XML 37 R20.htm IDEA: XBRL DOCUMENT v3.20.2
Postretirement and Other Employee Benefits
 12 Months Ended
Jun. 30, 2020
Retirement Benefits [Abstract]  
Postretirement and Other Employee Benefits Postretirement and Other Employee Benefits
Defined Contribution Pension Plans
        We have a 401(k) Plan (the Plan), whereby eligible U.S. employees may contribute up to 60% of their eligible compensation, subject to limitations established by the Internal Revenue Code. We may contribute a discretionary matching contribution annually equal to 50% of each such participant’s contribution to the Plan up to the first 5% of their annual eligible compensation. We charged approximately $2.7 million, $2.4 million and $2.2 million to expense in the fiscal years ended June 30, 2020, 2019 and 2018, respectively, associated with our matching contribution for those years.
        We have a Group Personal Pension Plan (GPPP) for employees in the UK, whereby eligible employees may contribute a portion of their compensation, subject to their age and other limitations established by HM Revenue & Customs. We contribute 4% of the employee’s annual compensation as long as the individual contributes a minimum of 1% of their annual compensation to the GPPP. We charged approximately $1.5 million, $2.0 million and $1.8 million to expense in the fiscal years ended June 30, 2020, 2019 and 2018, respectively, under the GPPP.
        We have a GPPP related to European employees from our acquisition of Sterci and governed by local regulatory requirements. We contributed approximately $1.9 million, $1.7 million and $1.5 million in the fiscal years ended June 30, 2020, 2019 and 2018, respectively, under the GPPP.
        We have a retirement contribution plan with respect to our employees in Israel (Israel plan) under which we contribute 6.5% of each eligible employee’s annual compensation. Employees are entitled to amounts accumulated in the Israel plan upon reaching retirement age. We charged approximately $0.6 million, $0.5 million and $0.4 million to expense in the fiscal years ended June 30, 2020, 2019 and 2018, respectively, related to the Israel plan.
Defined Benefit Pension Plan
        We sponsor a defined benefit pension plan for our Swiss-based employees (the Swiss pension plan) that is governed by local regulatory requirements. As of June 30, 2020, we had 126 employees, which is approximately 6% of our workforce, covered under this plan. The Swiss pension plan is governed by the Swiss Federal Law on Occupational Retirements, Survivors’ and Disability Pension plans. We use a third party pension fund, Profond, to administer this plan. We charged approximately $3.1 million, $2.1 million and $1.8 million to expense in the fiscal years ended June 30, 2020, 2019 and 2018, respectively, related to this plan. The annual measurement date for our pension benefits is June 30.
        During the fiscal years ended June 30, 2020 and 2019, we made lump sum pension payments exceeding the settlement accounting threshold related to our Swiss pension plan. As required under pension accounting rules, we recorded $1.0 million and $0.6 million, of unrecognized actuarial loss in other expense in our consolidated statements of comprehensive income (loss) in our consolidated balance sheets for the fiscal years ended June 30, 2020 and 2019, respectively, and decreased accumulated other comprehensive loss by $1.0 million and $0.6 million in our consolidated balance sheets for the fiscal years ended June 30, 2020 and 2019, respectively.
        During fiscal years ended June 30, 2014 and June 30, 2018, Profond decreased the pension benefit conversion rates over two respective five year periods, from a maximum of 7.2% to 6.8% in fiscal year 2014 and from a maximum of 6.8% to 6.2% in fiscal year 2018. The changes in conversion rates reduced the projected benefits at retirement for all employees and qualified as plan amendments. The prior service credits arising from the amendments were recorded as components of accumulated other comprehensive income (loss) for the fiscal years ended June 30, 2014 and June 30, 2018.
        The accumulated benefit obligation (ABO) represents the obligations of a pension plan for past service as of the measurement date, which is the present value of benefits earned to date based on current compensation levels. The Swiss pension plan ABO as of June 30, 2020 was $50.8 million. The projected benefit obligation (PBO) is the ABO adjusted to reflect the impact of future compensation levels. The following table represents the PBO, change in plan assets, funded status and amounts recognized in our consolidated balance sheets at June 30, 2020 and 2019:
 June 30,
 20202019
 (in thousands)
Change in benefit obligation:  
Projected benefit obligation at beginning of year$56,908 $51,368 
Service cost2,955 2,532 
Interest cost226 456 
Actuarial (gain) loss(2,374)4,124 
Plan participant contributions905 880 
Benefits paid, net of transfers into plan(222)(215)
Settlement(5,500)(3,060)
Effect of foreign currency exchange rate changes1,677 823 
Projected benefit obligation at end of year$54,575 $56,908 
Change in plan assets:  
Fair value of plan assets at beginning of year$37,306 $36,929 
Actual return on plan assets(1,181)339 
Employer contribution1,899 1,870 
Plan participant contributions905 880 
Benefits paid, net of transfers into plan(222)(215)
Settlement(5,500)(3,060)
Effect of foreign currency exchange rate changes1,109 563 
Fair value of plan assets at end of year$34,316 $37,306 
Pension liability at end of fiscal year$(20,259)$(19,602)
Accumulated other comprehensive loss consists of the following:
Net prior service credit$2,642 $2,877 
Net actuarial loss(10,436)(11,586)
Accumulated other comprehensive loss, before income tax$(7,794)$(8,709)
        
        For the fiscal year ended June 30, 2020, we reclassified approximately $1.5 million of net actuarial loss and $0.3 million of net prior service credit to components of net periodic benefit cost from accumulated other comprehensive loss. For the fiscal year ending June 30, 2021, we expect to reclassify approximately $0.2 million of net actuarial loss and $0.3 million of net prior service credit as components of net periodic benefit cost from accumulated other comprehensive loss.
        The net unfunded balance of our defined benefit pension plan is recorded as a non-current liability and all unrecognized gains or losses, net of tax, are recorded as a component of other comprehensive loss within stockholders’ equity at June 30, 2020.
Assumptions:
 Fiscal Year Ended June 30,
 202020192018
Weighted-average assumptions used to determine net benefit costs:  
Discount rate0.40 %0.90 %0.70 %
Expected return on plan assets3.25 %3.75 %3.50 %
Rate of compensation increase1.75 %1.75 %1.50 %
Weighted-average assumptions used to determine benefit obligations at year end:   
Discount rate0.25 %0.40 %0.90 %
Expected return on plan assets2.75 %3.25 %3.75 %
Rate of compensation increase1.50 %1.75 %1.75 %
        The expected return on plan assets is determined by adjusting the market value of assets to reflect the investment gains and losses from prior years. We amortize gains and losses in our net periodic benefit cost which result from actual experience different from that assumed and from changes in assumptions. If, as of the beginning of the year, the net gain or loss exceeds 10% of the greater of the projected benefit obligation and the market related value of plan assets, the amortization is that excess divided by the average remaining service period of participating employees expected to receive benefits under the plan.
        The fair value of plan assets for the Swiss pension plan was $34.3 million at June 30, 2020. As is customary with Swiss pension plans, the plan assets are invested in a collective fund with multiple employers through a Swiss insurance company. We do not have rights to the individual assets of the plan nor do we have investment authority over the assets of the plan. The collective fund maintains a variety of investment positions primarily in equity securities and highly rated debt securities. The valuation of the collective fund assets as a whole is a Level 3 measurement; however the individual investments of the fund are generally Level 1 (equity securities), Level 2 (fixed income) and Level 3 (real estate) investments. We determine the fair value of the plan assets based on information provided by the collective fund, through review of the collective fund’s annual financial statements, and we further consider whether there are other indicators that the investment balances reported by the fund could be impaired. We concluded that no such impairment indicators were present at June 30, 2020.
        The Swiss pension plan's actual asset allocation as compared to Profond’s target asset allocations for fiscal year 2020 were as follows:
 ActualTarget
Asset Category:  
Cash and cash equivalents8 %2 %
Equity Securities49 %49 %
Fixed Income12 %17 %
Real Estate27 %28 %
Other4 %4 %
        As of June 30, 2020, the estimated future benefit payments (inclusive of any future service) were as follows:
 (in thousands)
2021$1,644 
20221,598 
20231,876 
20241,841 
20253,077 
2025-202910,657 
        
        Net periodic pension costs for the Swiss pension plan included the following components:
Fiscal Year Ended June 30,
202020192018
(in thousands)
Components of net periodic cost
Service cost$2,955 $2,532 $2,539 
Interest cost226 456 353 
Net prior service credit(311)(306)(91)
Net actuarial loss482 219 217 
Expected return on plan assets(1,252)(1,384)(1,196)
Settlements1,049 617 — 
Net periodic cost$3,149 $2,134 $1,822 
        The components of net periodic pension cost other than current service cost are presented within other expense, net in our unaudited consolidated statements of comprehensive income (loss).
        We expect to make a contribution of approximately $1.8 million to our pension plan in fiscal year 2021, which is the legal funding regulation minimum for the Swiss pension plan.
Israeli Severance Pay
        We provide severance payments based on the Israeli severance pay law and certain other circumstances to employees of our Israeli subsidiary.
        Our liability for severance pay for service periods prior to January 12, 2015 is calculated based on the most recent employee salaries multiplied by the number of years of employment as of January 12, 2015. We make monthly deposits in insurance funds designed to fund a portion of this overall severance liability and the value of these deposits, inclusive of earnings and losses attributable to these deposits, is recorded as an asset on our consolidated balance sheet. In the event of a separation, the employee receives the balance in deposited funds with any remaining severance liability balance paid by us. As of June 30, 2020, for service periods prior to January 12, 2015, our severance liability (classified in other liabilities within our consolidated balance sheet) was $1.3 million and our severance deposit (classified as other assets within the consolidated balance sheet) was $1.0 million.
        Effective January 12, 2015, our statutory severance liability is covered under the provisions of Section 14 of the Israel severance pay law (Section 14). Under Section 14 we are released from any future severance liability once we fund the statutory severance requirement via payment to an insurance fund on behalf of the employee. As a result, for severance obligations arising after January 12, 2015, we do not recognize any liability (or asset) for severance related obligations once we fund the statutory severance requirement.