HTC 2013 Annual Report Download - page 152

FINANCIAL INFORMATION FINANCIAL INFORMATION
300 301
Compensation of Key Management
Personnel
For the Year Ended December
31
2013 2012
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
$577,638
2,979
-
165
5,634
$618,338
9,560
-
-
-
$586,416 $627,898
The remuneration of directors and key executives
was determined by the remuneration committee
having regard to the performance of individuals
and market trends.
Acquisition of Property, Plant and
Equipment
For the Year Ended December
31
2013 2012
Other related parties - other
related parties' chairperson
or its significant stockholder,
is HTC's chairperson
$3,238 $61,155
As of December 31, 2012, the unpaid amount was
NT$2,127 thousand.
Other Related-party Transactions
a. To enhance product diversity, the Company
entered into a trademark and technology license
agreement with associates and other related
parties. The royalty expense was NT$219,026
thousand and NT$271,701 thousand for the years
ended December 31, 2013 and 2012, respectively.
As of December 31, 2012 the amount of unpaid
royalty was NT$130,960 thousand.
b. Other related parties provide business consulting
service to the Company. The business
consulting service fees were NT$2,748 thousand
and NT$4,036 thousand for the years ended
December 31, 2013 and 2012, respectively.
As of December 31 and January 1, 2012, the
unpaid business consulting service fees
were NT$3,398 thousand, NT$210 thousand,
respectively.
c. The Company leased staff dormitory owned
by a related party under an operating lease
agreement. The term of the lease agreement
is from April 2012 to March 2015 and the
rental payment is determined at the prevailing
rates in the surrounding area. The Company
recognized and paid rental expenses amounting
to NT$5,209 thousand for the years ended
December 31, 2013 and 2012, each.
d. In October, 2013, the Company sold back all
of shares in Beats Electronics, LLC to Beats
Electronics, LLC for US$265,000 thousand.
This transaction resulted in the recognition of
a gain on disposal amounting to NT$2,637,673
thousand. For the related information, please
refer to Note 16.
34. PLEDGED ASSETS
To protect the rights and interests of its employees,
In September 2012, the Company deposited
unpaid employee bonus in a new trust account.
The trust account, which is under other current
financial assets, had amounted to NT$2,359,041
thousand and NT$3,645,820 thousand as of
December 31, 2013 and 2012 respectively.
As of December 31, 2013, December 31, 2012
and January 1, 2012 the Company had provided
time deposits of NT$1,090 thousand, NT$3,700
thousand and NT$68,700 thousand had been
classified as other current financial assets,
respectively, as collateral for rental deposits and as
part of the requirements for the Company to get
a certificate from the National Tax Administration
of the Northern Taiwan Province stating that it had
no pending income tax.
35. COMMITMENTS, CONTINGENCIES
AND SIGNIFICANT CONTRACTS
a. In April 2008, IPCom GMBH & CO., KG ("IPCom")
filed a multi-claim lawsuit against the Company
with the District Court of Mannheim, Germany,
alleging that the Company infringed IPCom's
patents. In November 2008, the Company
filed declaratory judgment action for non-
infringement and invalidity against three of
IPCom's patents with the Washington Court,
District of Columbia.
In October 2010, IPCom filed a new complaint
against the Company alleging patent
infringement of patent owned by IPCom in
District Court of Dusseldorf, Germany.
In June 2011, IPCom filed a new complaint against
the Company alleging patent infringement of
patent owned by IPCom with the High Court in
London, the United Kingdom. In September 2011,
the Company filed declaratory judgment action
for non-infringement and invalidity in Milan, Italy.
Legal proceedings in above-mentioned courts
in Germany and the United Kingdom are still
ongoing. The Company evaluated the lawsuits
and considered the risk of patents-in-suits are
low. Also, preliminary injunction and summary
judgment against the Company are very unlikely.
In March 2012, Washington Court granted on the
Company's summary judgment motion and ruled
on non-infringement of two of patents-in-suit.
As for the third patents-in-suit, the Washington
Court has granted a stay on case pending appeal
decision. In January 2014, the Court of Appeal
for the Federal Circuit affirmed the Washington
Court's decision.
As of the date that the board of directors
approved and authorized for issuing
consolidated financial statements, there had
been no critical hearing nor had a court decision
been made, except for the above.
b. From May 2011 onwards, Nokia Corporation
("Nokia") and the Company filed patent
infringement actions against the other
respectively in the U.S. International Trade
Commission ("ITC"), U.S. District Court for the
District of Delaware, German district courts,
and English High Court. On February 8, 2014,
the two companies reached a settlement that
included the dismissal of all current lawsuits
and a patent and technology collaboration
agreement. The Company will make payments
to Nokia and the collaboration will involve
the Company's LTE patent portfolio, further
strengthening Nokia's licensing offering. The
companies will also explore future technology
collaboration opportunities.
c. In March 2008, Flashpoint Technology, Inc., a
U.S. entity, sued the Company with 10 patents
in the District Court of Delaware alleging the
Company infringed its patents and seeking
damage compensation. The Company filed re-
exams and the district court case was stayed
pending the result of the re-examination from
U.S. Patent and Trademark Office in November
2009, and is still stayed.
In May 2010, Flashpoint filed the first ITC
investigation against the Company with ITC
alleging that the Company infringed its patents
and requested ITC to prevent the Company from
importing to and selling devices in the United
States. In November 2011, the ITC Committee
issued its Final Determination and ruled that the
Company does not infringe patents owned by
Flashpoint.
In May 2012, Flashpoint filed another ITC
investigation against the Company with ITC
alleging that the Company infringed its patents
and requested ITC to prevent the Company
from importing to and selling devices in the
United States. In September 2013, the ITC
Administrative Law Judge made an Initial
Determination that favors HTC on two of the
three patents in suit. On the matter of the third
patent, only two End-of-Life HTC device models
are potentially