Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

Defined Benefit Plan:

The following tables summarize changes in the benefit obligation, the plan assets and the funded status of our pension plan as well as the components of net periodic benefit costs, including key assumptions (in thousands). The measurement dates for plan assets and obligations were December 31, 2019 and 2018.



	December 31,
	2019			2018
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year	$	55,759		$	58,998
Service cost	1,090			1,295
Interest cost	2,257			2,056
Actuarial loss (gain) ⁽¹⁾	7,889			(4,478		)
Benefit payments	(2,742		)	(2,112		)
Benefit obligation at end of year	$	64,253		$	55,759
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	50,802		$	53,808
Actual return on plan assets	10,356			(1,894		)
Employer contributions	1,000			1,000
Benefit payments	(2,742		)	(2,112		)
Fair value of plan assets at end of year	$	59,416		$	50,802
Unfunded status at end of year (included in accounts payable and accrued expenses in 2019 and 2018)	$	(4,837	)	$	(4,957	)
Accumulated benefit obligation	$	64,159		$	55,683
Net loss recognized in accumulated other comprehensive loss	$	14,897		$	15,050

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(1)	The change in actuarial loss (gain) is attributable primarily to census and mortality table updates and a decrease in the discount rate in 2019.

The following is the required information for other changes in plan assets and benefit obligation recognized in other comprehensive income (in thousands):



	Year Ended December 31,
	2019			2018			2017
Net loss	$	1,044		$	1,143		$	82
Amortization of net loss ⁽¹⁾	(1,197		)	(1,228		)	(1,475		)
Total recognized in other comprehensive income	$	(153	)	$	(85	)	$	(1,393	)
Total recognized in net periodic benefit cost and other comprehensive income	$	880		$	767		$	213

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(1)	The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $1.2 million.

The following is the required information with an accumulated benefit obligation in excess of plan assets (in thousands):



	December 31,
	2019		2018
Projected benefit obligation	$	64,253	$	55,759
Accumulated benefit obligation	64,159		55,683
Fair value of plan assets	59,416		50,802

The components of net periodic benefit cost are as follows (in thousands):



	Year Ended December 31,
	2019			2018			2017
Service cost	$	1,090		$	1,295		$	1,223
Interest cost	2,257			2,056			2,123
Expected return on plan assets	(3,511		)	(3,727		)	(3,215		)
Amortization of net loss	1,197			1,228			1,475
Total	$	1,033		$	852		$	1,606

The components of net periodic benefit cost other than the service cost component are included in Interest and Other Income, net in the Consolidated Statements of Operations.

The assumptions used to develop net periodic benefit cost are shown below:



	Year Ended December 31,
	2019		2018		2017
Discount rate	4.12	%	3.50	%	4.01	%
Salary scale increases	3.50	%	3.50	%	3.50	%
Long-term rate of return on assets	7.00	%	7.00	%	7.00	%

The selection of the discount rate is made annually after comparison to yields based on high quality fixed-income investments. The salary scale is the composite rate which reflects anticipated inflation, merit increases, and promotions for the group of covered participants. The long-term rate of return is a composite rate for the trust. It is derived as the sum of the percentages invested in each principal asset class included in the portfolio multiplied by their respective expected rates of return. We considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This analysis resulted in the selection of 7.00% as the long-term rate of return assumption for 2019.

The assumptions used to develop the actuarial present value of the benefit obligation are shown below:



	Year Ended December 31,
	2019		2018		2017
Discount rate	3.09	%	4.12	%	3.50	%
Salary scale increases	3.50	%	3.50	%	3.50	%

The expected contribution to be paid for the Retirement Plan by us during 2020 is approximately $1.0 million. The expected benefit payments for the next 10 years for the Retirement Plan is as follows (in thousands):



2020	$	2,436
2021	2,602
2022	2,772
2023	2,936
2024	3,062
2025-2029	16,209

The participant data used in determining the liabilities and costs for the Retirement Plan was collected as of January 1, 2019, and no significant changes have occurred through December 31, 2019.

At December 31, 2019, our investment asset allocation compared to our benchmarking allocation model for our plan assets was as follows:



	Portfolio		Benchmark
Cash and Short-Term Investments	5	%	4	%
U.S. Stocks	51	%	56	%
International Stocks	14	%	10	%
U.S. Bonds	24	%	26	%
International Bonds	5	%	3	%
Other	1	%	1	%
Total	100	%	100	%

The fair value of plan assets was determined based on publicly quoted market prices for identical assets, which are classified as Level 1 observable inputs. The allocation of the fair value of plan assets was as follows:



	December 31,
	2019		2018
Cash and Short-Term Investments	18	%	20	%
Large Company Funds	34	%	33	%
Mid Company Funds	7	%	7	%
Small Company Funds	7	%	6	%
International Funds	11	%	8	%
Fixed Income Funds	15	%	18	%
Growth Funds	8	%	8	%
Total	100	%	100	%

Concentrations of risk within our equity portfolio are investments classified within the following sectors: technology, financial services, healthcare, consumer cyclical goods and industrial, which represents approximately 21%, 17%, 15%, 12% and 11% of total equity investments, respectively.

Defined Contribution Plans:

Compensation expense related to our defined contribution plans was $3.9 million in 2019, $3.8 million in 2018 and $3.9 million in 2017.