Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT PLANS

v2.3.0.15
PENSION AND OTHER POSTRETIREMENT PLANS
 12 Months Ended
Sep. 30, 2011
PENSION AND OTHER POSTRETIREMENT PLANS [Abstract]  
PENSION AND OTHER POSTRETIREMENT PLANS
11.
PENSION AND OTHER POSTRETIREMENT PLANS:

The Company provides defined benefit pension and other postretirement plans to certain employees. The following provides a reconciliation of benefit obligations, plan assets and funded status of the plans as of the Company's actuarial valuation as of September 30, 2011:

   
Pension
    
Other Postretirement
  
   
2011
    
2010
    
2011
    
2010
  
Change in benefit obligation:
                        
Benefit obligation, beginning of year
   $ 145,909     $ 138,935     $ 24,400     $ 25,650  
Service cost
     5,016       4,489       632       691  
Interest cost
     7,510       7,495       1,254       1,383  
Assumption changes
     16,501       2,034       2,285       683  
Actuarial gain
     (887 )       (1,677 )     (226 )     (3,214 )
Benefit payments
     (6,016 )       (5,367 )     (798 )     (793 ) 
Benefit obligation, end of year
     168,033       145,909       27,547       24,400  
 
                                
Change in plan assets:
                                
Fair value, beginning of year
     94,869       84,428       -       -  
Actual return
     1,300       6,036       -       -  
Benefit payments
     (6,016 )      (5,367 )      (798 )      (793 ) 
Employer contributions
     10,401       9,772       798       793  
Fair value, end of year
     100,554       94,869       -       -  
                                 
Funded status
     (67,480 )      (51,040 )      (27,547 )      (24,400 ) 
Unrecognized actuarial loss
     85,868       68,793       8,462       6,810  
Unrecognized prior service cost
     (525 )      227       (1,607 )      (2,083 ) 
Net amount recognized
   $ 17,863     $ 17,980     $ (20,692 )    $ (19,673 ) 
                                 
Amounts recognized in the consolidated balance sheet:
                                
Current liability
   $ (766 )    $ (765 )    $ (1,130 )   $ (1,093 )
Noncurrent benefit liability
     (66,714 )      (50,275 )      (26,417 )     (23,307 )
Accumulated other comprehensive loss
     85,343       69,020       6,855       4,727  
Net amount recognized
   $ 17,863     $ 17,980     $ (20,692 )   $ (19,673 )
                                 
Amounts recognized in accumulated
                                
      other comprehensive loss:
                                
Net actuarial loss
   $ 85,868     $ 68,793     $ 8,462     $ 6,810  
Prior service cost
     (525 )      227       (1,607 )     (2,083 )
Net amount recognized
   $ 85,343     $ 69,020     $ 6,855     $ 4,727  
                                 
 
Based upon actuarial valuations performed as of September 30, 2011 and 2010, the accumulated benefit obligation for the Company's defined benefit pension plans was $149,846 and $130,342 at September 30, 2011 and 2010, respectively, and the projected benefit obligation for the Company's defined benefit pension plans was $168,033 and $145,909 at September 30, 2011 and 2010, respectively.

Net periodic pension and other postretirement benefit cost for the plans included the following:

   
Pension
    
Other Postretirement
  
   
2011
    
2010
    
2009
    
2011
    
2010
    
2009
  
                                     
Service cost
   $ 5,016     $ 4,489     $ 3,366     $ 632     $ 691     $ 572  
Interest cost
     7,510       7,495       7,496       1,254       1,383       1,542  
Expected return on plan assets
     (7,398 )      (6,982 )      (7,593 )      -       -       -  
Amortization:
                                                
Prior service cost
     26       24       28       (476 )      (726 )      (1,297 ) 
Net actuarial loss
     5,364       5,395       1,759       407       521       294  
Net benefit cost
   $ 10,518     $ 10,421     $ 5,056     $ 1,817     $ 1,869     $ 1,111  

Benefit payments under the Company's principal retirement plan are made from plan assets, while benefit payments under the supplemental retirement plan and postretirement benefit plan are made from the Company's operating cash.  Under I.R.S. regulations, the Company was not required to make any significant contributions to its principal retirement plan in fiscal 2011. The Company is not required to make any significant contributions to its principal retirement plan in fiscal 2012.

Contributions made in fiscal 2011 are as follows:

Contributions
  
Pension
    
Other Postretirement
  
             
             
   Principal retirement plan
   $ 9,000     $ -  
   Supplemental retirement plan
     745       -  
   Other postretirement plan
     -       798  

Amounts of AOCL expected to be recognized in net periodic benefit costs in fiscal 2012 include:

         
Other
  
   
Pension
    
Postretirement
  
   
Benefits
    
Benefits
  
             
Net actuarial loss
   $ 6,820     $ 535  
Prior service cost
     (45 )     (451 )
 
The measurement date of annual actuarial valuations for the Company's principal retirement and other postretirement benefit plans was September 30 for fiscal 2011, 2010 and 2009.  The weighted-average assumptions for those plans were:

   
Pension
    
Other Postretirement
  
   
2011
    
2010
    
2009
    
2011
    
2010
    
2009
  
Discount rate
     4.75 %     5.25 %     5.50 %     4.75 %     5.25 %     5.50 %
Return on plan assets
     8.00       8.00       8.50       -       -       -  
Compensation increase
     3.50       3.50       4.25       -       -       -  

The underlying basis of the investment strategy of the Company's defined benefit plans is to ensure the assets are invested to achieve a positive rate of return over the long term sufficient to meet the plans' actuarial interest rate and provide for the payment of benefit obligations and expenses in perpetuity in a secure and prudent fashion, maintain a prudent risk level that balances growth with the need to preserve capital, diversify plan assets so as to minimize the risk of large losses or excessive fluctuations in market value from year to year, achieve investment results over the long term that compare favorably with other pension plans and appropriate indices.  The Company's investment policy, as established by the Company's pension board, specifies the types of investments appropriate for the plans, asset allocation guidelines, criteria for the selection of investment managers, procedures to monitor overall investment performance as well as investment manager performance.  It also provides guidelines enabling plan fiduciaries to fulfill their responsibilities.

The Company's primary defined benefit pension plan's weighted-average asset allocation at September 30, 2011 and 2010 and weighted-average target allocation were as follows:

   
Plan Assets at
    
Target
  
Asset Category
  
2011
    
2010
    
Allocation
  
Equity securities
   $ 50,147     $ 49,941       50 %
Fixed income, cash and cash equivalents
     37,032       32,716       30 %
Other investments
     13,375       12,212       20 %
    $ 100,554     $ 94,869       100 %

Plan assets in the fixed income, cash and cash equivalents category include cash of 9% and 10% at September 30, 2011 and 2010, respectively, which reflects cash contributions to the Company's principal pension plan immediately prior to the end of fiscal 2011 and 2010.

Based on an analysis of the historical performance of the plan's assets and information provided by its independent investment advisor, the Company set the long-term rate of return assumption for these assets at 8.0% in 2011 for purposes of determining pension cost and funded status under current guidance.  The Company's discount rate assumption used in determining the present value of the projected benefit obligation is based upon published indices.

As of September 30, 2010, the Company adopted new accounting guidance requiring additional disclosures for plan assets of defined pension plans.  As required by the guidance, the Company categorized plan assets within a three level fair value hierarchy (see Note 3 for a further discussion of the fair value hierarchy). The valuation methodologies used to measure the fair value of pension assets, including the level in the fair value hierarchy in which each type of pension plan asset is classified as follows.
 
Equity securities consist of direct investments in the stocks of publicly traded companies.  Such investments are valued based on the closing price reported in an active market on which the individual securities are traded.  As such, the direct investments are classified as Level 1.

Mutual funds are valued at the net asset values of shares held by the Plan at year end.  As such, these mutual fund investments are classified as Level 1.

Fixed income securities consist of publicly traded fixed interest obligations (primarily U.S. government notes and corporate and agency bonds).  Such investments are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data.  As such, U.S. government notes are included in Level 1, and the remainder of the fixed income securities is included in Level 2.

Cash and cash equivalents consist of direct cash holdings and short-term money market mutual funds.  These values are valued based on cost, which approximates fair value, and as such, are classified as Level 1.

Other investments consist primarily of real estate, commodities, private equity holdings and hedge fund investments.  These holdings are valued by investment managers based on the most recent information available.  The valuation information used by investment managers may not be readily observable.  As such, these investments are classified as Level 3.


Asset Category
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Equity securities - stocks
   $ 23,954     $ -     $ -     $ 23,954  
Equity securities - mutual funds
     26,193       -       -       26,193  
Fixed income securities
     7,197       14,421       -       21,618  
Cash and cash equivalents
     15,414       -       -       15,414  
Other investments
     -       -       13,375       13,375  
Total
   $ 72,758     $ 14,421     $ 13,375     $ 100,554  

Changes in the fair value of Level 3 assets are summarized as follows:

   
Fair Value
                            
Fair Value
  
   
September 30,
                
Realized
    
Unrealized
    
September 30,
  
 Asset Category
  
2010
    
Acquisitions
    
Dispositions
    
Losses
    
Gains
    
2011
  
                                     
Other investments
   $ 12,212     $ -     $ -     $ 90     $ 1,073     $ 13,375  

Benefit payments expected to be paid are as follows:

         
Other
  
   
Pension
    
Postretirement
  
Years ending September 30:
  
Benefits
    
Benefits
  
             
2012
   $ 6,042     $ 1,130  
2013
     6,365       1,240  
2014
     6,762       1,363  
2015
     7,120       1,454  
2016
     7,599       1,519  
2017-2020
     45,547       9,657  
    $ 79,435     $ 16,363  
 
For measurement purposes, a rate of increase of 9.0% in the per capita cost of health care benefits was assumed for 2012; the rate was assumed to decrease gradually to 5.0% for 2030 and remain at that level thereafter.  Assumed health care cost trend rates have a significant effect on the amounts reported.  An increase in the assumed health care cost trend rates by one percentage point would have increased the accumulated postretirement benefit obligation as of September 30, 2011 by $1,384 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $114.  A decrease in the assumed health care cost trend rates by one percentage point would have decreased the accumulated postretirement benefit obligation as of September 30, 2011 by $1,226 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $100.