Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT PLANS

v2.4.0.8
PENSION AND OTHER POSTRETIREMENT PLANS
12 Months Ended
Sep. 30, 2013
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, 2013 and 2012:

   
Pension
   
Other Postretirement
 
   
2013
   
2012
   
2013
   
2012
 
Change in benefit obligation:
                       
Benefit obligation, beginning of year
  $ 195,860     $ 168,033     $ 28,831     $ 27,547  
Acquisitions
    9,437       -       -       -  
Service cost
    7,160       5,852       796       730  
Interest cost
    8,024       7,842       1,129       1,283  
Assumption changes
    (26,288 )     19,701       (10,270 )     2,508  
Actuarial (gain) loss
    (891 )     688       (854 )     (2,473 )
Benefit payments
    (7,225 )     (6,256     (751 )     (764 )
Benefit obligation, end of year
    186,077       195,860       18,881       28,831  
 
                               
Change in plan assets:
                               
Fair value, beginning of year
    116,577       100,554       -       -  
Actual return
    10,838       16,000       -       -  
Benefit payments
    (7,225 )     (6,256     (751 )     (764
Employer contributions
    3,523       6,279       751       764  
Fair value, end of year
    123,713       116,577       -       -  
                                 
Funded status
    (62,363 )     (79,283     (18,881 )     (28,831
Unrecognized actuarial loss (gain)
    56,148       92,940       (3,001 )     8,561  
Unrecognized prior service cost
    (1,935 )     (2,142     (1,502 )     (1,774
Net amount recognized
  $ (8,150 )   $ 11,515     $ (23,384 )   $ (22,044
                                 
Amounts recognized in the consolidated balance sheet:
                               
Current liability
  $ (721 )   $ (720   $ (925 )   $ (1,106 )
Noncurrent benefit liability
    (61,642 )     (78,563     (17,956 )     (27,725 )
Accumulated other comprehensive loss
    54,213       90,798       (4,503 )     6,787  
Net amount recognized
  $ (8,150 )   $ 11,515     $ (23,384 )   $ (22,044 )
                                 
Amounts recognized in accumulated
                               
      other comprehensive loss:
                               
Net actuarial loss (income)
  $ 56,148     $ 92,940     $ (3,001 )   $ 8,561  
Prior service cost
    (1,935 )     (2,142     (1,502 )     (1,774 )
Net amount recognized
  $ 54,213     $ 90,798     $ (4,503 )   $ 6,787  
                                 
 
Based upon actuarial valuations performed as of September 30, 2013 and 2012, the accumulated benefit obligation for the Company’s defined benefit pension plans was $156,661 and $172,142 at September 30, 2013 and 2012, respectively, and the projected benefit obligation for the Company’s defined benefit pension plans was $186,077 and $195,860 at September 30, 2013 and 2012, respectively.

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

   
Pension
   
Other Postretirement
 
   
2013
   
2012
   
2011
   
2013
   
2012
   
2011
 
                                     
Service cost
  $ 7,160     $ 5,852     $ 5,016     $ 796     $ 730     $ 632  
Interest cost
    8,024       7,842       7,510       1,129       1,283       1,254  
Expected return on plan assets
    (9,071     (7,836     (7,398     -       -       -  
Amortization:
                                               
Prior service cost
    (206     (45     26       (272     (451     (476
Net actuarial loss
    7,903       6,814       5,364       439       535       407  
Net benefit cost
  $ 13,810     $ 12,627     $ 10,518     $ 2,092     $ 2,097     $ 1,817  

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 2013. The Company is not required to make any significant contributions to its principal retirement plan in fiscal 2014.

Contributions made in fiscal 2013 are as follows:

Contributions
 
Pension
   
Other Postretirement
 
             
   Principal retirement plan
  $ 2,500     $ -  
   Supplemental retirement plan
    725       -  
   Other postretirement plan
    -       751  

Amounts of AOCL expected to be recognized in net periodic benefit costs in fiscal 2014 include:

         
Other
 
   
Pension
   
Postretirement
 
   
Benefits
   
Benefits
 
             
Net actuarial loss
  $ 3,964     $ (87 )
Prior service cost
    (206 )     (195 )
 
The measurement date of annual actuarial valuations for the Company’s principal retirement and other postretirement benefit plans was September 30 for fiscal 2013, 2012 and 2011.  The weighted-average assumptions for those plans were:

   
Pension
   
Other Postretirement
 
   
2013
   
2012
   
2011
   
2013
   
2012
   
2011
 
Discount rate
    5.00 %     4.00 %     4.75 %     5.00 %     4.00 %     4.75 %
Return on plan assets
    8.00       8.00       8.00       -       -       -  
Compensation increase
    3.50       3.50       3.50       -       -       -  

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, 2013 and 2012 and weighted-average target allocation were as follows:

   
Plan Assets at
   
Target
 
Asset Category
 
2013
   
2012
   
Allocation
 
Equity securities
  $ 67,954     $ 63,186       55 %
Fixed income, cash and cash equivalents
    36,817       35,218       30 %
Other investments
    18,942       18,173       15 %
    $ 123,713     $ 116,577       100 %

Plan assets in the fixed income, cash and cash equivalents category include cash of 2% and 4% of plan assets at September 30, 2013 and 2012, respectively, which reflects cash contributions to the Company’s principal pension plan immediately prior to the end of each fiscal year.

Based on an analysis of the historical and expected future 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 2013 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.

The Company categorizes 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.

The Company’s defined benefit pension plans’ asset categories at September 30, 2013 and 2012 were as follows:

   
September 30, 2013
 
Asset Category
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Equity securities - stocks
  $ 36,127     $ -     $ -     $ 36,127  
Equity securities - mutual funds
    30,507       1,320       -       31,827  
Fixed income securities
    17,912       9,487       -       27,399  
Cash and cash equivalents
    9,418       -       -       9,418  
Other investments
    -       -       18,942       18,942  
Total
  $ 93,964     $ 10,807     $ 18,942     $ 123,713  

   
September 30, 2012
 
Asset Category
 
Level 1
   
Level 2
   
Level 3
   
Total
 
Equity securities - stocks
  $ 34,127     $ -     $ -     $ 34,127  
Equity securities - mutual funds
    29,059       -       -       29,059  
Fixed income securities
    10,523       12,707       -       23,230  
Cash and cash equivalents
    11,988       -       -       11,988  
Other investments
    -       -       18,173       18,173  
Total
  $ 85,697     $ 12,707     $ 18,173     $ 116,577  

Changes in the fair value of Level 3 assets at September 30, 2013 and 2012 are summarized as follows:

   
Fair Value,
                           
Fair Value,
 
   
Beginning of
               
Realized
   
Unrealized
   
End of
 
Asset Category
 
Period
   
Acquisitions
   
Dispositions
   
Gains (Losses)
   
Gains
   
Period
 
Other investments:
                                   
Fiscal Year Ended:
                                   
September 30, 2013
  $ 18,173     $ -       -     $ 48     $ 721     $ 18,942  
September 30, 2012
    13,375       3,800       -       766       232       18,173  

 
Benefit payments expected to be paid are as follows:

         
Other
 
   
Pension
   
Postretirement
 
Years ending September 30:
 
Benefits
   
Benefits
 
             
2014
  $ 7,080     $ 926  
2015
    7,722       917  
2016
    8,190       1,004  
2017
    8,550       1,126  
2018
    9,063       1,186  
2019-2023
    53,709       6,275  
    $ 94,314     $ 11,434  

For measurement purposes, a rate of increase of 8.0% in the per capita cost of health care benefits was assumed for 2013; 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, 2013 by $967 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $107.  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, 2013 by $846 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $94.