Postretirement Benefits

12 Months Ended

Sep. 30, 2012

Postretirement Benefits

13.    Postretirement Benefits

Defined Benefit Pension Plans

On October 26, 2005, the Company purchased Helix Technology Corporation and assumed responsibility for the liabilities and assets of the Helix Employees’ Pension Plan (the “Helix Plan”). The Plan is a final average pay pension plan. In May 2006, the Company’s Board of Directors approved the freezing of benefit accruals and future participation in the Plan effective October 31, 2006. During the quarter ended March 31, 2012, the Company advised participants of the Helix Plan that it intended to settle this pension obligation during fiscal year 2012. This settlement occurred in the quarter ended September 30, 2012 and resulted in accelerated cash payments of approximately $6.4 million by the Company to fully satisfy the pension liability, and resulted in an accelerated amortization of approximately $8.9 million of prior pension losses which is included as a pension settlement charge in the Consolidated Statements of Operations.

The Company acquired Nexus on July 25, 2011, and in connection with this acquisition, assumed responsibility for the liabilities of the Nexus Biosystems AG Pension Plan (the “Nexus Plan”). The Nexus Plan covers substantially all employees of the Company’s Swiss subsidiary. Admittance for risk benefits (disability and death) is as of January 1 for employees who are 17 or older. Admittance into the pension plan with retirement pension occurs as of January 1 for employees who are age 24 or older. Pension benefits are based on the accumulated savings credits plus interest. The amount of the savings credit is based on the employee’s age.

The Company also has a pension plan covering certain employees of its Taiwan subsidiary that were employed by this entity on or before July 1, 2005 (the “Taiwan Plan”). After July 1, 2005, most participants of this plan decided to join a defined contribution plan and as a result, their service earned under the Taiwan Plan was frozen.

The Company uses a September 30th measurement date in the determination of net periodic benefit costs, benefit obligations and the value of plan assets for all plans. The following tables set forth the funded status and amounts recognized in the Company’s consolidated balance sheets at September 30, 2012 and 2011 for the Helix Plan, the Nexus Plan and the Taiwan Plan (the “Plans”) (in thousands):

	September 30,
	2012			2011
Benefit obligation at beginning of year	$	28,068		$	15,914
Acquisition date benefit obligations from entities acquired during the fiscal year		—			10,354
Service cost		787			216
Interest cost		984			796
Actuarial loss		1,235			2,138
Benefits paid		(2,203	)		(356	)
Settlement loss		1,040			—
Settlements paid		(18,928	)		—
Foreign currency translation		(802	)		(994	)
Benefit obligation at end of year	$	10,181		$	28,068

	September 30,
	2012			2011
Fair value of assets at beginning of year	$	20,173		$	9,990
Acquisition date fair value of assets for entities acquired during the fiscal year		—			9,226
Actual return on plan assets		1,446			1,322
Disbursements		(2,463	)		(356	)
Employer contributions		7,684			778
Employee contributions		334			76
Settlements paid		(18,928	)		—
Foreign currency translation		(231	)		(863	)
Fair value of assets at end of year	$	8,015		$	20,173

	September 30,
	2012			2011
Funded status/accrued benefit liability	$	(2,166	)	$	(7,895	)

The following table provides pension amounts recorded within the account line items of the Company’s consolidated balance sheets (in thousands):

	September 30,
	2012		2011
Accrued compensation and benefits	$	478	$	734
Long-term pension liability		1,688		7,161

In addition, accumulated other comprehensive income at September 30, 2012 and 2011 includes unrecognized net actuarial losses of $1.1 million and $8.9 million, respectively. The estimated portion of net actuarial loss remaining in accumulated other comprehensive income that is expected to be recognized as a component of net periodic pension cost for the year ended September 30, 2013 is $6,000.

Net periodic pension cost consisted of the following (in thousands):

	Year Ended September 30,
	2012			2011			2010
Service cost	$	787		$	216		$	100
Interest cost		984			796			775
Expected return on assets		(1,072	)		(764	)		(604	)
Amortization of losses		620			458			327
Net periodic pension cost		1,319			706			598
Settlement loss		8,937			—			—
Total pension cost	$	10,256		$	706		$	598

Other changes in Plan assets and benefit obligations recognized in other comprehensive loss (in thousands):

	September 30,
	2012			2011
Net loss	$	1,226		$	1,502
Amortization of net loss		(620	)		(458	)
Settlement loss		(8,937	)		—
Total recognized in other comprehensive income		(8,331	)		1,044
Total recognized in net periodic benefit cost and other comprehensive income	$	(7,012	)	$	1,750

Certain information for the Plans with respect to accumulated benefit obligations follows (in thousands):

	September 30,
	2012		2011
Projected benefit obligation	$	10,181	$	28,068
Accumulated benefit obligation		8,906		26,663
Fair value of plan assets		8,015		20,173

Weighted-average assumptions used to determine net cost at September 30, 2012, 2011 and 2010 follows:

	Year Ended September 30,
	2012			2011			2010
Discount rate		3.51	%		3.99	%		5.50	%
Expected return on plan assets		2.18	%		4.68	%		8.00	%
Rate of compensation increase		1.84	%		1.79	%		N/A

Weighted-average assumptions used to determine the pension obligation at September 30, 2012, 2011 and 2010 follows:

	Year Ended September 30,
	2012			2011			2010
Discount rate		1.89	%		3.76	%		4.75	%
Rate of compensation increase		1.84	%		1.79	%		N/A

Compensation increase assumptions for the periodic pension cost and pension obligation apply to the Nexus Plan and Taiwan Plan only.

The Company bases its determination of pension expense or benefit on a market-related valuation of assets, which reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return on assets. Since the market-related value of assets recognizes gains or losses over a five-year period, the future value of assets will be impacted as previously deferred gains or losses are recognized. As of September 30, 2012, under the Plans, the Company had cumulative investment losses of approximately $44,000, which remain to be recognized in the calculation of the market-related value of assets. The Company also had cumulative other actuarial losses of $1,026,000 at September 30, 2012, which are amortized into net periodic benefit costs over the average remaining service period of active participants in the plans.

The discount rate utilized for determining the future pension obligations for the Nexus Plan is based on corporate bonds yields for bonds denominated in Swiss francs. This discount rate was 1.90% at September 30, 2012, down from 2.30% at September 30, 2011.

The expected long term rate of return on Plan assets used to determine future pension obligations was 2.18% and 4.68% as of September 30, 2012 and 2011, respectively. In developing the expected return on plan assets assumption, the Company evaluated fixed income yield curve data and equity return assumption studies, and applied this data to the expected asset allocation to develop an appropriate projected return on Plan assets.

Plan Assets

The fair value of plan assets for the Nexus Plan and Taiwan Plan were $7.5 million and $0.5 million, respectively, at September 30, 2012. As is customary with Swiss pension plans, the assets of the Nexus Plan are invested in a collective fund with multiple employers through a Swiss insurance company. Investment holdings are primarily in highly rated debt securities. The assets of the Taiwan Plan are invested with a trustee that has been selected by the Taiwan government. The Company has no investment authority over the assets of either the Nexus Plan or the Taiwan Plan. The asset allocation of the plan assets of the non-U.S. plans at September 30, 2012 was as follows:

	Percentage of Plan Assets at September 30, 2012
Equity securities		4	%
Debt securities		76
Other		19
Cash		1
		100	%

The fair value of pension assets by asset category and by level at September 30, 2012 were as follows (in thousands):

	As of September 30, 2012
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—		7,513		—	$	7,513
Taiwan collective trust		—		502		—		502
Total	$	—	$	8,015	$	—	$	8,015

See Note 5 for a description of the levels of inputs used to determine fair value measurements.

During the fourth quarter of fiscal year 2012, the Company made contributions of $6.4 million to the Helix Plan in connection with the settlement, which was in addition to the $0.7 million of required minimum contributions made to this plan throughout fiscal year 2012. The Company made required minimum contributions throughout fiscal year 2012 to all of its plans of $1.2 million. The Company expects to contribute $0.5 million to its plans in fiscal 2013 to meet minimum funding targets.

Expected benefit payments over the next ten years are anticipated to be paid as follows (in thousands):

2013	$	1,590
2014		53
2015		55
2016		56
2017		57
2018-2022		457

The Company sponsors defined contribution plans that meet the requirements of Section 401(k) of the Internal Revenue Code. All United States employees of the Company who meet minimum age and service requirements are eligible to participate in the plan. The plan allows employees to invest, on a pre-tax basis, a percentage of their annual salary subject to statutory limitations.

The Company’s contribution expense for worldwide defined contribution plans was $3.1 million, $2.9 million and $2.6 million for the years ended September 30, 2012, 2011 and 2010, respectively.