17)

Employee Benefit Plans

The Company has a 401(k) profit-sharing plan for U.S. employees meeting certain requirements in which eligible employees may contribute between 1% and 50% of their annual compensation to this plan, and, with respect to employees who are age 50 and older, certain specified additional amounts, limited by an annual maximum amount determined by the Internal Revenue Service. The Company, at its discretion, makes certain matching contributions to these plans based on participating employees’ contributions to the plans and their total compensation. The Company’s contributions were $6,093, $5,651 and $6,524 for 2018, 2017 and 2016, respectively.

The Company maintains a bonus plan which provides cash awards to key employees, at the discretion of the compensation committee of the Board of Directors, based upon operating results and employee performance. In addition, the Company’s foreign locations also have various bonus plans based upon local operating results and employee performance. The total bonus expense was $38,254, $46,783 and $28,097 for 2018, 2017 and 2016, respectively.

The Company provides supplemental retirement benefits for one of its current executive officers and a number of former retired executives. The total cost of these benefits was $4,609, $3,478 and $1,805 for 2018, 2017 and 2016, respectively. The accumulated benefit obligation was $20,644 and $15,929 at December 31, 2018 and 2017, respectively, which was included in other long-term liabilities.

The Company also has a deferred compensation plan for certain Light & Motion segment executives.

Defined Benefit Pension Plans

As a result of the Newport Merger, the Company assumed all assets and liabilities of Newport’s defined benefit pension plans, which cover substantially all of its full-time employees in France, Germany, Israel and Japan. In addition, there are certain pension assets and liabilities relating to former employees in the United Kingdom. The German plan is unfunded, as permitted under the plan and applicable laws.

For financial reporting purposes, the calculation of net periodic pension costs was based upon a number of actuarial assumptions including a discount rate for plan obligations, an assumed rate of return on pension plan assets and an assumed rate of compensation increase for employees covered by the plan. All of these assumptions were based upon management’s judgment, considering all known trends and uncertainties. Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of the Company’s pension plans.

The net periodic benefit costs for the plans included the following components:


	Year Ended December 31,
	2018			2017
Service cost	$	657		$	708
Interest cost on projected benefit obligations		433			458
Expected return on plan assets		(115	)		(116	)
Amortization of actuarial net loss		127			400

	$	1,102		$	1,450

The changes in projected benefit obligations and plan assets, as well as the ending balance sheet amounts for the Company’s defined benefit plans, were as follows:


	Year Ended December 31,
	2018			2017
Change in projected benefit obligations:
Projected benefit obligations, beginning of year	$	25,736		$	23,450
Service cost		657			708
Interest cost		433			458
Actuarial gain		(98	)		(312	)
Benefits paid		(895	)		(1,271	)
Currency translation adjustments		(948	)		2,703

Projected benefit obligations, end of year	$	24,885		$	25,736

Change in plan assets:
Fair value of plan assets, beginning of year	$	8,152		$	7,672
Company contributions		324			324
(Loss) gain on plan assets		(56	)		177
Benefits paid		(369	)		(722	)
Currency translation adjustments		(229	)		701

Fair value of plan assets, end of year		7,822			8,152

Net underfunded status	$	(17,063	)	$	(17,584	)

Changes in plan assets and benefit obligations recognized in other comprehensive income included the following components:


	Year Ended December 31,
	2018			2017
Amounts recognized in accumulated comprehensive income:
Accumulated net actuarial gain	$	235		$	235
Income tax (expense) benefit		(86	)		88

Accumulated other comprehensive gain	$	149		$	323

As of December 31, 2018, the estimated benefit payments for the Company’s defined benefit plans for the next 10 years were as follows:


	Estimated benefit payments
2019	$	1,046
2020	$	1,252
2021	$	1,210
2022	$	1,312
2023	$	1,129
2024-2028	$	7,313

	$	13,262

The Company expects to contribute $1,660 to the plans during 2019.

The weighted-average rates used to determine the net periodic benefit costs were as follows:


	December 31, 2018
Discount rate		1.9	%
Rate of increase in salary levels		2.1	%
Expected long-term rate of return on assets		1.9	%

In determining the expected long-term rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance.

Plan assets were held in the following categories as a percentage of total plan assets:


	Year Ended December 31, 2018
	Amount		Percentage
Cash	$	193		2.00	%
Debt securities		4,855		62
Equity securities		1,342		17
Other		1,432		19

	$	7,822		100	%

In general, the Company’s asset management objectives include maintaining an adequate level of diversification to reduce interest rate and market risk while providing adequate liquidity to meet immediate and future benefit payment requirements. In Japan, assets are primarily invested in pooled funds of insurance companies. The expected long-term rate of return on these assets is approximately 1.5%, which is based on the general yield environment for high quality instruments in Japan. The United Kingdom pension plan invests in a combination of equity and bond funds. The allocation mix is designed to minimize risk while providing a rate of return that will provide asset growth which will be sufficient to cover expected liabilities. The expected long-term rate of return on these assets is approximately 2.6%, which is a combination of long dated government and corporate bond yields for the bond funds, and long dated government and corporate bond yields with an allowance for out-performance for equity funds. In France, assets are invested in group insurance contracts and the expected long-term rate of return on these assets is approximately 1.6%, which is based on the expected return on the underlying assets.

The Company’s Israeli plans account for the deferred vested benefits using the shut-down method of accounting, which resulted in assets of $14,409 and vested benefit obligations of $17,552, as of December 31, 2018 and assets of $15,048 and vested benefit obligations of $17,932, as of December 31, 2017. Under the shut-down method, the liability is calculated as if it were payable as of the balance sheet date, on an undiscounted basis.

Other Pension-Related Assets

As of December 31, 2018 and 2017, the Company had assets with an aggregate market value of $5,890 and $6,255, respectively, which it has set aside in connection with its German pension plans. These assets are invested in group insurance contracts through the insurance companies administering these plans, in accordance with applicable pension laws. The Germany contracts have a guaranteed minimum rate of return ranging from 2.25% to 4.25%, depending on the contract. Because the assets were not separate legal assets of the pension plan, they were not included in the Company’s plan assets shown above. However, the Company has designated such assets to pay pension benefits. Such assets are included in other assets in the accompanying consolidated balance sheet.