NOTE 9EMPLOYEE BENEFIT PLANS

Retirement Savings Plan

We offer a contributory retirement savings plan that has two components: (1) A 401(k) component with a Company match and (2) A discretionary fiscal year Company contribution.

The 401(k) component of the retirement savings plan allows eligible U.S. employees to contribute a portion of their pre-tax income to the plan each pay period. We then match 50% of employees’ pre-tax and Roth 401 (k) contributions (excluding “catch-up” contributions that employees age 50 or older may make to the plan), up to 6% of compensation, subject to limitations imposed by federal law. Effective October 1, 2015, we increased the match to 75% of employees’ pre-tax and Roth 401 (k) contributions up to 6%. Our matching contributions were $2,732, $2,559 and $2,384 in fiscal years 2015, 2014 and 2013, respectively. Employees may also contribute a percentage of their salary to the plan on an after-tax basis.

We also provide, on an annual fiscal year basis, a discretionary contribution to the retirement plan for eligible U.S. employees. U.S. employees who are active as of the end of the fiscal year and whom have been paid for 1,000 hours or more of service during a plan year are eligible for a fiscal year contribution. After three years as a participant, employees have a vested interest equal to 100% of the total Company’s discretionary fiscal year contributions. The plan provides for a discretionary fiscal year contribution based on company financial performance up to the maximum contribution allowed by federal law. We will fund the discretionary contribution if we exceed our Earnings Before Interest and Taxes (EBIT) target. Our Board of Directors approves any changes to the contribution levels under the plan. Our fiscal year contributions under the plan totaled $0, $0 and $2,955 in fiscal years 2015, 2014 and 2013, respectively.

Defined Benefit Pension Plan

One of our German subsidiaries has a non-contributory, defined benefit retirement plan for eligible employees. This plan provides benefits based on the employee's years of service and compensation during the years immediately preceding retirement, termination, disability or death, as defined in the plan. We use a September 30 measurement date for this defined benefit retirement plan.

We recognize the funded status of the defined benefit pension in our Consolidated Balance Sheet Statements, recognize changes in that funded status in the year in which the changes occur through comprehensive income and measure the plan’s assets and obligations that determine the plan’s funded status as of the end of our fiscal year.

The pretax amount recognized in Accumulated Other Comprehensive Income (AOCI) as of October 3, 2015 and September 27, 2014 consists of the following:



(in thousands)		2015		2014
Actuarial net loss	$	9,999	$	10,469

The portion of the pretax amount in AOCI at September 27, 2014 that was recognized in earnings during the fiscal year ended October 3, 2015 was $501. The portion of the pretax amount in AOCI at October 3, 2015 that is expected to be recognized as a component of net periodic retirement cost during the next fiscal year is $589. The actuarial loss in fiscal year 2015 of $1,256 was primarily a result of the change in the discount rate from 2.48% in fiscal year 2014 to 2.27% in fiscal year 2015.

The following is a summary of the changes in benefit obligations and plan assets during fiscal years 2015 and 2014.



(in thousands)		2015		2014
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	28,618	$	23,691
Service cost		860		800
Interest cost		634		833
Actuarial loss		1,256		5,762
Exchange rate change		(3,491)		(1,830)
Benefits paid		(605)		(638)
Projected benefit obligation, end of year	$	27,272	$	28,618

Change in plan assets:
Fair value of plan assets, beginning of year	$	20,269	$	18,589
Actual return on plan assets		1,040		2,978
Employer contributions		605		638
Exchange rate change		(2,542)		(1,298)
Benefits paid		(605)		(638)
Fair value of plan assets, end of year	$	18,767	$	20,269

The following is a summary of the funded status of the defined benefit retirement plan and amounts recognized in our Consolidated Balance Sheets at October 3, 2015 and September 27, 2014.



(in thousands)		2015		2014
Funded status:
Funded status, end of year	$	(8,505)	$	(8,349)
Accumulated other comprehensive loss		9,999		10,469
Net amount recognized	$	1,494	$	2,120

Amounts recognized in consolidated balance sheets:
Accrued payroll and related costs	$	(721)	$	(695)
Pension benefit plan obligation		(7,784)		(7,654)
Deferred income taxes		3,031		3,175
Accumulated other comprehensive income, net of tax		6,968		7,294
Net amount recognized	$	1,494	$	2,120

The weighted average assumptions used to determine the defined benefit retirement plan obligation at October 3, 2015 and September 27, 2014, and also the net periodic benefit cost for the following fiscal year, were as follows:



	2015		2014
Discount rate	2.27	%	2.48	%
Expected rate of return on plan assets	5.50	%	5.50	%
Expected rate of increase in future compensation levels	3.00	%	3.40	%

The discount rate is calculated based on zero-coupon bond yields published by the Deutsche Bundesbank for maturities that match the weighted average duration of the pension liability, adjusted for the average credit spread of corporate bond rates above the government bond yields.

The expected rate of return on plan assets represents the weighted average of the expected returns on individual asset categories in the portfolio. We use investment services to assist with determining the overall expected rate of return on pension plan assets. Factors considered in our determination include historical long-term investment performance and estimates of future long-term returns by asset class.

The overall objective of our investment policy and strategy for the defined benefit retirement plan is to maintain sufficient liquidity to pay benefits and minimize the volatility of returns while earning the highest possible rate of return over time to satisfy the benefit obligations. The plan fiduciaries assist us with setting our long-term strategic investment objectives for the defined benefit retirement plan assets. The objectives include preserving the funded status of the trust and balancing risk and return. Investment performance and plan asset mix are reviewed periodically.

At both October 3, 2015 and September 27, 2014, plan assets were invested in a single mutual fund, the underlying assets of which are allocated to fixed income and cash and cash equivalents categories as shown in the table below. During the fourth quarter of fiscal year 2014, in an effort to increase the long-term expected return, the plan assets were transferred from one single mutual fund to another through a sale and simultaneous purchase. The new mutual fund targets a higher exposure to equity markets and is able to generate a higher overall return on a long-term basis. Any decisions to change the asset allocation are made by the plan fiduciaries. The investment in equity and fixed income securities has a long-term targeted allocation of assets of 50% equity and 50% fixed income.

The actual defined benefit retirement plan asset allocations within the balanced mutual fund at October 3, 2015 and September 27, 2014 are as follows:



	Percentage of Plan Assets
	2015		2014
Fixed income securities1	83.0	%	49.0	%
Cash and cash equivalents2	13.0	%	51.0	%
Other	4.0	%	-	%
Total	100.0	%	100.0	%

1Fixed income securities are comprised primarily of international government agency and international corporate bonds with investment grade ratings.

2Cash and cash equivalents include deposit accounts holding cash in Euros and other currencies and term deposits primarily held as collateral for equity futures. The market values of the equity and futures are linked to the values of equity indexes of developed country markets, including the U.S., Great Britain, Europe, Canada, Switzerland and Japan.

As of October 3, 2015 and September 27, 2014, the fair value of the defined benefit retirement plan assets, which are subject to fair value measurements as described in Note 6 are as follows:


	October 3, 2015
(in thousands)		Level 1		Level 2		Level 3		Total
Mutual fund1	$	-	$	18,767	$	-	$	18,767


	September 27, 2014
(in thousands)		Level 1		Level 2		Level 3		Total
Mutual fund1	$	-	$	20,269	$	-	$	20,269

1The fair value of the mutual fund is generally valued based on closing prices from national exchanges, if the underlying securities are traded on an active market, or fixed income pricing models that use observable market inputs.

Net periodic benefit cost for our defined benefit retirement plan for fiscal years 2015, 2014 and 2013 included the following components:



(in thousands)		2015		2014		2013
Service cost	$	860	$	800	$	690
Interest cost		634		833		768
Expected return on plan assets		(1,009)		(1,024)		(690)
Net amortization and deferral		501		464		520
Special termination benefits		-		25		-
Net periodic benefit cost	$	986	$	1,098	$	1,288

The accumulated benefit obligation of our defined benefit retirement plan as of October 3, 2015 and September 27, 2014 was $24,657 and $25,646, respectively.

The future pension benefit payments, which reflect expected future service, for the next five fiscal years, and the combined five fiscal years thereafter, are as follows:



	Pension Benefits
Fiscal Year	(in thousands)
2015	$	721
2016		740
2017		774
2018		835
2019		879
2020 through 2024		5,292
Total	$	9,241

Other Retirement Plans

Certain of our international subsidiaries have non-contributory, unfunded post-retirement benefit plans that provide retirement benefits for eligible employees and managing directors. Generally, these postretirement plans provide benefits that accumulate based on years of service and compensation levels. At October 3, 2015 and September 27, 2014, the aggregate liabilities associated with these post-retirement benefit plans was $3,247 and $4,216, respectively.