HTC 2008 Annual Report Download - page 117

Financial Information | 99
98 | 2008 Annual Report
>Derivative Financial Instruments
December 31
2006
2007
2008
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
NT$
NT$
NT$
NT$
NT$
US$
NT$
US$
(Note 3)
(Note 3)
Liabilities
Financial liabilities at fair value
through profit or loss
76,470
76,470
96,256
96,256
514,083
15,673
514,083
15,673
Methods and Assumptions Used in
Determining Fair Values of Financial
Instruments
Not subject to Statement of Financial Accounting
Standards No. 34 - “Financial Instruments:
Recognition and Measurement” are cash,
receivables, other current financial assets,
payables, accrued expenses and other current
financial liabilities, which have carrying amounts
that approximate their fair values.
The financial instruments neither include
refundable deposits, guarantee deposits nor
long-term bank loans. The fair values of
aforementioned financial instruments were based
on the present value of future cash flows
discounted at the average interest rates for time
deposits with maturities similar to those of the
financial instruments.
The fair values of financial instruments at fair value
through profit or loss and available-for-sale
financial assets are based on quoted market prices
in an active market, and their fair values can be
reliably measured. If the securities do not have
market prices, fair value is measured on the basis
of financial or other information. The Company
uses estimates and assumptions that are
consistent with information that market participants
would use in setting a price for these securities.
Methodology Used to Determine the Fair
Values of Financial Instruments
Quoted Market Prices
Measurement Method
December 31
December 31
2006
2007
2008
2006
2007
2008
NT$
NT$
NT$
US$
NT$
NT$
NT$
US$
(Note 3)
(Note 3)
Assets
Available-for-sale financial assets - noncurrent
$
1,733
$
784
$
339
$
10
$
-
$
-
$
-
$
-
Financial assets carried at cost
-
-
-
-
1,192
501,192
501,192
15,280
Bond investments not quoted in an active market
-
-
-
-
-
33,030
-
-
Investments accounted for using equity method
-
-
-
-
-
-
39,906
1,217
Liabilities
Financial liabilities at fair value through profit or loss
76,470
96,256
514,083
15,673
-
-
-
-
There was no loss or gain recognized for the years
ended December 31, 2006, 2007 and 2008 on the
fair value changes of derivatives with fair values
estimated using valuation techniques. However,
on the changes in fair value of available-for-sale
financial assets, the Company recognized an
unrealized gain of NT$849 thousand, an
unrealized loss of NT$949 thousand and another
unrealized loss of NT$445 thousand (US$14
thousand) under stockholders’ equity in the years
ended December 31, 2006, 2007 and 2008,
respectively.
As of December 31, 2006, 2007 and 2008,
financial assets exposed to cash flow interest rate
risk amounted to NT$30,468,400 thousand,
NT$46,613,935 thousand and NT$60,900,272
thousand (US$1,856,715 thousand), respectively.
As of December 31, 2007, financial assets
exposed to fair value interest rate risk was
NT$33,030 thousand.
Financial Risks
>Market Risk
The Company uses derivative contracts for
hedging purposes, i.e., to reduce any adverse
effect of exchange rate fluctuations of accounts
receivable/payable. The gains or losses on these
contracts almost offset the gains or losses on the
hedged items. Thus, market risk is not material.
>Credit Risk
The Company deals only with banks with good
credit standing based on the banks’ reputation and
takes into account past experience with them.
Moreover, the Company has a series of control
procedures for derivative transactions.
Management believes its exposure to
counter-parties’ default on contracts is low.
>Cash Flow Risk
The Company has sufficient working capital to
settle derivative contracts. However, there are no
future cash requirements for contract settlement.
27.RELATED-PARTY TRANSACTIONS
The related parties were as follows:
Related Party
Relationship with the Company
First International Computer, Inc. (FIC)
Chairperson is an immediate relative of the chairperson of HTC
FIC (Suzhou) Inc.
Chairperson is an immediate relative of the chairperson of HTC
Xander International Corp.
Chairperson is an immediate relative of the chairperson of HTC
VIA Technologies, Inc.
Same c hairperson with HTC
Chander Electronics Corp.
Same chairperson with HTC
Way-Lien Technology Inc.
Same chairperson with HTC
Captec Partners Management Corp.
Main director is the chairperson of HTC
Comserve Network Netherlands B.V.
Main director is an immediate relative of the chairperson of HTC
Employees’ Welfare Committee
Employees’ Welfare Committee of HTC
Landtek Corporation (BVI)
Main director is the chairperson of HTC
HTC Education Foundation for Social Welfare Charity
a non-profit organization of which the funds donated from the Company exceeds one
third of the non-profit organization’s total funds
High Tech Computer Foundation
a non-profit organization of which the funds donated from the Company exceeds one
third of the non-profit organization’s total funds