NOTE 12 — PENSION PLANS

We offer defined benefit pension plans, defined contribution pension plans, as well as several unfunded health care benefit plans primarily for certain of our retired employees.

Historically, we estimated the service and interest cost components of net periodic pension and postretirement benefit cost by applying a single weighted-average discount rate, derived from the yield curve used to measure the benefit obligation at the beginning of the period. During the current fiscal quarter, we elected to change our approach in estimating service and interest cost by applying the split discount rate approach. Under the split discount rate approach, we estimate service and interest cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. We made this change in order to more precisely measure our service and interest costs, and the split discount rate approach achieves this by improving the correlation between projected benefit cash flows and the corresponding spot yield curve rates. This change will not affect the measurement of our total benefit obligation at our annual measurement date, as the change in service and interest cost is completely offset by deferred actuarial (gains)/losses that will arise at the next annual measurement date. As this change is treated as a change in estimate, the impact is reflected in the current period and prospectively, and historical measurements of service and interest cost are not affected.

This change in estimate is anticipated to reduce our current year annual net periodic benefit expense by approximately $5.4 million for our U.S. Plans and by approximately $1.0 million for our non-U.S. plans. Accordingly, for the quarter ended August 31, 2015, total service cost and interest cost for all plans was $9.6 million and $6.1 million, respectively, a reduction of $0.2 million and $1.4 million, respectively, as a result of implementing the new approach. This resulted in an increase in income from continuing operations and net income of approximately $1.6 million and $1.1 million, respectively, and an increase in both basic and diluted earnings per share of $0.01.

The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the three month periods ended August 31, 2015 and 2014:


	U.S. Plans						Non-U.S. Plans
	Three Months Ended August 31,						Three Months Ended August 31,
Pension Benefits	2015			2014			2015			2014
(In thousands)
Service cost	$	8,202		$	7,564		$	1,067		$	1,231
Interest cost		4,499			5,002			1,323			1,891
Expected return on plan assets		(6,437	)		(6,034	)		(1,983	)		(2,296	)
Amortization of:
Prior service cost		58			74						10
Net actuarial losses recognized		4,190			3,472			457			487

Net Periodic Benefit Cost	$	10,512		$	10,078		$	864		$	1,323


	U.S. Plans						Non-U.S. Plans
	Three Months Ended August 31,						Three Months Ended August 31,
Postretirement Benefits	2015			2014			2015		2014
(In thousands)
Service cost	$	—		$	—		$	281	$	313
Interest cost		59			66			221		308
Amortization of:
Prior service (credit)		(62	)		(62	)
Net actuarial (gains) losses recognized		—			(34	)		61		104

Net Periodic Benefit Cost	$	(3	)	$	(30	)	$	563	$	725

Note that the information reflected above for the U.S. plans includes the Day-Glo plan as of its reconsolidation date of January 1, 2015.

We previously disclosed in our financial statements for the fiscal year ended May 31, 2015 that we expected to contribute approximately $31.9 million to our retirement plans in the U.S. and approximately $5.7 million to plans outside the U.S. during the current fiscal year. As of August 31, 2015, this has not changed.