Note 16 – Retirement Plans

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

Our Board of Directors approved plan amendments that froze the following retirement plans:

•

Retirement Plan for the Employees of John Wiley & Sons, Canada was frozen effective December 31, 2015;

•

Retirement Plan for the Employees of John Wiley & Sons, Ltd., a U.K. plan was frozen effective April 30, 2015 and;

•

U.S. Employees’ Retirement Plan, Supplemental Benefit Plan, and Supplemental Executive Retirement Plan, were frozen effective June 30, 2013.

We maintain 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 this 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:

	2019						2018						2017
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Service Cost	$	—		$	912		$	—		$	960		$	—		$	967
Interest Cost		11,704			12,943			11,666			13,876			12,398			14,449
Expected Return on Plan Assets		(13,472	)		(25,551	)		(13,154	)		(26,385	)		(14,053	)		(21,173	)
Net Amortization of Prior Service Cost		(154	)		57			(154	)		57			(154	)		54
Recognized Net Actuarial Loss		2,035			3,746			2,289			3,832			2,622			2,553
Curtailment/Settlement Loss		—			—			-			19			8,842			—
Net Pension Expense (Income)	$	113		$	(7,893	)	$	647		$	(7,641	)	$	9,655		$	(3,150	)

Discount Rate		4.3	%		2.6	%		4.1	%		2.6	%		4.0	%		3.5	%
Rate of Compensation Increase		N/A			3.0	%		N/A			3.0	%		N/A			3.0	%
Expected Return on Plan Assets		6.8	%		6.5	%		6.8	%		6.5	%		6.8	%		6.7	%

We adopted ASU 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” on May 1, 2018. Refer to Note 2, "Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards," for more information. The guidance requires that the service cost component of net pension and postretirement benefit costs be reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Such amounts are reflected in Operating and Administrative Expenses on our Consolidated Statements of Income. The guidance requires that the other components of net benefit costs be reported separately from the service cost component and below operating income. Such amounts are reflected in Interest Income and Other on our Consolidated Statements of Income. We were required to retrospectively adopt this guidance.

We 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 on the Consolidated Statements of Income in the year ended April 30, 2017.

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 $794.2 million, $762.8 million and $621.9 million, respectively, as of April 30, 2019, and $820.4 million, $787.6 million, and $624.4 million, respectively, as of April 30, 2018.

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.

We recognize 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, on the Consolidated Statements of Financial Position. The change in the funded status of the plan is recognized in Accumulated Other Comprehensive Loss on the Consolidated Statements of Financial Position. Plan assets and obligations are measured at fair value as of our 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:

	U.S.			Non-U.S.		Total
Actuarial Loss	$	2,390		$	4,091	$	6,481
Prior Service Cost		(154	)		82		(72	)
Total	$	2,236		$	4,173	$	6,409

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

	2019						2018
	U.S.			Non-U.S.			U.S.			Non-U.S.
CHANGE IN PLAN ASSETS
Fair Value of Plan Assets, Beginning of Year	$	204,983		$	419,448		$	200,001		$	390,133
Actual Return on Plan Assets		9,705			24,891			15,352			2,780
Employer Contributions		14,753			11,872			5,020			8,385
Employee Contributions		—			—			—			—
Settlements		—			—			-			(239	)
Benefits Paid		(15,813	)		(16,282	)		(15,390	)		(15,909	)
Foreign Currency Rate Changes		—			(31,680	)		—			34,298
Fair Value, End of Year	$	213,628		$	408,249		$	204,983		$	419,448
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit Obligation, Beginning of Year	$	(279,644	)	$	(540,686	)	$	(290,785	)	$	(519,588	)
Service Cost		—			(912	)		—			(960	)
Interest Cost		(11,704	)		(12,943	)		(11,666	)		(13,876	)
Actuarial Gains (Losses)		(9,662	)		(11,013	)		7,417			23,528
Benefits Paid		15,813			16,282			15,390			15,909
Foreign Currency Rate Changes		—			41,143			—			(45,938	)
Settlements and Other		—			(886	)		-			239
Benefit Obligation, End of Year	$	(285,197	)	$	(509,015	)	$	(279,644	)	$	(540,686	)
Underfunded Status, End of Year	$	(71,569	)	$	(100,766	)	$	(74,661	)	$	(121,238	)
AMOUNTS RECOGNIZED ON THE STATEMENT OF FINANCIAL POSITION
Current Pension Liability		(5,188	)		(816	)		(4,818	)		(780	)
Noncurrent Pension Liability		(66,381	)		(99,950	)		(69,843	)		(120,458	)
Net Amount Recognized in Statement of Financial Position	$	(71,569	)	$	(100,766	)	$	(74,661	)	$	(121,238	)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS (BEFORE TAX) CONSIST OF
Net Actuarial (Losses)	$	(94,028	)	$	(177,157	)	$	(82,636	)	$	(183,316	)
Prior Service Cost Gains (Losses)		2,408			(1,154	)		2,562			(441	)
Total Accumulated Other Comprehensive Loss	$	(91,620	)	$	(178,311	)	$	(80,074	)	$	(183,757	)
Change in Accumulated Other Comprehensive Loss	$	(11,546	)	$	5,446		$	11,749		$	(11,708	)
WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ASSETS AND LIABILITIES
Discount Rate		4.1	%		2.4	%		4.3	%		2.6	%
Rate of Compensation Increase		N/A			3.0	%		N/A			3.0	%
Accumulated Benefit Obligations	$	(285,197	)	$	(477,561	)	$	(279,644	)	$	(507,932	)

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 plans 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 50% equity securities and 50% fixed income securities and cash. 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%. We regularly review the investment allocations and periodically rebalance investments to the target allocations. We categorize our 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.

We did not maintain any level 3 assets during the years ended April 30, 2019 and 2018. In accordance with ASU 2015-07, “Fair Value Measurement (“Topic 820”), certain investments that are measured at fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient do not have to be classified in the fair value hierarchy. We adopted ASU 2015-07 in the year ended April 30, 2018 and it was applied retrospectively to all periods presented. The fair value amounts presented in the following tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefit plan assets. The following tables set forth, by level within the fair value hierarchy, pension plan assets at their fair value as of April 30:

	2019						2018
	Level 1		Level 2		Total		Level 1		Level 2		Total
U.S. Plan Assets
Investments measured at NAV:
Global Equity Securities: Limited Partnership					$	109,490					$	95,933
Fixed Income Securities: Commingled Trust Funds						104,138						100,295
Other: Real Estate Commingled Trust Fund						—						8,755
Total Assets at NAV					$	213,628					$	204,983

Non-U.S. Plan Assets
Equity Securities:
U.S. Equities	$	—	$	39,652	$	39,652	$	—	$	31,203	$	31,203
Non-U.S. Equities		—		117,575		117,575		—		96,387		96,387
Balanced Managed Funds		—		48,550		48,550		—		91,743		91,743
Fixed Income Securities: Commingled Funds		855		199,720		200,575		—		197,804		197,804
Other:
Real Estate/Other		—		501		501		—		549		549
Cash and Cash Equivalents		1,396		—		1,396		1,762		—		1,762
Total Non-U.S. Plan Assets	$	2,251	$	405,998	$	408,249	$	1,762	$	417,686	$	419,448
Total Plan Assets	$	2,251	$	405,998	$	621,877	$	1,762	$	417,686	$	624,431

Expected employer contributions to the defined benefit pension plans in the year ended April 30, 2020 will be approximately $17.0 million, including $11.7 million of minimum amounts required for our non-U.S. plans. From time to time, we may elect to make voluntary contributions to our defined benefit plans to improve their funded status. Included in our defined benefit pension contributions for the year ended April 30, 2019 was a discretionary contribution of $10.0 million to the U.S. Employees' Retirement Plan of John Wiley & Sons, Inc.

Benefit payments to retirees from all defined benefit plans are expected to be the following in the fiscal year indicated:

Fiscal Year	U.S.		Non-U.S.		Total
2020	$	16,287	$	8,868	$	25,155
2021		14,741		9,610		24,351
2022		14,894		11,019		25,913
2023		15,259		11,433		26,692
2024		15,436		12,097		27,533
2025 – 2029		76,053		71,732		147,785
Total	$	152,670	$	124,759	$	277,429

We provide contributory life insurance and health care benefits, subject to certain dollar limitations, for substantially all of our eligible retired U.S. employees. The retiree health benefit is no longer 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 our Consolidated Statement of Income in the year ended April 30, 2017. 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 on the Consolidated Statements of Financial Position as of April 30, 2019 and 2018, was $1.6 million and $1.8 million, respectively. Annual (credits) expenses for these plans for the years ended April 30, 2019, 2018, and 2017 were $(0.1) million, $(0.1) million and $(0.2) million, respectively.

We have defined contribution savings plans. Our contribution is based on employee contributions and the level of our match. We may make discretionary contributions to all employees as a group. The expense recorded for these plans was approximately $13.1 million, $14.4 million, and $15.5 million in the years ended April 30, 2019, 2018, and 2017 respectively.