POST EMPLOYMENT BENEFITS

12 Months Ended

Sep. 30, 2023

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 "Pension Plan"), which operated through April 2012. As of April 30, 2012, the accumulation of plan benefits of employees in the Pension Plan was permanently suspended and therefore the Pension Plan was curtailed.

The following tables summarize the changes in the benefit obligation funded status of the Pension Plan and amounts reflected in the Company’s consolidated balance sheets as of September 30, 2023 and 2022.


	Fiscal Year Ended September 30,		Fiscal Year Ended September 30,
	2023		2022

Accumulated benefit obligation:	$	12,957	$	12,812

Change in projected benefit obligation:
Projected benefit obligation, beginning of period	$	12,812	$	24,302
Interest cost	733		381
Benefits paid	(570)		(595)
Foreign currency translation adjustment	1,235		(3,370)
Actuarial gains	(1,253)		(7,906)
Projected benefit obligation at end of period	12,957		12,812

Change in fair value of plan assets:
Fair value of plan assets, beginning of period	$	14,385	$	21,269
Actual loss on plan assets	(427)		(3,948)
Employer contributions	1,226		1,059
Foreign currency translation adjustment	1,379		(3,400)
Benefits paid	(570)		(595)
Fair value of plan assets, end of period	15,993		14,385
Funded status	$	3,036	$	1,573

The net periodic benefit costs, which are presented within general and administrative expenses, under the Pension Plan were as follows:


	Fiscal Year Ended September 30,		Fiscal Year Ended September 30,
	2023		2022
Components of net periodic benefit expense:
Interest cost	733		381
Expected return on assets	(798)		(744)
Amortization of prior gain	(152)		—
Net periodic benefit cost	$	(217)	$	(363)

Gains Related to Changes in Benefit Obligation

The actuarial gains during the twelve months ended September 30, 2023 were primarily due to increased discount rate assumptions as a result of the continued trend of rising interest rates and updated plan cash commutation factors. The actuarial gains during the twelve months ended September 30, 2022 were due to a significant increase in the discount rate

as a result of rising interest rates in the U.K. The remainder of the changes in both periods were 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, 2023 and 2022:


	Fiscal Year Ended September 30,		Fiscal Year Ended September 30,
	2023		2022
Discount rate	5.33	%	1.85	%
Expected return on plan assets	4.96	%	4.01	%

Our expected return on plan asset assumption, used to determine benefit obligations, is 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.

At September 30, 2023, we are increasing our long-term rate of return assumption to 4.85% for pension plan assets. The major assumptions used in determining benefit obligations were as follows:


	Fiscal Year Ended September 30,		Fiscal Year Ended September 30,
	2023		2022
Discount rate	5.67	%	5.33	%
Rate of compensation increases	0.00	%	0.00	%

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.

Plan assets distribution was as follows:


	Fiscal Year Ended September 30,		Fiscal Year Ended September 30,
	2023		2022
Cash	3.31	%	24.90	%
Equity securities	2.35		6.20
Debt securities	91.23		49.50
Real estate mutual fund	1.20		5.90
Other	1.91		13.50
Total	100.00	%	100.00	%

The fair value of total plan assets by asset category and fair value hierarchy levels as of September 30, 2023 were as follows:


	Fair value as of September 30, 2023		Fair Value Measurements at Reporting Date Using:
			Level 1		Level 2		Level 3
Cash	$	431	$	431	$	—	$	—
Fixed income securities:
Investment grade corporate bonds	14,184		—		14,184		—
Other types of investments:
Multi-asset fund	1,378		—		1,378
Total	$	15,993	$	431	$	15,562	$	—

The method of calculation of the fair value of each level of investment is described in Note 2 - Summary of Significant Accounting Policies.

The fair value of total plan assets by asset category and fair value hierarchy levels as of September 30, 2022 were as follows:


	Fair value as of September 30, 2022		Fair Value Measurements at Reporting Date Using:
			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 method of calculation of the fair value of each level of investment is described in Note 2 - Summary of Significant Accounting Policies.

Pension Funding and Payments

During the fiscal year ended September 30, 2023, the Company contributed $1,226 to the Pension Plan and does not expect to contribute any amounts to the Pension Plan within 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:


	2024		2025		2026		2027		2028		Thereafter		Total
Projected Benefit Payments	$	786	$	661	$	787	$	985	$	827	$	4,142	$	8,188

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 the Netherlands. Defined contribution benefit expense for the twelve months ended September 30, 2023 and 2022 were $4,596 and $3,312, respectively.