Note 18:  Pension and Employee Benefit Plans

Defined contribution employee benefit plans

The Company maintains a domestic 401(k) plan that allows employees to contribute a portion of their salary to help them save for retirement. The Company currently matches employee contributions up to 4.5 percent of their compensation. The Company’s expense for defined contribution employee benefit plans during fiscal 2026, 2025 and 2024 was $10.6 million, $9.3 million, and $8.3 million, respectively.

In addition, the Company maintains non-qualified deferred compensation plans for eligible employees, and various non-U.S. subsidiaries have government-required defined contribution plans in place, under which they contribute a percentage of employee earnings into accounts, consistent with local laws.

Statutory termination plans

Certain non-U.S. subsidiaries have statutory termination indemnity plans covering eligible employees. The benefits under these plans are based upon years of service and final average compensation levels or a monthly retirement benefit amount. These programs are substantially unfunded in accordance with local laws.

Pension plans

During fiscal 2026, the Company completed the termination of its primary U.S. pension plan. The Company contributed $14.9 million to fully fund the plan and settled all future obligations under it through a combination of lump-sum payments to participants and the purchase of irrevocable annuity contracts. As a result, the Company recorded a non-cash pension termination charge of $116.1 million during fiscal 2026 to recognize actuarial losses that were previously included within accumulated other comprehensive loss on its consolidated balance sheet. Prior to the plan termination in fiscal 2026, the U.S. plan covered most domestic employees hired on or before December 31, 2003 and provided benefits based primarily upon years of service and average compensation for salaried and some hourly employees.

Certain non-U.S. subsidiaries of the Company have legacy defined benefit plans which cover a small number of active employees and are substantially unfunded. The primary non-U.S. plans are maintained in Germany and Italy and are closed to new participants. The Company previously maintained pension plans in Germany that conveyed to the buyer of the Germany automotive businesses during fiscal 2024; see Note 2 for additional information.

As described above, the Company contributed $14.9 million to its U.S. pension plan during fiscal 2026. The Company contributed $6.5 million and $0.9 million to its U.S. pension plans during fiscal 2025 and 2024, respectively. In addition, the Company contributed $1.3 million, $1.1 million, and $1.8 million to its non-U.S. pension plans during fiscal 2026, 2025 and 2024, respectively. These contributions are reported within the change in other liabilities in the consolidated statements of cash flows.

Postretirement plans

The Company provides selected healthcare and life insurance benefits for eligible retired domestic employees. The Company periodically amends these unfunded plans to change the contribution rate of retirees and the amounts and forms of coverage. An annual limit on the Company’s cost is defined for the majority of these plans. The Company’s net periodic income for its postretirement plans in fiscal 2026, 2025 and 2024 was $0.3 million, $0.3 million, and $0.4 million, respectively.

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Measurement date

The Company uses March 31 as the measurement date for its pension and postretirement plans.

Changes in benefit obligations and plan assets, as well as the funded status of the Company’s global pension plans, were as follows:

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As of March 31, 2026, 2025 and 2024, the benefit obligation associated with the Company’s non-U.S. pension plans totaled $11.7 million, $11.8 million, and $13.0 million, respectively. The $0.1 million decrease in the benefit obligation associated with non-U.S. pension plans as of March 31, 2026, compared with the prior year, was primarily due to employer contributions of $1.3 million and net actuarial gains during the year totaling $0.5 million, partially offset by service and interest cost totaling $0.7 million and the impact of foreign currency exchange rates. In fiscal 2025, the $1.2 million decrease was primarily due to employer contributions and net actuarial gains during the year totaling $2.0 million, partially offset by service and interest cost totaling $0.6 million.

The accumulated benefit obligation for pension plans was $11.9 million and $180.2 million as of March 31, 2026 and 2025, respectively. As of March 31, 2026, these pension plans had a net actuarial gain of $0.5 million recognized in accumulated other comprehensive loss, compared with a net actuarial loss of $122.0 million as of March 31, 2025. The changes were driven by the aforementioned U.S. pension plan termination in fiscal 2026.

Costs for the Company’s global pension plans included the following components:

The Company used a discount rate of 5.6% and 5.5% as of March 31, 2026 and 2025, respectively, for determining its benefit obligations under its U.S. pension plans. The Company used a weighted-average discount rate of 4.5% and 4.0% as of March 31, 2026 and 2025, respectively, for determining its benefit obligations under its non-U.S. pension plans. The Company used a discount rate of 5.5%, 5.4%, and 5.2% to determine its costs under its U.S. pension plans for fiscal 2026, 2025 and 2024, respectively. The Company used a weighted-average discount rate of 4.2%, 3.9%, and 4.0% to determine its costs under its non-U.S. pension plans for fiscal 2026, 2025 and 2024, respectively. The Company determined the discount rates used for its U.S. pension plans by modeling a portfolio of high-quality corporate bonds, with appropriate consideration given to expected defined benefit payment terms and duration of the respective pension obligations. The Company used a similar process to determine the discount rate for its non-U.S. pension obligations.

Historically, prior to its termination, the primary U.S. pension plan held 100 percent of the Company’s world-wide pension plan assets. During the last three fiscal years, the Company’s pension plans did not directly own shares of Modine common stock. The Company’s U.S. pension plan weighted-average asset allocations at the measurement date of March 31, 2025 were as follows:

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The expected rate of return on U.S. plan assets is based upon historical return experience and forward-looking return expectations for major asset class categories. For fiscal 2026 U.S. pension plan expense, prior to the termination of the plan, the expected rate of return on plan assets was 5.5 percent. For fiscal 2025 and 2024 U.S. pension plan expense, the expected rate of return on plan assets was 5.5 percent and 6.5 percent, respectively.

Estimated pension benefit payments for the Company’s global pension plans are shown below.

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