14. Defined Benefit Pension Obligation

The Company has established a defined pension plan for its employees in its Switzerland subsidiary. The plan provides benefits to employees upon retirement, death or disability. The Company uses June 30 as the year-end measurement date for this plan. The unfunded liability of $2.7 million was recognized in long-term other liabilities in the accompanying balance sheet as of June 30, 2017. Actuarial gain of $0.9 million was recognized in other comprehensive loss in fiscal 2017.

Obligations and Funded Status

The following table presents the funded status of the defined benefit pension plan (in thousands):

	June 30,
	2017			2016
Change in benefit obligation:
Benefit obligation—beginning of fiscal year	$	12,435		$	8,861
Service cost		1,996			1,903
Interest cost		49			76
Plan participants' contributions		1,945			2,239
Plan amendment		—			(490	)
Actuarial (gain) loss		(846	)		1,163
Foreign currency changes		265			(347	)
Benefit and expense payments		(1,865	)		(970	)

Benefit obligation—end of fiscal year	$	13,979		$	12,435


Change in plan assets:
Plan assets—beginning of fiscal year	$	9,572		$	7,184
Employer contributions		1,283			1,226
Actual return on plan assets		137			176
Plan participants' contributions		1,945			2,239
Foreign currency changes		221			(283	)
Benefit and expense payments		(1,865	)		(970	)

Plan assets—end of fiscal year	$	11,293		$	9,572


Funded status	$	(2,686	)	$	(2,863	)


Amounts recognized within the consolidated balance sheets:
Assets	$	—		$	—
Long-term other liabilities		(2,686	)		(2,863	)

Net amount recognized	$	(2,686	)	$	(2,863	)

The following table presents the amounts recognized in accumulated other comprehensive loss (before tax) for the defined benefit pension plan (in thousands):

	June 30,
	2017			2016
Net loss	$	(2,066	)	$	(1,517	)
Prior service cost (credit)		949			(549	)

Accumulated other comprehensive loss	$	(1,117	)	$	(2,066	)

The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for this defined benefit pension plan where accumulated benefit obligation exceeded the fair value of plan assets (in thousands):

	June 30,
	2017		2016
Projected benefit obligation	$	13,979	$	12,435
Accumulated benefit obligation	$	11,293	$	9,572
Fair value of plan assets	$	11,293	$	9,572

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss

The following table shows the components of the Company's net periodic benefit costs and the other amounts recognized in other comprehensive loss, before tax, related to the Company's defined benefit pension plan (in thousands):

	Year ended June 30,
	2017			2016			2015
Net Periodic Benefit Costs:
Service cost	$	1,996		$	1,903		$	980
Interest cost		49			76			107
Expected returns on assets		(132	)		(102	)		(92	)
Amortization of prior service cost (credit)		(46	)		—			—
Amortization of net loss		114			53			3

Net periodic benefit costs		1,981			1,930			998

Other Amounts Recognized in Other Comprehensive Loss:
Net (gain) loss arising during the year		(881	)		1,093			953
Prior service cost (credit)		46			(491	)		—
Amortization of net (gain) loss		(114	)		(53	)		(3	)

Total recognized in other comprehensive loss		(949	)		549			950

Total recognized in net periodic benefit costs and other comprehensive loss	$	1,032		$	2,479		$	1,948

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during fiscal year 2018 related to the Company's defined benefit pension plan are as follows (in thousands):

	2018
Net loss	$	1,582
Prior service cost (credit)		(429	)

Accumulated other comprehensive loss	$	1,153

Assumptions

The assumptions used to determine net periodic benefit cost and to compute the expected long-term return on assets for the Company's defined benefit pension plan were as follows:

	Fiscal Years
	2017			2016			2015
Net Periodic Benefit Costs:
Discount rate		0.70	%		0.40	%		0.90	%
Rate of compensation increase		2.00	%		2.00	%		2.00	%
Expected long-term return on assets		1.40	%		1.40	%		1.50	%

The assumptions used to measure the benefit obligation for the Company's defined benefit pension plan were as follows:

	June 30,
	2017			2016
Benefit Obligation:
Discount rate		1.40	%		1.40	%
Rate of compensation increase		2.00	%		2.00	%

Estimated Contributions and Future Benefit Payments

The Company made contributions of approximately $1.3 million, $1.2 million and $1.2 million to the defined benefit pension plan during fiscal years 2017, 2016 and 2015 respectively. The Company expects total contributions to the defined benefit pension plan for fiscal year 2018 will be approximately $1.2 million.

Estimated future benefit payments to the defined benefit pension plan at June 30, 2017 were as follows (in thousands):

Year Ending June 30,	Future Benefits
2018	$	1,048
2019		965
2020		905
2021		858
2022		819
Thereafter		4,283

Total	$	8,878

Plan Assets

The plan assets are invested in insurance contracts with Swiss Life Foundation BVG (BVG) insurance company based in Zurich, Switzerland at the end of fiscal year 2016 and 2017 and are expected to be invested 100% in insurance contracts in fiscal 2018, which are reinsured by Swiss Life Ltd (SLL). SLL invests the vested pension capital and provides a 100% capital and interest rate guarantee as negotiated by the Company. In 2017, the Company negotiated a guaranteed interest rate of 1.25% for mandatory retirement savings and 0.75% for supplementary retirement savings. The pension plan is entitled to an annual bonus from the SLL comprising the effective savings, risk and cost results. The technical administration and management of the savings account are guaranteed by the SLL on behalf of BVG. Insurance benefits due are paid directly to the entitled persons by the SLL in the name of and for the account of the collective foundation. The Company has committed itself to pay the annual contributions and costs due under the pension fund regulations.

The contract of affiliation between the Company and BVG can be terminated by either side. In the event of a termination, recipients of retirement and survivors' benefits would remain with the collective foundation. The Company commits itself to transfer its active insured members and recipients of disability benefits to the new employee benefits institution, thus releasing BVG from all obligations.