EMPLOYEE BENEFITS

The Company has non-contributory defined benefit pension plans covering certain U.S. employees. Retirement benefits are generally provided based on the employees’ years of service and average earnings. Normal retirement age is 65, with provisions for earlier retirement. The Company elected to freeze its U.S. defined benefit pension plans as of September 30, 2009 and, as a result, there are no benefit accruals related to service performed after that date.

The financial position of the Company’s non-contributory defined benefit plans as of fiscal year end 2018 and 2017 was as follows:



	2018			2017
Projected benefit obligation:
Projected benefit obligation, beginning of year	$	28,472		$	29,449
Service cost	—			—
Interest cost	1,058			1,043
Actuarial gain	(1,712		)	(1,025		)
Benefits paid	(987		)	(995		)
Projected benefit obligation, end of year	26,831			28,472
Fair value of plan assets:
Fair value of plan assets, beginning of year	20,802			17,793
Actual gain on plan assets	968			2,639
Company contributions	5,188			1,365
Benefits paid	(987		)	(995		)
Fair value of plan assets, end of year	25,971			20,802
Funded status of the plans	(860		)	(7,670		)
Amounts recognized in the Consolidated Balance Sheets consist of:
Current pension liabilities	184			186
Non-current pension liabilities	676			7,484
Accumulated other comprehensive loss	(5,329		)	(7,799		)
Components of accumulated other comprehensive loss:
Net actuarial loss	(5,329		)	(7,799		)
Accumulated other comprehensive loss	$	(5,329	)	$	(7,799	)

Net periodic benefit cost for the non-contributory defined benefit pension plans for the respective years included the following pre-tax amounts:



	2018			2017			2016
Interest cost	$	1,058		$	1,043		$	1,137
Expected return on plan assets	(763		)	(1,193		)	(1,265		)
Amortization of unrecognized net actuarial loss	553			731			566
Net periodic pension cost	848			581			438
Other changes in benefit obligations recognized in other comprehensive income ("OCI"):
Net actuarial (gain) loss	(2,470		)	(3,201		)	2,507
Total recognized in net periodic pension cost and OCI	$	(1,622	)	$	(2,620	)	$	2,945

The Company expects to recognize $330 of unrecognized loss amortization as a component of net periodic benefit cost in 2019. This amount is included in accumulated other comprehensive income as of September 28, 2018.

At September 28, 2018, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $26,831 and $25,971, respectively, and there were no plans with plan assets in excess of benefit obligations. At September 29, 2017, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $28,472 and $20,802, respectively, and there were no plans with plan assets in excess of benefit obligations.

The Company anticipates making contributions to the defined benefit pension plans of $184 through September 30, 2019.

Estimated benefit payments from the Company’s defined benefit plans to participants for each of the next five years and the five years thereafter are as follows:



2019	$	1,160
2020	1,214
2021	1,228
2022	1,245
2023	1,284
Five years thereafter	7,231

Actuarial assumptions used to determine the projected benefit obligation and net periodic pension cost as of the following fiscal years were as follows:



	Projected Benefit Obligation						Net Periodic Pension Cost
	2018		2017		2016		2018		2017		2016
Discount rate	4.22	%	3.79	%	3.60	%	3.79	%	3.60	%	4.35	%
Long-term rate of return	N/A		N/A		N/A		3.45	%	6.50	%	7.50	%
Average salary increase rate	N/A		N/A		N/A		N/A		N/A		N/A

The change in discount rates in 2018 and 2017 resulted in an actuarial gain during the year of approximately $1,633 and $795, respectively. The change in discount rates in 2016 resulted in an actuarial loss during 2016 of approximately $3,152. The remainder of the actuarial gains or losses for each of the three years was related to adjustments to mortality tables and other modifications to actuarial assumptions.

To determine the discount rate assumption used in the Company’s pension valuation, the Company identified a benefit payout stream based on the demographics of the pension plans and constructed a hypothetical bond portfolio using high-quality corporate bonds with cash flows that matched that benefit payout stream. A yield curve was calculated based on this hypothetical portfolio which was used for the discount rate determination.

The Company determines the long-term rate of return assumption for plan assets by using the historical asset returns for various investment asset classes and adjusting them to reflect future expectations. The expected asset class returns are weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

The Company uses measurement dates of October 1 to determine pension expenses for each year and the last day of the fiscal year to determine the fair value of the pension assets.

The Company’s pension plans’ weighted average asset allocations at September 28, 2018 and September 29, 2017, by asset category were as follows:



	2018		2017
Equity securities	5	%	73	%
Fixed income securities	93	%	24	%
Other securities	2	%	3	%
	100	%	100	%

The Company elected to make additional contributions to its defined benefit plans in fiscal 2018, continuing its strategy to de-risk the plans. As a result of the improved funded status, the Company changed its investment strategy for the plans, allocating the majority of its assets, 95%, into fixed income securities designed to minimize the pension plans' exposure to changes in interest rates. The remaining 5% of assets are allocated to global equities.

The following table summarizes the Company’s pension plan assets measured at fair value as of September 28, 2018:



	Level 1		Level 2		Level 3		Total
Description:
Mutual funds	$	25,588	$	—	$	—	$	25,588
Money market funds	331		—		—		331
Group annuity contract	—		—		52		52
Total	$	25,919	$	—	$	52	$	25,971

The following table summarizes the Company’s pension plan assets measured at fair value as of September 29, 2017:



	Level 1		Level 2		Level 3		Total
Description:
Mutual funds	$	20,207	$	—	$	—	$	20,207
Money market funds	515		—		—		515
Group annuity contract	—		—		80		80
Total	$	20,722	$	—	$	80	$	20,802

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended September 28, 2018 and September 29, 2017:



	2018			2017
Level 3 assets, beginning of year	$	80		$	113
Purchases	—			2
Unrealized (loss) gain	(2		)	1
Sales	(26		)	(36		)
Level 3 assets, end of year	$	52		$	80

The fair values of the money market fund and mutual fund assets were derived from quoted market prices as substantially all of these instruments have active markets. The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with comparable durations. The annuity contract consists of high quality bonds.

The Company also has a non-qualified deferred compensation plan that provides certain officers and employees the ability to defer a portion of their compensation until a later date. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company. The deferred compensation liability, which is reported at fair value equal to the related rabbi trust assets, and is classified as “Other liabilities” on our accompanying Consolidated Balance Sheets, was approximately $17,477 and $14,932 as of September 28, 2018 and September 29, 2017, respectively. See “Note 4 Fair Value” for additional information.

A majority of the Company’s full-time employees are covered by defined contribution programs. Expenses attributable to the defined contribution programs were approximately $1,321, $1,189 and $1,126 for 2018, 2017 and 2016, respectively.