Note 15 - Retirement Plans

The Company and its principal subsidiaries have retirement plans that cover substantially all employees. The plans generally provide for employee retirement between the ages of 60 and 65, and benefits based on length of service and compensation, as defined.

Plan Curtailments

The Company’s Board of Directors approved plan amendments that froze the U.S. Employees’ Retirement Plan, Supplemental Benefit Plan, and Supplemental Executive Retirement Plan, effective June 30, 2013. These plans are U.S. defined benefit plans. Under the amendments, no new employees are permitted to enter these plans and no additional benefits for current participants for future services will be accrued after June 30, 2013.

The Company’s Board of Directors approved plan amendments that froze the Retirement Plan for the Employees of John Wiley & Sons, Canada, effective December 31, 2015. Under the amendments, no new employees are permitted to enter this plan and no additional benefits for current participants for future services will be accrued after December 31, 2015. The Company recorded a one-time pension plan benefit of $0.6 million in fiscal year 2015 as a result of the plan amendments. The curtailment benefit is included within the fiscal year 2015 Restructuring Charges line item in the Consolidated Statements of Income.

The Company’s Board of Directors approved plan amendments that froze the Retirement Plan for the Employees of John Wiley & Sons, Ltd., a U.K. plan, effective April 30, 2015. Under the amendments, no new employees are permitted to enter this plan and no additional benefits for current participants for future services will be accrued after April 30, 2015. While there was no significant amount recorded for the curtailment, there was a resulting concession with employees to contribute an additional $0.8 million to the Company’s defined contribution plans in fiscal year 2015. This contribution was recognized in the Restructuring charges line item in the Company’s Consolidated Statements of Income.

The Company maintains the Supplemental Executive Retirement Plan for certain officers and senior management which provides for the payment of supplemental retirement benefits after the termination of employment for 10 years or in a lifetime annuity. Under certain circumstances, including a change of control as defined, the payment of such amounts could be accelerated on a present value basis. Future accrued benefits to the Plan have been discontinued as noted above.

The components of net pension expense (income) for the defined benefit plans and the weighted-average assumptions were as follows (in thousands):

	2017		2016		2015
	U.S.	Non-U.S.	U.S.	Non-U.S.	U.S.	Non-U.S.
Service Cost	$ -	$967	$ -	$1,455	$ -	$5,942
Interest Cost	12,398	14,449	13,612	16,446	13,159	17,417
Expected Return on Plan Assets	(14,053)	(21,173)	(14,756)	(25,088)	(13,782)	(22,654)
Net Amortization of Prior Service Cost	(154)	54	(154)	55	(115)	68
Recognized Net Actuarial Loss	2,622	2,553	2,240	2,475	1,470	6,299
Curtailment/Settlement Loss (Gain)	8,842	-	1,857	-	-	(428)
Net Pension Expense (Income)	$9,655	$(3,150)	$2,799	$(4,657)	$732	$6,644

Discount Rate	4.0%	3.5%	4.2%	3.5%	4.7%	4.2%
Rate of Compensation Increase	N/A	3.0%	N/A	3.0%	N/A	3.2%
Expected Return on Plan Assets	6.8%	6.7%	6.8%	6.7%	6.8%	6.7%

The Company announced a voluntary, limited-time opportunity for terminated vested employees who are participants in the U.S. Employees’ Retirement Plan of John Wiley & Sons, Inc. (the “Pension Plan”) to request early payment of their entire Pension Plan benefit in the form of a single lump sum payment. Eligible participants who wished to receive the lump sum payment were required to make an election by August 29, 2016. Approximately 780 eligible participants made the election to receive the lump sum totaling $28.3 million which was paid from pension plan assets in October 2016. Settlement accounting rules were applied, which resulted in a plan remeasurement and recognition of a pro-rata portion of unamortized net actuarial loss of $8.8 million which was recorded in Operating and Administrative Expenses in the Consolidated Statements of Income. The curtailment/settlement loss in fiscal year 2016 of $1.9 million, noted above, related to a disability payment made subject to terms of the Company’s Supplemental Executive Retirement Plan.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the retirement plans with accumulated benefit obligations in excess of plan assets were $800.1 million, $753.3 million and $579.7 million, respectively, as of April 30, 2017 and $797.4 million, $759.2 million and $567.8 million, respectively, as of April 30, 2016.

The Recognized Net Actuarial Loss for each fiscal year is calculated using the “corridor method” which reflects the amortization of the net loss at the beginning of the fiscal year in excess of 10% of the greater of the market value of plan assets or the projected benefit obligation. The amortization period is based on the average expected life of plan participants.

The Company recognizes the overfunded or underfunded status of defined benefit postretirement plans, measured as the difference between the fair value of plan assets and the projected benefit obligation, in the Consolidated Statements of Financial Position. The change in the funded status of the plan is recognized within Accumulated Other Comprehensive Loss in the Consolidated Statements of Financial Position. Plan assets and obligations are measured at fair value as of the Company’s balance sheet date.

The amounts in Accumulated Other Comprehensive Loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows (in thousands):

	U.S.	Non-U.S.	Total
Actuarial Loss	$2,230	$3,673	$5,903
Prior Service Cost	(154)	54	(100)
Total	$2,076	$3,727	$5,803

The following table sets forth the changes in and the status of the Company’s defined benefit plans’ assets and benefit obligations:

Dollars in thousands	2017		2016
CHANGE IN PLAN ASSETS	U.S.	Non-U.S.	U.S.	Non-U.S.
Fair Value of Plan Assets, Beginning of Year	$215,923	$352,484	$222,966	$376,576
Actual Return on Plan Assets	17,345	75,432	2,610	(2,789)
Employer Contributions	10,463	14,041	9,459	8,450
Employee Contributions	-	-	-	68
Settlements	(28,258)	-	(4,446)	-
Benefits Paid	(15,472)	(9,487)	(14,666)	(14,354)
Foreign Currency Rate Changes	-	(42,337)	-	(15,467)
Fair Value, End of Year	$200,001	$390,133	$215,923	$352,484
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit Obligation, Beginning of Year	$(336,908)	$(461,161)	$(329,388)	$(484,458)
Service Cost	-	(967)	-	(1,455)
Interest Cost	(12,398)	(14,449)	(13,612)	(16,446)
Employee Contributions	-	-	-	(68)
Actuarial Gain (Loss)	14,791	(105,151)	(13,020)	9,582
Benefits Paid	15,472	9,487	14,666	14,354
Foreign Currency Rate Changes	-	52,653	-	17,330
Settlements and Other	28,258	-	4,446	-
Benefit Obligation, End of Year	$(290,785)	$(519,588)	$(336,908)	$(461,161)
Funded Status	$(90,784)	$(129,455)	$(120,985)	$(108,677)
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION:
Other Noncurrent Assets	-	134	-	-
Current Pension Liability	(4,977)	(799)	(4,817)	(675)
Noncurrent Pension Liability	(85,807)	(128,790)	(116,168)	(108,002)
Net Amount Recognized in Statement of Financial Position	$(90,784)	$(129,455)	$(120,985)	$(108,677)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS (BEFORE TAX) CONSIST OF:
Net Actuarial (Loss)	$(94,539)	$(171,601)	$(124,087)	$(139,307)
Prior Service Cost Gain (Loss)	2,716	(448)	2,870	(521)
Total Accumulated Other Comprehensive Loss	$(91,823)	$(172,049)	$(121,217)	$(139,828)
Change in Accumulated Other Comprehensive Loss	$29,394	$(32,221)	$(21,224)	$(10,993)
WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ASSETS AND LIABILITIES:
Discount Rate	4.1%	2.6%	4.0%	3.5%
Rate of Compensation Increase	N/A	3.0%	N/A	3.0%
Accumulated Benefit Obligations	$(290,785)	$(472,841)	$(336,908)	$(422,861)

Basis for determining discount rate:

The discount rates for the United States, United Kingdom and Canadian pension plans were based on the derivation of a single-equivalent discount rate using a standard spot rate curve and the timing of expected benefit payments. The spot rate curve used is based upon a portfolio of Moody’s-rated Aa3 (or higher) corporate bonds. The discount rates for the other international plans were based on similar published indices with durations comparable to that of each plan’s liabilities.

Basis for determining the expected asset return:

The expected long-term rates of return were estimated using market benchmarks for equities, real estate, and bonds applied to each plan’s target asset allocation and are estimated by asset class including an anticipated inflation rate. The expected long-term rates are then compared to the historic investment performance of the plan assets as well as future expectations and estimated through consultation with investment advisors and actuaries.

Pension plan assets/investments:

The investment guidelines for the defined benefit pension plans are established based upon an evaluation of market conditions, plan liabilities, cash requirements for benefit payments, and tolerance for risk. Investment guidelines include the use of actively and passively managed securities. The investment objective is to ensure that funds are available to meet the plan’s benefit obligations when they are due. The investment strategy is to invest in high quality and diversified equity and debt securities to achieve our long-term expectation. The plans’ risk management practices provide guidance to the investment managers, including guidelines for asset concentration, credit rating and liquidity. Asset allocation favors a balanced portfolio, with a global aggregated target allocation of approximately 49% equity securities, 50% fixed income securities and cash, and 1% real estate. Due to volatility in the market, the target allocation is not always desirable and asset allocations will fluctuate between acceptable ranges of plus or minus 5%. The Company regularly reviews the investment allocations and periodically rebalances investments to the target allocations. The Company categorizes its pension assets into three levels based upon the assumptions (inputs) used to price the assets. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

·	Level 1: Unadjusted quoted prices in active markets for identical assets.

·	Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets.

·	Level 3: Unobservable inputs reflecting assumptions about the inputs used in pricing the asset.

The Company did not maintain any level 3 assets during fiscal years 2017 and 2016. The following tables set forth, by level within the fair value hierarchy, pension plan assets at their fair value as of April 30 (in thousands):

	2017			2016
	Level 1	Level 2	Total	Level 1	Level 2	Total
U.S. Plan Assets
Equity Securities:
U.S. Commingled Funds	$ -	$ 64,125	$ 64,125	$ -	$69,550	$69,550
Non-U.S. Commingled Funds	-	27,272	27,272	-	28,741	28,741
Fixed Income Commingled Funds	-	95,922	95,922	-	105,841	105,841
Real Estate	-	12,682	12,682	-	11,791	11,791
Total U.S. Plan Assets	$ -	$ 200,001	$ 200,001	$ -	$215,923	$215,923

Non-U.S. Plan Assets
Equity Securities:
U.S. Equities	$ -	$ 28,598	$ 28,598	$ -	$24,688	$24,688
Non-U.S. Equities	-	85,961	85,961	-	72,892	72,892
Balanced Managed Funds	10,196	69,453	79,649	10,070	32,203	42,273
Fixed Income Funds	-	187,797	187,797	-	211,561	211,561
Other:
Real Estate/Other	-	489	489	-	508	508
Cash and Cash Equivalents	7,639	-	7,639	562	-	562
Total Non-U.S. Plan Assets	$ 17,835	$ 372,298	$ 390,133	$10,632	$341,852	$352,484
Total Plan Assets	$ 17,835	$ 572,299	$ 590,134	$10,632	$557,775	$568,407

Expected employer contributions to the defined benefit pension plans in fiscal year 2018 will be approximately $12.3 million, including $7.3 million of minimum amounts required for the Company’s non-U.S. plans. From time to time, the Company may elect to make voluntary contributions to its defined benefit plans to improve their funded status.

Benefit payments to retirees from all defined benefit plans are expected to approximate $23.7 million in fiscal year 2018, $23.1 million in fiscal year 2019, $24.6 million in fiscal year 2020, $24.1 million in fiscal year 2021, $25.8 milion in fiscal year 2022 and $143.5 million for fiscal years 2023 through 2027.

The Company provides contributory life insurance and health care benefits, subject to certain dollar limitations for substantially all of its eligible retired U.S. employees. The retiree health benefit will no longer be available for any employee who retires after December 31, 2017. This resulted in a curtailment gain of $2.5 million which was recognized in the Operating and Administrative Expenses line item in the Company’s Consolidated Statement of Income. The cost of such benefits is expensed over the years the employee renders service and is not funded in advance. The accumulated post-retirement benefit obligation recognized in the Consolidated Statements of Financial Position as of April 30, 2017 and 2016 was $1.7 million and $2.2 million, respectively. Annual expenses for these plans for fiscal years 2017, 2016 and 2015 were $(0.2) million, $0.2 million and $0.7 million, respectively.

The Company has defined contribution savings plans. The Company contribution is based on employee contributions and the level of Company match. The Company may make discretionary contributions to all employees as a group. The employer cash contributions to these plans were approximately $15.2 million, $16.3 million and $14.8 million in fiscal years 2017, 2016, and 2015 respectively. Approximately $0.8 million of the fiscal year 2015 contributions were reflected in the Restructuring Charges line item as they were related to contractual obligations resulting from the curtailment of the U.K. defined benefit pension plan. The expense recorded for these plans was approximately $15.5 million, $16.2 million and $15.2 million in fiscal years 2017, 2016, and 2015 respectively.