Pension and Severance Plans

12 Months Ended

Dec. 31, 2024

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,
	2024		2023
	(In thousands)
Balance at January 1	$	47,906	$	56,289
Provision of severance benefits	3,142		1,653
Severance payments	(1,416)		(8,770)
Foreign currency (gain) loss	(6,194)		(1,266)
Balance at December 31	43,438		47,906
Payments remaining with the National Pension Fund	(101)		(119)
Total accrued severance plan obligations at December 31	43,337		47,787
Less current portion of accrued severance plan obligations (Note 10) (1)	12,231		7,906
Non-current portion of accrued severance plan obligations	$	31,106	$	39,881

(1)In December 2024, some employees accepted our offer to convert their Korean severance and defined benefit pension plan participation to a defined contribution plan. This will result in the conversion of approximately $5 million of obligations from our Korean severance plan to a defined contribution plan, which is expected to be funded during the first quarter of 2025.

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, 2024 and 2023:


	For the Year Ended December 31,
	2024		2023
	(In thousands)
Change in projected benefit obligation:
Projected benefit obligation at January 1	$	164,281	$	159,760
Service cost	13,645		15,032
Interest cost	5,718		6,202
Benefits paid	(11,320)		(14,056)
Actuarial (gain) loss	2,458		4,150



Effects of curtailment	(320)		(617)
Settlement	(883)		(1,073)
Foreign exchange (gain) loss	(14,423)		(5,117)
Projected benefit obligation at December 31	159,156		164,281
Change in plan assets:
Fair value of plan assets at January 1	129,196		127,338
Actual gain (loss) on plan assets	8,918		12,325
Employer contributions	12,165		7,368

Settlement	(883)		(1,073)
Benefits paid	(11,320)		(14,056)
Foreign exchange gain (loss)	(12,794)		(2,706)
Fair value of plan assets at December 31	125,282		129,196
Funded status of the Plans at December 31	$	(33,874)	$	(35,085)


	December 31,
	2024		2023
	(In thousands)
Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost (included in non-current assets)	$	5,991	$	12,039
Accrued benefit liability (included in pension and severance obligations) (1)	(39,865)		(47,124)
Net amount recognized at year end	$	(33,874)	$	(35,085)

(1)As of December 31, 2024, $0.9 million was recognized in accrued expenses.

The accumulated benefit obligation as of December 31, 2024 and 2023 was $123.4 million and $128.3 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, 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
Amortization and settlement gain included in net periodic pension cost	—		(388)		(388)
Net gain (loss) arising during period	—		1,053		1,053
Adjustments to unrealized components of defined benefit pension plan included in other comprehensive income (loss)	—		665		665
Balance at December 31, 2024	$	602	$	15,968	$	16,570

Information for pension plans with benefit obligations in excess of plan assets is as follows:


	December 31,
	2024		2023
	(In thousands)
Plans with underfunded or non-funded projected benefit obligation:
Aggregate projected benefit obligation	$	92,191	$	100,662
Aggregate fair value of plan assets	52,326		53,539
Plans with underfunded or non-funded accumulated benefit obligation:
Aggregate accumulated benefit obligation	55,646		60,638
Aggregate fair value of plan assets	20,122		21,304

The following table summarizes total pension expense:


	For the Year Ended December 31,
	2024		2023		2022
	(In thousands)
Components of net periodic pension cost and total pension expense:
Service cost	$	13,645	$	15,032	$	20,072
Interest cost	5,718		6,202		4,731
Expected return on plan assets	(5,554)		(5,144)		(5,605)

Recognized actuarial (gain) loss	(462)		(156)		53
Net periodic pension cost	13,347		15,934		19,251
Curtailment (gain) loss	(320)		(617)		—
Settlement (gain) loss	33		132		(1,374)
Total pension expense	$	13,060	$	15,449	$	17,877

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,
	2024		2023		2022
Discount rate for determining net periodic pension cost	3.8	%	4.2	%	2.6	%
Discount rate for determining benefit obligations at December 31	3.8	%	3.8	%	4.2	%
Rate of compensation increase for determining net periodic pension cost	3.7	%	3.6	%	3.7	%
Rate of compensation increase for determining benefit obligations at December 31	3.8	%	3.7	%	3.6	%
Expected rate of return on plan assets for determining net periodic pension cost	4.5	%	4.1	%	3.8	%

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	50	%	45	%	5	%

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, 2024				December 31, 2023
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(In thousands)				(In thousands)
Cash and cash equivalents	$	749	$	—	$	749	$	217	$	—	$	217
Equity securities	14,276		—		14,276		13,680		—		13,680
Debt securities
Government bonds	3,712		—		3,712		3,674		—		3,674
Corporate bonds	1,259		—		1,259		1,130		—		1,130
Treasury notes	11,881		—		11,881		11,993		—		11,993
Mutual and commingled funds
Equity funds	11,950		7,270		19,220		29,016		7,807		36,823
Debt funds	18,210		12,516		30,726		12,031		13,163		25,194
Guaranteed investment contracts	—		30,365		30,365		—		23,189		23,189
Taiwan retirement fund	12,428		—		12,428		12,478		—		12,478
Other, net	—		666		666		—		818		818
Total fair value of pension plan assets	$	74,465	$	50,817	$	125,282	$	84,219	$	44,977	$	129,196

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 $10 million during 2025. 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)
2025	$	9,307
2026	11,145
2027	13,419
2028	14,037
2029	13,922
2030 to 2034	97,256

Defined Contribution Plans

We sponsor defined contribution plans in Korea, Malaysia, Taiwan and the U.S. Total defined contribution expense was $26.5 million, $27.0 million and $24.2 million for 2024, 2023 and 2022, respectively.