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Pension and Severance Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Pension and Severance Plans | Pension and Severance Plans Korean Severance Plan Our subsidiary in Korea maintains an unfunded severance plan that covers certain employees that were employed prior to August 1, 2015. To the extent eligible employees are terminated, our subsidiary in Korea would be required to make lump-sum severance payments on behalf of these eligible employees for service provided prior to August 1, 2015. Factors used to determine severance benefits include employees’ length of service, seniority and rate of pay. The employees’ length of service and seniority are fixed as of July 31, 2015. The employees’ rate of pay is adjusted to the rate of pay at the time of termination. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. Our contributions to the National Pension Plan of the Republic of Korea are deducted from accrued severance benefit liabilities. On August 1, 2015, our subsidiary in Korea began sponsoring a defined benefit pension plan and a defined contribution plan. Existing employees at that time were given the option of choosing either a defined benefit pension plan or a defined contribution plan for their future benefits and new employees since that date are enrolled in a defined contribution plan. The changes to the balance of our accrued severance plan obligations are as follows:
| For the Year Ended December 31,
| 2023 |  | 2022 |  |
| (In thousands)
Balance at January 1 | $ | 56,289 |  |  | $ | 73,345 |  |  |
Provision of severance benefits | 1,653 |  |  | 2,119 |  |  |
Severance payments | (8,770) |  |  | (15,295) |  |  |
Foreign currency (gain) loss | (1,266) |  |  | (3,880) |  |  |
Balance at December 31 | 47,906 |  |  | 56,289 |  |  |
Payments remaining with the National Pension Fund | (119) |  |  | (124) |  |  |
Total accrued severance plan obligations at December 31 | 47,787 |  |  | 56,165 |  |  |
Less current portion of accrued severance plan obligations (Note 10) | 7,906 |  |  | 7,422 |  |  |
Non-current portion of accrued severance plan obligations | $ | 39,881 |  |  | $ | 48,743 |  |  |
Foreign Defined Benefit Pension Plans Our subsidiaries in Japan, Korea, Malaysia, the Philippines and Taiwan sponsor defined benefit plans (the “Plans”). Charges to expense are based upon actuarial analyses. The following table summarizes the changes to the Plans’ benefit obligations, fair value of the Plans’ assets and the funded status of the Plans at December 31, 2023 and 2022:
| For the Year Ended December 31,
| 2023 |  | 2022
| (In thousands)
Change in projected benefit obligation: |  |  |
Projected benefit obligation at January 1 | $ | 159,760 |  |  | $ | 200,187 |
Service cost | 15,032 |  |  | 20,072 |
Interest cost | 6,202 |  |  | 4,731 |
Benefits paid | (14,056) |  |  | (8,573) |
Actuarial (gain) loss | 4,150 |  |  | (24,571) |
Effects of curtailment | (617) |  |  | 508 |
Settlement | (1,073) |  |  | (16,914) |
Foreign exchange (gain) loss | (5,117) |  |  | (15,680) |
Projected benefit obligation at December 31 | 164,281 |  |  | 159,760 |
Change in plan assets: |  |  |
Fair value of plan assets at January 1 | 127,338 |  |  | 157,012 |
Actual gain (loss) on plan assets | 12,325 |  |  | (6,528) |
Employer contributions | 7,368 |  |  | 12,946 |
Settlement | (1,073) |  |  | (16,914) |
Benefits paid | (14,056) |  |  | (8,573) |
Foreign exchange gain (loss) | (2,706) |  |  | (10,605) |
Fair value of plan assets at December 31 | 129,196 |  |  | 127,338 |
Funded status of the Plans at December 31 | $ | (35,085) |  |  | $ | (32,422) |
| December 31,
| 2023 |  | 2022
| (In thousands)
Amounts recognized in the Consolidated Balance Sheets consist of: |  |  |
Prepaid benefit cost (included in non-current assets) | $ | 12,039 |  |  | $ | 12,308 |
Accrued benefit liability (included in pension and severance obligations) | (47,124) |  |  | (44,730) |
Net amount recognized at year end | $ | (35,085) |  |  | $ | (32,422) |
The accumulated benefit obligation as of December 31, 2023 and 2022 was $128.3 million and $125.6 million, respectively. The following table summarizes, by component, the change in accumulated other comprehensive income (loss), net of tax related to our Plans:
| Prior Service Cost |  | Actuarial Net Gain (Loss) |  | Total
| (In thousands)
Balance at December 31, 2021 | $ | 602 |  |  | $ | 5,014 |  |  | $ | 5,616 |
Amortization and settlement gain included in net periodic pension cost | — |  |  | (1,021) |  |  | (1,021) |
Net gain (loss) arising during period | — |  |  | 9,625 |  |  | 9,625 |
Adjustments to unrealized components of defined benefit pension plan included in other comprehensive income (loss) | — |  |  | 8,604 |  |  | 8,604 |
Balance at December 31, 2022 | $ | 602 |  |  | $ | 13,618 |  |  | $ | 14,220 |
Amortization and settlement gain included in net periodic pension cost | — |  |  | (46) |  |  | (46) |
Net gain (loss) arising during period | — |  |  | 1,731 |  |  | 1,731 |
Adjustments to unrealized components of defined benefit pension plan included in other comprehensive income (loss) | — |  |  | 1,685 |  |  | 1,685 |
Balance at December 31, 2023 | $ | 602 |  |  | $ | 15,303 |  |  | $ | 15,905 |
Information for pension plans with benefit obligations in excess of plan assets is as follows:
| December 31,
| 2023 |  | 2022
| (In thousands)
Plans with underfunded or non-funded projected benefit obligation: |  |  |
Aggregate projected benefit obligation | $ | 100,662 |  |  | $ | 96,310 |
Aggregate fair value of plan assets | 53,539 |  |  | 51,581 |
Plans with underfunded or non-funded accumulated benefit obligation: |  |  |
Aggregate accumulated benefit obligation | 60,638 |  |  | 61,764 |
Aggregate fair value of plan assets | 21,304 |  |  | 20,740 |
The following table summarizes total pension expense:
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (In thousands)
Components of net periodic pension cost and total pension expense: |  |  |  |  |
Service cost | $ | 15,032 |  |  | $ | 20,072 |  |  | $ | 25,908 |
Interest cost | 6,202 |  |  | 4,731 |  |  | 4,900 |
Expected return on plan assets | (5,144) |  |  | (5,605) |  |  | (5,600) |
Recognized actuarial (gain) loss | (156) |  |  | 53 |  |  | 128 |
Net periodic pension cost | 15,934 |  |  | 19,251 |  |  | 25,336 |
Curtailment (gain) loss | (617) |  |  | — |  |  | (954) |
Settlement (gain) loss | 132 |  |  | (1,374) |  |  | (743) |
Total pension expense | $ | 15,449 |  |  | $ | 17,877 |  |  | $ | 23,639 |
The components of net periodic pension cost other than the service cost component are included in other (income) expense, net in our Consolidated Statements of Income. The following table summarizes the weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligations:
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Discount rate for determining net periodic pension cost | 4.2 | % |  | 2.6 | % |  | 2.3 | %
Discount rate for determining benefit obligations at December 31 | 3.8 | % |  | 4.2 | % |  | 2.6 | %
Rate of compensation increase for determining net periodic pension cost | 3.6 | % |  | 3.7 | % |  | 3.7 | %
Rate of compensation increase for determining benefit obligations at December 31 | 3.7 | % |  | 3.6 | % |  | 3.7 | %
Expected rate of return on plan assets for determining net periodic pension cost | 4.1 | % |  | 3.8 | % |  | 3.7 | %
The measurement date for determining the Plans’ assets and benefit obligations is December 31, each year. Discount rates are generally derived from yield curves constructed from high-quality corporate or foreign government bonds, for which the timing and amount of cash outflows approximate the estimated payouts. The expected rate of return assumption is based on weighted-average expected returns for each asset class. Expected returns reflect a combination of historical performance analysis and the forward-looking views of the financial markets and include input from our actuaries. We have no control over the direction of our investments in our defined benefit plans in Taiwan as the local Labor Standards Law Fund mandates such contributions into a cash account balance at the Bank of Taiwan. Our defined benefit pension plan in Malaysia is a non-funded plan, and as such, no asset exists related to this plan. Our investment strategies for our defined benefit plans in Japan, Korea and the Philippines are based on long-term, sustained asset growth through low to medium risk investments. The current rate of return assumption targets are based on asset allocation strategies as follows:
| Allocation
| Debt |  | Equity |  | Other
Japan defined benefit plan | 64 | % |  | 34 | % |  | 2 | %
Korea defined benefit plan | 30 | % |  | 20 | % |  | 50 | %
Philippine defined benefit plan | 56 | % |  | 42 | % |  | 2 | %
The fair value of our pension plan assets, by asset category utilizing the fair value hierarchy as discussed in Note 16, is as follows:
| December 31, 2023 |  | December 31, 2022 |  |  |  |  |
| Level 1 |  | Level 2 |  |  |  | Total |  | Level 1 |  | Level 2 |  |  | Total |  |  |  |  |
| (In thousands) |  | (In thousands) |  |  |  |  |
Cash and cash equivalents | $ | 217 |  |  | $ | — |  |  |  |  | $ | 217 |  |  | $ | 1,117 |  |  | $ | — |  |  |  | $ | 1,117 |  |  |  |  |  |
Equity securities | 13,680 |  |  | — |  |  |  |  | 13,680 |  |  | 13,339 |  |  | — |  |  |  | 13,339 |  |  |  |  |  |
Debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government bonds | 3,674 |  |  | — |  |  |  |  | 3,674 |  |  | 2,982 |  |  | — |  |  |  | 2,982 |  |  |  |  |  |
Corporate bonds | 1,130 |  |  | — |  |  |  |  | 1,130 |  |  | 540 |  |  | — |  |  |  | 540 |  |  |  |  |  |
Treasury notes | 11,993 |  |  | — |  |  |  |  | 11,993 |  |  | 11,561 |  |  | — |  |  |  | 11,561 |  |  |  |  |  |
Mutual and commingled funds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity funds | 29,016 |  |  | 7,807 |  |  |  |  | 36,823 |  |  | 23,931 |  |  | 7,157 |  |  |  | 31,088 |  |  |  |  |  |
Debt funds | 12,031 |  |  | 13,163 |  |  |  |  | 25,194 |  |  | 11,651 |  |  | 13,409 |  |  |  | 25,060 |  |  |  |  |  |
Guaranteed investment contracts | — |  |  | 23,189 |  |  |  |  | 23,189 |  |  | — |  |  | 28,340 |  |  |  | 28,340 |  |  |  |  |  |
Taiwan retirement fund | 12,478 |  |  | — |  |  |  |  | 12,478 |  |  | 12,845 |  |  | — |  |  |  | 12,845 |  |  |  |  |  |
Other, net | — |  |  | 818 |  |  |  |  | 818 |  |  | (383) |  |  | 849 |  |  |  | 466 |  |  |  |  |  |
Total fair value of pension plan assets | $ | 84,219 |  |  | $ | 44,977 |  |  |  |  | $ | 129,196 |  |  | $ | 77,583 |  |  | $ | 49,755 |  |  |  | $ | 127,338 |  |  |  |  |  |
The Taiwan retirement fund category of our plan assets represents accounts that our subsidiaries in Taiwan have in a government labor retirement fund in the custody of the Bank of Taiwan. The accounts earn a minimum guaranteed rate of return and are invested in a mix of cash, domestic and foreign equity securities and domestic and foreign debt securities. We expect to make contributions of approximately $11 million during 2024. We closely monitor the funded status of the Plans with respect to legislative requirements. We intend to make at least the minimum contribution required by law each year. The estimated future benefit payments related to our foreign defined benefit plans are as follows:
| Payments
| (In thousands)
2024 | $ | 9,369 |
2025 | 11,715 |
2026 | 12,383 |
2027 | 15,185 |
2028 | 16,062 |
2029 to 2033 | 98,940 |
Defined Contribution Plans We sponsor defined contribution plans in Korea, Malaysia, Taiwan and the U.S. Total defined contribution expense was $27.0 million, $24.2 million and $21.8 million for 2023, 2022 and 2021, respectively.

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