HTC 2011 Annual Report Download - page 82

(16) ACCRUED EXPENSES
Accrued expenses as of December 31, 2010 and 2011 were as follows:
2010 2011
NT$ NT$ US$ (Note 3)
Marketing $15,742,853 $25,556,956 $844,049
Bonus to employees 8,491,704 7,238,637 239,065
Services 2,770,306 2,760,164 91,158
Salaries and bonuses 2,089,517 2,500,248 82,574
Research materials 726,105 1,848,332 61,043
Import, export and freight 1,060,399 1,197,075 39,535
Repairs and maintenance 138,747 264,044 8,720
Donation 217,800 235,800 7,788
Insurance 122,947 188,970 6,241
Meals and welfare 162,337 153,108 5,056
Pension cost 69,296 110,560 3,651
Travel 43,396 49,571 1,637
Others 28,222 260,766 8,612
$31,663,629 $42,364,231 $1,399,129
1.
Based on the resolutions passed by the Company'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.
2.
The Company accrued marketing expenses on the basis of
related agreements and other factors that would significantly
affect the accruals.
3.
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$82,200
thousand. This donation excludes the land, of which the ownership
remains with the Company. The difference between the estimated
building donation and the actual construction cost will be treated
as an adjustment in the year when the completed floors are actually
turned over to the HTC Cultural and Educational Foundation.
4.
Service fees accrued referred mainly to marketing activities,
research and design, and business consulting services provided
by related parties.
(17) OTHER CURRENT LIABILITIES
Other current liabilities as of December 31, 2010 and 2011 were as follows:
2010 2011
NT$ NT$ US$ (Note 3)
Warranty provisions $9,057,050 $12,755,264 $421,258
Provisions for contingent loss on
purchase orders 1,942,147 2,052,881 67,799
Deferred credits - gain from
intercompany transactions 345,455 1,151,531 38,031
Other payables (Note 25) 601,717 709,129 23,420
Agency receipts 459,156 388,885 12,843
Advance receipts 333,282 134,748 4,450
Others 371,883 630,563 20,825
$13,110,690 $17,823,001 $588,626
1.
The 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.
2.
Other payables were payables for patents, treasury stock,
miscellaneous expenses of overseas sales offices and repair
materials.
3.
Agency receipts were primarily employees' income tax,
insurance, royalties and overseas value-added tax.
4.
Deferred credits - gains on intercompany transactions were
unrealized profit from intercompany transactions.
5.
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.
(18) 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 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 based on the Act were NT$219,565 thousand in
2010 and NT$350,450 thousand (US$11,574 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 Company's contributions to a pension fund
was 2% after the Act took effect. The pension fund is deposited in the
9.
In October 2009, the Company and its subsidiary, High Tech
Computer Asia Pacific Pte. Ltd., acquired equity interests of 1%
and 99%, respectively in HTC Holding Cooperatief U.A. for NT$13
thousand and NT$1,325 thousand, respectively. As a result,
the Company has accounted for this investment by the equity
method since the acquisition date.
10.
In December 2009, the Company acquired 100% equity interest
in Huada Digital Corporation ("Huada") for NT$245,000
thousand and accounted for this investment by the equity
method. In September 2011, the Company increased this
investment by NT$5,000 thousand (US$164 thousand). As of
December 31, 2011, the Company's investment in Huada had
amounted to NT$250,000 thousand (US$8,256 thousand). In
September 2011, the Fair Trade Commission Executive Yuan,
R.O.C. (Taiwan) approved an investment by Chunghwa Telecom
Co., Ltd. (CHT) in Huada and the registration of this investment
was completed in October 2011. After CHT's investment, the
Company's ownership percentage declined from 100% to 50%,
resulting in an adjustment debited to capital surplus - long-term
equity investments of NT$374 thousand (US$12 thousand).
11.
In August 2011, the Company acquired 100% equity interest in HTC
Investment One (BVI) Corporation for NT$9,625,903 thousand
(US$317,906 thousand) and accounted for this investment by
the equity method. Because the registration of this investment
had not been completed as of December 31, 2011, an amount of
NT$316,782 thousand (US$10,462 thousand) was temporarily
accounted for under "prepayments for long-term investments."
12.
On its equity-method investments, the Company had gains of
NT$1,457,395 thousand in 2010 and NT$2,718,362 thousand
(US$89,777 thousand) in 2011.
13.
The financial statements of the equity-method investees for the
years ended December 31, 2010 and 2011 had been examined by
the Company's independent auditors.
14.
Under the revised Statement of Financial Accounting Standards No. 7
- "Consolidated Financial Statements," which took effect on January
1, 2005, the Company included the accounts of all its direct and
indirect subsidiaries in the consolidated financial statements as of
and for the years ended December 31, 2010 and 2011. All significant
intercompany balances and transactions have been eliminated.
(15) PROPERTIES
Properties as of December 31, 2010 and 2011 were as follows:
2010 2011
Carrying Value Cost Accumulated
Depreciation Carrying Value
NT$ NT$ NT$ NT$ US$ (Note 3)
Land $5,690,718 $7,462,281 $- $7,462,281 $246,451
Buildings and structures 2,724,948 3,680,608 937,924 2,742,684 90,580
Machinery and equipment 2,035,978 7,100,072 4,212,153 2,887,919 95,377
Molding equipment - 172,632 172,632 - -
Computer equipment 85,412 398,289 300,428 97,861 3,232
Transportation equipment 4,407 6,570 2,793 3,777 125
Furniture and fixtures 30,720 204,185 135,689 68,496 2,262
Leased assets 785 4,712 4,647 65 2
Leasehold improvements 79,751 215,437 83,795 131,642 4,348
Prepayments for land, construction-in- progress and equipment-in-transit 288,511 2,027,620 - 2,027,620 66,964
$10,941,230 $21,272,406 $5,850,061 $15,422,345 $509,341
1.
In December 2008, the Company bought land - about 8.3 thousand square meters - from Yulon Motors Ltd. for NT$3,335,000 thousand to
build the Taipei R&D headquarters in Xindian City. The Company had paid 80% and 20% of the purchase price and completed the transfer
registration of the corresponding portions of the land in December 2008 and January 2010, respectively.
2.
In November 2010, the Company bought land and building for NT$404,000 thousand from a related party, VIA Technologies, Inc. to have more
office space in Xindian.
3.
In April 2011, the Company bought land adjacent to its Taoyuan plant for NT$1,770,000 thousand (US$58,456 thousand) from an unrelated
party to build a complete HTC technology park and meet future capacity expansion requirements.
4.
Prepayments for construction-in-progress and equipment-in-transit were for the construction of the Taipei R&D headquarters and Taoyuan
plant as well as miscellaneous equipment.
5. There were no interests capitalized for 2010 and 2011.
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