Note 10 — 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,
		2015				2014				2013
Service cost during the period		$	546			$	576			$	544
Interest cost on projected benefit obligation			1,434				1,359				1,427
Expected return on assets			(3,033	)			(2,728	)			(2,738	)
Amortization of:
Unrecognized prior service cost			4				4				4
Actuarial loss			580				1,002				1,011
Net pension (benefit) cost		$	(469	)		$	213			$	248

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

 

		Year ended March 31,
		2015				2014				2013
Discount rate			4.46	%			4.28	%			4.76	%
Rate of increase in compensation levels			3.00	%			3.00	%			3.50	%
Long-term rate of return on plan assets			8.00	%			8.00	%			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 2016.

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

 

		Year ended March 31,
		2015				2014
Change in the benefit obligation
Projected benefit obligation at beginning of year		$	32,789			$	32,278
Service cost			442				472
Interest cost			1,434				1,359
Actuarial loss (gain)			5,573				(226	)
Benefit payments			(1,186	)			(1,094	)
Projected benefit obligation at end of year		$	39,052			$	32,789

 

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

 

		March 31,
		2015				2014
Discount rate			3.74	%			4.46	%
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		$	38,548			$	34,627
Employer contribution			55				—
Actual return on plan assets			2,967				5,015
Benefit and administrative expense payments			(1,186	)			(1,094	)
Fair value of plan assets at end of year		$	40,384			$	38,548
Funded status
Funded status at end of year		$	1,332			$	5,759
Amount recognized in the Consolidated Balance Sheets		$	1,332			$	5,759

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. In fiscal 2015, the mortality assumption changed from the RP 2000 Mortality Table, projected to 2015 and weighted 50% blue collar for males and the RP 2000 Combined Healthy Table for females projected to 2015 to the sex district RP 2014 dollar weighted annuitant and non-annuitant Mortality Table projected to 2020 using scale MP-2014. This change resulted in an increase to the projected benefit obligation of approximately $2,145. 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, 2015 and 2014 was $33,998 and $28,254, respectively. At March 31, 2015 and 2014, the pension plan was fully funded on an accumulated benefit obligation and projected benefit obligation basis.

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

 

		March 31,
		2015				2014
Net actuarial loss		$	9,141			$	5,939
Prior service cost			—				2
		$	9,141			$	5,941

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

 

		March 31,
		2015				2014
Net actuarial loss (gain) arising during the year		$	3,578			$	(1,692	)
Amortization of actuarial loss			(375	)			(647	)
Amortization of prior service cost			(3	)			(3	)
		$	3,200			$	(2,342	)

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 2016 are $1,174 and $0, respectively.

 

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

 

2016		$	1,263
2017			1,370
2018			1,467
2019			1,495
2020			1,635
2021-2025			9,128
Total		$	16,358

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

 

		Target Allocation				March 31,
						2015				2014
Asset Category
Equity securities			50-70	%			66	%			66	%
Debt securities			20-50	%			34	%			34	%
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, 2015 and 2014, by asset category, are as follows:

 

						Fair Value Measurements Using
Asset Category		At March 31,  2015				Quoted prices in active markets for identical assets (Level 1)				Significant other observable inputs (Level 2)				Significant unobservable inputs (Level 3)
Cash		$	126			$	126			$	—			$	—
Equity securities:
U.S. companies			21,586				21,586				—				—
International companies			4,854				4,854				—				—
Fixed income:
Corporate bond funds
Intermediate-term			11,109				11,109				—				—
Short-term			2,709				2,709				—				—
		$	40,384			$	40,384			$	—			$	—

 

						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			$	—			$	—

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 2015, fiscal 2014 and fiscal 2013 was $294, $257 and $204, 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 2015, fiscal 2014, and fiscal 2013 related to this plan was $70, $70 and $24, respectively. At March 31, 2015 and 2014, the related liability was $341 and $298, respectively. The current portion of the related liability of $26 and $26 at March 31, 2015 and 2014, 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. 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 $940 in fiscal 2015, $831 in fiscal 2014 and $753 in fiscal 2013.

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,
		2015				2014				2013
Interest cost on accumulated benefit obligation		$	31			$	33			$	39
Amortization of prior service benefit			(106	)			(166	)			(166	)
Amortization of actuarial loss			35				46				44
Net postretirement benefit income		$	(40	)		$	(87	)		$	(83	)

 

The weighted average discount rate used to develop the net postretirement benefit cost were 3.59%, 3.26% and 3.96% in fiscal 2015, fiscal 2014 and fiscal 2013, respectively.

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

 

		Year ended March 31,
		2015				2014
Change in the benefit obligation
Projected benefit obligation at beginning of year		$	951			$	1,030
Interest cost			31				33
Actuarial loss (gain)			75				(16	)
Benefit payments			(89	)			(96	)
Projected benefit obligation at end of year		$	968			$	951

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

 

		March 31,
		2015				2014
Discount rate			3.11	%			3.59	%
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 2021 and subsequent years. This was accomplished using .5% decrements for the years ended March 31, 2015 through 2021.

 

		Year ended March 31,
		2015				2014
Change in fair value of plan assets
Fair value of plan assets at beginning of year		$	—			$	—
Employer contribution			89				96
Benefit payments			(89	)			(96	)
Fair value of plan assets at end of year		$	—			$	—
Funded status
Funded status at end of year		$	(968	)		$	(951	)
Amount recognized in the Consolidated Balance Sheets		$	(968	)		$	(951	)

The current portion of the accrued postretirement benefit obligation of $92 and $98, at March 31, 2015 and 2014, 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,
		2015				2014
Net actuarial loss		$	321			$	295
Prior service cost			—				(68	)
		$	321			$	227

 

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

 

		March 31,
		2015				2014
Net actuarial loss (gain) arising during the year		$	48			$	(10	)
Amortization of actuarial loss			(23	)			(30	)
Amortization of prior service cost			69				107
		$	94			$	67

The estimated net actuarial loss and prior service cost for the other postretirement benefit plan that will be amortized from accumulated other comprehensive loss into net postretirement benefit income in fiscal 2016 are $38 and $0, respectively.

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

 

2016		$	92
2017			89
2018			86
2019			82
2020			78
2021-2025			331
Total		$	758

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 233 and 252 shares in the ESOP at March 31, 2015 and 2014, respectively. There were no Company contributions to the ESOP in fiscal 2015, fiscal 2014 or fiscal 2013. 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 $3,738. The liability of $446 and $221 on March 31, 2015 and 2014, respectively, 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 Sheets.