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Retirement Benefits | 12 Months Ended
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Sep. 30, 2019
Retirement Benefits [Abstract] |
Retirement Benefits | Note 19. Retirement benefits Woodward provides various retirement benefits to eligible members of the Company, including contributions to various defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and postretirement life insurance benefits. Eligibility requirements and benefit levels vary depending on employee location. Defined contribution plans Most of the Company’s U.S. employees are eligible to participate in the U.S. defined contribution plan. The U.S. defined contribution plan allows employees to defer part of their annual income for income tax purposes into their personal 401(k) accounts. The Company makes matching contributions to eligible employee accounts, which are also deferred for employee personal income tax purposes. Certain non-U.S. employees are also eligible to participate in similar non-U.S. plans. Most of Woodward’s U.S. employees with at least two year s of service receive an annual contribution of Woodward stock, equal to 5% of their eligible prior year wages, to their personal Woodward Retirement Savings Plan accounts. In the second quarters of fiscal years 2019, 2018, and 2017, Woodward fulfilled its annual Woodward stock contribution obligation using shares held in treasury stock by issuing a total of 158 shares of common stock for a value of $14,846 in fiscal year 2019, 202 total shares of common stock for a value of $14,741 in fiscal year 2018, and 199 shares of common stock for a value of $14,014 in fiscal year 2017. The Woodward Retirement Savings Plan (the “WRS Plan”) held 3,623 shares of Woodward stock as of September 30, 2019 and 3,955 shares as of September 30, 2018. The shares held in the WRS Plan participate in dividends and are considered issued and outstanding for purposes of calculating basic and diluted earnings per share. Accrued liabilities included obligations to contribute shares of Woodward common stock to the WRS Plan of $11,701 as of September 30, 2019 and $11,475 as of September 30, 2018. The amount of expense associated with defined contribution plans was as follows:
|  |  | Year Ended September 30,
|  | 2019 |  | 2018 |  | 2017
Company costs |  | $ | 35,510 |  | $ | 34,084 |  | $ | 32,008
Defined benefit plans Woodward has defined benefit plans that provide pension benefits for certain retired employees in the United States, the United Kingdom, Japan, and Germany. Woodward also provides other postretirement benefits to its employees including postretirement medical benefits and life insurance benefits. Postretirement medical benefits are provided to certain current and retired employees and their covered dependents and beneficiaries in the United States and the United Kingdom. Life insurance benefits are provided to certain retirees in the United States under frozen plans, which are no longer available to current employees. A September 30 measurement date is utilized to value plan assets and obligations for all of Woodward’s defined benefit pension and other postretirement benefit plans. On October 26, 2018, the High Court of Justice in the United Kingdom (the “High Court”) issued a ruling (the “Court Ruling”) requiring defined benefit plan sponsors in the United Kingdom to equalize benefits payable to men and women under its United Kingdom defined benefit pension plans by amending those plans to increase the pension benefits payable to participants that accrued such benefits during the period from 1990 to 1997. In the Court Ruling, the High Court also provided details on acceptable alternative methods of amending plans to equalize the pension benefits. Although final guidance around the appropriate equalization methodology to be used has not yet been issued, Woodward has concluded that Court Ruling is applicable to its defined benefit pension plan in the United Kingdom and has made the necessary plan amendments. Woodward’s current estimate of the impact of the Court Ruling in the amount of $601 has been reflected in the United Kingdom defined benefit pension plan’s obligation and assets as of September 30, 2019 and will be amortized as a net prior service cost beginning in fiscal year 2020. Woodward does not expect any changes to the estimate resulting from final guidance around the appropriate equalization methodology to be used will be material to the United Kingdom defined benefit pension plan’s obligation and assets. In connection with the acquisition of L’Orange on June 1, 2018, Woodward assumed the unfunded defined benefit pension obligations of the L’Orange defined benefit pension plans in Germany (the “L’Orange Pension Plans”). Woodward’s assumption of the liability associated with the L’Orange Pension Plans was part of the total consideration paid by Woodward to acquire L’Orange and thus reduced Woodward’s cash payment for the transaction. Woodward has completed its valuation of the defined benefit pension obligations associated with the L’Orange Pension Plans and determined the value of the associated unfunded obligation was $39,257, of which $1,143 was considered current as of the June 1, 2018 acquisition date. The L’Orange Pension Plans had expenses of $2,004 and $673 and Woodward made $782 and $219 of contributions to the L’Orange Pension Plans to pay participant benefits during the years ended September 30, 2019 and September 30, 2018, respectively. The L’Orange Pension Plans are unfunded. Excluding the Woodward HRT Plan, which is only partially frozen to salaried participants, the defined benefit plans in the United States were frozen in fiscal year 2007 and no additional employees may participate in the U.S. plans and no additional service costs will be incurred. Pension Plans The actuarial assumptions used in measuring the net periodic benefit cost and plan obligations of retirement pension benefits were as follows:
| 2019 |  | 2018 |  | 2017
United States: |  |  |  |  |  |  |  |
Weighted-average assumptions to determine benefit obligation at September 30: |  |  |  |  |  |  |  |
Discount rate | 3.25 | % |  | 4.35 | % |  | 3.80 | %
Weighted-average assumptions to determine periodic benefit costs for years ended September 30: |  |  |  |  |  |  |  |
Discount rate | 4.35 |  |  | 3.80 |  |  | 3.65 |
Long-term rate of return on plan assets | 7.39 |  |  | 7.39 |  |  | 7.38 |
The discount rate assumption is intended to reflect the rate at which the retirement benefits could be effectively settled based upon the assumed timing of the benefit payments. In the United States, Woodward uses a bond portfolio matching analysis based on recently traded, non-callable bonds rated AA or better that have at least $50 million outstanding to determine the benefit obligations at year end.
| 2019 |  | 2018 |  | 2017
United Kingdom: |  |  |  |  |  |  |  |
Weighted-average assumptions to determine benefit obligation at September 30: |  |  |  |  |  |  |  |
Discount rate | 1.74 | % |  | 2.68 | % |  | 2.56 | %
Rate of compensation increase | 3.50 |  |  | 3.60 |  |  | 3.60 |
Weighted-average assumptions to determine periodic benefit costs for years ended September 30: |  |  |  |  |  |  |  |
Discount rate - service cost | 2.70 |  |  | 2.58 |  |  | 2.33 |
Discount rate - interest cost | 2.51 |  |  | 2.36 |  |  | 2.24 |
Rate of compensation increase | 3.60 |  |  | 3.60 |  |  | 3.40 |
Long-term rate of return on plan assets | 4.75 |  |  | 4.75 |  |  | 4.75 |
| 2019 |  | 2018 |  | 2017
Japan: |  |  |  |  |  |  |  |
Weighted-average assumptions to determine benefit obligation at September 30: |  |  |  |  |  |  |  |
Discount rate | 0.53 | % |  | 0.62 | % |  | 0.58 | %
Rate of compensation increase | 2.00 |  |  | 2.00 |  |  | 2.00 |
Weighted-average assumptions to determine periodic benefit costs for years ended September 30: |  |  |  |  |  |  |  |
Discount rate - service cost | 0.80 |  |  | 0.72 |  |  | 0.59 |
Discount rate - interest cost | 0.42 |  |  | 0.38 |  |  | 0.45 |
Rate of compensation increase | 2.00 |  |  | 2.00 |  |  | 2.02 |
Long-term rate of return on plan assets | 2.50 |  |  | 2.50 |  |  | 2.50 |
| 2019 |  | 2018 |  | 2017
Germany: |  |  |  |  |  |  |  |
Weighted-average assumptions to determine benefit obligation at September 30: |  |  |  |  |  |  |  |
Discount rate | 0.81 | % |  | 1.87 | % |  | n/a |
Rate of compensation increase | 2.50 |  |  | 2.50 |  |  | n/a |
Weighted-average assumptions to determine periodic benefit costs for years ended September 30: |  |  |  |  |  |  |  |
Discount rate - service cost | 2.06 |  |  | 2.05 |  |  | n/a |
Discount rate - interest cost | 1.53 |  |  | 1.49 |  |  | n/a |
Rate of compensation increase | 2.50 |  |  | 2.50 |  |  | n/a |
In the United Kingdom, Germany and Japan, Woodward uses a high-quality corporate bond yield curve matched with separate cash flows to develop a single rate to determine the single rate equivalent to settle the entire benefit obligations in each jurisdiction. For the fiscal years ended September 30, 2019 and 2018, the discount rate used to determine periodic service cost and interest cost components of the overall benefit costs was based on spot rates derived from the same high-quality corporate bond yield curve used to determine the September 30, 2018 and 2017 benefit obligation, respectively, matched with separate cash flows for each future year. Compensation increase assumptions, where applicable, are based upon historical experience and anticipated future management actions. In determining the long-term rate of return on plan assets, Woodward assumes that the historical long-term compound growth rates of equity and fixed-income securities will predict the future returns of similar investments in the plan portfolio. Investment management and other fees paid out of the plan assets are factored into the determination of asset return assumptions. Mortality assumptions are based on published mortality studies developed primarily based on past experience of the broad population and modified for projected longevity trends. The projected benefit obligations in the United States as of September 30, 2019 and September 30, 2018 were based on the Society of Actuaries (“SOA”) RP-2014 Mortality Tables Report projected back to 2006 using the SOA’s Mortality Improvement Scale MP-2014 (“MP-2014”) and projected forward using a custom projection scale based on MP-2014 with a 10-year convergence period and a long-term rate of 0.75%. As of September 30, 2019 and September 30, 2018, mortality assumptions in Japan were based on the Standard rates 2014 and mortality assumptions for the United Kingdom pension scheme were based on the Self-administered pension scheme (“SAPS”) S2 “all” tables with a projected 1.5% annual improvement rate. As of September 30, 2019 and mortality assumptions in Germany were based on the Heubeck 2018 G mortality tables whereas at September 30, 2018 mortality assumptions in Germany were based on Heubeck 2005 G mortality tables. Net periodic benefit costs consist of the following components reflected as expense in Woodward’s Consolidated Statement of Earnings:
|  | Year Ended September 30,
|  | United States |  | Other Countries |  | Total
|  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Service cost |  | $ | 1,451 |  | $ | 1,643 |  | $ | 1,675 |  | $ | 2,036 |  | $ | 1,124 |  | $ | 1,133 |  | $ | 3,487 |  | $ | 2,767 |  | $ | 2,808
Interest cost |  |  | 6,384 |  |  | 6,004 |  |  | 5,757 |  |  | 1,906 |  |  | 1,526 |  |  | 1,208 |  |  | 8,290 |  |  | 7,530 |  |  | 6,965
Expected return on plan assets |  |  | (11,986) |  |  | (11,614) |  |  | (10,529) |  |  | (2,638) |  |  | (2,780) |  |  | (2,605) |  |  | (14,624) |  |  | (14,394) |  |  | (13,134)
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses |  |  | 617 |  |  | 598 |  |  | 1,854 |  |  | 283 |  |  | 291 |  |  | 514 |  |  | 900 |  |  | 889 |  |  | 2,368
Net prior service cost |  |  | 709 |  |  | 709 |  |  | 383 |  |  | - |  |  | - |  |  | - |  |  | 709 |  |  | 709 |  |  | 383
Net periodic (benefit) cost |  | $ | (2,825) |  | $ | (2,660) |  | $ | (860) |  | $ | 1,587 |  | $ | 161 |  | $ | 250 |  | $ | (1,238) |  | $ | (2,499) |  | $ | (610)
The following tables provide a reconciliation of the changes in the projected benefit obligation and fair value of assets for the defined benefit pension plans:
|  | At or for the Year Ended September 30,
|  | United States |  | Other Countries |  | Total
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018
Changes in projected benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 150,032 |  | $ | 161,130 |  | $ | 103,485 |  | $ | 66,369 |  | $ | 253,517 |  | $ | 227,499
Plan amendment |  |  | - |  |  | - |  |  | 601 |  |  | - |  |  | 601 |  |  | -
Obligation assumed in L'Orange acquisition |  |  | - |  |  | - |  |  | - |  |  | 39,257 |  |  | - |  |  | 39,257
Service cost |  |  | 1,451 |  |  | 1,643 |  |  | 2,036 |  |  | 1,124 |  |  | 3,487 |  |  | 2,767
Interest cost |  |  | 6,384 |  |  | 6,004 |  |  | 1,906 |  |  | 1,526 |  |  | 8,290 |  |  | 7,530
Net actuarial losses (gains) |  |  | 23,841 |  |  | (13,128) |  |  | 22,174 |  |  | (383) |  |  | 46,015 |  |  | (13,511)
Contribution by participants |  |  | - |  |  | 34 |  |  | 9 |  |  | 9 |  |  | 9 |  |  | 43
Benefits paid |  |  | (6,113) |  |  | (5,651) |  |  | (3,181) |  |  | (2,888) |  |  | (9,294) |  |  | (8,539)
Foreign currency exchange rate changes |  |  | - |  |  | - |  |  | (5,495) |  |  | (1,529) |  |  | (5,495) |  |  | (1,529)
Projected benefit obligation at end of year |  | $ | 175,595 |  | $ | 150,032 |  | $ | 121,535 |  | $ | 103,485 |  | $ | 297,130 |  | $ | 253,517
Changes in fair value of plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 165,342 |  | $ | 160,332 |  | $ | 62,380 |  | $ | 64,380 |  | $ | 227,722 |  | $ | 224,712
Actual return on plan assets |  |  | 11,327 |  |  | 10,627 |  |  | 5,121 |  |  | 1,407 |  |  | 16,448 |  |  | 12,034
Contributions by the Company |  |  | - |  |  | - |  |  | 1,697 |  |  | 994 |  |  | 1,697 |  |  | 994
Contributions by plan participants |  |  | - |  |  | 34 |  |  | 9 |  |  | 9 |  |  | 9 |  |  | 43
Benefits paid |  |  | (6,113) |  |  | (5,651) |  |  | (3,181) |  |  | (2,888) |  |  | (9,294) |  |  | (8,539)
Foreign currency exchange rate changes |  |  | - |  |  | - |  |  | (2,449) |  |  | (1,522) |  |  | (2,449) |  |  | (1,522)
Fair value of plan assets at end of year |  | $ | 170,556 |  | $ | 165,342 |  | $ | 63,577 |  | $ | 62,380 |  | $ | 234,133 |  | $ | 227,722
Net (under)/over funded status at end of year |  | $ | (5,039) |  | $ | 15,310 |  | $ | (57,958) |  | $ | (41,105) |  | $ | (62,997) |  | $ | (25,795)
At September 30, 2019, the Company’s defined benefit pension plans in the United Kingdom, Japan and Germany represented $58,494, $11,110 and $51,931 of the total projected benefit obligation, respectively. At September 30, 2019, the United Kingdom and Japan pension plan assets represented $52,105 and $11,472 of the total fair value of all plan assets, respectively. The German pension plans are unfunded and have no plan assets. The accumulated benefit obligations of the Company’s defined benefit pension plans at September 30, 2019 was $175,595 in the United States, $56,389 in the United Kingdom, $10,081 in Japan, and $51,908 in Germany, and at September 30, 2018 was $150,032 in the United States, $50,594 in the United Kingdom, $9,975 in Japan and $40,358 in Germany.
|  | Plans with accumulated benefit obligation in excess of plan assets |  | Plans with accumulated benefit obligation less than plan assets
|  | At September 30, |  | At September 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Projected benefit obligation |  | $ | (286,495) |  | $ | (65,938) |  | $ | (10,635) |  | $ | (187,579)
Accumulated benefit obligation |  |  | (284,368) |  |  | (65,915) |  |  | (9,605) |  |  | (184,864)
Fair value of plan assets |  |  | 222,661 |  |  | 23,385 |  |  | 11,472 |  |  | 204,337
The following tables provide the amounts recognized in the statement of financial position and accumulated other comprehensive losses for the defined benefit pension plans:
|  | At or for the Year Ended September 30,
|  | United States |  | Other Countries |  | Total
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018
Amounts recognized in statement of financial position consist of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other non-current assets |  | $ | - |  | $ | 17,068 |  | $ | 838 |  | $ | 1,090 |  | $ | 838 |  | $ | 18,158
Accrued liabilities |  |  | - |  |  | - |  |  | (1,539) |  |  | (1,322) |  |  | (1,539) |  |  | (1,322)
Other non-current liabilities |  |  | (5,039) |  |  | (1,758) |  |  | (57,256) |  |  | (40,873) |  |  | (62,295) |  |  | (42,631)
Net (under)/over funded status at end of year |  | $ | (5,039) |  | $ | 15,310 |  | $ | (57,957) |  | $ | (41,105) |  | $ | (62,996) |  | $ | (25,795)
Amounts recognized in accumulated other ‎comprehensive income consist of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrecognized net prior service cost |  | $ | 5,750 |  | $ | 6,459 |  | $ | 579 |  | $ | - |  | $ | 6,329 |  | $ | 6,459
Unrecognized net losses |  |  | 28,167 |  |  | 4,285 |  |  | 32,641 |  |  | 14,529 |  |  | 60,808 |  |  | 18,814
Total amounts recognized |  |  | 33,917 |  |  | 10,744 |  |  | 33,220 |  |  | 14,529 |  |  | 67,137 |  |  | 25,273
Deferred taxes |  |  | (11,577) |  |  | (5,892) |  |  | (10,029) |  |  | (5,081) |  |  | (21,606) |  |  | (10,973)
Amounts recognized in accumulated other comprehensive income |  | $ | 22,340 |  | $ | 4,852 |  | $ | 23,191 |  | $ | 9,448 |  | $ | 45,531 |  | $ | 14,300
The following table reconciles the changes in accumulated other comprehensive losses for the defined benefit pension plans:
|  | Year Ended September 30,
|  | United States |  | Other Countries |  | Total
|  | 2019 |  | 2018 |  | 2019 |  | 2018 |  | 2019 |  | 2018
Accumulated other comprehensive losses at beginning of year |  | $ | 10,744 |  | $ | 24,192 |  | $ | 14,529 |  | $ | 14,198 |  | $ | 25,273 |  | $ | 38,390
Net loss (gain) |  |  | 24,499 |  |  | (12,141) |  |  | 19,691 |  |  | 990 |  |  | 44,190 |  |  | (11,151)
Prior service cost due to plan amendment |  |  | - |  |  | - |  |  | 601 |  |  | - |  |  | 601 |  | $ | -
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses |  |  | (617) |  |  | (598) |  |  | (283) |  |  | (292) |  |  | (900) |  |  | (890)
Prior service cost |  |  | (709) |  |  | (709) |  |  | - |  |  | - |  |  | (709) |  |  | (709)
Foreign currency exchange rate changes |  |  | - |  |  | - |  |  | (1,318) |  |  | (367) |  |  | (1,318) |  |  | (367)
Accumulated other comprehensive losses at end of year |  | $ | 33,917 |  | $ | 10,744 |  | $ | 33,220 |  | $ | 14,529 |  | $ | 67,137 |  | $ | 25,273
The amounts expected to be amortized from accumulated other comprehensive losses and reported as a component of net periodic benefit cost during fiscal year 2020 are as follows:
|  | United States |  | Other Countries |  | Total
Prior service cost |  | $ | 936 |  | $ | 22 |  | $ | 958
Net actuarial losses |  |  | 1,430 |  |  | 1,017 |  |  | 2,447
Pension benefit payments are made from the assets of the pension plans. The German pension plans are unfunded, therefore, benefit payments are made from Company contributions into these plans as required to meet the payment obligations. Using foreign exchange rates as of September 30, 2019 and expected future service assumptions, it is anticipated that the future benefit payments will be as follows:
Year Ending September 30, |  | United States |  | Other Countries |  | Total
2020 |  | $ | 7,170 |  | $ | 3,631 |  | $ | 10,801
2021 |  |  | 7,823 |  |  | 3,363 |  |  | 11,186
2022 |  |  | 8,383 |  |  | 3,239 |  |  | 11,622
2023 |  |  | 8,924 |  |  | 3,805 |  |  | 12,729
2024 |  |  | 9,385 |  |  | 3,695 |  |  | 13,080
2025 – 2029 |  |  | 51,139 |  |  | 19,494 |  |  | 70,633
Woodward expects its pension plan contributions in fiscal year 2020 will be $657 in the United Kingdom, $234 in Japan and $1,061 in Germany. Woodward expects to have no pension plan contributions in fiscal year 2020 in the United States. Pension plan assets The overall investment objective of the pension plan assets is to earn a rate of return over time which, when combined with Company contributions, satisfies the benefit obligations of the pension plans and maintains sufficient liquidity to pay benefits. As the timing and nature of the plan obligations varies for each Company sponsored pension plan, investment strategies have been individually designed for each pension plan with a common focus on maintaining diversified investment portfolios that provide for long-term growth while minimizing the risk to principal associated with short-term market behavior. The strategy for each of the plans balances the requirements to generate returns, using investments expected to produce higher returns, such as equity securities, with the need to control risk within the pension plans using less volatile investment assets, such as debt securities. A strategy of more equity-oriented allocation is adopted for those plans which have a longer-term investment plan based on the timing of the associated benefit obligations. A pension oversight committee is assigned by the Company to each pension plan. Among other responsibilities, each committee is responsible for all asset class allocation decisions. Asset class allocations, which are reviewed by the respective pension committee on at least an annual basis, are designed to meet or exceed certain market benchmarks and align with each plan’s investment objectives. In evaluating the asset allocation choices, consideration is given to the proper long-term level of risk for each plan, particularly with respect to the long-term nature of each plan’s liabilities, the impact of asset allocation on investment results and the corresponding impact on the volatility and magnitude of plan contributions and expense and the impact certain actuarial techniques may have on the plans’ recognition of investment experience. From time to time, the plans may move outside the prescribed asset class allocation in order to meet significant liabilities with respect to one or more individuals approaching retirement. Risks associated with the plan assets include interest rate fluctuation risk, market fluctuation risk, risk of default by debt issuers and liquidity risk. To manage these risks, the assets are managed by established, professional investment firms and performance is evaluated regularly by the Company’s pension oversight committee against specific benchmarks and each plan’s investment objectives. Liability management and asset class diversification are central to the Company’s risk management approach and overall investment strategy. The assets of the U.S. plans are invested in actively managed mutual funds. The assets of the plans in the United Kingdom and Japan are invested in actively managed pooled investment funds. Each individual mutual fund or pooled investment fund has been selected based on the investment strategy of the related plan, which mirrors a specific asset class within the associated target allocation. The plans in Germany are unfunded and have no plan assets. Pension plan assets at September 30, 2019 and 2018 do not include any direct investment in Woodward’s common stock. ‎ The asset allocations are monitored and rebalanced regularly by investment managers assigned to the individual pension plans. The actual allocations of pension plan assets and target allocation ranges by asset class, are as follows:
|  | At September 30,
|  | 2019 |  | 2018
|  | Percentage of Plan Assets |  | Target Allocation Ranges |  | Percentage of Plan Assets |  | Target Allocation Ranges
United States: |  |  |  |  |  |  |  |  |  |  |  |
Asset Class |  |  |  |  |  |  |  |  |  |  |  |
Equity Securities |  | 60.6% |  | 41.4% | - | 81.4% |  | 65.1% |  | 41.5% | - | 81.5%
Debt Securities |  | 37.9% |  | 28.6% | - | 48.6% |  | 33.1% |  | 28.5% | - | 48.5%
Other |  | 1.5% |  | 0.0% |  | 1.8% |  | 0.0%
|  | 100.0% |  |  |  |  |  | 100.0% |  |  |  |
United Kingdom: |  |  |  |  |  |  |  |  |  |  |  |
Asset Class |  |  |  |  |  |  |  |  |  |  |  |
Equity Securities |  | 41.6% |  | 30.0% | - | 60.0% |  | 44.8% |  | 30.0% | - | 60.0%
Debt Securities |  | 57.8% |  | 45.0% | - | 70.0% |  | 54.8% |  | 45.0% | - | 70.0%
Other |  | 0.6% |  | 0.0% |  | 0.4% |  | 0.0%
|  | 100.0% |  |  |  |  |  | 100.0% |  |  |  |
Japan: |  |  |  |  |  |  |  |  |  |  |  |
Asset Class |  |  |  |  |  |  |  |  |  |  |  |
Equity Securities |  | 41.4% |  | 36.0% | - | 44.0% |  | 41.0% |  | 36.0% | - | 44.0%
Debt Securities |  | 57.7% |  | 55.0% | - | 63.0% |  | 58.1% |  | 55.0% | - | 63.0%
Other |  | 0.9% |  | 0.0% | - | 2.0% |  | 0.9% |  | 0.0% | - | 2.0%
|  | 100.0% |  |  |  |  |  | 100.0% |  |  |  |
Actual allocations to each asset class can vary from target allocations due to periodic market value fluctuations, investment strategy changes, and the timing of benefit payments and contributions. The following table presents Woodward’s pension plan assets using the fair value hierarchy established by U.S. GAAP as of September 30, 2019 and September 30, 2018.
|  | At September 30, 2019
|  | Level 1 |  | Level 2 |  | Level 3 |  |  |
|  | United States |  | Other Countries |  | United States |  | Other Countries |  | United States |  | Other Countries |  | Total
Asset Category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 2,568 |  | $ | 418 |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | 2,986
Mutual funds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. corporate bond fund |  |  | 64,514 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 64,514
U.S. equity large cap fund |  |  | 56,829 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 56,829
International equity large cap growth fund |  |  | 46,645 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 46,645
Pooled funds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese equity securities |  |  | - |  |  | - |  |  | - |  |  | 2,518 |  |  | - |  |  | - |  |  | 2,518
International equity securities |  |  | - |  |  | - |  |  | - |  |  | 2,226 |  |  | - |  |  | - |  |  | 2,226
Japanese fixed income securities |  |  | - |  |  | - |  |  | - |  |  | 4,915 |  |  | - |  |  | - |  |  | 4,915
International fixed income securities |  |  | - |  |  | - |  |  | - |  |  | 1,710 |  |  | - |  |  | - |  |  | 1,710
Global target return equity/bond fund |  |  | - |  |  | - |  |  | - |  |  | 12,488 |  |  | - |  |  | - |  |  | 12,488
Index linked U.K. equity fund |  |  | - |  |  | - |  |  | - |  |  | 3,738 |  |  | - |  |  | - |  |  | 3,738
Index linked international equity fund |  |  | - |  |  | - |  |  | - |  |  | 5,438 |  |  | - |  |  | - |  |  | 5,438
Index linked U.K. corporate bonds fund |  |  | - |  |  | - |  |  | - |  |  | 16,737 |  |  | - |  |  | - |  |  | 16,737
Index linked U.K. government securities fund |  |  | - |  |  | - |  |  | - |  |  | 5,491 |  |  | - |  |  | - |  |  | 5,491
Index linked U.K. long-term government securities fund |  |  | - |  |  | - |  |  | - |  |  | 7,898 |  |  | - |  |  | - |  |  | 7,898
Total assets |  | $ | 170,556 |  | $ | 418 |  | $ | - |  | $ | 63,159 |  | $ | - |  | $ | - |  | $ | 234,133
|  | At September 30, 2018
|  | Level 1 |  | Level 2 |  | Level 3 |  |  |
|  | United States |  | Other Countries |  | United States |  | Other Countries |  | United States |  | Other Countries |  | Total
Asset Category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 2,908 |  | $ | 317 |  | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | 3,225
Mutual funds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. corporate bond fund |  |  | 54,699 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 54,699
U.S. equity large cap fund |  |  | 60,176 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 60,176
International equity large cap growth fund |  |  | 47,559 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 47,559
Pooled funds: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Japanese equity securities |  |  | - |  |  | - |  |  | - |  |  | 2,506 |  |  | - |  |  | - |  |  | 2,506
International equity securities |  |  | - |  |  | - |  |  | - |  |  | 2,214 |  |  | - |  |  | - |  |  | 2,214
Japanese fixed income securities |  |  | - |  |  | - |  |  | - |  |  | 4,968 |  |  | - |  |  | - |  |  | 4,968
International fixed income securities |  |  | - |  |  | - |  |  | - |  |  | 1,730 |  |  | - |  |  | - |  |  | 1,730
Global target return equity/bond fund |  |  | - |  |  | - |  |  | - |  |  | 12,495 |  |  | - |  |  | - |  |  | 12,495
Index linked U.K. equity fund |  |  | - |  |  | - |  |  | - |  |  | 4,326 |  |  | - |  |  | - |  |  | 4,326
Index linked international equity fund |  |  | - |  |  | - |  |  | - |  |  | 5,973 |  |  | - |  |  | - |  |  | 5,973
Index linked U.K. corporate bonds fund |  |  | - |  |  | - |  |  | - |  |  | 16,121 |  |  | - |  |  | - |  |  | 16,121
Index linked U.K. government securities fund |  |  | - |  |  | - |  |  | - |  |  | 4,913 |  |  | - |  |  | - |  |  | 4,913
Index linked U.K. long-term government securities fund |  |  | - |  |  | - |  |  | - |  |  | 6,817 |  |  | - |  |  | - |  |  | 6,817
Total assets |  | $ | 165,342 |  | $ | 317 |  | $ | - |  | $ | 62,063 |  | $ | - |  | $ | - |  | $ | 227,722
Cash and cash equivalents: Cash and cash equivalents held by the Company’s pension plans are held on deposit with creditworthy financial institutions. The fair value of the cash and cash equivalents are based on the quoted market price of the respective currency in which the cash is maintained. Pension assets invested in mutual funds: The assets of the Company’s U.S. pension plans are invested in various mutual funds which invest in both equity and debt securities. The fair value of the mutual funds is determined based on the quoted market price of each fund. Pension assets invested in pooled funds: The assets of the Company’s Japan and United Kingdom pension plans are invested in pooled investment funds, which include both equity and debt securities. The assets of the United Kingdom pension plan are invested in index-linked pooled funds which aim to replicate the movements of an underlying market index to which the fund is linked. Fair value of the pooled funds is based on the net asset value of shares held by the plan as reported by the fund sponsors. All pooled funds held by plans outside of the United States are considered to be invested in international equity and debt securities. Although the underlying securities may be largely domestic to the plan holding the investment assets, the underlying assets are considered international from the perspective of the Company. There were no transfers into or out of Level 3 assets in fiscal years 2019 or 2018. Other postretirement benefit plans Woodward provides other postretirement benefits to its employees including postretirement medical benefits and life insurance benefits. Postretirement medical benefits are provided to certain current and retired employees and their covered dependents and beneficiaries in the United States and the United Kingdom. Benefits include the option to elect company provided medical insurance coverage to age 65 and a Medicare supplemental plan after age 65. Life insurance benefits are also provided to certain retirees in the United States under frozen plans which are no longer available to current employees. A September 30 measurement date is utilized to value plan assets and obligations for Woodward’s other postretirement benefit plans. The postretirement medical benefit plans, other than the plan assumed in an acquisition in fiscal year 2009, were frozen in fiscal year 2006 and no additional employees may participate in the plans. Generally, employees who had attained age 55 and had rendered 10 or more years of service before the plans were frozen were eligible for these postretirement medical benefits. Certain participating retirees are required to contribute to the plans in order to maintain coverage. The plans provide postretirement medical benefits for approximately 695 retired employees and their covered dependents and beneficiaries and may provide future benefits to 8 active employees and their covered dependents and beneficiaries, upon retirement, if the employees elect to participate. All the postretirement medical plans are fully insured for retirees who have attained age 65. The actuarial assumptions used in measuring the net periodic benefit cost and plan obligations of postretirement benefits were as follows:
| 2019 |  | 2018 |  | 2017
Weighted-average discount rate used to determine benefit obligation at September 30 | 3.05 | % |  | 4.30 | % |  | 3.78 | %
Weighted-average discount rate used to determine net periodic benefit cost for years ended September 30 | 4.30 |  |  | 3.80 |  |  | 3.63 |
The discount rate assumption is intended to reflect the rate at which the postretirement benefits could be effectively settled based upon the assumed timing of the benefit payments. In the United States, Woodward used a bond portfolio matching analysis based on recently traded, non-callable bonds rated AA or better that have at least $50 million outstanding to determine the benefit obligations at year end. In the United Kingdom, Woodward uses a high-quality corporate bond yield curve matched with separate cash flows to develop a single rate to determine the single rate equivalent to settle the entire benefit obligations in each jurisdiction. Mortality assumptions are based on published mortality studies developed primarily based on past experience of the broad population and modified for projected longevity trends. The projected benefit obligations in the United States as of September 30, 2019 and September 30, 2018 mortality assumptions were based on the SOA’s RP-2014 Mortality Tables Report projected back to 2006 using the SOA’s MP-2014 and projected forward using a custom projection scale based on MP-2014 with a 10-year convergence period and a long-term rate of 0.75%. As of September 30, 2019 and September 30, 2018, mortality assumptions for the United Kingdom postretirement medical plan were based on the SAPS S2 “all” tables with a projected 1.5% annual improvement rate. Assumed healthcare cost trend rates at September 30, were as follows:
|  |  |  | 2019 |  | 2018
Health care cost trend rate assumed for next year |  |  |  | 6.25 | % |  | 6.50 | %
Rate to which the cost trend rate is assumed to decline |  |  |  |  |  |  |  |
(the ultimate trend rate) |  |  |  | 5.00 | % |  | 5.00 | %
Year that the rate reaches the ultimate trend rate |  |  |  | 2025 |  |  | 2025 |
Healthcare costs have generally trended upward in recent years, sometimes by amounts greater than 5%. Assumed health care cost trend rates have a significant effect on the amounts reported for postretirement medical plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
|  |  | Change In Health Care Cost Trend Rate
|  |  | 1% increase |  | 1% decrease
Effect on projected fiscal year 2020 service and interest cost |  |  | $ | 74 |  | $ | (65)
Effect on accumulated postretirement benefit obligation at September 30, 2019 |  |  |  | 2,417 |  |  | (2,128)
Net periodic benefit costs consist of the following components reflected as expense in Woodward’s Consolidated Statements of Earnings:
|  | Year Ended September 30,
|  | 2019 |  | 2018 |  | 2017
Service cost |  | $ | 5 |  | $ | 7 |  | $ | 14
Interest cost |  |  | 1,154 |  |  | 1,165 |  |  | 1,244
Amortization of: |  |  |  |  |  |  |  |  |
Net losses |  |  | 55 |  |  | 94 |  |  | 201
Net prior service benefit |  |  | (5) |  |  | (158) |  |  | (158)
Curtailment gain |  |  | - |  |  | (330) |  |  | -
Net periodic cost |  | $ | 1,209 |  | $ | 778 |  | $ | 1,301
The following table provides a reconciliation of the changes in the accumulated postretirement benefit obligation and fair value of assets for the postretirement benefits for the fiscal years ended September 30:
|  | Year Ended September 30,
|  | 2019 |  | 2018
Changes in accumulated postretirement benefit obligation: |  |  |  |  |  |
Accumulated postretirement benefit obligation at beginning of year |  | $ | 27,985 |  | $ | 32,252
Service cost |  |  | 5 |  |  | 7
Interest cost |  |  | 1,154 |  |  | 1,165
Premiums paid by plan participants |  |  | 1,192 |  |  | 1,311
Net actuarial gains |  |  | (373) |  |  | (2,716)
Benefits paid |  |  | (3,292) |  |  | (3,707)
Curtailment |  |  | - |  |  | (330)
Foreign currency exchange rate changes |  |  | - |  |  | 3
Accumulated postretirement benefit obligation at end of year |  | $ | 26,671 |  | $ | 27,985
Changes in fair value of plan assets: |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | - |  | $ | -
Contributions by the company |  |  | 2,100 |  |  | 2,396
Premiums paid by plan participants |  |  | 1,192 |  |  | 1,311
Benefits paid |  |  | (3,292) |  |  | (3,707)
Fair value of plan assets at end of year |  | $ | - |  | $ | -
Funded status at end of year |  | $ | (26,671) |  | $ | (27,985)
The following tables provide the amounts recognized in the statement of financial position and accumulated other comprehensive losses for the postretirement plans:
|  | Year Ended September 30,
|  | 2019 |  | 2018
Amounts recognized in statement of financial position consist of: |  |  |  |  |  |
Accrued liabilities |  | $ | (2,048) |  | $ | (2,249)
Other non-current liabilities |  |  | (24,623) |  |  | (25,736)
Funded status at end of year |  | $ | (26,671) |  | $ | (27,985)
Amounts recognized in accumulated other comprehensive income consist of: |  |  |  |  |  |
Unrecognized net prior service (benefit) cost |  | $ | 4 |  | $ | (1)
Unrecognized net (gains) losses |  |  | (3) |  |  | 425
Total amounts recognized |  |  | 1 |  |  | 424
Deferred taxes |  |  | (414) |  |  | (518)
Amounts recognized in accumulated other comprehensive income |  | $ | (413) |  | $ | (94)
Woodward pays plan benefits from its general funds; therefore, there are no segregated plan assets as of September 30, 2019 or September 30, 2018. The accumulated benefit obligations of the Company’s postretirement plans were $26,671 at September 30, 2019 and $27,985 at September 30, 2018. The following table reconciles the changes in accumulated other comprehensive losses for the other postretirement benefit plans:
|  | Year Ended September 30,
|  | 2019 |  | 2018
Accumulated other comprehensive losses at beginning of year |  | $ | 424 |  | $ | 3,074
Net gain |  |  | (373) |  |  | (2,654)
Curtailment arising during the period |  |  | - |  |  | (59)
Amortization of: |  |  |  |  |  |
Net losses |  |  | (55) |  |  | (95)
Prior service benefit |  |  | 5 |  |  | 158
Accumulated other comprehensive losses at end of year |  | $ | 1 |  | $ | 424
Using foreign currency exchange rates as of September 30, 2019 and expected future service, it is anticipated that the future Company contributions to pay benefits, excluding participate contributions, will be as follows:
Year Ending September 30, |  |  |
2020 |  | $ | 3,237
2021 |  |  | 3,220
2022 |  |  | 3,183
2023 |  |  | 3,125
2024 |  |  | 3,061
2025 – 2029 |  |  | 13,891
Multiemployer defined benefit plans Woodward operates multiemployer defined benefit plans for certain employees in both the Netherlands and Japan. The amounts of contributions associated with the multiemployer defined benefit plans were as follows:
|  |  | Year Ended September 30,
|  | 2019 |  | 2018 |  | 2017
Company contributions |  | $ | 252 |  | $ | 334 |  | $ | 292
The plan in the Netherlands is a quasi-mandatory plan that covers all of Woodward’s employees in the Netherlands and is part of the Dutch national pension system. The Company may elect to withdraw from its multiemployer plan in Japan, although it has no plans to do so. If the Company elects to withdraw from the Japanese plan, it would incur an immaterial one-time contribution cost. Changes in Japanese regulations could trigger reorganization of or abolishment of the Japanese multiemployer plan, which could impact future funding levels.

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