Note 11. Pension

Japan Defined Benefit Plans

We assumed two defined benefit plans that provide retirement benefits to our employees in Japan in connection with our acquisition of NeoPhotonics Semiconductor on March 29, 2013. Under the defined benefit plans in Japan, we calculate benefits based on an employee’s individual grade level, years of service and performance. Employees are entitled to a lump sum benefit upon retirement or upon certain instances of termination. Partially offsetting this liability is a $1.9 million receivable equal to the value of the plan assets. The Company is currently in the process of establishing a new pension plan (“New Pension Plan”) for its employees in Japan. Until the New Pension Plan is established, the value of the plan assets will remain in plans administered by LAPIS and LAPIS has an obligation to transfer the value of these assets to the New Pension Plan. The net pension liability was $6.1 million at September 30, 2013 with anticipated outflows as follows (in thousands):

2013 (remaining 3 months)	$	46
2014		401
2015		194
2016		626
2017		844
Thereafter		3,991
	$	6,102

Net periodic pension costs for the three months and nine months periods ended September 30, 2013 included the following (in thousands):

	Three months ended September 30, 2013			Nine months ended September 30, 2013
Service costs	$	85		$	173
Interest cost		20			40
Expected return on plan assets		(11	)		(22	)
Net periodic pension costs	$	94		$	191

The Company had contributed $0.3 million to the benefit plans as of September 30, 2013 and contributed an additional $0.2 million during the period from October 1, 2013 to December 31, 2013.