| Employee Benefit Plans | Employee Benefit Plans Employee Share Purchase Plans and Stock Incentive Plans As of March 31, 2018 , the Company offers the 2006 ESPP (2006 Employee Share Purchase Plan (Non-U.S.)), the 1996 ESPP (1996 Employee Share Purchase Plan (U.S.)), the 2006 Plan (2006 Stock Incentive Plan) and the 2012 Plan (2012 Stock Inducement Equity Plan). Shares issued to employees as a result of purchases or exercises under these plans are generally issued from shares held in treasury stock. The following table summarizes share-based compensation expense and total income tax provision (benefit) recognized for fiscal years 2018 , 2017 and 2016 (in thousands): Years Ended March 31, 2018 2017 2016 Cost of goods sold $ 3,733 $ 2,663 $ 2,340 Marketing and selling 17,765 14,723 9,273 Research and development 6,381 4,200 3,046 General and administrative 16,259 14,304 12,353 Restructuring — — 7 Total share-based compensation expense 44,138 35,890 27,019 Income tax benefit (15,998 ) (8,536 ) (6,297 ) Total share-based compensation expense, net of income tax benefit $ 28,140 $ 27,354 $ 20,722 The income tax benefit in the respective period primarily consists of tax benefit related to the share-based compensation expense for the period and direct tax benefit realized, including net excess tax benefits recognized from share-based awards vested or exercised upon the adoption of ASU 2016-09 on April 1, 2017. The income tax benefit is reduced by income tax provision resulting from the remeasurement of applicable deferred tax assets and liabilities due to the enactment of the Tax Act in the United States on December 22, 2017. See "Note 8 - Income Taxes" for more information. As of March 31, 2018 , 2017 and 2016 , the Company capitalized $0.7 million , $0.6 million and $0.5 million , respectively, of stock-based compensation expenses to inventory. The following table summarizes total unamortized share-based compensation expense and the remaining months over which such expense is expected to be recognized, on a weighted-average basis by type of grant (in thousands, except number of months): March 31, 2018 Unamortized Expense Remaining Months ESPP $ 1,337 4 Time-based RSUs 56,723 21 Market-based and performance-based RSUs 13,620 23 $ 71,680 Under the 1996 ESPP and 2006 ESPP plans, eligible employees may purchase shares at the lower of 85% of the fair market value at the beginning or the end of each offering period, which is generally six months. Subject to continued participation in these plans, purchase agreements are automatically executed at the end of each offering period. An aggregate of 29.0 million shares was reserved for issuance under the 1996 and 2006 ESPP plans. As of March 31, 2018 , a total of 5.9 million shares was available for new awards under these plans. The 2006 Plan provides for the grant to eligible employees and non-employee directors of stock options, stock appreciation rights, restricted stock and RSUs. Awards under the 2006 Plan may be conditioned on continued employment, the passage of time or the satisfaction of performance and market vesting criteria. The 2006 Plan, as amended, has no expiration date. All stock options under this plan have terms not exceeding ten years and are issued at exercise prices not less than the fair market value on the date of grant. An aggregate of 30.6 million shares was reserved for issuance under the 2006 Plan. As of March 31, 2018 , a total of 10.6 million shares was available for new awards under this plan. Time-based RSUs granted to employees under the 2006 Plan generally vest in four equal annual installments on the grant date anniversary. Time-based RSUs granted to non-executive board members under the 2006 Plan vest in one annual installment on the grant date anniversary, or if earlier and only if the non-executive board member is not re-elected as a director at such annual general meeting, the date of the next annual general meeting following the grant date. Performance-based RSUs granted in fiscal years 2016 and 2017 under the 2006 Plan vest contingent upon the achievement of predetermined financial metrics, the performance period of which is approximately three years. The performance condition can be achieved before the end of the performance period. Market-based options granted under the 2006 Plan vest upon meeting the Company's share price performance criteria. The number of shares of common stock to be received at vesting for market-based RSUs granted in fiscal years 2016 and 2017 under the 2006 Plan will range from 0 percent to 150 percent of the target number of stock units based on the Company's total stockholder return (TSR) relative to the performance of companies in the NASDAQ-100 Index for each measurement period, generally over a three -year period. In fiscal year 2018, the Company granted RSUs with both performance and market conditions, which vest at the end of the three -year performance period upon meeting predetermined financial metrics over three years, with the number of shares to be received upon vesting determined based on weighted average constant currency revenue growth rate and the Company's TSR relative to the performance of companies in the NASDAQ-100 Index over the same three year period. The Company presents shares granted and vested at 100 percent of the target of the number of stock units that may potentially vest. Under the 2012 Plan, stock options and RSUs may be granted to eligible employees to serve as an inducement to enter into employment with the Company. Awards under the 2012 Plan may be conditioned on continued employment, the passage of time or the satisfaction of market stock performance criteria, based on individually written employment offer letter. The 2012 Plan has an expiration date of March 28, 2022. An aggregate of 1.8 million shares was reserved for issuance under the 2012 Plan. As of March 31, 2018 , no shares were available for new awards under this plan. The estimates of share-based compensation expense require a number of complex and subjective assumptions including stock price volatility, employee exercise patterns, future forfeitures, probability of achievement of the set performance condition, dividend yield, related tax effects and the selection of an appropriate fair value model. The grant date fair value of the awards using the Black-Scholes-Merton option-pricing valuation model and Monte-Carlo simulation method are determined with the following assumptions and values: Employee Stock Purchase Plans Years Ended March 31, 2018 2017 2016 Dividend yield 1.67 % 2.50 % 3.47 % Risk-free interest rate 1.37 % 0.51 % 0.29 % Expected volatility 27 % 35 % 26 % Expected life (years) 0.5 0.5 0.5 Weighted average grant date fair value per share $ 8.69 $ 5.73 $ 3.29 RSUs with Market Conditions Years Ended March 31, 2018 2017 2016 Dividend yield 1.75 % 3.29 % 3.78 % Risk-free interest rate 1.40 % 0.86 % 0.84 % Expected volatility 31 % 34 % 38 % Expected life (years) 3.0 3.0 3.0 The dividend yield assumption is based on the Company's history and future expectations of dividend payouts. The unvested RSUs or unexercised options are not eligible for these dividends. The expected life is based on the purchase offerings periods expected to remain outstanding, or the performance period for RSUs with market conditions. Expected volatility is based on historical volatility using the Company's daily closing prices, or including the volatility of components of the NASDAQ 100 index for market-based RSUs, over the expected life. The Company considers the historical price volatility of its shares as most representative of future volatility. The risk-free interest rate assumptions are based upon the implied yield of U.S. Treasury zero-coupon issues appropriate for the expected life of the Company's share-based awards. The Company estimated awards forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company used historical data to estimate pre-vesting option and RSU forfeitures and recorded share-based compensation expense only for those awards that are expected to vest. Effective April 1, 2017, the Company adopted ASU 2016-09 and accounts for forfeitures as they occur. The impact from the change in accounting for forfeitures did not have a material impact on the Company's consolidated financial statements. For RSUs with performance conditions, the Company estimates the probability and timing of the achievement of the set performance condition at the time of the grant based on the historical financial performance and the financial forecast in the remaining performance period and reassesses the probability in subsequent periods when actual results or new information become available. A summary of the Company's stock option activities under all stock plans for fiscal years 2018 , 2017 and 2016 is as follows (including discontinued operations for fiscal year 2016): Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (Years) (In thousands) Outstanding, March 31, 2015 7,876 Granted — Exercised (746 ) $ 4,026 Canceled or expired (1,796 ) Outstanding, March 31, 2016 5,334 Granted — Exercised (1,784 ) $ 14,627 Canceled or expired (500 ) Outstanding, March 31, 2017 3,050 $ 18 Granted — — Exercised (994 ) $ 28 $ 8,347 Canceled or expired (16 ) $ 35 Outstanding, March 31, 2018 2,040 $ 14 4.0 $ 46,630 Vested and exercisable, March 31, 2018 2,040 $ 14 4.0 $ 46,630 As of March 31, 2018 , the exercise price of outstanding options ranged from $4 to $26 per share option. The tax benefit realized for the tax deduction from options exercised during the fiscal years 2018 , 2017 and 2016 was $1.8 million , $4.2 million and $1.2 million , respectively. A summary of the Company's time-based, market-based, and performance-based RSU activities for fiscal years 2018 , 2017 and 2016 is as follows (including discontinued operations for all the periods presented): Number of Shares Weighted-Average Grant Date Fair Value Weighted-Average Remaining Vesting Period Aggregate Fair Value (In thousands) (Years) (In thousands) Outstanding, March 31, 2015 4,939 Granted—time-based 2,247 $ 13 Granted—market-based 356 $ 14 Granted - performance-based 356 $ 13 Vested (1,557 ) $ 22,823 Canceled or expired (820 ) Outstanding, March 31, 2016 5,521 Granted—time-based 2,390 $ 16 Granted—market-based 160 $ 15 Granted - performance-based 604 $ 15 Vested (2,126 ) $ 48,644 Canceled or expired (368 ) Outstanding, March 31, 2017 6,181 $ 14 Granted—time-based 1,212 $ 33 Granted—market and performance based 409 $ 33 Vested (2,248 ) $ 14 $ 81,582 Canceled or expired (333 ) $ 17 Outstanding, March 31, 2018 5,221 $ 20 1.4 $ 191,777 The RSU outstanding as of March 31, 2018 above includes 1.4 million shares with market-based and performance-based vesting conditions. The tax benefit realized for the tax deduction from RSUs that vested during the fiscal years 2018 , 2017 and 2016 was $20.3 million , $13.1 million and $5.1 million , respectively. Defined Contribution Plans Certain of the Company's subsidiaries have defined contribution employee benefit plans covering all or a portion of their employees. Contributions to these plans are discretionary for certain plans and are based on specified or statutory requirements for others. The charges to expense for these plans for fiscal years 2018 , 2017 and 2016 , were $7.6 million , $5.8 million and $6.8 million , respectively. Defined Benefit Plans Certain of the Company's subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees' years of service and earnings, or in accordance with applicable employee benefit regulations. The Company's practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations. The Company recognizes the overfunded or underfunded status of defined benefit pension plans and non-retirement post-employment benefit obligations as an asset or liability in its consolidated balance sheets and recognizes changes in the funded status of defined benefit pension plans in the year in which the changes occur through accumulated other comprehensive income (loss), which is a component of shareholders' equity. Each plan's assets and benefit obligations are remeasured as of March 31 each year. All the amounts in this "Defined Benefit Plans" section include activities from both continuing and discontinued operations for fiscal year 2016, and the amounts from discontinued operations are not material for that period. The net periodic benefit cost of the defined benefit pension plans and the non-retirement post-employment benefit obligations for fiscal years 2018 , 2017 and 2016 was as follows (in thousands): Years Ended March 31, 2018 2017 2016 Service costs $ 9,715 $ 10,385 $ 10,117 Interest costs 1,126 800 1,147 Expected return on plan assets (1,792 ) (1,724 ) (1,657 ) Amortization: Net transition obligation — 4 4 Net prior service credit recognized (51 ) (117 ) (124 ) Net actuarial loss recognized 242 1,032 1,854 $ 9,240 $ 10,380 $ 11,341 The changes in projected benefit obligations for fiscal years 2018 and 2017 were as follows (in thousands): Years Ended March 31, 2018 2017 Projected benefit obligations, beginning of the year $ 114,640 $ 120,473 Service costs 9,715 10,385 Interest costs 1,126 800 Plan participant contributions 3,522 3,020 Actuarial gains (1,580 ) (11,081 ) Benefits paid (1,202 ) (5,214 ) Plan amendment related to statutory change (2,519 ) 65 Administrative expense paid (144 ) (132 ) Currency exchange rate changes 5,357 (3,676 ) Projected benefit obligations, end of the year $ 128,915 $ 114,640 The accumulated benefit obligation for all defined benefit pension plans as of March 31, 2018 and 2017 was $108.9 million and $94.3 million , respectively. The following table presents the changes in the fair value of defined benefit pension plan assets for fiscal years 2018 and 2017 (in thousands): Years Ended March 31, 2018 2017 Fair value of plan assets, beginning of the year $ 71,376 $ 65,279 Actual return on plan assets 1,824 4,733 Employer contributions 5,995 5,865 Plan participant contributions 3,522 3,020 Benefits paid (1,202 ) (5,214 ) Administrative expenses paid (144 ) (132 ) Currency exchange rate changes 3,347 (2,175 ) Fair value of plan assets, end of the year $ 84,718 $ 71,376 The Company's investment objectives are to ensure that the assets of its defined benefit plans are invested to provide an optimal rate of investment return on the total investment portfolio, consistent with the assumption of a reasonable risk level, and to ensure that pension funds are available to meet the plans' benefit obligations as they become due. The Company believes that a well-diversified investment portfolio will result in the highest attainable investment return with an acceptable level of overall risk. Investment strategies and allocation decisions are also governed by applicable governmental regulatory agencies. The Company's investment strategy with respect to its largest defined benefit plan, which is available only to Swiss employees, is to invest in the following allocation ranges: 29.5 - 36.5% for equities, 29.0 - 39.0% for bonds, and 5.0 - 15.0% for cash and cash equivalents. The Company also can invest in real estate funds, commodity funds, and hedge funds depending upon economic conditions. The following tables present the fair value of the defined benefit pension plan assets by major categories and by levels within the fair value hierarchy as of March 31, 2018 and 2017 (in thousands): March 31, 2018 2017 Level 1 Level 2 Total Level 1 Level 2 Total Cash and cash equivalents $ 18,331 $ 24 $ 18,355 $ 11,864 $ 46 $ 11,910 Equity securities 26,204 — 26,204 20,985 — 20,985 Debt securities 25,150 — 25,150 22,373 — 22,373 Swiss real estate funds 12,096 — 12,096 9,699 — 9,699 Hedge funds — — — — 3,507 3,507 Insurance contracts — 32 32 — 61 61 Other 2,623 258 2,881 2,654 187 2,841 $ 84,404 $ 314 $ 84,718 $ 67,575 $ 3,801 $ 71,376 The funded status of the plans was as follows (in thousands): Years Ended March 31, 2018 2017 Fair value of plan assets $ 84,718 $ 71,376 Less: projected benefit obligations 128,915 114,640 Underfunded status $ (44,197 ) $ (43,264 ) Amounts recognized on the balance sheet for the plans were as follows (in thousands): March 31, 2018 2017 Current liabilities $ (1,763 ) $ (1,266 ) Non-current liabilities (42,434 ) (41,998 ) Net liabilities $ (44,197 ) $ (43,264 ) Amounts recognized in accumulated other comprehensive loss related to defined benefit pension plans were as follows (in thousands): March 31, 2018 2017 2016 Net prior service credits $ 3,843 $ 1,274 $ 1,613 Net actuarial loss (9,821 ) (11,407 ) (27,612 ) Net transition obligation — — (4 ) Accumulated other comprehensive loss (5,978 ) (10,133 ) (26,003 ) Deferred tax benefit (420 ) (347 ) (168 ) Accumulated other comprehensive loss, net of tax $ (6,398 ) $ (10,480 ) $ (26,171 ) The following table presents the amounts included in accumulated other comprehensive loss as of March 31, 2018 , which are expected to be recognized as a component of net periodic benefit cost in fiscal year 2019 (in thousands): Year Ending March 31, 2019 Amortization of net prior service credits $ (381 ) Amortization of net actuarial loss 95 $ (286 ) The Company reassesses its benefit plan assumptions on a regular basis. The actuarial assumptions for the defined benefit plans for fiscal years 2018 and 2017 were as follows: Years Ended March 31, 2018 2017 Benefit Obligations: Discount rate 0.85%-7.5% 0.75%-7.00% Estimated rate of compensation increase 2.25%-10.00% 2.5%-10.00% Periodic Costs: Discount rate 0.75%-7.00% 0.5%-8.00% Estimated rate of compensation increase 2.5%-10.00% 2.5%-10.00% Expected average rate of return on plan assets 1.0%-2.5% 1.0%-2.75% The discount rate is estimated based on corporate bond yields or securities of similar quality in the respective country, with a duration approximating the period over which the benefit obligations are expected to be paid. The Company bases the compensation increase assumptions on historical experience and future expectations. The expected average rate of return for the Company's defined benefit pension plans represents the average rate of return expected to be earned on plan assets over the period that the benefit obligations are expected to be paid, based on government bond notes in the respective country, adjusted for corporate risk premiums as appropriate. The following table reflects the benefit payments that the Company expects the plans to pay in the periods noted (in thousands): Years Ending March 31, 2019 $ 7,199 2020 7,701 2021 7,046 2022 7,341 2023 7,064 2024-2028 38,546 $ 74,897 The Company expects to contribute $5.7 million to its defined benefit pension plans during fiscal year 2019 . Deferred Compensation Plan One of the Company's subsidiaries offers a deferred compensation plan that permits eligible employees to make 100% vested salary and incentive compensation deferrals within established limits. The Company does not make contributions to the plan. The deferred compensation plan's assets consist of marketable securities and are included in other assets on the consolidated balance sheets. The marketable securities are classified as trading investments and were recorded at a fair value of $17.7 million and $15.0 million as of March 31, 2018 and 2017 , respectively, based on quoted market prices. The Company also had $17.7 million and $15.0 million in deferred compensation liability as of March 31, 2018 and 2017 , respectively. Earnings, gains and losses on trading investments are included in other income (expense), net and corresponding changes in deferred compensation liability are included in operating expenses and cost of goods sold. |
