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Retirement Benefits
 9 Months Ended
Jun. 30, 2020
Compensation And Retirement Disclosure [Abstract]  
Retirement Benefits

Note 20.  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 124 shares of common stock for a value of $14,748 in the second quarter of fiscal year 2020, compared to a total of 158 shares of common stock for a value of $14,846 in the second quarter of fiscal year 2019.

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

 

 

 

Three-Months Ended

 

 

Nine-Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Company costs

 

$

8,005

 

 

$

8,969

 

 

$

25,619

 

 

$

26,426

 

 

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 is being amortized as a net prior service cost beginning in fiscal year 2020.  Woodward does not expect that 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.

U.S. GAAP requires that, for obligations outstanding as of September 30, 2019, 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. However, U.S. GAAP further requires an interim re-measurement of plan assets and obligations when there are substantial plan amendments, settlements, or curtailments.  Many variables, such as changes in interest rates, mortality rates, health care costs, investment returns and/or the market value of plan assets, can affect the funded status of our defined benefit pension and other postretirement benefit plans and cause volatility in the net periodic benefit cost and future funding requirements of the plans.  Woodward has concluded that the changes in the market conditions as a result of the COVID-19 pandemic do not require an interim re-measurement as Woodward believes that the assumptions, such as the discount rate and expected return on plan assets, used to project the plans’ assets and pension benefit liabilities are conservative, therefore resulting in a proper projection of Woodward’s benefit obligations.  Woodward further believes that as a result of the known impacts of the COVID-19 pandemic there are not any significant changes in plan assets, plan amendments, settlements, or curtailments that would result in an interim re–measurement.  

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

 

 

 

Three-Months Ended June 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Service cost

 

$

414

 

 

$

363

 

 

$

706

 

 

$

509

 

 

$

1,120

 

 

$

872

 

Interest cost

 

 

1,398

 

 

 

1,596

 

 

 

313

 

 

 

477

 

 

 

1,711

 

 

 

2,073

 

Expected return on plan assets

 

 

(3,087

)

 

 

(2,996

)

 

 

(690

)

 

 

(663

)

 

 

(3,777

)

 

 

(3,659

)

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

 

358

 

 

 

154

 

 

 

257

 

 

 

71

 

 

 

615

 

 

 

225

 

Prior service cost

 

 

234

 

 

 

177

 

 

 

5

 

 

 

—

 

 

 

239

 

 

 

177

 

Net periodic retirement pension (benefit) cost

 

$

(683

)

 

$

(706

)

 

$

591

 

 

$

394

 

 

$

(92

)

 

$

(312

)

Contributions paid

 

$

—

 

 

$

—

 

 

$

335

 

 

$

319

 

 

$

335

 

 

$

319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine-Months Ended June 30,

 

 

 

United States

 

 

Other Countries

 

 

Total

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Service cost

 

$

1,244

 

 

$

1,088

 

 

$

2,124

 

 

$

1,533

 

 

$

3,368

 

 

$

2,621

 

Interest cost

 

 

4,193

 

 

 

4,788

 

 

 

953

 

 

 

1,442

 

 

 

5,146

 

 

 

6,230

 

Expected return on plan assets

 

 

(9,260

)

 

 

(8,989

)

 

 

(2,230

)

 

 

(1,997

)

 

 

(11,490

)

 

 

(10,986

)

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

 

1,073

 

 

 

463

 

 

 

778

 

 

 

215

 

 

 

1,851

 

 

 

678

 

Prior service cost

 

 

702

 

 

 

532

 

 

 

17

 

 

 

—

 

 

 

719

 

 

 

532

 

Net periodic retirement pension (benefit) cost

 

$

(2,048

)

 

$

(2,118

)

 

$

1,642

 

 

$

1,193

 

 

$

(406

)

 

$

(925

)

Contributions paid

 

$

—

 

 

$

—

 

 

$

2,067

 

 

$

1,382

 

 

$

2,067

 

 

$

1,382

 

 

The components of 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

 

 

Nine-Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Service cost

 

$

1

 

 

$

1

 

 

$

2

 

 

$

4

 

Interest cost

 

 

195

 

 

 

288

 

 

 

586

 

 

 

865

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

 

12

 

 

 

13

 

 

 

35

 

 

 

41

 

Prior service cost (benefit)

 

 

1

 

 

 

(1

)

 

 

2

 

 

 

(4

)

Net periodic other postretirement cost

 

$

209

 

 

$

301

 

 

$

625

 

 

$

906

 

Contributions paid

 

$

851

 

 

$

512

 

 

$

1,372

 

 

$

1,589

 

 

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 2020 may differ from the current estimate.  Woodward estimates its remaining cash contributions in fiscal year 2020 will be as follows:

 

Retirement pension benefits:

 

 

 

 

United States

 

$

—

 

United Kingdom

 

 

34

 

Japan

 

 

—

 

Germany

 

 

330

 

Other postretirement benefits

 

 

1,865

 

 

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

 

 

Nine-Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Company contributions

 

$

127

 

 

$

55

 

 

$

325

 

 

$

193