Note 18. Retirement benefits

Woodward provides various retirement benefits to eligible members of the Company, including contributions to various defined contribution plans, pension benefits associated with defined benefit plans, postretirement medical benefits and postretirement life insurance benefits. Eligibility requirements and benefit levels vary depending on employee location.

Defined contribution plans

Most of the Company’s U.S. employees are eligible to participate in the U.S. defined contribution plan. The U.S. defined contribution plan allows employees to defer part of their annual income for income tax purposes into their personal 401(k) accounts. The Company makes matching contributions to eligible employee accounts, which are also deferred for employee personal income tax purposes. Certain foreign employees are also eligible to participate in similar foreign plans.

Most of Woodward’s U.S. employees with at least two years of service receive an annual contribution of Woodward stock, equal to 5% of their eligible prior year wages, to their personal Woodward Retirement Savings Plan accounts. In the second quarter of fiscal years 2017 and 2016, Woodward fulfilled its annual Woodward stock contribution obligation using shares held in treasury stock by issuing a total of 199 shares of common stock for a value of $14,014 in fiscal year 2017, and 317 total shares of common stock for a value of $13,999 in fiscal year 2016.

The amount of expense associated with defined contribution plans was as follows:



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Company costs	$	8,039	$	8,204	$	23,790	$	23,686

Defined benefit plans

Woodward has defined benefit plans that provide pension benefits for certain retired employees in the United States, the United Kingdom, and Japan. Woodward also provides other postretirement benefits to its employees including postretirement medical benefits and life insurance benefits. Postretirement medical benefits are provided to certain current and retired employees and their covered dependents and beneficiaries in the United States and the United Kingdom. Life insurance benefits are provided to certain retirees in the United States under frozen plans, which are no longer available to current employees. A September 30 measurement date is utilized to value plan assets and obligations for all of Woodward’s defined benefit pension and other postretirement benefit plans.

U.S. GAAP requires that, for obligations outstanding as of September 30, 2016, the funded status reported in interim periods shall be the same asset or liability recognized in the previous year end statement of financial position adjusted for (a) subsequent accruals of net periodic benefit cost that exclude the amortization of amounts previously recognized in other comprehensive income (for example, subsequent accruals of service cost, interest cost, and return on plan assets) and (b) contributions to a funded plan or benefit payments.

During the third quarter of fiscal year 2016, Woodward opened a lump-sum buy-out window, which closed in the fourth quarter of fiscal year 2016 and was fully settled during the first quarter of fiscal year 2017, for certain former U.S. employees and/or their dependents eligible to receive postretirement defined benefit pension payments for past employment services to the Company. Eligible pension plan participants elected to receive a one-time lump-sum payment or an immediate annuity in lieu of future pension benefit payments. Pension benefit payments paid from available pension plan assets under the lump-sum buy-out options were $670 during the first nine-months of fiscal year 2017. Woodward expects to make no further pension benefit payments under the lump-sum buy-out options.

The components of the net periodic retirement pension costs recognized are as follows:



	Three-Months Ended June 30,
	United States				Other Countries				Total
	2017		2016		2017		2016		2017		2016
Service cost	$	419	$	424	$	192	$	190	$	611	$	614
Interest cost		1,439		1,309		305		413		1,744		1,722
Expected return on plan assets		(2,632)		(2,535)		(656)		(672)		(3,288)		(3,207)
Amortization of:
Net actuarial loss		464		323		130		62		594		385
Prior service cost		95		96		-		-		95		96
Net periodic retirement pension benefit	$	(215)	$	(383)	$	(29)	$	(7)	$	(244)	$	(390)
Contributions paid	$	-	$	84	$	99	$	128	$	99	$	212


	Nine-Months Ended June 30,
	United States				Other Countries				Total
	2017		2016		2017		2016		2017		2016
Service cost	$	1,256	$	1,522	$	571	$	561	$	1,827	$	2,083
Interest cost		4,318		3,935		897		1,259		5,215		5,194
Expected return on plan assets		(7,897)		(7,612)		(1,935)		(2,035)		(9,832)		(9,647)
Amortization of:
Net actuarial loss		1,391		969		383		190		1,774		1,159
Prior service cost		287		288		-		-		287		288
Net periodic retirement pension benefit	$	(645)	$	(898)	$	(84)	$	(25)	$	(729)	$	(923)
Contributions paid	$	-	$	84	$	565	$	656	$	565	$	740

The components of the net periodic other postretirement benefit costs recognized are as follows:



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Service cost	$	4	$	5	$	11	$	16
Interest cost		311		263		933		787
Amortization of:
Net actuarial loss		50		39		151		117
Prior service benefit		(40)		(40)		(119)		(119)
Net periodic other postretirement cost	$	325	$	267	$	976	$	801
Contributions paid	$	592	$	588	$	2,011	$	1,809

The amount of cash contributions made to these plans in any year is dependent upon a number of factors, including minimum funding requirements in the jurisdictions in which Woodward operates and arrangements made with trustees of certain foreign plans. As a result, the actual funding in fiscal year 2017 may differ from the current estimate. Woodward estimates its remaining cash contributions in fiscal year 2017 will be as follows:



Retirement pension benefits:
United States	$	-
United Kingdom		123
Japan		-
Other postretirement benefits		2,028

Multiemployer defined benefit plans

Woodward operates multiemployer defined benefit plans for certain employees in both the Netherlands and Japan. The amounts of contributions associated with the multiemployer plans were as follows:



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Company contributions	$	73	$	110	$	220	$	397