NOTE 13 – POST RETIREMENT BENEFIT PLANS

Defined Benefit Pension Plans

The Company has certain non-contributory defined benefit pension plans for salaried and hourly employees in the United States, Canada, Germany, the Netherlands, South Africa and the United Kingdom. The Company uses a measurement date of October 31 for fair value purposes for its pension plans. The salaried employees plans’ benefits are based primarily on years of service and earnings. The hourly employees plans’ benefits are based primarily upon years of service. Certain benefit provisions are subject to collective bargaining. The Company contributes an amount that is not less than the minimum funding and not more than the maximum tax-deductible amount to these plans. Salaried employees in the United States who commence service on or after November 1, 2007 and on various dates in the preceding five years for the non-U.S. plans are not eligible to participate in the defined benefit pension plans, but are eligible to participate in a defined contribution retirement program. The category “Other International” represents the noncontributory defined benefit pension plans in Canada and South Africa.

Pension plan contributions by the Company totaled $16.9 million during 2014, which consisted of $15.5 million of employer contributions and $1.4 million of benefits paid directly by the Company. Pension plan contributions, including benefits paid directly by the Company totaled $15.8 million and $19.8 million during 2013 and 2012, respectively. Contributions, including benefits paid directly by the Company, during 2015 are expected to be approximately $17.5 million.

The following table presents the number of participants in the defined benefit plans:


October 31, 2014	Consolidated		USA		Germany		United Kingdom		Netherlands		Other International
Active participants		2,131		1,772		112		133		66		48
Vested former employees		2,149		1,431		60		399		238		21
Retirees and beneficiaries		4,131		2,372		256		718		728		57
Other plan participants		30		0		0		0		30		0

October 31, 2013	Consolidated		USA		Germany		United Kingdom		Netherlands		Other International
Active participants		2,244		1,880		122		133		48		61
Vested former employees		2,184		1,452		64		399		249		20
Retirees and beneficiaries		4,147		2,320		250		718		804		55
Other plan participants		35		0		0		0		35		0

The actuarial assumptions are used to measure the year-end benefit obligations at October 31 and the pension costs for the subsequent year were as follows:


For the year ended October 31, 2014	Consolidated			United States			Germany			United Kingdom			Netherlands			International
Discount rate		3.69	%		4.22	%		2.45	%		3.72	%		2.20	%		4.83	%
Expected return on plan assets		5.73	%		6.25	%		N/A			6.25	%		3.25	%		6.09	%
Rate of compensation increase		2.93	%		3.00	%		2.75	%		3.25	%		2.25	%		2.41	%
For the year ended October 31, 2013
Discount rate		4.30	%		4.75	%		3.40	%		4.25	%		3.25	%		5.28	%
Expected return on plan assets		5.70	%		6.00	%		N/A			6.50	%		3.25	%		5.82	%
Rate of compensation increase		2.99	%		3.00	%		2.75	%		3.50	%		2.25	%		2.35	%
For the year ended October 31, 2012
Discount rate		3.92	%		4.00	%		3.50	%		4.25	%		3.25	%		4.89	%
Expected return on plan assets		6.46	%		6.75	%		N/A			6.75	%		5.00	%		6.55	%
Rate of compensation increase		2.99	%		3.00	%		2.75	%		3.50	%		2.25	%		2.29	%

The discount rate is determined by developing a hypothetical portfolio of individual high-quality corporate bonds available at the measurement date, the coupon and principal payments of which would be sufficient to satisfy the plans’ expected future benefit payments as defined for the projected benefit obligation. The discount rate by country is equivalent to the average yield on that hypothetical portfolio of bonds and is a reflection of current market settlement rates on such high quality bonds, government treasuries, and annuity purchase rates. To determine the expected long-term rate of return on pension plan assets, we consider current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. In developing future return expectations for our defined benefit pension plans’ assets, we formulate views on the future economic environment, both in the U.S. and globally. We evaluate general market trends and historical relationships among a number of key variables that impact asset class returns, such as expected earnings growth, inflation, valuations, yields and spreads, using both internal and external sources. We also take into account expected volatility by asset class and diversification across classes to determine expected overall portfolio results given current and expected allocations. We also use published mortality tables for determining the expected lives of plan participants and believe that the tables selected are most-closely associated with the expected lives of plan participants as the table are based on the country in which the participant is employed.

Based on our analysis of future expectations of asset performance, past return results, and our current and expected asset allocations, we have assumed a 5.7% long-term expected return on those assets for cost recognition in 2014. For the defined benefit pension plans, we apply our expected rate of return to a market-related value of assets, which stabilizes variability in the amounts to which we apply that expected return.

We amortize experience gains and losses as well as the effects of changes in actuarial assumptions and plan provisions over a period no longer than the average future service of employees.

Benefit Obligations

The components of net periodic pension cost include the following (Dollars in millions):


															Other
For the year ended October 31, 2014	Consolidated			United States			Germany		United Kingdom			Netherlands			International
Service cost	$	15.7		$	10.4		$	0.6	$	2.5		$	1.6		$	0.6
Interest cost		29.6			16.6			1.3		7.5			3.6			0.6
Expected return on plan assets		(33.9	)		(17.4	)		—		(12.6	)		(3.1	)		(0.8	)
Amortization of prior service cost		0.2			0.2			—		—			—			—
Recognized net actuarial loss		10.4			6.8			0.7		1.9			0.8			0.2

Net periodic pension cost	$	22.0		$	16.6		$	2.6	$	(0.7	)	$	2.9		$	0.6


For the year ended October 31, 2013	Consolidated			United States			Germany		United Kingdom			Netherlands			Other International
Service cost	$	16.7		$	11.5		$	0.6	$	2.9		$	1.2		$	0.5
Interest cost		27.6			15.9			1.2		6.5			3.3			0.7
Expected return on plan assets		(32.1	)		(16.4	)		—		(11.7	)		(3.2	)		(0.8	)
Amortization of prior service cost		0.6			0.5			—		—			—			0.1
Recognized net actuarial loss		16.4			13.6			0.6		1.3			0.6			0.3

Net periodic pension cost	$	29.2		$	25.1		$	2.4	$	(1.0	)	$	1.9		$	0.8



For the year ended October 31, 2012	Consolidated			United States			Germany		United Kingdom			Netherlands			Other International
Service cost	$	13.4		$	10.0		$	0.4	$	2.1		$	0.5		$	0.4
Interest cost		29.6			16.6			1.4		7.0			3.9			0.7
Expected return on plan assets		(33.9	)		(17.6	)		—		(11.8	)		(3.6	)		(0.9	)
Amortization of prior service cost		1.5			1.5			—		—			—			—
Recognized net actuarial loss		11.4			9.9			0.1		0.6			0.4			0.4

Net periodic pension cost	$	22.0		$	20.4		$	1.9	$	(2.1	)	$	1.2		$	0.6

Benefit obligations are described in the following tables. Accumulated and projected benefit obligations (ABO and PBO) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation.

The following table sets forth the plans’ change in projected benefit obligation (Dollars in millions):


	Consolidated			USA			Germany			United Kingdom			Netherlands			Other International
For the year ended October 31, 2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	703.8		$	358.7		$	39.0		$	174.9		$	116.9		$	14.3
Service cost		15.7			10.4			0.6			2.5			1.6			0.6
Interest cost		29.6			16.6			1.3			7.5			3.6			0.6
Plan participant contributions		0.3			—			—			—			0.3			—
Expenses paid from assets		(2.5	)		(1.2	)		—			(1.1	)		—			(0.2	)
Plan Amendments		(0.5	)		0.4			—			—			(0.9	)		—
Actuarial loss		92.8			51.4			5.7			15.9			18.1			1.7
Foreign currency effect		(14.6	)		—			(3.3	)		(0.4	)		(9.9	)		(1.0	)
Benefits paid		(37.7	)		(16.7	)		(1.4	)		(12.4	)		(6.1	)		(1.1	)

Benefit obligation at end of year	$	786.9		$	419.6		$	41.9		$	186.9		$	123.6		$	14.9

For the year ended October 31, 2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	722.4		$	404.7		$	35.3		$	161.9		$	103.4		$	17.1
Service cost		16.7			11.5			0.6			2.9			1.2			0.5
Interest cost		27.6			15.9			1.2			6.5			3.3			0.7
Plan participant contributions		0.3			—			—			—			0.3			—
Expenses paid from assets		(2.2	)		(1.9	)		—			—			—			(0.3	)
Multi-plan combination		0.4			0.4			—			—			—			—
Actuarial (gain) loss		(23.8	)		(40.6	)		0.9			9.7			7.7			(1.5	)
Foreign currency effect		9.4			—			2.4			0.8			7.0			(0.8	)
Benefits paid		(47.0	)		(31.3	)		(1.4	)		(6.9	)		(6.0	)		(1.4	)

Benefit obligation at end of year	$	703.8		$	358.7		$	39.0		$	174.9		$	116.9		$	14.3

Actuarial loss increased to $92.8 million for the year ended October 31, 2014, primarily attributable to a decrease in discount rates and an updated mortality table.

The following tables set forth the PBO, ABO, plan assets and instances where the ABO exceeds the plan assets for the respective years (Dollars in millions):


Actuarial value of benefit obligations
	Consolidated		USA		Germany		United Kingdom		Netherlands		Other International
October 31, 2014
Projected benefit obligation	$	786.9	$	419.6	$	41.9	$	186.9	$	123.6	$	14.9
Accumulated benefit obligation		752.5		393.2		38.9		184.9		122.0		13.5
Plan assets		650.8		325.6		—		202.7		107.8		14.7
October 31, 2013
Projected benefit obligation	$	703.8	$	358.7	$	39.0	$	174.9	$	116.9	$	14.3
Accumulated benefit obligation		674.4		339.1		35.9		171.3		115.2		12.9
Plan assets		621.2		301.8		—		198.9		106.5		14.0
Plans with ABO in excess of Plan assets
October 31, 2014
Accumulated benefit obligation	$	567.6	$	393.2	$	38.9	$	—	$	122.0	$	13.5
Plan assets		445.2		325.6		—		—		107.9		11.7
October 31, 2013
Accumulated benefit obligation	$	503.0	$	339.1	$	35.9	$	—	$	115.2	$	12.8
Plan assets		419.2		301.8		—		—		106.5		10.9

Future benefit payments, which reflect expected future service, as appropriate, during the next five years, and in the aggregate for the five years thereafter, are as follows (Dollars in millions):


Year	Expected benefit payments
2015	$	33.0
2016	$	33.7
2017	$	35.1
2018	$	37.1
2019	$	38.6
2020-2024	$	214.8

Plan assets

The plans’ assets consist of domestic and foreign equity securities, government and corporate bonds, cash, insurance annuity mutual funds and not more than the allowable number of shares of the Company’s common stock, which was 247,504 Class A shares and 160,710 Class B shares at October 31, 2014 and 2013.

The investment policy reflects the long-term nature of the plans’ funding obligations. The assets are invested to provide the opportunity for both income and growth of principal. This objective is pursued as a long-term goal designed to provide required benefits for participants without undue risk. It is expected that this objective can be achieved through a well-diversified asset portfolio. All equity investments are made within the guidelines of quality, marketability and diversification mandated by the Employee Retirement Income Security Act and/or other relevant statutes. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio.

The Company’s weighted average asset allocations at the measurement date and the target asset allocations by category are as follows:


Asset Category	2014 Target			2014 Actual			2013 Target			2013 Actual
Equity securities		24	%		28	%		23	%		31	%
Debt securities		49	%		39	%		49	%		46	%
Other		27	%		33	%		28	%		23	%

Total		100	%		100	%		100	%		100	%

The fair value of the pension plans’ investments is presented below. The inputs and valuation techniques used to measure the fair value of the assets are consistently applied and described in Note 10.


	Consolidated			USA			Germany		United Kingdom			Netherlands			Other International
For the year ended October 31, 2014
Change in plan assets:
Fair value of plan assets at beginning of year	$	621.2		$	301.8		$	—	$	198.9		$	106.5		$	14.0
Actual return on plan assets		62.6			29.8			—		15.7			15.8			1.3
Expenses paid		(2.5	)		(1.2	)		—		(1.1	)		—			(0.2	)
Plan participant contributions		0.3			—			—		—			0.3			—
Multi-plan combination		—			—			—		—			—			—
Foreign currency impact		(10.0	)		—			—		(0.3	)		(8.7	)		(1.0	)
Employer contributions		15.5			11.9			—		1.9			—			1.7
Benefits paid		(36.3	)		(16.7	)		—		(12.4	)		(6.1	)		(1.1	)

Fair value of plan assets at end of year	$	650.8		$	325.6		$	—	$	202.7		$	107.8		$	14.7

For the year ended October 31, 2013
Change in plan assets:
Fair value of plan assets at beginning of year	$	599.1		$	298.4		$	—	$	187.4		$	99.3		$	14.0
Actual return on plan assets		48.9			25.1			—		15.9			6.5			1.4
Expenses paid		(2.1	)		(1.8	)		—		—			—			(0.3	)
Plan participant contributions		0.3			—			—		—			0.3			—
Multi-plan combination		—			—			—		—			—			—
Foreign currency effects		6.4			—			—		0.8			6.5			(0.9	)
Employer contributions		14.4			11.4			—		1.7			—			1.3
Benefits paid		(45.8	)		(31.3	)		—		(6.9	)		(6.1	)		(1.5	)

Fair value of plan assets at end of year	$	621.2		$	301.8		$	—	$	198.9		$	106.5		$	14.0

The following table presents the fair value measurements for the pension assets:


As of October 31, 2014 (Dollars in millions)

Asset Category	Fair Value Measurement
	Level 1		Level 2		Level 3		Total
Mutual funds	$	143.0	$	160.4	$	—	$	303.4
Common stock		31.0		—		—		31.0
Cash		13.7		—		—		13.7
Money market fund		0.2		—		—		0.2
Common collective trusts		—		132.5		—		132.5
Government Bonds		—		15.6		—		15.6
Corporate bonds		—		3.1		—		3.1
Other assets		—		0.2		—		0.2
Insurance Annuity		—		—		151.1		151.1

Total	$	187.9	$	311.8	$	151.1	$	650.8


As of October 31, 2013 (Dollars in millions)

Asset Category	Fair Value Measurement
	Level 1		Level 2		Level 3		Total
Mutual funds	$	183.7	$	145.7	$	—	$	329.4
Common stock		33.8		—		—		33.8
Cash		15.9		—		—		15.9
Common collective trusts		—		121.5		—		121.5
Government Bonds				21.8				21.8
Corporate bonds				2.2				2.2
Insurance Annuity						96.6		96.6

Total	$	233.4	$	291.2	$	96.6	$	621.2

The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3). There have been no transfers in or out of level 3:


	Pension Plan
(Dollars in millions)	2014			2013
Balance at beginning of year	$	96.6		$	87.1
Actual return on plan assets held at reporting date:
Assets still held at reporting date		15.9			6.5
Plan participant contributions		0.3			0.3
Net purchases (settlements)		47.0			(6.1	)
Transfers		—			2.3
Currency impact		(8.7	)		6.5

Balance at end of year	$	151.1		$	96.6

Financial statement presentation including other comprehensive income:


	Consolidated			USA			Germany			United Kingdom		Netherlands			Other International
As of October 31, 2014
Unrecognized net actuarial loss	$	198.5		$	110.1		$	16.8		$	41.1	$	25.4		$	5.1
Unrecognized prior service cost		—			0.9			—			—		(0.9	)		—
Unrecognized initial net obligation		0.3			—			—			—		—			0.3

Accumulated other comprehensive loss (Pre-tax)	$	198.8		$	111.0		$	16.8		$	41.1	$	24.5		$	5.4

Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost	$	18.6		$	—		$	—		$	15.8	$	—		$	2.8
Accrued benefit liability		(154.6	)		(94.0	)		(41.8	)		—		(15.7	)		(3.1	)
Accumulated other comprehensive loss		198.8			111.0			16.8			41.1		24.5			5.4

Net amount recognized	$	62.8		$	17.0		$	(25.0	)	$	56.9	$	8.8		$	5.1


	Consolidated			USA			Germany			United Kingdom			Netherlands			Other International
As of October 31, 2013
Unrecognized net actuarial loss	$	148.5		$	77.8		$	13.1		$	30.4		$	22.8		$	4.4
Unrecognized prior service cost		0.8			0.8			—			—			—			—
Unrecognized initial net obligation		0.3			—			—			—			—			0.3

Accumulated other comprehensive loss (Pre-tax)	$	149.6		$	78.6		$	13.1		$	30.4		$	22.8		$	4.7

Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost	$	29.6		$	—		$	—		$	26.6		$	—		$	3.0
Accrued benefit liability		(112.1	)		(56.9	)		(39.0	)		(2.5	)		(10.4	)		(3.3	)
Accumulated other comprehensive loss		149.6			78.6			13.1			30.4			22.8			4.7

Net amount recognized	$	67.1		$	21.7		$	(25.9	)	$	54.5		$	12.4		$	4.4


	October 31, 2014			October 31, 2013
Accumulated other comprehensive loss at beginning of year	$	149.6		$	204.8
Increase or (decrease) in accumulated other comprehensive (income) or loss
Net transition obligation amortized during fiscal year		(0.1	)		(0.1	)
Net prior service costs amortized during fiscal year		(0.2	)		(0.5	)
Net loss amortized during fiscal year		(10.4	)		(16.4	)
Prior service (cost) or credit recognized during fiscal year due to curtailment		—			—
Prior service costs occurring during fiscal year		(0.5	)		0.4
Liability (gain) loss occurring during fiscal year		92.8			(23.9	)
Asset (gain) occurring during fiscal year		(28.6	)		(16.9	)

Increase (decrease) in accumulated other comprehensive loss	$	53.0		$	(57.4	)
Foreign currency impact		(3.8	)		2.2

Accumulated other comprehensive (income) or loss at current fiscal year end	$	198.8		$	149.6

In 2015, the Company expects to record an amortization loss of $14.5 million of prior service costs from shareholders’ equity into pension costs.

Defined contribution plans

The Company has several voluntary 401(k) savings plans that cover eligible employees. For certain plans, the Company matches a percentage of each employee’s contribution up to a maximum percentage of base salary. Company contributions to the 401(k) plans were $7.3 million in 2014, $6.5 million in 2013 and $3.9 million in 2012.

Supplemental Employee Retirement Plan

The Company has a supplemental employee retirement plan which is an unfunded plan providing supplementary retirement benefits primarily to certain executives and longer-service employees.

Postretirement Health Care and Life Insurance Benefits

The Company has certain postretirement health and life insurance benefit plans in the United States and South Africa. The Company uses a measurement date of October 31 for its postretirement benefit plans.

The following table presents the number of participants in the post-retirement health and life insurance benefit plans:


October 31, 2014	Consolidated		USA		South Africa
Active participants		25		12		13
Vested former employees		0		0		0
Retirees and beneficiaries		779		683		96
Other plan participants		0		0		0

October 31, 2013	Consolidated		USA		South Africa
Active participants		26		12		14
Vested former employees		0		0		0
Retirees and beneficiaries		894		793		101
Other plan participants		0		0		0

The discount rate actuarial assumptions at October 31 are used to measure the year-end benefit obligations and the pension costs for the subsequent year were as follows:


	Consolidated			United States			South Africa
For the year ended October 31, 2014		4.45	%		3.70	%		8.20	%
For the year ended October 31, 2013		4.67	%		3.95	%		8.10	%

The components of net periodic cost for the postretirement benefits include the following (Dollars in millions):


For the years ended October 31,	2014			2013			2012
Service cost	$	—		$	—		$	—
Interest cost		0.8			0.8			1.1
Amortization of prior service cost		(1.6	)		(1.5	)		(1.6	)
Recognized net actuarial gain		—			—			—

Net periodic income	$	(0.8	)	$	(0.7	)	$	(0.5	)

The following table sets forth the plans’ change in benefit obligation (Dollars in millions):


	October 31, 2014			October 31, 2013
Benefit obligation at beginning of year	$	18.5		$	19.3
Service cost		—			—
Interest cost		0.8			0.8
Actuarial loss		(0.5	)		0.4
Foreign currency effect		(0.3	)		(0.5	)
Plan amendments		—			—
Benefits paid		(1.2	)		(1.5	)

Benefit obligation at end of year	$	17.3		$	18.5

Financial statement presentation included other comprehensive income (Dollars in millions):


	October 31, 2014		October 31, 2013
Unrecognized net actuarial gain	$	0.8	$	0.5
Unrecognized prior service credit		7.4		9.0

Accumulated other comprehensive income	$	8.2	$	9.5

The accumulated postretirement health and life insurance benefit obligation and fair value of plan assets for the consolidated plans were $17.3 million and $0, respectively, as of October 31, 2014 compared to $18.5 million and $0, respectively, as of October 31, 2013.

The healthcare cost trend rates on gross eligible charges are as follows:


	Medical
Current trend rate		7.5	%
Ultimate trend rate		5.2	%
Year ultimate trend rate reached		2026

A one-percentage point change in assumed health care cost trend rates would have the following effects (Dollars in thousands):


	1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on total of service and interest cost components	$	40	$	(30	)
Effect on postretirement benefit obligation	$	520	$	(444	)

Future benefit payments, which reflect expected future service, as appropriate, during the next five years, and in the aggregate for the five years thereafter, are as follows (Dollars in millions):


Year	Expected benefit payments
2015	$	2.7
2016	$	1.5
2017	$	1.5
2018	$	1.4
2019	$	1.3
2020-2024	$	5.7