HTC 2007 Annual Report Download - page 93

AN OVERVIEW OFTHE COMPANY'S FINANCIAL STATUS
181180
Under their respective local government regulations,
other subsidiaries have defined contribution pension
plans covering all eligible employees. The pension
fund contributions were NT$846 thousand in 2005,
NT$3,006 thousand in 2006 and NT$15,728
thousand (US$485 thousand) in 2007.
Based on the Statement of Financial Accounting
Standards No. 18 - "Accounting for Pensions" issued
by the Accounting Research and Development
Foundation of the ROC, pension cost under a
defined benefit pension plan should be calculated by
the actuarial method.
The Company's net pension costs under the defined
benefit plan in 2005, 2006 and 2007 were as follows:
2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Service cost $ 44,766 $ 5,259 $ 4,930 $ 152
Interest cost 10,042 9,400 8,629 266
Projected return on plan assets (5,782) (10,320) (8,988 ) (277)
Amortization of unrecognized
net transition obligation, net - - 74 3
Amortization of net
pension benefit 6,154 1,708 2,182 67
Net pension cost $ 55,180 $ 6,047 $ 6,827 $ 211
The reconciliation between pension fund status and
prepaid pension cost as of December 31, 2005,
2006 and 2007 is as follows:
2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Present actuarial value of benefit obligation
Vested benefits $ 792 $ - $ - $ -
Non-vested benefits 127,313 153,371 172,092 5,307
Accumulated benefit obligation 128,105 153,371 172,092 5,307
Additional benefits on future salaries 161,127 159,023 145,809 4,496
Projected benefit obligation 289,232 312,394 317,901 9,803
Plan assets at fair value ( 274,197) (311,532) (348,853 ) ( 10,757)
Funded status 15,035 862 ( 30,952 ) ( 954)
Unrecognized net transitional obligation - - ( 1,032 ) ( 32)
Unrecognized pension loss ( 64,795) ( 74,882) ( 63,229 ) ( 1,950)
Additional minimum pension liability - - 953 29
Prepaid pension cost $( 49,760) $( 74,020) $( 94,260) $( 2,907)
Assumptions used in actuarially determining the
present value of the projected benefit obligation
were as follows:
2005 2006 2007
Weighted-average discount rate 3.25% 2.75% 2.75%
Assumed rate of increase in future compensation 4.75% 4.25% 2%-4%
Expected long-term rate of return on plan assets 3.25% 2.75% 2.75%
•The vested benefits as of D ece m ber 31, 2005, 2006 and
2007 a
m ounted to N T$962 thousand, N T$0 thousand and
N T$0 thousand, respectively.
VI
18. LONG-TERM BANK LOANS
2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Secured loans (Notes 9 and 27)
NT$50,000 thousand, repayable
from July 2006 in 16 quarterly
installments; 1% annual interest $ - $ - $ 31,250 $ 964
NT$65,000 thousand, repayable in
quarterly installments from the
completion date of the loan plan; 1%
annual interest; the loan plan had not
been completed as of
December 31, 2007 - - 65,000 2,004
Less current portion - - (20,625) (636)
$ - $ - $ 75,625 $ 2,332
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$90,488 thousand
in 2006 and NT$113,985 thousand (US$3,515
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. The rate of the Company's
contributions to a pension fund is 2%. These
contributions are deposited in the Central Trust of
China (which merged with the Bank of Taiwan in July
2007, with the Bank of Taiwan as the survivor entity,)
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$348,853 thousand (US$10,757
thousand) as of December 31, 2005, 2006 and
2007, respectively.
The related pension benefit obligation for those
employees that elected to join the defined
contribution plan were not settled, therefore, no
settlement or curtailment charge was recorded.
H.T.C. (B.V.I.) Corp., HTC HK, Limited, and HTC
Asia Pacific Pte. Ltd. have no pension plans.
FINANCEI CONSOLIDATED REPORT l