Note 8 — Benefit Plans

The Company has defined benefit pension plans covering substantially all of its employees in the United States and certain foreign locations. The Company also provides certain postretirement healthcare and life insurance benefits to qualifying domestic retirees. Postretirement healthcare and life insurance benefit plans in foreign countries are not material. The measurement date used for the Company’s employee benefit plans is September 30.

On November 30, 2011, the Company remeasured its U.S. defined pension plan as a result of amendments to this plan that were approved and communicated to affected employees during the first quarter of fiscal year 2012. Effective January 1, 2013, all plan participants’ benefits in the defined benefit traditional pension plan will be converted to a defined benefit cash balance pension plan. The November 30, 2011 remeasurement was based upon a discount rate of 5.1%, compared with the discount rate of 4.9% used on the September 30, 2011 measurement date. The increase in the discount rate reduced total fiscal year 2012 net pension cost by $5,300. An increase in plan assets held as of November 30, 2011 compared with assets held as of September 30, 2011 also reduced total fiscal year 2012 net pension cost by $6,200. The total reduction in fiscal year 2012 net pension cost resulting from the remeasurement was $40,200.

Net pension and other postretirement cost for the years ended September 30 included the following components:


	Pension Plans									Other Postretirement Benefits
	2012			2011			2010			2012			2011			2010
Service cost	$	74,560		$	88,692		$	72,901		$	5,870		$	5,842		$	5,007
Interest cost		91,181			93,228			90,432			12,755			13,143			14,190
Expected return on plan assets		(103,624	)		(103,081	)		(99,199	)		—			—			—
Amortization of prior service (credit) cost		(11,049	)		(1,294	)		(1,091	)		(690	)		(686	)		4
Amortization of loss		56,416			55,735			41,812			4,632			4,465			3,408
Amortization of net asset		(11	)		(34	)		(47	)		—			—			—
Curtailment/settlement loss		20,466			1,096			—			(1,135	)		—			—

	$	127,939		$	134,342		$	104,808		$	21,432		$	22,764		$	22,609

Net pension cost attributable to foreign plans included in the preceding table was $31,085, $34,429 and $25,820 in 2012, 2011 and 2010, respectively.

The settlement loss recorded in 2012 included lump sum benefit payments associated with the Company’s supplemental pension plan. The Company recognizes pension settlements when payments from the supplemental plan exceed the sum of service and interest cost components of net periodic pension cost associated with this plan for the fiscal year. The settlement loss recorded in 2012 also included settlements associated with certain foreign plans.

The change in benefit obligation, change in fair value of plan assets, funded status and amounts recognized in the Consolidated Balance Sheets for these plans were as follows:


	Pension Plans						Other Postretirement Benefits
	2012			2011			2012			2011
Change in benefit obligation:
Beginning obligation	$	1,996,441		$	1,911,295		$	269,458		$	260,124
Service cost		74,560			88,692			5,870			5,842
Interest cost		91,181			93,228			12,755			13,143
Plan amendments		(124,048	)		(3,683	)		(5,042	)		—
Benefits paid		(124,309	)		(108,381	)		(27,065	)		(25,776	)
Actuarial loss		439,082			22,146			5,384			8,277
Settlements		(45,496	)		—			—			—
Other, includes translation		105			(6,856	)		5,841			7,848

Benefit obligation at September 30	$	2,307,516		$	1,996,441		$	267,201		$	269,458

Change in fair value of plan assets:
Beginning fair value	$	1,352,730		$	1,413,848		$	—		$	—
Actual return on plan assets		223,483			1,391			—			—
Employer contribution		166,367			53,505			—			—
Benefits paid		(124,309	)		(108,381	)		—			—
Settlements		(45,496	)		—			—			—
Other, includes translation		567			(7,633	)		—			—

Plan assets at September 30	$	1,573,342		$	1,352,730		$	—		$	—

Funded Status at September 30:
Unfunded benefit obligation	$	(734,174	)	$	(643,711	)	$	(267,201	)	$	(269,458	)

Amounts recognized in the Consolidated Balance Sheets at September 30:
Other	$	51		$	3,217		$	—		$	—
Salaries, wages and related items		(5,856	)		(6,042	)		(17,590	)		(18,188	)
Long-term Employee Benefit Obligations		(728,369	)		(640,886	)		(249,611	)		(251,270	)

Net amount recognized	$	(734,174	)	$	(643,711	)	$	(267,201	)	$	(269,458	)

Amounts recognized in Accumulated other comprehensive (loss) income before income taxes at September 30:
Net transition asset	$	357		$	398		$	—		$	—
Prior service credit		122,235			9,193			10,365			6,013
Net actuarial loss		(1,152,948	)		(911,146	)		(70,949	)		(70,653	)

Net amount recognized	$	(1,030,356	)	$	(901,555	)	$	(60,584	)	$	(64,640	)

Foreign pension plan assets at fair value included in the preceding table were $466,450 and $419,452 at September 30, 2012 and 2011, respectively. The foreign pension plan projected benefit obligations were $632,442 and $500,969 at September 30, 2012 and 2011, respectively.

Pension plans with accumulated benefit obligations in excess of plan assets and plans with projected benefit obligations in excess of plan assets consist of the following at September 30:


	Accumulated Benefit Obligation Exceeds the Fair Value of Plan Assets				Projected Benefit Obligation Exceeds the Fair Value of Plan Assets
	2012		2011		2012		2011
Projected benefit obligation	$	2,054,644	$	1,616,534	$	2,307,472	$	1,862,441
Accumulated benefit obligation	$	1,999,604	$	1,338,643
Fair value of plan assets	$	1,364,169	$	989,043	$	1,573,247	$	1,215,513

The estimated net actuarial loss and prior service credit for pension benefits that will be amortized from Accumulated other comprehensive (loss) income into net pension costs over the next fiscal year are expected to be $(75,524) and $13,130, respectively. The estimated net actuarial loss and prior service credit for other postretirement benefits that will be amortized from Accumulated other comprehensive (loss) income into net other postretirement costs over the next fiscal year are expected to be $(3,911) and $1,139, respectively.

The weighted average assumptions used in determining pension plan information were as follows:


	2012			2011			2010
Net Cost
Discount rate:
U.S. plans(A)(B)		4.90	%		5.20	%		5.90	%
Foreign plans		5.26			4.68			5.63
Expected return on plan assets:
U.S. plans		7.75			8.00			8.00
Foreign plans		6.06			6.31			6.38
Rate of compensation increase:
U.S. plans(A)		4.25			4.50			4.50
Foreign plans		3.61			3.56			3.35
Benefit Obligation
Discount rate:
U.S. plans(A)		3.90			4.90			5.20
Foreign plans		3.94			5.26			4.68
Rate of compensation increase:
U.S. plans(A)		4.25			4.25			4.50
Foreign plans		3.28			3.61			3.56

(A)	Also used to determine other postretirement and postemployment benefit plan information.

(B)	On November 30, 2011, the Company remeasured its U.S. defined benefit pension plan based upon a 5.10% discount rate compared to the discount rate of 4.90% used on September 30, 2011. All other U.S. plans remained at 4.90%.

At September 30, 2012 the assumed healthcare trend rates were 7.5% pre and post age 65, gradually decreasing to an ultimate rate of 5.0% beginning in 2024. At September 30, 2011 the corresponding assumed healthcare trend rates were 7.6% pre and post age 65, gradually decreasing to an ultimate rate of 5.0% beginning in 2024. A one percentage point increase in assumed healthcare cost trend rates in each year would increase the accumulated postretirement benefit obligation as of September 30, 2012 by $11,526 and the aggregate of the service cost and interest cost components of 2012 annual expense by $638. A one percentage point decrease in the assumed healthcare cost trend rates in each year would decrease the accumulated postretirement benefit obligation as of September 30, 2012 by $9,527 and the aggregate of the 2012 service cost and interest cost by $480.

Expected Rate of Return on Plan Assets

The expected rate of return on plan assets is based upon expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, the Company considers many factors, including historical assumptions compared with actual results; benchmark data; expected returns on various plan asset classes, as well as current and expected asset allocations.

Expected Funding

The Company’s funding policy for its defined benefit pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that may be appropriate considering the funded status of the plans, tax consequences, the cash flow generated by the Company and other factors. While the Company does not anticipate any significant required contributions to its pension plans in 2013, the Company made a discretionary contribution of $100,000 to its U.S. pension plan in October 2012.

Expected benefit payments are as follows:


	Pension Plans		Other Postretirement Benefits
2013	$	149,098	$	17,590
2014		148,264		17,942
2015		154,868		18,348
2016		159,853		18,658
2017		167,326		18,774
2018-2022		862,741		92,863

Expected receipts of the subsidy under the Medicare Prescription Drug Improvement and Modernization Act of 2003, which are not reflected in the expected other postretirement benefit payments included in the preceding table, are as follows: 2013, $1,417; 2014, $1,404; 2015, $1,382; 2016, $1,353; 2017, $1,315; 2018-2022, $5,751.

Investments

The Company’s primary objective is to achieve returns sufficient to meet future benefit obligations. It seeks to generate above market returns by investing in more volatile asset classes such as equities while at the same time controlling risk with allocations to more stable asset classes like fixed income.

U.S. Plans

The Company’s U.S. plans comprise 70% of total benefit plan investments, based on September 30, 2012 market values, and have a target asset mix of 65% equities and 35% fixed income. This mix was established based on an analysis of projected benefit payments and estimates of long-term returns, volatilities and correlations for various asset classes. The mix is reviewed periodically by the named fiduciary of the plans and is intended to provide above-market returns at an acceptable level of risk over time.

The established target mix includes ranges by which the target may deviate in order to accommodate normal market fluctuations. Routine cash flows are used to bring the mix closer to target and a move outside of the acceptable ranges will signal the potential for a formal rebalancing, based on an assessment of current market conditions and transaction costs. Any tactical deviations from the established asset mix require the approval of the named fiduciary.

The U.S. plans may enter into both exchange traded and non-exchange traded derivative transactions in order to manage interest rate exposure, volatility, term structure of interest rates, and sector and currency exposures within the fixed income portfolios. The Company has established minimum credit quality standards for counterparties in such transactions.

The following table provides the fair value measurements of U.S. plan assets, as well as the measurement techniques and inputs utilized to measure fair value of these assets, at September 30, 2012 and 2011.


	Total U.S. Plan Asset Balances at September 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Income:
Mortgage and asset-backed securities(A)	$	137,064	$	—	$	137,064	$	—
Corporate bonds(B)		106,981		—		106,981		—
Government and agency-U.S.(C)		74,641		57,401		17,240		—
Government and agency-Foreign(D)		5,696		—		5,696		—
Other(E)		8,964		—		8,964		—
Equity securities(F)		724,447		639,646		84,801		—
Cash and cash equivalents(G)		49,099		49,099		—		—

Fair value of plan assets	$	1,106,892	$	746,146	$	360,746	$	—


	Total U.S. Plan Asset Balances at September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Income:
Mortgage and asset-backed securities(A)	$	165,042	$	—	$	165,042	$	—
Corporate bonds(B)		111,954		—		111,954		—
Government and agency-U.S.(C)		41,885		26,577		15,308		—
Government and agency-Foreign(D)		6,836		—		6,836		—
Other(E)		8,277		—		8,277		—
Equity securities(F)		562,047		435,847		126,200		—
Cash and cash equivalents(G)		37,237		37,237		—		—

Fair value of plan assets	$	933,278	$	499,661	$	433,617	$	—

(A)	Values are based upon a combination of observable prices, independent pricing services and relevant broker quotes.

(B)	Values are based upon comparable securities with similar yields and credit ratings.

(C)	Values of instruments classified as Level 1 are based on the closing price reported on the major market on which the investments are traded. Values of instruments classified as Level 2 are based upon quoted market prices from observable pricing sources.

(D)	Values are based upon quoted market prices from observable pricing sources.

(E)	Classification contains various immaterial investments and valuation varies by investment type. Values are primarily based upon quoted market prices from observable pricing sources.

(F)

Values of instruments classified as Level 1 are based on the closing price reported on the major market on which the investments are traded. Values of instruments classified as Level 2 are based on the net asset value provided by the fund administrator, which is based on the value of the underlying assets owned by the fund, less its liabilities and then divided by the number of fund units outstanding.

(G)	Values are based upon quoted market prices or broker/dealer quotations.

The U.S. portion of fixed income assets is invested in mortgage-backed, corporate, government and agency and asset-backed instruments. Mortgage-backed securities consist of residential mortgage pass-through certificates. Corporate bonds are diversified across industry and sector and, while consisting primarily of investment grade instruments, include an allocation to high-yield debt as well. U.S. government investments consist of obligations of the U.S. Treasury and its agencies.

The non-U.S. portion of fixed income investments consists primarily of corporate bonds in developed markets but includes an allocation to emerging markets debt as well. The value of derivative instruments is not material and is included in the “Other” category provided in the table above.

Equity securities included within the plans’ assets consist of publicly-traded U.S. and non-U.S. equity securities. In order to achieve appropriate diversification, these portfolios are allocated among multiple asset managers and invested across market sectors, investment styles, capitalization weights and geographic regions.

A portion of the U.S. plans’ assets consists of investments in cash and cash equivalents, primarily to accommodate liquidity requirements relating to trade settlement and benefit payment activity.

Foreign Plans

Foreign plan assets comprise 30% of the Company’s total benefit plan assets, based on market value at September 30, 2012. Such plans have local independent fiduciary committees, with responsibility for development and oversight of investment policy, including asset allocation decisions. In making such decisions, consideration is given to local regulations, investment practices and funding rules.

The following table provides the fair value measurements of foreign plan assets, as well as the measurement techniques and inputs utilized to measure fair value of these assets, at September 30, 2012 and 2011.


	Total Foreign Plan Asset Balances at September 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Income:
Corporate bonds(A)	$	36,612	$	—	$	36,612	$	—
Government and agency-U.S.(B)		3,230		3,230		—		—
Government and agency-Foreign(C)		75,667		35,317		40,350		—
Equity securities(D)		244,418		229,672		14,649		97
Cash and cash equivalents(E)		17,443		17,443		—		—
Real estate(F)		9,058		—		6,017		3,041
Insurance contracts(G)		80,022		—		—		80,022

Fair value of plan assets	$	466,450	$	285,662	$	97,628	$	83,160


	Total Foreign Plan Asset Balances at September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fixed Income:
Corporate bonds(A)	$	34,905	$	—	$	34,905	$	—
Government and agency-U.S.(B)		1,065		1,065		—		—
Government and agency-Foreign(C)		77,949		36,687		41,262		—
Equity securities(D)		215,309		201,325		13,726		258
Cash and cash equivalents(E)		1,191		1,191		—		—
Real estate(F)		10,688		—		—		10,688
Insurance contracts(G)		78,345		—		—		78,345

Fair value of plan assets	$	419,452	$	240,268	$	89,893	$	89,291

(A)	Values are based upon comparable securities with similar yields and credit ratings.

(B)	Values are based on the closing price reported on the major market on which the investments are traded.

(C)	Values of instruments classified as Level 1 are based on the closing price reported on the major market on which the investments are traded. Values of instruments classified as Level 2 are based upon quoted market prices from observable pricing sources.

(D)

(E)	Values are based upon quoted market prices or broker/dealer quotations.

(F)	Values represent the estimated fair value based on the fair value of the underlying investment value or cost, adjusted for any accumulated earnings or losses.

(G)	Values approximately represent cash surrender value.

Fixed income investments include corporate, U.S. government and non-U.S. government securities. Equity securities included in the foreign plan assets consist of publicly-traded U.S. and non-U.S. equity securities. Real estate investments consist of investments in funds holding an interest in real properties. The foreign plans also hold a portion of assets in cash and cash equivalents, in order to accommodate liquidity requirements.

The following table summarizes the changes, for the years ended September 30, 2012 and 2011, in the fair value of foreign pension assets measured using Level 3 inputs:


	Equity Securities			Real Estate			Insurance Contracts			Total Assets
Balance at September 30, 2010	$	267		$	9,486		$	62,244		$	71,997
Actual return on plan assets:
Relating to assets held at September 30, 2010		(4	)		46			2,613			2,655
Purchases, sales and settlements, net		—			1,363			14,710			16,073
Transfers in (out) from other categories		—			—			92			92
Exchange rate changes		(5	)		(207	)		(1,314	)		(1,526	)

Balance at September 30, 2011	$	258			10,688		$	78,345		$	89,291
Actual return on plan assets:
Relating to assets held at September 30, 2011		(137	)		(22	)		2,953			2,794
Purchases, sales and settlements, net		(16	)		(1,648	)		1,488			(176	)
Transfers in (out) from other categories		—			(5,879	)		—			(5,879	)
Exchange rate changes		(8	)		(98	)		(2,764	)		(2,870	)

Balance at September 30, 2012	$	97			3,041		$	80,022		$	83,160

Postemployment Benefits

The Company utilizes a service-based approach in accounting for most of its postemployment benefits. Under this approach, the costs of benefits are recognized over the eligible employees’ service period. The Company has elected to delay recognition of actuarial gains and losses that result from changes in assumptions.

Postemployment benefit costs for the years ended September 30 included the following components:


	2012			2011			2010
Service cost	$	16,399		$	13,327		$	11,409
Interest cost		5,639			5,054			4,379
Amortization of prior service credit		(1,697	)		(1,697	)		(1,697	)
Amortization of loss		15,639			10,490			7,777

	$	35,980		$	27,174		$	21,868

The changes in benefit obligation for these postemployment benefits were as follows:


	Postemployment benefits
	2012			2011
Change in benefit obligation:
Beginning obligation	$	137,575		$	112,751
Service cost		16,399			13,327
Interest cost		5,639			5,054
Benefits paid		(51,989	)		(42,572	)
Actuarial loss		55,025			49,015

Benefit obligation at September 30	$	162,649		$	137,575

The postemployment benefit plan obligations as of September 30, 2012 and 2011 were unfunded. The amounts recognized in Accumulated other comprehensive (loss) income before income taxes for the net actuarial loss was $157,525 and $116,442 at September 30, 2012 and 2011, respectively. The estimated net actuarial loss that will be amortized from the Accumulated other comprehensive (loss) income into postemployment benefit cost over the next fiscal year is $19,210.

Savings Incentive Plan

The Company has a voluntary defined contribution plan (“Savings Incentive Plan”) covering eligible employees in the United States. The Company matches contributions for eligible employees to 75% of employees’ contributions, up to a maximum of 4.5% of each employee’s eligible compensation. The cost of the Savings Incentive Plan was $36,281 in 2012, $36,535 in 2011 and $34,097 in 2010. The Company guarantees employees’ contributions to the fixed income fund of the Savings Incentive Plan, which consists of diversified money market instruments. The amount guaranteed was $254,060 at September 30, 2012.