| Employee Benefit Plans | Employee Benefit Plans We maintain multiple employee benefit plans, covering employees at certain locations. Our qualified U.S. defined benefit pension plan is not open to new entrants. New employees are not eligible to participate in the pension plan. Instead, we make contributions for those employees to an employee-directed investment fund in the Moog Inc. Retirement Savings Plan ("RSP"). Effective January 1, 2020, all employees hired prior to January 1, 2019 are eligible to either participate in the new RSP(+) or remain in the existing RSP. All employees hired after January 1, 2019 are automatically enrolled in the new RSP(+). The Company’s contributions to both the RSP and RSP(+) are based on a percentage of the employee’s eligible compensation and age and are in addition to the employer match on voluntary employee contributions. The Company's contributions and the employer match were both enhanced under the new RSP(+). The RSP and RSP(+) includes an employee stock ownership feature. As one of the investment alternatives, participants in the RSP and RSP(+) can acquire our stock at market value. Shares are allocated and compensation expense is recognized as the employer share match is earned. At October 3, 2020 , the participants in the RSP and RSP(+) owned 1,519,892 Class B shares. On September 16, 2020, we entered into an agreement to purchase a single premium non-participating group annuity contract and transferred the future benefit obligations and annuity administration for certain retirees and beneficiaries in our qualified U.S defined benefit pension plan. This settlement reduced the projected benefit obligation and fair value of assets by $486,615 and resulted in a one-time settlement charge of $121,324 . The changes in projected benefit obligations and plan assets and the funded status of the U.S. and non-U.S. defined benefit plans are as follows: U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Change in projected benefit obligation: Projected benefit obligation at prior year measurement date $ 1,065,937 $ 915,274 $ 249,575 $ 207,645 Service cost 23,033 21,003 6,771 4,988 Interest cost 30,597 36,924 2,785 4,393 Contributions by plan participants — — 832 828 Actuarial (gains) losses 97,438 130,377 (3,572 ) 48,564 Foreign currency exchange impact — — 16,256 (10,878 ) Benefits paid (40,246 ) (36,455 ) (5,278 ) (6,040 ) Curtailments — — 81 — Settlements (486,615 ) — (2,999 ) — Other (1,455 ) (1,186 ) (32 ) 75 Projected benefit obligation at measurement date $ 688,689 $ 1,065,937 $ 264,419 $ 249,575 Change in plan assets: Fair value of assets at prior year measurement date $ 1,004,163 $ 878,983 $ 166,242 $ 145,641 Actual return on plan assets 134,871 157,966 (5,088 ) 24,623 Employer contributions 5,154 4,855 7,017 7,464 Contributions by plan participants — — 832 828 Benefits paid (40,246 ) (36,455 ) (5,278 ) (6,040 ) Settlements (486,615 ) — (2,999 ) — Foreign currency exchange impact — — 10,071 (6,220 ) Other (1,455 ) (1,186 ) (32 ) (54 ) Fair value of assets at measurement date $ 615,872 $ 1,004,163 $ 170,765 $ 166,242 Funded status and amount recognized in assets and liabilities $ (72,817 ) $ (61,774 ) $ (93,654 ) $ (83,333 ) Amount recognized in assets and liabilities: Long-term assets $ 30,887 $ 35,429 $ 3,862 $ 2,575 Current and long-term pension liabilities (103,704 ) (97,203 ) (97,516 ) (85,908 ) Amount recognized in assets and liabilities $ (72,817 ) $ (61,774 ) $ (93,654 ) $ (83,333 ) Amount recognized in AOCIL, before taxes: Prior service cost (credit) $ — $ 133 $ 56 $ 82 Actuarial losses 184,156 324,145 60,721 56,411 Amount recognized in AOCIL, before taxes $ 184,156 $ 324,278 $ 60,777 $ 56,493 Our funding policy is to contribute at least the amount required by law in the respective countries. The total accumulated benefit obligation as of the measurement date for all defined benefit pension plans was $868,316 in 2020 and $1,235,230 in 2019 . At the measurement date in 2020 , our plans had fair values of plan assets totaling $786,637 . The following table provides aggregate information for the pension plans, which have projected benefit obligations or accumulated benefit obligations in excess of plan assets: October 3, 2020 September 28, 2019 Projected benefit obligation $ 312,995 $ 278,405 Accumulated benefit obligation 277,404 208,625 Fair value of plan assets 111,776 95,294 Weighted-average assumptions used to determine benefit obligations as of the measurement dates and weighted-average assumptions used to determine net periodic benefit cost are as follows: U.S. Plans Non-U.S. Plans 2020 2019 2018 2020 2019 2018 Assumptions for net periodic benefit cost: Service cost discount rate 3.5 % 4.4 % 4.2 % 1.6 % 2.9 % 2.5 % Interest cost discount rate 2.9 % 4.1 % 3.5 % 1.3 % 2.6 % 2.2 % Return on assets 4.5 % 5.3 % 7.0 % 2.7 % 3.5 % 3.5 % Rate of compensation increase 2.9 % 3.5 % 3.5 % 2.1 % 2.5 % 2.5 % Assumptions for benefit obligations: Discount rate 3.0 % 3.3 % 4.3 % 1.4 % 1.6 % 2.8 % Rate of compensation increase 3.3 % 2.9 % 3.5 % 2.2 % 2.1 % 2.5 % Pension plan investment policies and strategies are developed on a plan specific basis, which varies by country. The overall objective for the long-term expected return on both domestic and international plan assets is to earn a rate of return over time to meet anticipated benefit payments in accordance with plan provisions. The long-term investment objective of both the domestic and international retirement plans is to maintain the economic value of plan assets and future contributions by producing positive rates of investment return after subtracting inflation, benefit payments and expenses. Each of the plan’s strategic asset allocations is based on this long-term perspective and short-term fluctuations are viewed with appropriate perspective. The U.S. qualified defined benefit plan’s assets are invested for long-term investment results. To accommodate the long-term investment horizon while providing appropriate liquidity, the plan maintains a liquid cash reserve sufficient to allow the plan to meet its benefit payment, fee and expense obligations. Its assets are broadly diversified to help alleviate the risk of adverse returns in any one security or investment class. The international plans’ assets are invested in both low-risk and high-risk investments in order to achieve the long-term investment strategy objective. Investment risks for both domestic and international plans are considered within the context of the entire asset allocation, rather than on a security-by-security basis. The U.S. qualified defined benefit plan and certain international plans have investment committees that are responsible for formulating investment policies, developing manager guidelines and objectives and approving and managing qualified advisors and investment managers. The guidelines established for each of the plans define permitted investments within each asset class and apply certain restrictions such as limits on concentrated holdings in order to meet overall investment objectives. Pension obligations and the related costs are determined using actuarial valuations that involve several assumptions. The return on assets assumption reflects the average rate of return expected on funds invested or to be invested to provide for the benefits included in the projected benefit obligation. In determining the return on assets assumption, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. Asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk and to provide adequate liquidity to meet immediate and future benefit payment requirements. In determining our U.S. pension expense for 2020 , we assumed an average rate of return on U.S. pension assets of approximately 4.5% measured over a planning horizon with reasonable and acceptable levels of risk. The rate of return was based on the actual asset allocation of 18% in equity securities and 82% in fixed income securities at September 28, 2019 . As a result of the pension settlement transaction, we modified our asset allocation to align our investment portfolio to maintain the funded status of the plan. In determining our non-U.S. pension expense for 2020 , we assumed an average rate of return on non-U.S. pension assets of approximately 2.7% measured over a planning horizon with reasonable and acceptable levels of risk. The rate of return assumed an average asset allocation of 30% in equity securities and 70% in fixed income securities and other investments. The weighted average asset allocations by asset category for the pension plans as of October 3, 2020 and September 28, 2019 are as follows: U.S. Plans Non-U.S. Plans Target 2020 2019 Target 2020 2019 Asset category: Equity 35%-45% 37% 18% 20%-40% 24% 25% Fixed Income 55%-65% 63% 82% 30%-45% 38% 36% Other —% —% —% 25%-40% 38% 39% The valuation methodologies used for pension plan assets measured at fair value have been applied consistently. Cash and cash equivalents : Direct cash holdings valued at cost, which approximates fair value. Money market funds : Institutional short-term investment vehicles valued daily. Shares of registered investment companies: Consists of both equity and fixed income mutual funds. Valued at quoted market prices that represent the net asset value of shares held by the plan at year end. Fixed income securities: Valued using methods, such as dealer quotes, available trade information, spreads, bids and offers provided by a pricing vendor. Equity securities: Traded on national exchanges are valued at the last reported sales price. Investments denominated in foreign currencies are translated into U.S. dollars using the last reported exchange rate. Collective investment trust : Net asset value of the fund is calculated daily by the investment manager. Unit linked life insurance funds : Net asset value of the fund is calculated daily by the investment manager. Investment in insurance contracts: Valued at contract value, which is the fair value of the underlying investment of the insurance company . Limited partnerships : Valued at net asset value of units held. The NAV is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liability. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different from the reported NAV. Securities or other assets for which market quotations are not readily available or for which market quotations do not represent the value at the time of pricing (including certain illiquid securities) are fair valued in accordance with procedures established under the supervision and responsibility of the Trustee of that investment. Such procedures may include the use of independent pricing services or affiliated advisor pricing, which use prices based upon yields or prices of securities of comparable quality, coupon, maturity and type, indications as to values from dealers, operating data and general market conditions. The following tables present the consolidated plan assets using the fair value hierarchy, which is described in Note 12 - Fair Value, as of October 3, 2020 and September 28, 2019 . U.S. Plans, October 3, 2020 Level 1 Level 2 Level 3 Total Investments at fair value: Shares of registered investment companies: Equity funds $ 197,580 $ — $ — $ 197,580 Fixed income funds 390,695 — — 390,695 Money market funds — 6,281 — 6,281 Total investments in fair value hierarchy 588,275 6,281 — 594,556 Investments measured at NAV practical expedient (1) 21,316 Total investments at fair value $ 588,275 $ 6,281 $ — $ 615,872 Non-U.S. Plans, October 3, 2020 Level 1 Level 2 Level 3 Total Investments at fair value: Mutual funds: Equity funds $ — $ 6,159 $ — $ 6,159 Fixed income funds — 7,558 — 7,558 Equity securities 8,689 — — 8,689 Fixed income securities — 17,930 — 17,930 Collective investment trusts — 19,636 — 19,636 Unit linked life insurance funds — 53,607 — 53,607 Money market funds — 576 — 576 Cash and cash equivalents 149 — — 149 Insurance contracts and other — — 56,461 56,461 Total investments at fair value $ 8,838 $ 105,466 $ 56,461 $ 170,765 U.S. Plans, September 28, 2019 Level 1 Level 2 Level 3 Total Investments at fair value: Shares of registered investment companies: Equity funds $ 144,898 $ — $ — $ 144,898 Fixed income funds 823,008 — — 823,008 Money market funds — 6,418 — 6,418 Insurance contract — — 505 505 Total investments in fair value hierarchy 967,906 6,418 505 974,829 Investments measured at NAV practical expedient (1) 29,334 Total investments at fair value $ 967,906 $ 6,418 $ 505 $ 1,004,163 Non-U.S. Plans, September 28, 2019 Level 1 Level 2 Level 3 Total Investments at fair value: Mutual funds: Equity funds $ — $ 6,372 $ — $ 6,372 Fixed income funds — 7,657 — 7,657 Equity securities 7,310 — — 7,310 Fixed income securities — 18,740 — 18,740 Collective investment trusts — 18,118 — 18,118 Unit linked life insurance funds — 51,062 — 51,062 Money market funds — 386 — 386 Cash and cash equivalents 384 — — 384 Insurance contracts and other — — 56,213 56,213 Total investments at fair value $ 7,694 $ 102,335 $ 56,213 $ 166,242 (1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total retirement plan assets. The following is a roll forward of the consolidated plan assets classified as Level 3 within the fair value hierarchy: U.S. Plans Non-U.S. Plans Total Balance at September 29, 2018 $ 484 $ 40,601 $ 41,085 Return on assets 21 16,868 16,889 Purchases from contributions to Plans — 2,887 2,887 Settlements paid in cash — (1,603 ) (1,603 ) Foreign currency translation — (2,540 ) (2,540 ) Balance at September 28, 2019 505 56,213 56,718 Return on assets 4 (4,671 ) (4,667 ) Purchases from contributions to Plans — 2,508 2,508 Settlements paid in cash (509 ) (1,274 ) (1,783 ) Foreign currency translation — 3,685 3,685 Balance at October 3, 2020 $ — $ 56,461 $ 56,461 The following table summarizes investments measured at fair value based on net asset value (NAV) per share as of October 3, 2020 : Fair Value October 3, 2020 September 28, 2019 Unfunded Commitments Redemption Frequency Redemption Notice Period Limited partnerships (1) $ 21,316 $ 29,334 $ 4,888 Varies 10-45 days Total $ 21,316 $ 29,334 $ 4,888 (1) Investments in limited partnerships held by us invest primarily in emerging markets, equity and equity related securities. The strategy for the partnerships is to have exposure to certain markets or to securities that are judged to achieve superior earnings growth and/or judged undervalued relative to intrinsic value. T he preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although we believe the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Expense for all defined benefit plans is as follows: U.S. Plans Non-U.S. Plans 2020 2019 2018 2020 2019 2018 Service cost $ 23,033 $ 21,003 $ 22,535 $ 6,771 $ 4,988 $ 5,738 Interest cost 30,597 36,924 32,292 2,785 4,393 4,241 Expected return on plan assets (44,084 ) (45,054 ) (53,744 ) (4,577 ) (5,182 ) (5,001 ) Amortization of prior service cost (credit) 133 187 187 (3 ) (18 ) (60 ) Amortization of actuarial loss 25,316 26,639 28,709 4,943 2,532 2,512 Curtailment loss — — — 100 — — Settlement loss 121,324 — — 676 — — Total expense for defined benefit plans $ 156,319 $ 39,699 $ 29,979 $ 10,695 $ 6,713 $ 7,430 The estimated net prior service credit and net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost for pension plans in 2021 are $6 and $19,261 , respectively. Benefits expected to be paid to the participants of the plans are: U.S. Plans Non-U.S. Plans 2021 $ 8,587 $ 6,206 2022 12,161 7,737 2023 16,205 9,304 2024 20,111 7,615 2025 23,617 7,964 Five years thereafter 167,235 45,256 We presently anticipate contributing approximately $5,200 to the SERP Trust for the non-qualified plan and $8,700 to the non-U.S. plans in 2021 . Expense for all defined contribution plans consists of: 2020 2019 2018 U.S. defined contribution plans $ 27,698 $ 19,848 $ 16,568 Non-U.S. defined contribution plans 5,965 5,270 4,821 Total expense for defined contribution plans $ 33,663 $ 25,118 $ 21,389 We provide postretirement health care benefits to certain domestic retirees, who were hired prior to October 1, 1989. There are no plan assets. The changes in the accumulated benefit obligation of this unfunded plan for 2020 and 2019 are shown in the following table: October 3, 2020 September 28, 2019 Change in Accumulated Postretirement Benefit Obligation (APBO): APBO at prior year measurement date $ 8,810 $ 8,857 Service cost 55 68 Interest cost 211 315 Contributions by plan participants 629 644 Benefits paid (668 ) (1,134 ) Actuarial (gains) losses 237 60 APBO at measurement date $ 9,274 $ 8,810 Funded status $ (9,274 ) $ (8,810 ) Accrued postretirement benefit liability $ 9,274 $ 8,810 Amount recognized in AOCIL, before taxes: Prior service credit $ — $ 259 Actuarial gains 3,297 4,142 Amount recognized in AOCIL, before taxes $ 3,297 $ 4,401 The cost of the postretirement benefit plan is as follows: 2020 2019 2018 Service cost $ 55 $ 68 $ 84 Interest cost 211 315 281 Amortization of prior service credit (259 ) (471 ) (470 ) Amortization of actuarial gain (607 ) (713 ) (511 ) Net periodic postretirement benefit cost (income) $ (600 ) $ (801 ) $ (616 ) As of the measurement date, the assumed discount rate used in the accounting for the postretirement benefit obligation was 2.3% in 2020 , 3.0% in 2019 and 4.2% in 2018 . The assumed service cost discount rate and interest cost discount rate used in the accounting for the net periodic postretirement benefit cost were 3.1% and 2.5% , respectively in 2020 , 4.3% and 3.8% , respectively in 2019 and 3.7% and 2.8% , respectively in 2018 . For measurement purposes, a 8.0% annual per capita rate of increase of medical and drug costs were assumed for 2021 , gradually decreasing to 4.5% for 2035 and years thereafter. A one percentage point increase in this rate would increase our accumulated postretirement benefit obligation as of the measurement date in 2020 by $140 , while a one percentage point decrease in this rate would decrease our accumulated postretirement benefit obligation by $133 . There would be no material effect on the total service cost and interest cost components of the net periodic postretirement benefit cost given a one percentage point increase or decrease in this rate. Employee and management profit sharing reflects a discretionary payment based on our financial performance. Profit share expense was $21,968 , $33,250 and $22,524 in 2020 , 2019 and 2018 , respectively. |
