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138 United Microelectronics Corporation Annual Report 2004
(13) Pension Fund
a. Change in benefit obligation during the year:
For the year ended December 31, 2004 2003
Projected benefit obligation at beginning
of year
$(3,725,630) $(3,287,327)
Service cost (471,937) (482,185)
Interest cost (123,181) (123,168)
Benefits paid 36,894 15,720
Gain (Loss) on projected benefit obligation (70,507) 151,330
Projected benefit obligation at end of year $(4,354,361) $(3,725,630)
b. Change in pension assets during the year:
For the year ended December 31, 2004 2003
Fair value of plan assets at beginning of year $1,196,723 $991,059
Actual return on plan assets 35,728 33,312
Contributions from employer 193,711 193,311
Benefits paid (36,894) (15,720)
Transferred in from merger with SiSMC 3,703 –
Others 11,159 (5,239)
Fair value of plan assets at end of year $1,404,130 $1,196,723
c. The funding status of the pension plan is listed as follows:
As of December 31, 2004 2003
Benefit obligation
Vested benefit obligation $(455,706) $(424,662)
Non-vested benefit obligation (1,378,172) (1,210,526)
Accumulated benefit obligation (1,833,878) (1,635,188)
Effect from projected salary
increase
(2,520,483) (2,090,442)
Projected benefit obligation (4,354,361) (3,725,630)
Fair value of plan assets 1,404,130 1,196,723
Funded status (2,950,231) (2,528,907)
Unrecognized net transitional
benefit obligation
219,572 261,627
Unrecognized loss 28,956 16,244
Adjustment required to recognize
minimum liabilities
Accrued pension liabilities per
actuarial report
(11,705) (41,852)
(2,713,408) (2,292,888)
Over accrual – (17,004)
Accrued pension liabilities
recognized in the balance sheet
$(2,713,408) $(2,309,892)
d. The components of the net periodic pension cost are as follows:
For the year ended December 31, 2004 2003
Service cost $471,937 $482,185
Interest cost 123,181 123,168
Expected return on plan assets (26,884) (26,727)
Amortization of unrecognized net transitional benefit obligation 45,444 45,927
Amortization of unrecognized pension loss 13,279 13,784
Transferred from SiSMC in the merger 8,844 –
Net periodic pension cost $635,801 $638,337
The actuarial assumptions underlying are as follows:
For the year ended December 31, 2004 2003
The Company UMO UMCJ The Company UMO UMCJ
Discount Rate 3.50% 3.75% 2.00% 3.50% 3.50% 2.00%
Rate of salary increase 5.00% 4.00% 3.71% 5.00% 5.00% 3.71%
Expected return on plan assets 3.50% 2.75% 1.00% 2.75% 2.75% 1.00%
(14) Capital Stock
a. As recommended by the board of directors and approved
by the shareholders’ meeting on June 9, 2003, the
Company issued 665,898 thousand new shares from the
capitalization of retained earnings, of which NTD 6,079
million were stock dividends and NTD 580 million were
employees’ bonus.
b. As of December 31, 2003, 22,000,000 thousand common
shares were authorized to be issued and 16,140,744 thousand
common shares were issued, each at a par value of
NTD 10.
c. Based on the resolution of the board of directors’ meeting
on February 26, 2004, the Company merged with SiSMC
on July 1, 2004, the effective date, through the issuance
of 357,143 thousand new shares at a par value of NTD 10
each. 2.24 shares of SiSMC were exchanged to 1 share of
the Company, the surviving company.
d. As recommended by the board of directors and amended
by the shareholders’ meeting on June 1, 2004, the Company
issued 1,399,685 thousand new shares from the
capitalization of retained earnings that amounted to NTD
13,335 million and capital reserve that amounted to NTD
661 million, of which NTD 12,224 million were stock dividends
and NTD 1,111 million were employees’ bonus.
e. On July 22, 2004, the Company wrote off 149,728 thousand
shares of treasury stocks, which were bought back
Note 4