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Postretirement Benefits
12 Months Ended
May. 31, 2015
Postretirement Benefits

NOTE N — POSTRETIREMENT BENEFITS

We sponsor several unfunded-health-care-benefit plans for certain of our retired employees as well as post-retirement life insurance for certain key employees. Eligibility for these benefits is based upon various requirements. The following table illustrates the effect on operations of these plans for the three years ended May 31, 2015:

 

     U.S. Plans     Non-U.S. Plans  

(In thousands)

   2015     2014     2013     2015      2014      2013  

Service cost - Benefits earned during the period

   $ —       $ —       $ —       $ 1,173      $ 1,264      $ 1,185  

Interest cost on the accumulated obligation

     263       297       349       1,155        1,225        1,188  

Amortization of:

              

Prior service (credit)

     (247     (153     (86        

Net actuarial (gains) losses

     (136     (144     16       391        516        470  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Net Periodic Postretirement (Benefit) Expense

$ (120 $ —     $ 279   $ 2,719   $ 3,005   $ 2,843  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

The changes in benefit obligations of the plans at May 31, 2015 and 2014 were as follows:

 

     U.S. Plans      Non-U.S. Plans  

(In thousands)

   2015      2014      2015      2014  

Accumulated postretirement benefit obligation at beginning of year

   $ 6,787      $ 8,514      $ 28,255      $ 28,415  

Service cost

     —          —          1,173        1,264  

Interest cost

     263        297        1,155        1,225  

Benefit payments

     (230      (362      (536      (421

Medicare subsidy received

     —          37        

Plan amendments

     —          (1,471      

Actuarial (gains) losses

     820        (228      (1,751      (766

Currency exchange rate changes

           (3,650      (1,462
  

 

 

    

 

 

    

 

 

    

 

 

 

Accumulated and accrued postretirement benefit obligation at end of year

$ 7,640   $ 6,787   $ 24,646   $ 28,255  
  

 

 

    

 

 

    

 

 

    

 

 

 

In determining the postretirement benefit amounts outlined above, measurement dates as of May 31 for each period were applied.

Amounts recognized in the Consolidated Balance Sheets for the years ended May 31, 2015 and 2014 are as follows:

 

     U.S. Plans      Non-U.S. Plans  

(In thousands)

   2015      2014      2015      2014  

Current liabilities

   $ (430    $ (410    $ (454    $ (522

Noncurrent liabilities

     (7,210      (6,377      (24,192      (27,733
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Amount Recognized

$ (7,640 $ (6,787 $ (24,646 $ (28,255
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table presents the pretax net actuarial gain (loss) and prior service credits recognized in accumulated other comprehensive income (loss) not affecting retained earnings:

 

     U.S. Plans      Non-U.S. Plans  

(In thousands)

   2015      2014      2015      2014  

Net actuarial gain (loss)

   $ 124      $ 1,080      $ (5,968    $ (9,136

Prior service credits

     1,587        1,834        
  

 

 

    

 

 

    

 

 

    

 

 

 

Total recognized in accumulated other comprehensive income not affecting retained earnings

$ 1,711   $ 2,914   $ (5,968 $ (9,136
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table includes the changes recognized in other comprehensive income:

 

     U.S. Plans      Non-U.S. Plans  

(In thousands)

   2015      2014      2015      2014  

Changes in plan assets and benefit obligations recognized in other comprehensive income:

           

Prior service cost

   $ —        $ (1,471    $ —        $ —    

Net loss (gain) arising during the year

     820        (228      (1,751      (766

Effect of exchange rates on amounts included in AOCI

           (1,026      (532

Amounts recognized as a component of net periodic benefit cost:

           

Amortization or curtailment recognition of prior service credit (cost)

     247        153        

Amortization or settlement recognition of net gain (loss)

     136        144        (391      (516
  

 

 

    

 

 

    

 

 

    

 

 

 

Total recognized in other comprehensive loss (income)

$ 1,203   $ (1,402 $ (3,168 $ (1,814
  

 

 

    

 

 

    

 

 

    

 

 

 

The following weighted-average assumptions were used to determine our year-end benefit obligations and net periodic postretirement benefit costs under the plans:

 

     U.S. Plans          Non-U.S. Plans  

Year-End Benefit Obligations

   2015     2014          2015     2014  

Discount rate

     3.95     4.00        4.00     4.40

Current healthcare cost trend rate

     11.34     12.28        6.06     6.31

Ultimate healthcare cost trend rate

     4.50     4.50        4.20     4.20

Year ultimate healthcare cost trend rate will be realized

     2029       2029          2030       2030  

 

     U.S. Plans     Non-U.S. Plans  

Net Periodic Postretirement Cost

   2015     2014     2013     2015     2014     2013  

Discount rate

     4.00     3.95     3.75     4.40     4.50     4.75

Healthcare cost trend rate

     12.28     7.54     7.70     6.31     6.43     6.92

Ultimate healthcare cost trend rate

     4.50     4.50     4.50     4.20     4.20     4.20

Year ultimate healthcare cost trend rate will be realized

     2029       2029       2029       2030       2030       2030  

Increasing or decreasing current healthcare cost trend rates by 1% would affect our accumulated postretirement benefit obligation and net postretirement expense by the following amounts for the years ended May 31, 2015 and 2014:

 

     U.S. Plans      Non-U.S. Plans  

(In thousands)

   2015      2014      2015      2014  

1% Increase in trend rate

           

Accumulated Benefit Obligation

   $ 334      $ 239      $ 6,430      $ 6,502  

Postretirement Cost

     10        11        675        727  
  

 

 

    

 

 

    

 

 

    

 

 

 

1% Decrease in trend rate

Accumulated Benefit Obligation

$ (290 $ (209 $ (3,295 $ (5,011

Postretirement Cost

  (8   (10   (499   (534
  

 

 

    

 

 

    

 

 

    

 

 

 

We expect to pay approximately $0.9 million to $1.2 million in estimated postretirement benefits in each of the next five years. In the five years thereafter (2021-2025) we expect to pay a cumulative total of $7.5 million.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”), was signed into law on December 8, 2003. The Act provides for prescription drug benefits under Medicare Part D and contains a subsidy to plan sponsors who provide “actuarially equivalent” prescription drug plans. Our actuary has determined that the prescription drug benefit provided by our postretirement plan is considered to be actuarially equivalent to the benefits provided under the Act for all years since inception. However, effective January 1, 2014, we changed our retiree medical offering to a Medicare Advantage Plan. Under the Medicare Advantage Plan, any Part D subsidy belongs to the insurance carrier. Our results reflect this change.

We have included the impact of our portion of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 subsidy in the determination of accumulated postretirement benefit obligation for the U.S. nonpension postretirement benefit plan for the periods ended May 31, 2015 and 2014. We received our last subsidy during our fiscal year ended May 31, 2014, during which time we received reimbursements from Medicare related to this law amounting to approximately $37,000.