Defined Benefit Pension Obligation

12 Months Ended

Jun. 30, 2022

Defined Benefit Pension Obligation Disclosure [Abstract]

Note 16. Defined Benefit Pension Obligation

The Company has established a defined benefit pension plan for its employees in its Switzerland subsidiary. The plan provides benefits to employees upon retirement, death or disability. The Company uses June 30 as the year‑end measurement date for this plan. The unfunded liability of $0.1 million was recognized in long‑term other liabilities in the accompanying balance sheet as of June 30, 2022. Actuarial gain of $4.3 million was recognized in other comprehensive loss in fiscal 2022.

Obligations and Funded Status

The following table presents the funded status of the defined benefit pension plan (in thousands):


	June 30,
	2022			2021
Change in benefit obligation:
Benefit obligation—beginning of fiscal year	$	18,705		$	18,426
Service cost		1,513			1,766
Interest cost		75			38
Plan participants’ contributions		2,554			1,676
Plan amendment		(699	)		25
Actuarial (gain)/loss		(3,460	)		(807	)
Foreign currency changes		(577	)		281
Benefit and expense payments		(658	)		(2,700	)
Benefit obligation—end of fiscal year	$	17,453		$	18,705
Change in plan assets:
Plan assets—beginning of fiscal year	$	14,419		$	13,958
Employer contributions		1,225			1,117
Actual return on plan assets		374			199
Plan participants’ contributions		2,554			1,676
Foreign currency changes		(564	)		169
Benefit and expense payments		(658	)		(2,700	)
Plan assets—end of fiscal year	$	17,350		$	14,419
Funded status	$	(103	)	$	(4,286	)
Amounts recognized within the consolidated balance sheets:
Assets	$	—		$	—
Long-term other liabilities		(103	)		(4,286	)
Net amount recognized	$	(103	)	$	(4,286	)

The following table presents the amounts recognized in accumulated other comprehensive loss (before tax) for the defined benefit pension plan (in thousands):


	June 30,
	2022		2021
Net actuarial loss (gain)	$	3,723	$	(1,236	)
Prior service cost		224		872
Accumulated other comprehensive income (loss)	$	3,947	$	(364	)

The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for this defined benefit pension plan where accumulated benefit obligation exceeded the fair value of plan assets (in thousands):


	June 30,
	2022		2021
Projected benefit obligation	$	17,453	$	18,705
Accumulated benefit obligation	$	15,546	$	16,891
Fair value of plan assets	$	17,350	$	14,419

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss

The following table shows the components of the Company’s net periodic benefit costs and the other amounts recognized in other comprehensive loss, before tax, related to the Company’s defined benefit pension plan (in thousands):


	Year ended June 30,
	2022			2021			2020
Net Periodic Benefit Costs:
Service cost	$	1,513		$	1,766		$	2,003
Interest cost		75			38			62
Expected returns on assets		(144	)		(142	)		(151	)
Amortization of prior service cost		54			54			(2	)
Amortization of net loss		—			—			—
Settlement charges		—			—			178
Net periodic benefit costs		1,498			1,716			2,090
Other Amounts Recognized in Other Comprehensive Loss:
Net (gain) loss arising during the year		(3,584	)		(850	)		(593	)
Prior service cost		(53	)		(54	)		2
Amortization of prior service cost		(678	)		24			1,005
Amortization of net gain		—			—			—
Effect of settlement		4			8			(178	)
Total recognized in other comprehensive (gain) loss		(4,311	)		(872	)		236
Total recognized in net periodic benefit costs and other comprehensive loss	$	(2,813	)	$	844		$	2,326

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during fiscal year 2023 related to the Company’s defined benefit pension plan are as follows (in thousands):


	2023
Net gain	$	172
Prior service credit		24
Accumulated other comprehensive income	$	196

Assumptions

The assumptions used to determine net periodic benefit cost and to compute the expected long‑term return on assets for the Company’s defined benefit pension plan were as follows:


	Fiscal Years
	2022			2021			2020
Net Periodic Benefit Costs:
Discount rate		1.90	%		0.40	%		0.25	%
Rate of compensation increase		1.75	%		1.50	%		1.50	%
Expected long-term return on assets		1.00	%		1.00	%		1.00	%

The assumptions used to measure the benefit obligation for the Company’s defined benefit pension plan were as follows:


	June 30,
	2022			2021
Benefit Obligation:
Discount rate		1.90	%		0.40	%
Rate of compensation increase		1.75	%		1.50	%

Estimated Contributions and Future Benefit Payments

The Company made contributions of approximately $1.2 million, $1.1 million and $1.3 million to the defined benefit pension plan during fiscal years 2022, 2021 and 2020 respectively. The Company expects total contributions to the defined benefit pension plan for fiscal year 2023 will be approximately $1.3 million.

Estimated future benefit payments expected to be paid by the defined benefit pension plan at June 30, 2022 are as follows (in thousands):


Year Ending June 30,	Future Benefits
2023	$	1,001
2024		1,015
2025		1,212
2026		1,054
2027		1,218
Thereafter		8,605
Total	$	14,105

Plan Assets

The plan assets are invested in insurance contracts with Copré Collective Foundation based in Lausanne, Switzerland at the end of fiscal years 2022 and 2021, respectively. In fiscal 2022 and 2021, the risks of death and disability are reinsured with Zurich Life Insurance. The Copré Foundation for Occupational Benefits defines and is responsible for the asset strategy and invests the plan assets for the Company. In fiscal 2022 and 2021 the guaranteed interest rate for mandatory retirement savings was 1.00% for both years. The technical administration and management of the savings account are guaranteed by the Copré Foundation for Occupational Benefits. Insurance benefits due are paid directly to the entitled persons by the Copré Foundation for Occupational Benefits. Accuray International Sàrl has committed itself to pay the annual contributions and costs due under the pension fund regulations.

The contract of affiliation between the Company and the Copré Collective Foundation can be terminated by either side. In the event of a termination, recipients of retirement and survivors’ benefits would remain with the collective foundation. The Company commits itself to transfer its active insured members and recipients of disability benefits to the new employee benefits institution, thus releasing the Copré Collective Foundation from all obligations.