POST EMPLOYMENT BENEFITS

12 Months Ended

Sep. 30, 2022

POST EMPLOYMENT BENEFITS

POST EMPLOYMENT BENEFITS

9.POST EMPLOYMENT BENEFITS

Defined Benefit Plan

As a result of the Envigo acquisition, the Company has a defined benefit plan in the U.K., the Harlan Laboratories UK Limited Occupational Pension Scheme (the "Plan"), which operated through to April 2012. As of April 30, 2012, the accumulation of plan benefits of employees in the Plan was permanently suspended and therefore the Plan was curtailed.

The following tables summarize the changes in the benefit obligation funded status of the Company’s defined benefit plans and amounts reflected in the Company’s consolidated balance sheets as of September 30, 2022.

	Fiscal Year Ended
	September 30,
	2022
Accumulated benefit obligation:	$	12,812
Change in projected benefit obligation:
Projected benefit obligation, acquisition date	$	24,302
Service cost		-
Interest cost		381
Contributions by plan participants		-
Benefits paid		(595)
Foreign currency translation adjustment		(3,370)
Actuarial (gains) losses		(7,906)
Projected benefit obligation at end of period		12,812
Change in fair value of plan assets:
Fair value of plan assets, acquisition date	$	21,269
Actual loss on plan assets		(3,948)
Employer contributions		1,059
Foreign currency translation adjustment		(3,400)
Benefits paid		(595)
Fair value of plan assets, end of period		14,385
Funded status	$	1,573

The net periodic benefit costs, which are presented within general and administrative expense, under the Company’s defined benefit plans were as follows:

	Fiscal Year Ended
	September 30,
	2022
Components of net periodic benefit expense:
Service cost	$	-
Interest cost		381
Expected return on assets		(744)
Net periodic benefit cost	$	(362)

Gains Related to Changes in Benefit Obligation

The actuarial gains during the twelve months ended September 30, 2022 were due to significant increase in the discount rate as a result of rising interest rates in the U.K. The remainder of the changes are cumulative translation adjustments and reductions in assets as a result of overall deterioration in markets, driven by increasing interest rates..

Assumptions

The major assumptions used in determining the net periodic benefit costs for the fiscal year ended September 30, 2022:

	Fiscal Year Ended
	September 30,
	2022
Discount rate		1.85	%
Expected return on plan assets		4.01	%

Our expected return on plan asset assumption, used to determine benefit obligations, are based on historical long-term rates of return on investments. Many factors, including portfolio allocation, target portfolio allocation and expected expenses, are evaluated during the process of determining the expected return on plan assets.

Discount rates were determined for the defined benefit retirement plan at the measurement date to reflect the yield of a portfolio of high-quality bonds matched against the timing and amounts of projected future benefit payments.

	Fiscal Year Ended
	September 30,
	2022
Discount rate		5.33	%
Rate of compensation increases		-

At September 30, 2022, we are increasing our long-term rate of return assumption to 4.96% for pension plan assets.The major assumptions used in determining benefit obligations were as follows:

Pension Plan Assets

The Company maintains target allocation percentages among various asset categories based on an investment policy designed to achieve long-term objectives of return, while mitigating downside risk and considering expected cash flows. The Company’s investment policy is reviewed from time to time to ensure consistency with long-term objectives. The Company’s target allocation percentages were materially consistent with the actual percentages above at September 30, 2022.

Plan assets distribution was as follows:

	Fiscal Year Ended
	September 30,
Cash	24.90	%
Equity securities	6.20
Debt securities	49.50
Real estate mutual fund	5.90
Other	13.50
Total	100.00	%

The fair value of total plan assets by asset category and fair value hierarchy levels are as follows:

	Fair value as of		Fair Value Measurements at Reporting Date Using:
	September 30, 2022		Level 1		Level 2		Level 3
Cash	$	409	$	409	$	-	$	-
Fixed income securities:
Investment grade corporate bonds		4,408		-		4,408		-
Other types of investments:
Multi-asset fund		9,568				9,568
Total	$	14,385	$	409	$	13,976	$	-

The calculation of the fair value of each level of investment is described in Note 2.

Pension Funding and Payments

During the fiscal year ended September 30, 2022, the Company contributed $1,059 to the pension plans and expects to contribute $1,271 to its pension plans in the next twelve months.

Estimated pension benefit payments expected to be paid in cash in each of the next five years and in the aggregate for the following five years thereafter are as follows:

	2023		2024		2025		2026		2027		Thereafter		Total
Projected Benefit Payments	$	632	$	717	$	603	$	718	$	898	$	3,780	$	7,348

Defined Contribution Plans

The Company has defined contribution benefit plans that cover its employees in the U.S., U.K. (the Group Personal Pension Plan) and Netherlands. Defined contribution benefit expense for the twelve months ended September 30, 2022 and 2021 were $3,312 and $852, respectively. The contribution expense increased primarily due to growth in overall headcount through organic growth and the acquisitions in fiscal 2022.