Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

14. Employee Benefit Plans

Defined Contribution Plans

The Company has defined contribution employee savings plans in the U.K., Japan, and the U.S. The Company matches the contributions of participating employees on the basis of percentages specified in each plan. Company matching contributions to the plans were $3.9 million, $3.1 million and $2.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Defined Benefit Plans

The Company maintains a frozen defined benefit pension plan in the United Kingdom (the “U.K. Plan”). The U.K. Plan was closed to new membership in 1997 and stopped accruing additional pension benefits for existing members in 2003. Benefits under the U.K. Plan were based on the employees’ years of service and compensation as of the date the plan was frozen in 2003, adjusted for inflation. The Company continues to fund the plan in accordance with the pension regulations in the U.K. and based on periodic agreements with the trustees of the U.K. Plan.

The net periodic pension cost consisted of the following components (in thousands):

	Year Ended December 31,
	2018			2017			2016
Components of the net periodic pension cost:
Interest cost	$	939		$	991		$	1,232
Expected return on plan assets		(1,717	)		(1,665	)		(1,566	)
Amortization of actuarial losses		826			1,045			726
Net periodic pension cost	$	48		$	371		$	392

The actuarial assumptions used to compute the net periodic pension cost for the years ended December 31, 2018, 2017 and 2016, respectively, were as follows:

	Year Ended December 31,
	2018			2017			2016
Weighted-average discount rate		2.4	%		2.6	%		3.8	%
Weighted-average long-term rate of return on plan assets		4.8	%		5.2	%		5.3	%

The actuarial assumptions used to compute the benefit obligations as of December 31, 2018 and 2017, respectively, were as follows:

	December 31,
	2018			2017
Weighted-average discount rate		2.7	%		2.4	%
Rate of inflation		2.8	%		2.9	%

The discount rates used are derived from (AA) corporate bonds that have maturities approximating the terms of the pension obligations under the U.K. Plan. In estimating the expected return on plan assets, the Company considered the historical performance of the major asset classes held by the U.K. Plan and current forecasts of future rates of return for these asset classes.

The following table provides a reconciliation of benefit obligations and plan assets of the U.K. Plan (in thousands):

	December 31,
	2018			2017
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	40,329		$	37,261
Interest cost		939			991
Actuarial (gains) losses		(1,718	)		(27	)
Benefits paid		(1,301	)		(1,313	)
Prior service cost (1)		754			—
Foreign currency exchange rate changes		(2,121	)		3,417
Projected benefit obligation at end of year	$	36,882		$	40,329
Accumulated benefit obligation at end of year	$	36,882		$	40,329
Change in plan assets:
Fair value of plan assets at beginning of year	$	36,476		$	31,304
Actual return on plan assets		(1,083	)		2,605
Employer contributions		941			887
Benefits paid		(1,301	)		(1,313	)
Foreign currency exchange rate changes		(1,909	)		2,993
Fair value of plan assets at end of year	$	33,124		$	36,476
Funded status at end of year	$	(3,758	)	$	(3,853	)
Amounts included in accumulated other comprehensive loss not yet recognized in net periodic pension cost:
Net actuarial losses at beginning of year	$	(10,493	)	$	(11,697	)
Net actuarial gains (losses) during the year		(1,082	)		967
Prior service cost arising during the year (1)		(754	)		—
Amounts reclassified from accumulated other comprehensive income to income before income taxes		826			1,045
Foreign currency exchange rate changes		383			(808	)
Net actuarial loss	$	(11,120	)	$	(10,493	)
Amounts expected to be amortized from accumulated other comprehensive loss into net periodic pension cost over the next fiscal year consists of:
Net actuarial loss	$	959		$	957
Prior service cost		29			—

(1) On October 26, 2018, the High Court of Justice in the U.K. ruled that the Guaranteed Minimum Pensions (“GMPs”) provided by pension schemes need to equalize lifetime GMP benefits between genders. In order to meet the requirements set out by the High Court, the Company recorded an estimate of $0.8 million additional benefit obligations based on the existing plan participants, the date the U.K. Plan was allowed to stop accruing additional benefits, the pension plan rules and the approach taken to equalize the benefits. The additional benefit obligation will be amortized and recognized as part of net periodic pension cost in the consolidated statement of operations over the average remaining life expectancy of the plan participants.

The funded status of the U.K. Plan is included in other long term liabilities in the accompanying consolidated balance sheets.

The following table reflects the total expected benefit payments to plan participants and have been estimated based on the same assumptions used to measure the Company’s benefit obligations as of December 31, 2018 (in thousands):

	Amount
2019	$	859
2020		1,133
2021		1,197
2022		1,038
2023		1,137
2024-2026		8,370
Total	$	13,734

In the U.K., funding valuations are conducted every three years in order to determine the future level of contributions. Based on the results of the most recent valuation, the Company’s annual contributions will be approximately $0.9 million in 2019 and will increase by 2.9% per year thereafter.

Fair Value of Plan Assets

The trustees of the U.K. Plan have the fiduciary responsibilities to manage the plan assets in consultation with the Company. The overall objective is to invest plan assets in a portfolio of diversified assets, primarily through the use of institutional collective funds, to achieve balanced growth through a combination of investments in equities for long-term growth and investments in debt instruments that match a portion of the expected future benefit payments and to maintain adequate liquidity to make pension payments to pensioners.

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2018 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	24,564	$	—	$	—	$	—	$	24,564
Fixed income (2)		8,451		—		—		—		8,451
Cash		109		109		—		—		—
Total	$	33,124	$	109	$	—	$	—	$	33,015

(1) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows: equities (42%), bonds (19%), other assets (38%) and cash (1%).  

(2) This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows: bonds (86%) and cash (14%).

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2017 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	26,816	$	—	$	—	$	—	$	26,816
Fixed income (2)		9,524		—		—		—		9,524
Cash		136		136		—		—		—
Total	$	36,476	$	136	$	—	$	—	$	36,340

(1) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows: equities (38%), bonds (27%), other assets (31%) and cash (4%).

(2) This class comprises a diversified portfolio of global investments which seeks long-term capital growth and is allocated on a weighted average basis as follows: bonds (92%) and cash (8%).