POST-RETIREMENT BENEFITS

401(k) Plan

In the U.S., we sponsor a 401(k) plan that allows voluntary contributions by eligible employees, who may elect to contribute up to the maximum allowed under the U.S. Internal Revenue Service regulations. We generally make 100 percent matching contributions on the first 3 percent and 50 percent matching contributions on the following 2 percent (up to a maximum of $18,000 per eligible employee for calendar year 2015). We recorded related expenses of $0.4 million, $0.5 million and $0.8 million in fiscal years ended July 2, 2016, June 27, 2015 and June 28, 2014, respectively, including amounts related to our discontinued operations.

Defined Contribution Plan

We contribute to a U.K. based defined contribution pension scheme for employees. Contributions under this plan and the related expenses were $1.2 million, $1.2 million and $1.4 million in the fiscal years ended July 2, 2016, June 27, 2015 and June 28, 2014, respectively.

Japan Defined Contribution and Benefit Plan

In connection with our acquisition of Opnext, we assumed a defined contribution plan and a defined benefit plan that provides retirement benefits to our employees in Japan.

Under the defined contribution plan, contributions are provided based on grade level and totaled $0.5 million, $0.5 million and $0.8 million for the years ended July 2, 2016, June 27, 2015 and June 28, 2014, respectively. Employees can elect to receive the benefit as additional salary or contribute the benefit to the plan on a tax-deferred basis.

Under the defined benefit plan in Japan (the "Japan Plan"), we calculate benefits based on an employee’s individual grade level and years of service. Employees are entitled to a lump sum benefit upon retirement or upon certain instances of termination. During the second quarter of fiscal year 2015, we sold our Komoro Business, and as part of the sale transferred a portion of our Japan Plan covering employees of the Komoro Business to Ushio Opto.

As of July 2, 2016, there were no Japan Plan assets. As of July 2, 2016, there was $0.1 million in accrued expenses and other liabilities and $6.8 million in other non-current liabilities in our consolidated balance sheet, to account for the projected benefit obligations under the Japan Plan.

The reconciliation of the actuarial present value of the projected benefit obligations for the defined benefit plan for the year ended July 2, 2016 and June 27, 2015 was as follows:



	July 2, 2016			June 27, 2015
	(Thousands)
Change in projected benefit obligation:
Projected benefit obligation, beginning of period	$	4,817		$	8,287
Service cost	560			693
Interest cost	48			69
Benefits paid	(144		)	(580		)
Decrease in obligation in connection with the sale of the Komoro Business	—			(1,974		)
Actuarial (gain) loss on obligation	614			(60		)
Change in methodology used to estimate the actuarial present value of accumulated plan benefits	—			(471		)
Currency translation adjustment	1,017			(1,147		)
Projected benefit obligation, end of period	$	6,912		$	4,817
Amounts recognized in consolidated balance sheets:
Accrued expenses and other liabilities:
Underfunded pension liability	$	50		$	273
Other non-current liabilities:
Underfunded pension liability	$	6,862		$	4,544
Amounts recognized in accumulated other comprehensive income, net of tax:
Pension actuarial (gain) loss	$	363		$	(182	)
Accumulated benefit obligation, end of period	$	6,912		$	4,817

During the first quarter of fiscal year 2015, we recorded an adjustment of $0.5 million in accumulated other comprehensive income in connection with revising our methodology for estimating the actuarial present value of accumulated plan benefits under the Japan Plan.

Net periodic pension cost associated with the Japan Plan in fiscal years ended July 2, 2016, June 27, 2015 and June 28, 2014 include the following components:



	July 2, 2016		June 27, 2015		June 28, 2014
	(Thousands)
Service cost	$	560	$	693	$	963
Interest cost	48		69		95
Net amortization	—		35		62
Net periodic pension cost	$	608	$	797	$	1,120

The projected and accumulated benefit obligations for the Japan Plan were calculated as July 2, 2016 and June 27, 2015 using the following assumptions:



	July 2, 2016		June 27, 2015
Discount rate	0.9	%	1.1	%
Salary increase rate	2.2	%	2.2	%
Expected average remaining working life (in years)	14.3		13.8

As of July 2, 2016, the accumulated benefit obligation was $6.9 million. Estimated future benefit payments under the Japan Plan are estimated to be $0.1 million in fiscal year 2017, $0.2 million in fiscal year 2018, $0.3 million in fiscal year 2019, $0.5 million in fiscal year 2020, $0.3 million in fiscal year 2021 and a total of $2.3 million for the following 5 years.