The Company provides retirement plans, including defined benefit and defined contribution plans, and other postretirement benefit plans to certain employees. The Company applies ASC Topic 715 “Compensation – Retirement Benefits,” which required the recognition in pension and other postretirement benefits obligations and accumulated other comprehensive income of actuarial gains or losses, prior service costs or credits and transition assets or obligations that had previously been deferred. This statement also requires an entity to measure a defined benefit postretirement plan’s assets and obligations that determine its funded status as of the end of the fiscal year.

The Company provides defined benefit pension plans to certain employees. The Company uses March 31 as the measurement date. The following provides a reconciliation of benefit obligation, plan assets, and funded status of the plans:



	March 31,
	2020			2019
Change in benefit obligation:
Benefit obligation at beginning of year	$	446,397		$	462,284
Service cost	1,139			1,078
Interest cost	14,759			15,526
Actuarial (gain) loss	26,193			4,074
Benefits paid	(26,852		)	(27,068		)
Foreign exchange rate changes	(1,770		)	(9,497		)
Benefit obligation at end of year	$	459,866		$	446,397

Change in plan assets:
Fair value of plan assets at beginning of year	$	321,902		$	326,745
Actual gain (loss) on plan assets	7,512			11,333
Employer contribution	10,967			11,018
Benefits paid	(26,852		)	(27,068		)
Foreign exchange rate changes	(163		)	(126		)
Fair value of plan assets at end of year	$	313,366		$	321,902

Funded status	$	(146,500	)	$	(124,495	)
Unrecognized actuarial loss	105,878			73,836
Net amount recognized	$	(40,622	)	$	(50,659	)



	March 31,
	2020			2019
Other assets	$	6,587		$	6,424
Accrued liabilities	(3,563		)	(3,546		)
Other non-current liabilities	(149,524		)	(127,373		)
Accumulated other comprehensive loss, before tax	105,878			73,836
Net amount recognized	$	(40,622	)	$	(50,659	)

In fiscal 2021, an estimated net loss of $3,516,000 and no prior service costs for the defined benefit pension plans will be amortized from accumulated other comprehensive loss to net periodic benefit cost.



	2020			2019			2018
Service costs—benefits earned during the period	$	1,139		$	1,078		$	2,580
Interest cost on projected benefit obligation	14,759			15,526			16,488
Expected return on plan assets	(15,887		)	(18,454		)	(21,483		)
Net amortization	2,279			2,339			3,083
Curtailment	—			—			5
Other	—			—			17
Net periodic pension cost (benefit)	$	2,290		$	489		$	690

The Company adopted ASU 2017-07 in the fiscal 2019. The service cost component of net periodic benefit cost above is recorded in Cost of products sold, Selling expense, and General and administrative expenses within the Consolidated Statements of Operations, while the remaining components are recorded to Other (income) expense, net. Fiscal 2018 amounts have been reclassified to provide comparable presentation in line with the guidance in ASU 2017-07 based on amounts previously disclosed for the various components of net periodic pension cost (benefit).

Unrecognized gains and losses are amortized through March 31, 2020 on a straight-line basis over the average remaining service period of active participants. Starting in fiscal 2016, the Company changed the amortization period of its largest plan to the average remaining lifetime of inactive participants, as a significant portion of the plan population is now inactive. This change increases the amortization period of the unrecognized gains and losses.

The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also net periodic pension cost for the following year:



	2020		2019		2018
Discount rate	2.79	%	3.42	%	3.49	%
Expected long-term rate of return on plan assets	5.01	%	5.77	%	6.77	%
Rate of compensation increase on active plans	0.59	%	0.61	%	0.39	%

The Company has an investment objective for domestic pension plans to adequately provide for both the growth and liquidity needed to support all current and future benefit payment obligations. The Company's policy is to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases, which is known as the glide path method. Within the table above, cash equivalents are categorized as fixed income as they earn lower returns than equity securities which includes alternative real estate funds (shown in the fair value tables below).

The Company’s funding policy with respect to the defined benefit pension plans is to contribute annually at least the minimum amount required by the Employee Retirement Income Security Act of 1974 (ERISA). Additional contributions may be made to minimize PBGC premiums. The Company plans to contribute the minimum amount required (approximately $4,945,000) to its pension plans in fiscal 2021 as a response to COVID-19 but will reassess later in the fiscal year and increase contributions if economic conditions improve.

The Company sponsors a defined benefit other postretirement health care plan that provide medical and life insurance coverage to certain U.S. retirees and their dependents of one of its subsidiaries. Prior to the acquisition of this subsidiary, the Company did not sponsor any postretirement benefit plans. The Company pays the majority of the medical costs for certain retirees and their spouses who are under age 65. For retirees and dependents of retirees who retired prior to January 1, 1989, and are age 65 or over, the Company contributes 100% toward the American Association of Retired Persons (“AARP”) premium frozen at the 1992 level. For retirees and dependents of retirees who retired after January 1, 1989, the Company contributes $35 per month toward the AARP premium. The life insurance plan is noncontributory.

The Company’s postretirement health benefit plans are not funded. The following sets forth a reconciliation of benefit obligation and the funded status of the plan:



	March 31,
	2020			2019
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,348		$	3,284
Interest cost	71			92
Actuarial gain	(340		)	(778		)
Benefits paid	(192		)	(250		)
Benefit obligation at end of year	$	1,887		$	2,348

Funded status	$	(1,887	)	$	(2,348	)
Unrecognized actuarial gain	(1,417		)	(1,282		)
Net amount recognized	$	(3,304	)	$	(3,630	)



	March 31,
	2020			2019
Accrued liabilities	$	(270	)	$	(326	)
Other non-current liabilities	(1,617		)	(2,022		)
Accumulated other comprehensive gain, before tax	(1,417		)	(1,282		)
Net amount recognized	$	(3,304	)	$	(3,630	)

In fiscal 2021, an estimated gain of $207,000 for the defined benefit postretirement health care plans will be amortized from accumulated other comprehensive loss to net periodic benefit cost. In fiscal 2020, net periodic postretirement benefit cost included the following:



	Year Ended March 31,
	2020			2019			2018
Interest cost	$	71		$	92		$	126
Net amortization	(205		)	(156		)	(5		)
Net periodic postretirement benefit cost	$	(134	)	$	(64	)	$	121

For measurement purposes, healthcare costs are assumed to increase 5.75% in fiscal 2021, grading down over time to 5.0% in four years. The discount rate used in determining the accumulated postretirement benefit obligation was 3.17% and 3.63% as of March 31, 2020 and 2019, respectively.

Assumed medical claims cost trend rates have an effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects



	One Percentage Point Increase		One Percentage Point Decrease
Effect on total of service and interest cost components	$	3	$	(3	)
Effect on postretirement obligation	78		(71		)

The Company has collateralized split-dollar life insurance arrangements with two of its former officers. Under these arrangements, the Company pays certain premium costs on life insurance policies for the former officers. Upon the later of the death of the former officer and their spouse, the Company will receive all of the premiums paid to-date. The net periodic pension cost for fiscal 2020 was $145,000 and the liability at March 31, 2020 is $4,631,000 with $4,494,000 included in Other non-current liabilities and $137,000 included in Accrued liabilities in the Consolidated Balance Sheet. The cash surrender value of the policies is $3,346,000 and $3,207,000 at March 31, 2020 and 2019, respectively. The balance is included in Other assets in the consolidated balance sheet.

The Company also sponsors defined contribution plans covering substantially all domestic employees and certain international employees. Participants may elect to contribute basic contributions. These plans provide for employer contributions based on employee eligibility and participation. The Company recorded a charge for such contributions of approximately $5,239,000, $5,260,000, and $4,198,000 for the years ended March 31, 2020, 2019, and 2018, respectively which are included in Cost of Products Sold, Selling Expenses, and General and Administrative Expenses within the Consolidated Statements of Operations. The Company expects its contributions for the defined contribution plans in future years to remain comparable to its fiscal 2020 contributions.

The Company classified its investments within the categories of equity securities, fixed income securities, alternative real estate, and cash equivalents, as the Company’s management bases its investment objectives and decisions from these four categories. The Company’s investment policy is to use its glide-path method to de-risk the portfolio by increasing liability-hedging investments as the pension liability funded status increases.



	March 31,
	2020		2019
Asset categories:
Equity securities	$	94,336	$	103,017
Fixed income securities	199,613		205,957
Alternative real estate	9,401		9,978
Cash equivalents	10,016		2,950
Total	$	313,366	$	321,902

The fair values of our defined benefit plans’ consolidated assets were determined using the fair value hierarchy of inputs described in Note 5. The fair values by category of inputs as of March 31, 2020 and March 31, 2019 were as follows:



	Measured at NAV (1)		Quoted Prices in Active Markets for Identical Assets		Significant other observable Inputs		Significant unobservable Inputs
As of March 31, 2020:			(Level 1)		(Level 2)		(Level 3)		Total
Asset categories:
Equity securities	$	42,252	$	52,084	$	—	$	—	$	94,336
Fixed income securities	30,598		24,014		139,498		5,503		199,613
Alternative real estate	4,195		5,206		—		—		9,401
Cash equivalents	—		10,016		—		—		10,016
Total	$	77,045	$	91,320	$	139,498	$	5,503	$	313,366



	Measured at NAV (1)		Quoted Prices in Active Markets for Identical Assets		Significant other observable Inputs		Significant unobservable Inputs
As of March 31, 2019:			(Level 1)		(Level 2)		(Level 3)		Total
Asset categories:
Equity securities	$	43,314	$	59,703	$	—	$	—	$	103,017
Fixed income securities	45,713		602		153,941		5,701		205,957
Alternative real estate	7,161		2,817		—		—		9,978
Cash equivalents	—		2,950		—		—		2,950
Total	$	96,188	$	66,072	$	153,941	$	5,701	$	321,902

The Level 2 fixed income securities are investments in a combination of funds whose underlying investments are in a variety of fixed income securities including foreign and domestic corporate bonds, securities issued by the U.S. government, U.S. and foreign government obligations, and other similar fixed income investments. The fair values of the underlying investments in these funds are generally based on independent broker dealer bids, or by comparison to other debt securities having similar durations, yields, and credit ratings. The fair values of these funds are determined based on their net asset values which are published daily. We are not aware of any significant restrictions on the issuances or redemption of shares of these funds

Fair value of Level 3 fixed income securities at the beginning of the year was $5,701,000. During fiscal 2020 fixed income securities earned investment return of $113,000 and had disbursements of $311,000, which includes liquidations, resulting in an ending balance of $5,503,000. These fixed income securities consist primarily of insurance contracts which are carried at their liquidation value based on actuarial calculations and the terms of the contracts. Significant inputs in determining the fair value for these contracts include company contributions, contract disbursements, and stated interest rates. Gains and losses on these contracts are recognized as part of net periodic pension cost and recorded as part of cost of sales, selling, or general and administrative expense.