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Pension and retirement plan
9 Months Ended
Mar. 31, 2018
Pension and retirement plan  
Pension and retirement plans

9. Pension plan

 

The Company has a noncontributory defined benefit pension plan (the “Plan”) that covers substantially all U.S. employees as of January 1, 2018, and an acquired closed noncontributory defined benefit pension plan in the U.S. covering certain PF employees (collectively, the “Plans”). Components of net period pension cost for the Plans were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarters Ended

 

Nine Months Ended

 

 

    

March 31,

    

April 1,

    

March 31,

    

April 1,

 

 

 

2018

   

2017 (1)

   

2018

   

2017 (1)

 

 

 

(Thousands)

 

Service cost

 

$

4,305

 

$

7,406

 

$

12,040

 

$

22,217

 

Interest cost

 

 

4,529

 

 

3,952

 

 

16,095

 

 

11,856

 

Expected return on plan assets

 

 

(10,862)

 

 

(10,840)

 

 

(38,376)

 

 

(32,520)

 

Amortization of prior service credits

 

 

(393)

 

 

(394)

 

 

(1,179)

 

 

(1,180)

 

Recognized net actuarial loss

 

 

3,456

 

 

3,610

 

 

10,948

 

 

10,830

 

Pension settlement charge

 

 

4,875

 

 

 —

 

 

18,859

 

 

 —

 

Net periodic pension cost

 

$

5,910

 

$

3,734

 

$

18,387

 

$

11,203

 

 


(1)

Includes discontinued operations

 

The Company contributed $12.0 million to the Plans during the first nine months of fiscal 2018 and expects to make an additional contribution to the Plans of $4.0 million in the fourth quarter of fiscal 2018.

 

The Plans meet the definition of defined benefit plans and as a result, the Company applies ASC 715 pension accounting to the Plans. The Plans, however, are cash balance plans that are similar in nature to defined contribution plans in that a participant’s benefit is defined in terms of stated account balances. The cash balance plans provide the Company with the benefit of applying any earnings on the Plans’ investments beyond the fixed return provided to participants, toward the Company’s future cash funding obligations.

 

Amounts reclassified out of accumulated other comprehensive income (loss), net of tax, to operating expenses during the third quarters and the first nine months of fiscal 2018 and fiscal 2017 were substantially all related to net periodic pension costs including recognition of actuarial losses and amortization of prior service credits.

 

In connection with the sale of the TS business, a significant number of former employees became terminated vested employees under the Plan. During the first nine months of fiscal 2018, the aggregate amount of former employee withdrawals from the Plan exceeded the pension accounting settlement threshold for fiscal 2018, which required a settlement expense under ASC 715 pension accounting. As a result, the Company recognized a $4.9 million and $18.9 million of pension settlement expenses before taxes in the third quarter and first nine months of fiscal 2018, respectively, classified within income (loss) from discontinued operations.