Note 11 — Employee Benefit Plans:

Retirement Plans

The Company has a qualified defined benefit plan covering U.S. employees hired prior to January 1, 2003, which is non-contributory. Benefits are based on the employee’s years of service and average earnings for the five highest consecutive calendar years of compensation in the ten-year period preceding retirement. The Company’s funding policy for the plan is to contribute the amount required by the Employee Retirement Income Security Act of 1974, as amended.

The components of pension cost are:

 

		Year ended March 31,
		2014				2013				2012
Service cost during the period		$	576			$	544			$	459
Interest cost on projected benefit obligation			1,359				1,427				1,421
Expected return on assets			(2,728	)			(2,738	)			(2,713	)
Amortization of:
Unrecognized prior service cost			4				4				4
Actuarial loss			1,002				1,011				517
Net pension cost (benefit)		$	213			$	248			$	(312	)

The weighted average actuarial assumptions used to determine net pension cost are:

 

		Year ended March 31,
		2014				2013				2012
Discount rate			4.28	%			4.76	%			5.63	%
Rate of increase in compensation levels			3.00	%			3.50	%			3.50	%
Long-term rate of return on plan assets			8.00	%			8.50	%			8.50	%

The expected long-term rate of return is based on the mix of investments that comprise plan assets and external forecasts of future long-term investment returns, historical returns, correlations and market volatilities.

The Company does not expect to make any contributions to the plan during fiscal 2015.

Changes in the Company’s benefit obligation, plan assets and funded status for the pension plan are presented below:

 

		Year ended March 31,
		2014				2013
Change in the benefit obligation
Projected benefit obligation at beginning of year		$	32,278			$	30,430
Service cost			472				439
Interest cost			1,359				1,427
Actuarial (gain) loss			(226	)			1,561
Benefit payments			(1,094	)			(1,579	)
Projected benefit obligation at end of year		$	32,789			$	32,278

 

The weighted average actuarial assumptions used to determine the benefit obligation are:

 

		March 31,
		2014				2013
Discount rate			4.46	%			4.28	%
Rate of increase in compensation levels			3.00	%			3.00	%
Change in fair value of plan assets
Fair value of plan assets at beginning of year		$	34,627			$	32,668
Actual return on plan assets			5,015				3,538
Benefit and administrative expense payments			(1,094	)			(1,579	)
Fair value of plan assets at end of year		$	38,548			$	34,627
Funded status
Funded status at end of year		$	5,759			$	2,349
Amount recognized in the Consolidated Balance Sheets		$	5,759			$	2,349

The projected benefit obligation is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation reflects the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases. The accumulated benefit obligation as of March 31, 2014 and 2013 was $28,254 and $27,809, respectively. At March 31, 2014 and 2013, the pension plan was fully funded on an accumulated benefit obligation basis.

Amounts recognized in accumulated other comprehensive loss, net of income tax, consist of:

 

		March 31,
		2014				2013
Net actuarial loss		$	5,939			$	8,278
Prior service cost			2				5
		$	5,941			$	8,283

The decrease in accumulated other comprehensive loss (income), net of income tax, consists of:

 

		March 31,
		2014				2013
Net actuarial (gain) loss arising during the year		$	(1,692	)		$	424
Amortization of actuarial loss			(647	)			(653	)
Amortization of prior service cost			(3	)			(3	)
		$	(2,342	)		$	(232	)

The estimated net actuarial loss and prior service cost for the pension plan that will be amortized from accumulated other comprehensive loss into net pension cost in fiscal 2015 are $580 and $4, respectively.

 

The following benefit payments, which reflect future service, are expected to be paid:

 

2015		$	1,260
2016			1,253
2017			1,359
2018			1,447
2019			1,477
2020-2024			8,711
Total		$	15,507

The weighted average asset allocation of the plan assets by asset category is as follows:

 

		Target Allocation				March 31,
						2014				2013
Asset Category
Equity securities			50-70	%			66	%			68	%
Debt securities			20-50	%			34	%			32	%
Other, including cash			0-10	%			—	%			—	%
							100	%			100	%

The investment strategy of the plan is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets are adjusted when considered necessary to reflect trends and developments within the overall investment environment.

The fair values of the Company’s pension plan assets at March 31, 2014 and 2013, by asset category, are as follows:

 

						Fair Value Measurements Using
Asset Category		At March 31,  2014				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Cash		$	122			$	122			$	—			$	—
Equity securities:
U.S. companies			20,396				20,396				—				—
International companies			4,905				4,905				—				—
Fixed income:
Corporate bond funds
Intermediate-term			10,507				10,507				—				—
Short-term			2,618				2,618				—				—
		$	38,548			$	38,548			$	—			$	—

 

						Fair Value Measurements Using
Asset Category		At March 31,  2013				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Cash		$	108			$	108			$	—			$	—
Equity securities:
U.S. companies			19,209				19,209				—				—
International companies			4,284				4,284				—				—
Fixed income:
Corporate bond funds
Intermediate-term			8,953				8,953				—				—
Short-term			2,073				2,073				—				—
		$	34,627			$	34,627			$	—			$	—

The fair value of Level 1 pension assets are obtained by reference to the last quoted price of the respective security on the market which it trades. See Note 1 to the Consolidated Financial Statements.

On February 4, 2003, the Company closed the defined benefit plan to all employees hired on or after January 1, 2003. In place of the defined benefit plan, these employees participate in the Company’s domestic defined contribution plan. The Company contributes a fixed percentage of employee compensation to this plan on an annual basis for these employees. The Company contribution to the defined contribution plan for these employees in fiscal 2014, fiscal 2013 and fiscal 2012 was $257, $204 and $161, respectively.

The Company has a Supplemental Executive Retirement Plan (“SERP”) which provides retirement benefits associated with wages in excess of the legislated qualified plan maximums. Pension expense recorded in fiscal 2014, fiscal 2013, and fiscal 2012 related to this plan was $70, $24 and $21, respectively. At March 31, 2014 and 2013, the related liability was $298 and $254, respectively. The current portion of the related liability of $26 and $27 at March 31, 2014 and 2013, respectively, is included in the caption “Accrued Compensation” and the long-term portion is separately presented in the Consolidated Balance Sheets.

The Company has a domestic defined contribution plan (401k) covering substantially all employees. Prior to January 1, 2012, company contributions to the plan were determined by a formula based on profitability and were made at the discretion of the Compensation Committee of the Board of Directors. Effective January 1, 2012, company contributions were no longer based upon profitability. The Company provides matching contributions equal to 100% of the first 3% of an employee’s salary deferral and 50% of the next 2% percent of an employee’s salary deferral. Company contributions are immediately vested. Contributions were $831 in fiscal 2014, $753 in fiscal 2013 and $457 in fiscal 2012.

Other Postretirement Benefits

In addition to providing pension benefits, the Company has a plan in the U.S. that provides health care benefits for eligible retirees and eligible survivors of retirees. The Company’s share of the medical premium cost has been capped at $4 for family coverage and $2 for single coverage for early retirees, and $1 for both family and single coverage for regular retirees.

On February 4, 2003, the Company terminated postretirement health care benefits for its U.S. employees. Benefits payable to retirees of record on April 1, 2003 remained unchanged.

 

The components of postretirement benefit income are:

 

		Year ended March 31,
		2014				2013				2012
Interest cost on accumulated benefit obligation		$	33			$	39			$	45
Amortization of prior service benefit			(166	)			(166	)			(166	)
Amortization of actuarial loss			46				44				37
Net postretirement benefit income		$	(87	)		$	(83	)		$	(84	)

The weighted average discount rate used to develop the net postretirement benefit cost were 3.26%, 3.96% and 4.69% in fiscal 2014, fiscal 2013 and fiscal 2012, respectively.

Changes in the Company’s benefit obligation, plan assets and funded status for the plan are as follows:

 

		Year ended March 31,
		2014				2013
Change in the benefit obligation
Projected benefit obligation at beginning of year		$	1,030			$	999
Interest cost			33				39
Actuarial (gain) loss			(16	)			95
Benefit payments			(96	)			(103	)
Projected benefit obligation at end of year		$	951			$	1,030

The weighted average actuarial assumptions used to develop the accrued postretirement benefit obligation were:

 

		March 31,
		2014				2013
Discount rate			3.59	%			3.26	%
Medical care cost trend rate			8.00	%			8.00	%

The medical care cost trend rate used in the actuarial computation ultimately reduces to 5% in 2020 and subsequent years. This was accomplished using .5% decrements for the years ended March 31, 2014 through 2020.

 

		Year ended March 31,
		2014				2013
Change in fair value of plan assets
Fair value of plan assets at beginning of year		$	—			$	—
Employer contribution			96				103
Benefit payments			(96	)			(103	)
Fair value of plan assets at end of year		$	—			$	—
Funded status
Funded status at end of year		$	(951	)		$	(1,030	)
Amount recognized in the Consolidated Balance Sheets		$	(951	)		$	(1,030	)

 

The current portion of the accrued postretirement benefit obligation of $98 and $107, at March 31, 2014 and 2013, respectively, is included in the caption “Accrued Compensation” and the long-term portion is separately presented in the Consolidated Balance Sheets.

Amounts recognized in accumulated other comprehensive loss, net of income tax, consist of:

 

		March 31,
		2014				2013
Net actuarial loss		$	295			$	336
Prior service cost			(68	)			(176	)
		$	227			$	160

The increase in accumulated other comprehensive loss, net of income tax, consists of:

 

		March 31,
		2014				2013
Net actuarial (gain) loss arising during the year		$	(10	)		$	61
Amortization of actuarial loss			(30	)			(28	)
Amortization of prior service cost			107				107
		$	67			$	140

The estimated net actuarial loss and prior service cost for the other postretirement benefit plan that will be amortized from accumulated other comprehensive loss (income) into net postretirement benefit income in fiscal 2015 are $40 and $(106), respectively.

The following benefit payments are expected to be paid during the fiscal years ending March 31:

 

2015		$	98
2016			93
2017			88
2018			82
2019			77
2020-2024			309
Total		$	747

Assumed medical care cost trend rates could have a significant effect on the amounts reported for the postretirement benefit plan. However, due to the caps imposed on the Company’s share of the premium costs, a one percentage point change in assumed medical care cost trend rates would not have a significant effect on the total service and interest cost components or the postretirement benefit obligation.

Employee Stock Ownership Plan

The Company has a noncontributory Employee Stock Ownership Plan (“ESOP”) that covers substantially all employees in the U.S. There were 252 and 279 shares in the ESOP at March 31, 2014 and 2013, respectively. There were no Company contributions to the ESOP in fiscal 2014, fiscal 2013 or fiscal 2012. Dividends paid on allocated shares accumulate for the benefit of the employees who participate in the ESOP.

Self-Insured Medical Plan

Effective January 1, 2014, the Company commenced self-funding the medical insurance coverage provided to its U.S. based employees. The Company has obtained a stop loss insurance policy in an effort to limit its exposure to claims. The Company has specific stop loss coverage per employee for claims incurred during the year exceeding $100 per employee with annual maximum aggregate stop loss coverage per employee of $1,000. The Company also has total plan annual maximum aggregate stop loss coverage of $3,707. The liability of $221 on March 31, 2014 related to the self-insured medical plan is primarily based upon claim history and is included in the caption “Accrued Compensation” in the Consolidated Balance Sheet.