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HTC 2014 Annual Report
HTC 2014
Annual Report
TWSE 2498
Mops.twse.com.tw│htc.com│printed on April 30, 2015

Table of contents

  • Page 1
    TWSE 2498 HTC 2014 Annual Report HTC 2014 Annual Report Mops.twse.com.tw htc.com printed on April 30, 2015

  • Page 2
    HTC spokesman Name Chialin Chang Title President of Global Sales & Chief Financial Officer Acting spokesman Not Available Tel +886 3 3753252 Email [email protected] corporate headquarters Address No. 23, Xinghua Road, Taoyuan District, Taoyuan City, Taiwan, R.O.C. Tel +886 3 3753252 taipei office ...

  • Page 3
    ... OF CONTENTS 4 Corporate governance p52 5 Capital and shares p108 1 Letter to HTC shareholders p4 3 Business operations p34 6 Financial status, operating results and risk management p126 2 Company profile p12 7 Affiliate information and other special notes p140 8 Financial information p160...

  • Page 4
    CHAPTER 1 LETTER TO HTC SHAREHOLDERS

  • Page 5

  • Page 6
    ... Phone by Tech Radar, Best in Show by Know Your Mobile, and Editor's Choice by PC Mag. Additionally, HTC REâ„¢ camera also won a Gold Product Award by Spark Awards. At Mobile World Congress in 2015, HTC Viveâ„¢ was awarded Best in Show and also received many accolades from media. HTC Vive was named...

  • Page 7

  • Page 8
    CHAPTER 2 COMPANY PROFILE

  • Page 9
    ... Purpose About HTC _ _ _ _ HTC brings brilliance to life through leading innovation in smart mobile device and experience design. Beginning with a vision to put a personal computer in the palm of our customers' hands, we have led the way in the evolution from palm PC to smartphone. The Pursuit...

  • Page 10

  • Page 11
    ...outstanding talent in product design, user interface, brand and sales and marketing. This talent has enabled HTC to receive global recognition, with awards including Device Manufacturer of the Year at Mobile World Congress in 2011, and HTC was listed in the top 100 international brands by Interbrand...

  • Page 12
    ...calling software from the Google Play store including Hangout, Skype, Tango, and other video calling apps. Face Tracking is also platform agnostic and can be seen on any smartphone and personal computer regardless of the operating system. iOS, Windows® PC, Macintosh® users and other Android phones...

  • Page 13
    ...® Office® at work. These apps will show up when you are at home or at work respectively. _ _ _ Accessories In 2015, HTC will focus on delivering intuitive HTC branded accessories that are core to the usability of HTC smartphones. HTC Dot View™ is regarded by users as one of the best cover...

  • Page 14
    ...of phones that is in many ways as aspirational as the HTC One series. As part of an expanding product line, in October 2014, HTC launched the HTC REâ„¢, a remarkably fun and easy-to-use camera that allows users to capture photos and videos and while being able to simply enjoy the moment. Designed to...

  • Page 15

  • Page 16

  • Page 17
    ... customer relations, customer service and communication. Board identifying growth strategies for HTC products. Internal Audit Future Development Peter Chou Marketing Idris Mootee Chief Marketing Officer Finance & Accounting Chialin Chang (Concurrent) President of Global Sales & Chief Financial...

  • Page 18
    ... Brazil. _ _ _ Human resources _ Employees represent one of HTC's most valuable assets. The company has, in recent years, actively recruited outstanding talent into its ranks - particularly in the areas of product design, user interface, brand promotion, and sales and marketing. While bringing on...

  • Page 19
    CHAPTER 3 BUSINESS OPERATIONS

  • Page 20
    ... in enterprise security and management. While the smartphone and tablet battles continue, and while growth gradually slows in the years ahead, every leading vendor is now looking at opportunities in adjacent markets such as wearables, virtual reality, the smart home and especially the living room...

  • Page 21
    ... Mobile World Congress and Game Developer Conference in March 2015. Awarded best new product at MWC 2015, it was broadly covered by media including Engadget's HTC's Vive made me believe in VR and Business Insider's most mind-blowing virtual reality experience ever . These new devices are part of HTC...

  • Page 22
    ... quarters of profitability. This trend has continued for Q1 2015. This turnaround began with substantial QoQ revenue growth for Q2 2014 driven largely by success of the then newly launched flagship HTC One M8. Net Promoter Scores have reached a high of 56.31 and customers cite design, sound, camera...

  • Page 23
    ... camera to bring image galleries to life. It redefines how people take pictures, play and share precious moments. In addition, HTC BoomSoundâ„¢ provides the industry's best mobile audio experience, utilizing front-facing speakers and dual dynamic microphones. Add to that a full HD screen, and users...

  • Page 24
    ... either Email accessing, webpage browsing, video playing, or even multiple unique leading front/back-camera capabilities allow smooth and fast operation. Through optimization of OS (Operating System) and HTC Senseâ„¢, battery service life is balanced under very high processing performance to develop...

  • Page 25
    ... on the phone by simply activating HTC RE App. Furthermore, automatic backup of photos and videos in cloud is available for easy access and sharing anywhere. Time-lapse video of HTC RE can also be set up using HTC RE App to take professional and amazing time-lapse videos. HTC and Google together...

  • Page 26
    ... N/A 2013 % N/A 100 100 Relation to HTC 2015 Q1 2015Q1 Supplier Code a Others Total Amount 6,016 22,101 28,117 % 21 79 100 Relation to HTC None Customer Code A B Others Total Amount 5,313 4,367 31,844 41,524 % 13 10 77 100 Relation to HTC None None 48 Business operations Business operations...

  • Page 27
    ... Recent Two-Year Period (1) Production Unit: 1,000 units / NT$ millions Principal Contractual Agreements The Company specializes in the research, design, manufacture and sale of smart mobile devices. To enhance the quality of its products and manufacturing technologies, the Company has agreements...

  • Page 28
    CHAPTER 4 CORPORATE GOVERNANCE

  • Page 29
    ...Principal work experience and academic qualifications Positions held concurrently in the company and/or and other company Chairwoman, VIA Technologies, Inc. Director, Formosa Plastics Corporation Chairwoman (Representative), H.T.C. (B.V.I) Corp. Chairwoman (Representative), HTC Investment One (BVI...

  • Page 30
    ... Asset Management Corporation. Professor, Department of Economics in National Taiwan University. Chairman, Taiwan-Hong Kong Economic and Cultural Cooperation Council Positions held concurrently in the company and/or and other company Max and Doris Starr Professor at Harvard Business School Director...

  • Page 31
    ... directly holds 5% or more of the total number of issued shares of the Company or that holds shares ranking in the top five in holdings. (6) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified Company or institution that has a financial or business...

  • Page 32
    ..., National Taiwan Ocean Head of Future Development Republic of China Peter Chou 2015.03.20 4,558,843 0.55% 595,019 0.07% 0 0.00% University. Director, Server Platform Design Division, Digital Equipment Corporation. None None None President of Global Sales & Chief Financial Officer Republic of...

  • Page 33
    .... Director, R&D, Digital Equipment Corporation. Master in Electronic Engineering, National Taiwan University of Science and Technology. Senior Manager, WM System Architecture Design. Positions held concurrently in the company and/or and other company Title Shareholding (note) Title Nationality Name...

  • Page 34
    ..., Assistant General Manager, or other managerial officers or employees) received employee bonuses (including stock and cash bonuses) in the most recent fiscal year. Remuneration paid to Directors Name Total Remuneration (A+B+C+D) Scale of remunerations to Directors of the Company Under NT$ 2,000...

  • Page 35
    ...Income Tax Act. This statement is intended to provide information disclosure and not tax-related information. Remuneration paid to Supervisors Name Total Remuneration (A+B+C) Scale of remunerations to Supervisors of the Company HTC Huang-Chieh Chu, Way-Chih Investment Co., Ltd. Representative: Shao...

  • Page 36
    ... Note 3 Employee profit sharing (D) Note 4 All Consolidated Entities Note 6 Cash Stock Exercisable Employee Stock Options (Note 5) Restricted employee shares (Note 8) Title Head of Future Development President of Global Sales & Chief Financial Officer Chief Operating Officer, Smartphone Business...

  • Page 37
    ... Chen HTC (Note) All Consolidated Entities (Note) Title Head of Future Development President of Global Sales & Chief Financial Officer Name Peter Chou Chialin Chang David Chen Marcus Woo Jason Mackenzie Philip Blair Jack Tong Crystal Liu N/A Stock (Note1) Cash(Note1) Total Employee Profit Sharing...

  • Page 38
    ... and policies are designed to support HTC's business strategy and the focus of performance differentiation. Our reward program and package is designed to be competitive within the markets to engage and motivate our people for the long term successes. In additional to country's fix bonuses (two...

  • Page 39
    ... on a quarterly basis to allow investors timely access to information on the company's operations and performance. In December 2008, the HTC Investor Relations Website was revised. A special corporate governance page was added along with disclosures of financial information. HTC achieved "A+" rating...

  • Page 40
    ... by HTC to the Board of Directors and Supervisors) : v HTC has both Chinese and English websites. HTC Investors pages provide information on financial and business and corporate governance, while PRODUCTS pages provide information relating to our products and services. v NO Summary HTC provides...

  • Page 41
    ... subjects that are related to corporate governance, as well as courses on internal control and responsibility in connection with preparation of financial reports. Details of professional development courses taken by the Board of Directors, Supervisors, and managerial officers for 2013 can be found...

  • Page 42
    ... the use of recycled materials with low environmental impact? v The company has an open and transparent performance appraisal system. At the end of each year, as part of the employee's performance appraisal process, the employee must finalize next year's learning plan and also communicate next year...

  • Page 43
    ... limited warranty sheet included in the HTC phone package Customer service contact numbers in all countries Customer service center contact info card in Taiwan Include the telephone numbers and methods of connecting to its dedicated customer service lines on its official Website Live customer chat...

  • Page 44
    ... which covers HTC's ethical management policy. This Code is disclosed in the Annual report and on the investor website. The Board of Directors and the management all place the greatest importance on adopting the highest standards of integrity and ethics in corporate management and employee work...

  • Page 45
    ... a Ethical Corporate Management Best Practice Principles per the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies. HTC adopted Code of Conduct to provide high ethical standards for all employees in conducting HTC business activities. All employees of HTC Corp...

  • Page 46
    ...'s 2015 second quarter summary financial forecast. 2. Adopted resolution for registering a change of share status to write-off 49,200 shares of the Company's restricted employee shares and setting the record date for the reduction of paid-up capital. 7. 2015.03.06 2015.03.20 Board of directors...

  • Page 47
    ... officer, principal financial officer, chief internal auditor, and principal research and development officer Title President & CEO President of Engineering and Operations Name Peter Chou Fred Liu Appointment Date 2004.04.30 2006.04.24 Effective Date 2015.03.20 2014.07.31 Type of the Change position...

  • Page 48
    ...iii) of the Regulations Governing Information to be Published in Annual Reports of Public Companies : None. Supervisor Head of Future Development President of Global Sales & Chief Financial Officer Chief Operating Officer, Smartphone Business 92 Corporate governance Corporate governance 93

  • Page 49
    ... the Statement of Financial Accounting Standards No. 6, among the Company's 10 largest shareholders. 2015.04.04 Shareholding under spouse and children of minor age % Shares % Shareholding under the title of third party Shares % Top 10 shareholders who are related parties to each other. (Note 2) Name...

  • Page 50
    8. Total number of shares and total equity stake held in the same enterprise by the Company, its Directors and Supervisors, Managers directly or indirectly 2015.03.31 Unit Investments directly or indirectly controlled by directors, supervisors, and managers of HTC Shares/Investment Amount 0 0 0 0 ...

  • Page 51
    ... are confirmed. We do our best to support local Taiwanese producers. To look after female employees and promote breast-feeding, HTC has set up 25 breast-feeding rooms and related facilities that offer mothers a comfortable nursing environment. These facilities were used 32,770 times in 2014. For...

  • Page 52
    ... a win-win partnership with suppliers through mutual sharing, learning, and growth. HTC was founded in Taiwan and is a Taiwanese company whose operations and procurement drives development of related sectors. Except for certain key parts and components, HTC's general procurement policy is to use raw...

  • Page 53
    ... and product manufacturing, as well as consumption by users. HTC is therefore giving our full attention to the planning and implementation of carbon reduction. 4.2 Energy and Climate Change HTC introduced the ISO 50001 energy management system in 2011 to gain a full picture of internal energy use...

  • Page 54
    ... In this way, they can become competitive citizens of good character. 5.2 Other Social Engagement and Actions 5.2.1 Blood Donation HTC regularly cooperates with the Hsinchu Blood Center to organize blood drives four times every year. Many "hot-blooded" employees have cultivated the habit of regular...

  • Page 55
    ... and ecology, and exploration for signs of life in outer space. Download HTC Power to Give app and complete related settings. When the cellphone is: Power is on, There is more than 90% power, A WiFi network connection exists, The screen is not active HTC Power To Give will automatically start...

  • Page 56
    CHAPTER 5 CAPITAL AND SHARES

  • Page 57
    ...505,380 Capital reduction : Cancellation of Treasury Shares 2015.04.04 Unit Share NT$ Capital increase by assets other than cash None Other Note 22 Note 23 Note 24 Note 25 Note 26 Note 27 1. Capital and Shares (1) Capitalization 2015.04.04 Unit Authorized Month/ Year 03/1998 10/1998 08/2000 04...

  • Page 58
    ... employee shares withdrawn by HTC without compensation. (5) Share prices for the past two fiscal years, the Company's net worth per share, earnings per share, dividends per share, and related information Year 2015.04.04 Each share has a par value of NT$10 Item Highest market price Market price...

  • Page 59
    ... Performance and Earnings per Share HTC will not distribute stock dividends at the 2015 Annual Shareholders' Meeting; therefore it is not applicable. (8) Employee Profit Sharing and Compensation for the Board of Directors and Supervisors 1. Percentage and scope of employee profit sharing...

  • Page 60
    ... for the company's development, and to increase employees' commitment and dedication to the company, so as to jointly benefit the company and 4. Global depository receipts 2015.03.31 Issue Date Issuance and Listing Total amount Offering price per GDR Units issued Underlying securities Common shares...

  • Page 61
    (2) Employee Stock Options Granted to Management Team and to Top 10 Employees 2015.04.30 Exercised Unexercised Price per Share (NTD) (Note 4) Unexercised Title Head of Future Development President of Global Sales & Chief Financial Officer Chief Operating Officer, Smartphone Business General Counsel...

  • Page 62
    ... Employee Shares Restricted New Restricted Employee Shares 1. An employee who remains employed at HTC after 1 year has elapsed from the time of the award of the new restricted employee shares (i.e., the record date of the capital increase), and who in the then-current fiscal year has a performance...

  • Page 63
    ...Global Sales & Chief Financial Officer Chief Operating Officer, Smartphone Business President of North Asia and China Managers Vice President Vice President Vice President Vice President Vice President Vice President Vice President Name Peter Chou Chialin Chang Number of Restricted Employee Shares...

  • Page 64
    ... the date of printing of this annual report, the Company has not issued new shares for mergers and acquisitions. (2) During the current fiscal year up to the date of printing of this annual report, the Board of Directors has not adopted any resolution to issue new shares for mergers and acquisitions...

  • Page 65
    CHAPTER 6 FINANCIAL STATUS, OPERATING RESULTS AND RISK MANAGEMENT

  • Page 66
    ... Parent (Loss) Profit For The Year Attributable To Non-Controlling Interest Total Comprehensive Income Attributable To Owners Of the Parent Total Comprehensive Income Attributable To Non-Controlling Interest Earnings Per Share * All numbers above are based on consolidated financial statements. NT...

  • Page 67
    ... expanding production and providing HTC employees with an appropriate working environment. New Equipment / Facilities Replacement / upgrade of equipment and facilities is critical to enhancing productivity and meeting rising market demand. HTC's operation is in good condition and the operating cash...

  • Page 68
    ... a leading competitive edge. Product differentiation and innovations in user experience allow us to develop a wide range of products tailored to meet diverse consumer needs. HTC SenseR is designed with customer at the center to make mobile phones more intuitive and easy to use. (3) We upgrade our...

  • Page 69
    ... and best user experiences. In early 2015, HTC announced strategic partnerships with the world-renowned sports company Under Armor Inc. and the legendary game developer Valve Corporation. Through these alliances, HTC underlined its diversification strategy with new connected lifestyle products. HTC...

  • Page 70
    ...of global telecom carriers to ensure HTC's leadership position in 4G market and technology. HTC will continue to use its resources to develop new technologies and enhance the holistic user experience in order to deliver products and services that fit all high-end, mid-end, and low-end segment market...

  • Page 71
    ... above. 7. Other Important Matters (1) Certification Details of Employees Whose Jobs are Related to the Release of the Company's Financial Information Number of Employees Certification Certified Public Accountants (CPA) Internal Auditor US Certified Public Accountants US CPA China CPA Finance and...

  • Page 72
    CHAPTER 7 AFFILIATE INFORMATION AND OTHER SPECIAL NOTES

  • Page 73
    ...HTC Myarmar Company Limited HTC Vietnam Services One Member Limited Liability Company HTC Communication Technologies (SH) 100.00% HTC India Private Limited 0.67% HTC South Eastern Europe Limited Liability Company HTC Russia LLC. 100.00% 100.00% 100.00% HTC Investment One (BVI) Corporation HTC...

  • Page 74
    ...of graphics technology Restaurants and parking lot business, and building cleaning services Repair and after-sales services Manufacture and sale of smart handheld devices and electronic components Design, research and development of application software Global investing activities, marketing, repair...

  • Page 75
    ... engage in online and download media services. 11. Dashwire, Inc. engages in design and management of cloud synchronization technology. 12. Inquisitive Minds, Inc. is mainly engaged in development and sale of digital education platform. 13. HTC Investment One (BVI) Corporation is mainly engaged in...

  • Page 76
    ...BVI) Corporation Representative: Peter Chou, Fred Liu, Grace Lei HTC Investment Corporation Representative: James Chen HTC HK, Limited Representative: Fred Liu HTC HK, Limited Representative: CS Wang HTC Communication Technologies (Shanghai Limited) Representative: Peter Chou Jack Company Title Name...

  • Page 77
    .... Representative: Edward Wang ABAXIA SAS Representative: Ongan Mordeniz Company 4,687 shares 100.00% Investor 1,500,000 shares 100.00% HTC Corporation Investee Capital Stock Assets Liabilities Net Worth Net Sales HTC Communication Canada, Ltd. Director $8,349,521 $163,012,214 $82,678,841...

  • Page 78
    ... lines: HTC's primary products are converged devices designed on Android and Windows Phone operating systems (OS), with wearable, virtual reality and other intelligent devices being actively developed. HTC products support voice communication, mobile Internet, multimedia, global positioning service...

  • Page 79
    ... promotion activities Energy efficient air conditioning equipment System to supply recycled wastewater Rainwater collection tank construction to recycle rainwater (2) Environmental Protection Expenditures HTC primarily manufactures smartphones. With regard to production processes, airborne...

  • Page 80
    ...Learning and Mobile Learning platforms, e-Library as well as language courses and training for employees to make learning more convenient and flexible. Further, HTC sponsors regular seminars and workshops as part of its development initiatives. Globally recognized experts share insights into market...

  • Page 81
    ... year business performance. Additionally, HTC appropriate a percentage of annual earnings bonuses to employee approved by the board of directors and adopted by shareholders' meeting. Performance and earnings bonus are allocated based on work performance and relative level of contribution in order...

  • Page 82
    CHAPTER 8 FINANCIAL INFORMATION

  • Page 83
    ... Assets Total Assets Before Appropriation Current Liabilities After Appropriation 120,479,978 118,817,523 179,932,784 628 146,684,327 139,226,420 628 109,335,959 2014 2013 NT$ thousands Year 2012 127,271,142 42,652,154 19,935,586 1,625,340 12,702,516 199,186,738 118,817,523 2011...

  • Page 84
    ... - ROC GAAP Unit Year Item Current Assets Long-term Investments 2014 2013 2012 139,658,980 10,197,272 25,651,292 11,520,674 19,575,908 206,604,126 Before Appropriation 126,174,912 127,837,367 59,999 Before Appropriation Total Liabilities After Appropriation * Capital Stock 8,280,381 Capital Surplus...

  • Page 85
    ...) from Discontinued Operations Income (Loss) from Extraordinary Items Cumulative Effect of Changes in Accounting Principle Net Income Basic Earnings Per Share Abbreviated income statement was based on IFRS 2014 2013 2012 270,701,687 56,989,072 14,762,895 2,317,531 155,323 2011 455,079,186 119,754...

  • Page 86
    ...to competition in international markets, HTC managed to profit in 2014 from loss with effective control on operating costs and savings on operating expenses. Profitability ratio rose compared to the previous year with $1.80 for basic earnings per share. 4. Cash Flow Analysis In 2014, HTC managed to...

  • Page 87
    ... for 2014 due to competition in international markets, HTC managed to profit in 2014 from loss with effective control on operating costs and savings on operating expenses. Profitability ratio rose compared to the previous year with $1.80 for basic earnings per share. (5) Average Inventory Turnover...

  • Page 88
    ... balance sheets of HTC Corporation (the "Company") as of December 31, 2014 and 2013, and the related statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Company's management. Our...

  • Page 89
    HTC CORPORATION BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) 2014 ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 28) Trade receivables, net (Note 11) Trade receivables - related...

  • Page 90
    HTC CORPORATION STATEMENTS OF COMPREHEN SIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) 2014 Amount REVENUES (Notes 8, 22 and 29) COST OF REVENUES (Notes 12, 20, 23 and 29) GROSS PROFIT UNREALIZED GAINS REALIZED GAINS REALIZED GROSS PROFIT OPERATING ...

  • Page 91
    HTC CORPORATION STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) Share Capital Retained Earning Exchange Differences on Translating Foreign Operations $(1,089,693) Other Equity Unrealized Gains (Losses) on Available-forsale ...

  • Page 92
    HTC CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) 2014 CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before income tax Adjustments for: Depreciation expense Amortization expense Impairment loss recognized on trade ...

  • Page 93
    ..., manufacture, assemble, process, and sell smart mobile devices and provide after-sales service. In March 2002, the Company had its stock listed on the Taiwan Stock Exchange. On November 19, 2003, the Company listed some of its shares of stock on the Luxembourg Stock Exchange in the form of global...

  • Page 94
    ... a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using...

  • Page 95
    ... preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries, associates and jointly controlled entities. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the...

  • Page 96
    ... company only financial statements using the equity method of accounting. Under the equity method, an investment in an jointly controlled entity is initially recognized in the parent company only balance sheet at cost and adjusted thereafter to recognize the Company's share of the profit or loss...

  • Page 97
    ... profit or loss, available-for-sale financial assets, and loans and receivables. 1. Financial assets at fair value through profit or loss (FVTPL) Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated as at fair...

  • Page 98
    ... is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair...

  • Page 99
    ... events, the accrued marketing expenses are accounted for as an increase in marketing expenses or as a decrease in revenues. Treasury Stock When the Company acquires its outstanding shares that have not been disposed or retired, treasury stock is stated at 194 Financial information Financial...

  • Page 100
    ... the year ended December 31, 2013. 7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS December 31 2014 Financial assets held for trading Derivatives financial assets (not under hedge accounting) Exchange contracts Financial liabilities held for trading Derivatives financial liabilities...

  • Page 101
    ...profit or loss were included in the following line items in the statements of comprehensive income: For the Year Ended December 31 2014 Revenues Other gains and losses $102,057 1,939 $103,996 2013 $262,648 151,305 $413,953 2014 Trade receivables Trade receivables Trade receivables - related parties...

  • Page 102
    ... of the Company. The share of net income or loss and other comprehensive income from subsidiaries under equity method were accounted for based on the audited financial statements. 2013 The Company set up a subsidiary Huada, whose main business is software services, in December 2009. In October 2011...

  • Page 103
    ...(Continued) Other Intangible Assets Total Note payables Trade payables Trade payables - related parties 2014 $1,073 40,814,737 6,508,521 $47,324,331 2013 $1,355 42,787,368 5,622,019 $48,410,742 The average term of payment is four months. The Company has financial risk management policies in place...

  • Page 104
    ... Year Ended December 31 2014 Current service cost Interest cost Expected return on plan assets $9,864 7,716 (10,985) $6,595 An analysis by function Operating cost Selling and marketing General and administration Research and development $1,521 563 733 3,778 $6,595 $301 89 128 610 $1,128 2013 $4,598...

  • Page 105
    ..., the board of directors should propose allocation ratios based on the dividend policy set forth in HTC'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...

  • Page 106
    ... recognized in the financial statements for 2012. Information on the earnings appropriation proposed by the Company's board of directors and approved by the Company's shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange. Some sales denominated in...

  • Page 107
    ... income tax returns for 2013 onwards. The applications of such amendments were not to have significant effect on current and deferred tax assets and liabilities for the Company. The income tax for the years ended December 31, 2014 and 2013 can be reconciled to the accounting profit (loss) as follows...

  • Page 108
    ...(LOSS) PER SHARE Unit: NT$ Per Share For the Year Ended December 31 2014 Basic earnings (loss) per share Diluted earnings (loss) per share $1.80 $1.80 2013 $(1.60) $(1.60) Opening Balance Deferred tax assets Temporary differences Allowance for loss on decline in value of inventory Unrealized profit...

  • Page 109
    ... of ordinary shares used in the computation of diluted earnings (loss) per share 824,194 622 824,816 2013 Information about outstanding options as of the reporting date were as follows: December 31 2014 Range of exercise price (NT$) 829,082 829,082 Weighted-average remaining contractual life (years...

  • Page 110
    ...debt investments, trade receivables, other receivables, trade payables and other payables. The Company's Department of Financial and Accounting provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to...

  • Page 111
    ...credit limit Amount used Amount unused 2013 Purchase prices for related parties and third parties were similar. Outsourcing expenses were calculated based on contracted processing rate. The following balances of trade payables from related parties were outstanding at the end of the reporting period...

  • Page 112
    ...the Company to expand business overseas and render design, research and development support, consulting services and after-sales services. The Company recognized related expenses amounting to NT$8,667,945 thousand and NT$9,815,920 thousand for the years ended December 31, 2014 and 2013, respectively...

  • Page 113
    ... audited the parent company only financial statements of HTC Corporation as of and for the years ended December 31, 2014 and 2013 on which we have issued an unqualified report. February 6, 2015 January 1, 2014 - December 31, 2018 InterDigital Technology Corporation KONINKLIJKE PHILIPS ELECTRONICS...

  • Page 114
    HTC CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) 2014 ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 29) Debt investments with no ...

  • Page 115
    ... part of the consolidated financial statements. 2013 % 100 78 22 Amount $ 203,402,648 161,131,895 42,270,753 % 100 79 21 OTHER COMPREHENSIVE INCOME AND LOSS Exchange differences on translating foreign operations (Note 21) Unrealized losses on available-for-sale financial assets (Note 21) Cash...

  • Page 116
    HTC CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) Share Capital Retained Earning Exchange Differences on Translating Foreign Operations $(1,089,693) Other Equity Unrealized Gains (Losses)...

  • Page 117
    HTC CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED December 31, 2014 AND 2013 (In Thousands of New Taiwan Dollars) 2014 CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before income tax Adjustments for: Depreciation expense Amortization expense Impairment...

  • Page 118
    ... design, manufacture, assemble, process, and sell smart mobile devices and provide after-sales service. In March 2002, HTC had its stock listed on the Taiwan Stock Exchange. On November 19, 2003, HTC listed some of its shares of stock on the Luxembourg Stock Exchange in the form of global depositary...

  • Page 119
    ...gain (loss) on available-for-sale financial assets and cash flow hedges. However, the application of the above amendments will not result in any impact on the net profit for the year, other comprehensive income for the year (net of income tax), and total comprehensive income for the year. principal...

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    ...Company HTC Myanmar Company Limited Manufacture and sale of smart mobile devices and after-sales service International holding company; marketing, repair and after-sales services International holding company Design, research and development of application software Marketing, repair and after-sales...

  • Page 121
    .../download media services Design and management of cloud synchronization technology Development and sale of digital education platform Design, research and development of application software 100.00 100.00 100.00 - % of Ownership December 31, 2013 100.00 100.00 100.00 100.00 100.00 Investor HTC...

  • Page 122
    ... not retranslated. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company's foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at...

  • Page 123
    ... loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The residual value of an intangible asset...

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    ... forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company's documented risk management or investment strategy, and information about the grouping is provided internally on...

  • Page 125
    ... is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair...

  • Page 126
    ... for NT$174,253 thousand and NT$591,306 thousand for the years ended December 31, 2014 and 2013, respectively. a. Accrued marketing and advertising expenses The Company recognizes sale of goods as the conditions are met. For information on the principles of revenue recognition, please refer to Note...

  • Page 127
    ... line items in the consolidated statements of comprehensive income: For the Year Ended December 31 $ 22,424 $Revenues Other gains and losses 2014 $ 102,057 1,939 $ 103,996 2013 $ 262,648 151,305 $ 413,953 $ 262,544 $ 162,297 g. Estimates of warranty provision The Company estimates cost of product...

  • Page 128
    ... and the Company evaluates the financial performance periodically for the adjustment of credit limits. The concentration of credit risk is limited due to the fact that the customer base is diverse. Other Receivables Receivable from disposal of investments is derived from sale of shares of Saffron...

  • Page 129
    ... Company continued to account for this investment by the equity method. Investments in jointly controlled entity and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have not been audited for the year ended 2013...

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    ... 2013 Other Intangible Assets Patents Goodwill Total The major component parts of the buildings held by the Company included plants, electro-powering machinery and engineering systems, etc., which were depreciated over their estimated useful lives of 40 to 50 years, 20 years and 5 to 10 years...

  • Page 131
    ... were as follows: For the Year Ended December 31 2014 Current service cost Interest cost Expected return on plan assets $ 9,864 7,744 (11,017) $ 6,591 An analysis by function Operating cost Selling and marketing General and administrative Research and development 2013 $ 4,599 6,408 (9,885) $ 1,122...

  • Page 132
    ..., the board of directors should propose allocation ratios based on the dividend policy set forth in HTC's Articles and propose them at the stockholders' meeting. As part of a high-technology industry and as a growing enterprise, HTC considers its operating environment, industry developments, and...

  • Page 133
    ... financial statements for 2012. Information on the earnings appropriation proposed by the Company's board of directors and approved by the Company's shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange. Reason to Reacquire For 2014 To transfer shares...

  • Page 134
    ... plans 2013 Dividend income Others 26,381 404,588 $ 834,124 b. Other gains and losses For the Year Ended December 31 2014 Losses on disposal of property, plant and equipment Gain on disposal of intangible assets Gains on sale of investments Gain on disposal of investments accounted for using...

  • Page 135
    ... income tax returns for 2013 onwards. The applications of such amendments were not to have significant effect on current and deferred tax assets and liabilities for the Company. The income tax for the years ended December 31, 2014 and 2013 can be reconciled to the accounting profit (loss) as follows...

  • Page 136
    ... 2015 2018 2019 2023 2024 2027 2028 2029 2030 2031 2032 Shares Unit: In Thousands of Shares For the Year Ended December 31 2014 Weighted average number of ordinary shares used in computation of basic earnings (loss) per share Effect of dilutive potential ordinary shares: Bonus issue to employees...

  • Page 137
    ...-date Grant-date fair value (NT$) Exercise price Numbers of shares (thousand shares) Vesting period (years) November 2, 2014 $ 134.5 Gratuitous 4,600 1-3 years 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...

  • Page 138
    ...for-sale financial assets Domestic listed stocks - equity investments Level 2 Level 3 Total $- $ 162,297 $- $ 162,297 $ 239 $- $- $ 239 (Concluded) There were no transfers between Levels 1 and 2 for the years ended December 31, 2014 and 2013. 28. CAPITAL MANAGEMENT The Company manages its...

  • Page 139
    ...debt investments, trade receivables, other receivables, trade payables and other payables. The Company's Department of Financial and Accounting provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to...

  • Page 140
    ...and financial condition. $- $ 8,303 Purchase prices for related parties and third parties were similar. The outstanding of trade payables to related parties are unsecured and will be settled in cash. b. Operating Sales Loans to Related Parties For the Year Ended December 31 2014 Main management...

  • Page 141
    ... performance focuses on types of goods or services delivered or provided. Under IFRS 8 - "Operating Segments," the Company is organized and managed as a single reportable business segment. The Company's operations are mainly in the research, design, manufacture and sale of smart mobile devices...

  • Page 142
    ... and marketing plans, procurement plans, product roadmaps, product design records, product test plans and reports, product software and source codes, product pricing, product appearance, product specifications, tooling specifications, personnel information, financial information, customer lists...

  • Page 143
    ... to HTC or to invest exceeding five percent of total market value in such a company. Employees are also prohibited from use so-called "Inside Information" to gain personal profit or to influence the independent judgment of business entities, such as investment in competitors, customers, venders...

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    HTC Corporation Chairwoman: Cher Wang