $ | — |  |  | $ | — |  |  | $ | (66 | ) |  | $ | — |
The following is the target asset allocation for the Company's single employer pension plans—Farmer Bros. Plan, Brewmatic Plan and Hourly Employees' Plan—for fiscal 2015:
| Fiscal 2015
U.S. large cap equity securities | 29.9 | %
U.S. small cap equity securities | 7.6 | %
International equity securities | 12.5 | %
Debt securities | 40.0 | %
Real estate | 10.0 | %
Total | 100.0 | %
Estimated Amounts in OCI Expected To Be Recognized In fiscal 2015, the Company expects to recognize as a component of net periodic benefit (credit) cost $(0.4) million for the Farmer Bros. Plan, $(17,000) for the Brewmatic Plan, and $0.4 million for the Hourly Employees’ Plan. Estimated Future Contributions and Refunds In fiscal 2015, the Company expects to contribute $1.9 million to the Farmer Bros. Plan, $0.2 million to the Brewmatic Plan, and $0.5 million to the Hourly Employees’ Plan. The Company is not aware of any refunds expected from single employer pension plans. Estimated Future Benefit Payments The following benefit payments are expected to be paid over the next 10 fiscal years:
(In thousands) |  | Farmer Bros. Plan |  | Brewmatic Plan |  | Hourly Employees’ Plan
Year Ending: |  |
June 30, 2015 |  | $ | 6,350 |  |  | $ | 280 |  |  | $ | 47 |
June 30, 2016 |  | $ | 6,490 |  |  | $ | 280 |  |  | $ | 62 |
June 30, 2017 |  | $ | 6,650 |  |  | $ | 270 |  |  | $ | 78 |
June 30, 2018 |  | $ | 6,880 |  |  | $ | 280 |  |  | $ | 97 |
June 30, 2019 |  | $ | 7,050 |  |  | $ | 280 |  |  | $ | 110 |
June 30, 2020 to June 30, 2024 |  | $ | 38,860 |  |  | $ | 1,290 |  |  | $ | 890 |
These amounts are based on current data and assumptions and reflect expected future service, as appropriate. Multiemployer Pension Plans The Company participates in two multiemployer defined benefit pension plans that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, of which the Western Conference of Teamsters Pension Plan (“WCTPP”) is individually significant. The Company makes contributions to these plans generally based on the number of hours worked by the participants in accordance with the provisions of negotiated labor contracts. The risks of participating in multiemployer pension plans are different from single-employer plans in that: (i) assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if the Company stops participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The Company's participation in WCTPP is outlined in the table below. The Pension Protection Act (“PPA”) Zone Status available in the Company's fiscal year 2014 and fiscal year 2013 is for the plan's year ended December 31, 2013 and December 31, 2012, respectively. The zone status is based on information obtained from WCTPP and is certified by WCTPP's actuary. Among other factors, plans in the green zone are generally more than 80% funded. Based on WCTPP's annual report on Form 5500, WCTPP was 91.5% and 90.0% funded for its plan year beginning January 1, 2013 and 2012, respectively. The “FIP/RP Status Pending/Implemented” column indicates if a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented.
| Pension Plan |  | Employer Identification Number |  | Pension Plan Number |  | PPA Zone Status |  | FIP/RP Status Pending/ Implemented |  | Surcharge Imposed |  | Expiration Date of Collective Bargaining Agreements
| July 1, 2013 |  | July 1, 2012 |
| Western Conference of Teamsters Pension Plan |  | 91-6145047 |  | 001 |  | Green |  | Green |  | No |  | No |  | August 2014 to June 2017
Based upon the most recent information available from the trustees managing WCTPP, the Company's share of the unfunded vested benefit liability for the plan was estimated to be approximately $14.4 million if the withdrawal had occurred in calendar year 2013. These estimates were calculated by the trustees managing WCTPP. Although the Company believes the most recent plan data available from WCTPP was used in computing this 2013 estimate, the actual withdrawal liability amount is subject to change based on, among other things, the plan's investment returns and benefit levels, interest rates, financial difficulty of other participating employers in the plan such as bankruptcy, and continued participation by the Company and other employers in the plan, each of which could impact the ultimate withdrawal liability. If withdrawal liability were to be triggered, the withdrawal liability assessment can be paid in a lump sum or on a monthly basis. The amount of the monthly payment is determined as follows: Average number of hours reported to the pension plan trust during the three consecutive years with highest number of hours in the 10-year period prior to the withdrawal is multiplied by the highest hourly contribution rate during the 10-year period to determine the amount of withdrawal liability that has to be paid annually. The annual amount is divided by 12 to arrive at the monthly payment due. If monthly payments are elected, interest is assessed on the unpaid balance after 12 months at the rate of 7% per annum. In fiscal 2012, the Company paid a final settlement of $0.3 million towards withdrawal from the Central States Pension Fund that was part of the DSD Coffee Business acquisition and recorded the charge as "Pension withdrawal expense." In addition, in fiscal 2012, the Company withdrew from the Labor Management Pension Fund and recorded a charge of $4.3 million associated with withdrawal from this plan, representing the present value of the estimated withdrawal liability expected to be paid in quarterly installments of $0.1 million over 80 quarters. Installment payments will commence once the final determination of the amount of withdrawal liability is established. Upon withdrawal, the employees covered under this multiemployer pension plan were included in the Company's 401(k) plan (the “401(k) Plan”). The $4.3 million estimated withdrawal charge is included in the Company's consolidated statement of operations for the fiscal year ended June 30, 2012 as “Pension withdrawal expense,” with the short-term and long-term portions reflected in current and long-term liabilities, respectively, on the Company's consolidated balance sheets at June 30, 2014 and June 30, 2013. As of June 30, 2014, a final determination of liability has not been made by the pension plan administrator and installment payments have not commenced. Future collective bargaining negotiations may result in the Company withdrawing from the remaining multiemployer pension plans in which it participates and, if successful, the Company may incur a withdrawal liability, the amount of which could be material to the Company's results of operations and cash flows. Company contributions to the multiemployer pension plans:
(In thousands) |  | WCTPP(1)(2)(3) |  | All Other Plans(4)
Year Ended: |  |  |  |
June 30, 2014 |  | $ | 3,153 |  |  | $ | 34 |
June 30, 2013 |  | $ | 3,064 |  |  | $ | 37 |
June 30, 2012 |  | $ | 3,048 |  |  | $ | 113 |
____________
(1) | Individually significant plan.
(2) | Less than 5% of total contribution to WCTPP based on WCTPP's most recent annual report on Form 5500 for the calendar year ended December 31, 2013.
(3) | The Company guarantees that one hundred seventy-three (173) hours will be contributed upon for all employees who are compensated for all available straight time hours for each calendar month. An additional 6.5% of the basic contribution must be paid for PEER or the Program for Enhanced Early Retirement.
(4) | Includes a plan that is not individually significant.
The Company expects to contribute an aggregate of $3.3 million towards multiemployer pension plans in fiscal 2015. Multiemployer Plans Other Than Pension Plans The Company participates in eight defined contribution multiemployer plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company's participation in these plans is governed by collective bargaining agreements which expire on or before September 30, 2017. The Company's aggregate contributions to multiemployer plans other than pension plans in the fiscal years ended June 30, 2014, 2013 and 2012 were $6.6 million, $5.8 million and $5.8 million, respectively. The Company expects to contribute an aggregate of $7.2 million towards multiemployer plans other than pension plans in fiscal 2015. 401(k) Plan The Company's 401(k) Plan is available to all eligible employees who have worked more than 1,000 hours during a calendar year and were employed at the end of the calendar year. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The Company's matching contribution is discretionary, based on approval by the Company's Board of Directors. For the calendar years 2014, 2013 and 2012, the Company's Board of Directors approved a Company matching contribution of 50% of an employee's annual contribution to the 401(k) Plan, up to 6% of the employee's eligible income. The matching contributions (and any earnings thereon) vest at the rate of 20% for each of the participant's first 5 years of vesting service, so that a participant is fully vested in his or her matching contribution account after 5 years of vesting service. A participant is automatically vested in the event of death, disability or attainment of age 65 while employed by the Company. Employees are 100% vested in their contributions. For employees subject to a collective bargaining agreement, the match is only available if so provided in the labor agreement. The Company recorded matching contributions of $1.3 million, $1.2 million and $1.4 million in operating expenses for the fiscal years ended June 30, 2014, 2013 and 2012, respectively. Postretirement Benefits The Company sponsors a postretirement defined benefit plan that covers qualified non-union retirees and certain qualified union retirees ("Retiree Medical Plan"). The plan provides medical, dental and vision coverage for retirees under age 65 and medical coverage only for retirees age 65 and above. Under this postretirement plan, the Company’s contributions toward premiums for retiree medical, dental and vision coverage for participants and dependents are scaled based on length of service, with greater Company contributions for retirees with greater length of service, subject to a maximum monthly Company contribution. The Company's retiree medical, dental and vision plan is unfunded, and its liability was calculated using an assumed discount rate of 4.3% at June 30, 2014. The Company projects an initial medical trend rate of 8.0% in fiscal 2014, ultimately reducing to 4.5% in 10 years. The Company also provides a postretirement death benefit ("Death Benefit") to certain of its employees and retirees, subject, in the case of current employees, to continued employment with the Company until retirement and certain other conditions related to the manner of employment termination and manner of death. The Company records the actuarially determined liability for the present value of the postretirement death benefit. The Company has purchased life insurance policies to fund the postretirement death benefit wherein the Company owns the policy but the postretirement death benefit is paid to the employee's or retiree's beneficiary. The Company records an asset for the fair value of the life insurance policies which equates to the cash surrender value of the policies. Retiree Medical Plan and Death Benefit The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit for the fiscal years ended June 30, 2014, 2013 and 2012. Net periodic postretirement benefit cost for fiscal 2014 was based on employee census information as of July 1, 2013 and asset information as of June 30, 2014.
|  | Year Ended June 30,
(In thousands) |  | 2014 |  | 2013 |  | 2012
Components of Net Periodic Postretirement Benefit Cost: |  |
Service cost |  | $ | 936 |  |  | $ | 1,972 |  |  | $ | 1,817 |
Interest cost |  | 810 |  |  | 969 |  |  | 1,100 |
Expected return on plan assets |  | — |  |  | — |  |  | — |
Amortization of net gain |  | (880 | ) |  | 7 |  |  | (164 | )
Amortization of unrecognized transition (asset) obligation |  | — |  |  | — |  |  | — |
Amortization of prior service cost (credit) |  | (1,757 | ) |  | (1,757 | ) |  | (1,757 | )
Net periodic postretirement benefit cost |  | $ | (891 | ) |  | $ | 1,191 |  |  | $ | 996 |
The difference between the assets and the Accumulated Postretirement Benefit Obligation (APBO) at the adoption of ASC 715-60 was established as a transition (asset) obligation and is amortized over the average expected future service for active employees as measured at the date of adoption. Any plan amendments that retroactively increase benefits create prior service cost. The increase in the APBO due to any plan amendment is established as a base and amortized over the average remaining years of service to the full eligibility date of active participants who are not yet fully eligible for benefits at the plan amendment date. Gains and losses due to experience different than that assumed or from changes in actuarial assumptions are not immediately recognized. The tables below show the remaining bases for the transition (asset) obligation, prior service cost (credit), and the calculation of the amortizable gain or loss.
Amortization Schedule |  |
Transition (Asset) Obligation: The transition (asset) obligations have been fully amortized.
Prior service cost (credit) ($ in thousands):
Date Established |  | Balance at July 1, 2013 |  | Annual Amortization |  | Years Remaining |  | Curtailment |  | Balance at June 30, 2014
January 1, 2008 |  | $ | (1,423 | ) |  | $ | 230 |  |  | 6.2 |  | — |  |  | $ | (1,193 | )
July 1, 2012 |  | (16,054 | ) |  | 1,527 |  |  | 10.5 |  | — |  |  | (14,527 | )
|  | $ | (17,477 | ) |  | $ | 1,757 |  |  |  |  |  |  | $ | (15,720 | )
|  | Year Ended June 30,
|  | Retiree Medical Plan |  | Death Benefit
($ in thousands) |  | 2014 |  | 2013 |  | 2014 |  | 2013
Amortization of Net (Gain) Loss: |  |
Net (gain) loss as of July 1 |  | $ | (8,006 | ) |  | $ | (12,087 | ) |  | $ | 1,791 |  |  | $ | 1,850 |
Asset (gains) losses not yet recognized in market related value of assets |  | — |  |  | — |  |  | — |  |  | — |
Net (gain) loss subject to amortization |  | (8,006 | ) |  | (12,087 | ) |  | 1,791 |  |  | 1,850 |
Corridor (10% of greater of APBO or assets) |  | 1,262 |  |  | 872 |  |  | (826 | ) |  | (798 | )
Net (gain) loss in excess of corridor |  | $ | (6,744 | ) |  | $ | (11,215 | ) |  | $ | 965 |  |  | $ | 1,052 |
Amortization years |  | 10.7 |  |  | 11.1 |  |  | 7.4 |  |  | 8.0 |
The following tables provide a reconciliation of the benefit obligation and plan assets:
|  | Year Ended June 30,
(In thousands) |  | 2014 |  | 2013
Change in Benefit Obligation: |  |
Projected postretirement benefit obligation at beginning of year |  | $ | 16,701 |  |  | $ | 23,325 |
Service cost |  | 936 |  |  | 1,972 |
Interest cost |  | 810 |  |  | 969 |
Participant contributions |  | 708 |  |  | 729 |
Actuarial (gains) losses |  | 3,141 |  |  | (8,520 | )
Benefits paid |  | (1,407 | ) |  | (1,774 | )
Projected postretirement benefit obligation at end of year |  | $ | 20,889 |  |  | $ | 16,701 |
|  | Year Ended June 30,
(In thousands) |  | 2014 |  | 2013
Change in Plan Assets: |  |
Fair value of plan assets at beginning of year |  | $ | — |  |  | $ | — |
Employer contributions |  | 699 |  |  | 1,045 |
Participant contributions |  | 708 |  |  | 729 |
Benefits paid |  | (1,407 | ) |  | (1,774 | )
Fair value of plan assets at end of year |  | — |  |  | — |
Funded status of plan |  | $ | (20,889 | ) |  | $ | (16,701 | )
|  | June 30,
(In thousands) |  | 2014 |  | 2013
Amounts Recognized in the Consolidated Balance Sheet Consist of: |  |
Non-current assets |  | $ | — |  |  | $ | — |
Current liabilities |  | (919 | ) |  | (625 | )
Non-current liabilities |  | (19,970 | ) |  | (16,076 | )
Total |  | $ | (20,889 | ) |  | $ | (16,701 | )
|  | Year Ended June 30,
(In thousands) |  | 2014 |  | 2013
Amounts Recognized in Accumulated OCI Consist of: |  |  |  |
Net gain |  | $ | (6,216 | ) |  | $ | (10,131 | )
Transition obligation |  | (15,720 | ) |  | — |
Prior service cost (credit) |  | — |  |  | (17,604 | )
Total accumulated OCI |  | $ | (21,936 | ) |  | $ | (27,735 | )
|  | Year Ended June 30,
(In thousands) |  | 2014 |  | 2013
Other Changes in Plan Assets and Benefit Obligations Recognized in OCI: |  |
Unrecognized actuarial loss (gain) |  | $ | 3,141 |  |  | $ | (8,520 | )
Amortization of net loss |  | 880 |  |  | (7 | )
Amortization of prior service cost |  | 1,757 |  |  | 1,757 |
Total recognized in OCI |  | 5,778 |  |  | (6,770 | )
Net periodic benefit (credit) cost |  | (891 | ) |  | 1,191 |
Total recognized in net periodic benefit cost and OCI |  | $ | 4,887 |  |  | $ | (5,579 | )
The estimated net gain and prior service credit that will be amortized from accumulated OCI into net periodic benefit cost in fiscal 2015 are $0.5 million and $1.8 million, respectively.
(In thousands) |
Estimated Future Benefit Payments: |
Year Ending: |
June 30, 2015 | $ | 939 |
June 30, 2016 | $ | 1,029 |
June 30, 2017 | $ | 1,126 |
June 30, 2018 | $ | 1,252 |
June 30, 2019 | $ | 1,405 |
June 30, 2020 to June 30, 2024 | $ | 8,535 |
Expected Contributions: |
June 30, 2015 | $ | 939 |
Sensitivity in Fiscal 2015 Results Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one percentage point change in assumed health care cost trend rates would have the following effects in fiscal 2015:
|  | 1-Percentage Point
(In thousands) |  | Increase |  | Decrease
Effect on total of service and interest cost components |  | $ | 220 |  |  | $ | (183 | )
Effect on accumulated postretirement benefit obligation |  | $ | 1,378 |  |  | $ | (1,158 | )

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References No definition available. + Details
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