wintek corporation · 2012. 3. 14. · december 31, 2011 and 2010 of wintek electro-optics...
TRANSCRIPT
Wintek Corporation
Financial Statements for the Years Ended December 31, 2011 and 2010 and Independent Auditors’ Report
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INDEPENDENT AUDITORS’ REPORT
The Board of Directors and the Shareholders
Wintek Corporation
We have audited the accompanying balance sheets of Wintek Corporation as of December 31, 2011
and 2010, 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 Corporation’s
management. Our responsibility is to express an opinion on these financial statements based on
our audits. However, we did not audit the financial statements as of and for the years ended
December 31, 2011 and 2010 of Wintek Electro-Optics Corporation, Wintek (Central Europe)
GmbH and Wintek Technology (India) Private Limited, and as of and for the year ended December
31, 2011 of Wintek Vietnam Co., Ltd., the investments in which were accounted for by the equity
method. These four investees’ financial statements were audited by other auditors whose reports
have been furnished to us and our opinion, insofar as it relates to the amounts included for these
investees as well as the investees’ information disclosed in Note 27 to the financial statements, is
based solely on the reports of the other auditors. The carrying values of these investments were
NT$4,715,851 thousand and NT$760,084 thousand as of December 31, 2011 and 2010,
respectively, or 6% and 1%, respectively, of the Corporation’s total assets as of those dates. On
these investments, there were a loss at 18% (NT$358,629 thousand) of net loss before income tax
and a gain at 1% (NT$19,290 thousand) of net income before income tax in 2011 and 2010,
respectively.
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 and the reports of the other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the financial statements
referred to above present fairly, in all material respects, the financial position of Wintek
Corporation as of December 31, 2011 and 2010, 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, the requirements of the Business Accounting Law and the Guidelines
Governing Business Accounting relevant to financial accounting standards, and accounting
principles generally accepted in the Republic of China.
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We have also audited the consolidated financial statements of Wintek Corporation and subsidiaries
as of and for the years ended December 31, 2011 and 2010 and have issued a modified unqualified
opinion report thereon (not presented herewith) dated February 23, 2012.
February 23, 2012
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 independent 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 version
auditors’ report and financial statements shall prevail.
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WINTEK CORPORATION
BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Par Value)
2011 2010 2011 2010
ASSETS Amount % Amount % LIABILITIES AND SHAREHOLDERS’ EQUITY Amount % Amount %
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents (Notes 2 and 4) $ 2,915,473 4 $ 1,651,967 3 Short-term bank loans (Note 14) $ 5,612,686 7 $ 3,373,031 6
Financial assets at fair value through profit or loss - current Short-term bills payable (Note 15) 248,583 - - -
(Notes 2 and 5) 56,969 - 100,752 - Financial liabilities at fair value through profit or loss -
Available-for-sale financial assets - current (Notes 2 and 6) 106,523 - 208,824 - current (Notes 2 and 5) 23,753 - 127,586 -
Notes receivable (Notes 2 and 3) Notes payable
Third parties 527 - 603 - Third parties 13,551 - 7,040 -
Accounts receivable (Notes 2 and 3) Accounts payable
Third parties (Note 7) 15,150,896 20 10,638,715 17 Third parties 12,028,460 16 8,946,736 14
Related parties (Note 23) 91,009 - 376,295 1 Related parties (Note 23) 5,854,605 8 4,047,975 7
Other receivables (Notes 7 and 23) 3,459,660 5 6,927,679 11 Income tax payable (Notes 2 and 19) 20,775 - 170,480 1
Other financial assets - current (Note 2) 74,193 - 61,790 - Accrued expenses (Note 23) 2,248,919 3 1,835,795 3
Inventories (Notes 2, 8 and 24) 9,557,941 12 8,266,468 13 Payables for the acquisition of equipment (Note 23) 906,261 1 164,136 -
Deferred income tax assets - current (Notes 2 and 19) 397,912 - 324,720 1 Current portion of long-term bank loans (Notes 16 and 24) 3,249,940 4 1,945,952 3
Restricted assets - current (Note 4) - - 5,413 - Other current liabilities (Note 23) 1,441,579 2 1,722,955 3
Other current assets (Notes 2 and 23) 596,792 1 496,557 1
Total current liabilities 31,649,112 41 22,341,686 37
Total current assets 32,407,895 42 29,059,783 47
LONG-TERM BANK LOANS, NET OF CURRENT PORTION (Notes
16 and 24)
8,989,029 12 10,551,169 17
INVESTMENTS (Note 2)
Financial assets carried at cost - noncurrent (Note 9) 170,189 - 304,519 1 OTHER LIABILITIES
Investments accounted for by the equity method (Note 10) 23,770,652 31 14,030,533 23 Deferred intercompany gain (Notes 2 and 23) 117,527 - 1,602 -
Others 620 - - -
Total investments 23,940,841 31 14,335,052 24
Total other liabilities 118,147 - 1,602 -
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11, 23 and 24)
Cost Total liabilities 40,756,288 53 32,894,457 54
Land 2,770,253 4 2,365,861 4
Buildings 6,763,601 9 6,268,676 10 SHAREHOLDERS’ EQUITY
Machinery and equipment 22,915,986 30 21,406,358 35 Capital stock, NT$10.00 par value
Transportation equipment 19,927 - 31,272 - Authorized - 1,800,000 thousand shares in 2011; 1,500,000
Furniture and fixtures 64,601 - 73,443 - thousand shares in 2010
Leasehold improvements 14,396 - 2,380 - Issued and outstanding - 1,647,778 thousand shares in 2011;
Miscellaneous equipment 3,032,210 4 3,129,954 5 1,296,950 thousand shares in 2010 16,477,784 22 12,969,498 21
Total cost 35,580,974 47 33,277,944 54 Capital surplus
Less: Accumulated depreciation (19,021,755) (25) (16,474,698) (27) Additional paid-in capital from share issuance in excess of par 17,658,360 23 11,711,412 19
Less: Accumulated impairment (38,273) - (38,273) - Treasury stock transactions 172,402 - 172,402 -
Construction in progress 341,973 1 33,405 - Long-term investments 3,262 - 3,090 -
Prepayments for equipment 2,632,508 3 507,904 1 Merger 48,478 - 48,478 -
Employee stock options 3,264 - 6,614 -
Property, plant and equipment, net 19,495,427 26 17,306,282 28 Others 318 - 318 -
Retained earnings
OTHER ASSETS Legal reserve 1,576,205 2 1,403,641 2
Refundable deposits 51,086 - 72,619 - Unappropriated earnings (accumulated deficit) (1,904,878) (2) 1,725,640 3
Deferred charges (Notes 2, 12 and 23) 34,507 - 55,685 - Cumulative translation adjustments 1,670,453 2 316,648 1
Deferred income tax assets - noncurrent (Notes 2 and 19) 459,812 1 470,955 1 Unrealized gain on financial instruments 30,014 - 138,055 -
Others (Notes 2, 13 and 17) 102,382 - 89,877 -
Total shareholders’ equity 35,735,662 47 28,495,796 46
Total other assets 647,787 1 689,136 1
TOTAL $ 76,491,950 100 $ 61,390,253 100 TOTAL $ 76,491,950 100 $ 61,390,253 100
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated February 23, 2012)
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WINTEK CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings [Loss] Per Share)
2011 2010
Amount % Amount %
GROSS SALES $ 93,298,497 101 $ 63,261,263 101
SALES RETURNS 655,078 1 718,476 1
SALES ALLOWANCES 98,045 - 203,301 -
NET SALES (Notes 2 and 23) 92,545,374 100 62,339,486 100
COST OF GOODS SOLD (Notes 8, 20 and 23) 91,020,280 98 58,761,662 94
GROSS PROFIT 1,525,094 2 3,577,824 6
REALIZED (UNREALIZED) GROSS
INTERCOMPANY GAIN (Notes 2 and 23)
(4,812) - 14,563 -
REALIZED GROSS PROFIT 1,520,282 2 3,592,387 6
OPERATING EXPENSES (Notes 20 and 23)
Selling 514,196 1 528,826 1
General and administrative 644,850 1 740,279 1
Research and development 1,325,724 1 840,440 2
Total operating expenses 2,484,770 3 2,109,545 4
OPERATING INCOME (LOSS) (964,488) (1) 1,482,842 2
NONOPERATING INCOME AND GAINS
Interest income (Notes 5 and 23) 42,626 - 9,966 -
Investment income recognized under equity method,
net (Notes 2 and 10)
- - 1,037,505 2
Dividend income (Note 2) 13,902 - 9,015 -
Valuation gain on financial instruments, net (Notes 2
and 5)
- - 320,616 1
Royalty income (Notes 2 and 23) 9,574 - 53,894 -
Government subsidy income (Note 2) 10,055 - 28,054 -
Others (Note 23) 157,777 - 190,666 -
Total nonoperating income and gains 233,934 - 1,649,716 3
(Continued)
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WINTEK CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings [Loss] Per Share)
2011 2010
Amount % Amount %
NONOPERATING EXPENSES AND LOSSES
Interest expense, net of amount capitalized (Notes 2,
5, 7 and 11)
$ 379,972 - $ 359,654 1
Investment loss recognized under the equity method,
net (Notes 2 and 10)
571,678 1 - -
Loss on disposal of assets (Notes 2, 11 and 23) 10,353 - 12,590 -
Foreign exchange loss, net (Note 2) 55,178 - 565,952 1
Impairment loss on assets (Notes 2, 9 and 13) 159,327 - 4,944 -
Valuation loss on financial instruments, net (Notes 2
and 5)
38,528 - - -
Others (Note 20) 20,897 - 24,928 -
Total nonoperating expenses and losses 1,235,933 1 968,068 2
INCOME (LOSS) BEFORE INCOME TAX (1,966,487) (2) 2,164,490 3
INCOME TAX EXPENSE (BENEFIT) (Notes 2 and
19)
(61,609) - 105,770 -
NET INCOME (LOSS) $ (1,904,878) (2) $ 2,058,720 3
2011 2010
Before
Income
Tax
After
Income
Tax
Before
Income
Tax
After
Income
Tax
EARNINGS (LOSS) PER SHARE (NT$; Note 21)
Basic $ (1.20) $ (1.16) $ 1.59 $ 1.51
Diluted $ (1.20) $ (1.16) $ 1.57 $ 1.49
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated February 23, 2012) (Concluded)
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WINTEK CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Amount Per Share)
Retained Earnings (Note 18)
Unappropriated Cumulative Unrealized
Capital Stock (Note 18) Earnings Translation Gain on Financial Total
Issued and Capital Surplus (Accumulated Adjustments Instruments Shareholder’s
Authorized Outstanding (Notes 2 and 18) Legal Reserve Deficit) (Note 2) (Notes 2 and 18) Equity
BALANCE, JANUARY 1, 2010 $ 15,000,000 $ 11,320,411 $ 9,327,858 $ 1,403,641 $ (333,080) $ 1,273,615 $ 135,908 $ 23,128,353
Exercise of employee stock options - 149,087 354,826 - - - - 503,913
Recognition of an equity-method investee's remuneration to
employees due to the investee's newly granted employee stock
options - - 1,749 - - - - 1,749
Issuance of capital stock for GDRs - May 3, 2010 - 1,500,000 2,257,859 - - - - 3,757,859
Decrease in the Corporation's equity in the net assets of a subsidiary
due to the subscription for the subsidiary's newly issued shares at a
percentage different from the Corporation's current equity in the
subsidiary - - 22 - - - - 22
Net income in the year ended December 31, 2010 - - - - 2,058,720 - - 2,058,720
Translation adjustments on investments in shares of stock - - - - - (956,967) - (956,967)
Unrealized gain on available-for-sale financial instruments - - - - - - 2,147 2,147
BALANCE, DECEMBER 31, 2010 15,000,000 12,969,498 11,942,314 1,403,641 1,725,640 316,648 138,055 28,495,796
Increase in authorized capital stock 3,000,000 - - - - - - -
Issuance of capital stock for GDRs - January 19, 2011 - 2,000,000 7,416,934 - - - - 9,416,934
Recognition of an equity-method investee's remuneration to
employees due to the investee's newly granted employee stock
options - - (3,350) - - - - (3,350)
Issuance of common stock from capital surplus - 1,496,950 (1,496,950) - - - - -
Exercise of employee stock options - 11,336 26,964 - - - - 38,300
Decrease in the Corporation's equity in the net assets of a subsidiary
due to the subscription for the subsidiary's newly issued shares at a
percentage different from the Corporation's current equity in the
subsidiary - - 172 - - - - 172
Appropriations of 2010 earnings
Legal reserve - - - 172,564 (172,564) - - -
Cash dividends - NT$1.037 per share - - - - (1,553,076) - - (1,553,076)
Net loss in the year ended December 31, 2011 - - - - (1,904,878) - - (1,904,878)
Translation adjustments on investments in shares of stock - - - - - 1,353,805 - 1,353,805
Unrealized loss on available-for-sale financial instruments - - - - - - (108,041) (108,041)
BALANCE, DECEMBER 31, 2011 $ 18,000,000 $ 16,477,784 $ 17,886,084 $ 1,576,205 $ (1,904,878) $ 1,670,453 $ 30,014 $ 35,735,662
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated February 23, 2012)
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WINTEK CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (1,904,878) $ 2,058,720
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Deferred income taxes (62,049) (55,402)
Depreciation 4,609,789 4,400,623
Allowance for loss on inventories 1,253,000 794,088
Investment loss (gain) recognized under the equity method, net 571,678 (1,037,505)
Impairment loss on assets 159,327 4,944
Unrealized (realized) deferred intercompany gain 115,925 (1,602)
Cash dividends received from equity method investees 52,354 13,089
Amortization 43,124 82,184
Valuation loss (gain) on financial instruments, net 38,528 (320,616)
Loss on disposal of assets, net 10,353 12,590
Unrealized (realized) gross intercompany gain 4,812 (14,563)
Allowance for doubtful accounts 537 -
Gain on sale of investments (715) -
Others 620 -
Net changes in operating assets and liabilities
Financial instruments held for trading (98,578) 292,774
Notes receivable 76 1,230
Accounts receivable (4,228,646) (6,064,483)
Other receivables 3,469,233 (6,534,799)
Other financial assets - current (12,403) (15,207)
Inventories (2,544,892) (3,776,594)
Other current assets (105,047) (116,068)
Notes payable 6,511 6,823
Accounts payable 4,888,354 8,216,002
Income tax payable (149,705) 142,792
Accrued expenses 413,124 640,928
Other current liabilities (281,115) 1,295,999
Net cash provided by operating activities 6,249,317 25,947
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for by equity method (9,019,264) (1,967,730)
Acquisition of property, plant and equipment (6,103,713) (967,354)
Proceeds from disposal of available-for-sale financial assets 310,718 -
Acquisition of available-for-sale financial assets (310,003) -
Decrease in refundable deposits 21,533 11,129
Increase in deferred charges (21,527) (31,038)
(Continued)
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WINTEK CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
2011 2010
Increase in other assets $ (12,505) $ (12,677)
Proceeds from disposal of assets 11,554 84,051
Decrease in restricted assets 5,413 384,360
Net cash used in investing activities (15,117,794) (2,499,259)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock for GDRs 9,416,934 3,757,859
Repayment of long-term bank loans (3,945,952) (10,049,453)
Proceeds from long-term bank loans 3,687,800 9,012,300
Net increase (decrease) in short-term bank loans 2,239,655 (1,603,302)
Cash dividends (1,553,076) -
Net increase (decrease) in short-term bills payable 248,583 (199,866)
Exercise of employee stock options 38,300 503,913
Increase (decrease) in guarantee deposits received (261) 5
Net cash provided by financing activities 10,131,983 1,421,456
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
1,263,506 (1,051,856)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,651,967 2,703,823
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,915,473 $ 1,651,967
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid, net of amount capitalized $ 381,294 $ 354,580
Income tax paid $ 152,231 $ 17,614
NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term bank loans $ 3,249,940 $ 1,945,952
INVESTING ACTIVITIES AFFECTING BOTH CASH AND
NONCASH ITEMS
Acquisition of property, plant and equipment $ 6,845,838 $ 891,190
Decrease (increase) in payable for equipment (742,125) 76,164
Cash paid for acquisition of property, plant and equipment $ 6,103,713 $ 967,354
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated February 23, 2012) (Concluded)
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WINTEK CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Amounts Per Share and Unless Stated Otherwise)
1. ORGANIZATION AND OPERATIONS
Wintek Corporation (the “Corporation”) was incorporated on April 26, 1990. It manufactures and sells
liquid crystal displays (LCDs), liquid crystal modules (LCMs) and touch panels.
The Corporation’s shares have been listed on the Taiwan Stock Exchange (TSE) since December 19, 1998.
The Corporation had 5,005 and 4,196 employees as of December 31, 2011 and 2010, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
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 Republic of China (ROC). Significant
accounting policies are summarized as follows:
Foreign Currencies
Nonderivative foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in
effect when the transactions occur. Exchange differences arising from the 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
Corporation. Such adjustments are accumulated and reported as a separate component of shareholders’
equity.
Accounting Estimates
Under the above guidelines, law and principles, certain estimates and assumptions have been used for the
allowance for doubtful accounts, allowance for loss on inventory, depreciation of property, plant and
equipment, impairment loss on assets, amortization of deferred charges, income tax, pension cost, bonuses
to employees, directors and supervisors, etc. Actual results may differ from these estimates.
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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.
Current and Noncurrent Assets and Liabilities
Current assets include cash, cash equivalents 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 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.
Cash Equivalents
Cash equivalents, consisting of commercial paper, are highly liquid financial instruments with maturities of
three months or less when acquired and with carrying amounts that approximate their fair values.
Financial Assets/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 Corporation recognizes a financial asset or a financial liability on its balance
sheet when the Corporation becomes a party to the contractual provisions of the financial instrument. A
financial asset is derecognized when the Corporation loses 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. At each
balance sheet date, 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 the 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 as profit or loss.
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. All regular
way purchases or sales of financial assets are recognized and derecognized on a settlement date basis. The
fair value of financial assets and financial liabilities without quoted prices in an active market are
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 profit 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 settlement date basis.
The recognition, derecognition of available-for-sale financial assets are the same with those of financial
assets at FVTPL.
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Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows:
publicly traded stocks - at closing prices; and open-end mutual funds - at net asset values.
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 the 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.
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 the same with 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.
Impairment of Accounts Receivable
An allowance for doubtful accounts is provided on the basis of a review of the collectibility of accounts
receivable. The Corporation assesses the probability of collections of accounts receivable by aging
analysis of the outstanding receivables and assessing the economic environment.
As discussed in Note 3 to the financial statements, on January 1, 2011, the Corporation adopted the
third-time revised Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments:
Recognition and Measurement.” One of the main revisions is that the impairment of receivables
originated by the Corporation should be covered by SFAS No. 34. Accounts receivable are assessed for
impairment at the end of each reporting period and considered to be impaired when there is objective
evidence that, as a result of one or more events that occurred after the initial recognition of the accounts
receivable, the estimated future cash flows of the asset have been affected. Objective evidence of
impairment could include:
Significant financial difficulty of the debtor;
Accounts receivable becoming overdue; or
It becoming probable that the debtor will enter bankruptcy or financial re-organization.
Accounts receivable that are assessed not to be impaired individually are further assessed for impairment on
a collective basis. Objective evidence of impairment for a portfolio of accounts receivable could include
the Corporation’s past experience of collecting payments and an increase in the number of delayed
payments, as well as observable changes in national or local economic conditions that correlate with
defaults on receivables.
The amount of the impairment loss recognized is the difference between the asset carrying amount and the
present value of estimated future cash flows.
The carrying amount of the accounts receivable is reduced through the use of an allowance account.
When accounts receivable are considered uncollectible, they are written off against the allowance account.
Recoveries of amounts previously written off are credited to the allowance account. Changes in the
carrying amount of the allowance account are recognized as bad debt in profit or loss.
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Impairment of Assets
If the recoverable amount of an asset (mainly property, plant and equipment, deferred charges, idle assets
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 first treated as
a deduction to the unrealized revaluation increment and any remaining loss is charged to earnings.
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. A reversal of an impairment loss is
recognized in earnings, unless the asset is carried at a revalued amount, in which case the reversal of the
impairment loss is first recognized as gain to the extent that an impairment loss on the same revalued asset
was previously charged to earnings. Any excess amount is treated as an increase in the unrealized
revaluation increment.
For the purpose of impairment testing, goodwill is allocated to each of the relevant cash-generating units
(“CGUs”) that are expected to benefit from the synergies of the acquisition. A CGU to which goodwill
has been allocated is tested for impairment annually or whenever there is an indication that the CGU may
be impaired. If the recoverable amount of the CGU becomes less than its carrying amount, the
impairment is allocated to first reduce the carrying amount of the goodwill allocated to the CGU and then to
the other assets of the CGU pro rata on the basis of the carrying amount of each asset in the CGU. A
reversal of an impairment loss on goodwill is disallowed.
For long-term equity investments on which the Corporation has significant influence but over which it has
no control, the carrying amount (including goodwill) of each investment is compared with its own
recoverable amount for the purpose of impairment testing.
Inventories
Inventories consist of raw materials, supplies, work-in-process and finished goods. Inventories 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.
Investments Accounted for by the Equity Method
Investments in which the Corporation holds 20% of the investees’ voting shares or exercises significant
influence on 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 in proportion to the respective fair values of the noncurrent assets, with any
excess recognized as an extraordinary gain.
When the Corporation subscribes for its investee’s newly issued shares at a percentage different from its
percentage of ownership in the investee, the Corporation 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.
- 13 -
Unrealized Intercompany Gains
All gains on product or other sales to subsidiaries are wholly deferred or, in the case of other equity-method
investees that are not majority owned, are deferred only to the extent of the Corporation’s equity interest,
with the deferred profit reported as deferred intercompany gains. The gains or losses on sales between
subsidiaries are deferred at the percentage of equity interest in the subsidiary that incurred the gain or loss.
In addition, the Corporation recognizes its proportionate share in net income from product and other sales
of its subsidiaries and other equity-method investees in the year they are realized through the subsequent
sale of the related items to unrelated third parties.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses. Major additions and improvements to property, plant and equipment are capitalized, while costs of
repairs and maintenance are expensed currently. Borrowing costs directly attributable to the acquisition or
construction of property, plant and equipment are capitalized as part of the cost of those assets.
Depreciation expense is provided on a straight-line basis over useful lives estimated as follows: buildings
- 10 to 30 years; machinery and equipment - 3 to 10 years; transportation equipment - 3 to 5 years; furniture
and fixtures - 3 to 5 years; leasehold improvements - 2 to 3 years; and miscellaneous equipment - 3 to 10
years. Property, plant and equipment still in use beyond their original estimated useful lives are further
depreciated over their newly estimated service lives.
Upon retirement or disposal of property, plant and equipment, the related cost, accumulated depreciation
and accumulated impairment are removed from the accounts. Any resulting gain or loss is recorded as
nonoperating gain or loss in the current year.
Intangible Assets
Expenditures for research activities are recognized as expenses when incurred. An internally generated
intangible asset arising from development activities is capitalized and then amortized on a straight-line
basis if the recognition criteria for intangible assets have been met; otherwise, the development expenditure
is recognized as an expense when incurred.
Deferred Charges
Deferred charges, which pertain to technical assistance royalty, molding equipment, the enterprise resource
planning (ERP) system, supplies and manufacturing information system, are amortized using the
straight-line basis over 2 to 20 years.
Idle Assets
Idle assets are classified as other assets and stated at the lower of net fair value or carrying value. The
related cost, accumulated depreciation and accumulated impairment are written off, and any cost in excess
of net realizable value is recognized as loss. The remaining value is depreciated using the straight-line
basis.
Pension Costs
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 period in which employees render
services.
Curtailment or settlement gains or losses on the defined benefit plan are recognized as part of the net
periodic pension cost for the year.
- 14 -
Income Tax
The Corporation 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, then
it is classified as either current or noncurrent based on the expected length of time before it is realized or
settled.
The Corporation can control the timing of the reversal of a temporary difference arising from the difference
between the book value and the tax basis of a long-term equity investment in a foreign subsidiary and if the
temporary difference is not expected to reverse in the foreseeable future and will, in effect, exist
indefinitely, then a deferred tax liability or asset is not recognized.
The tax credits for purchases of eligible equipment and technology, research and development expenditures
and personnel training expenditures are recognized in the current period.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s income tax
provision.
Income tax (10%) on unappropriated earnings is recorded as expense in the year the shareholders resolve to
retain the earnings.
Stock-based Compensation
Employee stock options granted on or after January 1, 2008 are accounted for under SFAS No. 39 -
“Accounting for Share-based Payment.” Under the statement, the value of the stock options granted,
which is equal to the best available estimate of the number of stock options expected to vest multiplied by
the grant-date fair value, is expensed on a straight-line basis over the vesting year, with a corresponding
adjustment to capital surplus - employee stock options. The estimate is revised if subsequent information
indicates that the number of stock options expected to vest differs from previous estimates.
Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for
under the interpretations issued by the Accounting Research and Development Foundation (ARDF). The
Corporation adopted the intrinsic value method, under which compensation cost was recognized on a
straight-line basis over the vesting period.
Revenue Recognition
Revenue is recognized when the Corporation has transferred to the buyer the significant risks and rewards
of ownership of the 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
Corporation 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 Corporation 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, fair value of the consideration is not determined by discounting all future receipts using an
imputed rate of interest.
- 15 -
Royalties are recognized when:
a. It is probable that the economic benefits of a transaction will flow to the Corporation; and
b. The revenue can be measured reliably.
Royalties are recognized on an accrual basis in accordance with the substance of the contract.
If a contract meets the recognition criteria for sales of goods and the following conditions, royalties are
recognized at the time of sale:
a. The amount of the royalties is fixed or the royalties are nonrefundable;
b. The contract is noncancelable;
c. The contract permits the licensee to exploit the assigned rights freely; and
d. The licensor has no remaining obligations to perform.
Government Subsidy
Government subsidies that are realized should be recognized as income for the period and should be
presented as government subsidy income or other income. Government subsidies that are not yet realized
should be presented as deferred income. Deferred income should be recognized as government subsidy
income or other income only when the Corporation has met the related conditions and has fulfilled its
obligations.
Reclassifications
Certain accounts in the financial statements as of and for the year ended December 31, 2010 have been
reclassified to conform to the presentation of the financial statements as of and for the year ended
December 31, 2011.
3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES
Financial Instruments
On January 1, 2011, the Corporation adopted the newly revised SFAS No. 34 - “Financial Instruments:
Recognition and Measurement.” The main revisions include (1) finance lease receivables are now
covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts is
amended; (3) loans and receivables originated by the Corporation are now covered by SFAS No. 34; (4)
additional guidelines on impairment testing of financial assets carried at amortized cost when a debtor has
financial difficulties and the terms of obligations have been modified; and (5) accounting treatment by a
debtor for modifications in the terms of obligations. This accounting change had no significant impact on
the financial statements for the year ended December 31, 2011.
Operating Segments
On January 1, 2011, the Corporation adopted the newly issued SFAS No. 41 - “Operating Segments.” The
requirements of the statement are based on the information about the components of the Corporation that
management uses to make decisions about operating matters. SFAS No. 41 requires identification of
operating segments on the basis of internal reports that are regularly reviewed by the Corporation's chief
operating decision maker in order to allocate resources to the segments and assess their performance. This
statement supersedes SFAS No. 20 - “Segment Reporting.” For this accounting change, the Corporation
restated the segment information in the consolidated financial statements as of and for the year ended
December 31, 2010 to conform to the disclosures as of and for the year ended December 31, 2011.
- 16 -
4. CASH AND CASH EQUIVALENTS
December 31
2011 2010
Cash in banks $ 2,687,776 $ 567,355
Time deposits 205,158 1,087,390
Cash equivalents
Commercial paper - interest - 0.68% 19,951 -
Cash on hand and petty cash 2,588 2,635
2,915,473 1,657,380
Less: Restricted cash - current - (5,413)
$ 2,915,473 $ 1,651,967
5. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT
December 31
2011 2010
Financial assets held for trading
Forward exchange contracts
Domestic banks $ 582 $ 93,943
Foreign banks - 6,809
582 100,752
Swap contracts
Domestic banks 1,540 -
Cross-currency swap contracts
Domestic banks 16,076 -
Foreign banks 38,771 -
54,847 -
$ 56,969 $ 100,752
Financial liabilities held for trading
Cross-currency swap contracts
Domestic banks $ - $ 49,492
Foreign banks - 51,938
- 101,430
Forward exchange contracts
Domestic banks 1,042 2,333
Swap contracts
Domestic banks 1,823 -
Interest rate swap contracts
Domestic banks 20,888 23,823
$ 23,753 $ 127,586
- 17 -
The Corporation entered into forward exchange contracts, swap contracts, cross-currency swap contracts
and interest rate swap transactions for the years ended December 31, 2011 and 2010 to hedge against its
exposures to adverse exchange rate and interest rate fluctuations of its foreign-currency assets or liabilities.
The financial risk management objective of the Corporation is to minimize risks due to changes in fair
values or cash flows.
a. Forward exchange contracts
Outstanding forward exchange contracts as of December 31, 2011 and 2010 were as follows:
Contract Amount
Currency Maturity (In Thousands)
December 31, 2011
Sell/buy US$/JPY January 4, 2012 US$4,000/JPY311,840
Sell/buy US$/NT$ January 4, 2012 to January 13, 2012 US$18,000/NT$543,576
December 31, 2010
Sell/buy US$/JPY January 4, 2011 to March 1, 2011 US$34,000/JPY2,814,821
Sell/buy US$/NT$ January 4, 2011 to February 25, 2011 US$99,100/NT$2,991,497
Sell/buy INR/US$ January 10, 2011 to January 31, 2011 INR452,450/US$10,000
The contracts resulted in net a gains of $18,406 thousand and $401,829 thousand for the years ended
December 31, 2011 and 2010, respectively.
b. Swap contract
Outstanding swap contract as of December 31, 2011 was as follows:
Contract Amount
Currency Maturity (In Thousands)
December 31, 2011
Sell/Buy US$/NT$ January 12, 2012 to February 7, 2012 US$79,900/NT$2,418,513
The contract resulted in a net loss of $216,144 thousand for the year ended December 31, 2011.
c. Cross-currency swap contracts
Outstanding cross-currency swap contracts as of December 31, 2011 and 2010 were as follows:
Contract Amount
(In Thousands)
Maturity Date
Interest Rates
for Payment
(Receivables)
Interest Rates for
Receivables
December 31, 2011
US$16,500/NT$483,450 January 30, 2012 - USD Libor 1M+0.26%
US$10,000/NT$294,000 March 9, 2012 1.10% USD Libor 1M+0.50%
US$10,000/NT$290,000 May 23, 2012 0.90% USD Libor 3M+0.65%
US$6,000/NT$176,400 February 21, 2012 1.07% USD Libor 3M+1.20%
US$6,000/NT$176,358 February 22, 2012 1.05% USD Libor 3M+1.15%
US$10,000/NT$295,800 March 22, 2012 (1.00%) USD Libor 3M+1.00%
(Continued)
- 18 -
Contract Amount
(In Thousands)
Maturity Date
Interest Rates
for Payment
(Receivables)
Interest Rates for
Receivables
December 31, 2010
US$15,600/NT$498,810 January 28, 2011 0.16% USD Libor 1 M
US$10,000/NT$319,000 March 9, 2011 1.40% USD Libor 1 M+0.20%
US$10,000/NT$308,000 January 13, 2011 1.10% USD Libor 3 M+0.4%
US$4,740/NT$149,784 March 22, 2011 - 0.34%
US$3,000/NT$95,814 September 9, 2011 1.26% 1%+USD Libor 3M
US$5,000/NT$160,155 September 3, 2011 1.18% 1%+USD Libor 3M
(Concluded)
The contracts resulted in net gains of $164,332 thousand and net losses of $103,425 thousand for the
years ended December 31, 2011 and 2010, respectively.
d. Interest rate swap contracts
The Corporation entered into interest rate swap contracts with bank to hedge against adverse
fluctuations of the floating interest rates for its long-term bank loans. The contracts resulted in net
losses of $17,918 thousand and $10,417 thousand for the years ended December 31, 2011 and 2010,
respectively.
Outstanding interest rate swap contracts as of December 31, 2011 and 2010 are summarized as follows:
Principal Amount
(In Thousands)
Maturity Date
Interest Rates for Payments
Interest Rates for
Receivables
December 31, 2011
NT$571,429 (Note) December 15, 2012 Daily range accrual, 2.35% + (3*TWD 90D
CP)*N/M
N is the number of days which TWD 5Y CMS -
TWD 1Y CMS≤ 0 in that calculation period
90-day commercial paper
US$10,000 July 20, 2015 2.05% (Yearly, ACT/360) LI USD 3M+0bP
(Quarterly, ACT/360)
December 31, 2010
NT$1,142,857 (Note) December 15, 2012 Daily range accrual, 2.35% + (3*TWD 90D
CP)*N/M
N is the number of days which TWD 5Y CMS -
TWD 1Y CMS≤ 0 in that calculation period
90-day commercial paper
US$10,000 July 20, 2015 2.05% (Yearly, ACT /360) LI USD 3M+0bP
(Quarterly, ACT/360)
Note: The principal amounts of the interest rate swap contracts decrease gradually as bank loans are
repaid.
6. AVAILABLE-FOR- SALE FINANCIAL ASSETS - CURRENT
These assets comprised publicly listed stocks.
- 19 -
7. ACCOUNTS RECEIVABLE
December 31
2011 2010
Accounts receivable - third parties $ 15,167,453 $ 10,653,521
Less: Allowance for doubtful accounts (16,557) (14,806)
$ 15,150,896 $ 10,638,715
The movements of the allowance of doubtful accounts are summarized as follows:
Year Ended December 31
2011 2010
Beginning balance $ 14,806 $ 14,806
Allowance for doubtful accounts 537 -
Reclassification 1,214 -
Ending balance $ 16,557 $ 14,806
Factored notes and accounts receivable for the years ended December 31, 2011 and 2010 were as follows:
Counter-parties
Receivables
Sold (US$ in
Thousands)
Amounts
Collected
(US$ in
Thousands)
Advances
Received at
Year-end
(US$ in
Thousands)
Interest Rates
on Advances
Received (%)
Credit Line
(US$ in
Thousands)
Year ended December 31, 2011
Land Bank $ 73,464 $ 65,975 $ 6,740 1.48-2.67 $ 11,500
Shanghai Commercial & Savings Bank 27,195 23,287 3,517 1.48-2.67 6,000
Ta Chong Bank 47,180 40,668 5,861 1.48-2.67 10,000
Yuanta Commercial Bank 76,658 68,843 7,034 1.48-2.67 12,000
China Development Industrial Bank 53,569 46,405 6,447 1.48-2.67 11,000
Taichung Commercial Bank 77,159 66,739 9,378 1.48-2.67 16,000
Taipei Fubon Bank 77,159 66,739 9,378 1.48-2.67 16,000
Industrial Bank of Taiwan 38,329 34,422 3,517 1.48-2.67 6,000
Taiwan Business Bank 73,464 65,975 6,740 1.48-2.67 11,500
Bank of Taiwan 244,112 205,037 35,168 1.48-2.67 60,000
E.SUN Commercial Bank 77,159 66,739 9,378 1.48-2.67 16,000
Mega International Commercial Bank 27,195 23,287 3,517 1.48-2.67 6,000
Bank of Panhsin 19,165 17,211 1,758 1.48-2.67 3,000
DBS Bank 44,717 40,159 4,103 1.48-2.67 7,000
Bank of Kaohsiung 39,150 34,591 4,103 1.48-2.67 7,000
Cathay United Bank 25,553 22,948 2,345 1.48-2.67 4,000
First Commercial Bank 78,801 67,078 10,550 1.48-2.67 18,000
Hua Nan Commercial Bank 51,106 45,895 4,689 1.48-2.67 8,000
Far Eastern International Bank 44,717 40,159 4,103 1.48-2.67 7,000
Taishin Bank 22,494 14,211 - 2.66-2.75 30,000
$ 1,218,346 $ 1,056,368 $ 138,326
(Continued)
- 20 -
Counter-parties
Receivables
Sold (US$ in
Thousands)
Amounts
Collected
(US$ in
Thousands)
Advances
Received at
Year-end
(US$ in
Thousands)
Interest Rates
on Advances
Received (%)
Credit Line
(US$ in
Thousands)
Year ended December 31, 2010
Land Bank $ 11,512 $ 10,350 $ 10,350 1.58-1.62 $ 10,500
Shanghai Commercial & Savings Bank 4,004 3,600 3,600 1.58-1.62 4,000
Ta Chong Bank 7,007 6,300 6,300 1.58-1.62 7,000
Yuanta Bank 12,012 10,800 10,800 1.58-1.62 12,000
China Development Industrial Bank 8,008 7,200 7,200 1.58-1.62 8,000
Taichung Bank 11,512 10,350 10,350 1.58-1.62 11,500
Taipei Fubon Bank 11,512 10,350 10,350 1.58-1.62 11,500
Industrial Bank of Taiwan 6,006 5,400 5,400 1.58-1.62 6,000
Taiwan Business Bank 11,512 10,350 10,350 1.58-1.62 11,500
Bank of Taiwan 35,036 31,500 31,500 1.58-1.62 35,000
E.SUN Commercial Bank 11,512 10,350 10,350 1.58-1.62 11,500
Mega International Commercial Bank 4,004 3,600 3,600 1.58-1.62 4,000
Bank of Panhsin 3,003 2,700 2,700 1.58-1.62 3,000
DBS Bank 7,007 6,300 6,300 1.58-1.62 7,000
Bank of Kaohsiung 6,006 5,400 5,400 1.58-1.62 6,000
Cathay United Bank 4,004 3,600 3,600 1.58-1.62 4,000
First Commercial Bank 11,512 10,350 10,350 1.58-1.62 11,500
Hun Nan Bank 8,008 7,200 7,200 1.58-1.62 8,000
Far Eastern International Bank 7,007 6,300 6,300 1.58-1.62 7,000
$ 180,184 $ 162,000 $ 162,000
(Concluded)
Note 1: Under the factoring agreements, the Corporation, irrevocably and without recourse, transferred
accounts receivable to underwriting banks. Any risks of default on the factored accounts
receivable by customers having financial difficulties are borne by respective banks. The
Corporation is not responsible for the collection of factored receivables or for any legal
proceedings and costs of recovering these receivables.
Note 2: As of December 31, 2011 and 2010, total outstanding receivables resulting from the above
transactions, net of advances received, were classified under other receivables.
Note 3: For the years ended December 31, 2011 and 2010, underwriting banks’ fees of $69,158 thousand
and $6,632 thousand, respectively, were classified under bank expense and interest expense.
8. INVENTORIES
December 31
2011 2010
Finished goods $ 2,228,727 $ 1,267,005
Work in process 4,495,054 3,814,816
Raw materials and supplies 2,834,160 3,184,647
$ 9,557,941 $ 8,266,468
As of December 31, 2011 and 2010, the allowances for inventory devaluation were $2,174,295 thousand
and $1,360,815 thousand, respectively.
- 21 -
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2011 and 2010
was $91,020,280 thousand and $58,761,662 thousand, respectively, which included $1,253,000 thousand
and $794,088 thousand, respectively, due to write-downs of inventories.
9. FINANCIAL ASSETS CARRIED AT COST - NONCURRENT
December 31
2011 2010
% of % of
Carrying Owner- Carrying Owner-
Value ship Value ship
Unlisted stocks
Kingpak Technology Corporation (“Kingpak”) $ 113,160 6 $ 113,160 6
Calin Technology Co., Ltd. (“Calin Technology”) 40,748 4 40,748 4
Transcom Corporation (“Transcom”) 9,595 5 9,595 5
Integrated Solutions Technology, Inc. (“Integrated
Solutions”)
3,510 1
3,510 1
Uniflex Technology Inc. (“Uniflex”) 3,176 1 59,156 1
Mobilic Technology (Cayman) Corp. (“Mobilic
Cayman”)
- 11
- 11
Asia Pacific Microsystems, Inc. (“Microsystems”) - 4 63,890 4
Andes Technology Corporation (“Andes”) - 2 14,460 2
$ 170,189 $ 304,519
The above equity investments, which had no quoted prices in an active market and had fair values that
could not be reliably measured, were carried at cost.
Uniflex and Andes reduced their capital to offset their deficits in May 2011 and June 2010, respectively.
Thus, the Corporation recognized impairment losses of 55,980 thousand and 4,944 thousand for the year
ended December 31, 2011 and 2010, respectively.
The Corporation reassessed the recoverable amount of its investments as of December 31, 2011 and
recognized impairment losses of $63,890 thousand on Microsystems and $14,460 thousand on Andes.
10. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD
December 31
2011 2010
% of % of
Carrying Owner- Carrying Owner-
Value ship Value ship
Unlisted
Wintek Technology (Cayman) Corporation (“Wintek
Technology Cayman”) $ 10,735,097 100 $ 9,390,864 100
Masstop LLC 7,174,204 100 3,241,286 100
Wintek (B.V.I.) Corporation (“Wintek BVI”) 5,104,835 100 487,597 100
Wintek International Holding (Cayman) Corporation
(“Wintek International Holding”) 254,091 100 331,007 100
(continued)
- 22 -
December 31
2011 2010
% of % of
Carrying Owner- Carrying Owner-
Value ship Value ship
Unlisted
Wintek Electro-Optics Corporation (“Wintek
Electro-Optics”) $ 164,101 100 $ 168,229 100
Wintek (Central Europe) GmbH (“Wintek Central
Europe”) 124,867 100 122,873 100
Mactech Corporation (“Mactech”) 112,919 50 113,843 51
United Win Investment Corporation (“United Win
Investment”) 83,322 100 174,834 100
WinPower Optronics Corporation (“WinPower”) 17,216 36 - -
$ 23,770,652 $ 14,030,533
(Concluded)
The difference between the cost of investment and the Corporation’s equity in the carrying value of the
investee’s net assets resulted in goodwill. The movements of goodwill for the years ended of
December 31, 2011 and 2010 are summarized as follows:
Year Ended December 31
2011 2010
Beginning balance $ 36,031 $ 39,568
Effect of exchange rate changes 1,416 (3,537)
Ending balance $ 37,447 $ 36,031
In March 2010, the Investment Commission (IC) of the Ministry of Economic Affairs (MOEA) approved
the Corporation’s investment in Wintek (China) Technology Ltd. (“Wintek China”), which was formerly
named Wintek Technology Dongguan Limited. This investment was made through United Win
Technology (Cayman) Corporation (“United Win Cayman”) and Wintek Technology (H.K.) Limited
(“Wintek Technology H.K.”). Wintek China researches, develops, manufactures and sells liquid crystal
modules.
In December 2010, the Corporation established Wintek Vietnam Co., Ltd. (“Wintek Vietnam”) in Vietnam
through its investee Wintek BVI and Wintek International (Samoa) Corporation (“Wintek Samoa”) in
Samoa Island. Wintek Vietnam manufactures and processes LCDs, LCMs and touch panels.
- 23 -
Investment net income (loss) recognized was as follows:
Year Ended December 31
2011 2010
Net Income
(Loss) of the
Investee
Investment
Net Income
(Loss)
Recognized
Net Income
(Loss) of the
Investee
Investment
Net Income
(Loss)
Recognized
Wintek BVI $ (363,747) $ (363,534) $ 2,533 $ 2,533
Wintek Technology Cayman (84,812) (112,274) 946,889 904,002
United Win Investment (85,772) (85,772) (6,821) (6,821)
Mactech 230,671 54,716 172,945 20,549
Masstop LLC (9,346) (34,552) 98,213 97,952
Wintek International Holding (28,738) (28,738) 8,297 8,297
WinPower (17,780) (6,517) - -
Wintek Electro-Optics 3,843 3,769 8,094 8,977
Wintek Central Europe 1,224 1,224 2,016 2,016
$ (354,457) $ (571,678) $ 1,232,166 $ 1,037,505
Investments in which the Corporation holds over 50% of the investees’ voting shares or has controlling
interest were included in the consolidated financial statements. All significant intercompany accounts and
transactions have been eliminated from the consolidation.
11. PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 2011
Beginning Ending
Balance Addition Reclassification Disposal Balance
Cost
Land $ 2,365,861 $ 404,392 $ - $ - $ 2,770,253 Buildings 6,268,676 53,547 441,378 - 6,763,601
Machinery and equipment 21,406,358 492,486 2,550,221 (1,533,079 ) 22,915,986
Transportation equipment 31,272 3,321 1,070 (15,736 ) 19,927 Furniture and fixtures 73,443 13,894 - (22,736 ) 64,601
Leasehold improvements 2,380 10,330 2,104 (418 ) 14,396
Miscellaneous equipment 3,129,954 52,915 85,451 (236,110 ) 3,032,210 Construction in progress 33,405 749,946 (441,378 ) - 341,973
Prepayments for equipment 507,904 5,065,007 (2,940,403 ) - 2,632,508
33,819,253 $ 6,845,838 $ (301,557 ) $ (1,808,079 ) 38,555,455
Accumulated depreciation
Buildings 1,554,409 $ 330,940 $ - $ - 1,885,349
Machinery and equipment 12,747,499 3,660,892 (276,560 ) (1,512,114 ) 14,619,717
Transportation equipment 26,704 2,801 - (15,488 ) 14,017 Furniture and fixtures 49,640 10,621 - (22,596 ) 37,665
Leasehold improvements 1,906 1,845 - (418 ) 3,333
Miscellaneous equipment 2,094,540 602,690 - (235,556 ) 2,461,674 16,474,698 $ 4,609,789 $ (276,560 ) $ (1,786,172 ) 19,021,755
Accumulated impairment
Land 33,981 $ - $ - $ - 33,981
Buildings 4,292 - - - 4,292
38,273 $ - $ - $ - 38,273
Property, plant and equipment, net $ 17,306,282 $ 19,495,427
- 24 -
Year Ended December 31, 2010
Beginning Ending
Balance Addition Reclassification Disposal Balance
Cost
Land $ 2,365,861 $ - $ - $ - $ 2,365,861
Buildings 6,118,193 37,032 113,451 - 6,268,676
Machinery and equipment 20,381,436 169,389 1,058,178 (202,645 ) 21,406,358 Transportation equipment 31,940 - - (668 ) 31,272
Furniture and fixtures 69,569 4,433 - (559 ) 73,443
Leasehold improvements 2,380 - - - 2,380 Miscellaneous equipment 3,077,700 9,148 46,382 (3,276 ) 3,129,954
Construction in progress 79,043 67,813 (113,451 ) - 33,405
Prepayments for equipment 1,009,089 603,375 (1,104,560 ) - 507,904 33,135,211 $ 891,190 $ - $ (207,148 ) 33,819,253
Accumulated depreciation
Buildings 1,236,864 $ 317,545 $ - $ - 1,554,409
Machinery and equipment 9,383,770 3,471,885 - (108,156 ) 12,747,499
Transportation equipment 24,103 3,204 - (603 ) 26,704 Furniture and fixtures 39,565 10,465 - (390 ) 49,640
Leasehold improvements 1,476 430 - - 1,906
Miscellaneous equipment 1,499,088 597,094 - (1,642 ) 2,094,540 12,184,866 $ 4,400,623 $ - $ (110,791 ) 16,474,698
Accumulated impairment
Land 33,981 $ - $ - $ - 33,981
Buildings 4,292 - - - 4,292
38,273 $ - $ - $ - 38,273
Property, plant and equipment, net $ 20,912,072 $ 17,306,282
Under an operating lease, the Corporation rents the sites of its manufacturing facilities from the MOEA
under various contracts, with the latest expiry in April 2020. The monthly rentals are $235 thousand.
Interest capitalization was as follows:
Year Ended December 31
2011 2010
Interest expense $ 426,110 $ 374,460
Interest capitalized (recorded under prepayments for equipment and
construction in progress)
46,138 14,806
Interest rates 1.96%-2.78 % 1.82%-2.98%
12. DEFERRED CHARGES
December 31
2011 2010
Technical assistance royalty $ 11,304 $ 13,297
ERP system 10,553 5,051
Molding equipment 1,684 20,005
Supplies 111 780
Others 10,855 16,552
$ 34,507 $ 55,685
- 25 -
13. OTHER ASSETS - OTHERS
December 31
2011 2010
Idle assets
Cost $ 56,289 $ 162,946
Less: Accumulated depreciation (29,219) (106,615)
Accumulated impairment (27,070) (56,331)
- -
Others 102,382 89,877
$ 102,382 $ 89,877
The Corporation recognized impairment losses of $24,997 thousand for the year ended December 31, 2011,
which was recorded under nonoperating expenses and losses - impairment loss on assets.
14. SHORT-TERM BANK LOANS
December 31
2011 2010
Usance L/C loans : Interest - 0.95%-2.30% in 2011 and
0.79%-1.80% in 2010
$ 2,749,049 $ 1,664,887
Export loans : Interest - 0.82%-2.22% in 2011 and 0.46%-1.99% in
2010
2,073,837 1,408,144
Revolving loans : Interest - 1.97%-2.21% in 2011 and 1.43%-1.91%
in 2010
789,800 300,000
$ 5,612,686 $ 3,373,031
15. SHORT-TERM BILLS PAYABLE
Short-term bills payable were commercial paper. These instruments were issued with an annual discount
rate of 1.00%.
16. LONG-TERM BANK LOANS
December 31
2011 2010
Secured loans : Repayable in installments from October 2012 to
December 2015; interest - 1.46%-2.48% in 2011 and
1.20%-2.25% in 2010
$ 8,050,755 $ 9,538,193
Unsecured loans : Repayable in installments from June 2012 to
August 2014; interest - 1.46%-2.66% in 2011 and 1.20%-2.56% in
2010
4,188,214 2,958,928
12,238,969 12,497,121
Less: Current portion (3,249,940) (1,945,952)
$ 8,989,029 $ 10,551,169
- 26 -
The Corporation entered into loan agreements amounting to $6 billion in December 2007and $6.5 billion in
November 2010, with a syndicate of banks led by Bank of Taiwan. These loans were for constructing
plants and buying equipment. The agreements provided that the Corporation (a) should maintain certain
current, debt and interest coverage ratios based on the Corporation’s annual consolidated financial
statements and (b) should not, without the prior written consent of the majority of the banking syndicate,
sell important assets and royalties, buy back its own shares and reduce capital during the contract period.
Under SFAS No. 34 - “Financial Instruments: Recognition and Measurement” and No. 36 - “Financial
Instruments: Disclosure and Presentation”, the arrangement fee of a syndicate of banks is recognized as
deduction of financial liabilities and been amortized equally during the loan period.
To raise working capital, the Corporation entered into loan agreements with Chinatrust Commercial Bank,
Cosmos Bank and SinoPac Bank. Under the agreements, the Corporation should maintain certain current,
debt and interest coverage ratios based on the Corporation’s annual consolidated financial statements
during the contract term.
In September 2009, the Corporation signed a revised loan repayment contract with Bank of Taiwan, in
which the deadline for the one-time repayment of the principal of $7,116,000 thousand of the secured loan
was extended from September 2010 to September 2012. The loan was fully repaid ahead of schedule in
December 2010.
17. PENSION PLAN
The pension plan under the Labor Pension Act (the “LPA”) is a defined contribution plan. Based on the
LPA, the Corporation makes monthly contributions to the employees’ individual pension accounts at 6% of
monthly salaries and wages. Such pension costs recognized were $127,691 thousand and $104,919
thousand for the years ended December 31, 2011 and 2010, respectively.
Based on the defined benefit plan under the Labor Standards Law, pension benefits are calculated on the
basis of the length of service and average monthly salaries of the six months before retirement. The
Corporation 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.
Other defined benefit pension information was as follows:
a. Components of net pension cost:
Year Ended December 31
2011 2010
Service cost $ 2,622 $ 2,580
Interest cost 4,534 4,310
Actual return on plan assets (3,106) (3,879)
Loss on plan assets (2,114) (976)
Amortization 935 701
$ 2,871 $ 2,736
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b. Reconciliation of funded status of the plan and prepaid pension cost:
December 31
2011 2010
Benefit obligations:
Vested benefit obligation $ (25,837) $ (21,408)
Non-vested benefit obligation (130,729) (123,712)
Accumulated benefit obligation (156,566) (145,120)
Additional benefits based on future salaries (80,066) (81,558)
Projected benefit obligation (236,632) (226,678)
Fair value of plan assets 271,575 253,094
Funded status 34,943 26,416
Unrecognized net loss 47,987 44,010
Prepaid pension cost (recorded under other assets - others) $ 82,930 $ 70,426
Vested benefit $ (28,949) $ (24,420)
c. Actuarial assumptions:
December 31
2011 2010
Discount rate used in determining present values 2.00% 2.00%
Future salary increase rate 3.00% 3.00%
Expected rate of return on plan assets 2.00% 2.00%
d. Pension fund changes:
Year Ended December 31
2011 2010
Contributions $ 15,375 $ 15,425
Payment of benefits $ - $ 1,224
18. SHAREHOLDERS’ EQUITY
a. Issuance of global depositary receipts (GDRs)
The Corporation increased its capital by listing its shares in the form of GDRs. Each GDR represented
the right to receive 5 common shares. Other information about GDRs was as follows:
Issued Units
Issued Shares of Stock
(In Thousands) Issue Price (US$)
November 2002 16,000,000 80,000 $3.835
November 2004 19,000,000 95,000 5.24
October 2007 20,000,000 100,000 6.00
May 2010 30,000,000 150,000 4.07
January 2011 40,000,000 200,000 8.264
As of December 31, 2011, the GDR holders had exchanged GDRs amounting to US$624,480 thousand
and representing 642,823 thousand common shares, and total outstanding GDRs were equal to 4,274
thousand common shares, or 0.26% of total capital shares issued.
- 28 -
The GDR holders have the same rights as the Corporation’s shareholders. In addition, under the
related laws and depositary agreement, the GDR depositary will act on behalf of the GDR holders when
they:
1) Exercise voting rights;
2) Sell the securities of depositary receipts;
3) Receive dividends and subscribe for capital stock.
b. Common share issuance through private placement
In October 2006, the Corporation issued - in accordance with Article 43 of the Securities and
Exchange Act - 32,444 thousand common shares at par value of NT$10.00 through private
placement to certain investors. The issuance price was NT$27.74 per share. These shares may be
resold only after three years from the delivery date (November 23, 2006).
c. Employee stock options plans
Under a stock option plan (the “Plan”), the Corporation issued to employees 29,000 units in August
2007. Each unit represents one thousand common shares. Employees eligible to receive options
under the Plan are full-time employees of the Corporation and subsidiaries. The option is exercisable
two years from the grant dates. The option certificate is valid for six years and the vested right is
exercisable on the basis of an employee’s service years. The exercise price of the stock option is the
closing price of the Corporation’s share on the grant date. If any change is made in the common stock
subject to the Plan, the exercise price of any options under the Plan then outstanding will be
appropriately adjusted in accordance with a certain formula.
Other information about employee stock options was as follows:
Year Ended December 31
2011 2010
Weighted Weighted
- average - average
Exercise Exercise
Price Price
Employee Stock Options Units (NT$) Units (NT$)
Balance, beginning of year 9,933 $33.80 29,000 $34.90
Options forfeited (4,142) 29.91 (4,158) 33.80
Options exercised (1,134) 33.79 (14,909) 33.80
Balance, end of year 4,657 29.91 9,933 33.80
Options exercisable, end of year 4,657 29.91 9,933 33.80
The weighted-average stock prices at the date of exercise for stock options exercised during the years
ended December 31, 2011 and 2010 was NT$52.20 and NT$47.75, respectively.
- 29 -
Information about outstanding options as of December 31, 2011 and 2010 was as follows:
December 31
2011 2010
Exercise
Price (NT$)
Weighted-average
Remaining
Contractual Life
(Years) Exercise Price (NT$)
Weighted-average
Remaining
Contractual Life
(Years)
$29.91 1.67 $33.80 2.67
The compensation cost recognized under the intrinsic value method for the years ended December 31,
2011 and 2010 was NT$0. Had the Corporation used the Black-Scholes Model to evaluate the options
granted, the method, the assumptions and pro forma information assuming employee stock options
granted before January 1, 2008 had been accounted for under the SFAS No. 39 would have been as
follows:
Black-Scholes Model
Year Ended December 31
2011 2010
Assumptions:
Risk-free interest rate 2.28% 2.28%
Expected life 4 years 4 years
Expected volatility 44.06% 44.06%
Expected dividend yield - -
Net income (loss)
Pro forma $ (1,904,878) $ 2,058,720
After income tax basic earnings (loss) per share (NT$)
Pro forma ($1.16) $1.49
d. Capital surplus
Under the Company Law, capital surplus can only be used to offset deficit. In addition, under the
regulations of the Securities and Futures Bureau (SFB), the capital surplus from equity-method
investments cannot be used under any circumstances. The capital surplus from any paid-in capital in
excess of par value and from donations can only be capitalized once a year within a certain percentage
of paid-in capital and distributed as stock dividends; under the revised Company Law issued on January
4, 2012, the foregoing capital surplus may also be distributed in cash.
e. Appropriation of earnings and dividends policy
The Corporation’s Articles of Incorporation provide that, after (a) the payment of all taxes required by
law; (b) the offset of deficit; and (c) the deduction of legal reserve and special reserve, the remaining
earnings will be reserved for the operating requirements of its business or allocated as follows:
1) Up to 2% as remuneration of directors and supervisors;
2) 15% as employees’ bonus; and
3) The remainder, as dividends.
The Corporation’s dividend policy takes the following aspects into consideration:
1) Investment environment;
2) Global competition;
- 30 -
3) Shareholders’ benefits;
4) Dividend stability;
5) The Corporation’s capital expenditure budget, capital requirement and long-term financial plan.
Under the Company Law, the board of directors should draft a proposal on earnings distribution for
approval at the shareholders’ meeting. In principle, cash dividends should be more than 10% of total
dividends.
For the year ended December 31, 2011, the Corporation had no profits; thus, it did not had to estimate
the bonus to employees and remuneration to directors and supervisors. For the year ended December
31, 2010, the bonus to employees was $232,961 thousand and the remuneration to directors and
supervisors was $31,062 thousand, respectively. The bonus to employees and remuneration to
directors and supervisors represented 15% and 2%, respectively, of net income (net of the bonus and
remuneration). Material differences between such estimated amounts and the amounts proposed by
the Board of Directors in the following year are adjusted for in the year. If the actual amounts
subsequently resolved by the shareholders differ from the proposed amounts, the differences are
recorded in the year of shareholders’ resolution as a change in accounting estimate. If a share bonus is
resolved to be distributed to employees, the number of shares is determined by dividing the amount of
the share bonus by the closing price (after considering the effect of cash and stock dividends) of the
shares of the day immediately preceding the shareholders’ meeting.
Under the regulations of the SFB, a special reserve equivalent to the debit balance of any shareholders’
equity account, other than deficit and treasury stock is appropriated from retained earnings. The
balance of the special reserve is adjusted on the basis of the debit balance of the applicable
shareholders’ equity account at year-end.
Under the Company Law, legal reserve should be appropriated each year until the balance of the
reserve equals the Corporation’s paid-in capital. Under the revised Company Law issued on January 4,
2012, when the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess net of
an amount equal to 25% of paid-in capital may be transferred to capital or distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax
credit equal to their proportionate share of the income tax paid by the Corporation.
The appropriation of earnings for 2010 had been approved in the shareholders’ meeting in June 2011.
The appropriation of earnings and dividends per share were as follows:
For Year 2010
Appropriation
of Earnings
Dividends
Per Share
(NT$)
Offset of deficit $ 333,080 $ -
Legal reserve 172,564 -
Cash dividends 1,553,076 1.037
The Corporation had an operating loss in 2009; thus, in their meeting on June 17, 2010, the
shareholders resolved not to have an appropriation for 2009.
The bonus to employees and the remuneration to directors and supervisors for 2010, which were
approved in the shareholders’ meeting on June 10, 2011, were $232,961 thousand and $31,062
thousand, respectively. These amounts were the same as those appropriations made against the 2010
earnings.
- 31 -
In their meeting held on June 10, 2011, the shareholders also resolved the transfer of $1,496,950
thousand of capital surplus to paid-in capital. The Corporation then issued 149,694,980 shares, with a
NT$10.00 par value. This capital stock transaction was approved by the SFB, and the effective date of
issuance was August 8, 2011.
As of February 23, 2012, the date of the accompanying auditors’ report, the board of directors had not
resolved the appropriation of the 2011 earnings. Information on the bonus to employees and
remuneration to directors and supervisors is available on the Market Observation Post System website
of the Taiwan Stock Exchange.
f. Unrealized gain or loss on financial instruments
For the years ended December 31, 2011 and 2010, movements of the unrealized gain or loss on
financial instruments were as follows:
Available-
for-sale
Financial Assets
Equity-method
Investments
Total
Year ended December 31, 2011
Beginning balance $ 137,822 $ 233 $ 138,055
Recognized in shareholders’ equity (102,301) (5,740) (108,041)
Ending balance $ 35,521 $ (5,507) $ 30,014
Year ended December 31, 2010
Beginning balance $ 135,958 $ (50) $ 135,908
Recognized in shareholders’ equity 1,864 283 2,147
Ending balance $ 137,822 $ 233 $ 138,055
19. INCOME TAX
a. A reconciliation of income tax expense (benefit) based on income (loss) before income tax at the
statutory rate and income tax expense was as follows:
Year Ended December 31
2011 2010
Income tax expense (benefit) based on income (loss) before
income tax at the statutory rate
$ (334,303) $ 367,963
Tax effects of adjusting items
Tax-exempt income (122) -
Permanent differences 62,582 (190,946)
Temporary differences 91,367 87,522
Loss carryforwards 180,476 -
Investment tax credits - (159,155)
Current income tax expense $ - $ 105,384
- 32 -
b. The details of income tax expense (benefit) were as follows:
Year Ended December 31
2011 2010
Current income tax expense $ - $ 105,384
Deferred
Investment tax credits 183,922 50,023
Loss carryforwards (155,026) 10,102
Temporary differences (90,945) (96,451)
Effect of tax law changes on deferred income tax - 174,603
Valuation allowance - (193,679)
Additional income tax under the Alternative Minimum Tax Act - 50,027
Others 440 5,761
Income tax expense (benefit) $ (61,609) $ 105,770
Under Article 10 of the Statute for Industrial Innovation 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 effect from
January 1, 2010 and is effective 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.
c. Net deferred income tax assets (liabilities) were as follows:
December 31
2011 2010
Current:
Allowance for loss on inventories $ 369,630 $ 231,339
Unrealized cost of goods sold 32,670 21,327
Unrealized foreign exchange loss (gain) (5,566) 73,616
Employee welfare expense in excess of payment 1,972 2,079
Realized gross gain (920) (1,738)
Unrealized valuation loss (gain) on financial instruments 126 (1,903)
$ 397,912 $ 324,720
Noncurrent:
Loss carryforwards $ 883,483 $ 728,457
Investment tax credits 659,656 843,578
Unrealized deferred gain (loss) 18,280 (1,428)
Unrealized impairment loss 17,306 7,023
Unrealized valuation loss (gain) on financial instruments (5,773) 6,465
1,572,952 1,584,095
Less: Valuation allowance (1,113,140) (1,113,140)
$ 459,812 $ 470,955
- 33 -
d. Information about integrated income tax was as follows:
The Corporation had no unappropriated earnings generated before January 1, 1998.
As of December 31, 2011 and 2010, the balance of the imputation credits to be allocated to the
shareholders amounted to $225,527 thousand and $397,636 thousand, respectively.
The Corporation had an operating loss in 2011; thus, the shareholders resolved not to make
appropriations for that year. The actual ratio for distribution of earnings of 2010 is 20.48%.
e. In November 2010, the Industrial Development Bureau (IDB) approved the tax credits for Emerging,
Important and Strategic Industries. The credits can be used to reduce the Corporation’s tax obligations
for five years from 2013.
f. As of December 31, 2011, the investment tax credits that can be used to offset the Corporation’s future
income taxes were as follows:
Tax Amount
Regulatory Basis of Credit of Unused Expiry
Tax Credits Source of Tax Credits Granted Credit Year
Statute for Upgrading Eligible equipment $ 256,465 $ 256,465 2012
Industries Research and development 208,680 208,680 2012
(Same as above) Personnel training 307 307 2012
Eligible equipment 61,876 61,876 2013
Research and development 123,613 123,613 2013
Personnel training 2,628 2,628 2013
Eligible equipment 6,087 6,087 2014
$ 659,656
g. As of December 31, 2011, the loss carryforwards were as follows:
Year of Operating Loss
Tax Credit
Granted
Amount of
Unused Credit Expiry Year
2008 $ 1,758,726 $ 1,758,726 2018
2009 2,377,325 2,377,325 2019
2011 1,060,906 1,060,906 2021
$ 5,196,957 $ 5,196,957
h. Income tax returns through 2009 had been examined and cleared by the tax authorities.
- 34 -
20. LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSE
Year Ended December 31
2011 2010
Operating
Costs
Operating
Expenses Total
Operating
Costs
Operating
Expenses/
Nonoperating
Expenses and
Losses Total
Labor cost
Salaries $ 2,665,975 $ 772,505 $ 3,438,480 $ 1,741,326 $ 788,854 $ 2,530,180
Insurance 178,281 53,598 231,879 139,283 44,084 183,367
Pension 101,697 28,865 130,562 82,690 24,965 107,655
Others 643,837 41,460 685,297 498,344 32,984 531,328
Depreciation 4,425,677 184,112 4,609,789 4,276,091 124,532 4,400,623
Amortization 8,729 34,395 43,124 44,876 37,308 82,184
21. EARNINGS (LOSS) PER SHARE (E/LPS)
Number of Earnings (Loss)
Per Share (NT$)
Amounts (Numerator) Shares Before After
Before After (In Thousands) Income Income
Income Tax Income Tax (Denominator) Tax Tax
Year ended December 31, 2011
Basic $ (1,966,487) $ (1,904,878) 1,636,709 $ (1.20) $ (1.16)
Dilutive effects
Employee stock options - - 149
Employee bonus - - 3,537
Diluted $ (1,966,487) $ (1,904,878) 1,640,395 $ (1.20) $ (1.16)
Year ended December 31, 2010
Basic $ 2,164,490 $ 2,058,720 1,359,849 $ 1.59 $ 1.51
Dilutive effects
Employee stock options - - 11,646
Employee bonus - - 6,035
Diluted $ 2,164,490 $ 2,058,720 1,337,530 $ 1.57 $ 1.49
The ARDF issued Interpretation 2007-052 that requires companies to recognize bonuses paid to employees,
directors and supervisors as compensation expenses. These bonuses were previously recorded as
appropriations from earnings. If the Corporation may settle the bonus to employees by cash or shares, the
Corporation should presume that the entire amount of the bonus will be settled in shares and the resulting
potential shares should be included in the weighted average number of shares outstanding used in the
calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by
dividing the entire amount of the bonus by the closing price of the shares at the balance sheet date. Such
dilutive effect of the potential shares should be included in the calculation of diluted EPS until the
shareholders resolve the number of shares to be distributed to employees at their meeting in the following
year.
The weighted average number of shares outstanding for EPS calculation has been retroactively adjusted for
the issuance of employee stock bonuses distributed out of earnings for the year ended December 31, 2010
and stock dividends. This adjustment caused the basic and diluted after income tax EPS for the year
ended December 31, 2010 to decrease from NT$1.67 and NT$1.65 to NT$1.51 and NT$1.49.
- 35 -
22. FINANCIAL INSTRUMENTS
a. Fair values of financial instruments (consisting of financial assets not evaluated at the fair value) were
as follows:
December 31
2011 2010
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Nonderivative instruments
Assets
Financial assets carried at cost -
noncurrent
$ 170,189 $ -
$ 304,519 $ -
b. Methods and assumptions used to estimate the fair values of financial instruments were as follows:
1) The short-term financial instruments include cash and cash equivalents, notes and accounts
receivable, other receivables, other financial assets - current, restricted assets - current, refundable
deposits, short-term bank loans, short-term bills payable, notes and accounts payable, accrued
expenses and payables for the acquisition of equipment. The carrying values of these financial
instruments approximate their fair values because of their short maturities.
2) Fair values of financial instruments designated as at FVTPL and available-for-sale are based on
their quoted prices in an active market. Fair values of derivatives are based on their quoted prices
in an active market. For those derivatives 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 value of long-term bank loans are estimated using the present value of future cash flows. If
the interest rate is floating, fair values approximate carrying values. Otherwise, the discount rate is
based on the Corporation’s current incremental borrowing rates for similar types of borrowings.
c. Following are the fair values of the Corporation’s financial instruments, which were based on quoted
prices in an active market; otherwise, the fair value were estimated using valuation techniques:
December 31
2011 2010
Assets
Available-for-sale financial assets - current $ 106,523 $ 208,824
d. For financial instruments with fair values determined using valuation techniques, there were losses of
$38,528 thousand and gains of $320,616 thousand for the years ended December 31, 2011 and 2010,
respectively.
- 36 -
e. As of December 31, 2011 and 2010, financial assets exposed to fair value interest rate risk amounted to
$279,956 thousand and $87,390 thousand, respectively; financial liabilities exposed to fair value
interest rate risk amounted to $4,782,536 thousand and $3,565,518 thousand, respectively; financial
assets exposed to cash flow interest rate risk amounted to $2,713,339 thousand and $1,566,645
thousand, respectively; and financial liabilities exposed to cash flow interest rate risk amounted to
$13,338,590 thousand and $12,429,887 thousand, respectively.
f. On financial assets (liabilities) other than the financial assets (liabilities) at fair value through profit or
loss, for the years ended December 31, 2011 and 2010, interest incomes were $27,182 thousand and
$6,059 thousand, respectively, and interest expenses (including capitalized interest) were $397,870
thousand and $337,924 thousand, respectively.
g. Financial risks
1) Market risk
Market risk arise from the fluctuation of market exchange rates and interest rates. All derivative
financial instruments are used to hedge against adverse exchange rate and interest rate fluctuations
of the Corporation’s foreign currency-denominated receivables or payables and interest rate
fluctuations of its floating rate long-term loans. Gains or losses on derivative transactions have a
negative correlation with the gains or losses on the hedged receivables and payables. Interest rate
risks are also controlled because the cost of capital is fixed. Thus, market risks are believed to be
minimal.
2) Credit risk
Credit risk represents the potential loss that would be incurred by the Corporation if the
counter-parties breach 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
Corporation’s exposure to default by those parties to be material.
3) Liquidity risk
The Corporation’s operating funds are deemed sufficient to meet the cash flow demand; therefore,
liquidity risk is not considered to be significant.
4) Cash flow interest rate risk
The interest rates for the Corporation’s short-term and long-term bank loans are floating, i.e., the
effective interest rate will change because of changes in market interest rates. Thus, future cash
flows are expected to fluctuate because of these changes in market interest rates.
23. RELATED-PARTY TRANSACTIONS
a. Related parties
Related Party Relationship with the Corporation
Wintek Technology Cayman Wholly owned subsidiary
Masstop LLC Wholly owned subsidiary
Wintek BVI Wholly owned subsidiary
Wintek Electro-Optics Wholly owned subsidiary
United Win Investment Wholly owned subsidiary
(Continued)
- 37 -
Related Party Relationship with the Corporation
Wintek Central Europe Wholly owned subsidiary
Wintek International Holding Wholly owned subsidiary
Mactech Equity-method investee
WinPower Equity-method investee
United Win Cayman Wholly owned subsidiary of Wintek Technology
Cayman
United Win (H.K.) Technology Limited
(“United Win H.K.”)
Wholly owned subsidiary of United Win Cayman
Wintek Technology H.K. Wholly owned subsidiary of United Win Cayman
United Win (China) Technology Limited
(“United Win China”)
Wholly owned subsidiary of United Win H.K.
Wintek China Wholly owned subsidiary of Wintek Technology H.K.
Masstop Asia Pacific Ltd. (“Masstop”) Wholly owned subsidiary of Masstop LLC
Dongguan Masstop Liquid Crystal Display
Co., Ltd. (“Dongguan Masstop”)
Wholly owned subsidiary of Masstop
Dongguan Innolife Import and Export
Trading Co., Ltd. (“Dogguan Winova”)
Wholly owned subsidiary of Dongguan Masstop
Wintek Samoa Wholly owned subsidiary of Wintek BVI
Wintek Vietnam Wholly owned subsidiary of Wintek Samoa
Wintek Far East (Cayman) Corporation
(“Wintek Far East”)
Equity-method investee of Wintek International Holding
and Wintek Electro-Optics
Wintek Technology (India) Private Limited
(“Wintek Technology India”)
Equity-method investee of Wintek Far East
Hannstar Display Corporation (“Hannstar”) Hannstar’s president was a director of the Corporation
until April 26, 2010; on the same date, Hannstar
become a corporate director of the Corporation
Walsin Technology Corporation (“Walsin”) The president of Walsin is a brother of the Corporation’s
ex-director; the Corporation reelected the director on
April 26, 2010
(Concluded)
b. Significant transactions with related parties (in addition to those disclosed in other notes)
Year Ended December 31
2011 2010
Amount % Amount %
1) Net sales
Wintek Technology India $ 723,630 1 $ 1,144,898 2
United Win China 422,718 - 1,834,092 3
Wintek Electro-Optics 156,180 - 374,011 -
Dongguan Masstop 15,630 - - -
Others 181 - 383 -
$ 1,318,339 1 $ 3,353,384 5
- 38 -
The deferred gross profits (losses) (recorded under other current assets) on the above sales were as
follows:
December 31
2011 2010
Amount % Amount %
Wintek Technology India $ (13,376) (247) $ (11,233) (110)
United Win China 7,963 147 (199) (2)
Wintek Electro-Optics - - 1,207 12
$ (5,413) (100) $ (10,225) (100)
The prices of sales to related parties were individually negotiated on the basis of the difference
between the product price and the related market quotation. The collection periods for receivable
from sales to related parties were as follows:
Year Ended December 31
Related Party 2011 2010
Wintek Technology India T/T 90 days T/T 90 days
United Win China T/T 90 days T/T 90 days
Wintek Electro-Optics T/T 60 days T/T 60 days
Dongguan Masstop T/T 60 days -
Year Ended December 31
2011 2010
Amount % Amount %
2) Purchase
Dongguan Masstop $ 135,678 - $ 178,871 -
Hannstar 92,216 - 103,307 -
Wintek Technology India 16,552 - 44,077 -
Others 71 - 5,732 -
$ 244,517 - $ 331,987 -
The prices for purchases from related parties are individually negotiated on the basis of the
difference between the product price and the related market quotation. The payment terms were as
follows:
Year Ended December 31
Related Party 2011 2010
Dongguan Masstop T/T 60 days T/T 60 days
Hannstar 15 days after the end of the
transaction month
15 days after the end of the
transaction month
Wintek Technology India T/T 90 days T/T 90 days
- 39 -
Year Ended December 31
2011 2010
Amount % Amount %
3) Cost of goods sold - outsourced production
activities, packing expenses and spare parts
United Win China $ 8,724,985 10 $ 8,046,381 14
Dongguan Masstop 8,396,439 9 4,538,692 8
Wintek Vietnam 26,701 - - -
Mactech 19,413 - 13,271 -
Wintek Technology India - - 3,119 -
$ 17,167,538 19 $ 12,601,463 22
4) Operating expenses - commissions
Wintek Central Europe $ 12,995 1 $ 21,243 1
5) Nonoperating income and gains - royalty
and others
Wintek Vietnam $ 28,926 12 $ - -
United Win China 12,982 6 90,741 6
Dongguan Masstop 12,125 5 73,869 4
Walsin - - 932 -
Others 767 - 542 -
$ 54,800 23 $ 166,084 10
Other income is revenue of the Corporation on its purchase of raw materials, supplies and
machinery and equipment on behalf of its subsidiaries. The unrealized gain on this transaction as
of December 31, 2011 was $117,527 thousand (recorded under deferred intercompany gain).
December 31
2011 2010
Amount % Amount %
6) Accounts receivable
Wintek Technology India $ 62,235 68 $ 312,099 83
Wintek Electro-Optics 16,053 18 63,863 17
Dongguan Masstop 12,721 14 - -
Others - - 333 -
$ 91,009 100 $ 376,295 100
7) Other receivables
Dongguan Masstop $ 1,631,061 47 $ 5,084,238 73
Wintek China 460,155 13 - -
Wintek Vietnam 319,041 9 - -
United Win China 274,947 8 1,256,317 18
Others 633 - 41 -
$ 2,685,837 77 $ 6,340,596 91
- 40 -
The Corporation bought machinery and equipment on behalf of Dongguan Masstop, Wintek China,
Wintek Vietnam and United Win China for production use. Generally, the collection period was
three months after the date of shipping or inspection.
December 31
2011 2010
Amount % Amount %
8) Accounts payable
United Win China $ 5,829,474 100 $ 4,047,878 100
Wintek Vietnam 25,060 - - -
Others 71 - 97 -
$ 5,854,605 100 $ 4,047,975 100
9) Accrued expenses
Wintek Central Europe $ 5,797 - $ 6,340 -
10) Payables for the acquisition of equipment
Mactech $ 466,713 51 $ 121,406 74
11) Other payables (recorded under other
current liabilities)
Mactech $ 1,077,087 75 $ 788,165 46
Wintek Electro-Optics 6,630 - 7,935 -
Others - - 104 -
$ 1,083,717 75 $ 796,204 46
The Corporation bought machinery and equipment on behalf of related parties.
12) Transactions involving property, plant and equipment
Acquisitions Amount
Year ended December 31, 2011
Mactech Prepayments for equipment $ 1,366,475
Machinery and equipment 119,150
United Win China Machinery and equipment 131,406
Wintek Electro-Optics Prepayments for equipment 54,986
Machinery and equipment 7,280
$ 1,679,297
Year ended December 31, 2010
Mactech Prepayments for equipment $ 105,758
Machinery and equipment 58,914
Wintek Electro-Optics Prepayments for equipment 78,080
Machinery and equipment 272
(Continued)
- 41 -
Acquisitions Amount
Year ended December 31, 2010
United Win China Machinery and equipment $ 111,354
Dongguan Masstop Machinery and miscellaneous equipment 12,134
$ 366,512
(Concluded)
Gain on
Disposal
Fair Carrying of
Sale/Disposal Value Value Properties
Year ended December 31,
2011
United Win China Machinery and equipment $ 2,492 $ 2,361 $ 131
Wintek Vietnam Machinery and equipment 4,267 3,858 409
Furniture and fixtures 71 71 -
Miscellaneous equipment 454 - 454
Dongguan Masstop Machinery and equipment 3,681 3,394 287
Deferred expense 112 - 112
$ 11,077 $ 9,684 $ 1,393
Year ended December 31,
2010
United Win China Machinery and equipment $ 21,280 $ 21,129 $ 151
Dongguan Masstop Machinery and equipment 59,424 52,308 7,116
Miscellaneous equipment 2,350 1,766 584
Wintek Electro-Optics Machinery and equipment 631 618 13
$ 83,685 $ 75,821 $ 7,864
In 2007, the Corporation sold to Dongguan Masstop property, plant and equipment with a carrying
value of $82,597 thousand. The gain of $8,010 thousand on this sale, which was a downstream
transaction with an equity-method investee, should be deferred and amortized. The amortization
of the deferred gain of $1,602 thousand had been completed as of December 31, 2011.
13) Financing to related party (recorded under other receivables)
Year Ended December 31, 2011
Related Party
Maximum
Balance Ending Balance Interest Rate Interest Income
Dongguan Masstop $ 1,732,352 $ - 1.24% $ 7,294
- 42 -
14) Guarantees
Counterparty Guaranteed Item Guarantee Amount
As of December 31, 2011
United Win H.K. Loans from banks $ 3,621,140 (US$122,000 thousand)
Masstop Loans from banks 2,889,310 (US$97,500 thousand)
Dongguan Masstop Loans from banks 5,202,787 (US$5,000 thousand and
RMB1,100,000 thousand)
United Win China Loans from banks 143,900 (US$5,000 thousand)
As of December 31, 2010
United Win H.K. Loans from banks $ 1,324,580 (US$42,000 thousand)
Masstop Loans from banks 1,521,655 (US$47,000 thousand)
Dongguan Masstop Loans from banks 3,207,526 (US$5,000 thousand,
RMB650,000 thousand)
United Win China Loans from banks 97,440 (US$3,000 thousand)
In August 2011, Masstop and United Win H.K. entered into a US$200,000 thousand loan agreement
with a syndicate of banks led by Bank of Taiwan. The Corporation guaranteed this loan.
Under the loan agreement, the Corporation should (a) maintain current, debt and interest coverage
ratios every fiscal year based on the Corporation’s audited annual consolidated financial statements
and (b) ensure that as a direct or indirect owner of an equity interest of more than 75% each in
Masstop, United Win H.K., Dongguan Masstop and United Win China, it maintains operating
control over these four subsidiaries.
c. Compensation of directors, supervisors and management personnel
Year Ended December 31
2011 2010
Salaries $ 33,376 $ 26,454
Incentives 68,152 64,234
Bonus - 57,887
Service fees 413 315
$ 101,941 $ 148,890
24. MORTGAGED OR PLEDGED ASSETS
The Corporation mortgaged or pledged as collaterals for letters of credit, long-term bank loans and
endorsements provided to subsidiaries were as follows:
December 31
2011 2010
Property, plant and equipment, net $ 6,510,655 $ 9,238,860
Inventory - 419
$ 6,510,655 $ 9,239,279
- 43 -
25. SIGNIFICANT COMMITMENTS AS OF DECEMBER 31, 2011
a. Unused letters of credit were about $516,121 thousand.
b. The purchase of machinery and equipment amounted to about $528,436 thousand.
c. The purchase of buildings amounted to about $159,493 thousand.
d. Checks for $6,799,150 thousand had been issued for various financial guarantees provided (please see
Note 23 and Table 2)
e. The Corporation issued a promissory note amounting to US$266,000 thousand as collateral to a bank
counter-party that allegedly suffered loss due to a commercial dispute involving factoring agreements.
f. Under sales agreements expiring between 2012 and 2017, the Corporation should pay royalty fees at a
percentage of net sales of certain products. For the years ended December 31, 2011 and 2010 royalty
fees were $177,465 thousand and $232,500 thousand, respectively.
g. The Corporation leases transportation equipment, office and warehouses under renewable operating
lease agreements expiring between April 2012 and April 2016.
As of December 31, 2011, future lease payables were as follows:
Year Amount
2012 $ 12,821
2013 2,920
2014 1,242
2015 1,242
2016 and after 2016 311
$ 18,536
26. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND
LIABILITIES
The significant foreign-currency assets and liabilities of the Corporation were as follows:
December 31
2011 2010
Foreign
Currencies
(In Thousands)
Exchange
Rate
New Taiwan
Dollars
Foreign
Currencies
(In Thousands)
Exchange
Rate
New Taiwan
Dollars
Financial assets
Monetary items
USD $ 670,171 30.28 $ 20,292,778 $ 629,418 29.13 $ 18,334,946
JPY 72,968 0.39 28,458 23,733 0.36 8,544
EUR 2,481 39.18 97,206 1,037 38.92 40,360
Nonmonetary items
USD 1,281 30.28 38,789 234 29.13 6,816
Investments accounted for
by the equity method
USD 777,182 30.28 23,533,071 469,046 29.13 13,663,310
EUR 3,187 39.18 124,867 3,157 38.92 122,870
- 44 -
December 31
2011 2010
Foreign
Currencies
(In Thousands)
Exchange
rate
New Taiwan
Dollars
Foreign
Currencies
(In Thousands)
Exchange
rate
New Taiwan
Dollars
Financial liabilities
Monetary items
USD $ 709,747 30.28 $ 21,491,139 $ 471,724 29.13 $ 13,741,320
JPY 1,254,479 0.39 489,247 3,191,546 0.36 1,148,957
Nonmonetary items
USD 482 30.28 14,595 1,888 29.13 54,997
27. ADDITIONAL DISCLOSURES
The following disclosures are made as required by the Securities and Futures Bureau for the Corporation
and its investees:
a. Financings provided: Table 1 (attached)
b. Endorsements/guarantees provided: Table 2 (attached)
c. Marketable securities held: Table 3 (attached)
d. Marketable securities acquired or disposed of at cost or prices of at least NT$100 million or 20% of the
paid-in capital: Table 4 (attached)
e. Acquisition of individual real estate at costs of at least NT$100 million or 20% of the paid-in capital:
Table 5 (attached)
f. Disposal of individual real estate at prices of at least NT$100 million or 20% of the paid-in capital:
None
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital:
Table 6 (attached)
h. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
Table 7 (attached)
i. Names, locations, and related information of investees over which the Corporation exercises significant
influence: Table 8 (attached)
j. Derivative transactions of investees over which the Corporation has a controlling interest: Table 9,
Table 9-1 and Table 9-2 (attached)
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 net
income or loss, ending balance of investment, dividends remitted by the investee, and the limit of
investment in Mainland China: Table 10 (attached)
2) Significant direct or indirect transactions with the investees, prices and terms of payment, and
unrealized gain or loss: Please see Notes 10 and 23
- 45 -
3) Significant direct or indirect endorsement or guarantees provided to the investees: Table 2
(attached)
4) Significant direct or indirect financing provided to the investees: Table 1 (attached)
5) Other transactions with significant effect on the current income statement or financial position:
None
28. OPERATING SEGMENT FINANCIAL INFORMATION
The Corporation’s operating segment financial information has been disclosed in the consolidated financial
statement as of and for the years ended December 31, 2011 and 2010.
- 46 -
TABLE 1
WINTEK CORPORATION AND INVESTEES
FINANCINGS PROVIDED
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
No. Financier Counter-party Financial Statement Account Highest Balance
for the Period
Ending Balance
(Note 4)
Actual Amount
Used
Interest
Rate
Type of
Financing
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Doubtful
Accounts
Mortgage Maximum
Amount of the
Financing That
Can Be Provided
by the Financier
Item Value
0 Wintek Corporation Dongguan Masstop Other receivables - related parties $ 1,732,352 $ - $ - - Note 1 $ - Operating capital $ - - - Note 2
(US$ 60,026)
Wintek Vietnam Other receivables - related parties 24,657 - - - Note 1 - Operating capital - - - Note 2
(US$ 814)
1 United Win Cayman United Win H.K. Receivables from related parties US$ 40,000 US$ 40,000 US$ 32,000 1.79% Note 1 - Operating capital - - - Note 3
2 United Win H.K. United Win China Receivables from related parties US$120,000 US$120,000 US$ 91,000 1.79%-2.62% Note 1 - Operating capital - - - Note 3
Wintek China Receivables from related parties US$ 40,000 US$ 40,000 US$ 40,000 0.90-1.74% Note 1 - Operating capital - - - Note 3
3 Masstop Dongguan Masstop Receivables from related parties US$ 83,000 US$ 83,000 US$ 83,000 1.74%-2.58% Note 1 - Operating capital - - - Note 3
4 Wintek BVI Wintek Far East Receivables from related parties US$ 2,000 US$ 2,000 US$ 2,000 - Note 1 - Operating capital - - - Note 3
5 United Win China Wintek China Receivables from related parties US$ 80,000 US$ 80,000 US$ - - Note 1 - Operating capital - - - Note 3
4 Dongguan Masstop Wintek China Receivables from related parties US$ 63,000 US$ 63,000 US$ - - Note 1 - Operating capital - - - Note 3
Note 1: Necessary for short-term financing.
Note 2: The maximum amount provided to a signal entity was 6.25% of the Corporation’s net assets as of December 31, 2010 ($28,495,796 thousand x 6.25% = $1,780,987). For total financing provided, the maximum amount was 12.5% of the net assets of December 31, 2010 ($28,495,796
thousand x 12.5% = $3,561,975 thousand).
Note 3: For the financing provided by each subsidiary, the maximum amount should not exceed 25% of the net assets of the Corporation as of December 31, 2010 ($28,495,796 thousand x 25% = $7,123,949 thousand).
Note 4: The ending balance amount has been approved by the board of directors.
- 47 -
TABLE 2
WINTEK CORPORATION AND INVESTEES
ENDORSEMENTS/GUARANTEES PROVIDED
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
No. Endorser/
Guarantor
Counterparty Maximum Amount of
the Guarantee that
Can be Provided to
Each Counterparty
Maximum
Balance for the Period Ending Balance
Value of Collaterals
Properties
Ratio of Accumulated
Amount of Guarantee
Provided to Net Equity
of the Latest Financial
Statements
Maximum Amount of
the Total Guarantee
that Can be Provided
by the Guarantor
Name Nature of Relationship
0 Wintek Corporation United Win H.K. Note 1 Note 2 $ 4,806,860
(US$ 162,000)
$ 3,621,140
(US$ 122,000) $ - 9.53% Note 3
Masstop Note 1 Note 2 3,711,579
(US$ 124,500)
2,889,310
(US$ 97,500) - 7.60% Note 3
Dongguan Masstop Note 1 Note 2 5,218,037
(US$ 5,000 and
RMB 1,100,000)
5,202,787
(US$ 5,000 and
RMB 1,100,000)
- 13.69% Note 3
United Win China Note 1 Note 2 143,900
(US$ 5,000)
143,900
(US$ 5,000) - 0.38% Note 3
Note 1: See Note 23 to the financial statements.
Note 2: The maximum amount was 25% of the Corporation’s net assets as of December 31, 2010 ($28,495,796 x 25% = $7,123,949).
Note 3: The maximum was 50% of the Corporation’s net assets as of December 31, 2010 ($28,495,796 x 50% = $14,247,898).
Note 4: For the guarantees jointly provided by the Corporation and subsidiaries, the maximum amount of guarantee to each counterparty and total guarantee were 50% of the Corporation’s net assets as of December 31, 2010.
- 48 -
TABLE 3
WINTEK CORPORATION AND INVESTEES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Holding Company Type and Issuer of Securities Held Relationship with the
Holding Company Financial Statement Account
December 31, 2011
Note Shares Carrying Value
Percentage of
Ownership
Market Value or
Net Asset Value
(Note)
Wintek Corporation Capital stock
Sitronix Technology Co., Ltd. - Available-for-sale financial assets - current 3,247,657 $ 106,523 3 $ 106,523
Wintek Technology Cayman Investee Investments accounted for by the equity method 114,760,801 10,735,097 100 10,803,567
Wintek BVI Investee Investments accounted for by the equity method 169,730,328 5,104,835 100 5,104,835
Wintek International Holding Investee Investments accounted for by the equity method 16,610,003 254,091 100 254,091
Wintek Electro-Optics Investee Investments accounted for by the equity method 1,000 164,101 100 167,348
Mactech Equity-method Investee Investments accounted for by the equity method 18,324,187 112,919 50 393,052
United Win Investment Investee Investments accounted for by the equity method 20,704,000 83,322 100 83,322
WinPower Equity-method Investee Investments accounted for by the equity method 1,950,000 17,216 36 17,216
Kingpak The president of Wintek
Corporation is a brother
of Kingpak’s president
Financial assets carried at cost - noncurrent 7,792,952 113,160 6 91,673
Calin Technology - Financial assets carried at cost - noncurrent 3,037,852 40,748 4 39,902
Transcom - Financial assets carried at cost - noncurrent 1,324,166 9,595 5 8,002
Integrated Solutions - Financial assets carried at cost - noncurrent 322,044 3,510 1 2,642
Uniflex - Financial assets carried at cost - noncurrent 384,860 3,176 1 2,427
Mobilic Cayman - Financial assets carried at cost - noncurrent 2,340,839 - 11 13
Microsystems - Financial assets carried at cost - noncurrent 6,388,936 - 4 43,177
Andes - Financial assets carried at cost - noncurrent 1,156,955 - 2 7,683
Share capital
Masstop LLC Investee Investments accounted for by the equity method 187,702,422 7,174,204 100 7,199,554
Wintek Central Europe Investee Investments accounted for by the equity method - 124,867 100 124,867
Wintek Technology Cayman Capital stock
United Win Cayman Investee Investments accounted for by the equity method 110,902,030 US$ 349,433 100 US$ 349,433
Apticon Inc. - Investments accounted for by the equity method 3,333,333 US$ - 23 US$ -
Focal Tech Systems Inc. - Financial assets carried at cost - noncurrent 1,000,000 US$ 1,000 2 US$ 566
Share capital
IDesia Ltd. - Financial assets carried at cost - noncurrent 358,822 US$ - 10 US$ -
United Win Cayman Capital stock
United Win H.K. Investee Investments accounted for by the equity method 476,971,586 US$ 265,660 100 US$ 265,660
Wintek Technology H.K. Investee Investments accounted for by the equity method 49,700,000 US$ 50,692 100 US$ 50,692
United Win H.K. Share capital
United Win China Investee Investments accounted for by the equity method - HK$ 2,057,127 100 HK$ 2,057,127
(Continued)
- 49 -
Holding Company Type and Issuer of Securities Held Relationship with the
Holding Company Financial Statement Account
December 31, 2011
Note Shares Carrying Value
Percentage of
Ownership
Market Value or
Net Asset Value
(Note)
Wintek Technology H.K. Share capital
Wintek China Investee Investments accounted for by the equity method - HK$ 393,822 100 HK$ 393,822
Masstop LLC Capital stock
Masstop Investee Investments accounted for by the equity method 1,460,304,927 US$ 237,805 100 US$ 236,568
Masstop Share capital
Dongguan Masstop Investee Investments accounted for by the equity method - HK$ 1,809,940 100 HK$ 1,809,940
Donggan Masstop Share capital
Dongguan Innolife Investee Investments accounted for by the equity method - RMB 996 100 RMB 996
Wintek BVI Capital stock
Wintek Samoa Investee Investments accounted for by the equity method 166,000,000 US$ 154,842 100 US$ 154,842
Wintek Samoa Share capital
Wintek Vietnam Investee Investments accounted for by the equity method 149,000,000 US$ 137,830 100 US$ 137,830
United Win Investment Mutual funds
Capital Greater China - Available-for-sale financial assets - current 1,300,000 $ 12,987 - $ 12,987
Cathay Emerging Markets Fund - Available-for-sale financial assets - current 1,500,000 11,655 - 11,655
BNP Paribas TCB Elite Taiwan Fund - Available-for-sale financial assets - current 1,000,000 7,860 - 7,860
Capital stock
Uniflex - Financial assets carried at cost - noncurrent 394,728 3,258 1 2,489
Andes - Financial assets carried at cost - noncurrent 1,735,434 - 4 11,525
Kingpak - Financial assets carried at cost - noncurrent 2,066,000 20,000 2 24,304
Hsin Chu Golf Country Club Co., Ltd. - Financial assets carried at cost - noncurrent 3 9,260 - 220
Microsystems - Financial assets carried at cost - noncurrent 622,736 - - 4,209
Integrated Solutions - Financial assets carried at cost - noncurrent 322,044 3,308 1 2,642
Ultra Chip Inc. - Financial assets carried at cost - noncurrent 83,325 1,489 - 782
Calin Technology - Financial assets carried at cost - noncurrent 72,000 900 - 946
Mobilic Cayman - Financial assets carried at cost - noncurrent 1,280,000 - 6 7
Wintek International Holding Capital stock
Wintek Far East Equity-method Investee Investments accounted for by the equity method 16,610,000 US$ 8,393 81 US$ 8,393
Wintek Technology India Equity-method Investee Investments accounted for by the equity method 3 US$ - - US$ -
Wintek Electro-Optics Capital stock
Wintek Far East Equity-method Investee Investments accounted for by the equity method 4,000,000 US$ 2,021 19 US$ 2,021
Wintek Far East Capital stock
Wintek Technology India Equity-method Investee Investments accounted for by the equity method 22,610,000 US$ 12,414 100 US$ 12,414
Mactech Mutual funds
Allianz Glbl Inv All Seasons Hvest - Available-for-sale financial assets - current 3,000,000 $ 30,000 - $ 30,000
Capital stock
Taichung International Country Club - Financial assets carried at cost - noncurrent 3 2,940 - 490
Note: The estimated fair values of the securities held with no quoted market prices were based on the investees’ net assets. (Concluded)
- 50 -
TABLE 4
WINTEK CORPORATION AND INVESTEES
MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COST OR PRICES OF AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Company Name Type and Issuer of
Marketable Securities Financial Statement Account Counterparty
Nature of the
Relationship
Beginning Balance (Note) Acquisition
Investment
Gains (Losses)
Translation
Adjustments
Disposal Unrealized
(Realized) Gains
on Financial
Instruments
Ending Balance (Note)
Number of
Shares Amount
Number of
Shares Amount
Number of
Shares Amount Carrying Value
Gain (Loss) on
Disposal
Number of
Shares Amount
Wintek Corporation Mutual funds
YWT Money Market
Fund
Available-for-sale financial
assets - current
- - - $ - 19,948,409 $ 290,003 $ - $ - 19,948,409 $ 290,078 $ 290,003 $ 75 $ - - $ -
Capital stock
Wintek Technology
Cayman
Investments accounted for by
equity method
Wintek Technology Cayman Investee 95,060,801 9,390,864 19,700,000 594,595 (112,274 ) 861,912 - - - - - 114,760,801 10,735,097
Wintek BVI Investments accounted for by
equity method
Wintek BVI Investee 5,730,328 487,597 164,000,000 4,849,120 (363,534 ) 131,652 - - - - - 169,730,328 5,104,835
Share capital
Masstop LLC Investments accounted for by
equity method
Masstop LLC Investee 68,000,174 3,241,286 119,702,248 3,551,924 (34,552 ) 415,546 - - - - - 187,702,422 7,174,204
Wintek Technology
Cayman
Capital stock
United Win Cayman Investments accounted for by
equity method
United Win Cayman Investee 91,202,030 US$ 313,529 19,700,000 US$ 19,700 US$ 877 US$ 15,327 - - - - - 110,902,030 US$ 349,433
United Win Cayman Capital stock
Wintek Technology H.K. Investments accounted for by
equity method
Wintek Technology H.K. Investee 30,000,000 US$ 29,963 19,700,000 US$ 19,700 US$ (625 ) US$ 1,654 - - - - - 49,700,000 US$ 50,692
Wintek Technology H.K. Capital stock
Wintek China Investments accounted for by
equity method
Wintek China Investee - HK$ 232,883 - HK$ 153,214 HK$ (4,860 ) HK$ 12,585 - - - - - - HK$ 393,822
Masstop LLC Capital stock
Masstop Investments accounted for by
equity method
Masstop Investee 528,951,683 US$ 111,275 931,353,244 US$ 119,702 US$ (766 ) US$ 7,594 - - - - - 1,460,304,927 US$ 237,805
Masstop Share capital
Dongguan Masstop Investments accounted for by
equity method
Dongguan Masstop Investee - HK$ 821,064 - HK$ 931,348 HK$ 530 HK$ 56,998 - - - - - - HK$ 1,809,940
Wintek BVI Capital stock
Wintek Samoa Investments accounted for by
equity method
Wintek Samoa Investee 2,000,000 US$ 2,000 164,000,000 US$ 164,000 US$ (11,158 ) - - - - - - 166,000,000 US$ 154,842
Wintek Samoa Capital stock
Wintek Vietnam Investments accounted for by
equity method
Wintek Vietnam Investee - US$ - 149,000,000 US$ 149,000 US$ (11,170 ) - - - - - - 149,000,000 US$ 137,830
Note: Beginning and ending balances include the investees’ income (loss) and cumulative translation adjustments.
- 51 -
TABLE 5
WINTEK CORPORATION AND INVESTEES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2011
(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
Wintek Corporation Land January 11, 2011 $ 404,392 $ 404,392 Wu Chin-Kuan and
Huang Shun-Lan
Nil - - - $ - Valuation report For production
expansion
-
Wintek Vietnam Land use rights March 2011 US$ 9,354 US$ 9,354 Sai Gon-Bac Giang
Industrial Park
Corporation
Nil - - - - - For production
expansion
-
Land use rights September 2011 US$ 6,821 US$ 2,728 Sai Gon-Bac Giang
Industrial Park
Corporation
Nil - - - - - For production
expansion
-
Factory buildings
of S area and Q
area
September 2011 US$ 3,423 US$ 3,423 Sai Gon-Bac Giang
Industrial Park
Corporation
Nil - - - - Estimation of
construction
For production
expansion
-
Buildings of R area August 2011 US$ 25,976 US$ 16,586 Kim Vuon
Construction &
Consulting Co.,
Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
August 2011 US$ 19,280 US$ 13,496 Jianxing Vietnam
Construction
Development
Company Limited
Nil - - - - Estimation of
construction
For production
expansion
-
August 2011 US$ 6,600 US$ 4,331 Cong Ty Tnhh Phat
Trien Quoc Te
Thang Viet
Nil - - - - Estimation of
construction
For production
expansion
-
December 2011 US$ 8,965 US$ 1,608 Jianxing Vietnam
Construction
Development
Company Limited
Nil - - - - Estimation of
construction
For production
expansion
-
Buildings of Q
area
August 2011 US$ 4,945 US$ 2,588 Cong Ty Trach Nhiem
Huu Han Kim Dinh
Nil - - - - Estimation of
construction
For production
expansion
-
August 2011 US$ 844 US$ 136 Kim Vuon
Construction &
Consulting Co.,
Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
September 2011 US$ 1,640 US$ 1,032 Jianxing Vietnam
Construction
Development
Company Limited
Nil - - - - Estimation of
construction
For production
expansion
-
September 2011 US$ 860 US$ 516 Cong Ty Tnhh Phat
Trien Quoc Te
Thang Viet
Nil - - - - Estimation of
construction
For production
expansion
-
November 2011 US$ 200 US$ - Cong Yu Sheng
Construction Co.,
Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
(Continued)
- 52 -
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
Wintek Vietnam Buildings of S area August 2011 US$ 728 US$ 112 Kim Vuon
Construction &
Consulting Co., Ltd.
Nil - - - $ - Estimation of
construction
For production
expansion
-
August 2011 US$ 413 US$ 207 Jianxing Vietnam
Construction
Development
Company Limited
Nil - - - - Estimation of
construction
For production
expansion
-
September 2011 US$ 3,837 US$ 833 Cong Ty Trach Nhiem
Huu Han Kim Dinh
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 US$ 75 US$ 8 Jianxing Vietnam
Construction
Development
Company Limited
Nil - - - - Estimation of
construction
For production
expansion
-
November 2011 US$ 88 US$ - Cong Ty Tnhh Phat
Trien Quoc Te
Thang Viet
Nil - - - - Estimation of
construction
For production
expansion
-
November 2011 US$ 134 US$ - Lap Thanh Co., Ltd. Nil - - - - Estimation of
construction
For production
expansion
-
-
Wintek China Restaurant July 2011 RMB 18,200 RMB 13,650 Dongguan Stralight
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
July 2011 RMB 26,400 RMB 19,800 Hunan Wangcheng
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
Office buildings July 2011 RMB 28,000 RMB 23,800 Hunan Wangcheng
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
July 2011 RMB 19,000 RMB 16,150 Dongguan Stralight
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
July 2011 RMB 1,797 RMB 1,032 Fing Living Desing
Studio
Nil - - - - Estimation of
construction
For production
expansion
-
Integrated
Construction
October 2011 RMB 4,285 RMB 1,928 Foshan Huadun Civil
Defence Engineering
Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 189 RMB - DongGuan
SongShanHu Water
Supply and sewerage
engineering Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 922,630 RMB 161,902 Dongguan Stralight
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 145 RMB - DongGuan YueDong
Fire-fighting Co.,
Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 357,200 RMB 71,880 Mao Ming Shi Mao
Han Jian An Ji Tuan
Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 22,425 RMB 10,361 Fing Living Desing
Studio
Nil - - - - Estimation of
construction
For production
expansion
-
October 2011 RMB 116,400 RMB - Human Wangcheng
Construction
(Group) Co., Ltd.
Nil - - - - Estimation of
construction
For production
expansion
-
(Concluded)
- 53 -
TABLE 6
WINTEK CORPORATION AND INVESTEES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars)
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
Wintek Corporation Wintek Technology India Note Sale $ (723,630) (1%) T/T 90 days - - $ 62,235 -
United Win China Note Sale (411,189) - T/T 90 days - - - -
Wintek Electro-Optics Note Sale (156,180) - T/T 60 days - - 16,053 -
Dongguan Masstop Note Purchase 135,678 - T/T 60 days - - - -
Dongguan Masstop Wintek Corporation Note Sale (135,678) (2%) T/T 60 days - - - -
Wintek Technology India Wintek Corporation Note Purchase 723,630 84% T/T 90 days - - (62,235) (100%)
Wintek Electro-Optics Wintek Corporation Note Purchase 156,180 82% T/T 60 days - - (16,053) (100%)
United Win China Wintek Corporation Note Purchase 411,189 33% T/T 90 days - - - -
Note: See Note 23 to the financial statements.
- 54 -
TABLE 7
WINTEK CORPORATION AND INVESTEES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Company Name Related Party Nature of Relationship Ending Balance Turnover
Rate
Overdue Amounts Received
in Subsequent
Period
Allowance for
Doubtful Accounts Amount Action Taken
Wintek Corporation Dongguan Masstop (Note 1) $ 1,643,782
(Note 4)
2.46 $ - - $ 2,840 $ -
Wintek China (Note 1) 460,155
(Note 3)
- - - 114,777 -
Wintek Vietnam (Note 1) 319,041
(Note 3)
- - - - -
United Win China (Note 1) 274,947
(Note 3)
- - - - -
United Win China Wintek Corporation (Note 1) 5,829,474
(Note 4)
5.43 - - 1,484,554 -
Mactech Wintek Corporation (Note 1) 1,543,800
(Note 2)
3.68 - - 1,072,356 -
United Win Cayman United Win H.K. (Note 1) US$ 32,000
(Note 5)
- - - US$ 32,000 -
United Win H.K. United Win China (Note 1) US$ 91,000
(Note 5)
- - - US$ 32,000 -
Wintek China (Note 1) US$ 40,000
(Note 5)
- - - - -
Masstop Dongguan Masstop (Note 1) US$ 83,000
(Note 5)
- - - - -
Note 1: See Note 23 to the financial statements.
Note 2: The ending balance was under accounts receivable.
Note 3: The ending balance was under other receivables.
Note 4: The ending balance was under accounts receivable and other receivables.
Note 5: The ending balance was under other receivables from related parties.
- 55 -
TABLE 8
WINTEK CORPORATION AND INVESTEES NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Investor Investee Location Main Businesses and Products
Investment Amount Balance as of December 31, 2011 Net Income (Loss)
of the Investee
Investment Net
Income (Loss)
Recognized
Note December 31,
2011
December 31,
2010 Shares
Percentage of
Ownership Carrying Value
Wintek Corporation Wintek Technology Cayman British Cayman Islands Overseas reinvested holding company $ 3,676,432 $ 3,081,837 114,760,801 100 $ 10,735,097 $ (84,812) $ (112,274) Subsidiary
Masstop LLC United States Overseas reinvested holding company 5,760,840 2,208,916 187,702,422 100 7,174,204 (9,346) (34,552) Subsidiary
Wintek BVI British Virgin Islands Overseas reinvested holding company 5,029,705 180,585 169,730,328 100 5,104,835 (363,747) (363,534) Subsidiary
Wintek International Holding British Cayman Islands Overseas reinvested holding company 530,754 530,754 16,610,003 100 254,091 (28,738) (28,738) Subsidiary
Wintek Electro-Optics United States Sells LCD/LCM products 111,393 111,393 1,000 100 164,101 3,843 3,769 Subsidiary
Wintek Central Europe Germany Seller of LCD/LCM products 53,475 53,475 - 100 124,867 1,224 1,224 Subsidiary
Mactech Taichung, Taiwan Manufactures machinery and equipment 54,581 54,581 18,324,187 50 112,919 230,671 54,716 Investments accounted
for by the equity
method
United Win Investment Taichung, Taiwan Investment 202,000 202,000 20,704,000 100 83,322 (85,772) (85,772) Subsidiary
WinPower Hsinchu Hsien, Taiwan IC design 23,625 - 1,950,000 36 17,216 (17,780) (6,517) Investments accounted
for by the equity
method
Wintek Technology Cayman United Win Cayman British Cayman Islands Overseas reinvested holding company US$ 110,902 US$ 91,202 110,902,030 100 US$ 349,433 US$ 877 (Note) Indirectly owned
subsidiary
Apticon Inc. British Cayman Islands Overseas reinvested holding company US$ 6,000 US$ 6,000 3,333,333
23
US$ - - (Note) Investments accounted
for by the equity
method
United Win Cayman United Win H.K. Hong Kong Overseas reinvested holding company US$ 61,202 US$ 61,202 476,971,586 100 US$ 265,660 US$ 952 (Note) Indirectly owned
subsidiary
Wintek Technology H.K. Hong Kong Overseas reinvested holding company US$ 49,700 US$ 30,000 49,700,000 100 US$ 50,692 US$ (625) (Note) Indirectly owned
subsidiary
United Win H.K. United Win China Suzhou, People’s Republic of China Manufactures and sells electronic
components, accessories and related
products
US$ 60,912 US$ 60,912 - 100 HK$ 2,057,127 HK$ 13,453 (Note) Indirectly owned
subsidiary
Wintek Technology H.K. Wintek China Dongguan, People’s Republic of China Researches, develops, manufactures and sells
LCM products
US$ 49,700 US$ 30,000 - 100 HK$ 393,822 HK$ (4,860) (Note) Indirectly owned
subsidiary
Masstop LLC Masstop Hong Kong Overseas reinvested holding company and
seller of LCD/LCM products
US$ 187,702 US$ 68,000 1,460,304,927 100 US$ 237,805 US$ (766) (Note) Indirectly owned
subsidiary
Masstop Dongguan Masstop Dongguan, People’s Republic of China Manufactures and sells LCM and touch panel
products
HK$ 1,437,213 HK$ 505,865 - 100 HK$ 1,809,940 HK$ 530 (Note) Indirectly owned
subsidiary
Dongguan Masstop Dongguan Innolife Dongguan, People’s Republic of China Import and export trading RMB 1,000 RMB - - 100 RMB 996 RMB (4) (Note) Indirectly owned
subsidiary
Wintek BVI Wintek Samoa Samoa Islands Overseas reinvested holding company US$ 166,000 US$ 2,000 166,000,000 100 US$ 154,842 US$ (11,158) (Note) Indirectly owned
subsidiary
Wintek Samoa Wintek Vietnam Vietnam Manufactures and processes LCD/LCM and
touch panel products
US$ 149,000 US$ - 149,000,000 100 US$ 137,830 US$ (11,170) (Note) Indirectly owned
subsidiary
Wintek International Holding Wintek Far East British Cayman Islands Overseas reinvested holding company US$ 16,610 US$ 16,610 16,610,000 81 US$ 8,393 US$ (1,191) (Note) Indirectly owned
subsidiary
Wintek Technology India India Manufactures and sells LCD/LCM products US$ - US$ - 3 - US$ - US$ (1,191) (Note) Indirectly owned
subsidiary
Wintek Electro-Optics Wintek Far East British Cayman Islands Overseas reinvested holding company US$ 4,000 US$ 4,000 4,000,000 19 US$ 2,021 US$ (1,191) (Note) Indirectly owned
subsidiary
Wintek Far East Wintek Technology India India Manufactures and sells LCD/LCM products US$ 22,610 US$ 22,610 22,610,000 100 US$ 12,414 US$ (1,191) (Note) Indirectly owned
subsidiary
Note: Under certain regulations, the net investment income recognized need not be disclosed.
- 56 -
TABLE 9
WINTEK CORPORATION AND INVESTEES
DERIVATIVE TRANSACTIONS
YEAR ENDED DECEMBER 31, 2011
United Win H.K. used an interest rate swap contract to hedge against its exposures to rising interest rates on its
floating-rate (USD LIBOR) long-term bank loan. The contract had already expired at the end of December
2011. The transaction resulted in a loss of HK$53 thousand for the year ended December 31, 2011.
United Win H.K. used a currency structured instrument, which resulted in a net receivable of HK$1,185
thousand, recorded as financial assets at fair value through profit or loss - currency-structured instruments as of
December 31, 2011. The transaction resulted in net a gain of HK$1,506 thousand for the year ended
December 31, 2011. The structured currency instruments is summarized as follows:
Contract Amount (In Thousands) Maturity Exchange Rate
US$ 4,000
From November 10, 2011 to
October 11, 2013
RMB6.7:US$ 1.00
- 57 -
TABLE 9-1
WINTEK CORPORATION AND INVESTEES
DERIVATIVE TRANSACTIONS OF INVESTEES OVER WHICH THE CORPORATION HAS A
CONTROLLING INTEREST
YEAR ENDED DECEMBER 31, 2011
Mactech entered into forward exchange contracts, which resulted in a net receivable of NT$152 thousand,
recorded as financial assets at fair value through profit or loss - forward exchange contracts as of December 31,
2011. The contracts resulted in net losses of NT$4,833 thousand for the year ended December 31, 2011. The
open forward exchange contracts are summarized as follows:
Forward Exchange
Contracts - Sell
Contract Amount
(In Thousands)
Credit Risk
(In Thousands)
Fair Value
(In Thousands)
December 31, 2011 NT$19,509, US$1,501
and JPY22,275
NT$ 152 NT$ 152
- 58 -
TABLE 9-2
WINTEK CORPORATION AND INVESTEES
DERIVATIVE TRANSACTIONS OF INVESTEES OVER WHICH THE CORPORATION HAS A
CONTROLLING INTEREST
YEAR ENDED DECEMBER 31, 2011
United Win China had no derivative financial instruments as of December 31, 2011 but had net losses of
RMB722 thousand on financial instruments at fair value through profit or loss - forward exchange contracts for
the year ended December 31, 2011.
- 59 -
TABLE 10
WINTEK CORPORATION AND INVESTEES
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
YEAR ENDED DECEMBER 31, 2011
(In Thousands of New Taiwan Dollars)
Investee Main Businesses and Products Paid-in Capital Method of
Investment
Accumulated
Outflow of
Capital
Investment from
Taiwan as of
January 1, 2011
Outflow or Inflow of
Capital Investment
Accumulated
Outflow of
Capital
Investment from
Taiwan as of
December 31,
2011
Percentage of
Ownership
Investment Net
Income (Loss)
Recognized
(Note 4)
Carrying Value
as of
December 31,
2011
Accumulated
inward
Remittance of
Earnings as of
December 31,
2011
Accumulated
Investment as of
December 31,
2011
Investment
Amounts
Authorized by
the Investment
Commission,
MOEA (Note 5)
Maximum
Allowable
Investment
Authorized by
the Investment
Commission,
MOEA
Outflow Inflow
United Win China Manufactures and sells electronic
components, accessories and
related products
$ 3,723,825 Note 1 $ 1,844,111 $ - $ - $ 1,844,111 100% $ (3,562) $ 7,948,154 $ 484,400 $ 8,395,690 $ 11,631,201 (Note 6)
Dongguan Masstop Manufactures and sells LCMs and
touch panel products
6,097,686 Note 1 1,907,325 3,623,986 - 5,531,311 100% (11,251) 7,027,986 -
Apticon Technology
(Nanjing) Co.,
Ltd.
Manufactures LCD back light
modules
505,623 Note 2 (Note 3) - - - 23% - - -
Wintek China Researches, develops,
manufactures and sells LCM
products
1,504,668 Note 1 908,250 596,418 - 1,504,668 100% (18,205) 1,534,724 -
Note 1: The investment was made by establishing a corporation in a third country and then making the new corporation invest in companies located in Mainland China.
Note 2: The investment was made through a corporation established in a third country, which, in turn, invested in companies located in Mainland China.
Note 3: The investment in Mainland China was made by Apticon Inc., the investee of Wintek Technology Cayman, an investee of the Corporation. The capital of the investment was put up by Apticon Inc.
Note 4: Except for its investment in Apticon Technology (Nanjing) Co, Ltd., which had discontinued its operation, the Corporation recognized its equity in the net income (loss) of investees on the basis of financial statements audited by the Corporation’s independent CPA.
Note 5: The amount includes the investment amounts approved by the Investment Commission, MOEA but does not include the common stock issuance by the Mainland China-based subsidiary from its earnings.
Note 6: According to the “Regulations for Screening of Application to Engage in Technical Cooperation in Mainland China” issued by the Investment Commission of the Ministry of Economic Affairs on August 29, 2008, there is no limit on the investment in Mainland China since the Corporation
had acquired the IDB approval of the Corporation’s establishment of operating headquarters in Taiwan.
Note 7: The foreign-currency amounts were translated into New Taiwan dollars at the exchange rates of December 31, 2011.