HTC 2013 Annual Report Download - page 108

FINANCIAL INFORMATION FINANCIAL INFORMATION
212 213
Company's capital. Legal reserve may be used
to offset deficit. If the Company has no deficit
and the legal reserve has exceeded 25% of the
Company's capital, the excess may be transferred
to capital or distributed in cash.
The appropriations of earnings for 2012 and 2011
had been approved in the shareholders' meetings
on June 21, 2013 and June 12, 2012, respectively.
The appropriations and dividends per share were
as follows:
Appropriation of Earnings Dividends Per
Share (NT$)
For 2012 For 2011
For
2012
For
2011
Legal
reserve
$1,678,097 $6,197,580 $- $-
Special
reserve
(reversal)
854,138 (580,856) - -
Cash
dividends
1,662,454 33,249,085 2 40
Stock
dividends
- - - -
The bonus to employees for 2012 and 2011
approved in the shareholders' meetings on June
21, 2013 and June 12, 2012, respectively, were as
follows:
Amounts
Approved in
Shareholders'
Meetings
Amounts
Recognized
in Financial
Statements
For 2012
Cash
Stock
$976,327
-
$976,327 $976,327
For 2011
Cash
Stock
$7,238,637
-
$7,238,637 $7,238,637
The approved amounts of bonus to employees
were the same as the accrual amounts recognized
in the financial statements for 2012 and 2011,
respectively.
goals in determining the stock or cash dividends
to be paid. The Company's dividend policy
stipulates that at least 50% of total dividends may
be distributed as cash dividends.
No employee bonus was estimated as the
Company reported net loss for the year ended
December 31, 2013. The employee bonus for
2012 should be appropriated at 5% of net income
before deducting employee bonus expenses. If
the actual amounts subsequently resolved by the
stockholders differ from the proposed amounts,
the differences are recorded in the year of
stockholders' resolution as a change in accounting
estimate. If bonus shares are resolved to be
distributed to employees, the number of shares is
determined by dividing the amount of bonus by
the closing price (after considering the effect of
cash and stock dividends) of the shares of the day
immediately preceding the stockholders' meeting.
Under Rule No. 100116 and Rule No. 0950000507
issued by the FSC, an amount equal to the net
debit balance of certain shareholders' equity
accounts shall be transferred from unappropriated
earnings to a special reserve before any
appropriation of earnings generated before
January 1, 2012 shall be made. Any special reserve
appropriated may be reversed to the extent of the
decrease in the net debit balance.
Under Rule No. 1010012865 issued by the FSC on
April 6, 2012 and the directive titled "Questions
and Answers for Special Reserves Appropriated
Following Adoption of IFRSs", on the first-time
adoption of IFRSs, a company should appropriate
to a special reserve of an amount that was the
same as these of unrealized revaluation increment
and cumulative translation differences (gains)
transferred to retained earnings as a result of the
company's use of exemptions under IFRS 1. The
Company had a decrease in retained earnings that
resulted from all IFRSs adjustments; therefore, no
special reserve was appropriated.
Appropriation of earnings to legal reserve shall be
made until the legal reserve equals the
2013, there were 8,289.9 thousand units of
GDRs redeemed, representing 33,159.8 thousand
common shares, and the outstanding GDRs
represented 2,900.7 thousand common shares
or 0.35% of the Company's outstanding common
shares.
Capital Surplus
December 31,
2013
December 31,
2012
January 1,
2012
Additional
paid-in
capital -
issuance of
shares in
excess of par
$14,640,983 $14,809,608 $14,809,608
Treasury
shares
631,791 1,730,458 1,730,458
Merger 24,145 24,423 24,423
Employee
share options
26,742 - -
Expired stock
options
36,646 37,068 37,068
$15,360,307 $16,601,557 $16,601,557
The premium from shares issued in excess of par
(share premium from issuance of common shares,
treasury shares transactions, merger and expired
stock options) and donations may be used to
offset a deficit; in addition, when the Company has
no deficit, such capital surplus may be distributed
as cash dividends or transferred to capital (limited
to a certain percentage of the Company's capital
surplus and once a year).
In September and November 2013, the retirement
of treasury shares caused decreases of NT$168,625
thousand in additional paid-in capital - issuance
of shares in excess of par, NT$9,727 thousand in
capital surplus - treasury shares, NT$278 thousand
in capital surplus - merger and NT$422 thousand
in capital surplus - expired stock options. The
difference the carrying value of treasury shares
retired in excess of the sum of its par value and
premium from issuance of common share was
firstly offset against capital surplus - treasury
shares by NT$1,088,940 thousand, and the rest
offset against accumulated earnings amounting to
NT$814,170 thousand.
Retained Earnings and Dividend Policy
Under the Company's Articles of Incorporation,
the Company should make appropriations from its
net income in the following order:
a. To pay taxes.
b. To cover accumulated losses, if any.
c. To appropriate 10% legal reserve unless the total
legal reserve accumulated has already reached
the amount of the Company's authorized capital.
d. To recognize or reverse special reserve return
earnings.
e. To pay remuneration to directors and supervisors
at 0.3% maximum of the balance after deducting
the amounts under the above items (a) to (d).
f. To pay bonus to employees at 5% minimum of
the balance after deducting the amounts under
the above items (a) to (d), or such balance plus
the unappropriated retained earnings of previous
years. However, the bonus may not exceed the
limits on employee bonus distributions as set out
in the Regulations Governing the Offering and
Issuance of Securities by Issuers. Where bonus
to employees is allocated by means of new
share issuance, the employees to receive bonus
may include the affiliates' employees who meet
specific requirements prescribed by the board of
directors.
g. For any remainder, the board of directors should
propose allocation ratios based on the dividend
policy set forth in the Company's Articles and
propose them at the stockholders' meeting.
As part of a high-technology industry and as a
growing enterprise, the Company considers its
operating environment, industry developments,
and long-term interests of stockholders as well as
its programs to maintain operating efficiency and
meet its capital expenditure budget and financial