DEFINED BENEFIT PENSION PLANS

12 Months Ended

Jul. 31, 2020

Retirement Benefits [Abstract]

DEFINED BENEFIT PENSION PLANS

DEFINED BENEFIT PENSION PLANS

The Company sponsors two defined benefit pension plans covering certain of its employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined. During the year ended July 31, 2020, the Netherlands defined benefit plan was amended so active participants no longer accrued benefits as of January 1, 2020 which resulted in a pre-tax curtailment gain of $2.4 million recognized in accumulated other comprehensive income (loss).

The plan assets are primarily related to the two defined benefit plans associated with the Company's Netherlands facility and consist of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2020 and 2019, classified by fair value hierarchy:

					Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2020		Asset Allocations		Level 1		Level 2		Level 3
Insurance contract	$	28,388	98	%					$	28,388
Other investments	662		2	%	—		—		662
	$	29,050	100	%	$	—	$	—	$	29,050

					Fair Value Measurements at Reporting Date Using
(In thousands)	July 31, 2019		Asset Allocations		Level 1		Level 2		Level 3
Insurance contract	$	26,651	98	%	$	—	$	—	$	26,651
Other investments	616		2	%	—		—		616
	$	27,267	100	%	$	—	$	—	$	27,267

The following table summarizes the changes in benefit obligation, plan assets and funded status for these plans:

	July 31,
	2020			2019
	(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	34,538		$	29,849
Service cost	185			365
Interest cost	543			633
Actuarial (gain) loss	(691		)	5,125
Employee contributions	28			72
Benefits and administrative expenses paid	(212		)	(197		)
Adjustments	—			(20		)
Effect of curtailment	(2,390		)	—
Currency translation	1,926			(1,289		)
Benefit obligation at end of year	$	33,927		$	34,538
Change in plan assets
Fair value of plan assets at beginning of year	$	27,267		$	22,860
Actual return on plan assets	476			5,136
Employer contributions, net	(39		)	422
Employee contributions	28			73
Settlements	—			(19		)
Benefits and administrative expenses paid	(212		)	(197		)
Currency translation	1,530			(1,008		)
Fair value of plan assets at end of year	$	29,050		$	27,267
Funded status
Current liabilities	$	(31	)	$	(13	)
Noncurrent liabilities	(4,846		)	(7,259		)
Net amounts recognized on the consolidated balance sheet	$	(4,877	)	$	(7,272	)

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:

	July 31,
	2020		2019
	(In thousands)
Projected benefit obligation	$	33,927	$	34,538
Accumulated benefit obligation	$	33,927	$	32,361
Fair value of plan assets	$	29,050	$	27,267

The following table summarizes the components of net periodic pension cost:

	Fiscal Year Ended July 31,
	2020			2019
	(In thousands)
Service cost	$	185		$	365
Interest costs	543			633
Expected return on plan assets	(458		)	(492		)
Amortization of net actuarial loss	74			127
Curtailment gain	(143		)	—
Net periodic pension costs	$	201		$	633

The amount included in accumulated other comprehensive income expected to be recognized as a component of net periodic pension costs in fiscal year 2021 is approximately $2.1 million related to amortization of a net actuarial loss and prior service cost.

Assumptions

The table below summarizes the weighted average assumptions used to determine benefit obligations:

	Fiscal Year Ended July 31,
	2020		2019
Discount rate	1.48	%	1.48	%
Rate of compensation increase	1.96	%	1.97	%

The table below summarizes weighted average assumptions used to determine net periodic pension cost:

	Fiscal Year Ended July 31,
	2020		2019
Discount rate	1.39	%	1.46	%
Expected long-term rate of return on plan assets	1.37	%	1.45	%
Rate of compensation increase	1.77	%	1.92	%

The discount rate reflects the Company's best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as of July 31, 2020 for the appropriate duration of the plan.

To develop the expected long-term rate of return on assets assumptions, consideration is given to the current level of expected returns on risk free investments, the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for the future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

Benefit Payments

The following table summarizes expected benefit payments from the plans through fiscal year 2025. Actual benefit payments may differ from expected benefit payments. The minimum employer required contributions to the plans are expected to be approximately $0.3 million in fiscal year 2021.

	Pension Benefit Payments
	(In thousands)
For the fiscal year ending July 31:
2021	247
2022	258
2023	309
2024	472
2025	396
Next 5 years	2,811

The current target allocations for plan assets are primarily insurance contracts.

Valuation Technique

Benefit obligations are computed using the projected unit credit method. Benefits are attributed to service based on the plan's benefit formula. Cumulative gains and losses in excess of 10% of the greater of the pension benefit obligation or market-related value of plan assets are amortized over the expected average remaining lifetime of all inactive participants.