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Pension and Defined Contribution Plans
 12 Months Ended
Aug. 31, 2020
Retirement Benefits [Abstract]  
Pension and Defined Contribution Plans Pension and Defined Contribution Plans
Company-sponsored Pension Plans
We have several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. We make at least the minimum annual contributions to the plans to the extent indicated by actuarial valuations and statutory requirements. Plan assets are invested primarily in equity and fixed income securities. During fiscal 2019, we recognized an actuarial gain of $3.4 million as well as $0.4 million in net periodic pension cost related to the early retirement of one participant within our non-qualified domestic plans.
The following tables reflect the status of our domestic (U.S.-based) and international pension plans as of the dates presented (in millions):
 
Domestic Plans
 
International Plans
 
August 31,
 
August 31,
 
2020
 
2019
 
2020
 
2019
Change in benefit obligation:
 

 
 

 
 

 
 

Benefit obligation at beginning of year
$
239.2

 
$
203.2

 
$
44.6

 
$
45.5

Service cost
4.3

 
2.9

 
0.3

 
0.2

Interest cost
6.4

 
7.7

 
0.9

 
1.3

Amendments
—

 
11.4

 
—

 
—

Actuarial losses
8.5

 
26.2

 
0.7

 
3.2

Settlement gain
—

 
(3.4
)
 
—

 
—

Benefits paid
(8.8
)
 
(8.8
)
 
(1.4
)
 
(2.6
)
Other
—

 
—

 
4.1

 
(3.0
)
Benefit obligation at end of year
249.6

 
239.2

 
49.2

 
44.6

Change in plan assets:
 

 
 

 
 

 
 

Fair value of plan assets at beginning of year
$
151.5

 
$
149.4

 
$
30.7

 
$
30.9

Actual return on plan assets
19.0

 
9.0

 
1.9

 
3.1

Employer contributions
5.4

 
5.3

 
0.8

 
1.2

Benefits paid
(8.8
)
 
(12.2
)
 
(1.4
)
 
(2.6
)
Other
—

 
—

 
3.1

 
(1.9
)
Fair value of plan assets at end of year
167.1

 
151.5

 
35.1

 
30.7

Funded status at the end of year
$
(82.5
)
 
$
(87.7
)
 
$
(14.1
)
 
$
(13.9
)
Amounts recognized in the consolidated balance sheets consist of:
 

 
 

 
 

 
 

Current liabilities
$
(5.0
)
 
$
(1.8
)
 
$
—

 
$
(0.1
)
Non-current liabilities
(77.5
)
 
(85.9
)
 
(14.1
)
 
(13.8
)
Net amount recognized in consolidated balance sheets
$
(82.5
)
 
$
(87.7
)
 
$
(14.1
)
 
$
(13.9
)
Accumulated benefit obligation
$
249.1

 
$
239.2

 
$
49.2

 
$
44.6

Pre-tax amounts in accumulated other comprehensive loss:
 

 
 

 
 

 
 

Prior service cost
$
(8.4
)
 
$
(12.4
)
 
$
—

 
$
—

Net actuarial loss
(79.2
)
 
(83.4
)
 
(13.5
)
 
(13.0
)
Amounts in accumulated other comprehensive loss
$
(87.6
)
 
$
(95.8
)
 
$
(13.5
)
 
$
(13.0
)
Pensions plans in which benefit obligation exceeds plan assets:
 
 
 
 
 
 
 
Projected benefit obligation
$
249.6

 
$
239.2

 
$
49.2

 
$
44.6

Accumulated benefit obligation
249.1

 
239.2

 
49.2

 
44.6

Plan assets
167.1

 
151.5

 
35.1

 
30.7

Estimated amounts that will be amortized from accumulated comprehensive income over the next fiscal year:
 

 
 

 
 

 
 

Prior service cost
$
2.9

 
$
4.0

 
$
—

 
$
—

Net actuarial loss
$
4.1

 
$
4.1

 
$
0.6

 
$
1.4


Service cost of net periodic pension cost is allocated between Cost of products sold and Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the nature of the employee's services. All other components of net periodic pension cost are included within Miscellaneous expense, net in the Consolidated Statements of Comprehensive Income. Net periodic pension cost during the periods presented included the following components before tax (in millions):
 
Domestic Plans
 
International Plans
 
2020
 
2019
 
2018
 
2020
 
2019
 
2018
Service cost
$
4.3

 
$
2.9

 
$
2.7

 
$
0.3

 
$
0.2

 
$
0.2

Interest cost
6.4

 
7.7

 
7.3

 
0.9

 
1.3

 
1.3

Expected return on plan assets
(10.4
)
 
(10.5
)
 
(10.2
)
 
(2.0
)
 
(1.9
)
 
(2.2
)
Amortization of prior service cost
4.0

 
3.5

 
3.1

 
—

 
—

 
—

Settlement
—

 
0.4

 
—

 
—

 
—

 
—

Recognized actuarial loss
4.2

 
2.7

 
4.5

 
1.4

 
1.4

 
2.3

Net periodic pension cost
$
8.5

 
$
6.7

 
$
7.4

 
$
0.6

 
$
1.0

 
$
1.6


Weighted average assumptions used in computing the benefit obligation are as follows:
 
Domestic Plans
 
International Plans
 
2020
 
2019
 
2020
 
2019
Discount rate
2.2
%
 
2.8
%
 
1.9
%
 
2.0
%
Rate of compensation increase
5.0
%
 
5.0
%
 
3.0
%
 
3.1
%
Weighted average assumptions used in computing net periodic pension cost are as follows:
 
Domestic Plans
 
International Plans
 
2020
 
2019
 
2018
 
2020
 
2019
 
2018
Discount rate
2.8
%
 
3.9
%
 
3.5
%
 
2.0
%
 
2.9
%
 
2.5
%
Expected return on plan assets
7.0
%
 
7.3
%
 
7.5
%
 
6.5
%
 
6.5
%
 
6.5
%
Rate of compensation increase
5.0
%
 
5.5
%
 
5.5
%
 
3.0
%
 
3.1
%
 
3.1
%

It is our policy to adjust, on an annual basis, the discount rate used to determine the projected benefit obligation to approximate rates on high-quality, long-term obligations based on our estimated benefit payments available as of the measurement date. We use a published yield curve to assist in the development of our discount rates. We estimate that a 100 basis point increase in the discount rate would reduce net periodic pension cost approximately $1.0 million for both the domestic plans and international plans. The expected return on plan assets is derived primarily from a periodic study of long-term historical rates of return on the various asset classes included in our targeted pension plan asset allocation as well as future expectations. We estimate that each 100 basis point reduction in the expected return on plan assets would result in additional net periodic pension cost of $1.6 million and $0.3 million for domestic plans and international plans, respectively. We also evaluate the rate of compensation increase annually and adjust if necessary.
Our investment objective for domestic plan assets is to earn a rate of return sufficient to exceed the long-term growth of the plans’ liabilities without subjecting plan assets to undue risk. The plan assets are invested primarily in high quality equity and debt securities. We conduct a periodic strategic asset allocation study to form a basis for the allocation of pension assets between various asset categories. Specific allocation percentages are assigned to each asset category with minimum and maximum ranges established for each. The assets are then managed within these ranges. During fiscal 2020, the U.S. targeted asset allocation was 55% equity securities, 40% fixed income securities, and 5% real estate securities. Our investment objective for the international plan assets is also to add value by exceeding the long-term growth of the plans’ liabilities. During fiscal 2020, the international asset target allocation approximated 75% equity securities, 15% fixed income securities, and 10% multi-strategy investments.
Our pension plan asset allocation by asset category as of the dates presented is as follows:
 
% of Plan Assets
 
Domestic Plans
 
International Plans
 
2020
 
2019
 
2020
 
2019
Equity securities
58.2
%
 
53.3
%
 
76.9
%
 
73.0
%
Fixed income securities
37.3
%
 
41.8
%
 
13.7
%
 
17.1
%
Multi-strategy investments
—
%
 
—
%
 
9.4
%
 
9.9
%
Real estate
4.5
%
 
4.9
%
 
—
%
 
—
%
Total
100.0
%
 
100.0
%
 
100.0
%
 
100.0
%

Our pension plan assets are stated at fair value based on quoted market prices in an active market, quoted redemption values, or estimates based on reasonable assumptions as of the most recent measurement period. See the Fair Value Measurements footnote for a description of the fair value guidance. No transfers between the levels of the fair value hierarchy occurred during the current fiscal period. In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence. Certain pension assets valued at net asset value (“NAV”) per share as a practical expedient are excluded from the fair value hierarchy. Investments in pension plan assets are described in further detail below.
Short-term Fixed Income Investments
Short-term investments consist of money market funds, which are valued at the daily closing price as reported by the relevant fund (Level 1).
Mutual Funds
Mutual funds held by the domestic plans are open-end mutual funds that are registered with the Securities and Exchange Commission (“SEC”) and seek to either replicate or outperform a related index. These funds are required to publish their daily net asset value and to transact at that price. The mutual funds held by the domestic plans are deemed to be actively traded (Level 1).
Collective Trust
The collective trust seeks to outperform the overall small-cap stock market and is comprised of small cap equity securities with quoted prices in active markets for identical investments. The value of this fund is calculated on each business day by dividing the total value of assets, less liabilities, by the number of units of each class outstanding but is not published (Level 2).
Fixed Income Investments
The fixed interest fund seeks to maximize total return by investing primarily in a diversified portfolio of intermediate and long-term debt securities and is valued using the NAV of units of a management investment company’s trust. The NAV, as provided by the fund's trustee, is used as a practical expedient to estimate fair value. As such, these funds are excluded from the fair value hierarchy. The NAV is based on the fair value of the underlying investments held by the fund less the fund's liabilities.
Real Estate Fund
The real estate fund invests primarily in commercial real estate and includes mortgage loans that are backed by the associated property's investment objective. The fund seeks real estate returns, risk, and liquidity appropriate to a core fund. The fund also seeks to provide current income with the potential for long-term capital appreciation. This investment is valued based on the NAV per share, without further adjustment. The NAV, as provided by the fund's trustee, is used as a practical expedient to estimate fair value and is therefore excluded from the fair value hierarchy. NAV is based on the fair value of the underlying investments. Investors may request to redeem all or any portion of their shares on a quarterly basis. Each investor must provide a written redemption request at least sixty days prior to the end of the quarter for which the request is to be effective. If insufficient funds are available to honor all redemption requests at
any point in time, available funds will be allocated pro-rata based on the total number of shares held by each investor. All decisions regarding whether to honor redemption requests are made by the fund’s board of directors.
International Plan Investments
The international plans' assets consist primarily of funds invested in equity securities, multi-strategy investments, and fixed income investments. These securities are calculated using the values of the underlying holdings (i.e. significant observable inputs) but do not have actively quoted market prices (Level 2). The short-term fixed income investments represents cash and cash equivalents held by the funds at fiscal year end (Level 1).
The following tables present the fair value of the domestic pension plan assets by major category as of the dates presented (in millions):
 
 
 
Fair Value Measurements
 
Fair Value
as of
 
Quoted Market
Prices in Active
Markets for
Identical Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
August 31, 2020
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets included in the fair value hierarchy:
 
 
 
 
 
 
 
Mutual funds:
 

 
 

 
 

 
 

Domestic large cap equity fund
$
55.6

 
$
55.6

 
$
—

 
$
—

Foreign equity fund
26.0

 
26.0

 
—

 
—

Collective trust: Domestic small cap equities
15.7

 
—

 
15.7

 
—

Short-term fixed income investments
5.2

 
5.2

 
—

 
—

Total assets in the fair value hierarchy
102.5










Assets calculated at net asset value:
 
 
 
 
 
 
 
Fixed-income investments
57.0

 
 
 
 
 
 
Real estate fund
7.6

 
 
 
 
 
 
Total assets at net asset value
64.6

 
 
 
 
 
 
Total assets at fair value
$
167.1

 
 

 
 

 
 

 
 
 
Fair Value Measurements
 
Fair Value
as of
 
Quoted Market
Prices in Active
Markets for
Identical Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
August 31, 2019
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets included in the fair value hierarchy:
 
 
 
 
 
 
 
Mutual funds:
 

 
 

 
 

 
 

Domestic large cap equity fund
$
45.6

 
$
45.6

 
$
—

 
$
—

Foreign equity fund
20.5

 
20.5

 
—

 
—

Collective trust: Domestic small cap equities
14.6

 
—

 
14.6

 
—

Short-term fixed income investments
6.0

 
6.0

 
—

 
—

Total assets in the fair value hierarchy
86.7










Assets calculated at net asset value:
 
 
 
 
 
 
 
Fixed-income investments
57.4

 
 
 
 
 
 
Real estate fund
7.4

 
 
 
 
 
 
Total assets at net asset value
64.8

 
 
 
 
 
 
Total assets at fair value
$
151.5

 
 

 
 

 
 

The following tables present the fair value of the international pension plan assets by major category as of the dates presented (in millions):
 
 
 
Fair Value Measurements
 
Fair Value
as of
 
Quoted Market
Prices in Active
Markets for
Identical Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
August 31, 2020
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets included in the fair value hierarchy:
 
 
 
 
 
 
 
Equity securities
$
27.0

 
$
—

 
$
27.0

 
$
—

Short-term fixed income investments
0.3

 
0.3

 
—

 
—

Multi-strategy investments
3.3

 
—

 
3.3

 
—

Fixed-income investments
4.5

 
—

 
4.5

 
—

Total assets at fair value
$
35.1

 
 

 
 

 
 

 
 
 
Fair Value Measurements
 
Fair Value
as of
 
Quoted Market
Prices in Active
Markets for
Identical Assets
 
Significant
Other
Observable
Inputs
 
Significant
Unobservable
Inputs
 
August 31, 2019
 
(Level 1)
 
(Level 2)
 
(Level 3)
Assets included in the fair value hierarchy:
 
 
 
 
 
 
 
Equity securities
$
22.4

 
$
—

 
$
22.4

 
$
—

Short-term fixed income investments
0.3

 
0.3

 
—

 
—

Multi-strategy investments
3.0

 
—

 
3.0

 
—

Fixed-income investments
5.0

 
—

 
5.0

 
—

Total assets at fair value
$
30.7

 
 

 
 

 
 


We expect to contribute approximately $1.0 million and $1.2 million during fiscal 2021 to our domestic qualified plans and international defined benefit plans, respectively. These amounts are based on the total contributions required during fiscal 2021 to satisfy current legal minimum funding requirements for qualified plans and estimated benefit payments for non-qualified plans.
Benefit payments are made primarily from funded benefit plan trusts. Benefit payments are expected to be paid as follows during the years ending August 31 (in millions):
 
Domestic Plans
 
International Plans
2021
$
12.8

 
$
1.1

2022
11.7

 
1.2

2023
23.3

 
1.2

2024
17.9

 
1.3

2025
13.0

 
1.3

2026-2030
67.6

 
7.5


Multi-employer Pension Plans
We contribute to two multi-employer defined benefit pension plans under the terms of collective-bargaining agreements that cover certain of our union-represented employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects:

•
Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.
•
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be shared by the remaining participating employers.
•
If a participating employer chooses to stop participating in some of its multi-employer plans, the employer may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
Our contributions to these plans were $0.6 million for the year ended August 31, 2020, and $0.5 million for each of the years ended August 31, 2019, and 2018.
Defined Contribution Plans
We also have defined contribution plans to which both employees and we make contributions. Our cost for these plans was $8.2 million, $8.1 million, and $8.0 million for the years ended August 31, 2020, 2019, and 2018, respectively. Employer matching amounts are allocated in accordance with the participants’ investment elections for elective deferrals. At August 31, 2020, assets of the domestic defined contribution plans included shares of our common stock with a market value of approximately $5.9 million, which represented approximately 1.5% of the total fair market value of the assets in our domestic defined contribution plans.