Employee Benefit Plans

12 Months Ended

Sep. 30, 2011

Employee Benefit Plans [Abstract]

Employee Benefit Plans

12) Employee Benefit Plans

Defined Contribution Plans

The Partnership has two 401(k) plans that cover eligible non-union and union employees. Subject to IRS limitations, the 401(k) plans provide for each participant to contribute from 0% to 60% of compensation. For most participants, the Partnership generally can make a 4% (to a maximum of 5.5% for participants who had 10 or more years of service at the time the Defined Benefit Plans were frozen and who have reached the age 55) core contribution of a participant's compensation and generally can match 2/3 of each amount a participant contributes up to a maximum of 2.0% of a participant's compensation. However, participants at specific operating locations that participate in these plans are only eligible for an employer discretionary pretax matching contribution and/or an annual employer discretionary profit sharing contribution. The Partnership's aggregate contributions to the 401(k) plans during fiscal 2011, 2010, and 2009 were $4.7 million, $4.4 million, and $4.2 million, respectively.

Management Incentive Compensation Plan

The Partnership has a Management Incentive Compensation Plan. The long-term compensation structure is intended to align the employee's performance with the long-term performance of our unitholders. Under the Plan, employees who participate shall be entitled to receive a pro rata share of an amount in cash equal to:

• 50% of the distributions ("Incentive Distributions") of Available Cash in excess of the minimum quarterly distribution of $0.0675 per unit otherwise distributable to Kestrel Heat pursuant to the Partnership Agreement on account of its general partner units; and

• 50% of the cash proceeds (the "Gains Interest") which Kestrel Heat shall receive from the sale of its general partner units (as defined in the Partnership Agreement), less expenses and applicable taxes.

The pro rata share payable to each participant under the Plan is based on the number of participation points as described under "Fiscal 2011 Compensation Decisions—Management Incentive Compensation Plan." The amount paid in Incentive Distributions is governed by the Partnership Agreement and the calculation of Available Cash.

To fund the benefits under the Plan, Kestrel Heat has agreed to forego receipt of the amount of Incentive Distributions that are payable to plan participants. For accounting purposes, amounts payable to management under this Plan will be treated as compensation and will reduce net income. Kestrel Heat has also agreed to contribute to the Partnership, as a contribution to capital, an amount equal to the Gains Interest payable to participants in the Plan by the Partnership. The Partnership is not required to reimburse Kestrel Heat for amounts payable pursuant to the Plan.

The Plan is administered by the Partnership's Chief Financial Officer under the direction of the Board or by such other officer as the Board may from time to time direct. Determination of the employees that participate in the Plan is under the sole discretion of the Board of Directors. In general, no payments will be made under this plan if the Partnership is not distributing cash under the Incentive Distributions described above.

The Board of Directors reserves the right to amend, change or terminate the Plan at any time. Without limiting the foregoing, the Board of Directors reserves the right to adjust the amount of Incentive Distributions to be allocated to the Bonus Pool if in its judgment extenuating circumstances warrant adjustment from the guidelines, and to change the timing of any payments due thereunder at any time in its sole discretion.

The Partnership distributed approximately $261,000 during fiscal 2011 and $116,000 during fiscal 2010 in Incentive Distributions, of which named executive officers received approximately $92,000 during fiscal 2011 and $40,000 during fiscal 2010 under its long-term incentive plan. With regard to the Gains Interest, Kestrel Heat has not given any indication that it will sell its General Partner Units within the next twelve months. Thus the Plan's value attributable to the Gains Interest currently cannot be determined.

Union-Administered Pension Plans

The Partnership's contributions to union-administered pension plans were $7.0 million for fiscal 2011, $7.7 million for fiscal 2010, and $7.2 million for fiscal 2009. Some of these union administered pension plans have significant unfunded liabilities, a portion of which could be assessed to the Partnership should we withdraw from these plans. The Partnership does not expect to withdraw from these plans.

Defined Benefit Plans

The Partnership accounts for its two frozen defined benefit pension plans ("the Plan") in accordance with FASB ASC 715-10-05 Compensation-Retirement Benefits topic. The Partnership has no post-retirement benefit plans.

The following table provides the net periodic benefit cost for the period, a reconciliation of the changes in the Plan assets, projected benefit obligations, and the amounts recognized in other comprehensive income and accumulated other comprehensive income at the dates indicated using a measurement date of September 30:

(in thousands) Debit / (Credit)	Net Periodic Pension Cost in Income Statement			Cash			Fair Value of Pension Plan Assets			Projected Benefit Obligation			Other Comprehensive Income			Gross Pension Related Accumulated Other Comprehensive Income
Fiscal Year 2009
Beginning balance							$	38,657		$	(51,348	)				$	19,381
Interest cost		3,647									(3,647	)
Actual return on plan assets		(1,453	)					1,453
Employer contributions					(1,970	)		1,970
Benefit payments								(4,493	)		4,493
Investment and other expenses		(361	)								361
Difference between actual and expected return on plan assets		(1,227	)											1,227
Anticipated expenses		193									(193	)
Actuarial loss											(11,931	)		11,931
Amortization of unrecognized net actuarial loss		1,304												(1,304	)
Annual cost/change	$	2,103		$	(1,970	)		(1,070	)		(10,917	)	$	11,854			11,854
Ending balance							$	37,587		$	(62,265	)				$	31,235
Funded status at the end of the year										$	(24,678	)
Fiscal Year 2010
Interest cost		3,250									(3,250	)
Actual return on plan assets		(2,666	)					2,666
Employer contributions					(13,107	)		13,107
Benefit payments								(4,037	)		4,037
Investment and other expenses		(460	)								460
Difference between actual and expected return on plan assets		276												(276	)
Anticipated expenses		188									(188	)
Actuarial loss											(4,716	)		4,716
Amortization of unrecognized net actuarial loss		2,463												(2,463	)
Annual cost/change	$	3,051		$	(13,107	)		11,736			(3,657	)	$	1,977			1,977
Ending balance							$	49,323		$	(65,922	)				$	33,212
Funded status at the end of the year										$	(16,599	)
Fiscal Year 2011
Interest cost		2,993									(2,993	)
Actual return on plan assets		(3,984	)					3,984
Employer contributions					(3,224	)		3,224
Benefit payments								(4,097	)		4,097
Investment and other expenses		(377	)								377
Difference between actual and expected return on plan assets		597												(597	)
Anticipated expenses		246									(246	)
Actuarial loss											(3,191	)		3,191
Amortization of unrecognized net actuarial loss		2,765												(2,765	)
Annual cost/change	$	2,240		$	(3,224	)		3,111			(1,956	)	$	(171	)		(171	)
Ending balance							$	52,434		$	(67,878	)				$	33,041
Funded status at the end of the year										$	(15,444	)

At September 30, 2011 and 2010, the amounts included on the balance sheet in other long-term liabilities were $15.4 million and $16.6 million, respectively.

The $33.0 million net actuarial loss balance at September 30, 2011 for the two frozen defined benefit pension plans in accumulated other comprehensive income will be recognized and amortized into net periodic pension costs as an actuarial loss in future years. The estimated amount that will be amortized from accumulated other comprehensive income into net periodic pension cost over the next fiscal year is $2.8 million.

	September 30,
	2011			2010			2009
Weighted-Average Assumptions Used in the Measurement of the Partnership's Benefit Obligation
Discount rate at year end date		4.35	%		4.70	%		5.40	%
Expected return on plan assets for the year ended		7.75	%		7.75	%		8.25	%
Rate of compensation increase		N/A			N/A			N/A

The expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets determined using fair value.

The Partnership's expected long-term rate of return on plan assets is updated at least annually, taking into consideration our asset allocation, historical returns on the types of assets held, and the current economic environment. Based on these factors, the Partnership expects its pension assets will earn an average of 7.75% per annum.

The discount rate used to determine net periodic pension expense was 4.70% in 2011, 5.4% in 2010, and 7.6% in 2009. The discount rate used by the Partnership in determining pension expense and pension obligations reflects the yield of high quality (AA or better rating by a recognized rating agency) corporate bonds whose cash flows are expected to match the timing and amounts of projected future benefit payments.

The Plan's objectives are to have the ability to pay benefit and expense obligations when due, to maintain the funded ratio of the Plan, to maximize return within reasonable and prudent levels of risk in order to minimize contributions and charges to the profit and loss statement, and to control costs of administering the Plan and managing the investments of the Plan. The strategic asset allocation of the Plan (currently 60% domestic fixed income, 30% domestic equities and 10% international equities) is based on a long-term perspective and the premise that the Plan can tolerate some interim fluctuations in market value and rates of return in order to achieve long-term objectives.

The fair values and percentage of the Partnership's pension plan assets by asset category are as follows:

(in thousands)	Level 1		Level 2		Level 3		Total		Concentration Percentage
Asset Category at September 30, 2011
Corporate and U.S. government bond fund (1)		31,876		—		—		31,876		61	%
U.S. government and agency debt securities (1)		2,683		—		—		2,683		5	%
U.S. large-cap equity (1)		13,262		—		—		13,262		25	%
International equity (1)		4,189		—		—		4,189		8	%
Cash		424				—		424		1	%
Total		52,434		—		—		52,434		100	%

(1) Represent investments in Vanguard funds that seek to replicate the asset category description.

Partnership expects to make pension contributions of approximately $3.4 million in fiscal 2012.

Expected benefit payments over each of the next five years will total approximately $4.4 million per year. Expected benefit payments for the five years thereafter will aggregate approximately $21.6 million.