Pension and Other Postretirement Benefits
 12 Months Ended
Sep. 30, 2012
Pension and Other Postretirement Benefit Expense [Abstract]  
Pension and other postretirement benefits
Pension and Other Postretirement Benefits
Certain of the Company's employees are eligible to participate in the Company's qualified and supplemental noncontributory defined benefit pension plans and other postretirement benefit plans (partially subsidized retiree health and life insurance) or separate plans for Post Foods Canada Inc. The following disclosures reflect amounts related to the Company's employees based on separate actuarial valuations, projections and (for the U.S. plans for periods prior to the Spin-Off) certain allocations. In separating amounts in the U.S. plans between Post and Ralcorp, liabilities were calculated directly based on the participants of each group, and plan assets were allocated in accordance with the requirements of Internal Revenue Code Section 414(l) and ERISA Section 4044. The separation of the Post pension and other postretirement benefit plans from Ralcorp's pension and other postretirement benefit plans resulted in a one-time separation adjustment of $11.5 ($7.2, net of tax) recognized in Accumulated Other Comprehensive Income as a component of Stockholders' Equity. Amounts for the Canadian plans are included in these disclosures and are not disclosed separately because they do not constitute a significant portion of the combined amounts.
Effective January 1, 2011, benefit accruals for defined benefit pension plans were frozen for all administrative employees and certain production employees.
The following table provides a reconciliation of the changes in the plans' benefit obligations and fair value of assets over the two year period ended September 30, 2012, and a statement of the funded status and amounts recognized in the combined balance sheets as of September 30 of both years.
 
Pension Benefits
 
Other Benefits
 
Year Ended
September 30,
 
Year Ended
September 30,
 
2012
 
2011
 
2012
 
2011
Change in benefit obligation
 
 
 
 
 
 
 
Benefit obligation at beginning of period
$
27.0

 
$
29.8

 
$
89.8

 
$
67.7

Service cost
3.7

 
3.6

 
2.3

 
2.6

Interest cost
1.5

 
1.3

 
4.1

 
3.7

Plan participants' contributions
0.8

 
0.9

 
—

 
—

Actuarial loss (gain)
7.4

 
(1.2
)
 
5.1

 
16.3

Separation related adjustments
0.1

 
—

 
—

 
—

Benefits paid
(1.0
)
 
(0.3
)
 
(0.4
)
 
(0.3
)
Curtailments
—

 
(7.0
)
 
—

 
—

Amendments
—

 
—

 
—

 
—

Currency translation
0.4

 
(0.1
)
 
0.4

 
(0.2
)
Benefit obligation at end of period
$
39.9

 
$
27.0

 
$
101.3

 
$
89.8

 
 
 
 
 
 
 
 
Change in fair value of plan assets
 
 
 
 
 
 
 
Fair value of plan assets at beginning of period
$
12.5

 
$
8.2

 
$
—

 
$
—

Actual return on plan assets
2.6

 
1.3

 
—

 
—

Employer contributions
6.3

 
2.5

 
0.4

 
0.3

Separation related adjustments
1.8

 
—

 
—

 
—

Plan participants' contributions
0.8

 
0.9

 
—

 
—

Benefits paid
(1.0
)
 
(0.3
)
 
(0.4
)
 
(0.3
)
Currency translation
0.2

 
(0.1
)
 
—

 
—

Fair value of plan assets at end of period
23.2

 
12.5

 
—

 
—

Funded status
$
(16.7
)
 
$
(14.5
)
 
$
(101.3
)
 
$
(89.8
)
 
 
 
 
 
 
 
 
Amounts recognized in assets or liabilities
 
 
 
 
 
 
 
Other current liabilities
$
—

 
$
—

 
$
(1.5
)
 
$
(0.7
)
Other liabilities
(16.7
)
 
(14.5
)
 
(99.8
)
 
(89.1
)
Net amount recognized
$
(16.7
)
 
$
(14.5
)
 
$
(101.3
)
 
$
(89.8
)
 
 
 
 
 
 
 
 
Amounts recognized in accumulated other comprehensive income or loss
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
11.8

 
$
(4.9
)
 
$
29.6

 
$
13.7

Prior service cost (credit)
1.7

 
2.1

 
(2.9
)
 
(4.0
)
Total
$
13.5

 
$
(2.8
)
 
$
26.7

 
$
9.7

 
 
 
 
 
 
 
 
Weighted-average assumptions used to determine benefit obligation
 
 
 
 
 
 
 
Discount rate — U.S. plans
4.13
%
 
5.05
%
 
3.96
%
 
5.13
%
Discount rate — Canadian plans
4.25
%
 
5.15
%
 
4.39
%
 
5.26
%
Rate of compensation increase
3.00
%
 
3.00
%
 
3.00
%
 
3.00
%

The accumulated benefit obligation exceeded the fair value of plan assets for each pension plan, and the aggregate accumulated benefit obligation for pension plans was $37.0 at September 30, 2012 and $23.9 at September 30, 2011.
The following tables provide the components of net periodic benefit cost for the plans and amounts recognized in other comprehensive income.
 
Pension Benefits
 
Year Ended September 30,
 
2012
 
2011
 
2010
Components of net periodic benefit cost
 
 
 
 
 
Service cost
$
3.7

 
$
3.6

 
$
4.3

Interest cost
1.5

 
1.3

 
1.2

Expected return on plan assets
(1.5
)
 
(1.6
)
 
(1.3
)
Recognized net actuarial loss
0.5

 
0.4

 
0.3

Recognized prior service cost
0.4

 
0.4

 
0.3

Net periodic benefit cost
$
4.6

 
$
4.1

 
$
4.8

 
 
 
 
 
 
Weighted-average assumptions used to determine net benefit cost
 
 
 
 
 
Discount rate — U.S. plans (Pre-Spin)
5.05
%
 
5.40
%
 
6.00
%
Discount rate — U.S. plans (Post-Spin)
4.82
%
 
—
%
 
—
%
Discount rate — Canadian plans
5.15
%
 
5.40
%
 
6.10
%
Rate of compensation increase
3.00
%
 
3.25
%
 
3.25
%
Expected return on plan assets — U.S. plans
8.50
%
 
8.75
%
 
8.75
%
Expected return on plan assets — Canadian plans
6.25
%
 
6.25
%
 
6.25
%
 
 
 
 
 
 
Changes in plan assets and benefit obligation recognized in other comprehensive income or loss
 
 
 
 
 
Net loss (gain)
$
6.3

 
$
(7.9
)
 
$
3.3

Recognized loss
(0.6
)
 
(0.4
)
 
(0.3
)
Prior service cost
—

 
—

 
0.2

Recognized prior service cost
(0.4
)
 
(0.4
)
 
(0.3
)
Loss adjustment due to Spin-Off
10.8

 
—

 
—

Currency translation
0.1

 
—

 
—

Total recognized in other comprehensive income or loss (before tax effects)
$
16.2

 
$
(8.7
)
 
$
2.9

 
Other Benefits
 
Year Ended September 30,
 
2012
 
2011
 
2010
Components of net periodic benefit cost
 
 
 
 
 
Service cost
$
2.3

 
$
2.6

 
$
2.8

Interest cost
4.1

 
3.7

 
3.5

Recognized net actuarial loss
0.6

 
0.1

 
—

Recognized prior service credit
(1.2
)
 
(1.2
)
 
(1.3
)
Net periodic benefit cost
$
5.8

 
$
5.2

 
$
5.0

 
 
 
 
 
 
Weighted-average assumptions used to determine net benefit cost
 
 
 
 
 
Discount rate — U.S. plans (Pre-Spin)
5.13
%
 
5.13
%
 
6.00
%
Discount rate — U.S. plans (Post-Spin)
4.86
%
 
—
%
 
—
%
Discount rate — Canadian plans
5.26
%
 
5.26
%
 
6.10
%
Rate of compensation increase
3.00
%
 
3.25
%
 
3.25
%
 
 
 
 
 
 
Changes in plan assets and benefit obligation recognized in other comprehensive income or loss
 
 
 
 
 
Net loss
$
5.1

 
$
16.3

 
$
2.8

Recognized loss
(0.6
)
 
(0.1
)
 
—

Prior service cost
—

 
—

 
0.6

Recognized prior service credit
1.2

 
1.1

 
1.3

Loss adjustment due to Spin-Off
11.2

 
—

 
—

Currency translation
0.1

 
—

 
—

Total recognized in other comprehensive income or loss (before tax effects)
$
17.0

 
$
17.3

 
$
4.7


For pension benefits, the estimated net actuarial loss and prior service cost (credit) expected to be reclassified from accumulated other comprehensive income into net periodic benefit cost during 2013 related to pension are $0.9 and $0.4, respectively. The corresponding amounts related to other benefits are $1.7 and $(1.1), respectively.
The expected return on pension plan assets was determined based on historical and expected future returns of the various asset classes, using the target allocation. The broad target allocations are 48% equity securities (comprised of 24.5% U.S. equities and 23.5% foreign equities), 42% debt securities, and 10% real assets. At September 30, 2012, equity securities were 54%, debt securities were 38%, real assets were 6%, and other was 2% of the fair value of total plan assets, approximately 84% of which was invested in passive index funds. At September 30, 2011, equity securities were 51%, debt securities were 40%, and other was 9% of the fair value of total plan assets, approximately 83% of which was invested in passive index funds. The allocation guidelines were established based on management's determination of the appropriate risk posture and long-term objectives.
The following table represents the pension plan's assets measured at fair value on a recurring basis and the basis for that measurement (for more information on the fair value framework in ASC Topic 820, refer to Note 11).
 
September 30, 2012
 
September 30, 2011
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Mutual funds:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
$
12.5

 
$
—

 
$
12.5

 
$
—

 
$
6.4

 
$
—

 
$
6.4

 
$
—

Bonds
3.6

 
3.6

 
—

 
—

 
—

 
—

 
—

 
—

Pooled Assets
1.6

 
—

 
1.6

 
—

 
—

 
—

 
—

 
—

Fixed income
3.5

 
—

 
3.5

 
—

 
5.1

 
—

 
5.1

 
—

Real assets
1.4

 
—

 
1.4

 
—

 
0.7

 
—

 
0.7

 
—

 
22.6

 
3.6

 
19.0

 
—

 
12.2

 
—

 
12.2

 
—

Partnership/joint venture interests
—

 
—

 
—

 
—

 
0.2

 
—

 
—

 
0.2

Cash
0.6

 
0.6

 
—

 
—

 
0.1

 
0.1

 
—

 
—

 
$
23.2

 
$
4.2

 
$
19.0

 
$
—

 
$
12.5

 
$
0.1

 
$
12.2

 
$
0.2


The fair value of mutual funds is based on quoted net asset values of the shares held by the plan at year end.
Partnership/joint venture interests have unobservable inputs and trade infrequently or not at all. Because observable prices are not available, a market approach is used in valuing investments. The inputs used in estimating the value of investments include company operating performance, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issues, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, and other factors which are typically considered by market participants when trading private, middle market companies. Investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the general partner (who serves as the partnership's investment manager) in the absence of market information. Assumptions used by the general partner due to the lack of observable inputs may significantly impact the resulting fair value and therefore the partnership's results of operations. For all securities held, the general partner calculates a hypothetical equity value of the investment. For each investment, the general partner (i) determines the current operating results (either Adjusted EBITDA or Net Revenue), (ii) applies a market valuation multiple, which is based on publicly traded valuation multiples of, and/or valuation multiples from transactions involving, companies with similar attributes (with such multiples discounted as appropriate); then (iii) subtracts the structural debt on the portfolio company's balance sheet (seasonally adjusted when necessary), to derive a current hypothetical value for the equity. The general partner may also consider any other factors it deems relevant in establishing a fair value at which the investment could be realized. Such factors are documented in detail to establish the reasonableness of their intent. For fiscal 2012 and 2011, purchases, sales, and realized and unrealized gains and losses were not significant.
The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
For September 30, 2012 measurement purposes, the assumed annual rate of increase in the future per capita cost of covered health care benefits related to domestic plans for 2013 was 9.5% and 6.8% for participants under the age of 65 and over the age of 65, respectively, declining gradually to an ultimate rate of 5% for 2022 and beyond. For September 30, 2011 measurement purposes, the assumed annual rate of increase in the future per capita cost of covered health care benefits related to domestic plans for 2012 was 10% and 7% for participants under the age of 65 and over the age of 65, respectively, declining gradually to an ultimate rate of 5% for 2022 and beyond. For September 30, 2012 and 2011 measurement purposes, the assumed annual rate of increase in the future per capita cost of covered health care benefits related to Canadian plans for the following fiscal year was 7.5%, declining gradually to an ultimate rate of 5% for 2017 and beyond. A 1% change in assumed health care cost trend rates would result in the following changes in the accumulated postretirement benefit obligation and in the total service and interest cost components for fiscal 2012.
 
Increase
 
Decrease
Effect on postretirement benefit obligation
$
21.1

 
$
(16.6
)
Effect on total service and interest cost
2.1

 
(1.6
)

As of September 30, 2012, expected future benefit payments and related federal subsidy receipts (Medicare Part D) in the next ten fiscal years were as follows:
 
2013
 
2014
 
2015
 
2016
 
2017
 
2018-
2022
Pension benefits
$
0.9

 
$
1.0

 
$
1.1

 
$
1.1

 
$
1.1

 
$
9.1

Other benefits
1.5

 
1.8

 
2.1

 
2.5

 
3.1

 
21.8

Subsidy receipts
—

 
—

 
—

 
—

 
0.1

 
0.5


In addition to the contributions made as benefit payments in unfunded plans and participant contributions, the Company expects to make $5.7 of contributions to its defined benefit pension plans during fiscal 2013.
In addition to the defined benefit plans described above, the Company sponsors a defined contribution 401(k) plan under which it makes matching contributions. The Company expensed $1.8, $1.7, and $1.5 for the fiscal years ended September 30, 2012, 2011 and 2010, respectively.