NON-U.S. EMPLOYEE DEFINED BENEFIT PLANS

In connection with the Merger, the Company assumed GENBAND's defined benefit retirement plans that cover some employees at various international locations. The Company adopted GENBAND's policy to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations, or to directly pay benefits where appropriate. Benefits under the defined benefit plans are typically based either on years of service and the employee's compensation (generally during a fixed number of years immediately before retirement) or on annual credits. The range of assumptions that are used for the non-U.S. defined benefit plans reflect the different economic environments within the various countries.

During the year ended December 31, 2018, in conjunction with the Merger Restructuring Initiative, there were reductions in force that significantly reduced benefits that can be earned under the plans in several international locations that resulted in curtailment accounting. A curtailment gain of $0.5 million was recognized in 2018 and included as a component of Other (expense) income, net, in the Company's consolidated statement of operations. In the year ended December 31, 2018, settlement accounting was triggered in only one of these locations, resulting in an immaterial settlement charge.

A reconciliation of the changes in the benefit obligations and fair value of the assets of the defined benefit plans for the year ended December 31, 2018 and for the period from the Merger Date to December 31, 2017, the funded status of the plans and the amounts recognized in the consolidated balance sheets as of December 31, 2018 and 2017 were as follows (in thousands):



	Year ended December 31, 2018			October 27, 2017 to December 31, 2017
Changes in projected benefit obligations:
Projected benefit obligation, beginning of period	$	11,484		$	10,515
Service cost	449			68
Interest cost	150			25
Participant contributions	5			5
Benefits paid	(23		)	(3		)
Net actuarial loss on obligation	(414		)	562
Curtailment	(553		)	—
Settlement	(250		)	—
Currency loss	—			312
Projected benefit obligation, end of year	$	10,848		$	11,484

Changes in plan assets:
Fair value of plan assets, beginning of period	$	3,893		$	3,776
Actual return on plan assets	(53		)	(8		)
Employer contributions	292			22
Participant contributions	5			5
Administrative expenses	(22		)	(4		)
Benefits paid	(273		)	(3		)
Currency gain	—			105
Fair value of plan assets, end of year	$	3,842		$	3,893

Funded status at end of year	$	(7,006	)	$	(7,591	)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss	$	222		$	578

Amounts recognized in the consolidated balance sheets consist of:
Accrued expenses and other (current pension liability)	$	(75	)	$	(67	)
Other long-term liabilities (non-current pension liability)	(6,931		)	(7,524		)
Net amount recognized	$	(7,006	)	$	(7,591	)

Plans with underfunded or non-funded accumulated benefit obligations at December 31, 2018 and 2017 were as follows (in thousands):



	December 31, 2018		December 31, 2017
Aggregate projected benefit obligation	$	10,848	$	11,484
Aggregate accumulated benefit obligation	$	7,152	$	7,793
Aggregate fair value of plan assets	$	3,842	$	3,893

Net periodic benefit costs for the year ended December 31, 2018 and the period from the Merger Date to December 31, 2017 were as follows (in thousands):



	Year ended December 31, 2018			October 27, 2017 to December 31, 2017
Service cost	$	449		$	68
Interest cost	150			25
Expected return on plan assets	(45		)	(8		)
Plan asset expenses	22			4
Curtailment gain	(510		)	—
Settlement loss	3			—
Net periodic benefit costs	$	69		$	89

The Company made benefit payments of $273,000 in the year ended December 31, 2018, including $250,000 of one-time lump sum payments to participants, and $3,000 in the period from the Merger Date to December 31, 2017. Expected benefit payments for the next ten years are as follows:



Years ending December 31,
2019	$	75
2020	45
2021	94
2022	47
2023	231
2024 to 2028	643
	$	1,135

The changes in plan assets and benefit obligations recognized in other comprehensive income (loss) before tax for the year ended December 31, 2018 and the period from the Merger Date to December 31, 2017 were as follows (in thousands):



	Year ended December 31, 2018			October 27, 2017 to December 31, 2017
Net (gain) loss	$	(356	)	$	578

The Company defers all actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions. The unrecognized actuarial gains and losses are recorded as unrealized pension actuarial gains (losses) in the Company's consolidated balance sheets as a component of Accumulated other comprehensive income. These unrecognized gains and losses are amortized as a component of net periodic benefit cost when the net gains and losses exceed 10% of the greater of the market value of plan assets or the projected benefit obligation at the beginning of the year. Amortization of the amount included in Accumulated other comprehensive income into net periodic benefit cost is expected to total $4,000 for the year ended December 31, 2019.

The principal weighted average assumptions used to determine the benefit obligation at December 31, 2018 and 2017 were as follows:



	December 31, 2018		December 31, 2017
Discount rate	1.30	%	1.31	%
Rate of compensation increase	2.83	%	3.38	%

The principal weighted average assumptions used to determine net period benefit cost for the year ended December 31, 2018 and the period from the Merger Date to December 31, 2017 were as follows:



	Year ended December 31, 2018		October 27, 2017 to December 31, 2017
Discount rate	1.50	%	1.49	%
Expected long-term return on plan assets	1.34	%	1.23	%
Rate of compensation increase	3.38	%	3.38	%

Assumed discount rates are used in the measurement of the projected and accumulated benefit obligations, as well as the service and interest cost components of net periodic pension cost. Estimated discount rates reflect the rates at which the pension benefits could be effectively settled. For each defined benefit plan, the Company chooses an estimated discount rate from a readily available market index rate, based upon high-quality fixed income investments, specific to the country or economic zone in which the benefits are paid and taking into account the duration of the plan and the number of participants.

The plans in the Netherlands and Switzerland are funded through insurance contracts, which provide guaranteed interest credit. The fair value of the contract is derived from the insurance company's assessment of the minimum value of the benefits provided by the insurance contract. The methodology used to value the plan assets assumes that the value of the plan assets equals the guaranteed insured benefits. For consistency, the same discount rate used in the valuation of the benefit obligations is used to place a value on the plan assets. The assets are assumed to grow each year in line with the discount rate, and therefore, the expected return on the assets is set equal to the discount rate. The fair value of the combined plan assets was $3.8 million at December 31, 2018 and $3.9 million at December 31, 2017. The Company classifies the fair value of these plan assets as Level 2 in the fair value hierarchy as discussed in Note 5.

During the year ended December 31, 2018, employees in the Netherlands and Switzerland made contributions to the respective pension plans aggregating $5,000. During the period from the Merger Date to December 31, 2017, employees in the Netherlands and Switzerland made contributions to the respective plans aggregating $5,000. Employee contributions to these plans are based on a fixed 5% of the relevant pensionable earnings. The Company funds these plans by contributing at least the minimum amount required by applicable regulations and as recommended by an independent actuary. During the year ended December 31, 2018, the Company contributed $292,000 to its pension plans. During the period from the Merger Date to December 31, 2017, the Company contributed $22,000 to its pension plans. The Company expects to contribute $0.2 million to its pension plans in 2019.