Postretirement Benefits

12 Months Ended

Sep. 30, 2019

Compensation and Retirement Disclosure [Abstract]

Postretirement Benefits

14.    Postretirement Benefits

Defined Benefit Pension Plans

The Company has three active defined benefit pension plans (collectively, the “Plans”), including legacy Taiwan Plan, the legacy Switzerland Plan, and the newly acquired Tec-Sem Plan. The Plans cover substantially all of the Company’s employees in Switzerland and Taiwan. Retirement benefits are generally earned based on years of service and the level of compensation during active employment, but the level of benefits varies within the Plans. Eligibility is determined in accordance with local statutory requirements.

The Company uses September 30th as a measurement date to determine 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 as of September 30, 2019 and 2018 (in thousands):

	September 30,
	2019		2018
Benefit obligation at beginning of fiscal year	$	11,144	$	3,565
Benefit obligation through acquisition		—		7,852
Service cost		599		382
Interest cost		118		75
Actuarial loss		831		(165)
Benefits paid		(811)		(685)
Employee contributions		273		191
Settlements paid		—		—
Curtailment gain		—		—
Foreign currency translation		(239)		(71)
Benefit obligation at end of fiscal year	$	11,915	$	11,144
Fair value of assets at beginning of fiscal year	$	7,078	$	2,225
Fair value of assets through acquisition		—		5,052
Actual return on plan assets		(179)		69
Disbursements		(811)		(685)
Employer contributions		370		266
Employee contributions		273		191
Settlements paid		—		—
Foreign currency translation		(157)		(40)
Fair value of assets at end of fiscal year	$	6,574	$	7,078
Accrued benefit obligation	$	5,341	$	4,066

The accumulated benefit obligation of the Plans is $11.4 million and $10.6 million, respectively, at September 30, 2019 and 2018. All Plans have an accumulated benefit obligation and projected benefit obligation in excess of plans’ assets at September 30, 2019.

The following table provides pension-related amounts and their classification within the accompanying Consolidated Balance Sheets as of September 30, 2019 and 2018 (in thousands):

	September 30,
	2019		2018
Accrued compensation and benefits	$	366	$	431
Long-term pension liability		4,975		3,635
	$	5,341	$	4,066

The Company bases its determination of pension expense 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 represent 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. At September 30, 2019 and 2018, the Company had cumulative unrecognized net actuarial gains of $0.9 million and loss of less than $0.1 million, respectively, which are amortized into net periodic benefit cost over the average remaining service period of active Plans’ participants. The Company had cumulative unrecognized investment gains of $0.5 million at both September 30, 2019 and 2018, under the Plans which remain to be recognized in the calculation of the market-related values of assets.

The components of the Company’s net pension cost for the fiscal years ended September 30, 2019, 2018 and 2017 are as follows (in thousands):

	Year Ended September 30,
	2019		2018		2017
Service cost	$	599	$	382	$	268
Interest cost		118		75		22
Amortization of losses		(18)		5		7
Expected return on plan assets		(74)		(66)		(130)
Net periodic pension cost	$	625	$	396	$	167
Settlement gain		—		—		(259)
Total pension cost (gain)	$	625	$	396	$	(92)

The following changes in Plans’ assets and benefit obligations were recognized in other comprehensive income (loss) as of September 30, 2019 and 2018 (in thousands):

	September 30,
	2019		2018
Net gain	$	(854)	$	(191)
Amortization of net loss		30		(7)
Total recognized in other comprehensive income (loss)		(824)		(198)
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	(198)	$	593

The settlement gain of $0.3 million realized during fiscal year ended September 30, 2017 was recorded as a reduction of accumulated other comprehensive income (loss) and the pension cost during the period then ended. Please refer to Note 15, "Stockholders’ Equity", for further information on these reclassifications and their impact on the accumulated other comprehensive income and other comprehensive income during each fiscal year.

Weighted-average assumptions used to determine the projected benefit obligation for the fiscal years ended September 30, 2019, 2018 and 2017 are as follows:

	Year Ended September 30,
	2019		2018		2017
Discount rate	0.55	%	1.04	%	0.88	%
Expected return on plan assets	1.01	%	1.06	%	1.75	%
Expected rate of compensation increases	1.12	%	1.19	%	1.54	%

In selecting the appropriate discount rates for the Plans, the Company uses country-specific information, adjusted to reflect the duration of the particular plan. The expected return on plan assets is based on an evaluation of fixed income yield curves and equity return assumption studies applied to the Plans’ asset allocations.

Plan Assets

The fair value of plan assets for the two Swiss Plans and the Taiwan Plan were $6.5 million and $0.1 million, respectively, at September 30, 2019. The assets of the Swiss Plans are invested in a collective fund with multiple employers through a Swiss insurance company, which is a customary practice for Swiss pension plans. The Company does not have any rights or an investment authority over the Plan’s assets which are invested primarily in highly rated debt securities.

The assets of the Taiwan Plan are invested with a trustee selected by the Taiwan government, and the Company has no investment authority over the Plan’s assets.

The allocation of the Plans’ assets at September 30, 2019 is as follows:

	September 30,
	2019
Cash and cash equivalents	1	%
Debt securities	48
Equity securities	20
Other	31
	100	%

The fair values of pension assets by asset category and by level at September 30, 2019 are as follows (in thousands):

	As of September 30, 2019
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—	$	6,486	$	—	$	6,486
Taiwan collective trust		—		88		—		88
Total	$	—	$	6,574	$	—	$	6,574

The fair values of pension assets by asset category and by level at September 30, 2018 are as follows (in thousands):

	As of September 30, 2018
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—	$	6,754	$	—	$	6,754
Taiwan collective trust		—		324		—		324
Total	$	—	$	7,078	$	—	$	7,078

Please refer to Note 22, "Fair Value Measurements" for a description of the levels of inputs used to determine fair value measurements.

Benefit payments expected to be paid over the next five fiscal years and thereafter are as follows (in thousands):

Fiscal year ended September 30,
2020	$	366
2021		370
2022		373
2023		377
2024		381
Thereafter		3,474

The Company expects to contribute $0.4 million to the Plans in fiscal year 2020 to meet the minimum funding requirements of the Plans.

Defined Contribution Plans

The Company sponsors a defined contribution plan that meets the requirements of Section 401(k) of the Internal Revenue Code. All United States employees who meet minimum age and service requirements are eligible to participate in the plans. The plans allow employees to invest, on a pre-tax basis, a percentage of their annual salary and bonus subject to statutory limitations. The Company matches a portion of their contributions on a pre-tax basis up to a maximum amount of 4.5% of deferred pay. The expense recognized for the defined contribution plans was $4.6 million, $3.4 million and $3.0 million, respectively, for the fiscal years ended September 30, 2019, 2018 and 2017.