Pension Plans and Other Post Retirement Benefits

9 Months Ended

Mar. 31, 2019

PENSION PLANS AND OTHER POST RETIREMENT BENEFITS

The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT), GXS GmbH (GXS GER), GXS Philippines, Inc. (GXS PHP) and other plans as of March 31, 2019 and June 30, 2018:



	As of March 31, 2019
	Total benefit obligation		Current portion of benefit obligation*		Non-current portion of benefit obligation
CDT defined benefit plan	$	35,145	$	669	$	34,476
GXS GER defined benefit plan	27,224		1,002		26,222
GXS PHP defined benefit plan	5,556		155		5,401
Other plans	5,889		425		5,464
Total	$	73,814	$	2,251	$	71,563



	As of June 30, 2018
	Total benefit obligation		Current portion of benefit obligation*		Non-current portion of benefit obligation
CDT defined benefit plan	$	32,651	$	655	$	31,996
GXS GER defined benefit plan	25,382		1,027		24,355
GXS PHP defined benefit plan	3,853		138		3,715
Other plans	6,095		442		5,653
Total	$	67,981	$	2,262	$	65,719

* The current portion of the benefit obligation has been included within "Accrued salaries and commissions", all within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets (see note 9 "Accounts Payable and Accrued Liabilities").

Defined Benefit Plans

CDT Plan

CDT sponsors an unfunded defined benefit pension plan covering substantially all CDT employees (CDT plan) which provides for old age, disability and survivors’ benefits. Benefits under the CDT plan are generally based on age at retirement, years of service and the employee’s annual earnings. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. No contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan's active employees. As of March 31, 2019, there is approximately $0.2 million in accumulated other comprehensive income related to the CDT plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2019.

GXS GER Plan

As part of our acquisition of GXS Group, Inc. (GXS) in Fiscal 2014, we assumed an unfunded defined benefit pension plan covering certain German employees which provides for old age, disability and survivors' benefits. The GXS GER plan has been closed to new participants since 2006. Benefits under the GXS GER plan are generally based on a participant’s remuneration, date of hire, years of eligible service and age at retirement. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. No contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. As of March 31, 2019, there is approximately $0.03 million in accumulated other comprehensive income related to the GXS GER plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2019.

GXS PHP Plan

As part of our acquisition of GXS in Fiscal 2014, we assumed a primarily unfunded defined benefit pension plan covering substantially all of the GXS Philippines employees which provides for retirement, disability and survivors' benefits. Benefits under the GXS PHP plan are generally based on a participant’s remuneration, years of eligible service and age at retirement. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. Aside from an initial contribution which has a fair value of approximately $0.03 million as of March 31, 2019, no additional contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. As of March 31, 2019, there is approximately $0.1 million in accumulated other comprehensive income related to the GXS PHP plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2019.

The following are the details of the change in the benefit obligation for each of the above mentioned pension plans for the periods indicated:



	As of March 31, 2019												As of June 30, 2018
	CDT			GXS GER			GXS PHP			Total			CDT			GXS GER			GXS PHP			Total
Benefit obligation—beginning of period	$	32,651		$	25,382		$	3,853		$	61,886		$	28,881		$	23,730		$	4,495		$	57,106
Service cost	413			426			520			1,359			501			472			832			1,805
Interest cost	483			368			217			1,068			607			489			241			1,337
Benefits paid	(475		)	(746		)	(133		)	(1,354		)	(580		)	(974		)	(141		)	(1,695		)
Actuarial (gain) loss	2,975			2,490			1,021			6,486			2,442			997			(1,313		)	2,126
Foreign exchange (gain) loss	(902		)	(696		)	78			(1,520		)	800			668			(261		)	1,207
Benefit obligation—end of period	35,145			27,224			5,556			67,925			32,651			25,382			3,853			61,886
Less: Current portion	(669		)	(1,002		)	(155		)	(1,826		)	(655		)	(1,027		)	(138		)	(1,820		)
Non-current portion of benefit obligation	$	34,476		$	26,222		$	5,401		$	66,099		$	31,996		$	24,355		$	3,715		$	60,066

The following are details of net pension expense relating to the following pension plans:



	Three Months Ended March 31,
	2019									2018
Pension expense:	CDT		GXS GER		GXS PHP			Total		CDT		GXS GER		GXS PHP			Total
Service cost	$	136	$	141	$	185		$	462	$	130	$	123	$	210		$	463
Interest cost	159		121		77			357		158		127		62			347
Amortization of actuarial (gains) and losses	173		32		(142		)	63		141		19		(59		)	101
Net pension expense	$	468	$	294	$	120		$	882	$	429	$	269	$	213		$	911



	Nine Months Ended March 31,
	2019									2018
Pension expense:	CDT		GXS GER		GXS PHP			Total		CDT		GXS GER		GXS PHP			Total
Service cost	$	413	$	426	$	520		$	1,359	$	379	$	357	$	657		$	1,393
Interest cost	483		368		217			1,068		459		370		176			1,005
Amortization of actuarial (gains) and losses	524		98		(421		)	201		409		55		(182		)	282
Net pension expense	$	1,420	$	892	$	316		$	2,628	$	1,247	$	782	$	651		$	2,680

In determining the fair value of the pension plan benefit obligations as of March 31, 2019 and June 30, 2018, respectively, we used the following weighted-average key assumptions:



	As of March 31, 2019			As of June 30, 2018
	CDT	GXS GER	GXS PHP	CDT	GXS GER	GXS PHP
Assumptions:
Salary increases	3.50%	3.50%	6.50%	3.50%	3.50%	6.50%
Pension increases	2.00%	2.00%	N/A	2.00%	2.00%	N/A
Discount rate	1.56%	1.56%	6.00%	2.00%	2.00%	7.25%
Normal retirement age	65-67	65-67	60	65-67	65-67	60
Employee fluctuation rate:
to age 20	—%	—%	12.19%	—%	—%	12.19%
to age 25	—%	—%	16.58%	—%	—%	16.58%
to age 30	1.00%	—%	13.97%	1.00%	—%	13.97%
to age 35	0.50%	—%	10.77%	0.50%	—%	10.77%
to age 40	—%	—%	7.39%	—%	—%	7.39%
to age 45	0.50%	—%	3.28%	0.50%	—%	3.28%
to age 50	0.50%	—%	—%	0.50%	—%	—%
from age 51	1.00%	—%	—%	1.00%	—%	—%

Anticipated pension payments under the pension plans for the fiscal years indicated below are as follows:



	Fiscal years ending June 30,
	CDT		GXS GER		GXS PHP
2019 (three months ended June 30)	$	159	$	250	$	39
2020	680		1,003		153
2021	778		1,031		194
2022	866		1,039		301
2023	971		1,041		209
2024 to 2028	5,840		5,352		747
Total	$	9,294	$	9,716	$	1,643

Other Plans

Other plans include defined benefit pension plans that are offered by certain of our foreign subsidiaries. Many of these plans were assumed through our acquisitions or are required by local regulatory requirements. These other plans are primarily unfunded, with the aggregate projected benefit obligation included in our pension liability. The net periodic costs of these plans are determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs.