Accrued Severance Benefits

6 Months Ended

Jun. 30, 2014

11. Accrued Severance Benefits

The majority of accrued severance benefits is for employees in the Company’s Korean subsidiary, MagnaChip Semiconductor Ltd. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of June 30, 2014, 98% of employees of the Company were eligible for severance benefits.

Changes in accrued severance benefits are as follows:


	Three Months Ended			Six Months Ended			Three Months Ended			Six Months Ended
	June 30, 2014						June 30, 2013 (As Restated)
Beginning balance	$	136,176		$	135,356		$	115,318		$	116,036
Provisions		5,392			9,426			6,482			10,768
Severance payments		(1,976	)		(3,490	)		(2,312	)		(2,939	)
Translation adjustments		7,331			5,631			(3,878	)		(8,255	)

		146,923			146,923			115,610			115,610
Less: Cumulative contributions to the National Pension Fund		(387	)		(387	)		(361	)		(361	)
Group severance insurance plan		(825	)		(825	)		(727	)		(727	)

Accrued severance benefits, net	$	145,711		$	145,711		$	114,522		$	114,522

The severance benefits funded through the Company’s National Pension Fund and group severance insurance plan will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.

The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age:


	Severance benefit
Remainder of 2014	$	396
2015		315
2016		1,253
2017		1,840
2018		3,152
2019		2,410
2020 – 2024		25,507

The above amounts were determined based on the non-executive employees’ current salary rates and the number of service years that will be accumulated upon their retirement dates. These amounts do not include amounts that might be paid to non-executive employees that will cease working with the Company before their normal retirement ages.