Retirement Plan

The Company has pension plans covering substantially all of its Taiwan-based employees. The pension plans are based on the Labor Standards Law, a defined benefit plan (Benefit Plan) and the Labor Pension Act, a defined contribution plan (Contribution Plan).

Under the Labor Standards Law, the Benefit Plan provides for a lump sum payment upon retirement based on years of service and the employee’s compensation during the last six months of employment. In accordance with the Labor Standards Law of the R.O.C., the Company makes monthly contributions equal to 2% of its wages and salaries. The fund is administered by the Employees’ Retirement Fund Committee and is registered in this committee’s name. Accordingly, the pension fund assets are not included in the financial statements of the Company.

Under the Labor Pension Act effective July 1, 2005, employees may choose the requirements under the Labor Standards Law or the new statute. For employees subject to the new statute, the Company shall contribute no less than 6% of the employees’ wages and salaries to the Contribution Plan.

Benefit Obligation and Plan Assets

As of September 30, 2012 and 2011, the Company’s Benefit Plan had projected benefit obligations in excess of plan assets. The changes in the benefit obligation and plan assets for the Benefit Plan described above were as follows:



	2012		2011
	(in thousands)
Change in projected benefit obligation:
Beginning benefit obligation	$	5,178	$	4,002
Service cost	195		165
Interest cost	108		83
Actuarial loss	75		820
Currency exchange rate changes	205		108
Assumed liability in business combination	286		—
Ending projected benefit obligation	$	6,047	$	5,178



	2012		2011
	(in thousands)
Change in fair value plan assets:
Beginning fair value of plan assets	$	2,079	$	1,955
Actual return on plan assets	19		19
Employer contributions	70		52
Currency exchange rate changes	83		53
Assets acquired in business combination	259		—
Ending fair value of plan assets	$	2,510	$	2,079

The following table summarizes the amounts recognized on the consolidated balance sheet as of September 30:



	2012		2011
	(in thousands)
Other long-term liabilities	$	3,537	$	3,099
Accumulated other comprehensive income (net of tax of $204 in 2012)	2,126		2,155
Amount recognized	$	5,663	$	5,254

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) before taxes, as of September 30:



	2012			2011
	(in thousands)
Net transition asset	$	234		$	311
Net actuarial loss	(2,564		)	(2,466		)
Defined benefit plans, net	$	(2,330	)	$	(2,155	)

The following table summarizes the accumulated benefit obligation as of September 30:



	2012		2011
	(in thousands)
Accumulated benefit obligation	$	3,745	$	3,026

Weighted-average actuarial assumptions used to determine benefit obligations and plan assets for the Benefit Plan at September 30 were as follows:



	2012	2011
Discount rate	1.90-2.00%	2.00	%
Expected return on plan assets	1.90-2.00%	2.00	%
Rate of compensation increase	3.00-4.00%	3.00	%

The assumptions used in the expected long-term rate of return on plan assets are determined by the Bureau of Labor Insurance in Taiwan.

The net periodic benefit cost for the Benefit Plan included the following components at September 30:



	2012			2011			2010
	(in thousands)
Service cost	$	195		$	165		$	94
Interest cost	108			83			46
Expected return on plan assets	(44		)	(40		)	(38		)
Amortization of deferred amount	36			2			(58		)
Net periodic benefit cost	$	295		$	210		$	44

The balance of vested benefits was $45,000 and $0 as of September 30, 2012 and September 30, 2011, respectively.

Non-U.S. Plan Assets

For the Benefit Plan, the Company deposits funds into government-managed accounts, and accrues for the unfunded portion of its obligation.

Estimated Future Benefit Payments

The following table reflects the benefit payments, which include the amount that will be funded from retiree contributions that the Company expects to pay in the periods noted (in thousands):



Fiscal year ending:
2013	$	296
2014	$	374
2015	$	47
2016	$	150
2017	$	68
2018-2022	$	3,412

Estimated Future Contributions

The Company’s expected contributions to be paid to the Benefit Plan during fiscal 2013 is $41,000.