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United Radiant Technology Corporation Financial Statements for the Years Ended December 31, 2010 and 2009 and Independent Auditors’ Report
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INDEPENDENT AUDITORS’ REPORT The Board of Directors and Shareholders United Radiant Technology Corporation We have audited the accompanying balance sheets of United Radiant Technology Corporation as of December 31, 2010 and 2009, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United Radiant Technology Corporation as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China. As stated in Note 3 to the financial statements, on January 1, 2009, United Radiant Technology Corporation adopted the newly revised Statement of Financial Accounting Standards No. 10 - “Inventories”. March 16, 2011
Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.
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UNITED RADIANT TECHNOLOGY CORPORATION
BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Par Value)
2010 2009 2010 2009
ASSETS Amount % Amount % LIABILITIES AND SHAREHOLDERS’ EQUITY Amount % Amount %
CURRENT ASSETS CURRENT LIABILITIES
Cash (Note 4) $ 223,802 10 $ 426,076 19 Short-term bank loans (Note 15) $ 141,424 6 $ 18,961 1
Financial assets at fair value through profit or loss - current Notes payable 781 - 3,793 -
(Notes 2, 5 and 17) 1,700 - 31,780 2 Accounts payable (Note 26) 226,929 10 240,920 11
Available-for-sale financial assets - current (Notes 2 and 6) 3,577 - 4,563 - Accrued expenses (Notes 16 and 26) 104,012 5 101,461 4
Notes receivable (Note 2) 7,815 - 2,600 - Current portion of long-term bank loans (Notes 18 and 27) 13,295 1 28,125 1
Accounts receivable - third parties, net (Notes 2 and 7) 256,196 12 224,894 10 Other current liabilities 25,304 1 12,472 1
Accounts receivable - related parties (Notes 2 and 26) 47,885 2 47,533 2
Other receivable, less allowance for doubtful accounts of $16,391 Total current liabilities 511,745 23 405,732 18
thousand (Notes 2 and 26) 5,318 - 28,150 1
Inventories (Notes 2, 3 and 8) 253,883 12 195,500 9 LONG-TERM LIABILITIES
Deferred income tax assets - current (Notes 2 and 22) 38,025 2 51,680 2 Bonds payable (Notes 2, 17 and 27) 187,730 8 181,857 8
Restricted assets - current (Notes 4 and 27) 4,000 - 4,000 - Long-term bank loans (Notes 18 and 27) 12,740 1 9,375 -
Other current assets (Note 26) 19,859 1 20,874 1
Total long-term liabilities 200,470 9 191,232 8
Total current assets 862,060 39 1,037,650 46
OTHER LIABILITIES
INVESTMENTS (Note 2) Accrued pension cost (Notes 2 and 19) 17,400 1 19,983 1
Investments accounted for by the equity method (Note 9) 573,900 26 458,079 20 Guarantee deposits received 196 - 184 -
Financial assets carried at cost - noncurrent (Note 10) 13,312 1 14,215 1 Deferred credits - gains on intercompany transactions (Notes 2
and 26) 89,195 4 252 -
Total investments 587,212 27 472,294 21
Total other liabilities 106,791 5 20,419 1
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11, 26 and 27)
Land - - 10,400 - Total liabilities 819,006 37 617,383 27
Buildings 370,561 17 373,539 17
Machinery and equipment 1,727,756 79 1,965,853 87 SHAREHOLDERS’ EQUITY
Other equipment 185,530 8 183,513 8 Common stock - NT$10 par value
Total cost 2,283,847 104 2,533,305 112 Authorized - 315,500 thousand shares
Less: Accumulated depreciation (1,796,661) (82) (1,915,889) (85) Issued and outstanding - 2010: 158,949 thousand shares,
Construction in progress and prepayments for equipment 114,110 5 39,299 2 2009: 235,158 thousand shares 1,589,486 72 2,351,583 105
Capital surplus
Net property, plant and equipment 601,296 27 656,715 29 Treasury stock transactions 3,502 - 3,502 -
Long-term investments 6,978 - 6,978 -
INTANGIBLE ASSETS (Note 2) Equity component of convertible bonds 36,540 2 36,540 2
Patents 1,260 - - - Retained earnings
Computer software 4,742 - 5,436 - Accumulated deficit (217,624) (10) (762,098) (34)
Other equity
Total intangible assets 6,002 - 5,436 - Cumulative translation adjustments (26,839) (1) 8,447 -
Unrealized gain on financial instruments 766 - 1,828 -
OTHER ASSETS Treasury stock - 2010: 597 thousand shares, 2009: 883 thousand
Lease to others (Notes 2, 12 and 27) 12,153 1 - - shares (10,584) - (10,584) -
Idle assets (Notes 2 and 13) - - - -
Refundable deposits 3,362 - 3,808 - Total shareholders’ equity 1,382,225 63 1,636,196 73
Deferred charges (Note 2) 4,509 - 4,849 -
Long-term notes and accounts receivalbe (Notes 2, 7 and 14) - - - -
Deferred income tax assets - noncurrent (Notes 2 and 22) 22,627 1 11,621 1
Restricted assets - noncurrent (Notes 4 and 27) 102,010 5 61,206 3
Total other assets 144,661 7 81,484 4
TOTAL $ 2,201,231 100 $ 2,253,579 100 TOTAL $ 2,201,231 100 $ 2,253,579 100
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 16, 2011)
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UNITED RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Loss Per Share)
2010 2009
Amount % Amount %
GROSS SALES $ 1,770,182 101 $ 1,292,889 101
SALES RETURNS 8,690 1 9,863 1
SALES ALLOWANCES 2,023 - 1,607 -
NET SALES (Notes 2 and 26) 1,759,469 100 1,281,419 100
COST OF SALES (Notes 3, 8, 23 and 26) 1,725,013 98 1,371,764 107
GROSS PROFIT (LOSS) 34,456 2 (90,345) (7)
UNREALIZED INTERCOMPANY GAIN (Note 2) - - (5,879) -
REALIZED INTERCOMPANY GAIN (Note 2) - - 5,627 -
REALIZED GROSS PROFIT (LOSS) 34,456 2 (90,597) (7)
OPERATING EXPENSES (Notes 23 and 26)
Selling expenses 92,218 5 67,938 5
General and administrative expenses 81,704 5 65,871 5
Research and development expenses 13,755 1 10,320 1
Total operating expenses 187,677 11 144,129 11
OPERATING LOSS (153,221) (9) (234,726) (18)
NONOPERATING INCOME AND GAINS
Interest income 1,263 - 2,226 -
Valuation gain on financial assets (Notes 2 and 5) - - 8,380 1
Others (Notes 2 and 26) 11,007 1 9,437 1
Total nonoperating income and gains 12,270 1 20,043 2
NONOPERATING EXPENSES AND LOSSES
Interest expense (Notes 2 and 10) 7,575 - 1,814 -
Investment loss recognized under the equity method,
net (Notes 2 and 9) 8,061 1 14,376 1
Exchange loss, net (Note 2) 25,346 1 2,969 -
Valuation loss on financial liabilities (Notes 2 and 5) 30,080 2 - -
Others (Notes 2, 10 and 23) 2,961 - 3,156 1
Total nonoperating expenses and losses 74,023 4 22,315 2
(Continued)
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UNITED RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Loss Per Share)
2010 2009
Amount % Amount %
LOSS BEFORE INCOME TAX $ (214,974) (12) $ (236,998) (18)
INCOME TAX (Notes 2 and 22) 2,649 - 20,804 2
NET LOSS $ (217,623) (12) $ (257,802) (20)
2010 2009
Before
Income
Tax
After
Income
Tax
Before
Income
Tax
After
Income
Tax
LOSS PER SHARE (New Taiwan Dollars; Note 24)
Basic $ (1.36) $ (1.37) $ (1.50) $ (1.63)
Diluted $ (1.36) $ (1.37) $ (1.55) $ (1.67)
Pro forma information (after income tax) assuming the Company’s shares held by its subsidiary were accounted
for as financial assets at fair value through profit or loss instead of treasury stock is as follows:
2010 2009
NET LOSS $ (217,623) $ (257,802)
LOSS PER SHARE (New Taiwan Dollars)
Basic $ (1.36) $ (1.62)
Diluted $ (1.37) $ (1.66)
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 16, 2011) (Concluded)
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UNITED RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
Other Equity (Note 2)
Issued and
Outstanding
Common Stock
Capital Surplus
(Notes 2, 17, 20 Accumulated Deficit
Cumulative
Translation
Unrealized Gain
(Loss) on Financial
Instruments Treasury Stock Total Shareholders'
(Notes 20 and 21) and 21) (Notes 2 and 20) Adjustments (Note 20) (Notes 9 and 21) Equity
BALANCE, JANUARY 1, 2009 $ 2,363,033 $ 10,468 $ (504,296) $ 17,962 $ (871) $ (22,022) $ 1,864,274
Equity component of convertible bonds - 36,540 - - - - 36,540
Retirement of treasury stock - 1,145 thousand shares (11,450) 12 - - - 11,438 -
Net loss for the year ended December 31, 2009 - - (257,802) - - - (257,802)
Change in translation adjustments - - - (9,515) - - (9,515)
Adjustment due to changes in investee's equity in its investments - - - - 83 - 83
Unrealized gain on available-for-sale financial assets - - - - 2,616 - 2,616
BALANCE, DECEMBER 31, 2009 2,351,583 47,020 (762,098) 8,447 1,828 (10,584) 1,636,196
Capital reduction to offset deficit (762,097) - 762,097 - - - -
Net loss for the year ended December 31, 2010 - - (217,623) - - - (217,623)
Change in translation adjustments - - - (35,286) - - (35,286)
Adjustment due to changes in investee's equity in its investments - - - - 138 - 138
Unrealized loss on available-for-sale financial assets - - - - (1,200) - (1,200)
BALANCE, DECEMBER 31, 2010 $ 1,589,486 $ 47,020 $ (217,624) $ (26,839) $ 766 $ (10,584) $ 1,382,225
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 16, 2011)
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UNITED RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (217,623) $ (257,802) Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Deferred income tax 2,649 20,804 Depreciation 145,738 162,685 Amortization 13,884 16,072 Amortized discount on bonds payable 5,873 47 Allowance for doubtful accounts 6,522 728 Investment loss recognized under the equity method, net 8,061 14,376 Allowance (reversal of allowance) for loss on inventories (1,166) 5,583 Gain on idle asset valuation (472) (493) Loss (gain) on disposal of property, plant and equipment, net (54) 815 Valuation loss (gain) on financial instruments 30,080 (8,380) Impairment loss on financial assets carried at cost - noncurrent 903 1,765 Accrued pension cost (2,583) (1,063) Gain on sale of investments, net (504) - Unrealized intercompany gain, net - 252 Net changes in operating assets and liabilities
Notes receivable (5,215) 238 Accounts receivable (15,500) 24,070 Other receivables 156 295 Inventories (57,217) 45,047 Other current assets 1,015 (7,328) Notes payable (3,012) 2,059 Accounts payable (13,991) 14,144 Accrued expenses 2,551 7,796 Other current liabilities 3,221 (69)
Net cash provided by (used in) operating activities (96,684) 41,641
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets 4,590 200 Acquisition of investments accounted for by the equity method (159,030) (243,641) Acquisition of property, plant and equipment (178,460) (59,788) Proceeds from disposal of property, plant and equipment, idle assets,
etc
173,163 199 Increase in intangible assets (2,095) (4,632) Decrease (increase) in refundable deposits 446 (475) Increase in deferred charges (10,110) (6,020) Acquisition of available-for-sale financial assets (4,300) -
Net cash used in investing activities (175,796) (314,157)
(Continued)
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UNITED RADIANT TECHNOLOGY CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
2010 2009 CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in restricted assets - noncurrent $ (40,804) $ (61,206) Net increase (decrease) in short-term bank loans 122,463 (11,214) Repayments of long-term bank loans (31,065) (66,911) Increase (decrease) in guarantee deposits received 12 (20) Proceeds from long-term bank loans 19,600 - Issuance of convertible bonds - 194,950
Net cash provided by financing activities 70,206 55,599
NET DECREASE IN CASH (202,274) (216,917) CASH, BEGINNING OF YEAR 426,076 642,993 CASH, END OF YEAR $ 223,802 $ 426,076 SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 7,440 $ 1,849 NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term bank loans $ 13,295 $ 28,125 Idle assets reclassified to property, plant and equipment $ 12,226 $ - Property, plant and equipment reclassified to intangible assets $ 1,905 $ -
INVESTING ACTIVITIES AFFECTING BOTH CASH AND
NONCASH ITEMS
Acquisition of property, plant and equipment $ 188,071 $ 36,732 Decrease (increase) in payables for equipment purchased (9,611) 23,056 Cash paid for acquisition of property, plant and equipment $ 178,460 $ 59,788
The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 16, 2011) (Concluded)
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UNITED RADIANT TECHNOLOGY CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. ORGANIZATION AND OPERATIONS
United Radiant Technology Corporation (the “Company”) was incorporated in June 1990. It
manufactures, processes and sells various sizes of liquid crystal display panels, liquid display modules and
far infrared ray parts.
In August 1996, the Securities and Futures Commission (SFC, under the Financial Supervisory
Commission, Executive Yuan; renamed Securities and Futures Bureau effective July 1, 2004) approved the
trading of the Company’s common shares on the over-the-counter securities exchange in the Republic of
China (ROC).
The Company had 679 and 656 employees as of December 31, 2010 and 2009, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements have been prepared in conformity with the Guidelines Governing the Preparation
of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business
Accounting, and accounting principles generally accepted in the ROC. Under these guidelines, law and
principles, certain estimates and assumptions have been used for the allowance for doubtful accounts,
allowance for loss on inventories, depreciation of property, plant and equipment, loss and deprecation of
idle assets, amortization of intangible assets and deferred charges, asset impairment loss, income tax and
pension cost, etc. Actual results may differ from these estimates.
For readers’ convenience, the accompanying financial statements have been translated into English from
the original Chinese version prepared and used in the ROC. If inconsistencies arise between the English
version and the Chinese version or if differences arise in the interpretations between the two versions, the
Chinese version of the financial statements shall prevail.
Significant accounting policies are summarized as follows:
Current and Noncurrent Assets and Liabilities
Current assets include cash and those assets held primarily for trading purposes or to be realized, sold or
consumed within one year from the balance sheet date. All other assets such as property, plant and
equipment and intangible assets are classified as noncurrent. Current liabilities are obligations incurred
for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are
classified as noncurrent.
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Financial Assets and Liabilities at Fair Value Through Profit or Loss
Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss
(FVTPL) include financial assets or financial liabilities held for trading and those designated as at FVTPL
on initial recognition. The Company recognizes a financial asset or a financial liability on its balance
sheet when the Company becomes a party to the contractual provisions of the financial instrument. A
financial asset is derecognized when the Company has lost control of its contractual rights over the
financial asset. A financial liability is derecognized when the obligation specified in the relevant contract
is discharged, cancelled or expired.
Financial instruments at FVTPL are initially measured at fair value plus transaction costs that are directly
attributable to the acquisition. At each balance sheet date subsequent to initial recognition, financial assets
or financial liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized directly
in profit or loss in the year in which they arise. Cash dividends received subsequently (including those
received in the year of investment) are recognized as income for the year. On derecognition of a financial
asset or a financial liability, the difference between its carrying amount and the sum of the consideration
received and receivable or consideration paid and payable is recognized in profit or loss. All regular way
purchases or sales of financial assets are recognized and derecognized on a trade date basis.
A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a
financial liability held for trading. If the fair value of the derivative is positive, the derivative is
recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows:
publicly traded stocks - at closing prices; bonds-at prices quoted by the Taiwan GreTai Securities Market;
and financial assets and financial liabilities without quoted prices in an active market - at values determined
using valuation techniques.
Available-for-sale Financial Assets
Available-for-sale financial assets are initially measured at fair value plus transaction costs that are directly
attributable to the acquisition. At each balance sheet date subsequent to initial recognition,
available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized in
equity until the financial assets are disposed of, at which time, the cumulative gain or loss previously
recognized in equity is included in profit or loss for the year. All regular way purchases or sales of
financial assets are recognized and derecognized on a trade date basis.
The recognition, derecognition and the fair value bases of available-for-sale financial assets are similar to
those of financial assets at FVTPL.
Cash dividends are recognized on the ex-dividend date, except for dividends distributed from the
pre-acquisition profit, which are treated as a reduction of investment cost. Stock dividends are not
recognized as investment income but are recorded as an increase in the number of shares. The total
number of shares subsequent to the increase is used for recalculation of cost per share.
An impairment loss is recognized when there is objective evidence that the financial asset is impaired.
Any subsequent decrease in impairment loss for an equity instrument classified as available for sale is
recognized directly in equity. If the fair value of a debt instrument classified as available for sale
subsequently increases as a result of an event which occurred after the impairment loss was recognized, the
decrease in impairment loss is reversed to profit.
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Revenue Recognition, Trade Receivables and Allowance for Doubtful Accounts
Revenue from sales of goods is recognized when the Company has transferred to the buyer the significant
risks and rewards of ownership of goods, primarily upon shipment, because the earnings process has been
completed and the economic benefits associated with the transaction have been realized or are realizable.
The Company does not recognize sales revenue on materials delivered to subcontractors because this
delivery does not involve a transfer of risks and rewards of materials ownership.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
agreed between the Company and the customers for goods sold in the normal course of business, net of
sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date,
as the nominal value of the consideration to be received approximates its fair value and transactions are
frequent, the fair value of the consideration is not determined by discounting all future receipts using an
imputed rate of interest.
Allowance for doubtful accounts is determined on the basis of the evaluation of the collectibility and aging
of receivables as well as prior loss experience.
The aging of receivables exceeding twelve months will be reclassified to overdue receivables.
Inventories
Inventories consist of raw materials, supplies and spare parts, finished goods and work in process and are
stated at the lower of cost or net realizable value. Inventory write-downs are made item by item, except
where it may be appropriate to group similar or related items. Net realizable value is the estimated selling
price of inventories less all estimated costs of completion and costs necessary to make the sale.
Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance
sheet date.
Financial Assets Carried at Cost
Investments in equity instruments with no quoted prices in an active market and with fair values that cannot
be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market,
are measured at their original cost. The accounting treatment for dividends on financial assets carried at
cost is similar to that for dividends on available-for-sale financial assets. An impairment loss is
recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss
is disallowed.
Investments Accounted for by the Equity Method
Investments in which the Company holds 20 percent or more of the investees’ voting shares or exercises
significant influence over the investees’ operating and financial policy decisions are accounted for by the
equity method.
The acquisition cost is allocated to the assets acquired and liabilities assumed on the basis of their fair
values at the date of acquisition, and the acquisition cost in excess of the fair value of the identifiable net
assets acquired is recognized as goodwill. Goodwill is not being amortized. The fair value of the net
identifiable assets acquired in excess of the acquisition cost is used to reduce the fair value of each of the
noncurrent assets acquired (except for financial assets other than investments accounted for by the equity
method, noncurrent assets held for sale, deferred income tax assets, prepaid pension or other postretirement
benefit) in proportion to the respective fair values of the noncurrent assets, with any excess recognized as
an extraordinary gain.
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Profits from downstream transactions with an equity-method investee are eliminated in proportion to the
Company’s percentage of ownership in the investee; however, if the Company has control over the
investee, all the profits are eliminated. Profits from upstream transactions with an equity-method investee
are eliminated in proportion to the Company’s percentage of ownership in the investee. All of these
deferred profits are realized upon product or other sales to third parties.
When the Company subscribes for its investee’s newly issued shares at a percentage different from its
percentage of ownership in the investee, the Company records the change in its equity in the investee’s net
assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus.
When the adjustment should be debited to capital surplus, but the capital surplus arising from long-term
investments is insufficient, the shortage is debited to retained earnings.
The Company’s stock held by its subsidiaries is treated as treasury stock; related gains or losses are
recognized using the treasury stock method. Dividends distributed to subsidiaries are offset against
investment income and result in adjustments to capital surplus - treasury stock transactions.
When the Company’s share in losses of an investee over which the Company has control exceeds its
investment in the investee, unless the other shareholders of the investee have assumed legal or constructive
obligations and have demonstrated the ability to make payments on behalf of the investee, the Company has
to bear all of the losses in excess of the capital contributed by shareholders of the investee. If the investee
subsequently reports profits, such profits are first allocated to the Company to the extent of the excess
losses previously borne by the Company.
Property, Plant and Equipment and Lease to Others
Property, plant and equipment and lease to others are stated at cost less accumulated depreciation.
Borrowing costs directly attributable to the acquisition or construction of property, plant and equipment and
lease to others are capitalized as part of the cost of those assets. Major additions and improvements are
capitalized, while repairs and maintenance are expensed currently.
Depreciation is provided on a straight-line basis over estimated useful lives as follows: buildings - 8 to 40
years; machinery and equipment - 1 to 10 years; and other equipment - 1 to 20 years. Property, plant and
equipment and lease to others still in use beyond their original estimated useful lives are further depreciated
over their newly estimated useful lives.
The related cost and accumulated depreciation of property, plant and equipment and lease to others are
derecognized from the balance sheet upon asset disposal. Any gain or loss on disposal of the asset is
included in nonoperating gains or losses in the year of disposal.
Intangible Assets
Patents and computer software are initially recorded at cost and are amortized on a straight-line basis over
estimated useful lives of three years to seventeen years.
Idle Assets
Property, plant and equipment not used in operations are classified as idle assets and stated at the lower of
net realizable value or book value. The related cost and accumulated depreciation are written off and any
cost in excess of net realizable value is recognized as loss.
Deferred Charges
Deferred charges include cable reimbursement and molding expenses, which are stated at acquisition cost.
Deferred charges are amortized on a straight-line method over the estimated useful lives of one year to three
years.
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Impairment of Assets
If the recoverable amount of an asset (mainly property, plant and equipment, intangible assets, lease to
others, idle assets, deferred charges, and investments accounted for by the equity method) is estimated to be
less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An
impairment loss is charged to earnings unless the asset is carried at a revalued amount, in which case the
impairment loss is treated as a deduction to the unrealized revaluation increment.
If an impairment loss subsequently reverses, the carrying amount of the asset is increased accordingly, but
the increased carrying amount may not exceed the carrying amount that would have been determined had
no impairment loss been recognized for the asset in prior years.
Pension Cost
Pension cost under a defined benefit plan is determined by actuarial valuations. Contributions made under
a defined contribution plan are recognized as pension cost during the year in which employees render
services.
Convertible Bonds
For convertible bonds issued on or after January 1, 2006, the Company first determines the carrying amount
of the liability component by measuring the fair value of a similar liability that does not have an associated
equity component, then determines the carrying amount of the equity component, representing the equity
conversion option, by deducting the fair value of the liability component from the fair value of the
convertible bonds as a whole. The liability component (including embedded non-equity derivatives) is
measured at fair value. Upon conversion, the Company uses the aggregate carrying amount of the liability
and equity components of the bonds at the time of conversion as a basis to record the common shares
issued.
Pursuant to a newly released SFAS, transaction costs of bonds issued on or after January 1, 2006 are
allocated in proportion to the liability and equity components of the bonds.
Treasury Stock
Treasury stock is stated at cost and shown as a deduction to arrive at shareholders’ equity.
The Company accounts for its stock held by subsidiaries as treasury stock. The recorded cost of the stock
is based on its carrying amount as of January 1, 2002.
Income Tax
The Company applies the inter-year allocation method to its income tax, whereby deferred income tax
assets and liabilities are recognized for the tax effects of temporary differences, unused loss carryforwards
and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than
not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as
current or noncurrent in accordance with the classification of its related asset or liability. However, if a
deferred income tax asset or liability does not relate to an asset or liability in the financial statements, it is
classified as current or noncurrent based on the expected length of time before it is realized or settled.
Tax credits for purchases of machinery, equipment and technology, research and development expenditures,
and personnel training expenditures are recognized using the flow-through method.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as
income tax in the year the shareholders approve to retain the earnings.
- 13 -
Foreign Currencies
Non-derivative foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange
in effect when the transactions occur. Exchange differences arising from settlement of foreign-currency
assets and liabilities are recognized in profit or loss.
At the balance sheet date, foreign-currency monetary assets and liabilities are revalued using prevailing
exchange rates and the exchange differences are recognized in profit or loss.
At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities
that are measured at fair value are revalued using prevailing exchange rates, with the exchange differences
treated as follows:
a. Recognized in shareholders’ equity if the changes in fair value are recognized in shareholders’ equity;
b. Recognized in profit and loss if the changes in fair value are recognized in profit or loss.
Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange
rates at trade dates.
If the functional currency of an equity-method investee is a foreign currency, translation adjustments will
result from the translation of the investee’s financial statements into the reporting currency of the Company.
Such adjustments are accumulated and reported as a separate component of shareholders’ equity.
3. EFFECTS OF CHANGE IN ACCOUNTING PRINCIPLES
On January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting Standard
No. 10 - “Inventories”. The main revisions are (1) inventories are stated at the lower of cost or net
realizable value, and inventories are written down to net realizable value by item except when the grouping
of similar or related items is appropriate; (2) unallocated overheads are recognized as expenses in the period
in which they are incurred; and (3) abnormal costs, write-downs of inventories and any reversal of
write-downs are recorded as cost of goods sold for the period. This accounting change resulted in
increases of $41,272 thousand in net loss and of NT$0.26 in after incomes tax basic loss per share for 2009.
4. CASH
2010 2009
Cash on hand $ 100 $ 100
Cash in banks
Checking accounts 45 20
Demand deposits 188,032 104,556
Time deposits 141,635 386,606
329,812 491,282
Less: Restricted assets - current (4,000) (4,000)
Restricted assets - noncurrent (102,010) (61,206)
$ 223,802 $ 426,076
- 14 -
5. FINANCIAL INSTRUMENTS AT FVTPL - CURRENT
2010 2009
Financial assets held for trading
Including embedded financial instruments of domestic convertible
bonds (Note 17) $ 1,700 $ 31,780
On financial assets and liabilities held for trading, there were a net loss of $30,080 thousand in 2010 and a
net income of $8,380 thousand in 2009.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS - CURRENT
2010 2009
Domestic quoted stocks $ 3,100 $ 4,263
Depositary shares 477 -
Bonds - 300
$ 3,577 $ 4,563
7. ACCOUNTS RECEIVABLE - THIRD PARTIES, NET
2010 2009
Accounts receivable $ 257,876 $ 226,948
Less: Allowance for doubtful accounts (1,680) (2,054)
$ 256,196 $ 224,894
The movements of the allowance for doubtful accounts were as follows:
Years Ended December 31
2010 2009
Accounts
Receivable
Overdue
Receivable
Accounts
Receivable
Overdue
Receivable
Balance, beginning of year $ 2,054 $ 10,819 $ 3,476 $ 52,550 Allowance (reversal of allowance)
for doubtful accounts
6,924 (402) (1,422) 2,150 Amounts written off (7,298) (7,070) - (43,881) Balance, end of year $ 1,680 $ 3,347 $ 2,054 $ 10,819
Overdue receivables consisted of long-term notes and accounts receivable.
- 15 -
8. INVENTORIES
2010 2009
Finished goods $ 76,113 $ 53,517
Work in process 40,733 39,580
Raw materials 130,598 98,667
Supplies and spare parts 6,439 3,736
$ 253,883 $ 195,500
As of December 31, 2010 and 2009, the allowances for inventory devaluation were $215,657 thousand and
$264,692 thousand, respectively.
The costs of inventories recognized as cost of goods were $1,725,013 thousand in 2010 and $1,371,764
thousand in 2009. For 2010 , the cost of inventories recognized as cost of goods sold included $1,166
thousand, which was due to the reversal of write-downs of inventories. Previous write-downs had been
reversed as a result of increased selling prices in certain markets. For 2009, the cost of inventories
recognized as cost of goods sold included $5,583 thousand, which was due to write-downs of inventories.
9. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD
2010 2009
Carrying % of Carrying % of
Unlisted Companies Amount Ownership Amount Ownership
Firsthill Limited (“Firsthill”) $ 555,318 100 $ 441,193 100 United Radiant Technology (H.K.) Co.,
Ltd. (URT HK)
15,760 100 13,347 100 United Radiant Investment &
Development Corporation (URI)
10,622 100 10,827 100 United Radiant Technology GmbH
Deutschland (URT GmbH)
2,784 60 3,296 60 584,484 468,663 Transferred to treasury stock (10,584) (10,584) $ 573,900 $ 458,079
The Investment Commission (IC) of the Ministry of Economic Affairs (MOEA) had authorized the
Company’s investment in United Radiant Electric Technology (Suzhou) Limited (“United Radiant
[Suzhou]”). This investment was made through Firsthill, established in the British Virgin Islands, and
then Firsthill invested in United Radiant, Ltd., established in Mauritius. United Radiant (Suzhou) plans to
manufacture, process and sell LCD monitors and modules. As of December 31, 2010, the capital of
Firsthill, United Radiant, Ltd. and United Radiant (Suzhou) was US$18,500 thousand each.
- 16 -
Investment income (loss) recognized under the equity method was as follows:
Years Ended December 31
2010 2009
Firsthill $ (11,734) $ (607)
URT HK 3,869 (14,295)
URI (205) 79
URT GmbH 9 447
$ (8,061) $ (14,376)
The financial statements used as basis for calculating the carrying values of equity-method investments as
of December 31, 2010 and 2009 and the related equity in net income or loss for the years then ended, had
been audited, except those of URT GmbH. The Company believes that, had URT GmbH’s financial
statements been audited, any adjustments arising would have had no material effect on the Company’s
financial statements.
The Company prepares consolidated financial statements, which include the following: (a) all direct and
indirect subsidiaries; (b) all investees over which the Company has direct or indirect control over the
investees’ personnel, financial and operating policy decisions; and (c) other companies over which the
Company can exercise significant control through other ways. Thus, the accounts of the subsidiaries,
URT HK, URI, and Firsthill were included in the Company’s consolidated financial statements and those of
an indirect subsidiary, United Radiant, Ltd., were included in Firsthill’s consolidated financial statements,
and United Radiant (Suzhou) were included in United Radiant, Ltd.’s consolidated financial statements,
will all of the financial statements for the years ended December 31, 2010 and 2009. A Company
subsidiary, URT GmbH, was not consolidated in 2010 and 2009 because neither its total assets nor total
sales were material to the Company.
10. FINANCIAL ASSETS CARRIED AT COST - NONCURRENT
2010 2009
Unlisted Companies
Topunion Globaltek Inc. (“Topunion”) $ 7,575 $ 7,575
Viking Tech Corporation (“Viking”) 3,187 3,187
Emmt System Corporation (“Emmt”) 1,526 1,526
Rodan (Taiwan) Ltd. (“Rodan”) 866 1,769
Chung Yo Department Store Co., Ltd. (“Chung Yo”) 158 158
Metrodyne Co., Ltd. (“Metrodyne”) - -
Kin Son Electronic Co., Ltd. (“Kin Son”) - -
Optic North America (“Optic”) - -
$ 13,312 $ 14,215
The above equity investments, which had no quoted prices in an active market and which had fair values
that could not be reliably measured, were carried at cost.
In 1998, the Company sold its holding of Rodan’s 3,000 thousand shares and received the proceeds of this
sale. However, Rodan applied for approval for its stock to become a TIGER (Taiwan Innovating Growth
Entrepreneurs) stock; thus, some of the stocks sold earlier by the Company were deposited in a government
securities regulatory agency, and 2,434 thousand shares of Rodan’s stock sold (which had decreased to 535
thousand shares as of December 31, 2010 after Rodan’s capital decrease) could not be transferred to the
buyer. Because of the Company’s sale of Rodan’s 3,000 thousand shares, these shares were not included
in financial assets carried at cost - noncurrent.
- 17 -
To offset accumulated deficit, Rodan reduced its capital under a resolution passed at the shareholders’
meeting in 2010. Thus, the Company recognized an impairment loss of $903 thousand in 2010.
To offset its accumulated deficit, Emmt reduced its capital under a resolution passed at the shareholders’
meeting in 2009. Thus, the Company recognized an impairment loss of $1,765 thousand in 2009.
11. PROPERTY, PLANT AND EQUIPMENT
2010
Balance,
Beginning of
Year Additions Disposals Reclassification
Balance, End
of Year
Cost
Land $ 10,400 $ - $ - $ (10,400) $ - Buildings 373,539 - - (2,978) 370,561 Machinery and equipment 1,965,853 17,689 (314,375) 58,589 1,727,756 Other equipment 183,513 2,613 (1,933) 1,337 185,530 2,533,305 20,302 (316,308) 46,548 2,283,847 Construction in progress and
prepayments for equipment
39,299 167,769 (31,127) (61,831) 114,110 2,572,604 $ 188,071 $ (347,435) $ (15,283) 2,397,957
Accumulated depreciation Buildings 163,752 $ 16,858 $ - $ (1,152) 179,458 Machinery and equipment 1,604,040 117,152 (261,590) (75) 1,459,527 Other equipment 148,097 11,375 (1,871) 75 157,676 1,915,889 $ 145,385 $ (263,461) $ (1,152) 1,796,661
$ 656,715 $ 601,296
2009
Balance,
Beginning of
Year Additions Disposals Reclassification
Balance, End
of Year
Cost
Land $ 10,400 $ - $ - $ - $ 10,400 Buildings 373,454 85 - - 373,539 Machinery and equipment 1,959,007 8,275 (11,225) 9,796 1,965,853 Other equipment 179,298 2,421 (387) 2,181 183,513 2,522,159 10,781 (11,612) 11,977 2,533,305 Construction in progress and
prepayments for equipment
25,325 25,951 - (11,977) 39,299 2,547,484 $ 36,732 $ (11,612) $ - 2,572,604
Accumulated depreciation Buildings 146,823 $ 16,929 $ - $ - 163,752 Machinery and equipment 1,480,877 133,388 (10,225) - 1,604,040 Other equipment 136,595 11,875 (373) - 148,097 1,764,295 $ 162,192 $ (10,598) $ - 1,915,889
$ 783,189 $ 656,715
- 18 -
12. LEASE TO OTHERS
2010
Balance,
Beginning of
Year Additions Disposals Reclassification
Balance, End
of Year
Cost
Land $ - $ - $ - $ 10,400 $ 10,400 Buildings - - - 2,978 2,978 - $ - $ - $ 13,378 13,378
Accumulated depreciation Buildings - $ 73 $ - $ 1,152 1,225
$ - $ 12,153
13. IDLE ASSETS
2010 2009
Cost $ 18,435 $ 20,727
Less: Accumulated depreciation (17,983) (19,803)
Allowance for loss (452) (924)
$ - $ -
14. LONG-TERM NOTES AND ACCOUNTS RECEIVABLE
2010 2009
Overdue receivables $ 3,347 $ 10,819
Less: Allowance for doubtful accounts (3,347) (10,819)
$ - $ -
15. SHORT-TERM BANK LOANS
2010 2009
Letters of credit loans - interest rates at 1.0588%-2.357% in 2010
and 1.3193%-1.579% in 2009; the balance included JPY114,665
thousand, US$206 thousand and NT$34,353 thousand in 2010 and
JPY54,610 thousand in 2009
$ 81,424 $ 18,961
Unsecured loans - interest rate at 1.5% 60,000 -
$ 141,424 $ 18,961
- 19 -
16. ACCRUED EXPENSES
2010 2009
Salaries and bonuses $ 29,188 $ 30,403
Expendables in factory, etc. 44,813 39,338
Others (declaration charges and insurance, etc.) 30,011 31,720
$ 104,012 $ 101,461
17. BONDS PAYABLE
2010 2009
Third domestic secured convertible bonds $ 187,730 $ 181,857
In December 2009, the Company made a third issue of domestic convertible bonds amounting to $200,000
thousand to build factories, buy machinery and equipment and make investments.
Terms of the convertible bonds are summarized as follows:
Issue date: December 28, 2009
Maturity: December 28, 2012
Aggregate par value: $200,000 thousand
Coupon interest rate: 0%
Due payment: The bondholders may ask to put or to convert bonds into shares in
accordance with laws and regulations or the Company may call the
bonds according to the Company’s rules; otherwise, principal is
repayable in cash at one time upon maturity.
Put option for bondholders: Face value of bonds, with reserve for put premium. On December 28,
2011 at 102.01% (actual premium rate 1%)
Call right of bond issuer: The Company has the right to call and retire all or part of the bonds if
the closing price of the Company’s common stock exceeds 30% of the
prevailing conversion price for 30 consecutive trading days and if the
aggregate par value of outstanding bonds is less than $20,000 thousand.
The amount collected is equal to a gross yield in cash.
Conversion price: NT$7.98 (in dollars) per share on the issue date. After capital
reduction of June 23, 2010 adjusted in accordance with fiduciary
contracts, the conversion price of NT$11.81 (in dollars) per share was
recalculated.
Conversion period: The bondholders may request the Company to convert their bonds into
the Company’s common stock between after the third month from the
issue date and the 10th day before maturity, except when share transfer
is prohibited by law.
- 20 -
Under Statement of Financial Accounting Standards No. 36 - “Financial Instruments: Disclosure and
Presentation,” the Company isolated the liability components of the bonds from their equity instrument
components, as follows:
2010 2009
Par value of convertible bonds $ 200,000 $ 200,000
Initial recognized amount on financial assets of convertible bonds 23,400 23,400
Liability component of secured domestic convertible bonds (36,540) (36,540)
186,860 186,860
Unamortized transaction costs (5,050) (5,050)
Initial recognized amount of convertible bonds 181,810 181,810
Amortization 5,920 47
$ 187,730 $ 181,857
Financial assets at fair value through profit or loss - financial assets
held for trading: Put option, call option and conversion price
(Note 5)
Initially recognized amounts of financial assets of convertible
bonds $ 23,400 $ 23,400
Add (deduct): Valuation gain (loss) (21,700) 8,380
$ 1,700 $ 31,780
18. LONG-TERM BANK LOANS
2010 2009
Secured loans
Repayable in 16 quarterly installments of $9,375 thousand each
from April 2007 to March 2011, some repayments were ahead
of schedule; interest rates at 1.62% in 2010 and 1.5% in 2009
$ 9,375 $ 37,500
Repayable in 60 quarterly installments of $327 thousand each
from April 2010 to February 2015; interest rate at 2.202%
16,660 -
26,035 37,500
Less: Current portion (13,295) (28,125)
Noncurrent portion $ 12,740 $ 9,375
The Company entered into a secured loan agreement, effective 2006, with the Taiwan Cooperative Bank.
The loan terms and conditions are as follows:
a. Minimum current ratio of 1.0;
b. Interest coverage ratio of at least 1.5.
The Company should maintain the financial ratios mentioned above. Otherwise, the Company should
improve its financial structure in six months starting from April 30 of the next fiscal year, and it should pay
fees at 0.2% of the balance of the previous year’s bank loans.
- 21 -
19. PENSION PLANS
The pension plan under the Labor Pension Act (LPA) is a defined contribution plan. Based on the LPA,
the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly
salaries and wages. Related pension costs were $12,693 thousand in 2010 and $13,093 thousand in 2009.
Based on the defined benefit plan under the Labor Standards Law (LSL), pension benefits are calculated on
the basis of the length of service and average salary of the six months before retirement. The Company
contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the
pension fund monitoring committee. The pension fund is deposited in the Bank of Taiwan in the
committee’s name. The Company proposed the Management Employees Pension Plan in 2008 and will
contribute the related pension fund for the management employees. The Company recognized pension
costs of $3,172 thousand in 2010 and $3,503 thousand in 2009.
Other information on the defined benefit plan is as follows:
a. Components of net pension cost
2010 2009
Service cost $ 2,047 $ 2,222
Interest cost 1,841 2,498
Projected return on plan assets (1,339) (1,840)
Amortization 163 163
$ 2,712 $ 3,043
b. Reconciliation of funded status of the plans and accrued pension cost as of December 31, 2010 and
2009
2010 2009
Benefit obligation
Vested benefit obligation $ 801 $ 2,367
Non-vested benefit obligation 68,949 58,959
Accumulated benefit obligation 69,750 61,326
Additional benefit based on future salaries 37,011 30,723
Projected benefit obligation 106,761 92,049
Fair value of plan assets (65,623) (64,400)
Funded status 41,138 27,649
Unrecognized net transitional obligation (897) (1,060)
Unrecognized net loss (22,841) (6,606)
Accrued pension cost $ 17,400 $ 19,983
Vested benefit $ 933 $ 2,859
c. Actuarial assumptions as of December 31, 2010 and 2009
2010 2009
Discount rate used in determining present values 2.00% 2.00%
Future salary increase rate 3.00% 2.75%
Expected rate of return on plan assets 2.00% 2.00%
- 22 -
2010 2009
d. Contributions to the fund $ 5,295 $ 4,106
e. Payments from the fund $ 5,126 $ 4,785
20. SHAREHOLDERS’ EQUITY
Common Stock
In their meeting on May 7, 2010, the shareholders approved the Company’s capital reduction by 762,097
thousand shares (calculated at 324.0785 shares for every 1,000 shares) to offset Company losses. The
Financial Supervisory Commission approved this capital reduction in June 2010. The directors and
supervisors approved June 23, 2010 as the record date of the capital reduction.
Capital Surplus
Under the Company Law, capital surplus can only be used to offset a deficit. However, the capital surplus
from shares issued in excess of par (additional paid-in capital from issuance of common shares, conversion
of bonds and treasury stock transactions) and donations may be capitalized, which however is limited to a
certain percentage of the Company’s paid-in capital and once a year. Also, the capital surplus from
long-term investments may not be used for any purpose.
Appropriation of Earnings and Dividend Policy
Under the Company’s Articles of Incorporation, annual earnings should first be used to pay income tax and
offset any prior years’ deficit. From any remainder, 10% should be appropriated as legal reserve. Any
special reserve should be appropriated or reversed in accordance with the law. Any remaining balance
should be appropriated as follows:
a. 15% as bonuses to employees;
b. 5% as remuneration to directors and supervisors; and
c. 80% as dividends.
The Company’s Articles of Incorporation was amended to adjust the appropriation percentage of the
employees’ bonuses from 18% to 15%, directors and supervisors’ remuneration from 6% to 5%, and
dividends from 76% to 80%. The amendment was approved by shareholders under a resolution passed in
their annual meeting in May 2010.
For a stable dividend policy,the board of directors should take into account the financial position and capital
demand of the Company when deciding the type of dividends (cash or stock) to be distributed, and the cash
dividends must be more than 20% of total dividends paid.
Based on a directive issued by the Securities and Futures Bureau, an amount equal to the net debit balance
of certain shareholders’ equity accounts (including unrealized revaluation increment, unrealized gain or loss
on financial instruments, net loss not recognized as pension cost, cumulative transaction adjustments) shall
be transferred from unappropriated earnings to a special reserve. Any special reserve appropriated may be
reversed to the extent of the decrease in the net debit balance.
Legal reserve shall be appropriated until it has reached the Company’s paid-in capital. This reserve may
be used to offset a deficit. When the legal reserve has reached 50% of the Company’s paid-in capital, up
to 50% thereof may be transferred to paid-in capital.
- 23 -
The Company had accumulated deficits in 2010 and 2009; thus, there was no estimation of the bonus to
employees and the remuneration to directors and supervisors.
Information on the appropriation of earnings is available on the Market Observation Post System website of
the Taiwan Stock Exchange.
Unrealized Gain or Loss on Financial Instruments
For the years ended December 31, 2010 and 2009, movements of unrealized gain or loss on financial
instruments were as follows:
2010 2009
Balance, beginning of year $ 1,828 $ (871)
Recognized in shareholders’ equity (1,200) 2,616
From investments accounted for by the equity method 138 83
Balance, end of year $ 766 $ 1,828
21. TREASURY STOCK
Purpose of Treasury Stock
Number of
Shares,
Beginning of
Year
Addition
During the
Year
Reduction
During the
Year
Number of
Shares, End of
Year
Year ended December 31, 2010
Company’s shares held by its
subsidiaries (Note)
883 - 286 597
Year ended December 31, 2009
For transfer to employees 1,145 - (1,145) - Company’s shares held by its
subsidiaries
883 - - 883 2,028 - (1,145) 883
Note: Reduction shares result from capital reduction.
The Company’s shares held by its subsidiaries as of December 31, 2010 and 2009 were as follows:
Subsidiary
Shares
(In Thousands)
Carrying
Amount Market Value
December 31, 2010
URI 597 $ 5,365 $ 5,365
December 31, 2009
URI 883 $ 7,292 $ 7,292
- 24 -
Under the Securities and Exchange Act, the Company shall neither pledge treasury stock nor exercise
shareholders’ rights on these shares, such as rights to dividends and to vote. The subsidiaries holding
treasury stock, however, retain shareholders’ rights, except the rights to participate in any share issuance for
cash and to vote.
The Company retired treasury stock 1,145 thousand shares for $11,450 thousand in September 2009, and
credited an additional paid-in capital $12 thousand. Ministry of Economic Affairs, R.O.C approved this
retirement.
22. INCOME TAX
a. Income tax expense was as follows:
Years Ended December 31
2010 2009
Income tax expense at the statutory rate $ (36,545) $ (59,250)
Tax effect of adjusting items:
Permanent differences (50) (21)
Temporary differences 13,312 (7,089)
Loss carryforwards unused 23,283 66,360
Current income tax expense - -
Deferred income tax expense
Temporary differences (12,347) 8,770
Investment tax credits 788 13,738
Loss carryforwards (27,346) (26,383)
Effect of tax law changes on deferred income tax 42,258 64,685
Adjustment in valuation allowance due to changes in tax laws (31,179) (46,489)
Other adjustment in valuation allowance 30,475 6,483
$ 2,649 $ 20,804
The Legislative Yuan passed the following amendments to tax laws:
In January 2009, the Legislative Yuan passed the amendment of Article 39 of the Income Tax Law,
which extends the operating losses carryforward period from 5 years to 10 years.
In May 2009, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which
reduces a profit-seeking enterprise’s income tax rate from 25% to 20%, effective January 1, 2010.
Under Article 10 of the Statute for Industrial Innovation (SII) passed by the Legislative Yuan in April
2010, a profit-seeking enterprise may deduct up to 15% of its research and development expenditures
from its income tax payable for the fiscal year in which these expenditures are incurred, but this
deduction should not exceed 30% of the income tax payable for that fiscal year. This incentive took is
effective from January 1, 2010 till December 31, 2019.
In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which
reduced a profit-seeking enterprise’s income tax rate from 20% to 17%, effective January 1, 2010.
- 25 -
b. Deferred income tax assets (liabilities) were as follows:
2010 2009
Current
Allowance for loss on devaluated inventory $ 36,662 $ 52,938
Unrealized valuation loss (gain) on financial instruments 3,689 (1,677)
Unrealized exchange loss 1,467 163
Investment tax credits 1,157 2,942
Unrealized cost of goods sold 1,128 4,526
Allowance for doubtful accounts 316 1,954
Others 519 840
Less: Valuation allowance (6,913) (10,006)
$ 38,025 $ 51,680
Noncurrent
Loss carryforwards $ 160,911 $ 161,961
Investments loss recognized under the equity method 25,083 27,938
Investment tax credits 7,578 6,581
Impairment loss 4,513 5,310
Recognized pension costs in excess of amount deductible for
income tax purposes
3,509 4,600
Unrealized gain on disposal of asset 15,120 -
Others 1,083 192
Less: Valuation allowance (195,170) (194,961)
$ 22,627 $ 11,621
c. As of December 31, 2010, investment tax credits and loss carryforwards comprised:
Tax Creditable
Remaining
Creditable
Expiry
Laws and Statutes Tax Credit Source Amount Amount Year
Statute for Upgrading Industries Machinery and equipment $ 637 $ 637 2011
Research and development 520 520 2011
Machinery and equipment 853 853 2012
Research and development 1,414 1,414 2012
Machinery and equipment 1,134 1,134 2013
Research and development 2,022 2,022 2013
Machinery and equipment 2,155 2,155 2014
Income Tax Law Loss carryforwards 182,984 182,984 2013
Loss carryforwards 110,274 110,274 2016
Loss carryforwards 251,347 251,347 2018
Loss carryforwards 265,204 265,204 2019
Loss carryforwards 136,727 136,727 2020
Under the Statute for Upgrading Industries, the maximum investment tax credit that may be used as
offset against income tax liabilities is only up to 50% of the Company’s annual income tax payable.
But in the year of expiry, there will be no such limit.
d. The tax returns through 2007 have been assessed and cleared by the tax authorities.
- 26 -
e. Information on integrated income tax is as follows:
Before 1997, the Company had no unappropriated earnings.
As of December 31, 2010 and 2009, the balances of the imputation credits allocated to the shareholders
were $5,740 thousand for both year-ends.
As of December 31, 2009 and 2008, the Company had no allocation of imputation credits to
shareholders due to accumulated deficits.
23. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES
2010 2009
Classified as Classified as
Operating Operating
Expenses Expenses
Classified as and Classified as and
Operating Nonoperating Operating Nonoperating
Costs Losses Total Costs Losses Total
Personnel expense
Salary $ 202,302 $ 65,255 $ 267,557 $ 182,443 $ 62,507 $ 244,950
Pension 13,056 2,809 15,865 12,788 3,808 16,596
Insurance 18,945 6,501 25,446 18,558 5,383 23,941
Other 14,476 2,905 17,381 11,149 2,484 13,633
Depreciation 138,925 6,813 145,738 155,546 7,139 162,685
Amortization 11,125 2,759 13,884 14,504 1,568 16,072
24. LOSS PER SHARE (LPS)
LPS (NT$)
Net Loss (Numerator) Shares Before After
Before After (Denominator) Income Income
Income Tax Income Tax (In Thousands) Tax Tax
Year ended December 31, 2010
Basic LPS
Loss for the year attributable to
common shareholders $ (214,974) $ (217,623) 158,352 $ (1.36) $ (1.37)
Diluted LPS
Loss for the year attributable to
common shareholders plus effect of
potential dilutive common stock $ (214,974) $ (217,623) 158,352 $ (1.36) $ (1.37)
Year ended December 31, 2009
Basic LPS
Loss for the year attributable to
common shareholders $ (236,998) $ (257,802) 158,352 $ (1.50) $ (1.63)
Effect of dilutive potential common
stock
Convertible bonds (8,333) (6,249) 186
Diluted LPS
Loss for the year attributable to
common shareholders plus effect of
potential dilutive common stock $ (245,331) $ (264,051) 158,538 $ (1.55) $ (1.67)
For the loss per share calculation, the common shares held by the subsidiaries and treasury stock purchased,
were subtracted from the weighted-average of outstanding common stock shares.
- 27 -
In 2010, the convertible bonds were tested using the if-converted method. Thus, the shares corresponding
to these bonds were not included in the calculation of the diluted loss per share.
The average number of shares outstanding for LPS calculation had been considered for the effect of
retroactive adjustments arising from the capital reduction for loss offsetting (Note 20). These adjustment
caused the basic and diluted LPS after income tax for 2010 to increase from NT$1.10 to NT$1.63 and from
NT$1.13 to NT$1.67, respectively, and the basic and diluted before income tax LPS for 2009 to increase
from NT$1.01 to NT$1.50 and from NT$1.05 to NT$1.55, respectively.
25. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments
December 31
2010 2009
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Nonderivative financial
instruments
Assets
Available-for-sale financial
assets - current
$ 3,577 $ 3,577
$ 4,563 $ 4,563
Financial assets carried at
cost - noncurrent
13,312 -
14,215 -
Liabilities
Bonds payable 187,730 187,730 181,857 181,857
Long-term bank loans
(including current portion)
26,035 26,035
37,500 37,500
Derivative financial instruments
Domestic - financial assets at
fair value through profit or
loss - current
1,700 1,700
31,780 31,780
b. Methods and assumptions used to estimate the fair values of financial instruments were as follows:
1) The carrying amounts of the following short-term financial instruments approximate their fair
values because of their short maturities: cash, receivables, restricted assets, refundable deposits,
short-term bank loans, payables and guarantee deposits received.
2) Fair values of financial instruments designated as at FVTPL and available-for-sale financial assets
are based on their quoted prices in an active market. For those instruments with no quoted market
prices, their fair values are determined using valuation techniques incorporating estimates and
assumptions consistent with those generally used by other market participants to price financial
instruments.
3) Financial assets carried at cost are investments in unquoted shares, which have no quoted prices in
an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore,
no fair value is presented.
4) Fair values of bonds payable are estimated using the present value of future cash flows.
- 28 -
5) Fair values of long-term bank loans (including current portion) are estimated using the present value
of future cash flows discounted by the interest rates the Company may obtain for similar loans.
c. The fair values of the Company’s financial instruments that used the published price quotations in an
active market are as follows:
2010 2009
Assets
Available-for-sale financial assets - current $ 3,577 $ 4,263
d. On the valuation of financial instruments with fair values determined using valuation techniques, losses
were $30,080 thousand in 2010 and gains were $8,380 thousand in 2009.
e. Financial assets (liabilities) with fair value interest rate risk or cash flow interest rate risk were as
follows:
2010 2009
Fair value risk
Bonds payable $ 187,730 $ 181,857
Cash in banks(including restricted assets) 141,635 386,606
Cash flow risk
Cash in banks 188,032 104,556
Short-term loans 141,424 18,961
Long-term bank loans(including current portion) 26,035 37,500
f. For 2010 and 2009 the interest income (expense) associated with financial assets (liabilities) other than
those at FVTPL was as follows:
2010 2009
Interest income $ 1,263 $ 2,226
Interest expense 7,575 1,814
g. Financial risks
1) Market risk
Market risk refers to the exposure of fluctuations of market exchange rates and interest rates. The
Company did not use derivative financial instruments. Thus, market risk is considered insignificant.
2) Credit risk
Credit risk represents the potential loss that would be incurred by the Company if the
counter-parties breach financial instrument contracts. Financial instruments with positive fair
values at the balance sheet date are evaluated for credit risk. The counter-parties to the foregoing
financial instruments are reputable financial institutions and business organizations. Management
does not expect the Company’s exposure to default by those parties to be material.
- 29 -
3) Liquidity risk
The Company’s operating funds are deemed sufficient to meet cash flow demand, therefore,
liquidity risk is not considered to be significant.
The Company’s investments in available-for-sale financial assets are almost traded in active
markets and can be disposed of quickly at close to their fair values. However, the Company’s
investments in financial assets carried at cost have no active markets; thus, its liquidity risk is
expected to be high.
4) Cash flow interest rate risk
The Company’s short and long-term loans are floating-rate loans. When the market interest rate
increases by one percentage point, the Company’s cash outflow will increase by $1,675 thousand a
year.
26. RELATED-PARTY TRANSACTIONS
a. Related parties and their relationships with the Company:
Related Party Relationship with the Company
URT HK Wholly owned subsidiary
URT GmbH Wholly owned subsidiary
URI Wholly owned subsidiary
Firsthill Wholly owned subsidiary
United Radiant Ltd. Wholly owned subsidiary of Firsthill
United Radiant (Suzhou) Wholly owned subsidiary of United Radiant, Ltd.
Armi Products Corp. (“Armi”) The Company’s chairman is Armi’s legal chairman
b. Significant transactions with related parties:
Years Ended December 31
2010 2009
Amount % Amount %
1) Sales
URT HK $ 127,274 7 $ 82,054 7
URT GmbH 4,093 - 2,678 -
$ 131,367 7 $ 84,732 7
The prices of sales to related parties were individually negotiated on the basis of the difference between
the individual order and the product standard. Collection periods for third parties and related parties
were one month to three months, except that for URT HK, which is 150 days. As of December 31,
2010 and 2009, accounts receivable from URT HK amounted to $47,335 thousand and $70,189
thousand, respectively, of which $22,676 thousand is reclassified into other receivable because it
exceeded the normal credit term for its capital needs in 2009.
Years Ended December 31
2010 2009
Amount % Amount %
2) Cost of sales - purchase and processing
cost
URT HK $ 33,322 3 $ 3,614 -
- 30 -
The prices and terms of the purchases from related parties enhance 1% those given by third parties;
accounts receivable and payable are netted against each other monthly.
Years Ended December 31
2010 2009
Amount % Amount %
3) Operating expense - commission
URT GmbH $ 973 7 $ 701 6
4) Operating expense - others
Armi Products Corp. $ 1,938 3 $ - -
5) Nonoperating income and gains - others
URT HK $ 987 9 $ 2,362 25
December 31
2010 2009
Amount % Amount %
6) Accounts receivable
URT HK $ 47,335 99 $ 70,189 148
URT GmbH 550 1 20 -
47,885 100 70,209 148
Less: Other receivables - - (22,676) (48)
$ 47,885 100 $ 47,533 100
7) Other current assets
Firsthill $ 173 1 $ 561 3
United Radiant (Suzhou) 126 1 65 -
United Radiant Ltd. 27 - 1 -
$ 326 2 $ 627 3
8) Accounts payable
URT GmbH $ - - $ 75 -
9) Accrued expenses
URT GmbH $ 298 - $ 629 1
10) Property transactions
In 2010, the Company acquired property and equipment from URT HK for $1,330 thousand.
In 2010, the Company sold property and equipment, idle assets, etc., with a total book value of
$84,122 thousand to United Radiant (Suzhou) for $173,065 thousand and had an unrealized gain of
$88,943 thousand from this downstream transaction. As of December 31, 2010, the unrealized
remained at 88,943 thousand (recorded under deferred credits-gains on intercompany transactions).
- 31 -
In 2009, the Company sold property and equipment to URT HK for $199 thousand. Because the
sale was at book value, the Company had no gain or loss.
c. Compensation of directors, supervisors and management personnel:
Years Ended December 31
2010 2009
Salaries $ 7,620 $ 8,303
Bonus 1,320 10
$ 8,940 $ 8,313
27. MORTGAGED OR PLEDGED ASSETS
The Company’s assets mortgaged or pledged as collateral for taxation of internal sales, bank loans, and
convertible bonds were as follows:
December 31
2010 2009
Restricted assets - current $ 4,000 $ 4,000
Property, plant and equipment, net 200,233 210,345
Lease to others 1,753 -
Restricted assets - noncurrent 102,010 61,206
$ 307,996 $ 275,551
28. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
In addition to those disclosed in other notes, significant commitments and contingencies of the Company as
of December 31, 2010 were as follows:
a. Unused letters of credit for purchases of raw materials and machinery and equipment amounted to
approximately $19,929 thousand.
b. The Company had a commitment to buy machinery and equipment for $193,790 thousand, of which
$117,590 thousand had been paid.
c. The Company had rented plants and office from the Economic Bureau of the Taichung Export
Processing Zone and Emmt System Corporation. The estimated minimum rental expenses for future
years are as follows:
Year Rent Payable
2011 $ 3,226
2012 3,142
2013 3,098
2014 3,098
2015 3,083
2016 and after 11,324
$ 26,971
- 32 -
29. OTHERS
The Company’s material assets and liabilities in foreign currency were as follows:
December 31
2010 2009
Foreign
Currencies
Exchange
Rate
New Taiwan
Dollars
Foreign
Currencies
Exchange
Rate
New Taiwan
Dollars
Financial assets
Monetary item
USD $ 14,034 29.13 $ 408,799 $ 10,476 31.99 $ 335,118
JPY 1,466 0.3582 525 890 0.3472 309
HKD 1,353 3.748 5,071 13 4.126 54
Financial liabilities
Monetary item
USD 23,568 29.13 686,523 4,502 31.99 144,005
EUR 100 38.4706 3,836 17 46.1 949
JPY 157,968 0.3582 56,584 92,742 0.3472 32,200
HKD 4,679 3.748 17,546 230 4.126 949
RMB - - - 2 4.6415 10
30. ADDITIONAL DISCLOSURES
Following are the additional disclosures required by the Securities and Futures Bureau for the Company and
its investees:
a. Financings provided: Table 1 (attached).
b. Endorsements/guarantees provided: None.
c. Marketable securities held: Table 2 (attached).
d. Marketable securities acquired or disposed of at costs or prices of at least $100 million or 20% of the
paid-in capital: Table 3 (attached).
e. Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital:
Table 4 (attached).
f. Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: None.
g. Total purchases from or sales to related parties of at least $100 million or 20% of the paid-in capital:
Table 5 (attached).
h. Receivables from related parties amounting to at least $100 million or 20% of the paid-in capital:
None.
i. Names, locations, and related information of investees over which the Company exercises significant
influence: Table 6 (attached).
j. Derivative transactions of investees over which the Company has a controlling interest: None.
- 33 -
k. Investments in Mainland China
1) Name of the investees in Mainland China, main businesses and products, paid-in capital, method of
investment, information on inflow or outflow of capital, percentage of ownership, investment
income or loss, ending balance of investment, dividends remitted by the investee, and the limit of
investment in Mainland China: Table 7 (attached).
2) Significant direct or indirect transactions with the investees, prices and terms of payment,
unrealized gain or loss: Note 26.
3) Endorsements, guarantees or collateral directly or indirectly provided to the investees: None.
4) Financings directly or indirectly provided to the investees: None.
5) Other transactions that significantly impacted current year’s profit or loss or financial position:
None.
31. SEGMENT INFORMATION
a. Industry information: The Company’s sole business is the manufacture and sale of various sizes of
liquid crystal displays.
b. Geographic area: The Company has no overseas operations.
c. Export sales
Years Ended December 31
Area 2010 2009
America $ 703,385 $ 487,033
Europe 495,109 382,798
Southeast Asia 226,172 219,735
Australia 344 1,270
$ 1,425,010 $ 1,090,836
d. Major clients
Years Ended December 31
2010 2009
Names Amount % Amount %
Company A $ 391,475 22 $ 374,552 29
Company B 193,622 11 170,089 13
- 34 -
TABLE 1
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
FINANCINGS PROVIDED
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
No. Financing
Company Counter-party
Financial
Statement
Account
Maximum
Balance for
the Year
Ending
Balance Interest Rate
Type of
Financing
Transaction
Amount
Reason for
Short-term
Financing
Allowance for
Bad Debt
Collateral Financing
Limit for Each
Borrowing
Company
(Note)
Financing
Company’s
Financing
Amount Limit
(Note)
Item Value
0 United Radiant
Technology
Corporation
(the “Company”)
URT HK Other
receivable
$ 22,676 $ - - Short-term
Financing
$ 127,274 Turnover for
working
capital
$ - - - $ 138,223 $ 552,890
Note: Based on 10% of the individual’s net asset value, and 40% of the Company’s net asset value.
- 35 -
TABLE 2
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2010
(In Thousands, Unless Stated Otherwise)
Holding Company’s Name Marketable Securities Type and
Issuer/Name
Security Issuer’s Relationship
with the Holding Company Financial Statements Account
December 31, 2010
Shares/Units Carrying Amount Percentage of
Ownership
Market Value or
Net Asset Value
United Radiant Technology Corporation Stock
(the “Company”) Opto Tech Corporation Legal director Available-for-sale financial assets - current 149 $ 3,100 - $ 3,100
Firsthill Wholly owned subsidiary Investments accounted for by the equity method 18,500 555,318 100 555,318
URT HK Wholly owned subsidiary Investments accounted for by the equity method 36,490 15,760 100 15,760
URT GmbH Wholly owned subsidiary Investments accounted for by the equity method 90 2,784 60 2,784
URI Wholly owned subsidiary Investments accounted for by the equity method 1,000 38 100 38
Topunion None Financial assets carried at cost - noncurrent 950 7,575 13 6,785
Viking The Company’s chairman is
Vicking’s legal chairman
Financial assets carried at cost - noncurrent 198 3,187 - 3,674
Emmt None Financial assets carried at cost - noncurrent 174 1,526 1 1,757
Rodan None Financial assets carried at cost - noncurrent 309 866 3 3,184
Chung Yo None Financial assets carried at cost - noncurrent 61 158 - 485
Metrodyne None Financial assets carried at cost - noncurrent 1 - - -
Kin Son None Financial assets carried at cost - noncurrent 3,915 - 17 -
Optic None Financial assets carried at cost - noncurrent 14 - 7 -
Depositary shares
Z-Obee Holdings Limited None Available-for-sale financial assets - current 50 477 - 477
URT HK Stock
New Ocean Green Energy
Holdings Ltd.
None Available-for-sale financial assets - noncurrent 23 138 - 138
URI Stock
The Company Parent company Financial assets at fair value through profit or
loss - current
597 5,365 - 5,365
Opto Tech Corporation Director of parent company Financial assets at fair value through profit or
loss - current
10 208 - 208
Topunion None Financial assets carried at cost - noncurrent 50 425 1 357
Firsthill Stock
United Radiant, Ltd. Wholly owned subsidiary of
Firsthill
Investments accounted for by the equity method 18,500 555,492 100 555,492
United Radiant Ltd. Share certificate
United Radiant (Suzhou) Wholly owned subsidiary of
United Radiant, Ltd.
Investments accounted for by the equity method - 554,181 100 554,181
- 36 -
TABLE 3
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Holding Company Marketable Securities
Type and Issuer/Name
Financial Statement
Account Counter-party
Nature of
Relationship
Beginning Balance Acquisition Disposal Ending Balance (Note 2)
Shares/Units
(In Thousands) Amount
Shares/Units
(In Thousands) Amount
Shares/Units
(In Thousands) Amount
Carrying
Amount
Gain (Loss) on
Disposal
Shares/Units
(In Thousands) Amount
Stock
The Company Firsthill Investments accounted for
by the equity method
(Note 1) Wholly owned
subsidiary
13,500 $ 441,193 5,000 $ 159,030 - $ - $ - $ - 18,500 $ 555,318
Firsthill United Radiant, Ltd. Investments accounted for
by the equity method
(Note 1) Wholly owned
subsidiary of
Firsthill
13,500 441,805 5,000 159,030 - - - - 18,500 555,492
Share certificate
United Radiant, Ltd. United Radiant (Suzhou) Investments accounted for
by the equity method
(Note 1) Wholly owned
subsidiary of United
Radiant, Ltd.
- 440,258 - 159,030 - - - - - 554,181
Note 1: Share issuance for cash.
Note 2: Including investment gains or losses based on equity-method.
- 37 -
TABLE 4
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Company Name Type of Property Transaction Date Transaction
Amount Payment Term Counter-party
Nature of
Relationship
Prior Transaction made by Related Counter-party Price Reference
Purpose of
Acquisition Other Terms
Owner Relationship Transfer Date Amount
United Radiant (Suzhou) Buildings August 14, 2009 $ 155,602 $138,524 paid Zhejiang zhonglian
Construction Co., Ltd.
None - - - $ - - Factory and office -
- 38 -
TABLE 5
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Purchaser or Seller Related Party Nature of Relationship
with the Purchaser or Seller
Transaction Details Abnormal Transaction Notes and Accounts
Receivable (Payable) Note
Purchase
or Sale Amount
% to
Total Collection Terms Unit Price Collection Terms
Ending
Balance
%
to Total
The Company URT HK Subsidiary Sale $ (127,274) 7 T/T 150 days after accounts
receivable and payable are netted
against each other monthly
Note Note $ 47,335 15
URT HK The Company Parent Purchase 127,274 86 T/T 150 days after accounts
receivable and payable are netted
against each other monthly
The price has no
remarkable objects
to compare with
The collection terms
for third parties are
within one month
and three months
(47,335) 97
Note: See Note 26 to the financial statements.
- 39 -
TABLE 6
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
NAMES, LOCATIONS, AND RELATED INFORMATION ON INVESTEE ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Investor Company Investee Company Location Main Businesses and Products
Investment Amount Balance as of December 31, 2010 Net Income
(Loss) of the
Investee
Investment
Income (Loss)
Recognized
Note December 31,
2010
December 31,
2009
Shares (In
Thousands)
Percentage of
Ownership
Carrying
Amount
The Company Firsthill British Virgin Islands Makes investments $ 594,744 $ 435,714 18,500 100 $ 555,318 $ (11,734) $ (11,734) Subsidiary
URT HK Hong Kong Processes and sells various sizes of liquid crystal
display panels, liquid display modules and far
infrared ray parts.
152,558 152,558 36,490 100 15,760 3,869 3,869 Subsidiary
URT GmbH Germany Sells various sizes of liquid crystal display
panels, liquid display modules and far infrared
ray parts.
1,685 1,685 90 60 2,784 14 9 Subsidiary
URI Hsinchu, Taiwan Makes investments 10,010 10,010 1,000 100 38 (205) (205) Subsidiary
Firsthill United Radiant Ltd. Mauritius Makes investments 594,744 435,714 18,500 100 555,492 (12,149) (12,149) Indirect subsidiary
United Radiant, Ltd. United Radiant (Suzhou) Suzhou China Processes and sells various sizes of liquid crystal
display panels, liquid display modules and far
infrared ray parts.
594,294 435,264 - 100 554,181 (12,044) (12,044) Indirect subsidiary
- 40 -
TABLE 7
UNITED RADIANT TECHNOLOGY CORPORATION AND SUBSIDIARIES
INFORMATION ON INVESTMENT IN MAINLAND CHINA
YEAR ENDED DECEMBER 31, 2010
(In Thousands of New Taiwan Dollars and US Dollars)
Investee Company Main Businesses and
Products
Total Amount of
Paid-in Capital
Method of
Investment
Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2010
Investment Flows Accumulated
Outflow of
Investment from
Taiwan as of
December 31,
2010
Percentage of
Ownership
Investment
Income (Loss)
Recognized
(Note 2)
Carrying
Amount as of
December 31,
2010
Accumulated
inward
Remittance of
Earnings as of
December 31,
2010
Outflow Inflow
United Radiant, Ltd. Processes and sells various
sizes of liquid crystal
display panels liquid display
modules and far infrared ray
parts
US$ 18,500 Note 1 $ 435,264
(US$ 13,500)
$ 159,030
(US$ 5,000)
$ - $ 594,294
(US$ 18,500)
100 $ (12,044) $ 554,181 $ -
Accumulated Investment in
Mainland China as of
December 31, 2010
Investment Amount Authorized
by the Investment Commission,
MOEA
Upper Limit on Investment
(Note 3)
$ 594,294
(US$ 18,500)
$ 594,294
(US$ 18,500)
$ 829,335
Note 1: The investment was made through a subsidiary incorporated in a third area.
Note 2: The recognized equity in the investee’s net income or loss was based on the investee’s audited financial statement as of and for the year ended December 31, 2010.
Note 3: The related regulation refers is the “Regulations for Screening of Applications to Engage in Technical Corporation in Mainland China” issued by the Investment Commission of the Ministry of Economic Affairs.