Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT PLANS

v2.4.0.6
PENSION AND OTHER POSTRETIREMENT PLANS
 12 Months Ended
Sep. 30, 2012
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, 2012 and 2011:

   
Pension
    
Other Postretirement
  
   
2012
    
2011
    
2012
    
2011
  
Change in benefit obligation:
                        
Benefit obligation, beginning of year
   $ 168,033     $ 145,909     $ 27,547     $ 24,400  
Service cost
     5,852       5,016       730       632  
Interest cost
     7,842       7,510       1,283       1,254  
Assumption changes
     19,701       16,501       2,508       2,285  
Actuarial loss (gain)
     688       (887 )     (2,473 )     (226 )
Benefit payments
     (6,256 )     (6,016 )     (764 )     (798 )
Benefit obligation, end of year
     195,860       168,033       28,831       27,547  
 
                                
Change in plan assets:
                                
Fair value, beginning of year
     100,554       94,869       -       -  
Actual return
     16,000       1,300       -       -  
Benefit payments
     (6,256 )     (6,016 )     (764 )     (798 )
Employer contributions
     6,279       10,401       764       798  
Fair value, end of year
     116,577       100,554       -       -  
                                 
Funded status
     (79,283 )     (67,480 )     (28,831 )     (27,547 )
Unrecognized actuarial loss
     92,940       85,868       8,561       8,462  
Unrecognized prior service cost
     (2,142 )     (525 )     (1,774 )     (1,607 )
Net amount recognized
   $ 11,515     $ 17,863     $ (22,044 )   $ (20,692 )
                                 
Amounts recognized in the consolidated balance sheet:
                                
Current liability
   $ (720 )   $ (766 )   $ (1,106 )   $ (1,130 )
Noncurrent benefit liability
     (78,563 )     (66,714 )     (27,725 )     (26,417 )
Accumulated other comprehensive loss
     90,798       85,343       6,787       6,855  
Net amount recognized
   $ 11,515     $ 17,863     $ (22,044 )   $ (20,692 )
                                 
Amounts recognized in accumulated
                                
other comprehensive loss:
                                
Net actuarial loss
   $ 92,940     $ 85,868     $ 8,561     $ 8,462  
Prior service cost
     (2,142 )     (525 )     (1,774 )     (1,607 )
Net amount recognized
   $ 90,798     $ 85,343     $ 6,787     $ 6,855  
                                 
 
Based upon actuarial valuations performed as of September 30, 2012 and 2011, the accumulated benefit obligation for the Company's defined benefit pension plans was $172,142 and $149,846 at September 30, 2012 and 2011, respectively, and the projected benefit obligation for the Company's defined benefit pension plans was $195,860 and $168,033 at September 30, 2012 and 2011, respectively.

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

   
Pension
    
Other Postretirement
  
   
2012
    
2011
    
2010
    
2012
    
2011
    
2010
  
                                     
Service cost
   $ 5,852     $ 5,016     $ 4,489     $ 730     $ 632     $ 691  
Interest cost
     7,842       7,510       7,495       1,283       1,254       1,383  
Expected return on plan assets
     (7,836 )     (7,398 )     (6,982 )     -       -       -  
Amortization:
                                                
Prior service cost
     (45 )     26       24       (451 )     (476 )     (726 )
Net actuarial loss
     6,814       5,364       5,395       535       407       521  
Net benefit cost
   $ 12,627     $ 10,518     $ 10,421     $ 2,097     $ 1,817     $ 1,869  

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 2012. The Company is not required to make any significant contributions to its principal retirement plan in fiscal 2013.

Contributions made in fiscal 2012 are as follows:

Contributions
  
Pension
    
Other Postretirement
  
             
Principal retirement plan
   $ 5,000     $ -  
Supplemental retirement plan
     728       -  
Other postretirement plan
     -       953  

Amounts of AOCL expected to be recognized in net periodic benefit costs in fiscal 2013 include:

         
Other
  
   
Pension
    
Postretirement
  
   
Benefits
    
Benefits
  
             
Net actuarial loss
   $ 7,316     $ 439  
Prior service cost
     (206 )     (272 )
 
The measurement date of annual actuarial valuations for the Company's principal retirement and other postretirement benefit plans was September 30 for fiscal 2012, 2011 and 2010. The weighted-average assumptions for those plans were:

   
Pension
    
Other Postretirement
  
   
2012
    
2011
    
2010
    
2012
    
2011
    
2010
  
Discount rate
     4.00 %     4.75 %     5.25 %     4.00 %     4.75 %     5.25 %
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, 2012 and 2011 and weighted-average target allocation were as follows:

   
Plan Assets at
    
Target
  
Asset Category
  
2012
    
2011
    
Allocation
  
Equity securities
   $ 63,186     $ 50,147       50 %
Fixed income, cash and cash equivalents
     35,218       37,032       30 %
Other investments
     18,173       13,375       20 %
    $ 116,577     $ 100,554       100 %

Plan assets in the fixed income, cash and cash equivalents category include cash of 4% and 9% of plan assets at September 30, 2012 and 2011, 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 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 2012 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, 2012 and 2011 were as follows:

   
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  

   
September 30, 2011
  
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 at September 30, 2012 and 2011 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, 2012
   $ 13,375     $ 3,800     $ -     $ 766     $ 232     $ 18,173  
September 30, 2011
     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
  
             
2013
   $ 6,307     $ 1,106  
2014
     6,667       1,203  
2015
     6,981       1,284  
2016
     7,402       1,347  
2017
     7,879       1,478  
2018-2022
     47,811       9,394  
    $ 83,047     $ 15,812  

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 2031 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, 2012 by $1,447 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $122. 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, 2012 by $1,283 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $107.