Retirement Benefit Plans

Defined Benefit Plans

The Company and certain of its subsidiaries sponsor defined benefit pension plans covering most of its employees. The Company’s funding policy for its defined benefit pension plans is based on an actuarially determined cost method allowable under Internal Revenue Service regulations. One of the defined benefit pension plans covers substantially all non-union employees of the Company’s U.S. operations who were hired prior to March 1, 2003, and this plan was frozen in 2003. Another plan covered the Repair Group's union employees and no longer has active participants due to the business being discontinued at September 30, 2013. Consequently, although both plans continue, the non-union plan ceased the accrual of additional pension benefits for service subsequent to March 1, 2003, and due to the discontinued operations of the Repair Group, the related union plan will have no participants accrue any additional benefits subsequent to December 31, 2013.

The Company uses a September 30 measurement date for its U.S. defined benefit pension plans. Net pension expense, benefit obligations and plan assets for the Company-sponsored defined benefit pension plans consists of the following:



	Years Ended September 30,
	2014			2013			2012
Service cost	$	126		$	288		$	266
Interest cost	987			851			988
Expected return on plan assets	(1,573		)	(1,485		)	(1,413		)
Amortization of prior service cost	—			8			47
Amortization of net loss	450			917			861
Settlement cost	—			299			513
Curtailment cost	—			252			—
Net pension (benefit) expense for defined benefit plan	$	(10	)	$	1,130		$	1,262

As more fully discussed in Note 13, the Company exited the Repair Group in fiscal 2013. During fiscal 2013, the Repair Group incurred $252 of curtailment cost due to the discontinuation of the Repair Group.

The status of all defined benefit pension plans at September 30 is as follows:



	2014			2013
Benefit obligations:
Benefit obligations at beginning of year	$	23,596		$	26,306
Service cost	126			288
Interest cost	987			851
Actuarial loss (gain)	2,737			(2,624		)
Benefits paid	(1,306		)	(1,454		)
Curtailment expense	—			$	229
Benefit obligations at end of year	$	26,140		$	23,596
Plan assets:
Plan assets at beginning of year	$	20,435		$	18,949
Actual return on plan assets	2,465			2,154
Employer contributions	516			786
Benefits paid	(1,306		)	(1,454		)
Plan assets at end of year	$	22,110		$	20,435



	Plans in which Assets Exceed Benefit Obligations at September 30,				Plans in which Benefit Obligations Exceed Assets at September 30,
	2014		2013		2014			2013
Reconciliation of funded status:
Plan assets in excess of (less than) projected benefit obligations	$	347	$	1,086	$	(4,377	)	$	(4,246	)
Amounts recognized in accumulated other comprehensive loss:
Net loss	1,090		297		6,576			5,972
Prior service cost	—		—		—			—
Net amount recognized in the consolidated balance sheets	$	1,437	$	1,383	$	2,199		$	1,726
Amounts recognized in the consolidated balance sheets are:
Other assets	$	347	$	1,086	$	—		$	—
Accrued liabilities	—		—		(46		)	(46		)
Pension liability	—		—		(4,331		)	(4,200		)
Accumulated other comprehensive loss – pretax	1,090		297		6,576			5,972
Net amount recognized in the consolidated balance sheets	$	1,437	$	1,383	$	2,199		$	1,726

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit costs during fiscal 2015 are as follows:



	Plans in which Assets Exceed Benefit Obligations		Plans in which Benefit Obligations Exceed Assets
Net loss	$	495	$	595

Where applicable, the following weighted-average assumptions were used in developing the benefit obligation and the net pension expense for defined benefit pension plans:



	Years Ended September 30,
	2014		2013
Discount rate for liabilities	3.9	%	4.4	%
Discount rate for expenses	4.4	%	3.4	%
Expected return on assets	8.1	%	8.1	%

The Company classifies and discloses pension plan assets in one of the following three categories: (i) Level 1 - quoted market prices in active markets for identical assets; (ii) Level 2 - observable market based inputs or unobservable inputs that are corroborated by market data; or (iii) Level 3 - unobservable inputs that are not corroborated by market data. Level 1 and Level 2 assets are valued using market based inputs. Level 3 asset values are determined by the trustees using a discounted cash flow model.

The following tables set forth the asset allocation of the Company’s defined benefit pension plan assets and summarize the fair values and levels within the fair value hierarchy for such plan assets as of September 30, 2014 and 2013:



September 30, 2014	Asset Amount		Level 1		Level 2		Level 3
U.S. equity securities:
Large value	$	629	$	—	$	629	$	—
Large blend	10,626		—		10,626		—
Large growth	631		—		631		—
Mid blend	64		—		64		—
Small blend	55		—		55		—
Non-U.S equity securities:
Foreign large blend	1,679		—		1,679		—
Diversified emerging markets	83		—		83		—
U.S. debt securities:
Inflation protected bond	562		—		562		—
Intermediate term bond	7,001		—		4,899		2,102
High inflation bond	233		—		233		—
Non-U.S. debt securities:
Emerging markets bonds	226		—		226		—
Stable value:
Short-term bonds	321		—		321		—
Total plan assets at fair value	$	22,110	$	—	$	20,008	$	2,102



September 30, 2013	Asset Amount		Level 1		Level 2		Level 3
U.S. equity securities:
Large value	$	518	$	—	$	518	$	—
Large blend	9,632		—		9,632		—
Large growth	496		—		496		—
Mid blend	233		—		233		—
Small blend	245		—		245		—
Non-U.S equity securities:
Foreign large blend	1,617		—		1,617		—
Diversified emerging markets	31		—		31		—
U.S. debt securities:
Inflation protected bond	521		—		521		—
Intermediate term bond	6,231		—		4,232		1,999
High inflation bond	310		—		310		—
Non-U.S. debt securities:
Emerging markets bonds	102		—		102		—
Stable value:
Short-term bonds	499				499		—
Total plan assets at fair value	$	20,435	$	—	$	18,436	$	1,999

Changes in the fair value of the Company’s Level 3 investments during the years ending September 30, 2014 and 2013 were as follows:



	2014		2013
Balance at beginning of year	$	1,999	$	2,093
Actual return on plan assets	96		2
Purchases and sales of plan assets, net	7		(96		)
Balance at end of year	$	2,102	$	1,999

Investment objectives relative to the assets of the Company’s defined benefit pension plans are to (i) optimize the long-term return on the plans’ assets while assuming an acceptable level of investment risk; (ii) maintain an appropriate diversification across asset categories and among investment managers; and (iii) maintain a careful monitoring of the risk level within each asset category. Asset allocation objectives are established to promote optimal expected returns and volatility characteristics given the long-term time horizon for fulfilling the obligations of the Company’s defined benefit pension plans. Selection of the appropriate asset allocation for the plans’ assets was based upon a review of the expected return and risk characteristics of each asset category in relation to the anticipated timing of future plan benefit payment obligations. The Company has a long-term objective for the allocation of plan assets. However, the Company realizes that actual allocations at any point in time will likely vary from this objective due principally to (i) the impact of market conditions on plan asset values and (ii) required cash contributions to and distribution from the plans. The “Asset Allocation Range” listed below anticipates these potential scenarios and provides flexibility for the Plan’s investments to vary around the objective without triggering a reallocation of the assets, as noted by the following:



	Percent of Plan Assets at September 30,				Asset Allocation Range
	2014		2013		Asset Allocation Range
U.S. equities	54	%	54	%	30% to 70%
Non-U.S. equities	8	%	8	%	0% to 20%
U.S. debt securities	35	%	35	%	20% to 70%
Non-U.S. debt securities	1	%	1	%	0% to 10%
Other securities	2	%	2	%	0% to 60%
Total	100	%	100	%

External consultants assist the Company with monitoring the appropriateness of the above investment strategy and the related asset mix and performance. To develop the expected long-term rate of return assumptions on plan assets, generally the Company uses long-term historical information for the target asset mix selected. Adjustments are made to the expected long-term rate of return assumptions when deemed necessary based upon revised expectations of future investment performance of the overall investments markets.

The Company does not anticipate making any contributions to its defined benefit pension plans during fiscal 2015. The Company has carryover balances from previous periods that may be available for use as a credit to reduce the amount of contributions that the Company is required to make to certain of its defined benefit pension plans in fiscal 2015. The Company’s ability to elect to use such carryover balances will be determined based on the actual funded status of each defined benefit pension plan relative to the plan’s minimum regulatory funding requirements. The following defined benefit payment amounts are expected to be made in the future:



Years Ending September 30,	Projected Benefit Payments
2015	$	1,457
2016	1,359
2017	1,802
2018	1,930
2019	1,635
2020-2024	8,652

Multi-Employer Plans

The Company contributes to one (1) U.S. multi-employer retirement plan for certain union employees, as follow:



Pension Fund	Pension Protection Act Zone Status		FIP/RP Status Pending/ Implemented	Contributions by the Company						Surcharge Imposed	Expiration of Collective Bargaining Agreement
Pension Fund	2014	2013	FIP/RP Status Pending/ Implemented	2014		2013		2012		Surcharge Imposed	Expiration of Collective Bargaining Agreement
Fund ¹	Green	Green	No	$	54	$	50	$	52	No	5/31/2015

¹ The fund is the IAM National Pension Fund – EIN 51-6031295 / Plan number 2. The IAM National Pension Fund utilized the special 30-year amortization provided by Public law 111-192, section 211 to amortize its losses from 2008.

The plan's year-end to which the zone status relates is December 31, 2013 and 2012.

At December 31, 2013, the Company exited the Boilermaker-Blacksmith National Pension Trust. The Company incurred a withdrawal liability in the amount of $54. Prior to exiting the multi-employer retirement plan, the Company incurred expense of $52, $213 and $205 in fiscal 2014, 2013 and 2012, respectively.

The risks of participating in the multi-employer retirement plan are different from a single-employer plan in that (i) assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if the Company chooses to stop participating in the multi-employer retirement plan, the Company may be required to pay the plan an amount based on the unfunded status of the plan, referred to as a withdrawal liability.

Defined Contribution Plans

Substantially all non-union U.S. employees of the Company and its U.S. subsidiaries are eligible to participate in the Company’s U.S. defined contribution plan. The Company makes non-discretionary, regular matching contributions to this plan equal to an amount that represents one hundred percent (100%) of a participant’s deferral contribution up to one percent (1%) of eligible compensation plus eighty percent (80%) of a participant’s deferral contribution between one percent (1%) and six percent (6%)of eligible compensation. The Company’s regular matching contribution expense for its U.S. defined contribution plan in fiscal 2014, 2013 and 2012 was $696, $504 and $429, respectively. This defined contribution plan provides that the Company may also make an additional discretionary matching contribution during those periods in which the Company achieves certain performance levels. The Company’s additional discretionary matching contribution expense in fiscal 2014, 2013 and 2012 was $294, $253 and $54, respectively.