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 years 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. 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 the second quarter of fiscal year 2019, compared to a total of 202 shares of common stock for a value of $14,741 in the second quarter of fiscal year 2018.

The amount of expense associated with defined contribution plans was as follows:



	Three-Months Ended				Six-Months Ended
	March 31,				March 31,
	2019		2018		2019		2018
Company costs	$	9,086	$	8,716	$	17,457	$	16,595

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. Woodward has initially concluded that Court Ruling is applicable to its defined benefit pension plan in the United Kingdom and will make the necessary plan amendments. Based on its initial estimates, Woodward does not believe the Court Ruling represents a significant event requiring a remeasurement of its United Kingdom defined benefit pension plan’s obligation and assets as of March 31, 2019.

U.S. GAAP requires that, for obligations outstanding as of September 30, 2018, the funded status reported in interim periods shall be the same asset or liability recognized in the previous year end statement of financial position adjusted for (a) subsequent accruals of net periodic benefit cost that exclude the amortization of amounts previously recognized in other comprehensive income (for example, subsequent accruals of service cost, interest cost, and return on plan assets) and (b) contributions to a funded plan or benefit payments.

The components of the net periodic retirement pension costs recognized are as follows:



	Three-Months Ended March 31,
	United States				Other Countries				Total
	2019		2018		2019		2018		2019		2018
Service cost	$	362	$	411	$	512	$	165	$	874	$	576
Interest cost		1,596		1,501		485		344		2,081		1,845
Expected return on plan assets		(2,997)		(2,903)		(672)		(717)		(3,669)		(3,620)
Amortization of:
Net actuarial loss		155		149		73		75		228		224
Prior service cost		178		178		-		-		178		178
Net periodic retirement pension (benefit) cost	$	(706)	$	(664)	$	398	$	(133)	$	(308)	$	(797)
Contributions paid	$	-	$	-	$	509	$	119	$	509	$	119


	Six-Months Ended March 31,
	United States				Other Countries				Total
	2019		2018		2019		2018		2019		2018
Service cost	$	725	$	822	$	1,024	$	323	$	1,749	$	1,145
Interest cost		3,192		3,002		965		673		4,157		3,675
Expected return on plan assets		(5,993)		(5,807)		(1,334)		(1,403)		(7,327)		(7,210)
Amortization of:
Net actuarial loss		309		299		144		147		453		446
Prior service cost		355		355		-		-		355		355
Net periodic retirement pension (benefit) cost	$	(1,412)	$	(1,329)	$	799	$	(260)	$	(613)	$	(1,589)
Contributions paid	$	-	$	-	$	1,063	$	431	$	1,063	$	431

The components net periodic retirement pension costs other than the service cost and interest cost components are included in the line item “Other (income) expense, net” in the Condensed Consolidated Statements of Earnings. The interest cost component is include in the line item “Interest expense” in the Condensed Consolidated Statements of Earnings.

The components of the net periodic other postretirement benefit costs recognized are as follows:



	Three-Months Ended				Six-Months Ended
	March 31,				March 31,
	2019		2018		2019		2018
Service cost	$	2	$	2	$	3	$	4
Interest cost		289		291		577		583
Amortization of:
Net actuarial loss		14		24		28		48
Prior service benefit		(2)		(39)		(3)		(79)
Curtailment gain		-		-		-		(330)
Net periodic other postretirement cost	$	303	$	278	$	605	$	226
Contributions paid	$	704	$	1,009	$	1,077	$	1,235

The components of net periodic other postretirement benefit costs other than the service cost and interest cost components are included in the line item “Other (income) expense, net” in the Condensed Consolidated Statements of Earnings. The interest cost component is included in the line item “Interest expense” in the Condensed Consolidated Statements of Earnings.

The amount of cash contributions made to these plans in any year is dependent upon a number of factors, including minimum funding requirements in the jurisdictions in which Woodward operates and arrangements made with trustees of certain foreign plans. As a result, the actual funding in fiscal year 2019 may differ from the current estimate. Woodward estimates its remaining cash contributions in fiscal year 2019 will be as follows:



Retirement pension benefits:
United States	$	-
United Kingdom		345
Japan		-
Germany		418
Other postretirement benefits		2,538

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:



	Three-Months Ended				Six-Months Ended
	March 31,				March 31,
	2019		2018		2019		2018
Company contributions	$	61	$	87	$	138	$	167