Postretirement Benefits

12 Months Ended

Sep. 30, 2020

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, 2020 and 2019 (in thousands):

	September 30,
	2020		2019
Benefit obligation at beginning of fiscal year	$	11,915	$	11,144
Benefit obligation through acquisition		—		—
Service cost		576		599
Interest cost		71		118
Actuarial loss		557		831
Benefits paid		(401)		(811)
Employee contributions		300		273
Settlements paid		—		—
Curtailment gain		—		—
Foreign currency translation		833		(239)
Benefit obligation at end of fiscal year	$	13,851	$	11,915
Fair value of assets at beginning of fiscal year	$	6,574	$	7,078
Fair value of assets through acquisition		—		—
Actual return on plan assets		168		(179)
Disbursements		(401)		(811)
Employer contributions		404		370
Employee contributions		300		273
Settlements paid		—		—
Foreign currency translation		455		(157)
Fair value of assets at end of fiscal year	$	7,500	$	6,574
Accrued benefit obligation	$	6,351	$	5,341

The accumulated benefit obligation of the Plans is $13.2 million and $11.4 million, respectively, at September 30, 2020 and 2019. All Plans have an accumulated benefit obligation and projected benefit obligation in excess of plans’ assets at September 30, 2020.

The following table provides pension-related amounts and their classification within the accompanying Consolidated Balance Sheets as of September 30, 2020 and 2019 (in thousands):

	September 30,
	2020		2019
Accrued compensation and benefits	$	419	$	366
Long-term pension liability		5,932		4,975
	$	6,351	$	5,341

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, 2020 and 2019, the Company had cumulative unrecognized net actuarial gains of $1.5 million and $0.9 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 $0.6 million and $0.5 million at September 30, 2020 and 2019, 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, 2020, 2019 and 2018 are as follows (in thousands):

	Year Ended September 30,
	2020		2019		2018
Service cost	$	576	$	599	$	382
Interest cost		71		118		75
Amortization of losses		12		(18)		5
Expected return on plan assets		(71)		(74)		(66)
Net periodic pension cost	$	588	$	625	$	396
Settlement gain		—		—		—
Total pension cost (gain)	$	588	$	625	$	396

The following changes in Plans’ assets and benefit obligations were recognized in other comprehensive income (loss) as of September 30, 2020 and 2019 (in thousands):

	September 30,
	2020		2019
Net gain	$	(487)	$	(854)
Amortization of net loss		27		30
Total recognized in other comprehensive income (loss)		(460)		(824)
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	128	$	(198)

Weighted-average assumptions used to determine the projected benefit obligation for the fiscal years ended September 30, 2020, 2019 and 2018 are as follows:

	Year Ended September 30,
	2020		2019		2018
Discount rate	0.37	%	0.55	%	1.04	%
Expected return on plan assets	1.02	%	1.01	%	1.06	%
Expected rate of compensation increases	1.12	%	1.12	%	1.19	%

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 $7.4 million and $0.1 million, respectively, at September 30, 2020. 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, 2020 is as follows:

	September 30,
	2020
Cash and cash equivalents	2	%
Debt securities	59
Equity securities	19
Other	20
	100	%

The fair values of pension assets by asset category and by level at September 30, 2020 are as follows (in thousands):

	As of September 30, 2020
	Level 1		Level 2		Level 3		Total
Swiss Life collective foundation	$	—	$	7,371	$	—	$	7,371
Taiwan collective trust		—		129		—		129
Total	$	—	$	7,500	$	—	$	7,500

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

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):

Fiscal year ended September 30,
2021	$	282
2022		303
2023		300
2024		374
2025		384
Thereafter		99

The Company expects to contribute $0.4 million to the Plans in fiscal year 2021 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 $5.2 million, $4.6 million and $3.4 million, respectively, for the fiscal years ended September 30, 2020, 2019 and 2018.