RETIREMENT BENEFIT PLANS

DEFINED BENEFIT PLANS

As part of the acquisition of Codman Neurosurgery in 2017, the Company assumed various defined benefit which covers certain employees acquired with Codman Neurosurgery in Austria, France, Japan, Germany and Switzerland.

Net periodic benefit costs for the Company’s defined benefit pension plans for the years ended December 31, 2018 and 2017 included the following (amounts in thousands):



	Year ended December 31,
	2018			2017
Service cost	$	2,704		$	565
Interest cost	351			95
Expected return on plan assets	(944		)	(224		)
Recognized net actuarial loss	8			8
Net period benefit cost	$	2,119		$	444

The following weighted average assumptions were used to develop net periodic pension benefit costs and the actuarial present values of projected pension benefit obligations for the years ended December 31, 2018 and 2017, respectively:



	As of December 31,
	2018		2017
Discount rate	1.00	%	0.74	%
Expected return on plan assets	3.40	%	3.08	%
Rate of compensation increase	1.70	%	1.70	%

The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed income instruments. The resulting discount rates are consistent with the duration of plan liabilities. In 2018 and 2017, the discount rates were prescribed as the current yield on corporate bonds with an average rating of AA or AAA of equivalent currency and term to the liabilities. The expected returns on plan assets represent the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rates of return, the Company considers returns of historical market data as well as actual returns on the plan assets. Using this reference information, the long-term return expectations for each asset category are developed according to the allocation among those investment categories.

The assessment is determined using projections from external financial sources, long-term historical averages, actual returns by asset class and the various asset class allocations by market.

The following sets forth the change in projected benefit obligations and the change in plan assets for the years ended December 31, 2018 and 2017 and a reconciliation of the funded status at December 31, 2018 and 2017, respectively (amounts in thousands):



	Year ended December 31,
	2018			2017
Change In Projected Benefit Obligations
Projected benefit obligations, beginning of year	$	47,661		$	668
Interest cost	351			95
Service cost	2,704			565
Actuarial loss	762			(12		)
Employee contribution	641			180
Premiums paid	—			(89		)
Benefit payment	(1,483		)	(19		)
Plans transferred in	2,280			46,448
Effect of foreign currency exchange rates	(374		)	(175		)
Projected benefit obligations, end of year	$	52,542		$	47,661

	Year ended December 31,
	2018			2017
Change In Plan Assets
Plan assets at fair value, beginning of year	$	26,943		$	—
Actual return on plan assets	1,802			82
Employer contributions	1,720			450
Employee contributions	641			180
Benefits paid	(1,463		)	—
Premiums paid	—			(89		)
Plans transferred in	1,589			26,477
Effect of foreign currency exchange rates	(129		)	(157		)
Plan assets at fair value, end of year	$	31,103		$	26,943



	Year ended December 31,
	2018		2017
Reconciliation Of Funded Status
Fair value of plan assets	$	31,103	$	26,943
Benefit obligations	52,542		47,661
Unfunded benefit obligations	$	21,439	$	20,718

The unfunded benefit obligations are included in other liabilities in the consolidated balance sheets at December 31, 2018 and 2017, respectively.

As of December 31, 2018 and 2017, the Company had a $0.6 million and $0.4 million gain recognized within accumulated other comprehensive income (loss) that has not been recognized as a component of net periodic benefit cost. The combined accumulated benefit obligations for the defined benefit plans was $49.6 million and $42.9 million as of December 31, 2018 and 2017, respectively.

Unrecognized gains and losses are amortized over the average remaining future service for each plan. For plans with no active employees, they are amortized over the average life expectancy. The amortization of gains and losses is determined by using a 10% corridor of the greater of the market value of assets or the accumulated benefit obligation. Total unamortized gains and losses in excess of the corridor are amortized over the average remaining future service.

Prior service costs/benefits for the pension plans are amortized over the average remaining future service of plan participants at the time of the plan amendment.

The net plan assets of the pension plans are invested in common trusts. Common trusts are classified as Level 2 in fair value hierarchy. The fair value of common trusts is valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The investment strategy of the Company's defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk profile.

The investment strategy for the Company’s defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk tolerances. The benefit plans in Austria, France and Germany had no assets at December 31, 2018.

As of December 31, 2018, no plan assets are expected to be returned to the Company in the next twelve months.

The following table is the summary of expected future benefit payments (in thousands):



2019	$	1,410
2020	1,516
2021	1,317
2022	1,433
2023	1,878
Next five years	2,978

As of December 31, 2018, contributions expected to be paid to the plan in 2019 is $1.9 million.

DEFINED CONTRIBUTION PLANS

The Company also has various defined contribution savings plans that cover substantially all employees in the United States, Belgium, Canada, France, Japan, Netherlands, the U.K. and Puerto Rico. The Company matches a certain percentage of each employee’s contributions as per the provisions of the plans. Total contributions by the Company to the plans were $8.1 million, $7.2 million and $5.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.