Note 10 – Employee Benefit Plans

U.S. Plan

We maintain a defined contribution pension plan for U.S. employees established pursuant to Section 401(k) of the Internal Revenue Code. The plan allows voluntary employee contributions and discretionary employer contributions. For the years ended December 31, 2018, 2017, and 2016, we expensed contributions of $0.3 million, $0.2 million, and $0.2 million, respectively.

Non-U.S. Plan

We are subject to national mandatory pension systems and other compulsory plans, or make contributions to social pension funds based on local regulations. When our obligation is limited to the payment of the contribution into these plans or funds, the recognition of such liabilities is not required.

In addition, we have, in some countries, defined benefit plans consisting of final retirement salary and committed pension payments.

In Switzerland, the pension plan is a cash balance plan where contributions are expressed as a percentage of the pensionable salary. Contributions to Swiss plans are paid by the employees and the employer. The pension plan guarantees the amount accrued on the members’ savings accounts, as well as a minimum interest on those savings accounts. The plan assets are held in guaranteed investment contracts.

We also maintain a pension plan for our Belgian employees, in compliance with Belgian law. Contributions to Belgium plans are paid by the employees and the employer. Certain features of the plans require them to be categorized as defined benefit plans under ASC 715 due to Belgian social legislation, which prescribed a minimum annual return of 1.6% on employer contributions and 1.6% for employee contributions. The plan assets are held in guaranteed investment contracts.

The Company also includes a liability related to obligations to provide retirement benefits to employees who retire from the Company’s French subsidiary, as required by law. Per French regulations, each employee is entitled to a lump sum payment upon retirement based on years of service and salary at retirement. Benefit rights vest upon the statutory retirement age of 62. The obligation recorded represents the present value of amounts the Company expects to pay.

Components of net periodic pension cost:


	Year ended December 31,
	2018		2017		2016
in thousands
Service cost (gross)	$	1,281	$	1,397	$	783
Interest cost		199		188		243
Expected return on plan assets		(327)		(199)		(157)
Amortization of unrecognized actuarial gain		18		45		—
Net periodic pension cost	$	1,171	$	1,431	$	869

The net unfunded status of the Non-U.S. pension plans is as follows:


	As of December 31,
	2018		2017
Fair value of plan assets	$	12,823	$	12,390
Projected benefit obligation		(18,173)		(18,308)
Net unfunded benefit obligation	$	(5,350)	$	(5,918)

Net unfunded benefit obligation is recorded as other long-term liabilities in our consolidated Balance Sheets.

The change in the fair value of plan assets is as follows:


	Year ended December 31,
	2018		2017

Fair value of plan assets at January 1	$	12,390	$	11,024
Employee contributions		506		530
Actual return on plan assets		904		91
Benefits (paid), net of transfers		(1,601)		(1,277)
Employer contributions		971		992
Foreign exchange adjustment		(347)		1,030
Fair value of plan assets at December 31	$	12,823	$	12,390

The change in benefit obligations is as follows:


	Year ended December 31,
	2018		2017

Benefit obligations at January 1	$	18,308	$	16,690
Gross service cost		1,281		1,397
Interest cost		199		188
Employee contributions		506		530
Actuarial (gains)/losses		(672)		30
Plan amendment		560		(356)
Benefits (paid), net of transfers		(1,601)		(1,277)
Foreign exchange adjustment		(408)		1,106
Benefit obligations at December 31	$	18,173	$	18,308

Our investment policy meets our responsibility under local social legislation and aligns plan assets with liabilities, while minimizing risk. For the years ended December 31, 2018 and 2017, plan assets are invested in guaranteed investment contracts. Fair value of guaranteed investment contracts is surrender value. Fair value is determined using Level 3 inputs as defined by ASC 820, Fair Value Measurements. Changes in our plan assets are attributable to benefit payments and contributions as we have not actively traded our asssets during the years ended December 31, 2018 and December 31, 2017.

Other

The accumulated benefit obligation for the plans were $16.5 million and $16.7 million as of December 31, 2018 and 2017, respectively.

The Company expects to pay $1.0 million of contributions over the next twelve months.

The amounts reclassified out of other comprehensive income during the twelve months ended December 31, 2018, 2017, and 2016 were not material.

Actuarial Assumptions

Certain actuarial assumptions such as the discount rate and the long-term rate of return on plan assets have a significant effect on the amounts reported for net periodic cost and the benefit obligation. The assumed discount rates reflect the prevailing market rates of a universe of high-quality, non-callable, corporate bonds currently available that, if the obligation were settled at the measurement date, would provide the necessary future cash flows to pay the benefit obligation when due. In determining the long-term return on plan assets, the Company considers long-term rates of return of comparable low risk investments, such as Euro AA bonds.

The following assumptions were utilized in pension calculations:


	As of December 31, 2018
	2018			2017
	(%)
Discount rates	0.9	-	1.8	0.7	-	1.5
Inflation	1.0	-	2.0	1.0	-	1.8
Expected return on plan assets	1.3	-	2.0	1.3	-	2.0
Rate of salary increases	2.0	-	2.8	2.0	-	2.8

Project future pension benefits as of December 31, 2018:


2019	$	513
2020		446
2021		747
2022		785
2023		755
Beyond		3,953