HTC 2011 Annual Report Download - page 103

(21) STOCKHOLDERS' EQUITY
1. Capital Stock
(1) The Company's outstanding common stock as of January
1, 2010 amounted to NT$7,889,358 thousand, divided into
788,936 thousand common shares at NT$10.00 par value. In
April 2010, the Company retired 15,000 thousand treasury
shares amounting to NT$150,000 thousand. In June 2010, the
stockholders approved the transfer of retained earnings of
NT$386,968 thousand and employee bonuses of NT$50,206
thousand to capital stock. As a result, the amount of the
Company's outstanding common stock as of December 31,
2010 increased to NT$8,176,532 thousand, divided into 817,653
thousand common shares at NT$10.00 par value.
(2) In June 2011, the stockholders approved the transfer of retained
earnings of NT$403,934 thousand (US$13,340 thousand)
and employee bonuses of NT$40,055 thousand (US$1,323
thousand) to capital stock. Also, in December 2011, the
Company retired 10,000 thousand treasury shares amounting
to NT$100,000 thousand (US$3,303 thousand). As a result,
the amount of the Company's outstanding common stock
as of December 31, 2011 increased to NT$8,520,521 thousand
(US$281,400 thousand), divided into 852,052 thousand
common shares at NT$10.00 (US$0.33) par value.
2. Global Depositary Receipts
The Company issued 14,400 thousand common shares
corresponding to 3,600 thousand units of Global Depositary
Receipts (GDRs). For this GDR issuance, the Company's
stockholders, including Via Technologies, Inc., also issued
12,878.4 thousand common shares, corresponding to 3,219.6
thousand GDR units. Thus, the entire offering consisted of 6,819.6
thousand GDR units. Each GDR represents four common shares,
and was issued, at a premium, at NT$131.1. For this common
share issuance, net of related expenses, NT$1,696,855 thousand
was accounted for as capital surplus. This share issuance for
cash was completed and registered on November 19, 2003.
The holders of these GDRs have the same rights and obligations
as the stockholders of the Company. However, the distribution
of the offering and sales of GDRs and the shares represented
thereby in certain jurisdictions may be restricted by law. In
addition, the GDRs offered and the shares represented are not
transferable, except in accordance with the restrictions described
in the GDR offering circular and related laws applied in Taiwan.
Through the depositary custodian in Taiwan, GDR holders are
entitled to exercise these rights:
a. To vote; and
b. To receive dividends and participate in new share issuance for
cash subscription.
Taking into account the effect of stock dividends, the GDRs
increased to 9,015.1 thousand units (36,060.5 thousand
shares). The holders of these GDRs requested the Company to
redeem the GDRs to get the Company's common shares. As of
December 31, 2011, there were 6,404.4 thousand units of GDRs
redeemed, representing 25,617.5 thousand common shares, and
the outstanding GDRs represented 10,443 thousand common
shares or 1.25% of the Company's common shares.
3. Capital Surplus
Under the Company Law, capital surplus can only be used to
offset a deficit. However, the capital surplus from shares issued in
excess of par (additional paid-in capital from issuance of common
shares, conversion of bonds and treasury stock transactions)
and donations may be capitalized, with capitalization limited to
a certain percentage of the Company's paid-in capital. Also, the
capital surplus from long-term investments may not be used for
any purpose.
(1) Additional paid-in capital - issuance of shares in excess of par
The additional paid-in capital was NT$9,056,323 thousand as
of January 1, 2010. In April 2010, the retirement of treasury
stock caused a decrease of NT$172,188 thousand in additional
paid-in capital. The bonus to employees of NT$4,859,236
thousand for 2009 was approved in the stockholders' meeting
in June 2010. Of the approved bonus, NT$1,943,694 thousand
was in the form of common stock, consisting of 5,021 thousand
common shares at their fair value, which were distributed
in 2010. The difference between par value and fair value of
NT$1,893,488 thousand was accounted for as additional paid-
in capital in 2010. As a result, the additional paid-in capital as
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. Of the approved bonus,
NT$4,245,851 thousand (US$140,224 thousand) was in
the form of common stock, consisting of 4,006 thousand
common shares at their fair value, which were distributed
in 2011. The difference between par value and fair value
of NT$4,205,796 thousand (US$138,901 thousand) was
accounted for as additional paid-in capital in 2011. In
December 2011, the retirement of treasury stock caused a
decrease of NT$173,811 thousand (US$5,740 thousand) in
additional paid-in capital. As a result, the additional paid-in
capital as of December 31, 2011 was NT$14,809,608 thousand
(US$489,105 thousand).
4.
The provision for contingent loss on purchase orders is estimated
after taking into account the effects of changes in the product
market, in inventory management and in the Company's
purchases.
(19) LONG-TERM BANK LOANS
Long-term bank loans of Communication Global Certification Inc., a
direct subsidiary of HTC, as of December 31, 2010 and 2011 were as
follows:
2010 2011
NT$ NT$ US$ (Note 3)
Secured loans (Note 28)
NT$65,000 thousand, repayable
from July 2009 in 16 quarterly
installments; 1% annual interest
$24,376 $- $-
Less: Current portion (12,188) - -
$12,188 $- $-
(20) PENSION PLAN
The Labor Pension Act (the "Act), which provides for a new defined
contribution plan, took effect 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 required monthly
contributions of HTC and Communication Global Certification Inc.
(CGC) 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 based on the Act were NT$220,769 thousand in 2010
and NT$351,762 thousand (US$11,618 thousand) in 2011.
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 required contributions of HTC and CGC
to their respective pension funds was at 2% of monthly salaries and
wages after the Act took effect. The pension funds are deposited
in the Bank of Taiwan in the pension fund committees' name. The
pension fund balances were NT$448,631 thousand and NT$482,786
thousand (US$15,945 thousand) as of December 31, 2010 and 2011,
respectively.
H.T.C. (B.V.I.) Corp., HTC Investment Corporation, HTC I Investment
Corporation, Huada Digital Corporation, High Tech Computer Asia
Pacific Pte. Ltd. and HTC Investment One (BVI) Corporation 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$72,115 thousand
in 2010 and NT$200,330 thousand (US$6,616 thousand) in 2011.
Based on the Statement of Financial Accounting Standards No. 18 -
"Accounting for Pensions" issued by the Accounting Research and
Development Foundation of the ROC, pension cost under a defined
benefit pension plan should be calculated by the actuarial method.
1. The net pension costs of HTC and CGC under the
defined benefit plan in 2010 and 2011 were as follows:
2010 2011
NT$ NT$ US$ (Note 3)
Service cost $4,915 $5,980 $197
Interest cost 6,560 6,882 227
Projected return on plan assets (8,598) (9,226) (305)
Amortization of unrecognized
net transition obligation, net 74 74 3
Amortization 305 507 17
Net pension cost $3,256 $4,217 $139
2. The reconciliations between pension fund status and
prepaid pension cost as of December 31, 2010 and 2011
were as follows:
2010 2011
NT$ NT$ US$ (Note 3)
Present actuarial value of benefit
obligation
Vested benefits $1,525 $10,026 $331
Non-vested benefits 191,930 193,962 6,406
Accumulated benefit
obligation 193,455 203,988 6,737
Additional benefits on future
salaries 150,645 163,087 5,386
Projected benefit obligation 344,100 367,075 12,123
Plan assets at fair value (448,631) (482,786) (15,945)
Funded status (104,531) (115,711) (3,822)
Unrecognized net transitional
obligation (416) (342) (11)
Unrecognized pension loss (54,414) (68,285) (2,255)
Additional minimum pension
liability 536 635 21
Prepaid pension cost $(158,825) $(183,703) $(6,067)
3. Assumptions used in actuarially determining the
present value of the projected benefit obligations of
HTC and CGC were as follows:
2010 2011
Weighted-average discount rate 2.00% 2.00%
Assumed rate of increase in future compensation 2.00%-3.75% 4.00%
Expected long-term rate of return on plan assets 2.00% 2.00%
The payments from the fund amounted to NT$1,702 thousand in 2010
and NT$793 thousand (US$26 thousand) in 2011.
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