EMPLOYEE BENEFIT PLANS

Employee Retirement Plan

Effective May 9, 1997, the Company adopted a Defined Contribution 401(k) and Profit Sharing Plan (the “401(k) Plan”) for its United States and Canada employees. The 401(k) Plan covers all regular full-time and part-time employees who have completed three months of service and attained the age of twenty-one. United States employees can contribute up to 100 percent of their annual compensation but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code. The 401(k) plan permits matching and discretionary employer contributions. The Company’s matching contributions for its United States and Canada employees vest ratably over a five-year period. During each of the years ended December 31, 2016 and 2015, the Company contributed approximately $0.4 million and $0.2 million to the 401(k) Plan for matching contributions respectively.

The Company also sponsors a non-U.S. defined benefit plan covering its employees in its Japan subsidiary (the “Benefit Plan”). Benefits under the Benefit Plan are based on a point system for position grade and years of service. The Company utilizes actuarial methods. Inherent in the application of these actuarial methods are key assumptions, including, but not limited to, discount rates and expected long-term rates of return on plan assets. Changes in the related Benefit Plan costs may occur in the future due to changes in the underlying assumptions, changes in the number and composition of plan participants, and changes in the level of benefits provided. The Company uses a measurement date of December 31 to evaluate and record any post-retirement benefits related to the Benefit Plan.

Projected Benefit Obligation and Fair Value of Plan Assets

The Benefit Plan’s projected benefit obligation and valuation of plan assets were as follows for the years ended December 31 (in thousands):



Projected benefit obligation:	2016			2015
Balance, beginning of year	$	479		$	549
Service cost	83			75
Interest cost	2			3
Liability (gain) loss	6			(4		)
Benefits paid to participants	(138		)	(141		)
Foreign currency	19			(3		)
Balance, end of year	$	451		$	479

Plan assets:	2016			2015
Fair value, beginning of year	$	—		$	—
Company contributions	138			141
Benefits paid to participants	(138		)	(141		)
Fair value, end of year	$	—		$	—



Funded status of the Benefit Plan as of December 31 (in thousands):	2016			2015
Benefit obligation	$	(451	)	$	(479	)
Fair value of plan assets	—			—
Excess of benefit obligation over fair value of plan assets	$	(451	)	$	(479	)



Amounts recognized in the accompanying Consolidated Balance Sheets consist of, as of December 31 (in thousands):	2016			2015
Accrued benefit liability	$	(451	)	$	(479	)
Transition obligation and unrealized gain	(307		)	(339		)
Net amount recognized in the consolidated balance sheets	$	(758	)	$	(818	)



	Years Ended December 31,
Other changes recognized in comprehensive income (in thousands):	2016			2015
Net periodic cost	$	46		$	43
Current year actuarial (gain) loss	6			(4		)
Amortization of transition obligation	(4		)	(4		)
Total recognized in other comprehensive income (loss)	2			(8		)
Total recognized in comprehensive income	$	48		$	35



	As of December 31,
Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive gain (in thousands):	2016			2015
Transition obligation	$	30		$	22
Prior service cost	283			313
Net actuarial gain (loss)	(6		)	4
Total recognized in accumulated other comprehensive gain	$	307		$	339



2017 estimated amounts of amortized transition obligation (in thousands):	2017
Transition obligation	$	(4	)



	As of December 31,
Aggregate Benefit Plan information and accumulated benefit obligation in excess of plan assets (in thousands):	2016		2015
Projected benefit obligation	$	451	$	479
Accumulated benefit obligation	451		479
Fair value of plan assets	—		—

The weighted-average assumptions to determine the benefit obligation and net cost are as follows:



	2016		2015
Discount rate	0.30	%	0.40	%
Rate of increase in compensation levels	—		—

Components of Expense

Pension expense for the Benefit Plan is included in selling, general and administrative expenses in the Consolidated Statements of Operations and is comprised of the following for the years ended December 31 (in thousands):



	2016			2015
Service cost	$	83		$	75
Interest cost	2			3
Amortization of transition obligation	4			4
Prior service cost	(43		)	(39		)
Total pension expense	$	46		$	43

Estimated Benefits and Contributions

The Company expects to contribute approximately $21,000 to the Benefit Plan in 2017. As of December 31, 2016, benefits expected to be paid by the Benefit Plan for the next ten years is approximately as follows (in thousands):



2017	$	21
2018	22
2019	26
2020	28
2021	36
Next five years	478
Total expected benefits to be paid	$	611