Postretirement Benefits

Defined Benefit Pension Plans

The Company has two active defined benefit pension plans (collectively, the “Plans”). 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, 2016 and 2015 (in thousands):



	September 30,
	2016			2015
Benefit obligation at beginning of fiscal year	$	7,661		$	8,213
Service cost	548			482
Interest cost	71			124
Actuarial loss	106			733
Benefits paid	(712		)	(209		)
Employee contributions	156			444
Settlements paid	—			(1,795		)
Curtailment gain	(1,064		)	—
Foreign currency translation	81			(331		)
Benefit obligation at end of fiscal year	$	6,847		$	7,661



Fair value of assets at beginning of fiscal year	$	4,838		$	6,131
Actual return on plan assets	30			112
Disbursements	(837		)	(334		)
Employer contributions	296			306
Employee contributions	352			642
Settlements paid	—			(1,795		)
Foreign currency translation	55			(224		)
Fair value of assets at end of fiscal year	$	4,734		$	4,838



Accrued benefit obligation	$	2,113	$	2,823

The accumulated benefit obligation of the Plans is $6.3 million and $6.9 million, respectively, at September 30, 2016 and 2015. Both Plans have an accumulated benefit obligation and projected benefit obligation in excess of plans' assets at September 30, 2016 and 2015.

The following table provides pension-related amounts and their classification within the accompanying Consolidated Balance Sheets as of September 30, 2015 and 2014 (in thousands):



	September 30,
	2016		2015
Accrued compensation and benefits	$	155	$	298
Long-term pension liability	1,958		2,525
	$	2,113	$	2,823

Accumulated other comprehensive income at September 30, 2016 and 2015 includes unrecognized net actuarial losses of $0.3 million and $0.2 million, respectively, and cumulative unrecognized investment losses of $0.9 million and $0.8 million, respectively, during fiscal years 2016 and 2015. Unrecognized net actuarial losses and cumulative unrecognized investment losses within accumulated other comprehensive income were offset by a curtailment gain of $0.9 million at September 30, 2016.

The components of the Company’s net pension cost for the fiscal years ended September 30, 2016, 2015 and 2014 are as follows (in thousands):



	Year Ended September 30,
	2016			2015			2014
Service cost	$	548		$	482		$	406
Interest cost	71			124			154
Expected return on plan assets	(159		)	(210		)	(214		)
Amortization of losses	2			2			2
Other	—			—			—
Net periodic pension cost	462			398			348
Curtailment gain	(227		)	—			—
Settlement loss	—			232			—
Total pension cost	$	235		$	630		$	348

The following changes in Plans' assets and benefit obligations were recognized in other comprehensive income (loss) as of September 30, 2016 and 2015 (in thousands):



	September 30,
	2016			2015
Net loss	$	165		$	722
Amortization of net loss	(2		)	(2		)
Curtailment gain	(852		)	—
Settlement loss	—			(232		)
Total recognized in other comprehensive income (loss)	(689		)	488
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	(227	)	$	886

The curtailment gain of $0.2 million incurred during fiscal year 2016 and the settlement loss of $0.2 million incurred during fiscal year 2015 were reclassified from accumulated other comprehensive income (loss) into the results of operations during each fiscal year. Additionally, a curtailment gain of $1.1 million was recognized as a reclassification from accumulated other comprehensive income and a corresponding reduction in pension liabilities. 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, 2016, 2015 and 2014 are as follows:



	Year Ended September 30,
	2016		2015		2014
Discount rate	0.40	%	0.92	%	1.55	%
Expected return on plan assets	1.75	%	1.78	%	2.18	%
Expected rate of compensation increases	1.31	%	1.65	%	1.87	%

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.

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, 2016, the Company had cumulative unrecognized investment losses of approximately $0.9 million under the Plans which remain to be recognized in the calculation of the market-related values of assets. At September 30, 2016, the Company had cumulative unrecognized net actuarial losses of 0.3 million which are amortized into net periodic benefit cost over the average remaining service period of active Plans' participants.

Plan Assets

The fair value of plan assets for the Switzerland Plan and Taiwan Plan were $4.2 million and $0.5 million, respectively, at September 30, 2016. The assets of the Switzerland Plan 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, 2016 is as follows:



	September 30, 2016
Cash and cash equivalents	3	%
Debt securities	72
Equity securities	7
Other	18
	100	%

The fair values of pension assets by asset category and by level at September 30, 2016 are as follows (in thousands):



	As of September 30, 2016
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—	$	4,208	$	—	$	4,208
Taiwan collective trust	—		526		—		526
Total	$	—	$	4,734	$	—	$	4,734

The fair values of pension assets by asset category and by level at September 30, 2015 are as follows (in thousands):



	As of September 30, 2015
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—	$	4,347	$	—	$	4,347
Taiwan collective trust	—		491		—		491
Total	$	—	$	4,838	$	—	$	4,838

Please refer to Note 21, "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):



2017	$	203
2018	21
2019	21
2020	81
2021	104
Thereafter (through 2026)	735

The Company expects to contribute $0.2 million to the Plans in fiscal year 2017 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 $3.6 million, $3.0 million and $3.5 million, respectively, for the fiscal years ended September 30, 2016, 2015 and 2014.