HTC 2010 Annual Report Download - page 90

178 2 0 1 0 H T C A N N U A L R E P O R T 179
FINANCIAL INFORMATION
15. SHORT-TERM BORROWING
Short-term borrowings as of December 31, 2009 and 2010
were as follows:
2009 2010
NT$ NT$ US$(Note 3)
Working capital loans $ 72,326 $ - $ -
As of December 31, 2009, short-term borrowing was for
BandRich Inc.'s raising working capital and material purchase.
The Company lost its significant influence in BandRich Inc. in
July 2010, BandRich Inc. was not included in the consolidated
financial statements as of and for the year ended December 31,
2010.
16. ACCRUED EXPENSES
Accrued expenses as of December 31, 2009 and 2010 were as
follows:
2009 2010
NT$ NT$ US$(Note 3)
Marketing $ 8,784,378 $ 17,323,446 $ 594,694
Bonus to employees 4,859,236 8,491,704 291,511
Salaries and bonuses 1,001,358 2,642,916 95,101
Services 458,735 1,843,017 63,269
Freight 501,588 1,321,198 45,355
Research materials 529,935 780,501 26,794
Repairs and maintenance 64,893 250,638 8,604
Donation 217,800 217,800 5,573
Meals and welfare 114,030 197,590 6,783
Insurance 78,411 127,905 4,391
Pension cost 48,939 69,610 2,390
Travel 24,385 49,691 1,706
Others 280,200 110,012 3,776
$ 16,963,888 $ 33,426,028 $ 1,147,478
Based on the resolution passed by the Company's board of
directors, the employee bonuses for 2009 and 2010 should be
appropriated at 18% of net income before deducting employee
bonus expenses.
The Company accrued marketing expenses on the basis of
related agreements and other factors that would significantly
aect the accruals.
In September 2009, the Company's board of directors resolved
to donate to the HTC Cultural and Educational Foundation
NT$300,000 thousand, consisting of (a) the second and third
floors of Taipei's R&D headquarters, with these two floors to
be built at an estimated cost of NT$217,800 thousand, and
(b) cash of NT$82,200 thousand. This donation excludes the
land, of which the ownership remains with the Company. The
dierence between the estimated building donation and the
actual construction cost will be treated as an adjustment in the
year when the completed floors are actually turned over to the
HTC Cultural and Educational Foundation.
17. OTHER CURRENT LIABILITIES
Other current liabilities as of December 31, 2009 and 2010 were
as follows:
2009 2010
NT$ NT$ US$(Note 3)
Reserve for warranty
expenses $ 5,265,463 $ 9,104,973 $ 312,563
Other payables 474,908 269,045 9,236
Agency receipts 524,156 476,948 16,373
Advance receipts 152,907 805,838 27,664
Others 197,099 377,887 12,972
$ 6,614,533 $ 11,034,691 $ 378,808
The Company provides warranty service for one to two years
depending on the contract with customers. The warranty
liability is estimated based on management's evaluation of
the products under warranty, past warranty experience, and
pertinent factors.
Agency receipts were primarily employees' income tax,
insurance, royalties and overseas value-added tax.
Other payables were payables for miscellaneous expenses
of overseas sales oces and repair materials. In December
2008, the Company also estimated a contingent liability of
NT$125,663 thousand due to an increased financial risk from
a customer. If the customer cannot pay its payments, the
upstream firms might dun the Company for the customer's
liabilities.
In October 2008, H.T.C. (B.V.I.) Corp. acquired 100% equity
interest of One & Company Design, Inc., and paid the
investment to the original stockholders of One & Company
Design, Inc. in several installments based on the agreement.
In November 2009, One & Company Design, Inc. was sold
to High Tech Computer Asia Pacific Pte. Ltd. in line with
the reorganization of the Company's overseas subsidiaries'
investment structure. Related liabilities between One &
Company Design, Inc. and H.T.C. (B.V.I.) Corp. were transferred
as well. Of the investment, NT$40,880 thousand (US$1,403
thousand) had not been paid as of December 31, 2010.
In July 2010, HTC France Corporation acquired 100% equity
interest of ABAXIA SAS, and paid the investment to the original
stockholders of ABAXIA SAS in several installments based
on the agreement. Of the investment, NT$102,502 thousand
(US$3,519 thousand) had not been paid as of December 31,
2010.
18. LONG-TERM BANK LOANS
Long-term bank loans as of December 31, 2009 and 2010 were
as follows:
2009 2010
NT$ NT$ US$(Note 3)
Secured loans (Note 27)
NT$50,000 thousand,
repayable from July
2006 in 16 quarterly
installments; 1% annual
interest $ 6,250 $ - $ -
NT$65,000 thousand,
repayable from July
2009 in 16 quarterly
installments; 1% annual
interest 40,625 24,376 836
Less: Current portion ( 22,500) ( 12,188) ( 418)
$ 24,375 $ 12,188 $ 418
19. PENSION PLAN
The Labor Pension Act (the “Act”), which provides for a
new defined contribution plan, took eect 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$186,811
thousand in 2009 and NT$220,769 thousand (US$7,579
thousand) in 2010.
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 was 2% after the Act took
eect. The pension fund is deposited in the Bank of Taiwan
in the committee's name. The pension fund balances were
NT$417,407 thousand and NT$448,631 thousand (US$15,401
thousand) as of December 31, 2009 and 2010, respectively.
H.T.C. (B.V.I.) Corp., HTC HK, Limited, and High Tech Computer
Asia Pacific Pte. Ltd. have no pension plans.
Under their respective local government regulations, other
subsidiaries have defined contribution pension plans covering
all eligible employees. The pension fund contributions
were NT$38,234 thousand in 2009 and NT$72,115 thousand
(US$2,475 thousand) in 2010.
Based on the Statement of Financial Accounting Standards
No. 18 - “Accounting for Pensions” issued by the Accounting
Research and Development Foundation of the ROC, pension
cost under a defined benefit pension plan should be calculated
by the actuarial method.
The Company's net pension costs under the defined benefit
plan in 2009 and 2010 were as follows:
2009 2010
NT$ NT$ US$(Note 3)
Service cost $ 5,255 $ 4,915 $ 169
Interest cost 9,377 6,560 225
Projected return on plan
assets ( 11,094) ( 8,598) ( 295)
Amortization of
unrecognized net
transition obligation, net 74 74 3
Amortization of net
pension benefit 1,349 305 10
Net pension cost $ 4,961 $ 3,256 $ 112