Employee Benefit Plans

9 Months Ended

Apr. 30, 2020

Retirement Benefits, Description [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company and certain of its international subsidiaries have defined benefit pension plans for many of their hourly and salaried employees. There are two types of U.S. plans. The first type of U.S. plan (Hourly Pension Plan) is a traditional defined benefit pension plan primarily for union production employees. The second plan (Salaried Pension Plan) is for some salaried and non-union production employees, and provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit comprised of a percentage of current salary that varies with years of service, interest credits and transition credits. The Company no longer allows entrants into the U.S. Salaried Pension Plan and the participating employees no longer accrue Company contribution credits under the plan. Instead, eligible employees receive a 3% annual retirement contribution to their 401(k) in addition to the Company’s normal 401(k) match. The non-U.S. plans generally provide pension benefits based on years of service and compensation level. Components of net periodic benefit cost other than the service cost component are included in other income, net in the Condensed Consolidated Statements of Earnings.

Net periodic benefit costs for the Company’s pension plans include the following components (in millions):

	Three Months Ended April 30,				Nine Months Ended April 30,
	2020		2019		2020		2019
Net periodic benefit costs:
Service cost	$	1.5	$	1.5	$	4.7	$	4.5
Interest cost	3.3		4.1		10.1		12.3
Expected return on assets	(6.5)		(6.6)		(19.5)		(19.9)
Prior service cost amortization	0.2		0.1		0.5		0.4
Actuarial loss amortization	1.6		1.1		4.8		3.3
Settlement charge	2.3		—		2.3		—
Net periodic benefit costs	$	2.4	$	0.2	$	2.9	$	0.6

A settlement charge is required when the amount of all lump-sum distributions during the year is greater than the sum of the service and interest cost components of the annual net periodic pension cost. In the third quarter, the Company recorded a pension settlement charge of $2.3 million. As a result of the related remeasurement, the Company’s pension obligations increased with a corresponding adjustment to other comprehensive loss of $7.9 million (see Note 13).

The Company’s general funding policy is to make at least the minimum required contributions as required by applicable regulations, plus any additional amounts that it determines to be appropriate. The estimated minimum funding requirement for the Company’s qualified U.S. plans for the plan year ending July 31, 2020 is $4.4 million.

For the nine months ended April 30, 2020, the Company made required contributions of $3.5 million to its qualified U.S. pension plans and $1.4 million to its non-qualified U.S. pension plans. In May 2020, the Company contributed an additional $0.5 million to the qualified U.S. pension plans.

For the nine months ended April 30, 2020, the Company made required contributions of $1.0 million to its non-U.S. pension plans. The Company estimates it will contribute an additional $0.1 million to its non-U.S. pension plans during the remainder of fiscal 2020 based upon the local government prescribed funding requirements. Future estimates of the Company’s required pension plan contributions may change significantly depending on the actual rate of return on plan assets, discount rates and regulatory requirements.