NOTE R - EMPLOYEE RETIREMENT PLANS

Following our 2006 acquisition of Guidant, we sponsored the Guidant Supplemental Retirement Plan, a frozen, non-qualified defined benefit plan for certain former officers and employees of Guidant. The Guidant Supplemental Retirement Plan was partially funded through a Rabbi Trust that contains segregated company assets within restricted cash used to pay the benefit obligations related to the plan.

We also maintain an Executive Retirement Plan, a defined benefit plan covering executive officers and division presidents. Participants may retire with unreduced benefits once retirement conditions have been satisfied. In addition, we maintain retirement plans covering certain international employees.

We use a December 31 measurement date for these plans and record the underfunded portion as a liability within non-current liabilities, with the current portion within accrued expenses, on the consolidated balance sheets, recognizing changes in the funded status through OCI. The outstanding obligation is as follows:



	As of December 31, 2018
(in millions)	Accumulated Benefit Obligation (ABO)		Projected Benefit Obligation (PBO)		Fair value of Plan Assets		Underfunded PBO Recognized
Executive Retirement Plan	$	17	$	20	$	—	$	20
Guidant Supplemental Retirement Plan (frozen)	30		30		—		30
International Retirement Plans	166		182		107		75
	213		$	232	$	107	$	125



	As of December 31, 2017
(in millions)	Accumulated Benefit Obligation (ABO)		Projected Benefit Obligation (PBO)		Fair value of Plan Assets		Underfunded PBO Recognized
Executive Retirement Plan	$	18	$	21	$	—	$	21
Guidant Supplemental Retirement Plan (frozen)	33		33		—		33
International Retirement Plans	138		153		87		66
	$	189	$	207	$	87	$	120

A rollforward of the changes in the PBO for our funded retirement plans is as follows:



	Year Ended December 31,
(in millions)	2018			2017
Beginning obligations	$	207		$	152
Acquired and established plans (1)	23			33
Service costs	14			13
Interest costs	4			4
Actuarial (gain) loss	(1		)	2
Plan amendments and assumption changes	(2		)	(1		)
Benefits paid	(10		)	(8		)
Impact of foreign currency fluctuations	(3		)	11
Ending obligation	$	232		$	207


(1)	Plans obtained through acquisition and other increases in connection with our international operations.

The critical assumptions associated with our employee retirement plans as of December 31, 2018 and are as follows:



	Discount Rate	Expected Return on Plan Assets	Rate of Compensation Increase
Executive Retirement Plan	4.00%	N/A	3.00%
Guidant Supplemental Retirement Plan (frozen)	4.25%	N/A	N/A
International Retirement Plans	0.50% - 2.34%	1.90% - 4.10%	1.50% - 6.78%

The critical assumptions associated with our employee retirement plans as of December 31, 2017 are as follows:



	Discount Rate	Expected Return on Plan Assets	Rate of Compensation Increase
Executive Retirement Plan	3.25%	N/A	3.00%
Guidant Supplemental Retirement Plan (frozen)	3.50%	N/A	N/A
International Retirement Plans	0.50% - 2.25%	2.50% - 4.10%	1.50% - 6.78%

We base our discount rate on the rates of return available on high-quality bonds with maturities approximating the expected period over which benefits will be paid. The rate of compensation increase is based on historical and expected rate increases. We base our rate of expected return on plan assets on historical experience, our investment guidelines and expectations for long-term rates of return. Our international pension plan assets are invested in a variety of securities, primarily equity securities and government bonds. These securities are considered Level 1 and Level 2 investments.

A rollforward of the changes in the fair value of plan assets for our funded retirement plans is as follows:



	Year Ended December 31,
(in millions)	2018			2017
Beginning fair value	$	87		$	54
Acquired and established plans (1)	16			19
Actual return on plan assets	(2		)	6
Employer contributions	14			10
Participant contributions	2			1
Benefits paid	(10		)	(8		)
Impact of foreign currency fluctuations	—			4
Ending fair value	$	107		$	87


(1)	Plans obtained through acquisition and other increases in connection with our international operations.

We also sponsor a voluntary 401(k) Retirement Savings Plan for eligible employees. We match 200 percent of employee elective deferrals for the first two percent of employee eligible compensation and 50 percent of employee elective deferrals greater than two percent, but not exceeding six percent, of employee eligible compensation. Total expense for our matching contributions to the plan was $87 million in 2018, $79 million in 2017 and $72 million in 2016.