HTC 2013 Annual Report Download - page 148

FINANCIAL INFORMATION FINANCIAL INFORMATION
292 293
stockholders resolve the number of shares to be
distributed to employees at their meeting in the
following year.
28. SHARE-BASED PAYMENT
ARRANGEMENTS
Qualified employees of HTC and its subsidiaries
were granted 15,000 thousand options in
November 2013. Each option entitles the holder
to subscribe for one common share of HTC.
The options granted are valid for 7 years and
exercisable at certain percentages after the second
anniversary from the grant date. The exercise
price equals to the closing price of HTC's common
shares on the grant date. For any subsequent
changes in the HTC's common shares, the exercise
price is adjusted accordingly.
Information on employee share options was as
follows:
For the Year Ended
December 31
Number of
Options
(In
Thousands)
Weighted
average
Exercise
Price
(NT$)
Balance at January 1 - $-
Options granted during the year 15,000 149
Balance at December 31 15,000
Options exercisable, end of the year -
Weighted-average fair value of
options granted per unit (NT$) $43.603
Information about outstanding options as of the
reporting date was as follows:
December
31, 2013
December
31, 2012
January 1,
2012
Range of exercise
price (NT$)
$149 $- $-
Weighted-
average remaining
contractual life
(years)
6.8 years - -
Goodwill Arising on Acquisition
FunStream Corporation
Consideration transferred
Less: Fair value of identifiable
net assets acquired
$45,090
(73)
Goodwill arising on acquisition $45,017
Net Cash Outflow on Acquisition of
Subsidiary
For the Year Ended December 31
2013 2012
Consideration paid in cash
Less: Cash and cash
equivalent balances acquired
$-
-
$45,090
(69)
$- $45,021
Impact of Acquisition on the Results of the
Company
The results of acquiree since the acquisition
date included in the consolidated statements of
comprehensive income were as follows:
Year Ended December 31, 2012
Revenue
FunStream Corporation $-
Net loss
FunStream Corporation $(43)
Had these business combinations been in effect at the
beginning of the annual reporting period, the results
of acquiree included in the consolidated statements
of comprehensive income were as follows. This pro-
forma information is for illustrative purposes only and
is not necessarily an indication of revenue and results
of operations of the Company that actually would have
been achieved had the acquisition been completed,
nor is it intended to be a projection of future results.
Year Ended December 31, 2012
Revenue
FunStream Corporation $-
Net loss
FunStream Corporation $(43)
Options granted in November 2013 were priced
using the trinomial option pricing model and the
inputs to the model were as follows:
November 2013
Grant-date share price (NT$)
Exercise price (NT$)
Expected volatility
Expected life (years)
Expected dividend yield
Risk-free interest rate
$149
149
45.83%
7 years
5.00%
1.63%
Expected volatility was based on the historical
share price volatility over the past 1 year. The
Company assumed that employees would exercise
their options after the vesting date when the share
price was 1.63 times the exercise price.
Compensation cost recognized was $26,742
thousand for the year ended December 31, 2013.
29. BUSINESS COMBINATIONS
Subsidiaries Acquired
Principal
Activity
Date of
Acquisition
Proportion
of Voting
Equity
Interests
Acquired
(%)
Consideration
Transferred
FunStream
Corporation
Design,
research and
development
of 3-D
technology
February
2012
100.00% $45,090
The Company acquired FunStream Corporation to
obtain its techniques in the design, research and
development of 3-D technology. The Company
paid cash for the acquisition of FunStream
Corporation.
Assets Acquired and Liabilities Assumed
at the Date of Acquisition
FunStream Corporation
Current assets
Cash and cash equivalents
Other receivables
$69
4
Net assets $73
30. DISPOSAL OF SUBSIDIARIES
In September 2013, the Company sold its 100% stake in
Saffron Media Group Ltd. for US$47,000 thousand to
CDMG Holdings UK Limited. Saffron Media Group Ltd
is a provider of digital multimedia delivery services.
The Company and CHT each had held 50% share
of Huada, respectively. In March 2012, Huada held
a stockholders' meeting and re-elected its directors
and supervisors. As a result, the investment type of
the Company was changed to joint venture and the
Company continued to account for this investment by
the equity method.
In July 2012, the Company sold back 25% of Beats
Electronics, LLC shares to the founding members of
Beats for US$150,000 thousand. Beats specializes in
design, research and development of audio technology.
After the above transactions were completed, the
Company lost its control on Beats.
Consideration Received
Saffron Media
Group Ltd.
Huada Digital
Corporation
Beats
Electronics,
LLC
Cash and cash
equivalents
$223,970 $- $4,498,923
Deferred sales
proceeds
1,179,573 - -
$1,403,543 $- $4,498,923
At the completion of sales of Saffron Media Group
Ltd., CDMG Holdings UK Limited paid HTC US$7,500
thousand in cash plus a purchaser note (the "Note")
with five years term and 6% interest rate per annum,
which was classified as "long-term receivable", in
the amount of US$39,500 thousand. The Note and
interest payment will be made on due date. The Note
and accrued interest were secured by pledge of the
shares obtained by the buying party in this transaction.
Three-year non-recourse secured promissory notes (the
"Notes"), totaling US$150,000 thousand, were issued
by the buying party for the above buy back of Beats
Electronics, LLC and accounted for under "long-term
receivable". These notes payable, bear interest based
on LIBOR plus 1%, was secured by pledge of interest
obtained by the buying party in this transaction. The
Notes were received in full in November 2013.