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EMPLOYEES' RETIREMENT PLANS | 12 Months Ended
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Aug. 31, 2024
Retirement Benefits [Abstract] |
EMPLOYEES' RETIREMENT PLANS | NOTE 14. EMPLOYEES' RETIREMENT PLANS Substantially all employees in the U.S. are covered by a defined contribution 401(k) retirement plan. The tax qualified defined contribution plan is maintained, and contributions are made, in accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Company also provides certain eligible executives benefits pursuant to its Benefit Restoration Plan ("BRP") equal to amounts that would have been available under the tax qualified ERISA plan, but were subject to the limitations of ERISA, tax laws and regulations. Company expenses for these plans, a portion of which are discretionary, totaled $46.9 million, $40.4 million and $34.0 million for 2024, 2023 and 2022, respectively, of which $27.7 million, $26.1 million and $26.8 million was recorded in cost of goods sold, respectively, and the remainder was recorded in SG&A expenses in the Company's consolidated statements of earnings. The deferred compensation liability under the BRP was $48.8 million and $48.2 million at August 31, 2024 and 2023, respectively, of which $44.3 million and $41.1 million, respectively, was included in other noncurrent liabilities, and the remainder was included in accrued expenses and other payables on the Company's consolidated balance sheets. Though under no obligation to fund the BRP, the Company has segregated assets in a trust with a value of $67.0 million and $60.1 million at August 31, 2024 and 2023, respectively, and such assets were included in other noncurrent assets on the Company's consolidated balance sheets. The net holding gain on these segregated assets was $8.5 million in 2024, compared to a net holding gain of $5.0 million and a net holding loss of $7.1 million in 2023 and 2022, respectively, and was included in net sales in the Company's consolidated statements of earnings. U.K. Pension Plan In 2022, the Company acquired a partially funded defined benefit pension plan in the United Kingdom (the "U.K.") (the "U.K. Pension Plan"). The U.K. Pension Plan provides retirement benefit payments for participating retired employees and their spouses, and was closed to new participants prior to the acquisition. The Company’s funding policy for the U.K. Pension Plan is to contribute annually the amount necessary to provide for benefits based on accrued service and meet at least the minimum contributions required by applicable regulations. U.S. Pension Plan In 2019, the Company acquired a partially funded defined benefit pension plan in the U.S. (the "U.S. Pension Plan"), which was closed to new participants prior to the acquisition. In October 2022, the Company terminated its U.S. Pension Plan. As part of the termination, the Company made a contribution of $4.1 million. Plan assets were liquidated to purchase annuity contracts with an insurance company for all participants. The Company recognized a $4.2 million settlement charge as a result of the termination, including an immaterial non-cash charge for unrecognized losses within AOCI as of the termination date. The $4.2 million settlement charge was recognized within SG&A expenses in the consolidated statement of earnings during 2023. All other components of net periodic benefit cost recorded in the consolidated statements of earnings and changes in plan assets and benefits obligations recognized in OCI were immaterial in 2023 and 2022. No benefit obligation or plan assets related to the U.S. Pension Plan remain. The following tables include a reconciliation of the beginning and ending balances of the pension benefit obligation and the fair value of plan assets resulting from the U.K. Pension Plan and the U.S. Pension Plan and the related amounts recognized in the Company’s consolidated balance sheets as of August 31, 2024 and 2023:
|  | U.K. Pension Plan |  | U.S. Pension Plan |  |
(in thousands) |  | 2024 |  |  | 2023 |  | 2023 |  |  |  |
Benefit obligation at beginning of year |  | $ | 50,900 |  |  |  | $ | 52,042 |  |  | $ | 26,568 |  |  |  |  |
Interest cost |  | 2,615 |  |  |  | 2,261 |  |  | — |  |  |  |  |
Actuarial loss (gain) |  | 794 |  |  |  | (5,354) |  |  | (47) |  |  |  |  |
Benefits paid |  | (2,958) |  |  |  | (2,529) |  |  | (466) |  |  |  |  |
Foreign currency translation |  | 1,841 |  |  |  | 4,480 |  |  | — |  |  |  |  |
Settlement |  | — |  |  |  | — |  |  | (26,055) |  |  |  |  |
Benefit obligation at end of year |  | $ | 53,192 |  |  |  | $ | 50,900 |  |  | $ | — |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 49,522 |  |  |  | $ | 60,454 |  |  | $ | 24,440 |  |  |  |  |
Actuarial gain |  | — |  |  |  | — |  |  | (47) |  |  |  |  |
Actual return (loss) on plan assets |  | 2,733 |  |  |  | (13,533) |  |  | (1,966) |  |  |  |  |
Employer contributions |  | 339 |  |  |  | 297 |  |  | 4,094 |  |  |  |  |
Benefits paid |  | (2,958) |  |  |  | (2,529) |  |  | (466) |  |  |  |  |
Foreign currency translation |  | 1,779 |  |  |  | 4,833 |  |  | — |  |  |  |  |
Settlement |  | — |  |  |  | — |  |  | (26,055) |  |  |  |  |
Fair value of plan assets at end of year |  | $ | 51,415 |  |  |  | $ | 49,522 |  |  | $ | — |  |  |  |  |
Funded status at end of year liability recognized in the consolidated balance sheets as of August 31, |  | $ | (1,777) |  |  |  | $ | (1,378) |  |  | $ | — |  |  |  |  |
Amounts recognized in AOCI as of August 31, |  |  |  |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | 15,981 |  |  |  | $ | 16,477 |  |  | $ | — |  |  |  |  |
Weighted average assumptions used to determine benefit obligations are detailed below:
|  | U.K. Pension Plan
|  | 2024 |  | 2023
Effective discount rate for benefit obligations |  | 5.0 | % |  | 5.3 | %
The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels. Net periodic benefit costs (gains) are recorded in SG&A expenses within the consolidated statements of earnings. Components of net periodic benefit costs (gains) and other supplemental information are detailed below:
|  | U.K. Pension Plan |  |  |  |
|  | Year Ended August 31, |  |  |  |
(in thousands) |  | 2024 |  | 2023 |  | 2022 |  |  |  |
Interest cost |  | $ | 2,615 |  |  | $ | 2,261 |  |  | $ | 635 |  |  |  |  |
Expected return on plan assets |  | (2,065) |  |  | (2,589) |  |  | (1,067) |  |  |  |  |
Amortization of unrecognized net actuarial loss |  | 622 |  |  | — |  |  | — |  |  |  |  |
Total net periodic benefit costs (gains) |  | $ | 1,172 |  |  | $ | (328) |  |  | $ | (432) |  |  |  |  |
Other changes in plan assets and benefit obligations recognized in OCI |  |  |  |  |  |  |  |  |  |
Net actuarial (gain) loss arising during measurement period |  | $ | (496) |  |  | $ | 10,811 |  |  | $ | 5,666 |  |  |  |  |
Weighted average assumptions used to determine net periodic benefit costs (gains) are detailed below:
|  | U.K. Pension Plan |  |
|  | 2024 |  | 2023 |  | 2022 |  |  |  |
Effective rate for interest on benefit obligations |  | 5.3 | % |  | 4.3 | % |  | 2.9 | % |  |  |  |
Expected long-term rate of return |  | 5.0 | % |  | 4.6 | % |  | 4.0 | % |  |  |  |
The Company determines the discount rates used to measure liabilities as of the August 31 measurement date, which is also the date used for the related annual measurement assumptions. The discount rates reflect the current rate at which the associated liabilities could be effectively settled at the end of the year. For the U.K. Pension Plan, the Company sets its discount rate by reference to a corporate bond yield curve derived from AA rated U.K. corporate bonds. The single equivalent discount rate is derived as equivalent to applying the full yield curve approach to each future year's projected benefit cash flow. The expected return assumptions are based on the strategic asset allocation of each plan and long-term capital market return expectations. For the U.K. Pension Plan, the interest cost calculation is determined by applying the single equivalent discount rate to the discounted value of the year-by-year projected benefit payments. The single equivalent discount rate does not affect the measurement of the total benefit obligations. The Company plans to make immaterial contributions to the U.K. Pension Plan in 2025. Future contributions will depend on market conditions, interest rates and other factors. Plan Assets Plan assets consist primarily of public equity, corporate and government bonds. The principal investment objectives are to achieve, over the long term, a return on the plan assets which is consistent with the assumptions made by the plan actuaries in determining the funding of the plans, to ensure that sufficient liquid assets are available to meet benefit payments as they fall due and to consider the interest of the Company in relation to the size and volatility of the Company's contribution requirements. Each asset class has broadly diversified characteristics. Asset and benefit obligation forecasting studies are conducted periodically, generally every two to three years, or when significant changes have occurred in market conditions, benefits, participant demographics or funded status. The U.K. Pension Plan's weighted average target allocation ranges and actual allocations as a percentage of plan assets, including the notional exposure of future contracts by asset categories, are detailed below:
|  | Pension Assets
|  | Target Percent |  | 2024 |  | 2023
Fixed income securities |  | 95.0% | to | 100% |  | 99.6% |  | 88.2%
Cash and other |  | — | to | 5.0 |  | 0.4 |  | 11.8
Total |  |  |  |  |  | 100% |  | 100%
Investment Valuation Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date. Fixed income securities are valued at the yields currently available on comparable securities of issues with similar credit ratings. Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined based on average cost. Interest income is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date. Non-interest bearing cash is valued at cost, which approximates fair value. Fair Value Measurements The following table sets forth the fair value of the plan assets by asset class for the U.K. Pension Plan as of August 31, 2024 and 2023. Level 1 assets consist of cash and cash equivalents. Level 2 assets include funds invested in bonds and fixed income securities. Level 3 assets are measured at fair value using significant unobservable inputs and consist primarily of Secured Finance and Multistrategy Funds that invest in debt, loan and structured financial instruments in both public and private secured finance markets.
|  |  |  | Fair Value at Measurement Date Using |  |  |  |  |  |
(in thousands) |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  |  |  |  |  |
As of August 31, 2024: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  | $ | 51,194 |  |  | $ | — |  |  | $ | 51,194 |  |  | $ | — |  |  |  |  |  |  |
Cash and other |  | 221 |  |  | — |  |  | 221 |  |  | — |  |  |  |  |  |  |
Fair value of U.K. Pension Plan assets |  | $ | 51,415 |  |  |  |  |  |  |  |  |  |  |  |  |
As of August 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed income securities |  | $ | 43,654 |  |  | $ | — |  |  | $ | 40,497 |  |  | $ | 3,157 |  |  |  |  |  |  |
Cash and other |  | 5,868 |  |  | 376 |  |  | 5,356 |  |  | 136 |  |  |  |  |  |  |
Fair value of U.K. Pension Plan assets |  | $ | 49,522 |  |  |  |  |  |  |  |  |  |  |  |  |
The following table provides a reconciliation of the beginning and ending balances of U.K. Pension Plan Level 3 assets recognized in the consolidated balance sheets:
(in thousands) |  | Level 3 Plan Assets
Balance at August 31, 2022 |  | $ | 8,885 |
Sales |  | (4,997) |
Actual return on plan assets: |  |
Assets held as of the reporting date |  | 134 |
Assets sold during the year |  | 256 |
Transfers out of Level 3 |  | (1,541) |
Foreign currency translation |  | 556 |
Balance at August 31, 2023 |  | $ | 3,293 |
Sales |  | (3,139) |
Actual return on plan assets sold during the year |  | (139) |
Foreign currency translation |  | (15) |
Balance at August 31, 2024 |  | $ | — |
Future Pension Benefit Payments The following table provides the estimated aggregate pension benefit payments that are payable from the U.K. Pension Plan to participants in future years:
(in thousands) |  | U.K. Pension Plan
2025 |  | $ | 3,150 |
2026 |  | 3,225 |
2027 |  | 3,300 |
2028 |  | 3,379 |
2029 |  | 3,458 |
2030 through 2034 |  | 18,548 |

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 710 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//710/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 712 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//712/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 715 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//715/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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