stock code 2382...based on our reviews, except for the effects of the adjustments, if any, that...
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Stock Code:2382
(English Translation of Financial Report Originally Issued in Chinese)
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2015 AND 2014
(With Independent Accountants' Review Report Thereon)
Address:No. 188, Wen Hwa 2nd Rd., Kuei Shan District , Tao
Yuan City, Taiwan
Telephone:(03)327-2345
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Table of contents
Contents Page
1. Cover Page 1
2. Table of Contents 2
3. Independent Accountants' Review Report 3
4. Consolidated Balance Sheets 4
5. Consolidated Statements of Comprehensive Income 5
6. Consolidated Statements of Changes in Equity 6
7. Consolidated Statements of Cash Flows 7
8. Notes to the Consolidated Financial Statements
(1)Overview 8
(2)Financial Statements Authorization Date and Authorization Process 8
(3)New Standards and Interpretations Adopted 8~10
(4)Significant Accounting Policies 10~18
(5)Major Sources of Accounting Assumptions, Judgments and EstimationUncertainty
19
(6)Explanation to Significant Accounts 19~47
(7)Related Party Transactions 48~49
(8)Pledged Assets 50
(9)Significant Commitments and Contingencies 50~51
(10)Losses Due to Major Disasters 51
(11)Subsequent Events 51
(12)Other 52
(13)Segment Information 53
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Independent Accountants' Review Report
The Board of Directors of Quanta Computer Inc.:
We have reviewed the accompanying consolidated balance sheets of Quanta Computer Inc. and its subsidiaries
(the Group) as of September 30, 2015 and 2014, the consolidated statements of comprehensive income for the
three months ended September 30, 2015 and 2014 and for the nine months ended September 30, 2015 and 2014
and changes in stockholders' equity and cash flows for the nine months ended September 30, 2015 and 2014.
The Company’s management is responsible for the preparation and presentation of the condensed consolidated
financial statements. Our responsibility is to issue a report on these consolidated financial statements based on
our reviews.
Except as described in the third and fourth paragraphs, we reviewed these consolidated financial statements in
accordance with Statement of Auditing Standard No.36 “Engagements to Review Financial Statements”. A
review is limited primarily to inquiries of Company personnel and applying analytical procedures to financial
data and thus provides less assurance than an audit. We have not performed an audit, and accordingly, we do not
express an audit opinion.
Also included in the accompanying consolidated financial statements are the financial statements of certain
consolidated subsidiaries, which were not reviewed by independent accountants. These consolidated
subsidiaries had total assets of NT$90,337,150 thousand and NT$132,364,557 thousand, constituting 15.49%
and 23.87%, respectively, of the total consolidated assets as of September 30, 2015 and 2014. The total
liabilities of these subsidiaries as of September 30, 2015 and 2014 amounted to NT$43,461,776 thousand and
NT$51,484,238 thousand, constituting 9.71% and 12.18%, respectively, of total consolidated liabilities. The
comprehensive income of these subsidiaries for the three months ended September 30, 2015 and 2014 and for
the nine months ended September 30, 2015 and 2014 amounted to loss of NT$1,285,719 thousand, loss of
NT$1,122,383 thousand, loss of NT$2,975,053 thousand and loss of NT$2,269,656 thousand, constituting
(20.21)%, (20.56)%, (25.80)% and (14.75)%, respectively, of consolidated comprehensive income.
To the consolidated financial statements, the investments accounted for using the equity method of the Group
which stated at NT$308,641 thousand and NT$402,730 thousand as of September 30, 2015 and 2014,
respectively, and the share of profit (loss) of associates and joint ventures accounted for the using equity method
thereof amounted to loss of NT$6,658 thousand, profit of NT$7,978 thousand, loss of NT$15,777 thousand and
profit of NT$13,715 thousand for the three months ended September 30, 2015 and 2014 and for the nine months
ended September 30, 2015 and 2014, respectively, were recognized based upon the financial statements
prepared by investee companies not reviewed by the independent accountants in compliance with the review
procedures described in the preceding paragraph.
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Based on our reviews, except for the effects of the adjustments, if any, that might have emerged had the
financial statements of the said consolidated subsidiaries and the long-term equity investees been reviewed by
independent accountants, we are not aware of any material modifications that should be made to the
accompanying consolidated financial statements described in the first paragraph for them to be in conformity
with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the guidelines of
IFRS 34 “Interim Financial Reporting” which is approved by the FSC.
KPMG
CPA: Chiang, Chung Yi
Yang, Leou Fong
Taipei, Taiwan, R.O.C.
November 11, 2015
Note to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cashflows in accordance with the International Financial Reporting Standards approved by the R.O.C Financial SupervisoryCommissions and not those of any other jurisdictions. The standards, procedures, and practices to review such financialstatements are those generally accepted and applied in the Republic of China.
The accountants’ report and the accompanying financial statements are the English translation of the Chinese versionprepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, theEnglish and Chinese language accountants’ report and financial statements, the Chinese version shall prevail.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Consolidated Balance Sheets
SEPTEMBER 30, 2015, AND DECEMBER 31, SEPTEMBER 30, 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
September 30, 2015 December 31, 2014 September 30, 2014 ASSETS Amount % Amount % Amount %Current Assets:
Cash and cash equivalents (Note (6)(a)) $ 121,783,061 21 222,057,452 36 188,392,816 34
Current financial assets at fair value through profit or loss (Note (6)(b)) 2,747,553 - 4,251,887 1 3,710,747 1
Current available-for-sale financial assets (Note (6)(b)) 31,653,199 5 13,837,534 2 5,910,846 1
Accounts receivable, net (Notes (6)(c) and (7)) 179,084,389 31 183,376,661 30 166,107,239 30
Other receivables, net (Notes (6)(c) and (7)) 3,371,519 - 3,062,935 1 2,694,079 -
Inventories (Note (6)(d)) 166,297,399 29 100,739,763 17 115,905,540 21
Other current financial assets (Note (8)) 9,485,222 2 9,111,833 1 7,250,684 1
Other current assets, others 5,098,185 1 4,629,958 1 3,669,620 1
519,520,527 89 541,068,023 89 493,641,571 89
Non-current assets:
Non-current available-for-sale financial assets (Note (6)(b)) 907,711 - 3,999,716 1 3,406,836 1
Non-current financial assets at cost (Note (6)(b)) 60,290 - 60,290 - 109,947 -
Investments accounted for using equity method (Note (6)(e)) 308,641 - 394,742 - 402,730 -
Property, plant and equipment (Note (6)(f)) 50,732,069 9 51,163,310 8 46,490,284 8
Investment property, net (Note (6)(g)) 71,755 - 72,239 - 72,401 -
Intangible assets (Note (6)(h)) 854,389 - 822,591 - 796,555 -
Deferred tax assets 4,936,533 1 4,836,908 1 4,115,980 1
Other non-current financial assets (Note (8)) 3,776,099 1 3,789,021 1 4,059,450 1
Other non-current assets, others 1,899,649 - 1,607,882 - 1,394,172 -
63,547,136 11 66,746,699 11 60,848,355 11
TOTAL ASSETS $ 583,067,663 100 607,814,722 100 554,489,926 100
September 30, 2015 December 31, 2014 September 30, 2014 LIABILITIES AND EQUITY Amount % Amount % Amount %Current Liabilities:
Short-term borrowings (Note (6)(i)) $ 145,897,884 25 189,625,552 31 130,496,428 24
Short-term notes and bills payable (Note (6)(j)) - - 200,000 - - -
Current financial liabilities at fair value through profit or loss (Note (6)(b)) 6,061 - 20,986 - 12,470 -
Accounts payable (Note (7)) 210,046,740 36 175,376,332 29 203,332,953 37
Other payables (Note (7)) 25,229,528 4 28,180,189 5 19,142,181 3
Current tax liabilities 6,775,162 1 6,329,986 1 6,870,764 1
Other current financial liabilities 8,445,890 2 8,277,224 1 9,146,159 2
Long-term liabilities, current portion (Note (6)(k)) 7,609,711 2 11,754,916 2 12,134,938 2
Other current liabilities, others (Note (7)) 25,100,733 4 22,231,444 4 17,065,016 3
429,111,709 74 441,996,629 73 398,200,909 72
Non-current Liabilities:
Long-term borrowings (Note (6)(k)) 15,533,427 3 22,953,338 4 21,481,610 4
Deferred tax liabilities 1,837,967 - 1,841,553 - 2,116,599 -
Net defined benefit liabilities (Note (6)(m)) 700,416 - 702,734 - 700,434 -
Other non-current liabilities, others 375,689 - 240,372 - 186,369 -
18,447,499 3 25,737,997 4 24,485,012 4
Total Liabilities 447,559,208 77 467,734,626 77 422,685,921 76
Equity attributable to owners of parent : (Note (6)(o))
Share capital 38,626,274 7 38,626,274 6 38,626,274 7
Capital surplus 14,042,566 2 14,030,642 2 14,030,035 3
Retained earnings 80,405,815 14 82,979,816 14 77,567,889 14
Other equity interest (4,306,250) (1) (2,941,161) - (5,653,591) (1)
Treasury shares (333,094) - (333,094) - (333,094) -
Total equity attributable to owners of parent 128,435,311 22 132,362,477 22 124,237,513 23
Non-controlling interests 7,073,144 1 7,717,619 1 7,566,492 1
Total equity 135,508,455 23 140,080,096 23 131,804,005 24
TOTAL LIABILITIES AND EQUITY $ 583,067,663 100 607,814,722 100 554,489,926 100
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(English Translation of Financial Report Originally Issued in Chinese)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Consolidated Statements of Comprehensive Income
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
For the Three Months Ended September 30, For the Nine Months Ended September 30,2015 2014 2015 2014
Amount % Amount % Amount % Amount %Operating revenue (Notes (6)(q) and (7)) $ 275,897,237 100 244,332,767 100 732,099,688 100 674,671,011 100
Operating costs (Notes (6)(d) and (7)) 264,128,799 96 233,336,827 95 698,936,306 95 644,356,527 95
Gross profit from operations 11,768,438 4 10,995,940 5 33,163,382 5 30,314,484 5
Less:Unrealized profit from sales 1,755 - 713 - 1,755 - 713 -
Add:Realized profit from sales 2,625 - 1,011 - 1,087 - 525 -
11,769,308 4 10,996,238 5 33,162,714 5 30,314,296 5
Operating expenses :
Selling expenses 2,066,348 1 2,723,695 1 5,733,835 1 5,935,157 1
Administrative expenses 2,273,337 1 1,976,911 1 6,691,946 1 5,985,531 1
Research and development expenses 2,908,059 1 2,651,903 1 8,028,445 1 7,555,245 1
Total operating expenses 7,247,744 3 7,352,509 3 20,454,226 3 19,475,933 3
Net operating income 4,521,564 1 3,643,729 2 12,708,488 2 10,838,363 2
Non-operating income and expenses:
Other income (Notes (6)(s) and (7)) 868,667 - 2,188,928 1 3,451,757 1 7,004,724 1
Interest expenses (Note (6)(s)) (486,440) - (735,874) - (1,705,311) - (1,884,163) -
Other gains and losses (Note (6)(s)) 2,212,870 1 1,023,435 - 2,111,836 - 1,997,951 -
Share of (loss) profit of associates and joint venture accounted forusing equity method (Note (6)(e))
(6,658) - 7,978 - (15,777) - 13,715 -
Total non-operating income and expenses 2,588,439 1 2,484,467 1 3,842,505 1 7,132,227 1
Profit before tax 7,110,003 2 6,128,196 3 16,550,993 3 17,970,590 3
Less:Tax expenses (Note (6)(n)) 1,368,695 - 1,365,617 1 3,797,131 1 4,124,007 1
Profit 5,741,308 2 4,762,579 2 12,753,862 2 13,846,583 2
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit or loss:
Other comprehensive income (loss), exchange differences ontranslation
2,516,269 1 742,196 - 1,792,955 - (108,853) -
Other comprehensive (loss) income, available-for-sale financialassets
(1,889,826) (1) (37,164) - (2,999,605) - 1,637,138 -
Share of other comprehensive (loss) income of associates and jointventures accounted for using equity method
(7,363) - (8,899) - (14,385) - 9,196 -
Total items that may be reclassified subsequently to profit orloss
619,080 - 696,133 - (1,221,035) - 1,537,481 -
Other comprehensive income (loss) for the period, net of tax 619,080 - 696,133 - (1,221,035) - 1,537,481 -
Total comprehensive income for the period $ 6,360,388 2 5,458,712 2 11,532,827 2 15,384,064 2
Profit attributable to:
Profit, attributable to owners of parent $ 5,830,723 2 4,732,465 2 12,876,510 2 13,474,704 2
Profit, attributable to non-controlling interests (89,415) - 30,114 - (122,648) - 371,879 -
$ 5,741,308 2 4,762,579 2 12,753,862 2 13,846,583 2
Comprehensive income attributable to:
Comprehensive income, attributable to owners of parent $ 6,259,955 2 5,388,960 2 11,511,421 2 15,602,161 2
Comprehensive income, attributable to non-controlling interests 100,433 - 69,752 - 21,406 - (218,097) -
$ 6,360,388 2 5,458,712 2 11,532,827 2 15,384,064 2
Earnings per share attributable to parent company (Note (6)(p))
Basic earnings per share (NT dollars) $ 1.51 1.23 3.34 3.50
Diluted earnings per share (NT dollars) $ 1.50 1.22 3.31 3.47
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
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(English Translation of Financial Report Originally Issued in Chinese)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Consolidated Statements of Changes in Equity
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Equity Attributable to Owners of ParentShare Capital Retained Earnings Other Equity Interest
Exchange UnrealizedDifferences on Gains (Losses)
OrdinaryShare
Capital Surplus
Legal Reserve
Special Reserve
UnappropriatedRetainedEarnings
Translationof ForeignFinancial
Statements
on Available-for-sale
FinancialAssets
TreasuryShares
Total EquityAttributable to
Owners ofParent
Non-controllingInterests
Total Equity
Balance as of January 1, 2014 $ 38,626,274 14,018,710 23,215,807 4,470,257 51,085,105 2,967,226 (10,748,274) (333,094) 123,302,011 7,784,819 131,086,830
Profit for the period - - - - 13,474,704 - - - 13,474,704 371,879 13,846,583
Other comprehensive income for the period - - - - - 542,806 1,584,651 - 2,127,457 (589,976) 1,537,481
Total comprehensive income - - - - 13,474,704 542,806 1,584,651 - 15,602,161 (218,097) 15,384,064
Appropriation and distribution of retained earnings:
Legal reserve appropriated - - 1,861,800 - (1,861,800) - - - - - -
Special reserve appropriated - - - 3,310,791 (3,310,791) - - - - - -
Cash dividends of ordinary share - - - - (14,677,984) - - - (14,677,984) - (14,677,984)
Adjustments of capital surplus for company’s cash dividends
received by subsidiaries
- 11,328 - - - - - - 11,328 - 11,328
Changes of ownership in subsidiaries - (3) - - - - - - (3) 3 -
Changes in non-controlling interests - - - - - - - - - (233) (233)
Balance as of September 30, 2014 $ 38,626,274 14,030,035 25,077,607 7,781,048 44,709,234 3,510,032 (9,163,623) (333,094) 124,237,513 7,566,492 131,804,005
Balance as of January 1, 2015 $ 38,626,274 14,030,642 25,077,607 7,781,048 50,121,161 4,794,039 (7,735,200) (333,094) 132,362,477 7,717,619 140,080,096
Profit for the period - - - - 12,876,510 - - - 12,876,510 (122,648) 12,753,862
Other comprehensive income for the period - - - - - 1,645,455 (3,010,544) - (1,365,089) 144,054 (1,221,035)
Total comprehensive income - - - - 12,876,510 1,645,455 (3,010,544) - 11,511,421 21,406 11,532,827
Appropriation and distribution of retained earnings:
Legal reserve appropriated - - 1,888,439 - (1,888,439) - - - - - -
Special reserve appropriated - - - (4,839,887) 4,839,887 - - - - - -
Cash dividends of ordinary share - - - - (15,450,510) - - - (15,450,510) - (15,450,510)
Adjustments of capital surplus for company’s cash dividends
received by subsidiaries - 11,924 - - - - - - 11,924 - 11,924
Changes of ownership in subsidiaries - - - - (1) - - - (1) 1 -
Changes in non-controlling interests - - - - - - - - - (665,882) (665,882)
Balance as of September 30, 2015 $ 38,626,274 14,042,566 26,966,046 2,941,161 50,498,608 6,439,494 (10,745,744) (333,094) 128,435,311 7,073,144 135,508,455
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(English Translation of Financial Report Originally Issued in Chinese)
REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
For the Nine Months Ended September 30,2015 2014
Cash flows from operating activities:
Profit before tax $ 16,550,993 17,970,590
Adjustments:
Adjusting to reconcile profit (loss)
Depreciation expense 4,804,983 4,119,325
Amortization expense 700,732 522,603
Provision for bad debt expense 52,915 507,922
Net gain on financial assets or liabilities at fair value through profit or loss (29,527) (16,388)
Interest expense 1,705,311 1,884,163
Interest income (3,134,700) (6,845,538)
Dividend income (317,057) (159,186)
Share of loss (gain) of associates and joint ventures accounted for using equity method 15,777 (13,715)
Loss on disposal of property, plant and equipment 673,055 172,891
Property, plant and equipment transferred to expenses 74,088 2,496
Loss (gain) on disposal of Intangible assets 140 (72)
Gain on disposal of investments (106,768) (101,276)
Impairment loss on financial assets - 524,430
Impairment loss (reversal income) on non-financial assets 776 (28,687)
Unrealized foreign exchange loss 268,373 406,804
Others - (50,695)
Total adjustments to reconcile profit 4,708,098 925,077
Change in operating assets and liabilities:
Change in operating assets:
Financial assets held for trading (28,735) 80,216
Accounts receivable 12,307,318 14,420,801
Other receivables 54,513 (406,449)
Inventories (60,045,165) (28,310,225)
Other financial assets (760,450) (2,166,652)
Other current assets (126,233) (945,685)
Total changes in operating assets (48,598,752) (17,327,994)
Changes in operating liabilities:
Accounts payable 22,207,265 6,923,273
Other payables (3,286,975) 2,926,035
Other financial liabilities 118,583 3,761,346
Other current liabilities 2,765,073 3,484,743
Net defined benefit liabilities (2,318) (2,273)
Other liabilities 6,340 188
Total changes in operating liabilities 21,807,968 17,093,312
Total changes in operating assets and liabilities (26,790,784) (234,682)
Total adjustment (22,082,686) 690,395
Cash (used in) generated from operations (5,531,693) 18,660,985
Interest received 2,758,926 6,629,719
Dividends received 317,057 160,349
Interest paid (1,895,589) (1,784,441)
Income tax paid (3,451,362) (3,033,588)
Net cash (used in) from operating activities (7,802,661) 20,633,024
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(English Translation of Financial Report Originally Issued in Chinese)REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
For the Nine Months Ended September 30,2015 2014
Cash flows from investing activities:
Acquisition of financial assets at fair value through profit or loss, designated as upon initialrecognition
(6,018,451) (10,945,884)
Proceeds from disposal of financial assets at fair value through profit or loss, designated as uponinitial recognition
7,477,029 9,660,424
Acquisition of available-for-sale financial assets (81,878,169) (48,153,518)
Proceeds from disposal of available-for-sale financial assets 64,094,933 55,205,109
Proceeds from capital reduction of available-for-sale financial assets 170,008 123,081
Proceeds from disposal of financial assets at cost - 122,716
Proceeds from capital reduction of investments accounted for using equity method 56,250 5,822
Acquisition of property, plant and equipment (4,127,453) (2,575,096)
Proceeds from disposal of property, plant and equipment 469,486 670,114
Acquisition of intangible assets (200,805) (81,083)
Proceeds from disposal of intangible assets - 1,978
Increase in other financial assets (17,556) (1,893,022)
Decrease in other financial assets 543,010 103,587
Increase in other non-current assets (745,944) (443,553)
Decrease in other non-current assets 13,022 11,663
Net cash (used in) from investing activities (20,164,640) 1,812,338
Cash flows from financing activities:
Decrease in short-term loans (46,436,515) (29,104,575)
Decrease in short-term notes and bills payable (200,000) (600,000)
Proceeds from long-term debt 14,149,233 897,930
Repayments of long-term debt (26,629,143) (240,990)
Increase in other financial liabilities 1,941 20,507
Decrease in other financial liabilities (2,838) (5,401)
Increase in other non-current liabilities 132,852 90,436
Decrease in other non-current liabilities (11,344) (823)
Cash dividends paid (15,923,325) (15,920,610)
Change in non-controlling interests - (233)
Net cash used in financing activities (74,919,139) (44,863,759)
Effect of exchange rate changes on cash and cash equivalents 2,612,049 3,362,944
Net decrease in cash and cash equivalents (100,274,391) (19,055,453)
Cash and cash equivalents at beginning of period 222,057,452 207,448,269
Cash and cash equivalents at end of period $ 121,783,061 188,392,816
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(1) Overview
Quanta Computer Inc. (the Company) was incorporated on May 9, 1988 as a company limited by sharesand registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’s registeredoffice is No.188, Wen Hwa 2nd Rd., Kuei Shan District, Tao Yuan City, Taiwan, R. O. C. The Companyand its subsidiaries (the Group) engage primarily in the manufacturing, processing, and sales of laptopcomputers and telecommunication products.
(2) Financial Statements Authorization Date and Authorization Process
The consolidated financial statements were authorized for issuance by the Board of Directors onNovember 11, 2015.
(3) New Standards and Interpretations Adopted
(a) Impact of the 2013 version of the International Financial Reporting Standard (“IFRS”) endorsed bythe Financial Supervisory Commissions R.O.C. (“FSC”)
The Group has adopted the 2013 version of the IFRS endorsed by the FSC (excluding IFRS 9Financial instruments) in preparing consolidated financial statements starting 2015.
The new standards and amendments issued by the International Accounting Standards Board(“IASB”) were as follows:
New Standards and amendmentsEffective date
per IASBAmended IFRS 1“Limited Exemption from Comparative IFRS 7Disclosures for First-time Adopters”
July 1, 2010
Amended IFRS 1“Severe Hyperinflation and Removal of Fixed Dates forFirst-time Adopters”
July 1, 2011
Amended IFRS 1“Government Loans” January 1, 2013
Amended IFRS 7“Disclosure-Transfers of Financial Assets” July 1, 2011
Amended IFRS 7“Disclosure-Offsetting Financial Assets and FinancialLiabilities”
January 1, 2013
IFRS10 “Consolidated Financial Statements” January 1, 2013
(Investment Entitiesamendments, effectiveJanuary 1, 2014.)
IFRS 11 “Joint arrangements” January 1, 2013
IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013
IFRS 13 “Fair Value Measurement” January 1, 2013
Amended IAS 1“Presentation of Items of Other Comprehensive Income” July 1, 2012
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
New Standards and amendmentsEffective date
per IASBAmended IAS 12“Deferred Tax: Recovery of Underlying Assets” January 1, 2012
Amended IAS 19“Employee Benefits” January 1, 2013
Amended IAS 27“Separate Financial Statements” January 1, 2013
Amended IAS 32“Offsetting Financial Assets and Financial Liabilities” January 1, 2014
IFRIC20-“Stripping Costs in the Production Phase of a Surface Mine” January 1, 2013
The Group had assessed that the 2013 version of the IFRS may not have significant impact on theconsolidated financial statements except the following:
A. IAS 1 “Presentation of Financial Statements”
This standard requires the presentation in other comprehensive income section the line itemswhich are classified according to their nature, and grouped between those items that will or willnot be reclassified to profit and loss in subsequent periods. Allocation of income tax to twogroups of items of other comprehensive is also required. The Group is expecting to change thepresentation of comprehensive income statements in accordance with the standard. Also, thecomprehensive income statements for comparative periods are restated.
B. IFRS 12 “Disclosure of Interests in Other Entities”
The Group has increased disclosures on its interests in associates in accordance with thisstandard. Please refer to Note (6)(e) for related information.
C. IFRS 13 “Fair value measurement”
The standard defines fair value, provides a framework for measuring fair value, and requiresdisclosures on fair value measurement. The Group has increased its disclosures about themeasurement of fair value (Please refer to Note (6)(u).) However, according to the newdisclosure requirement, comparison with prior periods is not needed. Also, the Group haspostponed the adoption of the standard regarding fair value measurement during the transitionperiod of IFRS 13. As the adoption will be postponed until after 2015, the Group does notexpect any significant influence on financial condition and performance.
(b) Impact of IFRSs issued by IASB but not yet endorsed by the FSC
The 2013 version of the IFRS issued by the IASB but not yet endorsed by the FSC were asfollows:
New Standards and amendments
Effective date per IASB
IFRS 9 Financial instruments January 1, 2018
Amended IFRS 10 and IAS 28 Sale or Contribution of Assets between anInvestor and its Associate or Joint Venture
January 1, 2016
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
New Standards and amendments
Effective date per IASB
Amended IFRS 10, 12 and IAS 28 “Investment Entities: Applying theConsolidation Exception ”
January 1, 2016
Amended IFRS 11 “Accounting for Acquisitions of Interests in JointOperations”
January 1, 2016
IFRS 14 “Regulatory Deferral Accounts” January 1, 2016
IFRS 15 “Revenue from Contracts with Customers” January 1, 2018
Amended IAS 1 “Disclosure Initiative” January 1, 2016
Amended IAS 16 and IAS 38 “Clarification of Acceptable Methods ofDepreciation and Amortization”
January 1, 2016
Amended IAS 16 and IAS 41“Agriculture: Bearer Plants” January 1, 2016
Amended IAS 19“Define Benefit Plans: Employee Contributions”Amended IAS 27 Consolidated and Separate Financial Statements
July 1, 2014January 1, 2016
Amended IAS 36“Recoverable Amount Disclosures for Non-FinancialAssets”
January 1, 2014
Amended IAS 39“Novation of Derivatives and Continuation of HedgeAccounting”
January 1, 2014
The Annual Improvements: 2010-2012 & 2011-2013 Cycles July 1, 2014
The Annual Improvements to IFRS: 2012-2014 Cycles January 1, 2016
Amended IFRIC 21“Levies” January 1, 2014
As the standards and amendments above have not been endorsed by the FSC, the Group is in theprocess of assessing the impact on the financial position and the results of operations. Relatedimpact will be disclosed following the completion of its assessments.
(4) Significant Accounting Policies
( a ) Statement of compliance
The accompanying consolidated interim financial statements have been prepared in accordancewith the Regulations Governing the Preparation of Financial Report by Securities Issuers(hereinafter referred to as the Regulations) and the preparation and guidelines of IAS 34 InterimFinancial Reporting which are endorsed by the FSC. These consolidated interim financialstatements do not include all of the information required by the International Financial Reportingstandards, the International Accounting Standards, IFRIC Interpretations and SIC Interpretationsendorsed by the FSC (hereinafter referred to as the IFRS endorsed by the FSC) for annual financialstatements.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Except as described in the following paragraph, the significant accounting policies adopted in thepreparation of the interim consolidated financial statements are applied consistently with those ofthe consolidated financial statements for the year ended December 31, 2014. For other relatedinformation, please refer to the Note (4) of the consolidated financial statements for the year endedDecember 31, 2014. In addition, the consolidated financial statements will fully adopt the 2013IFRS version that was approved and endorsed by the Financial Supervisory Commission of theRepublic of China commencing from 2015.
For the impact of adopting the IFRS 2013 version, which is endorsed by FSC and effective in2015, please refer to Note (3)(a).
( b ) Basis of consolidation
Except as described in the Note (3)(a), the principles of preparation have been applied consistentlywith those described in the annual consolidated financial statements for the year ended December31, 2014. For detailed information, please refer to Note (4)(c) of the annual consolidated financialstatements for the year ended December 31, 2014.
1.List of subsidiaries in the consolidated financial statements
List of subsidiaries in the consolidated financial statements are as follows:
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
TheCompany
Quanta InternationalLimited (QIL)
Holding company %100.00 %100.00 %100.00
〞 QCJ Corp. Manufacture, after-sale service andsales of computersandtelecommunicationproducts
%100.00 %100.00 %100.00
〞 Quanta ComputerTechnology InvestmentCorp. (QCTI)
Investmentcompany
%100.00 %100.00 %100.00
〞 Quanta Venture CapitalCo., Ltd. (QVC)
Venture capital %100.00 %100.00 %100.00
〞 Quanta Cloud TechnologyInc. (QCT)
Wholesale ofcomputers andcomputeraccessories
%99.99 %99.99 %99.99
〞 FaceVsion Technology Inc.(FVT)
Wholesale ofelectriccomponents,equipment andretail of othertelecommunicationproducts
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
TheCompany
Gem-Tech Precision MetalCo., Ltd. (GTP)
Manufacture,wholesale andretail of productmolds
%100.00 %100.00 %100.00 On December15, 2014, theboard ofdirectorsdecided todissolve GTPand the relateddissolutionprocedures arein process
〞 CloudCast Technology Inc. Service, wholesaleand retail of informationsoftware, service ofdata processing
%100.00 %100.00 %100.00
TheCompany,QCTI andQVC
TWDT Precision Co., Ltd.(TWDT)
Computers,electronic products,optical productsand othertransportationmanufacturingbusiness
%55.00 %55.00 %55.00
TheCompanyand QCTI
Quanta Storage Inc. (QSI) Optical industry %30.22 %30.22 %30.22 Note
〞 RoyalTek Company Ltd.(RTK)
Satellite guidednavigation systemsand peripherals,navigated map anddesign,manufacture, sales,integration ofdigital map
%37.57 %37.57 %37.57 Note
〞 Quanta Microsystem Inc.(QMIT)
Electroniccompany
%100.00 %100.00 %100.00
QIL QCE Computer B.V. (QCE) Sales and after-saleservices ofcomputerperipherals
%100.00 %100.00 %100.00
〞 Access InternationalCompany (AIC)
Investmentcompany
%100.00 %100.00 %100.00
〞 Quanta ASIA LTD. (QAL) Investmentcompany and after-sale services
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
QIL Quanta CapitalManagement Ltd. (QCML)
Investmentcompany
%100.00 %100.00 %100.00
〞 Quanta ResearchInternational Inc. (QRII)
Investmentcompany
%100.00 %100.00 %100.00
〞 QCT LLC (QCT-USA) Sales of computers,and peripherals
%100.00 %100.00 %100.00
〞 QCT Inc. (QCTC) Investmentcompany
%100.00 %100.00 %100.00
QCE ThinkTech Industria EComercio DE InformaticaSA (Think Tech)
Manufacture andsales of computersand computerperipherals
%60.00 %60.00 %60.00
AIC Quanta ManufacturingIncorporation (QMI)
Assembly andprocess ofnotebook PCs
%100.00 %100.00 %100.00
〞 Quanta Service Inc. (QSI-USA)
Sales and after-saleservice of computerperipherals
%100.00 %100.00 %100.00
〞 Quanta Computer USA,Inc. (QCA)
After-sale serviceand sales ofnotebook PCs
%100.00 %100.00 %100.00
〞 QCH, Inc. (QCH) Sales of notebookPCs
%100.00 %100.00 %100.00
QMI Quanta ManufacturingNashville LLC (QMN)
Assembly andprocess ofnotebook PCs
%100.00 %100.00 %100.00
QSI-USA Quanta Service NashvilleLLC (QSN)
Sales of computerperipherals
%100.00 %100.00 %100.00
QCA Quanta Computer NashvilleLLC (QCN)
Sales and after-saleservice fornotebook PCs
%100.00 %100.00 %100.00
QCH QCH Nashville LLC(QCHN)
Sales of notebookPCs
%100.00 %100.00 %100.00
QAL Quanta Development LTD.(QDL)
Investmentcompany and salesof computerperipherals
%100.00 %100.00 %100.00
〞 Quanta InternationalTechnology LTD. (QIT)
Sales of computersand computerperipherals, andinvestmentcompany
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
QAL Q_Bus InternationalLimited (Q_Bus)
InvestmentCompany
%100.00 %100.00 %100.00
QRII Quanta ResearchCambridge Inc. (QRC)
Research anddevelopment ofcomputers, andcomputerperipherals
%100.00 %100.00 %100.00
QCTC QCT Korea Inc.(QCTK) Sales of computerperipherals
%100.00 %100.00 %100.00
QIT QCG Computer GMBH Sales of computersand computerperipherals
%100.00 %100.00 %100.00
QDL Quanta Development(HONG KONG) Limited(QDLHK)
Sales of computersand computerperipherals andinvestmentcompany
%100.00 %100.00 %100.00
QDLHK Tech-Front (Shanghai)Computer Co., Ltd. (TFC)
Manufacture andsales of computerperipherals
%100.00 %100.00 %100.00
〞 Tech-Com (Shanghai)Computer Co., Ltd. (TCC)
Manufacture andsales of computerperipherals
%100.00 %100.00 %100.00
〞 Tech-Trend (Shanghai)Computer Co., Ltd. (TTC)
Manufacture andsales of computerperipherals
%100.00 %100.00 %100.00
〞 Tech-Lead (Shanghai)Computer Co., Ltd. (TLC)
Manufacture andsales of computerperipherals
%100.00 %100.00 %100.00
〞 Tech-Giant (Shanghai)Computer Co., Ltd. (TGC)
Manufacture andsales of computerperipherals
%100.00 %100.00 %100.00
〞 Tech-Wave (Shanghai)Logistics Co., Ltd. (TWW)
Manufacture andstorage of notebookPCs
%100.00 %100.00 %100.00
〞 Tech-Full Computer(Changshu) Co., Ltd.(TNC)
Manufacture, sale,and after-saleservice for microcomputers,peripherals, andwearable electronicdevices
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
QDLHK Tech-Front (Chongqing)Computer Co., Ltd. (TFQ)
Process,manufacture andsales of computers
%100.00 %100.00 %100.00
〞 Tech-Wave (Chongqing)Logistics Co., Ltd. (TWQ)
Manufacture andstorage of notebookPCs
%100.00 %100.00 %100.00
〞 Kenseisha Shanghai P.M.P.Co., Ltd. (KSH)
Manufacture andsales of precisemachinery, itsperipherals andmetallic molds
%100.00 %100.00 %100.00
〞 CloudTech (Shanghai)Technology Co., Ltd.(YDSH)
Research anddevelopment,design, sales, after-sale service andtechnical advice ofservers, computers,network equipmentand software
%100.00 %100.00 %100.00
〞 CloudTech (Beijing)Technology Co., Ltd.(YUNDA)
Research anddevelopment,design, sales, after-sale service andtechnical advice ofservers, computers,network equipmentand software
%100.00 %100.00 %100.00
〞 CloudTech (Chongqing)Technology Co., Ltd.(YDCQ)
Research anddevelopment,design, sales, after-sale service andtechnical advice ofservers, technicalproduct, networkequipment andsoftware
%100.00 %100.00 %100.00
Q_Bus Exmore Services HoldingLimited (EXM)
Holding company %95.00 %95.00 %95.00
〞 Tech Chain Ltd. (TCL) Holding company %100.00 %100.00 %100.00
EXM Exmore Services Holding(HONG KONG) Limited(EXMHK)
Investmentcompany
%100.00 %100.00 %100.00
EXMHK Gem-Tech (Shanghai)Precision Mold Co., Ltd.
Manufacture andsale of non-metallicproduct molds
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
TCL Tech Chain (HONGKONG) Limited (TCLHK)
Investmentcompany
%100.00 %100.00 %100.00
TCLHK Zhan Yun (Shanghai)Electronics Co., Ltd.(ZYES)
Manufacture ofcomputers andcomputerperipherals
%100.00 %100.00 %100.00
〞 Changshu Zhan YunElectronics Co., Ltd.(ZYEC)
Manufacture ofcomputers andcomputerperipherals
%100.00 %100.00 %100.00
〞 Zhan Yun (Chongqing)Electronics Co., Ltd.(ZYEQ)
Manufacture ofcomputers andcomputerperipherals
%100.00 %100.00 %100.00
Q_Bus andTCLHK
Standard (Shanghai) EnergyCo., Ltd.
Assembly and saleof battery
%69.00 %69.00 %69.00
QSI Quanta StorageInternational Ltd. (QSI(CAYMAN))
Investmentcompany
%100.00 %100.00 %100.00
〞 Quanta Storage InvestmentInc.
Investmentcompany
%100.00 %100.00 %100.00
QSI(CAYMAN)
Quanta Storage (BVI) Ltd.(QSL (BVI))
Investmentcompany
%100.00 %100.00 %100.00
〞 Quanta Storage HoldingLtd. (QSH)
Investmentcompany
%100.00 %100.00 %100.00
〞 E-Forward Technology Ltd.(SAMOA) (E-Forward(SAMOA))
Manufacture andsale of computerperipherals storagedevices
%100.00 %100.00 %100.00
QSL(BVI) Quanta Storage Holding(HONG KONG) Ltd.(QHH)
Investmentcompany
%100.00 %100.00 %100.00
〞 TECHMAN Electronics(Hong Kong) Ltd.(TECHHK)
Investmentcompany
%100.00 %100.00 %100.00
〞 Techman Asia Ltd. (TMA) Sales and after-saleservice of computerperipherals storagedevices
%100.00 %- %-
QHH Quanta Storage (Shanghai),Ltd. (QSS)
Manufacture andsale of computerperipherals storagedevices
%100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
TECHHK Techman Electronics(Changshu) Ltd.
Manufacture andsale of computerperipherals storagedevices
%100.00 %100.00 %100.00
QSH Quanta Storage America, Inc.
(QSU (America))
Manufacture andsale of computerperipherals storagedevices
%- %100.00 %100.00 On June 22,2015, thebankruptcypetition of QSU(America) wasapproved.
E-Forward(SAMOA)
Quanta Storage Asia Ltd.(SAMOA) (QSA)
Sales and after -sale service ofcomputerperipheral storagedevices
%100.00 %100.00 %100.00
TWDT DTG (BVI) Ltd. (DTG) Import and exportbusiness
%100.00 %100.00 %100.00
DTG Fly Dragon InternationalLtd. (FDDT)
Investmentcompany andtrading company
%100.00 %100.00 %100.00
〞 Dragon Grand Group Ltd.(DGDT)
Investmentcompany andtrading company
%100.00 %100.00 %100.00
FDDT Dragontech City MetallicChangshu Co., Ltd. (CSDT)
Manufacture ofmachine cases,molds and tools
%100.00 %100.00 %100.00
DGDT Dragontech MetallicIndustry Co., Ltd. (SJDT)
Manufacture ofcomputers andcomputerperipherals
%100.00 %100.00 %100.00
FVT FaceVsion TechnologyUSA LLC (FVTUS)
Retail oftelecommunicationproducts andwholesale ofelectronicequipment andcomponents
%100.00 %100.00 %100.00
〞 FaceVsion TechnologyHong Kong Ltd. (FVTHK)
Investmentcompany
%100.00 %100.00 %100.00
FVTHK FaceVsion (Changshu)Trading Co., Ltd.
Trading company %100.00 %100.00 %100.00
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Name of Name of Principal Shareholding Investor Subsidiary Activity 2015.9.30 2014.12.31 2014.9.30 Note
RTK Royaltek InternationalEnterprises Ltd. (RTKI)
Investmentcompany
%100.00 %100.00 %100.00
RTKI Royaltek Trading(Changshu) Co., Ltd.
Import and exportbusiness andwholesale ofelectronic products
%100.00 %100.00 %100.00
QMIT Quanta Cloud TechnologyJapan Inc. (QCTJ)
Import and exportbusiness andwholesale ofelectronic products
%100.00 %100.00 %100.00 The new namewas registeredin December2014.(Previouslyknown as QMJ,Inc.)
Note: Though the Company holds less than half of these companies’ voting right, the Companyhas actual effect to lead these companies’ activities, considering the fact that thesecompanies’ other equity shares are highly separated and considering the participation ofother stockholders from previous stockholders’ meetings. In addition, no other signsuggests that any collectively decision-making agreement between other stockholdersexist. Therefore, the Company considers these companies as subsidiaries.
2.Subsidiaries excluded from the interim consolidated financial statements: None.
( c ) Income taxes
Tax expense in the interim financial statements is measured and disclosed according to paragraphB12 of IAS 34 "Interim Financial Reporting".
Income tax expense for the period is best estimated by multiplying pretax income for the interimreporting period by the effective annual tax rate as forecasted by the management. This should berecognized fully as tax expense for the current period.
Temporary differences between the carrying amounts of assets and liabilities for financialreporting purposes and their respective tax bases are measured based on the tax rates that havebeen enacted or substantively enacted at the time of the asset or liability is recovered or settled andrecognized directly in equity or other comprehensive income as tax expense.
( d ) Employee benefits
Pension cost for an interim period is calculated on a year-to-date basis by using the actuariallydetermined pension cost rate at the end of the prior financial year, adjusted for significant marketfluctuations since that time and for significant curtailments, settlements, or other significant one-off events.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(5) Major Sources of Accounting Assumptions, Judgments and Estimation Uncertainty
The preparation of the consolidated quarterly financial statements in conformity with IFRSs (inaccordance with IAS 34 “Interim Financial Reporting” and approved by the FSC) requires managementto make judgments, estimates and assumptions that affect the application of the accounting policies andthe reported amount of assets, liabilities, income and expenses. Actual results may differ from theseestimates.
In the preparation of the consolidated quarterly financial statements, the major sources of significantaccounting judgments and estimation uncertainty are consistent with Note (5) of the consolidatedfinancial statements for the year ended December 31, 2014.
(6) Explanation to Significant Accounts
Except as described in the following paragraphs, there were no significant differences with thosedisclosed in the annual consolidated financial statements for the year ended December 31, 2014. Pleaserefer to the Note (6) of the annual consolidated financial statements for the year ended December 31,2014 for other related information.
(a) Cash and cash equivalents
2015.9.30 2014.12.31 2014.9.30
Cash on hand, current deposits and checkingaccounts
$ 34,234,949 44,951,722 31,800,297
Time deposits 83,779,543 174,665,767 156,106,948
Short-term notes and bills 3,768,569 2,439,963 485,571
Cash and cash equivalents in consolidatedstatement of cash flows
$ 121,783,061 222,057,452 188,392,816
The Group's interest risk and sensitivity analysis of financial assets and liabilities were disclosedin Note (6)(u).
(b) Financial assets and liabilities
1.Details of financial assets and liabilities are as follows:
1) Current financial assets at fair value through profit or loss
2015.9.30 2014.12.31 2014.9.30Designated as at fair value through profit or loss $ 2,483,727 4,001,871 3,393,153
Held-for-trading financial assets
Beneficiary certificates-open-end mutual funds 263,826 250,016 317,594
Total $ 2,747,553 4,251,887 3,710,747
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2) Available-for-sale financial assets
2015.9.30 2014.12.31 2014.9.30Public quoted companies $ 4,621,045 7,690,976 6,233,850
Private equity 792,410 888,174 926,388
Debt investment 77,937 - -
Beneficiary certificates-open-end mutual funds
27,069,518 9,258,100 2,157,444
Total $ 32,560,910 17,837,250 9,317,682
Current $ 31,653,199 13,837,534 5,910,846
Non-current 907,711 3,999,716 3,406,836
Total $ 32,560,910 17,837,250 9,317,682
3) Non-current financial assets carried at cost
2015.9.30 2014.12.31 2014.9.30Private equities $ 60,290 60,290 109,947
The aforesaid equity investments held by the Group are measured at amortized cost at eachreporting date given the range of reasonable fair value estimates is large and the probabilityfor each estimate cannot be measured reliably.
4) Current financial liabilities at fair value through profit or loss
2015.9.30 2014.12.31 2014.9.30Designated at fair value through profit or loss
Forward exchange contracts $ 6,061 20,986 12,470
5) The Group's credit, currency and interest risks were disclosed in Note (6)(u).
6) As of September 30, 2015, December 31 and September 30, 2014, the aforesaid financialassets were pledged as collateral, which were disclosed in Note (8).
20
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2.Sensitivity analysis-equity price risk:
If the equity price changes, and if it is based on the same basis for both periods and assumes thatall other variables remain the same, the impact to other comprehensive income will be asfollows:
For the Nine Months Ended September 30,
2015 2014
Equity price atreporting day
After-tax othercomprehensive
incomeAfter-tax
profit (loss)
After-tax othercomprehensive
incomeAfter-tax
profit (loss)
Stock-increase 7% $ 378,942 - 501,217 -
Stock-decrease 7% $ (378,942) - (501,217) -
Beneficiary certificates - increase 1%
$ 270,695 2,638 21,574 3,176
Beneficiary certificates
- decrease 1%
$ (270,695) (2,638) (21,574) (3,176)
3.Foreign equity investments
1) Financial assets
2015.9.30Foreign currency
(in thousands) Exchange rate NTDUSD $ 21,233 USD/NTD=33.050 701,757
2014.12.31Foreign currency
(in thousands) Exchange rate NTDUSD $ 21,856 USD/NTD=31.680 692,402
2014.9.30Foreign currency
(in thousands) Exchange rate NTDUSD $ 20,007 USD/NTD=30.470 609,628
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
4.Derivative instrument
Derivative financial instruments are used to manage certain interest risk arising from theGroup’s operating, financing and investing activities. As of September 30, 2015, and December31, September 30, 2014, derivative financial instruments accounted for as held-for-tradingfinancial assets were as follows:
2015.9.30
Amount(in thousands) Currency Maturity period
Forward exchange contracts
US dollars sold USD 40,979 USD against CNY 2016.02.26~2016.09.09
US dollars sold USD 56,000 USD against NTD 2015.11.04~2016.08.26
US dollars purchased USD 52,000 NTD against USD 2015.10.14~2016.09.29
2014.12.31
Amount(in thousands) Currency Maturity period
Forward exchange contracts
US dollars sold USD 74,000 USD against NTD 2015.01.05~2015.02.24
US dollars purchased USD 20,000 NTD against USD 2015.06.18~2015.08.06
2014.9.30
Amount(in thousands) Currency Maturity period
Forward exchange contracts
US dollars sold USD 70,000 USD against NTD 2014.10.07~2015.02.24
US dollars purchased USD 20,000 NTD against USD 2015.06.18~2015.08.06
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(c) Accounts receivable and other receivables, net
2015.9.30 2014.12.31 2014.9.30Accounts receivable $ 182,600,101 185,731,310 168,576,633
Other receivables 3,383,410 3,075,782 2,707,506
Less: Allowance for uncollectible accounts (1,585,734) (1,524,092) (1,650,255)
Allowance for sales returns and discounts (1,941,869) (843,404) (832,566)
Net $ 182,455,908 186,439,596 168,801,318
The aging of overdue receivables was as follows:
2015.9.30 2014.12.31 2014.9.30Overdue 60 days and less $ 10,926,125 8,649,227 11,098,142
Overdue 61~120 days 778,931 122,279 328,734
Overdue 121 days and more 902,763 763,000 741,035
Total $ 12,607,819 9,534,506 12,167,911
The movements in allowance for uncollectible accounts for the nine months ended September 30,2015 and 2014 were as follows:
Individually-assessed
Collectively-assessed Total
Balance as of January 1, 2015 $ - 1,524,092 1,524,092
Impairment loss recognized - 52,915 52,915
Amounts written off - (68) (68)
Effect of movements in exchange rate - 8,795 8,795
Balance as of September 30, 2015 $ - 1,585,734 1,585,734
Balance as of January 1, 2014 $ - 1,148,389 1,148,389
Impairment loss recognized - 507,922 507,922
Amounts written off - (6,257) (6,257)
Effect of movements in exchange rate - 201 201
Balance as of September 30, 2014 $ - 1,650,255 1,650,255
23
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
The details of accounts receivables sold were as follows:
Unit:in thousands
2015.9.30
Bank Amount sold Factoring amount Credit Advanced Collateral Important clausesAmount
derecognized
Financial Institution $ 16,881,592 US$ 1,700,000 US$ 495,000 None Non-recourse, thebuyers bears thecredit risks and theseller bears non-credit risk.
16,881,592
2014.12.31
Bank Amount sold Factoring amount Credit advanced Collateral Important clausesAmount
derecognized
Financial Institution $ 23,760,000 US$ 950,000 US$ 727,500 None Non-recourse, thebuyer bears thecredit risk and theseller bears non-credit risk
23,760,000
2014.9.30
Bank Amount sold Factoring amount Credit advanced Collateral Important clausesAmount
derecognized
Financial Institution $ 21,329,000 US$ 950,000 US$ 677,500 None Non-recourse, thebuyer bears thecredit risk and theseller bears non-credit risk
21,329,000
As of September 30, 2015, and December 31, September 30, 2014, the Group sold its accountsreceivables without recourse and accounted them for under other receivables.
The Company signed the accounts receivable factoring agreements with financial institutions.According to the agreements, the Company bears almost all risks and rewards, and thus isineligible for derecognizing the financial assets. The book value of the accounts receivable factoredbut yet derecognized at reporting date is as follow:
Unit:in thousands
2015.9.30
The PurchaserAmount
transferred Credit Line
Credit Advanced(accounted under
short-term borrowings) CollateralFinancial Institutions $ 330,500 US$ 100,000 US$ 10,000 None
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(d) Inventories
2015.9.30 2014.12.31 2014.9.30
Finished goods $ 67,557,623 54,751,797 43,129,154
Work in process 34,417,842 8,242,416 12,283,155
Raw materials 57,176,443 28,310,929 55,334,395
Inventory in-transit 7,145,491 9,434,621 5,158,836
Total $ 166,297,399 100,739,763 115,905,540
The details of cost of goods sold were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Cost of goods sold $ 260,252,682 231,582,169 688,522,843 638,284,051
Loss on disposal of obsolescenceand scrapping
2,330,873 2,362,754 5,180,231 7,473,952
Loss (gain) on inventory valuationand obsolescence
1,623,219 (492,386) 5,491,849 (995,234)
Idle capacity loss 23,771 9,244 67,036 46,409
Others (101,746) (124,954) (325,653) (452,651)
Total $ 264,128,799 233,336,827 698,936,306 644,356,527
The losses on inventories impairment amounting to $995,234 were reversed because there werepart of inventories which net realizable value lower than cost were sold for the nine months endedSeptember 30, 2014.
(e) Investments accounted for using equity method
The Group's financial information for investments accounted for using equity method that areindividually insignificant was as follows:
2015.9.30 2014.12.31 2014.9.30The carrying amount of individually insignificantassociates' equity
$ 308,641 394,742 402,730
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Attributable to the Group:
Profit from continuing operation $ (6,658) 7,978 (15,777) 13,715
Other comprehensive (loss) income (7,363) (8,899) (14,385) 9,196
Total $ (14,021) (921) (30,162) 22,911
The aforesaid investments accounted for using equity method were not pledged as collateral.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
( f ) Property, plant and equipment
The cost, depreciation, and impairment of the property, plant and equipment of the Group as of andfor the nine months ended September 30, 2015 and 2014, were as follows:
Land Buildings
Machineryand
miscellaneousequipment
Equipmentto be
inspectedand
constructionin progress Total
Cost or deemed cost:
Balance as of January 1, 2015 $ 3,185,004 29,814,795 56,696,486 313,839 90,010,124
Additions - 11,729 3,990,869 113,204 4,115,802
Disposals and obsolescence - (9,372) (6,737,804) - (6,747,176)
Reclassification and effect of movements in exchange rate - 868,197 1,858,919 (147,656) 2,579,460
Balance as of September 30, 2015 $ 3,185,004 30,685,349 55,808,470 279,387 89,958,210
Balance as of January 1, 2014 $ 3,185,004 28,735,087 50,993,000 135,888 83,048,979
Additions - 33,081 2,524,862 221,183 2,779,126
Disposals and obsolescence - (232,525) (3,136,741) (1,050) (3,370,316)
Reclassification and effect of movements in exchange rate - 352,654 878,877 (124,024) 1,107,507
Balance as of September 30, 2014 $ 3,185,004 28,888,297 51,259,998 231,997 83,565,296
Depreciation and impairment losses:
Balance as of January 1, 2015 $ 57,496 7,777,874 31,011,444 - 38,846,814
Depreciation for the period - 707,059 4,097,440 - 4,804,499
Impairment loss - - 776 - 776
Disposals and obsolescence - (5,651) (5,598,984) - (5,604,635)
Reclassification and effect of movements in exchange rate - 253,499 925,188 - 1,178,687
Balance as of September 30, 2015 $ 57,496 8,732,781 30,435,864 - 39,226,141
Balance as of January 1, 2014 $ 57,496 6,774,357 28,175,437 - 35,007,290
Depreciation for the period - 703,748 3,415,093 - 4,118,841
Reversal of impairment loss - - (28,687) - (28,687)
Disposals and obsolescence - (232,524) (2,294,787) - (2,527,311)
Reclassification and effect of movements in exchange rate - 65,937 438,942 - 504,879
Balance as of September 30, 2014 $ 57,496 7,311,518 29,705,998 - 37,075,012
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Land Buildings
Machineryand
miscellaneousequipment
Equipmentto be
inspectedand
constructionin progress Total
Book value:
Balance as of January 1, 2015 $ 3,127,508 22,036,921 25,685,042 313,839 51,163,310
Balance as of September 30, 2015 $ 3,127,508 21,952,568 25,372,606 279,387 50,732,069
Balance as of January 1, 2014 $ 3,127,508 21,960,730 22,817,563 135,888 48,041,689
Balance as of September 30, 2014 $ 3,127,508 21,576,779 21,554,000 231,997 46,490,284
As of September 30, 2015, December 31 and September 30, 2014, the aforesaid property, plant andequipment were not pledged as collateral.
(g) Investment property
Land and landimprovement Buildings Total
Book value:
Balance as of January 1, 2015 $ 52,664 19,575 72,239
Balance as of September 30, 2015 $ 52,664 19,091 71,755
Balance as of January 1, 2014 $ 52,664 20,221 72,885
Balance as of September 30, 2014 $ 52,664 19,737 72,401
There were no significant additions, disposal, or recognition and reversal of impairment losses ofinvestment property for the nine months ended September 30, 2015 and 2014. Please refer to Note(6)(h) of the annual consolidated financial statements for the year ended December 31, 2014 forother related information.
The fair value of the investment property was not significantly different from those disclosed in theNote (6)(h) of the annual consolidated financial statements for the year ended December 31, 2014.
As of September 30, 2015, December 31 and September 30, 2014, the aforesaid investmentproperties were not pledged as collateral.
(h) Intangible assets
GoodwillSoftware and
trademark Total
Book value:
Balance as of January 1, 2015 $ 525,925 296,666 822,591
Balance as of September 30, 2015 $ 531,055 323,334 854,389
Balance as of January 1, 2014 $ 519,146 357,732 876,878
Balance as of September 30, 2014 $ 521,393 275,162 796,555
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
There were no significant additions, disposals, or recognition and reversal of impairment losses ofintangible assets for the nine months ended September 30, 2015 and 2014. Information onamortization for the period is discussed in Note (12)(a). Please refer to Note (6)(i) of the 2014annual consolidated financial statements for other related information.
( i ) Short-term borrowings
2015.9.30 2014.12.31 2014.9.30Credit loan $ 122,057,090 171,409,552 120,528,427
Purchase loan 1,553,526 - 339,481
Letter of credit 22,287,268 18,216,000 9,628,520
Total $ 145,897,884 189,625,552 130,496,428
Range of interest rates 0.56%~2.54% 0.72%~4.06% 0.79%~4.06%
Please refer to Note (8) for details of the Group's assets pledged as collateral for bank borrowings.
The Company has agreements with financial institutions to offsetting financial assets and financialliabilities since 2014. The following table lists the netting information of these financial assets andliabilities as of September 30, 2015, and December 31, September 30, 2014.
2015.9.30
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the balance sheet
Net financial assets/liabilities reported in the balance sheet
Bank deposits / Bank borrowings $ 602,732,505 602,732,505 -
2014.12.31
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the balance sheet
Net financial assets/liabilities reported in the balance sheet
Bank deposits / Bank borrowings $ 487,408,325 487,408,325 -
2014.9.30
PropertyFinancial assets/
liabilities recognized
Financial assets/liabilities offset
in the balance sheet
Net financial assets/liabilities reported in the balance sheet
Bank deposits / Bank borrowings $ 546,298,497 546,298,497 -
( j ) Short-term notes and bills payable
2014.12.31Guaranteeinstitution
Range of interest rates Amount
Notes and bills payable China Bills FinanceCorp.
0.82% $ 200,000
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(k) Long-term borrowings
Amount
Names of financial institutionNon-current
portionCurrentportion Total
Collateral orGuarantee
2015.9.30
Syndicated agreement with HUA NANBank and other 22 participating banks (v)
$ 14,872,500 - 14,872,500 None
Syndicated agreement with Mizuho Bankand other 13 participating banks (iii)
- 7,138,800 7,138,800 None
Bank of Nova Scotia(iv) 660,927 470,911 1,131,838 Time deposits
Total $ 15,533,427 7,609,711 23,143,138
2014.12.31
Syndicated agreement with TaiwanCooperative Bank and other 18participating banks (i)
$ 10,454,400 9,860,400 20,314,800 None
Sumitomo Mitsui Banking Corporation(ii)
- 1,425,600 1,425,600 Promissory notes
Syndicated agreement with Mizuho Bankand other 13 participating banks (iii)
11,404,800 - 11,404,800 None
Bank of Nova Scotia(iv) 1,094,138 468,916 1,563,054 Time deposits
Total $ 22,953,338 11,754,916 34,708,254
2014.9.30
Syndicated agreement with TaiwanCooperative Bank and other 18participating banks (i)
$ 10,055,100 9,483,788 19,538,888 None
Sumitomo Mitsui Banking Corporation(ii)
- 2,193,840 2,193,840 Promissory notes
Syndicated agreement with Mizuho Bankand other 13 participating banks (iii)
10,969,200 - 10,969,200 None
Bank of Nova Scotia(iv) 457,310 457,310 914,620 Time deposits
Total $ 21,481,610 12,134,938 33,616,548
(i) Effective June 2010, the Company and its subsidiary, QIL, entered into syndicated creditagreements with Taiwan Cooperative Bank and other 18 participating financial institutions,under which, the term facility and revolving facility available to the Company and QILaggregated USD 311,250 and USD 330,000 with floating interest rates for a period of 5years. According to agreement, the Company takes joint and several liabilities for QIL’srepayments.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(ii) Effective September and June 2013, the foreign subsidiaries obtained loan credit facilities ofUSD 50,000 and USD 30,000 with financial period over 12 months, but less than 18 monthsfrom Sumitomo Mitsui Banking Corporation. The date of withdrawing the initial fund wasSeptember 18 and June 26, 2013. The loan bears floating interest rates.
(iii) Effective August 2013, the Company entered into syndicated credit agreements with MizuhoBank and other 13 participating financial institutions, under which the term facility andrevolving facility available to the Company aggregated to USD 360,000, with floatinginterest rates for a period of 3 years. The borrowing duration is allowed to extend for 2years, but the extension is limited to one time only.
(iv) In 2014, the foreign subsidiaries obtained four loan credit facilities of USD 15,000, USD15,000, USD 12,000, and USD 8,000 with financial periods for 18, 24, 24, and 24 monthsfrom Bank of Nova Scotia. The dates of withdrawing the initial funds are January 14, March31, November 4, and November 20, 2014. The loans bear floating interest rates.
(v) Effective May 2015, the Company and its subsidiary, QIL, entered into syndicated creditagreement with HUA NAN Bank and other 22 participating financial institutions. Theagreement divides into 2 types, type A and type B. The term facility and revolving facilityavailable to the company and QIL both aggregate to USD330,000 for a period of 5 yearsfor type A, and both aggregate to USD120,000 for a period of 3 years for type B. The loanbears floating interest rates. According to agreement, the Company takes joint and severalliabilities for QIL's repayments.
(vi) Under these agreements, the financial statements of the Group on the balance sheet date(June 30 and December 31) shall maintain certain financial ratios such as current ratios, theratios of the net value of bank loans, interest coverage ratios and tangible net worth.Otherwise, the borrowings will be considered due and payable immediately. As ofSeptember 30, 2015, the Group didn't act against the restriction of these financial covenants.
(vii) The interest rates for all aforementioned credit facilities were 1.28%~2.00%, 0.76%~2.05%and 0.73%~2.05% as of September 30, 2015, and December 31, September 30, 2014,respectively.
( l ) Operating leases
1.Leases entered into as lessee
For the nine months ended September 30, 2015 and 2014, there were no significant new leasecontracts. Please refer to Note (6)(m) of the consolidated financial statements for the year endedDecember 31, 2014 for other related information.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(m) Employee benefits
1.Defined benefits plans
In prior fiscal year, there was no material volatility of the market, reimbursement and settlementor other material one-time events. As a result, pension cost in the accompanying interimfinancial statements is measured and disclosed as of December 31, 2014 and 2013.
The details of the Group's expenses were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Operating costs $ 2 1 8 5
Selling expenses 292 315 858 933
Administrative expenses 5,009 5,714 15,282 17,070
Research and developmentexpenses 1,607 1,691 4,635 5,215
Total $ 6,910 7,721 20,783 23,223
2.Defined contribution plans
The Group's pension expenses under the defined contribution plans were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Operating costs $ 503,958 210,444 1,265,721 488,148
Selling expenses 18,411 16,092 49,082 48,869
Administrative expenses 53,001 39,031 139,119 106,982
Research and developmentexpenses 84,809 63,800 224,395 184,580
Total $ 660,179 329,367 1,678,317 828,579
(n) Income taxes
1.The details of the Group's income tax expense were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Current tax expense
Current period $ 1,368,695 1,365,617 3,797,131 4,124,007
Total income tax expense $ 1,368,695 1,365,617 3,797,131 4,124,007
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2.The tax returns assessment and approval
The Company's tax returns through 2012 have been assessed and approved by the TaxAuthority.
3.Information related to integrated income tax system is summarized below:
2015.9.30 2014.12.31 2014.9.30
Unappropriated earnings of 1998 and after $ 50,498,608 50,121,161 44,709,234
Balance of the imputation credit account $ 7,421,181 7,302,454 5,481,815
2014 (estimated) 2013 (actual)Tax creditable ratio for earnings distribution to ROC residents %19.71 %17.55
Information about integrated income tax system shown on the table above was disclosed basedon the Rule No.10204562810 issued by the Ministry of Finance on October 17, 2013.
(o) Share capital and other equity accounts
Except the following, there is no significant difference in capital and reserves for the nine monthsended September 30, 2015 and 2014. Please refer to Note (6)(p) of the consolidated financialstatements for the year ended December 31, 2014 for other related information.
1.Retained earnings
According to the articles of incorporation, current-period earnings should first be used to settleall outstanding tax payables and prior-years losses. Then, 10% of the earnings should beappropriated as legal reserve. Next, special reserve may be appropriated or reversed inaccordance with the relevant law. The distribution of the remaining earnings should be asfollows:
1) Amount paid to directors and supervisors is less than 2%;
2) Employee benefits is not less than 2%;
If the prior employee benefits are paid in stocks, the target group must include employees of theaffiliate companies who satisfied certain qualifications. The target group and distributionpercentage are decided by the board of directors.
The Company may distribute the current year earnings base on reasons of finance, sales andoperation. The distribution in cash is the priority, yet it can also be distributed in stocks;however, the stock distribution cannot exceed 50% of the total distribution.
According to The Company Act which was amended on May 2015, employee benefits and theamount paid to directors and supervisors were no longer the compositions for earningsdistribution. The Company will amend the articles association before the deadline which was setby the authorities.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
For the three and nine months ended September 30, 2014, the Company accrued the employeebenefits of $433,000, and $1,214,000, respectively, and accrued the amount paid to the directorsand supervisors of $10,500, and $31,500, respectively. These amounts were estimated based onthe company's net profit for the nine months ended September 30, 2014, and the earningsallocation method, priority and factor for employee benefits and the board of directors'remuneration as stated under the company's article. These benefits were charged as operatingcosts and operating expenses for the nine months ended September 30, 2014.
For the year ended December 31, 2014 and 2013, the accrued employee benefits were$1,730,000 and $1,666,000, respectively, and the accrued amount paid to the directors andsupervisors of $42,000 for both periods. The 2014 actual amount paid to the directors andsupervisors was $40,000. The $2,000 difference is accounted as profit or loss in 2015. The 2013actual amount paid to the directors and supervisors was $40,000. The $2,000 difference isaccounted as profit or loss in 2014.
During the shareholder's meeting on June 18, 2015 and June 19, 2014, the shareholdersapproved to distribute the 2014 and 2013 earnings, respectively, as follows:
2014 2013Amount Amount
Dividends distributed to common shareholders
Cash $ 15,450,510 14,677,984
2.Other equity interest after tax
Exchangedifferences ontranslation of
foreign financialstatements
Unrealizedgains (losses)on available-
for-salefinancial assets Total
Balance as of January 1, 2015 $ 4,794,039 (7,735,200) (2,941,161)
Exchange differences on translation of foreign financialstatement
1,644,924 - 1,644,924
Exchange differences on associates accounted for usingequity method
531 - 531
Unrealized gains (losses) on available-for-sale financialassets
- (2,995,628) (2,995,628)
Unrealized gains (losses) on available-for-sale financialassets of associates accounted for using equity method
- (14,916) (14,916)
Balance as of September 30, 2015 $ 6,439,494 (10,745,744) (4,306,250)
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Exchangedifferences ontranslation of
foreign financialstatements
Unrealizedgains (losses)on available-
for-salefinancial assets Total
Balance as of January 1, 2014 $ 2,967,226 (10,748,274) (7,781,048)
Exchange differences on translation of foreign financialstatement
542,453 - 542,453
Exchange differences on associates accounted for usingequity method
353 - 353
Unrealized gains (losses) on available-for-sale financialassets
- 1,575,808 1,575,808
Unrealized gains (losses) on available-for-sale financialassets of associates accounted for using equity method
- 8,843 8,843
Balance as of September 30, 2014 $ 3,510,032 (9,163,623) (5,653,591)
3.Non-controlling interests after tax
For the Nine Months Ended September 30,
2015 2014
Balance, beginning of the period $ 7,717,619 7,784,819
The share attributed to non-controlling interests
(Loss) profit for the period (122,648) 371,879
Exchange differences on translation of foreignoperations
148,031 (612,326)
Unrealized gains or losses on available-for-salefinancial assets
(3,977) 22,350
Changes of ownership of subsidiaries 1 3
Change in non-controlling interests (665,882) (233)
Balance, end of the period $ 7,073,144 7,566,492
(p) Earnings per share
For the nine months ended September 30, 2015 and 2014, the basic and diluted earnings per sharewere calculated as follows:
1.Basic earnings per share
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Profit attributable to ordinaryshareholders of the Company
$ 5,830,723 4,732,465 12,876,510 13,474,704
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Weighted average number ofordinary shares (basic)
3,854,519 3,854,519 3,854,519 3,854,519
2.Diluted earnings per share
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Profit attributable to ordinaryshareholders of the Company
$ 5,830,723 4,732,465 12,876,510 13,474,704
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Weighted average number ofordinary shares (basic)
3,854,519 3,854,519 3,854,519 3,854,519
Effect of employee stockcompensation
43,822 - 37,540 -
Effect of employee stock bonus - 15,725 - 28,423
Weighted average number ofordinary shares (diluted)
3,898,341 3,870,244 3,892,059 3,882,942
(q) Operating revenue
The details of operating revenue were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Sales revenue $ 274,436,742 242,897,569 725,336,338 670,024,169
Other operating revenue 1,460,495 1,435,198 6,763,350 4,646,842
Total $ 275,897,237 244,332,767 732,099,688 674,671,011
( r ) Employee and board of directors compensation
For the three months and nine months ended September 30, 2015, the accrued employee benefitwere $584,000 and $1,217,000, respectively, and the accrued amount paid to the directors andsupervisors were $10,500 and $31,500, respectively. These amounts were calculated using theCompany's profit before tax for each period described above, and were determined according tothe earnings allocation method, priority and factor for employee benefits and the board ofdirectors' remuneration as stated under the Company's prepared amendment of the Articles ofAssociation. These bonuses are expensed under operating cost or expenses for the three monthsand nine months ended September 30, 2015. The difference between the actual amounts ofemployee compensation and estimation of employee compensation, if any, will be treated aschanges in accounting estimates and adjusted in profit or loss in the following year.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
( s ) Non-operating income and expenses
1.Other income
The details of other income were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Interest income
Bank deposits $ 835,215 2,155,363 3,108,546 6,833,075
Others 1,531 6,465 26,154 12,463
Dividend income 31,921 27,100 317,057 159,186
Total $ 868,667 2,188,928 3,451,757 7,004,724
2.Financial costs
The details of financial costs were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Interest expenses on bankborrowings
$ 486,440 735,874 1,705,311 1,884,163
3.Other gains and losses
The details of other gains and losses were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Foreign exchange (losses)gains
$ 2,302,619 1,223,431 2,605,656 2,255,021
Gains on disposal ofinvestment and financialassets
19,699 31,105 106,768 101,276
Gains on financial assets(liabilities) at fair valuethrough profit or loss
(16,396) 22,572 125,654 161,358
(Losses) gains on disposal ofproperty, plant, andequipment
(204,858) (105,723) (673,055) (172,891)
Impairment loss on financialassets
- (27,878) - (524,430)
Others 111,806 (120,072) (53,187) 177,617
Total $ 2,212,870 1,023,435 2,111,836 1,997,951
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
( t ) Reclassification of other comprehensive income
The details of reclassification of other comprehensive income were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Available-for-sale financial assets
Net changes in financial assets atfair value of the year
$ (1,870,127) (6,059) (2,892,837) 1,738,414
Net changes of fair valuereclassified to income
(19,699) (31,105) (106,768) (101,276)
Financial assets at fair valuethrough other comprehensiveincome
$ (1,889,826) (37,164) (2,999,605) 1,637,138
(u) Financial instruments
Except for the following, there was no significant change in fair value of financial instruments norwas there exposure to credit risk, liquidity risk and market risk due to financial instruments. Pleaserefer to Note (6)(v) of the consolidated financial statements for the year ended December 31, 2014for other related information.
1.Liquidity risks
The following are the contractual maturities of financial liabilities of the Group, includingestimated interest payments and excluding the impact of netting arrangements:
Carryingamount
Contractualcash flow
Within 6months 6-12 months 1-2 years 2-5 years
More than 5years
2015.9.30
Non-derivative financial liabilities
Long-term and short-term borrowings $ 169,041,022 170,185,520 145,479,824 8,291,017 671,168 15,743,511 -
Payables 243,722,158 243,722,158 239,438,465 4,053,494 230,199 - -
Derivative financial liabilities
Forward exchange contract:
Outflow (forward selling) 32,248 32,248 26,126 6,122 - - -
Inflow (forward buying) (26,187) (26,187) (3,112) (23,075) - - -
$ 412,769,241 413,913,739 384,941,303 12,327,558 901,367 15,743,511 -
2014.12.31
Non-derivative financial liabilities
Long-term and short-term borrowings $ 224,533,806 225,248,759 209,587,786 2,854,406 12,806,567 - -
Payables 211,833,745 211,833,745 211,482,655 253,840 97,250 - -
Derivative financial liabilities
Forward exchange contract:
Outflow (forward selling) (58,827) (58,827) (58,827) - - - -
Inflow (forward buying) 37,841 37,841 3,954 33,887 - - -
$ 436,346,565 437,061,518 421,015,568 3,142,133 12,903,817 - -
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Carryingamount
Contractualcash flow
Within 6months 6-12 months 1-2 years 2-5 years
More than 5years
2014.9.30
Non-derivative financial liabilities
Long-term and short-term borrowings $ 164,112,976 164,818,364 128,537,916 24,535,816 11,744,632 - -
Payables 231,621,293 231,621,293 231,460,162 (9,909) 171,040 - -
Derivative financial liabilities
Forward exchange contract:
Outflow (forward selling) 21,839 21,839 21,839 - - - -
Inflow (forward buying) (9,369) (9,369) - (9,369) - - -
$ 395,746,739 396,452,127 360,019,917 24,516,538 11,915,672 - -
The Group is not expecting that the cash flows included in the maturity analysis could occursignificantly earlier or at significantly different amounts.
2.Currency risks
1) Currency risks exposure
The Group’s significant exposure to foreign currency risks of financial assets and liabilitieswere as follows:
2015.9.30
Functional currencyExchange
rate CurrencyForeign currency
(in thousands)Carrying amount
(TWD)
Financial assets Monetary items TWD 33.050 USD $ 8,821,389 291,546,068
TWD 0.275 JPY 5,267,524 1,450,677
TWD 5.195 CNY 226,281 1,175,704
CNY 6.362 USD 241,932 7,994,984
USD 0.157 CNY 3,436,798 17,855,789
Financial liabilities Monetary items TWD 33.050 USD 8,042,600 264,949,633
CNY 6.362 USD 496,931 16,421,584
BRL 3.973 USD 27,114 896,132
USD 0.157 CNY 1,519,790 7,896,034
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2014.12.31
Functional currencyExchange
rate CurrencyForeign currency
(in thousands)Carrying amount
(TWD)
Financial assets
Monetary items
TWD 31.680 USD $ 8,544,519 270,690,108
TWD 0.265 JPY 4,561,460 1,209,250
CNY 6.201 USD 312,400 9,766,399
USD 0.161 CNY 6,322,960 32,735,501
Financial liabilities
Monetary items
TWD 31.680 USD 7,113,506 224,756,261
CNY 6.201 USD 668,153 20,886,876
BRL 2.680 USD 99,592 2,761,193
USD 0.161 CNY 1,959,225 10,143,526
2014.9.30
Functional currencyExchange
rate CurrencyForeign currency
(in thousands)Carrying amount
(TWD)
Financial assets Monetary items TWD 30.470 USD $ 6,374,694 194,236,868
TWD 0.278 JPY 2,984,671 830,932
CNY 6.149 USD 311,165 9,486,565
USD 0.163 CNY 5,618,978 27,827,752
Financial liabilities
Monetary items
TWD 30.470 USD 7,044,255 214,432,197
CNY 6.149 USD 712,841 21,624,642
BRL 2.451 USD 88,212 2,684,314
USD 0.163 CNY 835,181 4,136,201
Since the Group uses multiple functional currencies, the amounts for foreign currency gainsor losses are consolidated for presentation. For the nine months ended September 30, 2015and 2014, the foreign currency gains are $2,605,656 and $2,255,021, respectively.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2) Sensitivity analysis
The Group’s exposure to foreign currency risk arises from foreign currency exchangefluctuations on cash and cash equivalents, account receivable, other receivables, available-for-sales financial assets, loans and borrowings, accounts payable and other payables. Assumingother variables remain the same, a 1% depreciation or appreciation of the TWD againstforeign currencies for the nine months ended September 30, 2015 and 2014, would havedecreased or increased the net profit after tax by $242,210 and $90,350, respectively. Theanalysis is performed on the same basis for both periods.
3) Interest rate analysis
Please refer to the attached note for the liquidity risk management and the Group's interestrate exposure to its financial assets and liabilities.
The Group's sensitivity analysis in interest rates is based on the risk exposure to interest rateson the derivative and non-derivative financial instruments on the reporting date. For variablerate instruments, the sensitivity analysis assumes the variable rate liabilities are outstandingfor the whole year on the reporting date.
If the interest rate increases or decreases by 0.25%, the Group’s profit will increase ordecrease by $2,468 and $1,177 for the nine months ended September 30, 2015 and 2014,respectively, due to the floating rate borrowings of the Group. This analysis assumes that allother variables remain constant.
3.Fair value information
The Group uses observable market data to evaluate assets and liabilities when it is possible. Thedifferent inputs of levels of fair value hierarchy in determining the fair value are as follows:
Level 1: quoted prices (unadjusted) in active markets of identifiable assets or liabilities.‧
Level 2: inputs other than quoted prices included within level 1 that are observable for the‧asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the assets or liability that are not based on observable market data‧(unobservable inputs).
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
1) The categories and fair values of financial instruments
The book value and fair value of the Group's financial assets and financial liabilities are asfollows:
2015.9.30Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial assets at fair value
through profit or loss
Designated as at fair valuethrough profit or loss
$ 2,483,727 - - 2,483,727 2,483,727
Beneficiary certificates-open-end mutual funds
263,826 263,826 - - 263,826
Sub-total 2,747,553 263,826 - 2,483,727 2,747,553
Available-for-sale financial assets
Public quoted companies 4,621,045 4,621,045 - - 4,621,045
Private equity 792,410 - - 792,410 792,410
Debt investment 77,937 77,937 - - 77,937
Beneficiary certificates-open-endmutual funds
27,069,518 27,069,518 - - 27,069,518
Sub-total 32,560,910 31,768,500 - 792,410 32,560,910
Financial assets carried at cost 60,290 - - - -
Loans and receivables
Cash and cash equivalents 121,783,061 - - - -
Accounts receivable and otherreceivables
182,455,908 - - - -
Other financial assets 13,261,321 - - - -
Sub-total 317,500,290 - - - -
Total $ 352,869,043 32,032,326 - 3,276,137 35,308,463
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2015.9.30Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial liabilities at fair value
through profit or loss
Forward exchange contracts $ 6,061 - 6,061 - 6,061
Sub-total 6,061 - 6,061 - 6,061
Financial liabilities at amortizedcost
Short-term borrowings 145,897,884 - - - -
Accounts payable and otherpayables
235,276,268 - - - -
Current portion of long-termliabilities
7,609,711 - - - -
Long-Term borrowings 15,533,427 - - - -
Other financial liabilities 8,445,890 - - - -
Sub-total 412,763,180 - - - -
Total $ 412,769,241 - 6,061 - 6,061
2014.12.31Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial assets at fair value
through profit or loss
Designated as at fair valuethrough profit or loss
$ 4,001,871 - - 4,001,871 4,001,871
Beneficiary certificates-open-end mutual funds
250,016 250,016 - - 250,016
Sub-total 4,251,887 250,016 - 4,001,871 4,251,887
Available-for-sale financial assets
Public quoted companies 7,690,976 7,690,976 - - 7,690,976
Private equity 888,174 - - 888,174 888,174
Beneficiary certificates-open-endmutual funds
9,258,100 9,258,100 - - 9,258,100
Sub-total 17,837,250 16,949,076 - 888,174 17,837,250
Financial assets carried at cost 60,290 - - - -
Loans and receivables
Cash and cash equivalents 222,057,452 - - - -
Accounts receivable and otherreceivables
186,439,596 - - - -
Other financial assets 12,900,854 - - - -
Sub-total 421,397,902 - - - -
Total $ 443,547,329 17,199,092 - 4,890,045 22,089,137
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2014.12.31Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial liabilities at fair value
through profit or loss
Forward exchange contracts $ 20,986 - 20,986 - 20,986
Financial liabilities at amortizedcost
Short-term borrowings 189,625,552 - - - -
Short-term notes and bills payable 200,000 - - - -
Accounts payable and otherpayables
203,556,521 - - - -
Current portion of long-termliabilities
11,754,916 - - - -
Long-Term borrowings 22,953,338 - - - -
Other financial liabilities 8,277,224 - - - -
Sub-total 436,367,551 - - - -
Total $ 436,388,537 - 20,986 - 20,986
2014.9.30Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial assets at fair value
through profit or loss
Designated as at fair valuethrough profit or loss
$ 3,393,153 - - 3,393,153 3,393,153
Beneficiary certificates-open-end mutual funds
317,594 317,594 - - 317,594
Sub-total 3,710,747 317,594 - 3,393,153 3,710,747
Available-for-sale financial assets
Public quoted companies 6,233,850 6,233,850 - - 6,233,850
Private equity 926,388 - - 926,388 926,388
Beneficiary certificates-open-endmutual funds
2,157,444 2,157,444 - - 2,157,444
Sub-total 9,317,682 8,391,294 - 926,388 9,317,682
Financial assets carried at cost 109,947 - - - -
Loans and receivables
Cash and cash equivalents 188,392,816 - - - -
Accounts receivable and otherreceivables
168,801,318 - - - -
Other financial assets 11,310,134 - - - -
Sub-total 368,504,268 - - - -
Total $ 381,642,644 8,708,888 - 4,319,541 13,028,429
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
2014.9.30Fair value
Book value Level 1 Level 2 Level 3 TotalFinancial liabilities at fair value
through profit or loss
Forward exchange contracts $ 12,470 - 12,470 - 12,470
Financial liabilities at amortizedcost
Short-term borrowings 130,496,428 - - - -
Accounts payable and otherpayables
222,475,134 - - - -
Current portion of long-termliabilities
12,134,938 - - - -
Long-Term borrowings 21,481,610 - - - -
Other financial liabilities 9,146,159 - - - -
Sub-total 395,734,269 - - - -
Total $ 395,746,739 - 12,470 - 12,470
2) Valuation techniques for financial instruments not measured at fair value
The book values of the Group's loans and receivables, financial assets carried at cost andfinancial liabilities measured at amortized cost are similar to their fair values.
3) Valuation techniques for financial instruments measured at fair value
The Group considers the financial status, operating analysis, most recent transaction price,non-active market quoted price of related equity instrument, and active-market quoted price ofsimilar instrument and other information in determining the input value of investeecompanies. Periodically updates of information and input value for the valuation model andany necessary adjustments of fair value are required to ensure that the results of estimationare reasonable.
A.Non-derivative financial instruments
If quoted prices in active markets are available, the prices are established as fair values,such as public quoted company stock and beneficiary certificates-open-end mutual fund.
For the Company’s financial instruments that have no active markets, the measurement offair values is listed as follows:
Beneficiary certificate that has no quoted prices: The discounted cash flow model is usedto estimate fair values. The main assumption for the model is to discount expected futurecash flows by using a discount rate that reflects the time value of money and risks.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
Equity instrument that has no quoted prices: The net asset value method is used to estimatefair values. The main assumption for the model is to use the net asset value per share as themeasuring basis.
B.Derivative financial instruments
Derivative financial instruments are measured by using common valuation models such asdiscounted cash flow model and Black-Scholes model.
4) For the nine months ended September 30, 2015, there is no transferring of fair valuehierarchy. For the nine months ended September 30, 2014, the available-for-sale financialassets amounting to $4,150 were transferred from level 3 to level 1 because the quoted pricesin the active market became periodically available.
5) Changes in level 3 of the fair value
Financial assets at fairvalue through profit or
lossAvailable-for-sale
financial assets
Designated at initialrecognition
Unquoted equityinstruments
Balance as of January 1, 2015 $ 4,001,871 888,174
Total gains and losses recognized
In profit or loss 29,527 -
In other comprehensive income - 31,074
Reclassification and effect of movements in exchange rate (89,093) -
Purchases 6,018,451 43,157
Disposals / Redemption (7,477,029) (169,995)
Balance as of September 30, 2015 $ 2,483,727 792,410
Balance as of January 1, 2014 $ 2,094,075 1,096,990
Total gains and losses recognized
In profit or loss 16,388 (22,888)
In other comprehensive income - 62,659
Reclassification and effect of movements in exchange rate (2,770) (4,150)
Purchases 10,945,884 85,243
Disposals / Redemption (9,660,424) (291,466)
Balance as of September 30, 2014 $ 3,393,153 926,388
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
The aforementioned total gains and losses were recognized in “other gains and losses” and“unrealized gains and losses from available for sale financial assets.” The details of the assetswhich the Group still held as of September 30, 2015 and 2014 were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Total gains and losses recognized
In profit or loss (accounted as “other gains and losses”)
$ 1,879 3,035 66,812 25,166
In other comprehensive income (accounted as “unrealized gains (losses) on available-for-sale financial assets”)
(33,582) (30,381) 31,074 48,249
6) The quantified information for significant unobservable inputs (level 3) used in fair valuemeasurement
The Company’s financial instruments that use level 3 inputs to measure fair values includefinancial assets measured at fair value through profit or loss-debt investments and available-for-sale financial assets-equity investments.
The quantified information for significant unobservable inputs is as follows:
ItemValuationtechniques
Significant non-observable inputs
The relationshipbetween significant
Non-observable inputsand fair values
Financial assetsmeasured at fair valuethrough profit or loss -designated at initialrecognition
Discounted cash flow method
Weighted average capital‧costs (3.30%~4.90% onSeptember 30, 2015)
The higher the‧discounts, the lowerthe fair value.
Available-for-salefinancial assets-equityinvestments withoutquoted price
Net asset valuemethod
Net asset value‧ Not applicable‧
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
7) Sensitivity analysis for fair values of financial instruments using Level 3 Inputs
The Company’s fair value measurement on financial instruments is reasonable. However, themeasurement would be different if different valuation models or valuation parameters areused. For financial instruments using level 3 inputs, if the valuation parameters changed, theimpact on net income or loss and other comprehensive income or loss are as follows:
Impacts or fair value change on net income or loss
Impacts of fair value change on other comprehensive
income or loss
Inputs VariationAdvantageous
changeDisvantageous
changeAdvantageous
changeDisvantageous
change2015.9.30
Financial assetsmeasured at fair valuethrough profit or loss-designated at initialrecognition
weightedaveragecapital costs
5% $ 3,341 (3,341) - -
2014.12.31
Financial assetsmeasured at fair valuethrough profit or loss-designated at initialrecognition
weightedaveragecapital costs
5% $ 1,784 (1,784) - -
2014.9.30
Financial assetsmeasured at fair valuethrough profit or loss-designated at initialrecognition
weightedaveragecapital costs
5% $ 1,258 (1,258) - -
(v) Financial risk management
There were no significant differences of the Group's financial risk management and policies withthose disclosed in Note (6)(w) of the annual consolidated financial statements for the year endedDecember 31, 2014.
(w) Capital management
Management believes that the objectives, policies and processes of capital management of theGroup have been applied consistently with those described in Note (6)(x) of the annualconsolidated financial statements for the year ended December 31, 2014. Also, managementbelieves that there were no significant changes in the Group's capital management information asdisclosed for the year ended December 31, 2014.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(7) Related Party Transactions
(a ) Significant transactions with related parties
1.Revenues to related parties
The amounts of significant sales transactions and outstanding balances between the Group andrelated parties were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Associates $ 5,811 4,886 68,718 21,985
Other related parties 69 70 207 124
$ 5,880 4,956 68,925 22,109
There is no significant difference in terms and conditions of the sales to associates comparedwith those provided to third parties.
2.Purchases from related parties
The amounts of significant purchase transactions and outstanding balances between the Groupand related parties were as follows:
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Associates $ 9,821 461,068 37,626 1,802,772
Other related parties - - 4,252 -
$ 9,821 461,068 41,878 1,802,772
There is no significant difference in terms and conditions of the purchases from associatescompared with those provided to the third parties.
3.Receivables from related parties
Receivables from related parties were as follows:
Accounted for asCategory of related
party 2015.9.30 2014.12.31 2014.9.30
Accounts receivable Associates $ 176,378 180,920 174,249
Other receivables Associates 21 21 8
Other receivables Other related parties 760 661 10,709
$ 177,159 181,602 184,966
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
4.Payables to related parties
Payables to related parties were as follows:
Accounted for as Category of related
party 2015.9.30 2014.12.31 2014.9.30
Accounts payable Associates $ 155,102 213,250 293,732
Accounts payable Other related parties - 597 -
Other payables Associates 616 715 801
Other payables Other related parties 48,851 42,085 42,117
Other current liabilities Associates 7,786 7,463 8,360
$ 212,355 264,110 345,010
5.Others
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Associates
Other income $ 154 196 783 514
Processing expenses (247) (258) (529) (863)
$ (93) (62) 254 (349)
Other related parties
Rental revenue $ 8,049 10,765 24,147 17,564
Other income 993 1,101 2,890 3,044
Donation expenses (5,440) (48,025) (30,740) (179,935)
$ 3,602 (36,159) (3,703) (159,327)
(b) Transactions with key management personnel
For the Three Months EndedSeptember 30,
For the Nine Months EndedSeptember 30,
2015 2014 2015 2014
Short-term employee benefits $ 184,523 145,088 459,625 421,060
Post-employment benefits 516 492 1,532 1,525
$ 185,039 145,580 461,157 422,585
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(8) Pledged Assets
The book values of pledged assets were as follows:
Pledged assets Object 2015.9.30 2014.12.31 2014.9.30
Pledged time deposits Long-term and short-term borrowings,customs collateral and deposits forfactory lease
$ 7,128,972 9,310,181 8,710,775
Guarantee deposits paid Deposits for office and factory lease,and long-term material purchasecontracts
301,345 352,202 336,860
Total $ 7,430,317 9,662,383 9,047,635
(9) Significant Commitments and Contingencies
(a) Promissory notes issued as guarantee for purchasing, borrowings, foreign exchange forwardcontracts and import or export bills advance were as follows:
2015.9.30 2014.12.31 2014.9.30
TWD $ 52,395,300 52,792,700 57,162,700
USD (in thousands) 4,321,387 3,766,387 3,667,387
(b) As of September 30, 2015, December 31 and September 30, 2014, the guarantee notes receivedfrom outsourcing, vendor performance, and construction contracts amounted to $386,532,$380,001, and $380,001, respectively.
(c) Significant litigation:
1.Litigation 1:
QSI and the subsidiary (QSU (America)) and other peers in DVDs industry received an antitrustlawsuit (IN RE OPTICAL DISK DRIVE ANTITRUST LITIGATION) in 2010 and received thenotices of litigation in the last quarter of 2010. As of September 30, 2015, the case is still underexamination in the court of Northern District of California and the court approved thebankruptcy petition of QSU (America).
2.Litigation 2:
In October 2015, QSI received the investigation result of the antitrust lawsuit against 8 DVDproducers concerning DVDs importing to the European Union. The result includes a fine of 7.14million Euros imposed on QSI. QSI has reviewed the European Commission's judgment andprepares to appeal to the European Union Court. There is still great uncertainty about the finalresult at present. Any related influence will be further evaluated after the case is put on trial.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
3.Litigation 3:
The plaintiff, Donald Woligroski, filed an antitrust suit against QSI and the subsidiary (QSU(America)) and other peers in DVDs industry at the Queen’s Bench Winnipeg Centre. Afterreceiving the notices of litigation as of December 2011, QSI and its subsidiary (QSU (America))appointed a solicitor to defend the lawsuit. As of September 30, 2015, the court hasn't sent anyrequest or notification regarding the case.
4.Litigation 4:
The plaintiff, Neil Godfrey, filed an antitrust suit against QSI and the subsidiary (QSU(America)) and other peers in DVDs industry at the Supreme Court of British ColumbiaVancouver Registry. After receiving the notices of litigation as of December 2011, QSI and thesubsidiary (QSU (America)) appointed a solicitor to defend the lawsuit. As ofSeptember 30, 2015, the court hasn't sent any request or notification regarding the case.
5.Litigation 5:
In March 2014, QSI and its subsidiary, QSU (America), received a lawsuit notice from the USCourt (Northern District of California, San Francisco Division), stating that HP, Ingram MicroInc. and Synnex Corporation are charging them for violating the antitrust law on their DVDplayers. The case is still in progress.
6.Litigation 6:
The plaintiff, Cindy Retallick, filed an antitrust suit against QSI and the subsidiary (QSU(America)) and other peers in DVDs industry at the Queen's Bench (located in Regina City,Saskatchewan County, Canada). After receiving the notices of litigation as of June 2014, QSIand its subsidiary (QSU (America)) appointed a solicitor to defend the lawsuit. As of September30, 2015, the court hasn't sent any request or notification regarding the case.
7.Litigation 7:
The plaintiff, that Fanshawe College of Applied Arts and Technology, filed an antitrust suitagainst QSI and the subsidiary (QSU (America)) and other peers in DVDs industry at theSuperior Court of Ontario, Canada. After receiving the notices of litigation as of February 2015,QSI and the subsidiary (QSU (America)) appointed a solicitor to defend the lawsuit. As ofSeptember 30, 2015, the court hasn't sent any request or notification regarding the case.
(10) Losses Due to Major Disasters : None.
(11) Subsequent Events : Please refer to Note (9)(C)2 for related information.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(12) Other
(a) The employee benefits, depreciation, depletion and amortization expenses categorized by functionwere as follows:
By function For The Three Months EndedSeptember 30, 2015
For the Three Months EndedSeptember 30, 2014
By item Operatingcosts
Operatingexpenses Total
Operatingcosts
Operatingexpenses Total
Employee benefits
Salary 7,200,051 3,284,874 10,484,925 5,847,830 2,819,616 8,667,446
Labor and healthinsurance
1,144,391 244,221 1,388,612 774,066 186,050 960,116
Pension 503,960 163,129 667,089 210,445 126,643 337,088
Others 428,425 207,957 636,382 375,296 176,879 552,175
Depreciation 1,239,925 351,349 1,591,274 964,127 401,530 1,365,657
Amortization 116,713 122,961 239,674 102,380 65,111 167,491
By function For the Nine Months EndedSeptember 30, 2015
For the Nine Months EndedSeptember 30, 2014
By item Operatingcosts
Operatingexpenses Total
Operatingcosts
Operatingexpenses Total
Employee benefits
Salary 22,720,947 9,348,084 32,069,031 16,294,353 8,349,643 24,643,996
Labor and healthinsurance
3,172,110 707,466 3,879,576 2,164,929 579,815 2,744,744
Pension 1,265,729 433,371 1,699,100 488,153 363,649 851,802
Others 1,680,015 541,049 2,221,064 1,027,359 482,176 1,509,535
Depreciation 3,750,773 1,054,210 4,804,983 3,028,905 1,090,420 4,119,325
Amortization 364,481 336,251 700,732 313,984 208,619 522,603
(b) Seasonality of operation
The Group's operation is neither seasonal nor cyclical.
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(English Translation of Financial Report Originally Issued in Chinese)
AS OF SEPTEMBER 30, 2015 AND 2014 REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH THE GENERALLY ACCEPTED AUDITING
STANDARDS.
QUANTA COMPUTER INC. AND ITS SUBSIDIARIES
Notes to the Interim Consolidated Financial Statements
September 30, 2015 and 2014
(Amounts Expressed in Thousands of New Taiwan Dollars)
(13) Segment Information
(a) Operating segments financial information:
For the Three Months EndedSeptember 30, 2015
Electronicdepartment
Otherdepartments
Adjustmentand
elimination Total
Revenue:
Revenues from external customers$ 272,117,207 3,780,030 - 275,897,237
Inter-segment revenue 315,739,249 1,010,253 (316,749,502) -
Total $ 587,856,456 4,790,283 (316,749,502) 275,897,237
Reportable segment profit (loss) $ 5,700,036 (31,753) 73,025 5,741,308
For the Three Months EndedSeptember 30, 2014
Revenue:
Revenue from external customers $ 239,255,168 5,077,599 - 244,332,767
Inter-segment revenue 263,838,830 646,272 (264,485,102) -
Total $ 503,093,998 5,723,871 (264,485,102) 244,332,767
Reportable segment profit (loss) $ 4,445,096 222,797 94,686 4,762,579
For the Nine Months EndedSeptember 30, 2015
Revenue:
Revenue from external customers $ 719,503,092 12,596,596 - 732,099,688
Inter-segment revenue 804,918,276 1,272,004 (806,190,280) -
Total $ 1,524,421,368 13,868,600 (806,190,280) 732,099,688
Reportable segment profit (loss) $ 12,740,947 151,052 (138,137) 12,753,862
For the Nine Months EndedSeptember 30, 2014
Revenue:
Revenue from external customers $ 660,820,542 13,850,469 - 674,671,011
Inter-segment revenue 715,495,558 2,658,141 (718,153,699) -
Total $ 1,376,316,100 16,508,610 (718,153,699) 674,671,011
Reportable segment profit (loss) $ 15,425,624 773,404 (2,352,445) 13,846,583
53