Note 18. Retirement benefits

Woodward provides various 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 contributions to eligible employee accounts, which are also deferred for employee personal income tax purposes. Certain foreign employees are also eligible to participate in 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 2015 and 2014, Woodward fulfilled its annual Woodward stock contribution obligation using shares held in treasury stock by issuing 259 shares of common stock for a total value of $12,574 in fiscal year 2015, and 260 shares of common stock for a total value of $11,193 in fiscal year 2014.

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



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Company costs	$	7,908	$	5,537	$	23,034	$	16,219

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. During the third quarter of fiscal year 2014, Woodward terminated its defined benefit pension plan in Switzerland due to workforce reductions related to the closure of Woodward’s Swiss facility in connection with the realignment of the renewable power business that occurred in the third quarter of fiscal year 2013. 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, 2014, 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.

Effective June 30, 2015, the Company terminated the defined benefit pension plan for employees at its Duarte, California manufacturing facility. The plan, which was established in fiscal year 2013 in connection with the December 2012 acquisition of the Duarte business, was amended in fiscal year 2014 to cease all future benefit accruals under the plan and was closed to new entrants. Cash payout of benefits will occur after regulatory approval of the plan termination. In exchange for the freeze and termination of the plan, which were agreed upon through negotiations with the applicable employee union, the employees were provided replacement benefits through full participation in the Woodward U.S. defined contribution plan. Woodward does not expect future cash payouts to the beneficiaries of the terminated plan to be significantly different from the approximately $80 liability reflected in Woodward’s statement of financial position as of June 30, 2015.

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



	Three-Months Ended June 30,
	United States				Other Countries				Total
	2015		2014		2015		2014		2015		2014
Service cost	$	504	$	872	$	193	$	263	$	697	$	1,135
Interest cost		1,489		1,602		527		616		2,016		2,218
Expected return on plan assets		(2,662)		(2,432)		(751)		(781)		(3,413)		(3,213)
Amortization of:
Net actuarial (gain) loss		99		83		47		166		146		249
Prior service cost (benefit)		96		19		-		(1)		96		18
Curtailment (gain) loss		-		-		-		(915)		-		(915)
Net periodic retirement pension (benefit) cost	$	(474)	$	144	$	16	$	(652)	$	(458)	$	(508)
Contributions paid	$	-	$	100	$	143	$	176	$	143	$	276


	Nine-Months Ended June 30,
	United States				Other Countries				Total
	2015		2014		2015		2014		2015		2014
Service cost	$	1,513	$	2,616	$	590	$	784	$	2,103	$	3,400
Interest cost		4,475		4,815		1,595		1,816		6,070		6,631
Expected return on plan assets		(7,994)		(7,299)		(2,274)		(2,308)		(10,268)		(9,607)
Amortization of:
Net actuarial (gain) loss		297		248		142		490		439		738
Prior service cost (benefit)		288		56		-		(3)		288		53
Curtailment (gain) loss		-		-		-		(915)		-		(915)
Net periodic retirement pension (benefit) cost	$	(1,421)	$	436	$	53	$	(136)	$	(1,368)	$	300
Contributions paid	$	-	$	400	$	1,365	$	2,343	$	1,365	$	2,743

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



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Service cost	$	7	$	11	$	22	$	35
Interest cost		308		358		925		1,074
Amortization of:
Net actuarial (gain) loss		(18)		(50)		(54)		(150)
Prior service cost (benefit)		(40)		(40)		(119)		(119)
Net periodic other postretirement (benefit) cost	$	257	$	279	$	774	$	840
Contributions paid	$	570	$	481	$	1,471	$	1,849

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 2015 may differ from the current estimate. Woodward estimates its remaining cash contributions in fiscal year 2015 will be as follows:



Retirement pension benefits:
United States	$	21
United Kingdom		274
Japan		-
Other postretirement benefits		2,307

Multiemployer defined benefit plans

Woodward operates two multiemployer defined benefit plans for certain employees in the Netherlands and Japan. The company has been notified by the Japanese plan administrator that the plan for employees in Japan is being reorganized. Woodward anticipates that assets of the Japanese plan will be converted into a similar plan and is currently evaluating the potential cost of such conversion. The amounts of contributions associated with the multiemployer plans were as follows:



	Three-Months Ended				Nine-Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Company contributions	$	142	$	180	$	452	$	555