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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2023
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
Employee Benefit Plans

6. Employee Benefit Plans

Defined Benefit Plans — Oshkosh Defense and Pierce sponsor defined benefit pension plans for certain employees. The benefits provided are based primarily on years of service and a benefit dollar multiplier. The Company periodically amends the plans, including changing the benefit dollar multipliers and other revisions. In December 2012, salaried participants in the Pierce pension plan no longer receive service credit, other than for vesting purposes. In December 2013, the Pierce pension plan was amended to close participation in the plan for new production employees. In October 2016, the Oshkosh Defense hourly defined benefit pension plan was closed to new production employees.

On July 27, 2021, the Company’s Board of Directors approved a plan to terminate and settle the defined benefit plan related to salaried participants of an Oshkosh defined benefit pension plan. In the fourth quarter of 2022, the Company transferred plan assets to an insurance company that will provide for and pay the remaining benefits to participants and incurred a charge of $33.6 million associated with the settlement of this plan. The pre-tax balance in Accumulated Other Comprehensive Income associated with the plan, along with costs related to the settlement, were recorded as a component of “Miscellaneous, net”, with the related income tax effects recorded in “Provision for income taxes”, in the Consolidated Statements of Income.

Determination of defined benefit pension and postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate the benefits that employees earn while working, as well as the present value of those benefits. The Company uses the services of independent actuaries to assist with these calculations. The Company determines the discount rate used each year based on the rate of return currently available on a portfolio of high-quality fixed-income investments with a maturity that is consistent with the projected benefit payout period. The Company’s long-term rate of return on assets is based on consideration of historical and forward-looking returns and the current asset allocation strategy. The plans’ expected return on assets is based on the plans’ historical returns and expected returns for the asset classes in which the plans are invested.

Supplemental Executive Retirement Plans (SERP) — The Company maintains defined benefit and defined contribution SERPs for certain executive officers of Oshkosh and its subsidiaries. In fiscal 2013, the Oshkosh defined benefit SERP was amended to freeze benefits under the plan and executive officers in the defined benefit SERP at that time became eligible for the new Oshkosh defined contribution SERP. At the same time, the Company established a trust to fund obligations under the Oshkosh SERPs. As of December 31, 2023, the trust held assets of $14.1 million. The trust assets are subject to claims of the Company’s creditors. The trust assets are included in “Other current assets” and “Other long-term assets” in the Consolidated Balance Sheets. The Company recognized an expense of $1.2 million in 2023, income of $0.5 million in 2022, expense of $0.4 million for the three months ended December 31, 2021 and expense of $2.6 million in fiscal 2021, related to the Oshkosh defined contribution SERP.

Postretirement Medical Plans — Oshkosh and certain of its subsidiaries sponsor multiple postretirement benefit plans for Oshkosh Defense, JLG, and Kewaunee hourly employees, retirees and their spouses. The plans generally provide health benefits based on years of service and date of birth. These plans are unfunded.

Changes in benefit obligations and plan assets, as well as the funded status of the Company’s defined benefit pension plans were as follows (in millions):

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

Accumulated benefit obligation at end of period

 

$

346.2

 

 

$

327.9

 

Change in projected benefit obligation

 

 

 

 

 

 

Benefit obligation at beginning of period

 

$

333.2

 

 

$

611.8

 

Service cost

 

 

6.6

 

 

 

10.3

 

Interest cost

 

 

16.6

 

 

 

17.0

 

Actuarial loss (gain)

 

 

7.1

 

 

 

(148.5

)

Settlement

 

 

—

 

 

 

(135.4

)

Benefits paid

 

 

(14.0

)

 

 

(18.2

)

Currency translation adjustments

 

 

0.9

 

 

 

(3.8

)

Benefit obligation at end of period

 

$

350.4

 

 

$

333.2

 

Change in plan assets

 

 

 

 

 

 

Fair value of plan assets at beginning of period

 

$

298.7

 

 

$

533.0

 

Actual return on plan assets

 

 

39.4

 

 

 

(102.2

)

Company contributions

 

 

2.0

 

 

 

28.6

 

Settlement

 

 

—

 

 

 

(135.4

)

Expenses paid

 

 

(1.4

)

 

 

(2.9

)

Benefits paid

 

 

(14.0

)

 

 

(18.2

)

Currency translation adjustments

 

 

1.2

 

 

 

(4.2

)

Fair value of plan assets at end of period

 

$

325.9

 

 

$

298.7

 

Funded status of plan - at end of period

 

$

(24.5

)

 

$

(34.5

)

 

 

 

 

 

 

 

Recognized in consolidated balance sheet at end of period

 

 

 

 

 

 

Prepaid benefit cost (long-term asset)

 

$

7.6

 

 

$

6.2

 

Accrued benefit liability (current liability)

 

 

(2.0

)

 

 

(2.0

)

Accrued benefit liability (long-term liability)

 

 

(30.1

)

 

 

(38.7

)

 

 

$

(24.5

)

 

$

(34.5

)

 

Recognized in accumulated other comprehensive income (loss) as of end of period (net of taxes)

 

 

 

 

 

 

Net actuarial loss

 

$

35.2

 

 

$

27.8

 

Prior service (cost) benefit

 

 

(8.1

)

 

 

(9.6

)

 

 

$

27.1

 

 

$

18.2

 

 

Weighted-average assumptions as of end of period

 

 

 

 

 

 

Discount rate

 

 

4.89

%

 

 

5.09

%

Expected return on plan assets

 

 

6.50

%

 

 

6.50

%

Pension benefit plans with accumulated benefit obligations in excess of plan assets consisted of the following (in millions):

 

 

December 31,

 

 

 

2023

 

 

2022

 

Projected benefit obligation

 

$

29.0

 

 

$

316.0

 

Accumulated benefit obligation

 

 

28.6

 

 

 

310.8

 

Fair value of plan assets

 

 

—

 

 

 

275.4

 

 

Changes in benefit obligations and plan assets, as well as the funded status of the Company’s postretirement benefit plans were as follows (in millions):

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

Accumulated benefit obligation at end of period

 

$

52.1

 

 

$

44.6

 

Change in projected benefit obligation

 

 

 

 

 

 

Benefit obligation at beginning of period

 

$

44.6

 

 

$

55.7

 

Service cost

 

 

1.7

 

 

 

2.2

 

Interest cost

 

 

2.1

 

 

 

1.4

 

Actuarial loss (gain)

 

 

7.5

 

 

 

(12.0

)

Benefits paid

 

 

(3.8

)

 

 

(2.7

)

Benefit obligation at end of period

 

$

52.1

 

 

$

44.6

 

Change in plan assets

 

 

 

 

 

 

Company contributions

 

$

3.8

 

 

$

2.7

 

Benefits paid

 

 

(3.8

)

 

 

(2.7

)

Fair value of plan assets at end of period

 

$

—

 

 

$

—

 

Funded status of plan - at end of period

 

$

(52.1

)

 

$

(44.6

)

 

 

 

 

 

 

 

Recognized in consolidated balance sheet at end of period

 

 

 

 

 

 

Accrued benefit liability (current liability)

 

$

(3.9

)

 

$

(2.2

)

Accrued benefit liability (long-term liability)

 

 

(48.2

)

 

 

(42.4

)

 

 

$

(52.1

)

 

$

(44.6

)

 

Recognized in accumulated other comprehensive income (loss) as of end of period (net of taxes)

 

 

 

 

 

 

Net actuarial loss

 

$

(3.1

)

 

$

2.7

 

Prior service (cost) benefit

 

 

9.0

 

 

 

10.2

 

 

 

$

5.9

 

 

$

12.9

 

 

Weighted-average assumptions as of end of period

 

 

 

 

 

 

Discount rate

 

 

4.76

%

 

 

4.95

%

Expected return on plan assets

 

n/a

 

 

n/a

 

 

The components of net periodic benefit cost were as follows (in millions):

 

 

Pension Benefits

 

 

 

Year Ended
December 31,

 

 

(transition period)
Three Months Ended
December 31,

 

 

Year Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2021

 

 

2021

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

6.6

 

 

$

10.3

 

 

$

2.6

 

 

$

11.5

 

Interest cost

 

 

16.6

 

 

 

17.0

 

 

 

4.3

 

 

 

16.4

 

Expected return on plan assets

 

 

(19.4

)

 

 

(20.6

)

 

 

(5.3

)

 

 

(19.8

)

Amortization of prior service cost

 

 

1.9

 

 

 

2.2

 

 

 

0.6

 

 

 

2.3

 

Settlement

 

 

—

 

 

 

33.6

 

 

 

—

 

 

 

—

 

Amortization of net actuarial (gain) loss

 

 

(2.4

)

 

 

1.0

 

 

 

0.2

 

 

 

4.9

 

Expenses paid

 

 

1.0

 

 

 

3.0

 

 

 

2.5

 

 

 

3.0

 

Net periodic benefit cost

 

$

4.3

 

 

$

46.5

 

 

$

4.9

 

 

$

18.3

 

Other changes in plan assets and benefit obligations recognized in other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

$

(12.5

)

 

$

(26.2

)

 

$

(13.0

)

 

$

(74.1

)

Amortization of prior service cost

 

 

(1.9

)

 

 

(2.2

)

 

 

(0.6

)

 

 

(2.3

)

Settlement

 

 

—

 

 

 

(33.6

)

 

 

—

 

 

 

—

 

Amortization of net actuarial gain (loss)

 

 

2.4

 

 

 

(1.0

)

 

 

(0.2

)

 

 

(4.9

)

 

$

(12.0

)

 

$

(63.0

)

 

$

(13.8

)

 

$

(81.3

)

Weighted-average assumptions

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

5.09%

 

 

2.83%

 

 

2.91%

 

 

2.71%

 

Expected return on plan assets

 

6.50%

 

 

4.31%

 

 

4.46%

 

 

4.89%

 

 

 

 

Postretirement Health and Other

 

 

Year Ended
December 31,

 

 

(transition period)
Three Months Ended
December 31,

 

 

Year Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2021

 

 

2021

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

1.7

 

 

$

2.2

 

 

$

0.5

 

 

$

2.2

 

Interest cost

 

 

2.1

 

 

 

1.4

 

 

 

0.4

 

 

 

1.2

 

Amortization of prior service cost

 

 

(1.4

)

 

 

(1.4

)

 

 

(0.4

)

 

 

(1.4

)

Amortization of net actuarial (gain) loss

 

 

(0.2

)

 

 

0.3

 

 

 

0.1

 

 

 

0.3

 

Net periodic benefit cost

 

$

2.2

 

 

$

2.5

 

 

$

0.6

 

 

$

2.3

 

Other changes in plan assets and benefit obligations recognized in other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial (gain) loss

 

$

7.5

 

 

$

(12.0

)

 

$

2.2

 

 

$

(1.1

)

Amortization of prior service cost

 

 

1.4

 

 

 

1.4

 

 

 

0.4

 

 

 

1.4

 

Amortization of net actuarial gain (loss)

 

 

0.2

 

 

 

(0.3

)

 

 

(0.1

)

 

 

(0.3

)

 

$

9.1

 

 

$

(10.9

)

 

$

2.5

 

 

$

—

 

Weighted-average assumptions

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

4.95%

 

 

2.62%

 

 

2.61%

 

 

2.36%

 

Expected return on plan assets

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

Components of net periodic benefit cost other than “Service cost” and “Expenses paid” are included in “Miscellaneous, net” in the Consolidated Statements of Income.

Amounts expected to be recognized in pension and supplemental employee retirement plan net periodic benefit costs during 2024 included in “Accumulated other comprehensive loss” in the Consolidated Balance Sheet at December 31, 2023 are prior service costs of $1.7 million ($1.3 million net of tax) and unrecognized net actuarial losses of $2.6 million ($1.9 million net of tax).

The Company’s policy is to fund the pension plans in amounts that comply with contribution limits imposed by law. The Company does not expect to make contributions to its pension plans in 2024.

The Company’s Board of Directors has appointed an Investment Committee (Committee), which consists of members of management, to manage the investment of the Company’s pension plan assets. The Committee has established and operates under an Investment Policy. The Committee determines the asset allocation and target ranges based upon periodic asset/liability studies and capital market projections. The Committee retains external investment managers to invest the assets and an adviser to monitor the performance of the investment managers. The Investment Policy prohibits certain investment transactions, such as commodity contracts, margin transactions, short selling and investments in Company securities, unless the Committee gives prior approval.

The weighted average of the Company’s pension plan asset allocations and target allocations at December 31, 2023 by asset category for the Company's pension plans managed by the Committee, were as follows:

 

 

Target %

 

Actual

 

Asset Category

 

 

 

 

 

Fixed income

 

30% - 40%

 

 

35

%

Large-cap equity

 

25% - 40%

 

 

34

%

Mid-cap equity

 

10% - 20%

 

 

16

%

Small-cap equity

 

5% - 15%

 

 

13

%

Other

 

0% - 5%

 

 

2

%

 

 

 

 

100

%

The Company’s pension plan investment strategy is based on an expectation that, over time, equity securities will provide higher returns than debt securities. The plans primarily minimize the risk of larger losses under this strategy through diversification of investments by asset class, by investing in different styles of investment management within the classes and using several investment managers.

The fair value of plan assets by major category and level within the fair value hierarchy was as follows (in millions):

 

 

Quoted Prices for Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Common stocks

 

 

 

 

 

 

 

 

 

 

 

 

U.S. companies (a)

 

$

88.6

 

 

$

—

 

 

$

—

 

 

$

88.6

 

International companies (b)

 

 

—

 

 

 

5.0

 

 

 

—

 

 

 

5.0

 

Mutual funds (a)

 

 

94.3

 

 

 

—

 

 

 

—

 

 

 

94.3

 

Government and agency bonds (c)

 

 

—

 

 

 

16.1

 

 

 

—

 

 

 

16.1

 

Corporate bonds and notes (d)

 

 

—

 

 

 

6.9

 

 

 

—

 

 

 

6.9

 

Money market funds (e)

 

 

7.8

 

 

 

—

 

 

 

—

 

 

 

7.8

 

Other

 

 

 

 

 

—

 

 

 

0.6

 

 

 

0.6

 

 

$

190.7

 

 

$

28.0

 

 

$

0.6

 

 

 

219.3

 

Investments measured at net asset value (NAV) (f)

 

 

 

 

 

 

 

 

 

 

 

106.6

 

 

 

 

 

 

 

 

 

 

 

$

325.9

 

 

 

 

 

Quoted Prices for Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Common stocks

 

 

 

 

 

 

 

 

 

 

 

 

U.S. companies (a)

 

$

80.3

 

 

$

0.1

 

 

$

—

 

 

$

80.4

 

International companies (b)

 

 

—

 

 

 

5.5

 

 

 

—

 

 

 

5.5

 

Mutual funds (a)

 

 

82.9

 

 

 

—

 

 

 

—

 

 

 

82.9

 

Government and agency bonds (c)

 

 

—

 

 

 

15.4

 

 

 

—

 

 

 

15.4

 

Corporate bonds and notes (d)

 

 

—

 

 

 

5.7

 

 

 

—

 

 

 

5.7

 

Money market funds (e)

 

 

8.5

 

 

 

—

 

 

 

—

 

 

 

8.5

 

Other

 

 

—

 

 

 

—

 

 

 

0.5

 

 

 

0.5

 

 

$

171.7

 

 

$

26.7

 

 

$

0.5

 

 

 

198.9

 

Investments measured at net asset value (NAV) (f)

 

 

 

 

 

 

 

 

 

 

 

99.8

 

 

 

 

 

 

 

 

 

 

 

$

298.7

 

 

(a)
Primarily valued using a market approach based on the quoted market prices of identical instruments that are actively traded on public exchanges.
(b)
Valuation model looks at underlying security “best” price, exchange rate for underlying security’s currency against the U.S. dollar and ratio of underlying security to American depository receipt.
(c)
These investments consist of debt securities issued by the U.S. Treasury, U.S. government agencies and U.S. government-sponsored enterprises and have a variety of structures, coupon rates and maturities. These investments are considered to have low default risk as they are guaranteed by the U.S. government. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(d)
These investments consist of debt obligations issued by a variety of private and public corporations. These are investment grade securities which historically have provided a steady stream of income. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(e)
These investments largely consist of short-term investment funds and are valued using a market approach based on the quoted market prices of identical instruments.
(f)
These investments consist of privately placed funds that are valued based on NAV. NAV of the funds is based on the fair value of each fund’s underlying investments. In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plans assets that are in common collective trusts that calculate fair value based on NAV per share practical expedient (in millions):

 

 

Fair Value

 

 

Unfunded
 Commitments

 

 

Redemption Frequency
(if Currently Eligible)

 

Redemption Notice
Period (1)

December 31, 2023

 

$

106.6

 

 

$

—

 

 

N/A

 

15 days

December 31, 2022

 

$

99.8

 

 

$

—

 

 

N/A

 

15 days
(1)
Represents the maximum redemption period. A portion of the investment does not have any redemption period restrictions.

The Company’s estimated future benefit payments under Company sponsored plans were as follows (in millions):

 

 

Pension Benefits

 

 

Postretirement Health

 

Year Ending December 31,

 

Qualified

 

 

Non-Qualified

 

 

and Other

 

2024

 

$

13.3

 

 

$

2.0

 

 

$

3.9

 

2025

 

 

14.4

 

 

 

2.0

 

 

 

4.0

 

2026

 

 

15.7

 

 

 

2.0

 

 

 

4.3

 

2027

 

 

16.9

 

 

 

2.0

 

 

 

4.7

 

2028

 

 

18.0

 

 

 

2.0

 

 

 

5.0

 

2029-2032

 

 

103.4

 

 

 

10.6

 

 

 

22.9

 

Multi-Employer Pension Plans — The Company participates in the Boilermaker-Blacksmith National Pension Trust (Employer Identification Number 48-6168020), a multi-employer defined benefit pension plan related to collective bargaining employees at the Company’s Kewaunee facility. The Company’s contributions and pension benefits payable under the plan and the administration of the plan are determined by the terms of the related collective-bargaining agreement, which expires on May 1, 2027. The multi-employer plan poses different risks to the Company than single-employer plans in the following respects:

1. The Company’s contributions to the multi-employer plan may be used to provide benefits to all participating employees of the program, including employees of other employers.

2. In the event that another participating employer ceases contributions to the multi-employer plan, the Company may be responsible for any unfunded obligations along with the remaining participating employers.

3. If the Company chooses to withdraw from the multi-employer plan, the Company may be required to pay a withdrawal liability based on the underfunded status of the plan at that time.

As of April 2023, the plan-certified zone status as defined by the Pension Protection Act of 2006 was Red and accordingly the plan has implemented a financial improvement plan. The Company’s contributions to the multi-employer plan did not exceed 5% of the total plan contributions. The Company made contributions to the plan of $1.1 million in 2023, $1.2 million in 2022, $0.3 million for the three months ended December 31, 2021 and $1.4 million in fiscal 2021.

401(k) and Defined Contribution Pension Replacement Plans — The Company has defined contribution 401(k) plans for substantially all domestic employees. The plans allow employees to defer 2% to 100% of their income on a pre-tax basis. Each employee who elects to participate is eligible to receive Company matching contributions, which are based on employee contributions to the plans, subject to certain limitations. For certain businesses, in addition to matching contributions, the company also contributes between 2% and 6% of an employee’s base pay, depending on age. Amounts expensed for Company matching and discretionary contributions were $58.7 million in 2023, $50.2 million in 2022, $11.8 million for the three months ended December 31, 2021 and $45.5 million in fiscal 2021.