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2011 HTC
ANNUAL REPORT
mops.twse.com.tw | htc.com | Printed on May 10, 2012
TSE: 2498

Table of contents

  • Page 1
    2011 HTC ANNUAL REPORT mops.twse.com.tw | htc.com | Printed on May 10, 2012 TSE: 2498

  • Page 2
    ... HTC ANNUAL REPORT HTC SPOKESMAN NAME Chialin Chang TITLE Chief Financial Officer ACTING SPOKESMAN Joey Cheng TITLE OF ACTING SPOKESMAN Director of Investor Relations TEL +886 3 3753252 EMAIL [email protected] CORPORATE HEADQUARTERS ADDRESS No. 23, Xinghua Road, Taoyuan City, Taoyuan County, Taiwan...

  • Page 3
    HTC 2011 ANNUAL REPIRT CONTENTS 1 LETTER TI HTC SHAREHILDERS | 4 | 2 CIMPANY PRIFILE 5 CAPITAL AND SHARES 7 AFFILIATE INFIRMATIIN AND ITHER SPECIAL NITES | 12 | 3 BUSINESS IPERATIINS 4 CIRPIRATE GIVERNANCE | 94 | 6 FINANCIAL STATUS, IPERATING RESULTS | 116 | | 46 | AND RISK MANAGEMENT...

  • Page 4
    LETTER TO HTC SHAREHOLDERS

  • Page 5
    ... the 3rd largest smartphone player in North America. Also in 2011, HTC made Interbrand's annual Top 100 Best Global Brands list for the first time, becoming the first Chinese brand in history to earn an Interbrand top 100 listing. Financial Performance While rapidly expanding our business, we are...

  • Page 6
    ...smartphone (the HTC EVO 4G), Major Awards Designing products that meet consumer needs and lead market demand has earned HTC an impressive list of international recognition and awards. In February 2011, the Mobile World Congress (MWC) named HTC its "Device Manufacturer of the Year" the communication...

  • Page 7
    ... develop and market products that incorporate industry-leading technologies and deliver exceptional, user-tailored experiences. Whether at home, outdoors, in the car, or at work, HTC customers will instantly access the highest quality audio-visual, entertainment and mobile communications services...

  • Page 8
    COMPANY PROFILE

  • Page 9
    ... of the competition, HTC was the first company to launch 3G, 4G WiMAX and LTE smartphone devices in the world. In product design, our belief in putting customer at the center leads to the birth of HTC Sense™. This user-centric perspective features an amazing camera that let users take pictures of...

  • Page 10
    ... the Director of the Board) HT Cho and the Vice President (now Chief Executive Officer) Peter Chou put together HTC's first R&D team and developed the world's first handheld personal data HTC Brand Quietly brilliant is deeply rooted within HTC's corporate culture. We continuously roll out phones...

  • Page 11
    ...In our everyday life, images and sound are some of the most emotional elements. Our mobile phones have become the primary device for recording precious moments. Capitalizing on this insight, in 2012, HTC took high performance mobile imaging and high fidelity audio to the next level. COMPANY PROFILE...

  • Page 12
    ...COMPANY PROFILE Sharing should be simple. Through an easy-to-set up accessory, HTC phones can wirelessly project content onto any television. Users can now easily watch photos, video, movies in their phones on a big screen TV. From capturing to sharing, HTC phones provide a more personal experience...

  • Page 13
    ... Yoffie Chen-Kuo Lin Josef Felder 2 COMPANY PROFILE BOARD OF DIRECTORS Cher Wang Chairperson HT Cho Director / Member of the Compensation Committee Wen-Chi Chen Director Tan Ho-Chen Director David B. Yoffie Director Chen-Kuo Lin Independent Director / Member of the Compensation Committee Josef...

  • Page 14
    Management Team Peter Chou Fred Liu Chialin Chang Jason Mackenzie Matthew Costello David Chen Scott Croyle John Wang Kouji A. Kodera Grace Lei Crystal Liu CS Wang Georges Boulloy Gregory Fisher COMPANY PROFILE Chief Executive Officer & President President of Engineering and Operations Chief ...

  • Page 15
    ... corporate marketing strategies. 2 COMPANY PROFILE Finance & Accounting Global Sales and Marketing CEO & President Lead the global product sales and marketing team; conduct product promotion, new customer development, customer relations, customer services and PR related. Responsible for corporate...

  • Page 16
    ...of HTC's most valuable assets. The company has in recent years actively recruited outstanding talent into its ranks - particularly in the areas of product design, user interface, brand promotion, and sales and marketing. While bringing on professionals from Europe and Americas, we have also invested...

  • Page 17
    BUSINESS OPERATIONS

  • Page 18
    ..., and mobile phones already support a cornucopia of multimedia services. Mobile phones are now digital music players, web browsers, e-mail portals, high-speed internet devices, social network hubs and GPS navigation tools. They are an indispensable personal entertainment and work platform, and...

  • Page 19
    ... in favor of the Windows Phone OS. Gartner Research gave Android a dominant 46.5% share of the global smartphone market in 2011. HTC is the world's leading manufacturer of both Android and Windows Phone smartphones. Its leading R&D, innovation and operations are further enhanced by its many long...

  • Page 20
    ... year through its powerful combination of social networking functions and attractive price point. 3 BUSINESS OPERATIONS based global consumer acceptance of the HTC brand. We will continue to expand our share of the global mobile phone market by continuing to introduce new HTC products that closely...

  • Page 21
    ... superior Beats Audioâ„¢ sound technology delivers unprecedented recording-studio quality that greatly extends the smartphone user experience. Besides, HTC Titan and HTC Radar meet a diverse range of user needs running Windows Phone 7.5, Microsoft's latest mobile phone OS. 3 BUSINESS OPERATIONS as...

  • Page 22
    ...longer battery life and high performance new quad-core mobile processor and an amazing HD screen Super LCD 2 with custom HTC ImageChip. With HTC Senseâ„¢ 4, the new version of HTC s branded user experience that is introducing HTC ImageSenseâ„¢, a new suite of camera and imaging features that set HTC...

  • Page 23
    ... Purchase/Revenue for The Most Recent Two-Year Period 3. Board of Supervisor Proceedings Meetings of the board of supervisors take place every quarter, at which financial, legal, internal audit and other issues are reported. Issues reviewed by supervisors and certified public accountants include...

  • Page 24
    ... based on agreement. Authorization to use TDMA and CDMA technology; royalty payment based on agreement. GSM/DCS 1800/1900 Patent License; royalty payment based on agreement. Nokia Corporation Note: Main product item data not inclusive of income from maintenance / repairs or product development work...

  • Page 25
    CORPORATE GOVERNANCE

  • Page 26
    ... Finance, Executive Yuan. • Chairman, Taiwan External Trade Development Council. (TAITRA) • Chairman, Taiwan Asset Management Corporation. • Professor, Department of Economics in National Taiwan University. • Chairman, Board of Tunghai University. • Independent director, Taiwan High Speed...

  • Page 27
    ...the fifth degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the Company or that holds shares ranking in the top five in holdings...

  • Page 28
    ...Shareholding (note) shares % Spouse & Minor Shareholding (note) shares % Other persons holding shares in their name (note) shares % Principal work experience and academic qualifications Positions held concurrently in any other company Chief Executive Officer & President Peter Chou 2004.04.30...

  • Page 29
    ...shares % Other persons holding shares in their name (note) shares % Principal work experience and academic qualifications Positions held concurrently in any other company Managers with spouses or relatives within seconddegree of Kinship Title Name Relation Vice President Georges Boulloy 2010...

  • Page 30
    ... pay, various bonuses, cash rewards, transportation allowances, special allowances, various material benefits, accommodations, and personal cars received by Directors concurrently serving as employees (including those concurrently serving as General Manager, Assistant General Manager, or other...

  • Page 31
    ... most recent fiscal year's earnings distribution proposal. Note 3: Expenses relating to business execution by Supervisors in the most recent fiscal year (includes transportation allowances, special allowances, various subsidies, accommodations, and personal cars). Note 4: The 2011 net income NT$ 61...

  • Page 32
    ... Manager and Assistant General Managers as employee bonus (including stock and cash bonuses). Estimated amounts of 2011 employee bonus are calculated based on 2010 actual distribution ratio; distribution list for 2011 has not been decided yet. Note 5: Number of shares represented by employee stock...

  • Page 33
    ...of this annual report, distribution list of employee bonus has not been decided yet. Estimated amounts of 2011 employee bonus are calculated based on 2010 actual distribution ratio. Total remuneration for year 2010, related to amount of stock bonus, is calculated based on the closing price (NT$1,150...

  • Page 34
    ... information on the Market Observation Post System, HTC also convenes online investor conferences on a quarterly basis to allow investors timely access to information on the company's operations and performance. In December 2008, the HTC Investor Relations Website was revised. A special corporate...

  • Page 35
    ... is committed to providing a safe and healthy work environment, to respecting individuals and offering fair equality of opportunity, and to protecting company assets and personal information. • In Relations with Customers and Suppliers, HTC commits to maintaining long-term relationships on a fair...

  • Page 36
    ...for design quality, which is exclusively responsible for control and management of quality in hardware and software, product safety, and conformance with environmental regulations around the world. The department provides a complete range of product testing and certification. (6) Status of customer...

  • Page 37
    ...various kinds of services and information. It provides channels of communication that allow consumers to contact HTC by many means, including the limited warranty sheet included in the HTC phone package, customer service contact numbers in all countries, a Taiwan customer service center contact info...

  • Page 38
    ...'s Chief Financial Officer and Spokesperson 1. Adopted resolution for Fiscal 2011 earnings distribution proposal. 2. Adopted resolution to amend the agenda for convening the 2012 Annual General Shareholders Meeting of the Company. HTC Corporation. Chairman: Cher Wang President: Peter Chou Board...

  • Page 39
    ...cer & President President of Engineering and Operations President of Global Sales and Marketing Chief Operating Officer Accounting Name of CPA Firm Audit Fee CPA's Audit Period Years Ended December 31, 2011 Note Transfer pricing report, international tax consultation and CPA opinion on earnings...

  • Page 40
    ... of the total number of shares issued by the Company Children Name Fred Liu shares 25,000 Price - Vice President Vice President Vice President (note 3) Vice President Vice President CS Wang Georges Boulloy Gregory Fisher Lotus Chen Simon Hsieh (3) Stock Pledged with related party: None Vice...

  • Page 41
    ... Digital Inc. HTC America Content Services, Inc. HTC Communication Technologies (Shanghai) Limited HTC Investment One (BVI) Corporation S3 Graphics Co., Ltd. Dashwire, Inc. Inquisitive Minds, Inc. Beats Electronics, LLC 4 CORPORATE GOVERNANCE Communication Global Certification Inc. PT. High Tech...

  • Page 42
    ...ideas, in order to create a better quality of life for its employees, customers, suppliers, and contractors, and to achieve the goal of sustainable corporate development: • HTC values equally environmental protection, safety and health, production, quality and effective energy management. • HTC...

  • Page 43
    ... the year of 2011: work and career, family and life, and relationships. (5) Womens' Health • HTC sets up 10 breast feeding rooms with related equipment for use by breastfeeding mothers. The rooms were used as many as 10,920 times during 2011. HTC also launched a special project showing its support...

  • Page 44
    ..., HTC has always made the prevention of occupational accidents a highest priority. Each year, in accordance with relevant laws and regulations and its experience with actual operations, it draws up a "Labor Safety and Health Management Plan." The Plan is implemented in the following areas...

  • Page 45
    ... established an annual response plan and implements emergency response drills. • Medical Care: Purchase of medical consumables, physical examinations for new employees, medical checkups for employees already on the job, and medical checkups and management relating to special hazards. • Safe and...

  • Page 46
    ...• Employees, guests, and persons arriving on business at HTC are encouraged to use eco-friendly reusable tableware and cups. • In April 2011 HTC promoted a "LOHAS Green Energy Week," organizing a series of events on environmental, energy saving, and health themes, including, in response to World...

  • Page 47
    ...Code of Conduct, and the EU EuP Directive. In addition, our R&D team has developed outstanding power management systems. Based on consumer habits, handsets automatically switch to energy-saving mode that reduces energy use and extends battery life. Some models also include light sensors that trigger...

  • Page 48
    ... students in 3 high schools in 2010, which have providing financial support for a total of 350 students. Public Service Activities in Foreign Countries • HTC, in cooperation with World Vision Taiwan, provided support for 500 children from low-income households in Central America, Guatemala, and...

  • Page 49
    CAPITAL AND SHARES

  • Page 50
    ... authorized capital, 16,000,000 shares are reserved for the exercise of stock warrants, preferred shares with warrants, or corporate bonds with warrants (2) The outstanding shares include 20,825,045 shares of treasury stock bought back by HTC to be used for transfer to employees. 5 03/2004 08/2004...

  • Page 51
    ... long-term financial planning of the Company. Dividends are proposed by the Board of Directors to the Shareholders' Meeting on a yearly basis. Earnings may be allocated in cash or stock dividends, provided that the ratio of cash dividends may not be less than 50% of total dividends. (4) List of...

  • Page 52
    ... number of the Company's issued shares (Continued) 08/18/2011~09/16/2011 10,000,000 shares (1.16%) NTD 7,576,762,585 NTD 757.68 0 share 20,825,045 shares 2.44% For employee stock bonuses NT$4,245,852,065, the total issuance of new shares 4,005,520 shares is calculated based on the closing price...

  • Page 53
    ...percentage is calculated based on the total outstanding shares when the Company reported expiration of repurchase period or completion of the repurchase. Note 3: The repurchase purpose was approved by the Board of Directors for the amendment of repurchase purpose on Oct. 28, 2011, and such amendment...

  • Page 54
    FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT

  • Page 55
    ... 2011 HTC transferred 5,875,000 treasury shares to employees as performance incentive bonuses. At the close of 2011 HTC's total shareholder equity stood at NT$102.4 billion, a rise of NT$27.7 billion or 37% over year-end 2010. FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT FINANCIAL STATUS...

  • Page 56
    ... investments in 2011, for example, trend-setting high-performance headphones company Beats, online media & marketing firm Saffron Media Group; Interactive online gaming platform firm Onlive; Mobile web connected services platform Dashwire; and Children s learning applications platform company...

  • Page 57
    ...measures. 1. We work actively to establish HTC brand value, enhance 3. Diverse and growing universe of mobile data services drives smartphone market penetration New mobile phone operating systems such as Android and iOS, which permit easy app store downloading of social networking, shopping, travel...

  • Page 58
    ... Beats Audioâ„¢ sound technology delivers unprecedented recording-studio quality that greatly extends the smartphone user experience. Besides, HTC Titan and HTC Radar meet a diverse range of user needs running Windows Phone 7.5, Microsoft's latest mobile phone OS. In 2012 Mobile World Congress...

  • Page 59
    ... future product development trends and customer demands Ensure design quality of HTC products with regard to hardware, software and product safety Enhance production quality Provide after-sales service and enhance the quality of such FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT Internal...

  • Page 60
    AFFILIATE INFORMATION AND OTHER SPECIAL NOTES

  • Page 61
    ...00% PT. High Tech Computer Indonesia HTC (Thailand) Limited HTC India Private Limited 100.00% Saffron Media Group Ltd. HTC BLR 100.00% HTC Malaysia Sdn. Bhd. 7 0.67% HTC I Investment Corporation HTC South Eastern Europe Limited Liability Company 100.00% 100.00% HTC Communication Canada...

  • Page 62
    ...after-sales services International holding Design, research and development of application software Design, research and development of graphics technology Repair and after-sales services Manufacture and sales of smart handheld devices International holding Marketing, repair and after-sales services...

  • Page 63
    ... in online and download media services. (13) Dashwire, Inc. engages in design, research and development of wireless connectivity software. (14) Inquisitive Minds, Inc. engage in development and sale of digital education platform. (15) HTC Investment One (BVI) Corporation is the holding company of S3...

  • Page 64
    ... Ginkel High Tech Computer Asia Pacific Pte. Ltd. Representative David Chen HTC Investment One (BVI) Corporation Representative Peter Chou Fred Liu Grace Lei HTC HK, Limited Representative Fred Liu HTC HK, Limited Representative CS Wang Title Name or Representative Shareholding Shares (Investment...

  • Page 65
    ...7 Communication Global Certification Inc. High Tech Computer Asia Pacific Pte. Ltd. HTC Investment Corporation HTC I Investment Corporation Huada Digital Corporation HTC Investment One (BVI) Corporation High Tech Computer Corp. (Suzhou) Exedea Inc. High Tech Computer (H.K.) Limited HTC (Australia...

  • Page 66
    ... Android and Windows Phone operating systems (OS). HTC products support voice communication, mobile Internet, multimedia, global positioning service (GPS), personal data assistant (PDA), e-mail, instant data search, financial transaction services and other mobile digital services. The workï¬,ow for...

  • Page 67
    ... volumes AFFILIATE INFORMATION AND OTHER SPECIAL NOTES 4. Green Product Research and Development Environmental "green" design procedures have been enforced at HTC since 2000. These procedures address the complete product lifecycle - from design and production through consumer use and end-of-life...

  • Page 68
    ... earn market-competitive salaries that take into consideration academic background, work experience, seniority and current professional responsibilities / position level. The amount of annual employee performance bonuses is proposed by the president and approved by the board of directors based on...

  • Page 69
    FINANCIAL INFORMATION

  • Page 70
    ...Operations Income (Loss) from Extraordinary Items Cumulative Effect of Changes in Accounting Principle Net Income Basic Earnings Per Share Note 1: Note 2: In accordance with 2008 and 2011 financial reporting requirements, write-downs of inventories or reversal of write-downs and product warranty...

  • Page 71
    ... Ratio (%) Cash Flow Reinvestment Ratio (%) Operating Leverage Financial Leverage Various performance indicators remained healthy reï¬,ected the growth of HTC's business in 2011. FINANCIAL INFORMATION FINANCIAL INFORMATION 1. Capital Structure & Liquidity Analyses As of year-end 2011, our debt...

  • Page 72
    ... to 2010. FINANCIAL INFORMATION FINANCIAL INFORMATION 2. Operating Performance Analysis Fixed asset turnover and total asset turnover were all higher due to strong revenue growth. Days sales outstanding fell to 50 days in 2011. Average inventory turnover days kept at 35 days at 2011 year-end...

  • Page 73
    ...balance sheets of HTC Corporation (the "Company") as of December 31, 2010 and 2011, and the related statements of income, changes in stockholders' equity, and cash ï¬,ows for the years then ended, all expressed in New The Board of Directors has prepared the Company's 2011 Business Report, Financial...

  • Page 74
    HTC CORPORATION BALANCE SHEETS DECEMBER 31, 2010 AND 2011 (In Thousands, Except Par Value) 2010 ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 2 and 5) Financial assets at fair value through profit or loss (Notes 2, 6 and 24) Available-for-sale financial assets - current (Notes 2 and 7) ...

  • Page 75
    ... Share) 2010 Before After Income Tax Income Tax NT$ $51.98 NT$ $46.18 Before Income Tax NT$ $82.63 US$ (Note 3) $2.73 NT$ $73.32 2011 After Income Tax US$ (Note 3) $2.42 OPERATING EXPENSES (Notes 21 and 25) Selling and marketing General and administrative Research and development Total operating...

  • Page 76
    ...CORPORATION STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2010 AND 2011 (In Thousands of New Taiwan Dollars) Capital Stock Issued and Outstanding Common Stock BALANCE, JANUARY 1, 2010 Appropriation of the 2009 net earnings Stock dividends Cash dividends Transfer of employee...

  • Page 77
    HTC CORPORATION STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2010 AND 2011 (In Thousands) 2010 NT$ CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation (including depreciation of assets leased to others) ...

  • Page 78
    ... as follows: publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds - at prices quoted by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted prices in an active market - at values determined using valuation...

  • Page 79
    ... for the investment in prior years. 8 9. Financial Assets Carried at Cost Investments in equity instruments with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the emerging stock market, are...

  • Page 80
    ... performance. This statement supersedes SFAS No. 20 "Segment Reporting." For this accounting change, the Company restated the segment information as of and for the year ended December 31, 2010 to conform to the disclosures as of and for the year ended December 31, 2011. Buy/Sell Buy Buy Sell Sell...

  • Page 81
    ... recognized as cost of sales. (13) FINANCIAL ASSETS CARRIED AT COST Financial assets carried at cost as of December 31, 2010 and 2011 consisted of domestic unquoted stocks of the following companies: (14) INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD Investments accounted for by the equity method...

  • Page 82
    ...into account the effects of changes in the product market, in inventory management and in the Company's purchases. FINANCIAL INFORMATION FINANCIAL INFORMATION (18) PENSION PLAN 4. Service fees accrued referred mainly to marketing activities, research and design, and business consulting services...

  • Page 83
    ...-term equity investments As of January 1, 2010, the capital surplus from long-term equity-method investments was NT$18,411 thousand. When the Company did not subscribe for the new shares issued by an equity-method investee, Huada Digital Corporation, in September 2011, the Company's total investment...

  • Page 84
    ... can be accessed on the Market Observation Post System website. 8 7. On December 20, 2011, the Company's board of directors passed a resolution to buy back 10,000 thousand of its shares from the open market between December 20, 2011 and February 19, 2012, with the repurchase price ranged from NT...

  • Page 85
    ... 2009-2013 2010-2014 NT$ $831,154 2,309,975 $3,141,129 NT$ $813,302 2,310,286 6 $3,123,594 2011 US$ (Note 3) $26,860 76,300 $103,160 Based on the Income Tax Law of the ROC, the investment and research and development tax credits can be carried forward for four years. The total credits used in each...

  • Page 86
    ...for 2010 was calculated after the average number of shares outstanding was adjusted retroactively for the effect of stock dividend distribution in 2011. The Accounting Research and Development Foundation issued Interpretation 2007-052, which requires companies to recognize bonuses paid to employees...

  • Page 87
    ... $45,921 1 1 2011 % to Total Net Purchases FINANCIAL INFORMATION FINANCIAL INFORMATION Terms of payment and purchasing prices for both related and third parties were similar. (2) Sales and Services Provided 2010 Amount Related Party HTC America Inc. HTC Communication Co., Ltd. Employees' Welfare...

  • Page 88
    ... (Note 3) $120,190 $120,190 5 5 2011 % to Total Accounts Payable (8) Other Payables to Related Parties December 31 2010 Amount Related Party HTC America Inc. HTC EUROPE CO, LTD. Saffron Digital Ltd. HTC Corporation (Shanghai WGQ) HTC Nippon Corporation High Tech Computer Asia Pacific Pte. Ltd. NT...

  • Page 89
    ...Amount Related Party HTC HK, Limited HTC India Private Limited HTC Innovation Limited ABAXIA SAS One & Company Design, Inc. Saffron Digital Ltd. HTC Thailand Limited Communication Global Certification Inc. HTC Malaysia Sdn. Bhd. HTC BRASIL HTC NIPPON Corporation High Tech Computer H.K. Limited HTC...

  • Page 90
    ... to use CDMA technology to manufacture and sell units; royalty payment based on agreement. independent auditors' report, there had been no critical hearing nor had a court decision been made, except for the above. (2) In March 2010, Apple Inc. ("Apple") filed a lawsuit against the Company...

  • Page 91
    ...is organized and managed as a single reportable business segment. The Company's operations are mainly related to the research, design, manufacture and sales of smart handheld devices. Selected financial information is as follows: 1. Geographical Areas The Company's noncurrent assets located in an...

  • Page 92
    HTC CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2010 AND 2011 (In Thousands, Except Par Value) 2010 ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 2 and 5) Financial assets at fair value through profit or loss (Notes 2, 6 and 26) Available-for-sale financial ...

  • Page 93
    ....63 US$ (Note 3) $2.73 NT$ $73.32 (In Thousands, Except Earnings Per Share) 2011 After Income Tax US$ (Note 3) $2.42 OPERATING EXPENSES (Notes 23 and 27) Selling and marketing General and administrative Research and development Total operating expenses 21,757,601 5,038,543 12,940,014 39,736,158 40...

  • Page 94
    ... STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2010 AND 2011 (In Thousands of New Taiwan Dollars) Capital Stock Issued and Outstanding Common Stock BALANCE, JANUARY 1, 2010 Appropriation of the 2009 net earnings Stock dividends Cash dividends Transfer of employee bonuses to...

  • Page 95
    ...) 2010 NT$ NT$ 2011 US$ (Note 3) FINANCIAL INFORMATION FINANCIAL INFORMATION Other current financial assets Other assets - other Notes and accounts payable Income tax payable Accrued expenses Other current liabilities Net cash provided by operating activities $260,157 CASH FLOWS FROM INVESTING...

  • Page 96
    ... HTC Investment One S3 Graphics Co., Ltd. (BVI) Corporation High Tech Computer HTC India Private Ltd. Singapore Pte. Ltd. Design, research and development of application software - - FINANCIAL INFORMATION FINANCIAL INFORMATION International holding, marketing, repair and after-sales services...

  • Page 97
    ... HTC Communication Sweden AB HTC Italia SRL HTC Belgium BVBA/ SPRL HTC Nordic ApS HTC EUROPE CO., LTD. HTC FRANCE Corporation Marketing, repair and after-sales services Design, research and development of application software Marketing, repair and after-sales services Online/download media services...

  • Page 98
    ... as follows: publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds - at prices quoted by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted prices in an active market - at values determined using valuation...

  • Page 99
    ... Company provides warranty service for one year to two years depending on the contract with customers. The warranty liability is estimated on the basis of management's evaluation of the products under warranty, past warranty experience, and pertinent factors. research and development expenditures...

  • Page 100
    ... their performance. This statement supersedes SFAS No. 20 "Segment Reporting." For this accounting change, the Company restated the segment information as of and for the year ended December 31, 2010 to conform to the disclosures as of and for the year ended December 31, 2011. Buy Buy Sell Sell Sell...

  • Page 101
    ... to "financial assets carried at cost" using book value. 4. In 2009, the Company invested US$2,000 thousand in (12) HELD-TO-MATURITY FINANCIAL ASSETS Held-to-maturity financial assets as of December 31, 2010 and 2011 were as follows: 2010 NT$ Corporate bonds $207,946 NT$ $204,597 2011 US$ (Note...

  • Page 102
    ...'s board of directors, the employee bonuses for 2010 and 2011 should be appropriated at 18% and 10%, respectively, of net income before deducting employee bonus expenses. Others Net book value, end of year $208,581 $497,803 $416 $228,850 $935,650 1. The Company provides warranty service for...

  • Page 103
    ..., High Tech Computer Asia Pacific Pte. Ltd. and HTC Investment One (BVI) Corporation have no pension plans. of December 31, 2010 was NT$10,777,623 thousand. Also, in June 2011, the bonus to employees of NT$8,491,704 thousand (US$280,449 thousand) for 2010 was approved in the stockholders' meeting...

  • Page 104
    ... range, the Company planned to continue to buy back its shares. As of December 31, 2011, the Company had bought back 100 thousand shares for NT$49,710 thousand (US$1,642 thousand). Other treasury stock information for 2010 and 2011 were as follows: (In Thousands of Shares) Number of Shares, Purpose...

  • Page 105
    ... Inc. HTC Investment Corporation HTC I Investment Corporation Huada Digital Corporation High Tech Computer Asia Pacific Pte. Ltd. HTC Communication Co., Ltd. HTC America Inc. HTC EUROPE CO., LTD. Exedea Inc. HTC NIPPON Corporation HTC BRASIL HTC Corporation (Shanghai WGQ) One & Company Design, Inc...

  • Page 106
    ... number of shares outstanding was adjusted retroactively for the effect of stock dividend distribution in 2011. 8 Deferred tax assets - noncurrent 2. The Accounting Research and Development Foundation issued Interpretation 2007-052, which requires companies to recognize bonuses paid to employees...

  • Page 107
    ... are consistent with information that market participants would use in setting a price for these securities with no quoted market prices. (4) Financial assets carried at cost are investments in unquoted shares, which have no quoted prices in an active market and entail an unreasonably high cost to...

  • Page 108
    ... collection terms for products sold to related parties were similar to those for sales to third parties. (3) Accounts Receivable December 31 2010 Related Party % to Total Notes and Amount Accounts Receivable NT$ VIA Technologies, Inc. Others $2,113 30 $2,143 NT$ $473 $473 2011 % to Total Notes and...

  • Page 109
    ... management personnel for the year ended December 31, 2010 included the bonuses appropriated from the earnings of 2010, which were approved by the stockholders in their annual meeting in 2011. (31) OTHER EVENTS (28) PLEDGED ASSETS 1. As of December 31, 2010 and 2011, the Company had provided time...

  • Page 110
    ... Apple alleging infringement of its patents. (32) SEGMENT DISCLOSURES The Company is organized and managed as a single reportable business segment. The Company's operations are mainly related to the research, design, manufacture and sales of smart handheld devices. Selected financial information...

  • Page 111
    ...22, 2011. These assessments may be changed as the International Accounting Statements Board (IASB) continues to issue or amend standards, and as the FSC may issue new rules governing the adoption of IFRSs by companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or...

  • Page 112
    ... FINANCIAL INFORMATION HTC provides a one- to two-year period of free warranty maintenance in after sales service. It makes reasonable estimates of possible amounts for that service and recognizes warranty liabilities based on historical experience and other relevant factors. Allocation to product...

  • Page 113
    ... be used only for the purpose of executing work for HTC. "Confidential Information" shall mean all business, technical, operational or other information that is not generally known to the public and that an employee develops, has access to, and becomes acquainted with during the term of employment...

  • Page 114
    ... to HTC or to invest exceeding five percent of total market value in such a company. Employees are also prohibited from use so-called "Inside Information" to gain personal profit or to inï¬,uence the independent judgment of business entities, such as investment in competitors, customers, venders...

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