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v2.4.0.6
Retirement Benefits
6 Months Ended
May 31, 2012
Retirement Benefits [Abstract]  
Retirement Benefits

10. Retirement Benefits

Pension Benefits—On November 25, 2008, the Company decided to amend the defined benefit pension and benefits restoration plans to freeze future accruals under such plans. Effective February 1, 2009 and July 31, 2009, future benefit accruals for non-collective bargaining-unit employees and collective bargaining-unit employees were discontinued, respectively. No employees lost their previously earned pension benefits.

As of the last measurement date at November 30, 2011, the Company’s total defined benefit pension plan assets, total projected benefit obligations, and unfunded pension obligation for the qualified pension plan were approximately $1,296.8 million, $1,550.4 million, and $236.4 million, respectively. The total defined benefit pension assets were estimated to be $1,264.7 million as of May 31, 2012.

The Company does not expect to make any cash contributions to the tax-qualified defined benefit pension plan during fiscal years 2012 or 2013. The Pension Protection Act (the “PPA”) requires underfunded pension plans to improve their funding ratios based on the funded status of the plan as of specified measurement dates through contributions or application of prepayment credits. As of November 30, 2011, the Company has accumulated $59.5 million in prepayment credits as a result of advanced funding and it expects to apply these to satisfy any funding requirement during fiscal years 2012 and 2013.

Further, with the Office of Federal Procurement Policy issuance of the final rule harmonizing Cost Accounting Standard (“CAS”) 412, Composition and Measurement of Pension Cost, and CAS 413, Adjustment and Allocation of Pension Cost, with the PPA, the Company will recover portions of any required pension funding through its government contracts. Approximately 86% of the Company’s unfunded pension benefit obligation as of November 30, 2011 is related to its government contracting business segment, Aerojet. Accordingly, the Company believes a significant portion of any future contributions to its tax-qualified defined benefit pension plan would be recoverable through the Company’s overhead rates on its U.S. government contracts.

The funded status of the pension plan is affected by the investment experience of the plan’s assets, by any changes in U.S. law, and by changes in the statutory interest rates used by “tax-qualified” pension plans in the U.S. to calculate funding requirements or other plan experience. Accordingly, if the performance of the Company’s plan assets does not meet the assumptions, if there are changes to the Internal Revenue Service regulations or other applicable law or if other actuarial assumptions are modified, the future contributions to the Company’s underfunded pension plan could be significant in future periods.

 

Medical and Life Benefits—The Company provides medical and life insurance benefits to certain eligible retired employees, with varied coverage by employee group. Generally, employees hired after January 1, 1997 are not eligible for medical and life insurance benefits. The medical benefit plan provides for cost sharing between the Company and its retirees in the form of retiree contributions, deductibles, and coinsurance. Medical and life benefit obligations are unfunded. Medical and life benefit cash payments for eligible retired Aerojet and GenCorp employees are recoverable through the Company’s overhead rates on its U.S. government contracts.

Components of retirement benefit expense are:

 

                                 
    Pension Benefits     Postretirement Benefits  
    Three months ended  
    May 31,
2012
    May 31,
2011
    May 31,
2012
    May 31,
2011
 
    (In millions)  

Service cost

  $ 1.1     $ 1.0     $ 0.1     $ 0.1  

Interest cost on benefit obligation

    18.4       19.5       0.7       0.9  

Assumed return on plan assets

    (24.8     (25.6     —         —    

Recognized net actuarial losses (gains)

    15.5       16.6       (0.7     (0.9
   

 

 

   

 

 

   

 

 

   

 

 

 

Retirement benefit expense

  $ 10.2     $ 11.5     $ 0.1     $ 0.1  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

                                 
    Pension Benefits     Postretirement Benefits  
    Six months ended  
    May 31,
2012
    May 31,
2011
    May 31,
2012
    May 31,
2011
 
    (In millions)  

Service cost

  $ 2.2     $ 2.0     $ 0.1     $ 0.1  

Interest cost on benefit obligation

    36.8       39.1       1.5       1.8  

Assumed return on plan assets

    (49.6     (51.2     —         —    

Recognized net actuarial losses (gains)

    31.0       33.2       (1.5     (1.8
   

 

 

   

 

 

   

 

 

   

 

 

 

Retirement benefit expense

  $ 20.4     $ 23.1     $ 0.1     $ 0.1