Substantially all employees in the U.S. are covered by a defined contribution 401(k) retirement plan. The tax qualified defined contribution plan is maintained, and contributions are made, in accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Company also provides certain eligible executives benefits pursuant to its Benefit Restoration Plan ("BRP") equal to amounts that would have been available under the tax qualified ERISA plan, but were subject to the limitations of ERISA, tax laws and regulations. Company expenses for these plans, a portion of which are discretionary, are recorded in both cost of goods sold and selling, general and administrative expenses, and totaled $37.3 million, $32.9 million and $27.3 million for 2020, 2019 and 2018, respectively.

The deferred compensation liability under the BRP was $47.0 million and $45.7 million at August 31, 2020 and 2019, respectively, with $40.6 million and $39.9 million, respectively, included in other long-term liabilities on the Company's consolidated balance sheets. At August 31, 2020 and 2019, $6.4 million and $5.8 million, respectively, of the deferred compensation liability related to the BRP was included in accrued expenses and other payables on the Company's consolidated balance sheets. Though under no obligation to fund the BRP, the Company has segregated assets in a trust with a value of $60.8 million and $56.3 million at August 31, 2020 and 2019, respectively, and such assets were included in other noncurrent assets on the Company's consolidated balance sheets. The net holding gain on these segregated assets was $6.0 million, $3.3 million and $9.3 million for 2020, 2019 and 2018, respectively, and was included in net sales in the Company's consolidated statements of earnings.

In 2019, the Company acquired certain assets, including a partially funded defined benefit pension plan, from Gerdau S.A., (the "Plan") as part of the Acquisition. Upon closing of the Acquisition, the excess of projected Plan benefit obligations over the Plan assets was recognized as a liability and previously existing deferred actuarial gains and losses and unrecognized service costs or benefits were eliminated. Pension benefits associated with the Plan are generally based on each participant’s years of service, compensation and age at retirement or termination. The Plan was closed to new participants prior to the Acquisition.

In 2020, the Company announced its decision to close the melting operations at its Rancho Cucamonga facility and then subsequently announced its decision to sell this same facility. As a result of these announcements, the Company recorded a pension curtailment of $3.2 million in 2020.

The following tables include a reconciliation of the beginning and ending balances of pension benefit obligation and the fair value of Plan assets and the related amounts recognized in the Company’s consolidated balance sheets as of August 31, 2020 and 2019.


(in thousands)	2020		2019
Benefit obligation at beginning of year	$	31,661	$	—
Acquisition	—		26,336
Service cost	335		354
Interest cost	892		926
Curtailment loss	1,314		—
Special termination benefits	1,918		—
Actuarial loss	1,280		4,883
Benefits paid	(1,270)		(838)
Benefit obligation at end of year	36,130		31,661

Fair value of Plan assets at beginning of year	$	23,435	$	—
Acquisition	—		21,023
Actual return on Plan assets	2,248		2,887
Administrative expenses	(496)		(69)
Employer contributions	5,284		432
Benefits paid	(1,270)		(838)
Fair value of Plan assets at end of year	29,201		23,435
Funded status at end of year (net liability recognized in balance sheet as of August 31,)	$	(6,929)	$	(8,226)

Amounts recognized in accumulated other comprehensive income as of August 31,
Net actuarial loss	$	3,234	$	2,823

The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels.


(in thousands)	2020		2019
Service cost	$	335	$	354
Expected administrative expenses	450		250
Interest cost	892		926
Expected return on Plan assets	(1,334)		(1,008)
Special termination benefits	1,918		—
Settlements, curtailments and other	1,314		—
Total net periodic benefit cost	3,575		522
Other changes in Plan assets and benefit obligations recognized in other comprehensive income
Net actuarial loss arising during measurement period	3,642		2,823
Amortization of net actuarial gain	(3,232)		—
Total recognized in other comprehensive income	410		2,823
Total recognized in net periodic benefit cost and other comprehensive income	$	3,985	$	3,345

(1)Certain weighted average assumptions used to determine net periodic benefit cost for 2020 were remeasured at an interim date. This remeasurement resulted in an effective rate for interest on benefit obligations of 2.9% and an effective rate for service cost of 3.5%.

The Company determines the discount rate used to measure liabilities as of the August 31 measurement date for the Plan, which is also the date used for the related annual measurement assumptions. The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year. The Company sets its rate to reflect the yield of a portfolio of high quality corporate bonds that would produce cash flows sufficient in timing and amount to settle projected future benefits.

The Company measures service cost and interest cost separately using the full yield curve approach applied to each corresponding obligation. Service costs are determined based on duration-specific spot rates applied to the service cost cash flows. The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments. The full yield curve approach does not affect the measurement of the total benefit obligations.

The Company’s assumption for the expected return on Plan assets was 6% in 2020. Projected returns are based primarily on broad, publicly traded equity and fixed income indices and forward-looking estimates. As of August 31, 2020, the Company’s expected long-term rate of return on Plan assets for 2021 is 5%. The expected return assumption is based on the strategic asset allocation of the Plan and long-term capital market return expectations.

Plan assets consist primarily of public equity and corporate bonds. The principal investment objectives are to maximize total return without assuming undue risk exposure. Each asset class has broadly diversified characteristics. Asset and benefit obligation forecasting studies are conducted periodically, generally every two to three years, or when significant changes have occurred in market conditions, benefits, participant demographics or funded status.


	Pension Assets
	Target Percent				2020	2019
Fixed income securities	45%	—	50%	48.1%	50.1%
Equity securities:
Domestic	25.0	—	30.0	26.9	26.0
International	10.0	—	15.0	13.1	12.7
Mutual funds	5.0	—	10.0	10.1	9.5
Cash	—	—	5.0	1.8	1.7
Total				100.0%	100.0%

Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined based on average cost. Interest income is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date.

The following table sets forth the Plan assets by asset class as of August 31, 2020 and 2019. All securities are traded on a national securities exchange and therefore are Level 1 assets in the fair value hierarchy.


(in thousands)	Fair Value at Measurement Date
Asset Class	August 31, 2020		August 31, 2019
Fixed income securities	$	14,084	$	11,738
Equity securities:
Domestic	7,849		6,090
International	3,816		2,981
Mutual funds	2,937		2,232
Total equity securities	14,602		11,303
Cash	553		411
Total	29,239		23,452
Other	(38)		(17)
Fair value of Plan assets	$	29,201	$	23,435