HTC 2008 Annual Report Download - page 56

2OO 8 HTC AN N UAL REPO RT
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(2) Future Investment Plans
Long-term strategic investments made by the
corporation focus primarily on supporting HTC's
business success and growth in its main business.
Investment and acquisition decisions are taken
based on the benefit of such to the design and
development of future products, expansion of sales
and long-term development of the corporation.
Practical objectives of such investments include
reducing the cost of products, raising the quality and
inherent value of products, enhancing the
convenience of product user interfaces,
strengthening customer service and increasing
overall operational effectiveness. Major investments
planned for our main business address the areas of
mobile content, communications, mobile and
information security, location based services,
entertainment and user interface / experience
innovation. Investments currently approved by the
board of directors include a capitalization increase of
US$8 million in High Tech Computer Asia Pacific
PTE, Ltd. to, indirectly, invest in the establishment of
a subsidiary in China, the primary business interests
of which will be market development, repair and after
sales service as well as the support of China-based
distributors working to develop China market sales
for HTC products. HTC has allocated an additional
US$8 million for its China subsidiary, HTC
Electronics (Shanghai) Co., Ltd. Funds will help
finance expansion of production facilities in
Shanghai's Kangqiao Industrial Zone. Said
allocations for the two China investments will be
executed following approval by Taiwan's Investment
Commission (Ministry of Economic Affairs).
Furthermore, HTC has approved an investment of
US$12.5 million through the British Virgin Islands to
establish a subsidiary focused on trading raw
materials and semi-finished products.
6. RISK FACTORS OF RELEVANCE TO
HTC BUSINESS OPERATIONS
(1) Potential Factors of Influence on HTC
Competitiveness & Growth Goals and
Related M easures / Countermeasures
Competitiveness in the sector in which HTC
competes comes primarily from factors including: 1)
successful product research and development (R&D)
efforts and innovativeness and 2) strategic
partnership relationships with industry leaders and
an incisive understanding and grasp of market
trends. In addition to strong competencies in these
two areas, HTC maintains strong global business
development, streamlined production management
and global logistics capabilities - adding further
depth to its overall competitive position.
• Factors Favorable to the Achievement of HTC
Growth Goals
1. Partnerships with Industry Leaders Allow HTC Role
in Leading Industry Change and Trends
From the very beginning, strategic partnerships with
industry leaders such as Microsoft, Qualcomm,
Google and Texas Instruments and
telecommunications service providers have helped
HTC develop and expand markets for converged
devices such as the world's first Windows Mobile
based smart phone, the first smart phone featuring a
3D user interface, and, in 2008, the world's first
smart phone designed on the new Android operating
system. Such partnerships help inject innovation and
variation into HTC products while ensuring HTC
stands with industry leaders to drive and shape
industry trends.
2. Strategies to Reform Corporate Culture, Enhance
Organizational Strengths and Raise HTC Global
Brand Value and Recognition
HTC has in recent years made increasingly
successful efforts to remold and enhance internal
corporate culture in a way that reflects the
corporation's shift away from ODM business to a
new focus on the business of developing and
marketing its proprietary brand. The corporation is
also bolstering strengths in non-technical, executive
management talent essential to extending
international sales and marketing networks and
product design capabilities. Expected results include
a strengthening of the overall corporate organization
VI. FIN AN CIAL STATUS, O PERATIN G RESULTS AN D RISK MAN AGEM EN T
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(2) Cash Liquidity Analysis for the Coming Year
Unit: NT$1,000
Remedial measures for
projected cash deficit
Beginning cash Projected whole-year Projected whole-year Projected cash surplus Financial
balance cash flow from operating activities cash outflow (deficit) amount Investment plan management plan
61,826,873 37,756,872 26,497,924 73,085,821 --
Remedial measures for projected cash deficit: Not Applicable
4. THE EFFECT ON FINANCIAL OPERATIONS OF MATERIAL CAPITAL
EXPENDITURES DURING THE MOST RECENT FISCAL YEAR
(1) Review and Analysis of M aterial Capital Expenditures and Funding Sources
> Material capital expenditure utilization and funding sources
Unit: NT$1,000
Planned items Actual or projected Actual or projected Total amount of Actual or projected capital utilization
sources of capital date of completion required capital 2006 2007 2008 2009 2010
Plant Construction & Equipment / Working capital 2008
2,546,277 372,131 587,349 1,586,797
Facilities Purchase
Purchase, Installation and Working capital 2009
746,669 172,384 574,285
Maintenance of Equipment / Facilities
Purchase & Construction of New Plant Working capital 2010
7,579,848 2,765,318 3,064,530 1,750,000
> Anticipated benefits
• Construction of new plant facilities, Taipei R&D building and HTC Campus
New buildings and facilities to provide employees with suitably designed and furnished work
environments to support and enhance long-term, sustained business operations.
• Purchase and installation of equipment and facilities
Replacement / upgrade of equipment and facilities is essential to raising productivity and
reducing overall costs of doing business, and to supporting HTC's share of the market and
operating profit margin.
5. STATUS OF INVESTMENT DIVERSIFICATION DURING CURRENT YEAR
(1) Analysis of Equity Investments
Unit: NT$1,000
Other future
Item Amount(Note) Policy Primary reason for profits or losses Corrective plans investment plans
H.T.C. (B.V.I.) Corp. 457,727 Financial holding company: indirect Gains by the invested enterprise _ Please refer to (2)
investment in overseas maintenance,
installation, after-sales service, and .
market development companies
High Tech Computer Aisa 1,463,114 Investment holding Losses by the invested enterprise _ Please refer to (2)
Pacific PTE. Ltd.
Note: The investment amount for the current fiscal year exceeds five percent of paid-in capital.
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