HTC 2007 Annual Report Download - page 66

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AN OVERVIEW OFTHE COMPANY'S FINANCIAL STATUS
The number of shares issued upon the conversion of
any bond is determined by dividing the principal
amount of the bonds (translated into New Taiwan
dollars at a fixed exchange rate of NT$34.658 to
US$1.00) by the conversion price in effect on the
conversion date.
The initial conversion price was NT$205.32 per
share at the time of issuance. Upon the distribution
of stock dividends and the issuance of additional
common shares, the conversion price will be
adjusted.
19.PENSION PLAN
The Labor Pension Act (the "Act"), which provides
for a new defined contribution plan, took effect on
July 1, 2005. Employees covered by the Labor
Standards Law (the "Law") before the enforcement
of the Act were allowed to choose to remain to be
subject to the defined benefit pension mechanism
under the Law or to be subject instead to the Act.
Based on the Act, the rate of the Company's
required monthly contributions to the employees'
individual pension accounts is at least 6% of monthly
wages and salaries, and these contributions are
recognized as pension expense in the income
statement. The pension fund contributions were
NT$40,152 thousand in 2005, NT$89,723 thousand
in 2006 and NT$110,723 thousand (US$3,415
thousand) in 2007.
Under the Law, which provides for a defined benefit
pension plan, retirement payments should be made
according to the years of service, with a payment of
two units for each year of service but only one unit
per year after the 15th year; however, total units
should not exceed 45. On January 1, 2004, the rate
of the Company's contributions to a pension fund
increased from 2% to 8% of employees' salaries and
wages and then decreased to 2% after the Act took
effect. The fund is deposited in the Central Trust of
China, a government-designated custodian of
pension funds, and managed by the Pension Fund
Administration Committee. The pension fund
balances were NT$274,197 thousand, NT$311,532
thousand and NT$348,439 (US$10,744 thousand)
as of December 31, 2005, 2006 and 2007,
respectively.
Based on the Statement of Financial Accounting
Standards No. 18 - "Accounting for Pensions,"
issued by the Accounting Research and
Development Foundation of the ROC, pension cost
under a defined benefit pension plan should be
calculated by the actuarial method. Related
disclosure is as follows:
The Company's net pension costs under the defined
benefit plan in 2005, 2006 and 2007 were as follows:
VI
16.ACCRUED EXPENSES
Accrued expenses as of December 31, 2005, 2006
and 2007 were as follows:
2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Marketing $ - $ 983,088 $ 3,007,021 $ 92,723
Salaries and bonuses 698,818 762,942 914,062 28,186
Professional fees 39,445 49,221 615,365 18,975
Research materials 48,013 119,075 189,469 5,843
Export expenses 183,060 162,221 127,867 3,943
Meals and welfare 36,978 57,436 58,287 1,797
Insurance 45,307 40,398 46,967 1,448
Travel 23,689 58,027 40,777 1,257
Repairs and maintenance 23,690 23,759 32,564 1,004
Others 105,807 83,962 237,450 7,322
$ 1,204,807 $ 2,340,129 $ 5,269,829 $ 162,498
•The Co m pany accrued m arketing expenses on the basis of
related agree
m ents and other factors that would
significantly affect the accruals.
17.OTHER CURRENT LIABILITIES
Other current liabilities as of December 31, 2005,
2006 and 2007 were as follows:
2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Reserve for warranty expenses $ 964,503 $1,393,995 $3,469,957 $106,998
Employee bonus payable - 451,000 - -
Deferred credits - profit from
intercompany transactions 15,077 164,011 175,075 5,399
Agency receipts 86,467 122,897 107,618 3,318
Other payables to related
parties (Note 26) 89,777 110,617 244,094 7,527
Advance receipts 112,641 37,340 105,424 3,251
Directors' remuneration 21,842 21,842 21,842 674
Others 12,461 61,920 173,348 5,345
$1,302,768 $2,363,622 $4,297,358 $132,512
•The Co m pany provides warranty service for one to two
years, depending on the contracts with our custo
m ers. The
warranty liability is esti
m ated on m anage m ent ' s evaluation
of the products under warranty and recognized as warranty
liability.
• D eferred credits - profit fro m interco m pany transactions
were unrealized profit fro
m interco m pany transactions.
•Agency receipts were pri m arily overseas value-added tax,
e
m ployees ' inco m e tax, insurance, and other ite m s.
• O ther payables to related parties were pay m ents for
m iscellaneous expenses of overseas sales offices and
repair
m aterials.
18.BONDS PAYABLE
On January 29, 2003, the Company issued zero
coupon convertible bonds with an aggregate amount
of US$66,000 thousand and maturity in 2008. The
issue price was 100% of the US$1,000 par value.
Under the bond terms, a bondholder has the right to
request the Company to redeem the bonds on April
29, 2004 at their accreted principal amount. Thus,
some bondholders requested the Company to
redeem the bonds amounting to US$2,000
thousand, and other bondholders requested the
conversion of bonds amounting to US$64,000
thousand into 17,336 thousand shares. As a result,
the Company had no outstanding bonds payable as
of April 30, 2005.
FINANCEI INDEPENDENT AUDITORS' REPORT l