HTC 2014 Annual Report Download - page 131

• Financial information Financial information •
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17. NOTE AND TRADE PAYABLES
December 31
2014 2013
Note payables
Trade payables
Trade payables - related parties
$ 1,541
43,801,802
-
$ 1,355
46,266,193
8,303
$ 43,803,343 $ 46,275,851
The average term of payment is four months. The Company
has financial risk management policies in place to ensure
that all payables are paid within the pre-agreed credit terms.
18. OTHER LIABILITIES
December 31
2014 2013
Other payables
Accrued expenses
Payables for purchase of
equipment
Others
$ 31,937,918
300,027
-
$ 36,999,785
815,774
217,440
$ 32,237,945 $ 38,032,999
Other current liabilities
Advance receipts
Agency receipts
Others
$ 773,813
205,932
163,389
$ 529,470
259,529
167,128
$ 1,143,134 $ 956,127
Accrued Expenses
December 31
2014 2013
Marketing
Salaries and bonuses
Materials and molding expenses
Services
Import, export and freight
Bonus to employees
Repairs, maintenance and sundry
purchase
Others
$ 20,168,664
4,584,604
2,784,237
1,469,689
728,217
654,620
239,048
1,308,839
$ 22,592,673
5,757,389
1,650,934
1,780,205
647,588
3,278,053
237,463
1,055,480
$ 31,937,918 $ 36,999,785
The Company accrued marketing expenses on the basis of
related agreements and other factors that would significantly
affect the accruals.
The provision for contingent loss on purchase orders is
estimated after taking into account the effects of changes
in the product market, evaluating the foregoing effects
on inventory management and adjusting the Company’s
purchases.
20. RETIREMENT BENEFIT PLANS
Defined Contribution Plans
The pension plan under the Labor Pension Act (the “LPA”)
is a defined contribution plan. Based on the LPA, HTC,
Communication Global Certification Inc. (“CGC”) and Yoda
Co., Ltd. (“Yoda”) make monthly contributions to employees’
individual pension accounts at 6% of monthly salaries and
wages.
The Company has defined contribution retirement benefit
plans for all qualified employees of HTC, CGC and Yoda in
Taiwan. Besides, the employees of the Company’s subsidiary
are members of a state-managed retirement benefit plan
operated by local government. The subsidiary is required to
contribute amounts calculated at a specified percentage of
payroll costs to the retirement benefit scheme to fund the
benefits. The only obligation of the Company with respect
to the retirement benefit plan is to make the specified
contributions to the fund.
The total expenses recognized in the consolidated statement
of comprehensive income were NT$787,960 thousand and
NT$786,658 thousand, representing the contributions
payable to these plans by the Company at the rates specified
in the plans for the years ended December 31, 2014 and 2013,
respectively. As of December 31, 2014 and 2013, the amounts
of contributions payable were NT$98,605 thousand and
NT$109,323 thousand, respectively, the amounts were paid
subsequent to the end of the reporting period.
Defined Benefit Plans
Based on the defined benefit plan under the Labor Standards
Law (“LSL”), pension benefits are calculated on the basis
of the length of service and average monthly salaries of the
six months before retirement. HTC and CGC contributed
amounts equal to 2% of total monthly salaries and wages to a
pension fund administered by the pension fund monitoring
committee. The pension fund is deposited in Bank of Taiwan
in the committee’s name.
The plan assets are invested in domestic (foreign) equity
and debt securities, bank deposits, etc. The investment
is conducted at the discretion of Bureau of Labor Funds,
Ministry of Labor or under the mandated management.
However, in accordance with Regulations for Revenues,
Expenditures, Safeguard and Utilization of the Labor
Retirement Fund the return generated by employees'
pension contribution should not be below the interest rate
for a 2-year time deposit with local banks.
The actuarial valuations of plan assets and the present
value of the defined benefit obligation were carried out by
qualifying actuaries. The principal assumptions used for the
purposes of the actuarial valuations were as follows:
December 31
2014 2013
Discount rates
Expected return on plan
assets
Expected rates of salary
increase
1.625%- 2.000%
2.000%
2.250%- 4.000%
1.625%- 1.875%
2.000%
2.250%- 4.000%
Amounts recognized in profit or loss in respect of these
defined benefit plans were as follows:
For the Year Ended December 31
2014 2013
Current service cost
Interest cost
Expected return on plan assets
$ 9,864
7,744
(11,017)
$ 4,599
6,408
(9,885)
$ 6,591 $ 1,122
An analysis by function
Operating cost
Selling and marketing
General and administrative
Research and development
$ 1,518
563
731
3,779
$ 301
89
126
606
$ 6,591 $ 1,122
The amounts of actuarial losses recognized in other
comprehensive income were NT$33,346 thousand and
NT$17,106 thousand for the years ended December 31, 2014
and 2013, respectively. As of December 31, 2014 and 2013,
the amounts of actuarial losses recognized in accumulated
other comprehensive income were NT$55,834 thousand and
NT$22,488 thousand, respectively.
The amounts included in the consolidated balance sheets in
respect of the obligation on HTC and CGC under the defined
benefit plans were as follows:
19. PROVISIONS
December 31
2014 2013
Warranty provision
Provisions for contingent loss on
purchase orders
$ 5,208,111
633,068
$ 7,376,035
832,850
$ 5,841,179 $ 8,208,885
Movement of provisions for the years ended December 31,
2014 and 2013 were as follows:
2014
Warranty
Provision
Provisions
for
Contingent
Loss on
Purchase
Orders Total
Balance, beginning of
the year $ 7,376,035 $ 832,850 $ 8,208,885
Provisions recognized
(reversed) 17,213,295 (33,368) 17,179,927
Amount utilized during
the year (19,506,904) (166,414) (19,673,318)
Translation
adjustment 125,685 - 125,685
Balance, end of the year $ 5,208,111 $ 633,068 $ 5,841,179
2013
Warranty
Provision
Provisions
for
Contingent
Loss on
Purchase
Orders Total
Balance, beginning of
the year $ 8,058,509 $ 823,005 $ 8,881,514
Provisions recognized 13,945,001 359,350 14,304,351
Amount utilized during
the year (14,789,263) (349,505) (15,138,768)
Translation
adjustment 161,788 - 161,788
Balance, end of the year $ 7,376,035 $ 832,850 $ 8,208,885
The Company provides warranty service for its customers
for one year to two years. The warranty liability is estimated
on the basis of evaluation of the products under warranty,
past warranty experience, and pertinent factors.