HTC 2008 Annual Report Download - page 87

Financial Information | 39
38 | 2008 Annual Report
the Company’s paid-in capital. Also, the capital
surplus from long-term investments may not be used
for any purpose.
The additional paid-in capital was NT$4,410,871
thousand as of January 1, 2006. In April 2007, the
retirement of treasury stock caused a decrease of
additional paid-in capital amounted to 36,627
thousand. As a result, the additional paid-in capital
as of December 31, 2008 was NT$4,374,244
thousand (US$133,361 thousand). Under the
Company Law, the Company may transfer the
capital surplus to common stock if there is no
accumulated deficit.
When the Company did not subscribe for the new
shares issued by BandRich Inc. in May 2006 and
Vitamin D Inc. in September 2008, adjustments of
NT$15,845 thousand and NT$1,689 thousand
(US$52 thousand) were made to the investment’s
carrying value and capital surplus, respectively. As a
result, the capital surplus from long-term equity
investments as of December 31, 2008 was
NT$17,534 thousand (US$535 thousand).
The additional paid-in capital from a merger (Note 1),
which took effect on March 1, 2004, was NT$25,972
thousand. Then, because of treasury stock
retirement in April 2007, the additional paid-in capital
from a merger decreased to NT$25,756 thousand
(US$785 thousand).
Appropriation of Retained Earnings and
Dividend Policy
Based on the Company Law of the ROC and the
Company’s Articles of Incorporation, 10% of the
Company’s annual net income less any deficit
should first be appropriated as legal reserve until
this reserve equals its capital. From the remainder,
there should be appropriations of not more than 3‰
as remuneration to directors and supervisors and at
least 5% as bonuses to employees.
The appropriation of retained earnings should be
proposed by the board of directors and approved by
the stockholders in their annual meeting.
As part of a high-technology industry and a growing
enterprise, the Company considers its operating
environment, industry developments, and long-term
interests of stockholders as well as its programs to
maintain operating efficiency and meet its capital
expenditure budget and financial goals in
determining the stock or cash dividends to be paid.
The Company’s dividend policy stipulates that at
least 50% of total dividends may be distributed as
cash dividends.
Had the Company recognized the employees’
bonuses of NT$531,000 thousand as expenses in
2005, the pro forma earnings per share in 2005
would have decreased from NT$33.26 to NT$31.76,
which were not adjusted retroactively for the effect of
stock dividend distribution in later years.
Had the Company recognized the employees’
bonuses of NT$2,105,000 thousand as expenses in
2006, the pro forma earnings per share in 2006
would have decreased from NT$57.85 to NT$53.03,
which were not adjusted retroactively for the effect of
stock dividend distribution in the following year.
Had the Company recognized the employees’
bonuses of NT$1,313,200 thousand as expenses in
2007, the pro forma earnings per share in 2007
would have decreased from NT$50.48 to NT$48.19,
which were not adjusted retroactively for the effect of
stock dividend distribution in the following year.
Based on a resolution passed by the Company’s
board of directors in February 2008, the employee
bonus payable should be appropriated at 18% of net
income less employee bonus expenses. If the
actual amounts subsequently resolved by the
stockholders differ from the proposed amounts, the
differences are recorded in the year of stockholders’
resolution as a change in accounting estimate. If
bonus shares are resolved to be distributed to
employees, the number of shares is determined by
dividing the amount of bonus by the closing price
(after considering the effect of cash and stock
dividends) of the shares of the day preceding the
stockholders’ meeting.
As of January 17, 2009, the date of the
accompanying independent auditors’ report, the
appropriation of the 2008 earnings had not been
proposed by the Board of Directors. Information on
earnings appropriation can be accessed online
through the Market Observation Post System on the
Web site.
20.TREASURY STOCK
On October 7, 2008, the Company’s board of
directors passed a resolution to buy back 10,000
thousand Company shares from the open market.
The repurchase period was between October 8,
2008 and December 7, 2008, and the repurchase
price ranged from NT$400 (US$12) to NT$500
(US$15) per share. If the Company’s share price
was lower than this price range, the Company might
continue to buy back its shares.
The Company bought back 10,000 thousand shares
for NT$3,410,277 thousand (US$103,972 thousand)
during the repurchase period.
(In thousands of shares)
Purpose
As of
January 1, 2008
Increase
Decrease
As of
December 31, 2008
For maintaining the
Company’s credit and
stockholders’ equity
-
10,000
-
10,000
On December 12, 2006, the Company’s board of
directors passed a resolution to buy back 5,000
thousand Company shares from the open market.
The repurchase period was between December 13,
2006 and January 19, 2007, and the repurchase
price ranged from NT$601 to NT$800 per share. If
the Company’s share price was lower than this price
range, the Company might continue to buy back its
shares.
During the repurchase period, the Company bought
back 3,624 thousand shares, which were approved
to be retired by the Company’s board of directors in
April 2007, for NT$1,991,755 thousand.