Employee Benefit Plans

Defined Contribution Plan

Effective July 2002, the Company established a voluntary savings and defined contribution plan (the “Plan”) under Section 401(k) of the Internal Revenue Code. This Plan covers all U.S. employees meeting certain eligibility requirements and allows participants to contribute a portion of their annual compensation. Employees are 100% vested in their own contributions. For the years ended December 31, 2013, 2012 and 2011, the Company did not make any contributions to the Plan.

Effective July 1, 2007, the Company, in accordance with the labor pension system in Taiwan, contributes 6% of salaries to individual pension accounts managed by the Bureau of Labor Insurance. The plan covers all Taiwan employees that elect the new pension system and all employees hired after July 1, 2005. For the years ended December 31, 2013, 2012 and 2011, the Company contributed approximately $115,000, $127,000 and $127,000, respectively.

Defined Benefit Plan

The Company has a defined benefit plan covering employees in Taiwan. The Company accounts for its defined benefit plan in accordance with the authoritative guidance issued by the FASB on retirement benefits, which requires the Company to recognize the funded status of its defined benefit plan in the accompanying consolidated balance sheet, with the corresponding adjustment to accumulated other comprehensive income, net of tax.

At December 31, 2013 and 2012, $71,892 and $55,122, respectively, is included in accumulated other comprehensive income for amounts that have not yet been recognized in net periodic pension cost. These amounts include the following: unrecognized transition obligation of $28,551 and $35,279 at December 31, 2013 and 2012, respectively, and unrecognized actuarial losses of $43,341 and $19,843 at December 31, 2013 and 2012, respectively. During 2013, the total amount recorded in other comprehensive income related to the pension plan was $16,770 (net of tax), which consisted of an actuarial loss of $21,985 and the recognition of $5,215 of transition obligations recognized during 2013 as a component of net periodic pension cost. The transition obligation and actuarial loss included in accumulated other comprehensive loss and expected to be recognized in net periodic pension cost for the year ended December 31, 2014, is $5,711 and $761 respectively.

Pension information for the years ended December 31, 2013 and 2012, is as follows:



	2013			2012
Accumulated benefit obligation	$	171,651		$	160,279
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	269,760			366,158
Interest cost	4,621			7,571
Actuarial loss (gain)	23,517			(126,282		)
Benefits paid	—			—
Service cost	—			5,624
Currency translation and other	(9,053		)	16,689
Projected benefit obligation at end of year	$	288,845		$	269,760
Changes in plan assets:
Fair value of plan assets at beginning of year	$	108,214		$	92,651
Actual return on plan assets	1,277			792
Benefits paid	—			—
Employer contributions	8,909			9,911
Currency translation and other	(3,609		)	4,860
Fair value of plan assets at end of year	$	114,791		$	108,214
Funded status	$	174,054		$	161,546



Components of net periodic pension cost:
Interest cost	$	4,621		$	7,571
Expected return on plan assets	(1,854		)	(1,916		)
Amortization of net loss	5,783			11,159
Service cost	—			5,624
Net periodic pension cost	$	8,550		$	22,438

The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $10,000 are expected to be made during 2014. Benefit payments of approximately $227,000 are expected to be paid in 2016 through 2023.

The Company utilized the following assumptions in computing the benefit obligation at December 31, 2013 and 2012 as follows:



	Years ended December 31,
	2013		2012
Discount rate	2.25	%	1.75	%
Rate of increase in compensation levels	3.00	%	3.00	%
Expected long-term rate of return on plan assets	2.00	%	1.75	%