HTC 2009 Annual Report Download - page 73

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Under the Statute for Upgrading Industries, the Company was granted exemption from corporate income tax as follows:
Item Exempt from Corporate Income Tax Exemption Period
Sales of pocket PCs, pocket PCs (wireless) and Smartphones 2004.09.15-2009.09.14
Sales of pocket PCs (wireless) and Smartphones 2004.11.30-2009.11.29
Sales of pocket PCs (wireless) and Smartphones 2005.12.20-2010.12.19
Sales of wireless or smartphone which has 3G or GPS function 2006.12.20-2011.12.19
Sales of wireless or smartphone which has 3G or GPS function 2007.12.20-2012.12.19
Income taxes payable as of December 31, 2008 and 2009 were computed as follows:
2008 2009
NT$ NT$ US$(Note 3)
Income before income tax $ 31,590,479 $ 25,212,464 $ 788,136
Permanent differences
Loss (gain) on equity-method investments 57,289 ( 273,811 ) ( 8,559 )
Impairment loss - 30,944 967
Other 372,219 82,485 2,579
Temporary differences
Realized pension cost ( 21,951 )( 20,515 ) ( 641 )
Unrealized loss on decline in value of inventory 706,938 1,502,036 46,953
Unrealized royalties 2,104,308 2,312,014 72,273
Unrealized exchange losses, net 6,928 942,915 29,475
Unrealized bad debt expenses 180,011 503,089 15,727
Capitalized expense 74,251 ( 29,095 ) ( 910 )
Unrealized warranty expense 1,755,905 61,700 1,929
Unrealized marketing expenses 2,867,307 3,037,905 94,964
Unrealized valuation loss (gain) on financial instruments 417,827 ( 532,215 ) ( 16,637 )
Realized profit from intercompany transactions ( 40,984 )( 25,941 ) ( 811 )
Other ( 74,922 )196,431 6,140
Total income 39,995,605 33,000,406 1,031,585
Less: Tax-exempt income ( 31,976,991 )( 26,204,796) ) ( 819,156 )
Taxable income 8,018,614 6,795,610 212,429
Tax rate 25% 25% 25%
2,004,654 1,698,903 53,107
Income tax credit ( 10 )(10) -
Estimated income tax provision 2,004,644 1,698,893 53,107
Unappropriated earnings (additional 10% income tax) 352,583 202,145 6,319
Less: Investment research and development tax credits ( 352,583 )( 202,145 ) ( 6,319 )
Income tax payable determined pursuant to the Income Tax Law $ 2,004,644 $ 1,698,893 $ 53,107
Alternative minimum tax $ 3,396,417 $ 3,211,563 $ 100,393
Less: Prepaid and withheld income tax ( 438,747 )( 39,014 ) ( 1,220 )
Prior years¶ income tax payable 980,075 980,075 30,637
Income tax payable $ 3,937,745 $ 4,152,624 $ 129,810
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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 to
NT$500 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 during the repurchase period and retired them in January
2009.
On July 31, 2009, the Company’s board of directors passed a resolution
to buy back 13,000 thousand Company shares from the open market.
The repurchase period was between August 3, 2009 and October 2,
2009, and the repurchase price ranged from NT$300 to NT$500 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 7,085 thousand shares for NT$2,406,930 thousand
(US$75,240 thousand) during the repurchase period and retired them in
November 2009.
(In Thousands of Shares)
Purpose
As of
January
1, 2009 Increase Decrease
As of
December
31, 2009
For maintaining the
Company’s credit and
stockholders’ equity 10,000 7,085 17,085 -
Based on the Securities and Exchange Act of the ROC, the number of
reacquired shares should not exceed 10% of the Company’s issued and
outstanding stocks, and the total purchase amount should not exceed
the sum of the retained earnings, additional paid-in capital in excess of
par, and realized capital reserve. In addition, the Company should not
pledge its treasury shares nor exercise voting rights on the shares
before their reissuance.
21. PERSONNEL EXPENSES, DEPRECIATION AND AMORTIZATION
Function
2008 2009
NT$ NT$ US$(Note 3)
Expense Item
Operating
Costs
Operating
Expenses Total
Operating
Costs
Operating
Expenses Total
Operating
Costs
Operating
Expenses Total
Personnel expenses $2,960,403 $8,421,017 $11,381,420 $2,498,640 $6,743,119 $9,241,759 $78,108 $210,788 $288,896
Salary 2,602,602 7,961,251 10,563,853 2,110,277 6,209,064 8,319,341 65,967 194,094 260,061
Insurance 123,335 147,065 270,400 150,925 178,655 329,580 4,718 5,584 10,302
Pension cost 48,583 114,880 163,463 57,183 129,967 187,150 1,788 4,063 5,851
Other 185,883 197,821 383,704 180,255 225,433 405,688 5,635 7,047 12,682
Depreciation 271,168 294,434 565,602 294,601 335,536 630,137 9,209 10,489 19,698
Amortization - 35,983 35,983 11,357 28,490 39,847 355 891 1,246
22. INCOME TAX
The Company’s income tax returns through 2003 had been examined by the tax authorities. However, the Company disagreed with the tax authorities’
assessment on its returns for 2001 to 2003 and applied for the administrative litigation of its returns. Nevertheless, under the conservatism guideline, the
Company adjusted its income tax for the tax shortfall stated in the tax assessment notices.
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