Postretirement Benefits

12 Months Ended

Sep. 30, 2011

Postretirement Benefits

11.   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.

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 capital that comprises the sum of all savings credits, plus the credited interest, plus the vested benefits brought in. 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, 2011 and 2010 for the Plan (in thousands):

	Year Ended September 30,
	2011			2010
Benefit obligation at beginning of year	$	15,914		$	14,390
Acquisition date benefit obligations from entities acquired during the fiscal year		10,354			—
Service cost		216			100
Interest cost		796			775
Actuarial loss		2,138			1,380
Benefits paid		(356	)		(731	)
Foreign currency translation		(994	)		—
Benefit obligation at end of year	$	28,068		$	15,914

	Year Ended
	September 30,
	2011			2010
Fair value of assets at beginning of year	$	9,990		$	5,860
Acquisition date fair value of assets for entities acquired during the fiscal year		9,226			—
Actual return (loss) on plan assets		1,322			657
Disbursements		(356	)		(731	)
Employer contributions		778			4,204
Employee contributions		76			—
Foreign currency translation		(863	)		—
Fair value of assets at end of year	$	20,173		$	9,990

	September 30,
	2011			2010
Funded status/accrued benefit liability	$	(7,895	)	$	(5,924	)

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

	September 30,
	2011		2010
Accrued compensation and benefits	$	734	$	458
Long-term pension liability		7,161		5,466

In addition, accumulated other comprehensive income at September 30, 2011 and 2010 includes unrecognized net actuarial losses of $8.9 million and $8.4 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, 2012 is $0.6 million.

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

	Year Ended September 30,
	2011			2010			2009
Service cost	$	216		$	100		$	100
Interest cost		796			775			702
Expected return on assets		(764	)		(604	)		(709	)
Amortization of losses		458			327			89
Settlement loss		—			—			888
Net periodic pension cost	$	706		$	598		$	1,070

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

	September 30,
	2011			2010
Net loss	$	1,502		$	1,328
Amortization of net loss		(458	)		(327	)
Total recognized in other comprehensive income		1,044			1,001
Total recognized in net periodic benefit cost and other comprehensive income	$	1,750		$	1,599

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

	September 30,
	2011		2010
Projected benefit obligation	$	28,068	$	15,914
Accumulated benefit obligation		26,663		15,914
Fair value of plan assets		20,173		9,990

Weighted-average assumptions used to determine net cost at September 30, 2011, 2010 and 2009 follows:

	Year Ended September 30,
	2011			2010			2009
Discount rate		3.99	%		5.50	%		7.12	%
Expected return on plan assets		4.68	%		8.00	%		8.00	%
Rate of compensation increase		1.79	%		N/A			N/A

Weighted-average assumptions used to determine the pension obligation at September 30, 2011, 2010 and 2009 follows:

	Year Ended September 30,
	2011			2010			2009
Discount rate		3.76	%		4.75	%		5.50	%
Rate of compensation increase		1.79	%		N/A			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, 2011, under the plans, the Company had cumulative investment losses of approximately $0.2 million, which remain to be recognized in the calculation of the market-related value of assets. The Company also had cumulative other actuarial losses of $9.2 million at September 30, 2011, 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 future pension obligations for the Helix Plan is based on the Citigroup Pension Index adjusted for the Plan’s expected cash flows and was 4.38% at September 30, 2011, down from 4.75% at September 30, 2010.

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 2.30% at September 30, 2011.

The expected long term rate of return on Plan assets used to determine future pension obligations was 4.68% and 6.50% as of September 30, 2011 and 2010, 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.

Helix Plan Assets

The fair value of the Helix Plan assets was $11.6 million, or 58% of total pension plan assets at September 30, 2011. The assets of this plan are invested primarily in debt and equity securities. The investments of this plan are managed by a third party investment manager. The performance of the investment manager is reviewed regularly by an Investment Committee that is comprised of members of senior management. Results for the total portfolio and for each major category of assets are evaluated in comparison with appropriate market indices. The investment portfolio does not, at any time, have a direct investment in Company stock. It may have indirect investment in Company stock, if one of the funds selected by the investment manager invests in Company stock. The investment manager periodically recommends asset allocation changes to the Investment Committee. Due to the frozen status of the plan, the investment return objectives for that plan are to match the investment returns with the timing of future pension liability payments, which recently has led to increased investments in debt securities.

The Helix Plan asset allocation at September 30, 2011 and target allocation at September 30, 2012, by asset category is as follows:

	Percentage of			Target
	Plan Assets at			Allocation at
	September 30,			September 30,
	2011			2012
Equity securities		17	%	15% - 30%
Debt securities		67		50% - 70%
Other		4		0% - 10%
Cash		12		0% - 20%
		100	%

Plan Assets of Non-U.S. Plans

The fair value of plan assets for the Nexus Plan and Taiwan Plan were $8.1 million and $0.5 million, respectively, at September 30, 2011. 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, 2011 was as follows:

	Percentage of
	Plan Assets at
	September 30,
	2011
Equity securities		5	%
Debt securities		79
Other		15
Cash		1
		100	%

The fair value of pension assets by asset category and by level at September 30, 2011 were as follows (in thousands):

	As of September 30, 2011
	Level 1		Level 2		Level 3		Total
Fixed income securities:
Short duration bond mutual funds	$	468		—		—	$	468
Intermediate duration bond mutual funds		1,761		—		—		1,761
Long-term duration bond mutual funds		5,414		—		—		5,414
Other investments:
Global allocation mutual funds		2,929		—		—		2,929
Swiss Life collective foundation		—		8,046		—		8,046
Taiwan collective trust		—		483		—		483
Cash and cash equivalents		1,072		—		—		1,072
Total	$	11,644	$	8,529	$	—	$	20,173

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

During the fourth quarter of fiscal year 2011, the Company made a voluntary contribution of $0.2 million to the Helix Plan, which was in addition to the $0.6 million of required minimum contributions made to this plan throughout fiscal year 2011. The Company made required minimum contributions throughout fiscal year 2011 to all of its plans of $0.6 million. The Company expects to contribute $0.7 million to its plans in fiscal 2012 to meet minimum funding targets.

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

2012	$	1,193
2013		403
2014		797
2015		815
2016		877
2017-2021		6,481

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 $2.9 million, $2.6 million and $2.7 million for the years ended September 30, 2011, 2010 and 2009, respectively.

The Company has a Supplemental Key Executive Retirement Plan (acquired with Helix) which is designed to supplement benefits paid to participants under Company-funded, tax-qualified retirement plans. The Company did not record additional retirement costs for the years ended September 30, 2011, 2010 and 2009, in connection with this plan. At September 30, 2011 and 2010, the Company had $0.1 million accrued for benefits payable under the Supplemental Key Executive Retirement Plan.