Retirement Plans

The Company and its subsidiaries have various savings and retirement plans covering substantially all employees.

Defined Contribution Plans

The Company maintains a defined contribution plan for the benefit of its eligible U.S. employees. This plan provides for Company contributions of up to 5% of each participant’s total eligible compensation. In addition, the Company contributes an amount equal to each participant’s pre-tax contribution, if any, up to a maximum of 3% of each participant’s total eligible compensation. The total expense related to the defined contribution plans for U.S. employees was $41.4 million in fiscal 2018, $35.8 million in fiscal 2017 and $28.3 million in fiscal 2016.

Non-Qualified Deferred Compensation Plan

The Deferred Compensation Plan (DCP) allows certain members of management and other highly-compensated employees and non-employee directors to defer receipt of all or any portion of their compensation. The DCP was established to provide participants with the opportunity to defer receiving all or a portion of their compensation, which includes salary, bonus, commissions and director fees. Under the DCP, the Company provides all participants (other than non-employee directors) with Company contributions equal to 8% of eligible deferred contributions. The DCP is a non-qualified plan that is maintained in a rabbi trust. The fair value of the investments held in the rabbi trust are presented separately as deferred compensation plan investments, with the current portion of the investment included in prepaid expenses and other current assets in the consolidated balance sheet. See Note 2j., Fair Value, for further information on these investments. The deferred compensation obligation represents DCP participant accumulated deferrals and earnings thereon since the inception of the DCP net of withdrawals. The deferred compensation obligation is presented separately as Deferred compensation plan liability, with the current portion of the obligation in accrued liabilities in the consolidated balance sheet. The Company’s liability under the DCP is an unsecured general obligation of the Company.

Defined Benefit Pension Plans

The Company also has various defined benefit pension and other retirement plans for certain non-U.S. employees that are consistent with local statutory requirements and practices. The total expense related to the various defined benefit pension, contribution and other retirement plans for certain non-U.S. employees was $36.3 million in fiscal 2018, $33.0 million in fiscal 2017 and $26.9 million in fiscal 2016.

The Company’s funding policy for its foreign defined benefit pension plans is consistent with the local requirements of each country. The plans’ assets consist primarily of U.S. and non-U.S. equity securities, bonds, property and cash.

The Company has elected to measure defined benefit plan assets and obligations as of October 31, which is the month-end that is closest to its fiscal year-ends, which were November 3, 2018 for fiscal 2018 and October 28, 2017 for fiscal 2017.

Components of Net Periodic Benefit Cost

Net annual periodic pension cost of non-U.S. plans for fiscal 2018, fiscal 2017 and fiscal 2016 is presented in the following table:



	2018			2017			2016
Service cost	$	6,891		$	6,688		$	5,520
Interest cost	3,984			3,581			3,675
Expected return on plan assets	(4,559		)	(4,086		)	(3,764		)
Amortization of prior service cost	10			14			—
Amortization of transition obligation	1			(9		)	17
Recognized actuarial loss	1,621			1,865			679
Subtotal	$	7,948		$	8,053		$	6,127
Settlement impact	—			—			151
Net periodic pension cost	$	7,948		$	8,053		$	6,278

Benefit Obligations and Plan Assets

Obligation and asset data of the Company’s non-U.S. plans at November 3, 2018 and October 28, 2017 is presented in the following table:



	2018			2017
Change in Benefit Obligation
Benefit obligation at beginning of year	$	139,516		$	129,711
Service cost	6,891			6,688
Interest cost	3,984			3,581
Plan amendments	—			176
Actuarial gain	(20,406		)	(2,615		)
Benefits paid	(4,301		)	(2,663		)
Exchange rate adjustment	(2,146		)	4,638
Benefit obligation at end of year	$	123,538		$	139,516
Change in Plan Assets
Fair value of plan assets at beginning of year	$	79,616		$	69,823
Actual return on plan assets	(2,626		)	5,420
Employer contributions	13,793			4,995
Benefits paid	(4,301		)	(2,663		)
Exchange rate adjustment	(1,827		)	2,041
Fair value of plan assets at end of year	$	84,655		$	79,616
Reconciliation of Funded Status
Funded status	$	(38,883	)	$	(59,900	)
Amounts Recognized in the Balance Sheet
Non-current assets	$	6,569		$	—
Current liabilities	(767		)	(733		)
Non-current liabilities	(44,685		)	(59,167		)
Net amount recognized	$	(38,883	)	$	(59,900	)



	2018			2017
Reconciliation of Amounts Recognized in the Statement of Financial Position
Initial net obligation	$	—		$	(10	)
Prior service credit	(44		)	(45		)
Net loss	(20,800		)	(35,779		)
Accumulated other comprehensive loss	(20,844		)	(35,834		)
Accumulated contributions less than net periodic benefit cost	(18,039		)	(24,066		)
Net amount recognized	$	(38,883	)	$	(59,900	)
Changes Recognized in Other Comprehensive Income
Changes in plan assets and benefit obligations recognized in other comprehensive income
Prior service cost	$	—		$	176
Net loss arising during the year (includes curtailment gains not recognized as a component of net periodic cost)	$	(13,220	)	$	(3,949	)
Effect of exchange rates on amounts included in accumulated other comprehensive income (loss)	(138		)	1,952
Amounts recognized as a component of net periodic benefit cost
Amortization, settlement or curtailment recognition of net transition obligation	(10		)	(14		)
Amortization or curtailment recognition of prior service credit (cost)	(1		)	9
Amortization or settlement recognition of net loss	(1,621		)	(1,865		)
Total recognized in other comprehensive loss	$	(14,990	)	$	(3,691	)
Total recognized in net periodic cost and other comprehensive loss	$	(7,042	)	$	4,362
Estimated amounts that will be amortized from accumulated other comprehensive (loss) income over the next fiscal year
Initial net obligation	$	—		$	(10	)
Prior service credit	(2		)	(2		)
Net loss	(1,015		)	(1,582		)
Total	$	(1,017	)	$	(1,594	)

The accumulated benefit obligation for non-U.S. pension plans was $105.8 million and $116.7 million at November 3, 2018 and October 28, 2017, respectively.

Information relating to the Company’s non-U.S. plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets at November 3, 2018 and October 28, 2017 is presented in the following table:



	2018		2017
Plans with projected benefit obligations in excess of plan assets:
Projected benefit obligation	$	46,626	$	139,516
Fair value of plan assets	$	1,174	$	79,616
Plans with accumulated benefit obligations in excess of plan assets:
Projected benefit obligation	$	46,626	$	109,261
Accumulated benefit obligation	$	41,701	$	103,470
Fair value of plan assets	$	1,174	$	53,747

Assumptions

The range of assumptions used for the non-U.S. defined benefit plans reflects the different economic environments within the various countries as well as the differences in the attributes of the participants. As of October 29, 2016, the Company changed the method utilized to estimate the service cost and interest cost components of net periodic benefit cost for certain of its defined benefit pension plans. Prior to October 29, 2016, the Company estimated the service cost and interest cost components of net periodic benefit costs using a single weighted average discount rate. Beginning October 29, 2016, the Company uses a spot rate approach to estimate the service and interest cost components of net periodic benefit cost for certain of its defined benefit pension plans as the Company believes this approach calculates a better estimate. The change did not, and is not expected to, materially affect the Company's Consolidated Statement of Income.

The projected benefit obligation was determined using the following weighted-average assumptions:



	2018		2017
Discount rate	3.53	%	3.02	%
Rate of increase in compensation levels	3.26	%	3.18	%

Net annual periodic pension cost was determined using the following weighted average assumptions:



	2018		2017
Discount rate	3.02	%	2.92	%
Expected long-term return on plan assets	5.54	%	5.58	%
Rate of increase in compensation levels	3.18	%	3.36	%

The expected long-term rate of return on assets is a weighted-average of the long-term rates of return selected for the various countries where the Company has funded pension plans. The expected long-term rate of return on assets assumption is selected based on the facts and circumstances that exist as of the measurement date and the specific portfolio mix of plan assets. Management, in conjunction with its actuaries, reviewed anticipated future long-term performance of individual asset categories and considered the asset allocation strategy adopted by the Company and/or the trustees of the plans. While the review considered recent fund performance and historical returns, the assumption is primarily a long-term prospective rate.

The Company’s investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, in order to maximize the return on assets, a majority of assets are invested in equities. Investments within each asset class are diversified to reduce the impact of losses in single investments. The use of derivative instruments is permitted where appropriate and necessary to achieve overall investment policy objectives and asset class targets.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for each significant asset class to obtain a prudent balance between return and risk. The interaction between plan assets and benefit obligations is periodically studied by the Company and its actuaries to assist in the establishment of strategic asset allocation targets.

Fair value of plan assets

The following table presents plan assets measured at fair value on a recurring basis by investment categories as of November 3, 2018 and October 28, 2017 using the same three-level hierarchy described in Note 2j, Fair Value, of these Notes to Consolidated Financial Statements:



	November 3, 2018						October 28, 2017
	Fair Value Measurement at Reporting Date Using:						Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Unit trust funds(1)	$	—	$	2,549	$	2,549	$	—	$	1,676	$	1,676
Equities(1)	3,437		35,221		38,658		4,701		32,589		37,290
Fixed income securities(2)	—		42,312		42,312		—		39,442		39,442
Cash and cash equivalents	1,136		—		1,136		1,208		—		1,208
Total assets measured at fair value	$	4,573	$	80,082	$	84,655	$	5,909	$	73,707	$	79,616

_______________________________________

(1)

The majority of the assets in these categories are invested in a mix of equities, including those from North America, Europe and Asia. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund. Due to the nature of the underlying assets of these funds, changes in market conditions and the economic environment may significantly impact the net asset value of these investments and, consequently, the fair value of the investments. These investments are redeemable at net asset value to the extent provided in the documentation governing the investments. However, these redemption rights may be restricted in accordance with governing documents. Publicly traded securities are valued at the last trade or closing price reported in the active market in which the individual securities are traded.


(2)	The majority of the assets in this category are invested in funds primarily concentrated in non-U.S. debt instruments. The funds are valued using the net asset value method in which an average of the market prices for underlying investments is used to value the fund.

Estimated future cash flows

Expected fiscal 2019 Company contributions and estimated future benefit payments are as follows:



Expected Company Contributions
2019	$	4,149
Expected Benefit Payments
2020	$	2,580
2021	$	2,063
2022	$	2,212
2023	$	2,792
2024	$	3,247
2025 through 2028	$	21,966