17. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

While we are not involved in any legal proceedings that we believe will have a material impact on our consolidated financial position, results of operations or cash flows, we periodically become a party to legal proceedings in the ordinary course of business.

INDEMNIFICATION

In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the other party with respect to certain matters. Generally, these obligations arise in the context of agreements entered into by us, under which we customarily agree to hold the other party harmless against losses arising from items such as a breach of certain representations and covenants including title to assets sold, certain intellectual property rights and certain environmental matters. These terms are common in the industries in which we conduct business. In each of these circumstances, payment by us is subject to certain monetary and other limitations and is conditioned on the other party making an adverse claim pursuant to the procedures specified in the particular agreement, which typically allow us to challenge the other party's claims.

We evaluate estimated losses for such indemnifications under the accounting standards related to contingencies and guarantees. We consider such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, we have not experienced material costs as a result of such obligations and, as of September 30, 2018, have not recorded any liabilities related to such indemnifications in our financial statements as we do not believe the likelihood of such obligations is probable.

LEASE COMMITMENTS

We lease certain vehicles, warehouse facilities, office space, machinery and equipment under cancelable and noncancelable leases, all of which expire within five years from September 30, 2018, and may be renewed by us. Rent expense under such arrangements during fiscal 2018, 2017 and 2016 totaled $4,307, $3,120 and $2,765, respectively.

Future minimum rental commitments under noncancelable leases as of September 30, 2018 are as follows:

Fiscal Year	Operating
2019	$	3,456
2020		2,466
2021		2,099
2022		1,853
2023		1,890
Thereafter		7,890
	$	19,654

PURCHASE OBLIGATIONS

Purchase obligations include our take-or-pay arrangements with suppliers, and purchase orders and other obligations entered into in the normal course of business regarding the purchase of goods and services. We have been operating under a fumed silica supply agreement with Cabot Corporation, our former parent company which is not a related party, the current term of which runs through December 2019. This agreement provides us the option to purchase fumed silica, with no purchase requirements as of 2017, for which we have paid a fee of $1,500 in each of the fiscal years 2017, 2018 and will pay in 2019. The $1,500 payment due for 2019 is included in accrued expenses on our Consolidated Balance Sheet As of September 30, 2018, purchase obligations include $11,208 of contractual commitments related to our Cabot Corporation supply agreement for fumed silica.

POSTRETIREMENT OBLIGATIONS IN FOREIGN JURISDICTIONS

We have unfunded defined benefit plans covering employees in certain foreign jurisdictions as required by local law. Our plans in Japan, which represent the majority of our pension liability for such plans, had projected benefit obligations of $6,621 and $6,673 as of September 30, 2018 and 2017, respectively, and an accumulated benefit obligation of $5,234 and $5,253 as of September 30, 2018 and 2017, respectively. Key assumptions used in the actuarial measurement of the Japan pension liability include a weighted average discount rate of 0.50% at September 30, 2018 and 2017, respectively, and an expected rate of compensation increase of 2.50% at September 30, 2018 and 2017, respectively. Total future Japan pension costs included in accumulated other comprehensive income are $1,735 and $1,837 at September 30, 2018 and 2017, respectively.

Our plans in Korea had defined benefit obligations of $1,731 and $1,663 as of September 30, 2018 and 2017. Key assumptions used in the actuarial measurement of the Korea pension liability include weighted average discount rates of 3.75% and 4.00% at September 30, 2018 and 2017, respectively, and an expected rate of compensation increase of 4.50% at September 30, 2018 and 2017. Total future Korea pension costs included in accumulated other comprehensive income are $133 and $6 at September 30, 2018 and 2017, respectively.

Benefit costs for the combined plans were $1,236, $1,176 and $1,024 in fiscal years 2018, 2017 and 2016, respectively, consisting primarily of service costs, and were recorded as fringe benefit expense under cost of goods sold and operating expenses in our Consolidated Statement of Income. Estimated future benefit payments are as follows:

Fiscal Year	Amount
2019	$	372
2020		611
2021		461
2022		642
2023		554
2024 to 2028	$	4,237