12.Employee Benefit Plans

The Company sponsors postretirement benefit plans to provide pension, supplemental retirement funds, and medical expense reimbursement to eligible retired employees, as well as a directors’ retirement plan that provides for certain retirement benefits payable to non-employee directors. Following is a description of these benefit plans.

Defined Contribution Plans

The Company sponsors a 401(k) retirement savings plan covering substantially all Radiation Measurement U.S. full-time employees as well as substantially all of the employees of the Company’s Medical Physics segment and, prior to its divestiture, the Medical Products segment. The Company also maintains a supplemental defined contribution plan for certain executives, which allows participating executives to make voluntary deferrals and provides for employer contributions at the Company’s discretion.

The plans are qualified under applicable sections of the Internal Revenue Code and allow employees to contribute a portion of their pre-tax income in accordance with specified guidelines. The Company matches a percentage of the employee contributions up to certain limits. Amounts expensed for Company contributions under these plans during the fiscal years ended September 30, 2016, 2015 and 2014 were $1,842, $1,784 and $1,723, respectively.

Defined Benefit Plans

Historically the Company provided, to substantially all full-time employees in the U.S., a qualified noncontributory defined benefit pension plan to provide a basic replacement income benefit upon retirement. For key executives, the basic benefit was augmented with a supplemental executive retirement plan to address U.S. tax law limitations placed on the benefits under the qualified pension plan. The supplemental plan is not separately funded and costs of the plan are expensed annually. The qualified noncontributory defined benefit pension plan and the supplemental executive retirement plan were frozen in fiscal 2009 and future benefit accruals under such plans ceased. The Company formerly maintained a directors’ retirement plan that provided certain retirement benefits for non-employee directors. The directors’ plan was terminated in January 1997 and benefits accrued under the retirement plan were frozen.

The Company also maintains an unfunded retiree medical expense reimbursement plan. Under the terms of the plan, which covers retirees with ten or more years of service, the Company reimburses retirees to age 70, or to age 65 in accordance with plan changes effective October 1, 2005, for (i) a portion of the cost of coverage under the then-current medical and dental insurance plans if the retiree is under age 65, or (ii) all or a portion of the cost of Medicare and supplemental coverage if the retiree is over age 64. The assumptions for health-care cost ultimate trend rates were 6% for those younger than 65, and 5% for those 65 and older.

The Company recognizes the over- or underfunded status of its defined benefit pension and postretirement plans on its balance sheet and recognizes changes in the funded status, as the changes occur, through comprehensive income. The Company uses its fiscal year end, September 30, as the measurement date for its plans. The following tables set forth the status of the combined defined benefit pension plans and the postretirement medical plan, as pension benefits and other benefits, respectively, at September 30.



	Pension Benefits				Other Benefits
(Dollars in Thousands)	2016		2015		2016		2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	39,049	$	38,976	$	1,013	$	1,299
Service cost		-		-		60		51
Interest cost		1,570		1,554		38		32
Actuarial (gain) loss		4,119		(251)		160		(347)
Benefits paid		(1,256)		(1,230)		(47)		(22)
Benefit obligation at end of year		43,482		39,049		1,224		1,013
Change in plan assets:
Fair value of plan assets at beginning of year		23,399		24,785		-		-
Actual return on plan assets		1,768		(561)		-		-
Employer contributions		408		405		47		22
Benefits paid		(1,256)		(1,230)		(47)		(22)
Fair value of plan assets at end of year		24,319		23,399		-		-
Funded status at end of year	$	(19,163)	$	(15,650)	$	(1,224)	$	(1,013)



	Pension Benefits				Other Benefits
(Dollars in Thousands)	2016		2015		2016		2015
Amounts recognized in consolidated balance sheets:
Current liabilities – accrued pension and postretirement costs	$	(410)	$	(398)	$	(83)	$	(68)
Noncurrent liabilities – pension and postretirement obligations		(18,753)		(15,252)		(1,141)		(945)
Net amount recognized	$	(19,163)	$	(15,650)	$	(1,224)	$	(1,013)

Amounts recognized in accumulated other comprehensive income (loss):
Net loss (gain)	$	16,833	$	13,550	$	(155)	$	(330)
Net amount recognized in accumulated other comprehensive income (loss)	$	16,833	$	13,550	$	(155)	$	(330)

As of September 30, 2016 and 2015, the accumulated benefit obligation for all defined benefit pension plans was $43,482 and $39,049 respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets as of September 30 is set forth in the following table:



(Dollars in Thousands)	2016		2015
Projected benefit obligation	$	43,482	$	39,049
Accumulated benefit obligation		43,482		39,049
Fair value of plan assets		24,319		23,399

The components of net periodic benefit cost that were amortized from Accumulated Other Comprehensive Income were as follows:



	Pension Benefits
(Dollars in Thousands)	2016		2015		2014
Interest cost	$	1,570	$	1,554	$	1,500
Expected return on plan assets		(1,493)		(1,584)		(1,508)
Amortization of net loss		562		464		194
Net periodic benefit cost	$	639	$	434	$	186

	Other Benefits
(Dollars in Thousands)	2016		2015		2014
Service cost	$	60	$	51	$	62
Interest cost		38		32		51
Amortization of net gain		(15)		(48)		(11)
Net periodic benefit cost	$	83	$	35	$	102

Other changes in plan assets and benefit obligations recognized in other comprehensive income, pre-tax, were as follows:



	Pension Benefits
(Dollars in Thousands)	2016		2015		2014
Net loss	$	3,845	$	1,894	$	5,848
Amortization of net loss		(562)		(464)		(194)
Total recognized in other comprehensive income (loss)		3,283		1,430		5,654
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	3,922	$	1,864	$	5,840

	Other Benefits
(Dollars in Thousands)	2016		2015		2014
Net (gain) loss	$	160	$	(348)	$	150
Amortization of net gain		15		48		11
Total recognized in other comprehensive income (loss)		175		(300)		161
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	258	$	(265)	$	263

The estimated pre-tax amount in accumulated other comprehensive income expected to be recognized in net periodic benefit cost over the next fiscal year for pension benefits is a net loss of $11,335. The estimated pre-tax amount in accumulated other comprehensive income expected to be recognized in net periodic benefit cost over the next fiscal year for other benefits is a net gain of $5,532.

Assumptions

The weighted-average discount rate used to determine benefit obligations at September 30, 2016 was 3.38%, 3.04%, 3.30% and 2.35% for Pension, Key Executive SERP, Manager SERP and Directors plans, respectively, which all fall under “Pension Benefits” in this footnote. The weighted-average discount rate used to determine benefit obligations under “Other Benefits” was 2.76% at September 30, 2016.

The weighted-average assumptions used to determine net periodic benefit cost for years ended September 30 were as follows:



	Pension Benefits			Other Benefits
	2016	2015	2014	2016	2015	2014
Discount rate	4.15%	4.14%	4.72%	3.43%	3.40%	4.72%
Expected long-term return on plan assets	6.50%	6.50%	6.50%	na	na	na
Rate of compensation increase	na	na	na	na	na	na

The expected long-term rate of return of plan assets is based on historical and projected rates of return for current and planned asset classes in the plan’s investment portfolio. Based on the target asset allocation for each asset class, the overall expected rate of return for the portfolio was developed and adjusted for historical and expected experience of the active portfolio management results compared to the benchmark returns and for the effect of expenses paid from plan assets. The Company reviews this long-term assumption on an annual basis.

Assumed health care cost trend rates at September 30 were as follows:



	2016	2015
Health care cost trend rate assumed for next year	10%	10%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	6%	6%
Year that the rate reaches the ultimate trend rate	2020	2019

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects as of September 30, 2016.



(Dollars in Thousands)	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on aggregate of service and interest cost	$	8	$	8
Effect on postretirement benefit obligation	$	103	$	91

Contributions

The Company, under IRS minimum funding standards, has no required contributions to make to its defined benefit pension plan during fiscal 2017.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:



(Dollars in Thousands)		Pension Benefits		Other Benefits
2017	$	1,391	$	84
2018		1,588		124
2019		1,785		113
2020		1,794		104
2021		1,955		89
Years 2022-2026		11,005		649

Plan Assets

The Company’s pension plan weighted-average asset allocations by asset category at September 30 were as follows:



	Plan Assets at September 30,
Asset Category:	2016	2015
Fixed income	44%	46%
Equity securities	55%	53%
Cash equivalents	1%	1%
Total	100%	100%

Plan assets for the qualified defined benefit pension plan include marketable equity securities, corporate and government debt securities, and cash and short-term investments. The plan assets are not directly invested in the Company’s common stock. The supplemental executive retirement plans and the directors’ retirement plan are not separately funded.

The plan’s investment strategy supports the objectives of the plan. These objectives are to maximize returns in order to meet long-term cash requirements within reasonable and prudent levels of risk. To achieve these objectives, the Company has established a strategic asset allocation policy which is to maintain approximately one half of plan assets in high quality fixed income securities such as investment grade bonds and short-term government securities, with the other half containing large capitalization equity securities. The plan’s objective is to periodically rebalance its assets to approximate weighted-average target asset allocations. Investments are diversified across classes and within each class to minimize the risk of large losses.

Additional information regarding fair value inputs and hierarchy is contained in Note 2. Plan assets measured at fair value on a recurring basis are summarized below:



	Fair Value Measurements at September 30, 2016
(Dollars in Thousands)		(Level 1)		(Level 2)		(Level 3)
Asset Category:
Money market accounts	$	-	$	158	$	-
Debt securities:
Domestic		10,276		-		-
International		489		-		-
Equity securities:
Domestic		11,078		-		-
International		2,318		-		-
Total assets at fair value	$	24,161	$	158	$	-



	Fair Value Measurements at September 30, 2015
(Dollars in Thousands)		(Level 1)		(Level 2)		(Level 3)
Asset Category:
Money market accounts	$	129	$	-	$	-
Debt securities:
Corporate bonds		9,095		-		-
Government bonds		1,679		-		-
Equity securities:
Domestic		10,245		-		-
International		2,251		-		-
Total assets at fair value	$	23,399	$	-	$	-