Report to Shareholders

Transcription

1 Annual Report 2008

2 Report to Shareholders The technology industry is evolving rapidly. would continue the hard work, discipline and creative thinking to provide the best service to our customers. Moreover, will be a better company winning through this competitive environment. We will thrive to earn more order allocations, and at the same time maintain our leadership. is a 21-year-old growth company. Product diversity is important in this industry. We not only grow from notebook replaces desktop accelerating, but also enjoy netbook emerging around the world. We will continue to build innovative notebook and non-notebook product lines, where we will differentiate ourselves in a global technology industry. s performance for FY2008 and outlook are as follows: I. Revenue and Income In the tough 2008, managed to report growth in both revenues and notebook unit shipment. Net revenues was NT$763.1BN in year 2008, an increase of NT$30.7BN from NT$732.4BN in 2007 or 4.19% in annual growth. The total notebook shipment was approximately 36.8 million units. Both revenues and shipment reached historical high out of the disruptive financial crisis. Gross margin in 2008 was 4.28%. After-tax net income was NT$20.2BN, an increase of NT$1.8BN from NT$18.4BN in 2007 or 9.61% in annual growth. EPS in 2008 was Non-operating income and expenses were NT$11.6BN and NT$2.0BN, respectively. II. Research and Development (R&D) We will sharpen our innovative skills in every aspect, from technology innovation, design creativity, procurement process, manufacturing procedure, quality control to management schemes. All is to create value and drive profit. We would continuously challenge ourselves to think outside the box, not only on the task fulfillment but also on the mindset of every project planning. is inspired by the value of: seeking the truth in technology, the kindness in human being and the beauty in sensation. The combination of technology and humanity would empower the design capability, and this is the source of our competitive advantages. The unique character of this company provides a great potential in gaining new business opportunities and overall profitability.

3 We set the target of being the leader in the industry: provide best quality product, match speedy delivery, maintain substantial profit and serve customers as our top priority. We also believe products that improve people s living standards and help save costs would be the longer lasting innovation. Therefore, Research Institutions would build up closer relationship with MIT for further product development. III. Operations and Management The global economy is experiencing profound disruption, and a great deal of anxiety is therefore widely spread. There is no assurance of when the situation will bottom out. But prepare itself for the worst and aiming for the best we could become. We will emerge stronger, and we endeavor on pushing below objectives in this downturn: Credit Risk Management: to avoid possible default risk, it is crucial to make sure all payments are well received before due. Inventory Control Management: to understand customers intention and product roadmap, take initiatives on inventory control before any potential components write-off. Expenses Down: to make sure every dollar count and reduce all unnecessary expenses Source Quality and Cheap Components: to execute comprehensive adoption of cheaper components but with no quality to sacrifice. IV. Outlook in 2008 Despite the negative impact from global economic downturn, we believe will outperform the industry. And our confidence is grounded in the strategic transformation of four core vision, which are Quality, Speed, Margin and Customer Satisfaction, or in short QSMC. We are perfecting our approach on customer satisfaction. With best quality, price, performance and delivery, we thrive to perform better than what was anticipated or requested by customers. We focus on the fundamentals - humble and enthusiastic, creative and responsible, efficient and reliable. will be a stronger company winning through this crisis. And we have all the confidence to outshine in Chairman: Barry Lam President: C.C. Leung Chief Financial Officer: Tim Li

4 Inc % 99.99% 30.11% 75.57% 37.26% 99.90% 37.00% Int l (QIL) Storage Inc. Venture Capital Co. Network Capital Co. QCJ QCTI Microsystems Inc. RoyalTek Company DataOn Systems Inc. TWDT Precision Co., QCE BV (QCE) Access Int l Co. (AIC) Asia (QAL) Capital Management (QCML) DGT (BVI) Manufac -turing Inc. (QMI) Service Inc. (QSI) USA, Inc. (QCA) QCH Inc. (QCH) Development (QDL) Int l Technology (QIT) Q_Bbus Int l QMN LLC QSN, LLC QCN, LLC QCHN, LLC Development (Hong Kong) QCG GMBH Fly Dragon Int'l Exmore Services Holding Tech Chain Tech-Front Co., Tech-Com Co., Tech-Lead Co., Tech-Giant Co., Tech-Trend Co., Tech-Wave Warehouseing Co.,Ltd Tech-Full (Changshu) Co., Dragon City Metallic (Changshu) Co., Exmore Services Holding (Hong Kong) Tech Chain (Hong Kong) Gem-Tech Precision Co., Ltd Changshu Zhan Yun Electronics Co., Zhan Yun Electronics Co.,

5 Independent Auditors Report The Board of Directors and Shareholders of Inc.: We have audited the accompanying consolidated balance sheets of Inc. and its subsidiaries (the Consolidated Company) as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in stockholders equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the consolidated Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Rules Governing Auditing and Certification of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those regulations and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidences supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Inc. and its subsidiaries as of December 31, 2008 and 2007, and the results of its operations and its consolidated cash flows for the years then ended in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers, and accounting principles generally accepted in the Republic of China. As described in Note 3, to the consolidated financial statements effective January 1, 2008, the consolidated Company adopted the Republic of China Statement of Financial Accounting Standards (SFAS) No. 39 Accounting for Share-Based Payment and Interpretation (96)052 issued by Accounting Research and Development Foundation. The consolidated Company had classified, measured, and disclosed employee bonuses and remuneration to directors and supervisors in accordance with the newly released standard and interpretation, decreasing the after-tax income and earnings per share by NT$1,523,978 thousand and NT$0.42, respectively, for the year ended December 31, KPMG CPA: Charlotte Lin Leoufong Yang March 31, 2009 Note to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with the 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. The auditors report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors report financial statements, the Chinese version shall prevail.

6 CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) December 31, 2008 December 31, 2007 Amount % Amount % ASSETS Current Assets: Cash and cash equivalents (Notes (2) and (4)(a)) $ 59,221, ,279, Financial assets reported at fair value through profit or loss - current (Notes (2) and (4)(b)) 645, ,461 - Available-for-sale financial assets - current (Notes (2) and (4)(b)) 27,247, ,685,414 6 Held-to-maturity financial assets - current (Notes (2) and (4)(b)) ,848 - Financial assets carried at cost - current (Notes (2) and (4)(b)) 89,134-83,882 - Notes receivable, net 8,775-16,359 - Accounts receivable, net of allowance for doubtful accounts and sales allowances (Notes (2) and (4)(c)) Related parties (Note (5)) 192,163-25,151 - Other customers 102,302, ,311, Other receivables, net of allowance for doubtful accounts Related parties (Note (5)) 578,147-18,595 - Non-related parties 480, ,697 - Other financial assets - current 151, ,965 - Inventories (Notes (2) and (4)(d)) 50,317, ,164, Prepayments 910, ,181 - Other current assets - other 1,749, ,287 - Deferred income tax assets - current (Notes (2) and 4 (l)) 2,749, ,610, ,644, ,381, Investments: Financial assets reported at fair value through profit or loss - noncurrent (Notes (2) and (4)(b)) 430, ,410 - Available-for-sale financial assets - noncurrent (Notes (2) and (4)(b)) 202, Held-to-maturity financial assets - noncurrent (Notes (2) and (4)(b)) 50,065-50,083 - Financial assets carried at cost - noncurrent (Notes (2) and (4)(b)) 9,278, ,130,875 4 Long-term investments at equity (Notes (2) and (4)(e)) 566,486-1,015,120-10,528, ,643,488 4 Other Financial Assets - Noncurrent 236, ,575 - Property, Plant, and Equipment, at cost (Notes (2) and (4)(f) and (6)): Land 2,070, ,000,789 1 Buildings 20,459, ,559,613 5 Machinery and equipment 26,615, ,075,167 7 Molds and tools 192,158-57,009 - Transportation equipment 125, ,892 - Furniture and office facilities 1,332,984-1,238,288 - Leasehold improvements 680, ,915 - Miscellaneous equipment 1,945, ,478,237-53,421, ,765, Less: Accumulated depreciation (11,973,552) (4) (8,055,806) (2) Less: Accumulated impairment (213,075) - (266,752) - Construction in progress 918, ,326 - Prepayments for equipment 189,189-1,094,310-42,342, ,735, Intangible Assets (Note (2)): 1,358,490-1,230,736 - Other Assets: Idled assets (Notes (2) and (4)(g)) 62,559-76,863 - Rental assets (Notes (2) and (4)(g)) 2,016, ,027,220 1 Restricted assets (Note (6)) 25,810-20,344 - Other assets (Note (2)) 379, ,066-2,484, ,605,493 1 TOTAL ASSETS $ 303,594, ,810, The accompanying notes are an integral part of the consolidated financial statements.

7 CONSOLIDATED BALANCE SHEETS (CONT'D) DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) December 31, 2008 December 31, 2007 LIABILITIES AND STOCKHOLDERS' EQUITY Amount % Amount % Current Liabilities: Short-term debt (Note (4)(h)) $ 34,033, ,784,899 9 Financial liabilities reported at fair value through profit or loss current (Notes (2) and (4)(b)) 18, ,891 - Notes payable 130,706-93,612 - Accounts payable Related parties (Note (5)) 2,092, ,669,663 2 Vendors 117,563, ,237, Income tax payable 4,139, ,494,055 1 Accrued expenses (Note (5)) 9,753, ,706,907 2 Other payables (Note (5)) 3,075, ,687,440 2 Other financial liabilities current 2,498, ,087,605 1 Convertible corporate bonds current portion (Notes (2) and (4)(i)) ,801 - Current portion of long-term debt (Note (4)(j)) 3,114, ,111,850 1 Warranty reserve (Note (2)) 11,671, ,220,688 3 Other current liabilities 2,134, , ,226, ,422, Long-Term Liabilities: Convertible corporate bonds noncurrent (Notes (2) and (4)(i)) 6,394, ,401,862 2 Long-term debt (Note (4)(j)) 13,453, ,198,400 2 Other financial liabilities noncurrent 60,171-39,097-19,907, ,639,359 4 Other Liabilities: Deferred income tax liabilities noncurrent (Notes (2) and (4)(l)) 825,664-3,858 - Other liabilities 1,428-1, ,092-5,139 - Total Liabilities 210,960, ,067, Stockholders' Equity: Common stock - authorized 4,000,000 thousand shares, 3,649,526 thousand shares issued Common stock - and outstanding in 2008; 3,475,268 thousand shares issued and outstanding in 2007 Common stock - (Note (4)(m)) 36,495, ,752, Capital Surplus (Note (2)): Premium on stock issuance 6,702, ,702,065 2 Treasury stock 32,692-13,479 - Donated surplus Long-term investments at equity 530, ,238-7,265, ,267,826 2 Retained Earnings: Legal reserve (Note (2)) 12,494, ,649,548 3 Retained earnings unappropriated (Note (4)(o)) 33,594, ,215, ,088, ,864, Other Adjustments to Stockholders' Equity: Cumulative translation adjustments (Note (2)) 1,960, ,074 - Unrealized (loss) gain on financial instruments (Note (2)) (3,691,498) (1) 5,184,331 2 (1,731,257) - 6,139,405 2 Treasury Stock (Notes (2) and (4)(p)) (2,042,225) (1) (634,810) - Total parent Company's Equity 86,075, ,389, Minority Interest 6,559, ,353,210 2 Total Stockholders' Equity 92,634, ,743, Commitments and Contingencies (Note (7)) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 303,594, ,810, The accompanying notes are an integral part of the consolidated financial statements.

8 CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) For The Years Ended December 31, Amount % Amount % Operating revenues (Note (2)) $ 833,022, ,390, Less: Sales returns (12,017,674) -2 (7,418,681) (1) Less: Sales allowances (2,267,285) - (1,535,603) - Net sales 818,737, ,436, Cost of goods sold (773,856,494) -95 (737,157,760) (95) Gross margin 44,881, ,278,373 5 Realized gross profit beginning of the year Unrealized gross profit end of the year (73) - (112) - 44,881, ,278,290 5 Operating expenses Selling expenses (10,677,628) -1 (10,599,971) (1) General and administrative expenses (5,572,343) -1 (4,596,035) (1) Research and development expenses (7,313,565) -1 (5,331,057) (1) (23,563,536) -3 (20,527,063) (3) Income from operations 21,317, ,751,227 2 Non-operating income Interest income 1,636,919-1,283,793 - Dividend income 1,392, ,977 - Gain on disposal of investments 675, ,426 - Foreign exchange gains, net (Note (2)) 5,777, ,879,548 - Gain on valuation of financial assets (Notes (2) and (4)(b)) 129,368-55,857 - Gain on valuation of financial liabilities (Notes (2) and (4)(b)) 142, Other income 3,820,187-2,779,138-13,573, ,249,739 - Non-operating expenses Interest expense (2,204,590) - (2,552,950) - Investment loss recognized under equity method (Notes (2) and (4)(e)) (328,786) - (100,304) - Other investment loss (Note (2)) (802,918) - (290,829) - Loss for market price decline and obsolete and slow-moving inventories (Note (2)) (1,354,272) - (349,125) - Loss on disposal of obsolescence and scrapping (1,490,245) - (609,913) - Loss on valuation of financial liabilities (Notes (2) and (4)(b)) - - (11,412) - Miscellaneous disbursements (1,100,673) - (903,159) - (7,281,484) - (4,817,692) - Income before income tax 27,610, ,183,274 2 Income tax expense (Notes (2) and (4)(l)) (6,484,856) -1 (4,569,062) (1) Consolidated net income $ 21,125, ,614,212 1 Income attributable to : Shareholders of parent company $ 20,229, ,454,601 1 Minority interest income 896,059-1,159,611 - $ 21,125, ,614,212 1 Before Tax After Tax Before Tax After Tax Earnings per share attributable to parent company (Notes (2)and (4)(q)) Primary earnings per share $ $ Diluted earnings per share $ $ Primary earnings per share retroactively adjusted $ Diluted earnings per share retroactively adjusted $ Assuming that company shares held by its subsidiaries are not regarded as treasury stock: Pro-forma primary earnings per share $ $ Pro-forma diluted earnings per share $ $ The accompanying notes are an integral part of the financial statements.

9 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) Cash flows from operating activities: Amount Amount Consolidated net income $ 21,125,381 19,614,212 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 4,114,758 4,603,437 Depreciation of rental assets and idle assets 25,295 26,391 (Reversal) Provision for impairment loss on property, plant and equipment assets (90,196) 158,234 Amortization of corporate bonds issue cost 8,236 16,477 Amortization of discount on issuance of convertible corporate bonds transferred to interest expenses 48,578 71,570 Provision for doubtful accounts and sales allowances 620, ,841 Deferred expenses transferred to non-operating income (38,832) - Provision for impairment loss of idle assets 44, ,481 Provision for warranty reserve 2,332,808 3,378,392 Loss on disposal and retirement of property, plant and equipment, net 120, ,783 Provision for inventory market price decline and obsolescence 1,354, ,125 Gain on disposal of intangible assets (2,488) - Loss on long-term investments at equity over cash dividends received 370, ,035 Loss on permanent market decline on long-term investments at equity 89,985 - Loss on permanent market decline on available-for-sale financial assets 9,068 - Loss on permanent market decline on financial assets carried at cost 703, ,829 Gain on disposal of financial assets carried at cost (215,654) (13,872) Amortization of discount on held-to-maturity financial assets (8,904) (9,454) Gain on redemption of convertible corporate bonds 164,109 - Foreign exchange rate effect on long-term debts 63,200 (78,181) Foreign exchange rate effects 64,338 (41,583) Change in assets and liabilities: For The Year Ended December 31 Financial assets reported at fair value through profit or loss - current (121,781) 688,182 Notes receivable 7,595 (3,937) Accounts receivable 34,892,545 (68,963,496) Inventories 27,057,554 (29,777,339) Other receivables and other financial assets - current (785,032) 5,256,356 Prepayments and other current assets (1,151,904) (90,810) Deferred income tax assets, net (647,474) 87,667 Financial liabilities reported at fair value through profit or loss - current 16,440 (14,566) Notes payable 37,018 9,608 Accounts payable (51,383,199) 89,245,096 Accrued expenses 2,897, ,698 Income tax payable 1,610, ,529 Other payables and other financial liabilities - current (2,718,349) 318,668 Other current liabilities 1,891,202 (679,622) Other liabilities 38,842 23,964 Net cash provided by operating activities 42,544,401 26,977,715 The accompanying notes are an integral part of the consolidated financial statements.

10 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D) FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) For The Year Ended December Amount Amount Cash flows from investing activities: Increase in financial assets reported at fair value through profit or loss - noncurrent $ (128,001) (445,000) (Increase) decrease in available-for-sale financial assets - current (17,440,928) 19,289,081 Increase in available-for-sale financial assets - noncurrent (21,582) (11,075) Decrease in financial assets carried at cost - current 35,966 26,208 Increase in long-term investments at equity (81,256) (125,625) Cash paid for subsidiary and minority shareholder acquisition (853,421) (558,402) Increase in financial assets carried at cost - noncurrent (323,926) (479,944) Proceeds from return of financial assets carried at cost 265,830 10,134 Proceeds from sale of financial assets carried at cost - noncurrent 276,638 - (Increase) decrease in held-to-maturity financial assets - current 497,752 (50,083) Decrease in held-to-maturity financial assets - noncurrent 18 - Purchase of property, plant and equipment (8,522,300) (10,804,354) Purchase of rental assets (121) (845) Proceeds from sale of property, plant and equipment 895,175 1,907,175 Increase in intangible assets (211,754) (141,767) (Increase) decrease in restricted deposits (5,466) 70,238 Increase in other financial assets - noncurrent (13,195) (179,892) Increase in other assets (189,800) (378,246) Net cash (used in) provided by investing activities (25,820,371) 8,127,603 Cash flows from financing activities: Increase (decrease) in short-term debt 1,867,034 (4,154,397) Repayment of current portion of long-term debt (3,130,472) (1,880,888) Increase in long-term debt 12,235,669 - Decrease in convertible corporate bonds (1,268,904) (1,751,955) Increase other financial liabilities - noncurrent 3,679 34,667 Distribution of cash dividends (12,704,316) (8,833,617) Employee bonuses and remuneration to directors and supervisors (117,826) (116,000) Conversion of employee stock options 2,839 14,068 Conversion of employee stock options - - Purchase of treasury stock (1,577,601) - Transfer treasury stock to employees - 66,025 Issuance of stocks for cash 65,000 90,125 Changes in minority interest - 662,234 Net cash (used in) financing activities (4,624,898) (15,869,738) Foreign exchange rate effects 843,028 (298,527) Effect of amended requirement for consolidation of subsidiaries - - Effect of changing consolidated entities Effect of translation adjustments - - Net Increase in cash and cash equivalents 12,942,160 18,937,053 Cash and cash equivalents, beginning of the year 46,279,382 27,342,329 Cash and cash equivalents, end of the year $ 59,221,542 46,279,382 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest (excluding capitalized interest) $ 2,280,413 2,424,786 Income tax $ 5,512,374 3,652,900 Non-cash investing and financing activities: Current portion of long-term debt $ 2,363,647 0 Current portion of long-term debt and convertible corporate bonds $ 3,114,431 9,450,513 Current portion of convertible corporate bonds Construction in progress and prepayments for equipment transferred to other assets Financial assets reported at fair value through profit or loss transferred from noncurrent to current $ 145,000 80,000 Financial assets carried at cost - current transferred to available-for-sale financial assets - current $ 65,887 7,981 Financial assets carried at cost - noncurrent transferred from noncurrent to current $ 93,370 53,508 Financial assets carried at cost - noncurrent transferred to available-for-sale financial assets - noncurrent $ 38,642 - Financial assets carried at cost - noncurrent transferred to available-for-sale financial assets - current $ 103,509 - Long-term investments under equity method transferred to available-for-sale financial assets - current $ - - Long-term investments under equity method transferred to financial assets carried at cost - noncurrent $ - - Other receivables transferred to return of financial assets carried at cost - noncurrent $ - 61,200 Deferred expenses transferred to intangible assets Other receivables from return of capital Other receivables transferred to dividend income Employee bonuses and remuneration to directors and supervisors payable $ 55,000 77,000 Cash dividends payable $ 190,404 57,200 Purchase of property and equipment with cash and other payables: Property, plant and equipment $ 8,832,448 10,848,307 Add: Other payable, beginning of the year 790, ,791 Less: Other payable, end of the year (1,100,892) (790,744) Cash paid $ 8,522,300 10,804,354 The accompanying notes are an integral part of the consolidated financial statements.

11 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D) FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data) Assets and liabilities of the subsidiaries acquired at fair market value are as follows: For The Year Ended December 31, Amount Amount Cash $ - 205,804 Notes receivable and accounts receivable - 2,433,858 Other receivable - 5,442 Inventories - 908,001 Prepayments - 137,981 Other current assets - 7,205 Property, plant and equipment - 1,511,096 Other assets - 63,821 Short-term dabt - (1,238,418) Notes payable and accounts payable - (2,000,414) Accrued expenses - (74,310) Income tax payable - (16,148) Other payables - (75,952) Other current liabilities - (14,718) Minority interest - (1,089,042) Total cash inflow - 764,206 Cash balance of subsidiaries on the acquisition date - (205,804) Cash paid for the subsidiary acquisition $ - 558,402 The accompanying notes are an integral part of the financial statements.

12 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (All Amounts Expressed of New Taiwan Dollars in Thousands, Except for Share Data) Retained Earnings Unappropriated Common Capital Legal Retained Other adjustment item or Loss on Financial Cumulative Translation Minority Total Stock Surplus Reserve Earnings Treasury Stock Instruments Adjustments Interest Balance as of January 1, 2007 $ 33,630,080 7,123,162 9,358,952 21,659,480 (634,810) 1,065, ,963 4,852,421 77,249, earnings distribution: Legal reserve - - 1,290,596 (1,290,596) Remuneration to directors and supervisors (40,000) (40,000) Cash dividends (8,407,520) (8,407,520) Employee bonuses 450, (480,000) (30,000) Stock dividends 672, (672,602) Employee bonuses distributed by subsidiaries (8,074) (16,926) (25,000) Consolidated net income for the year ended December 31, ,454, ,159,611 19,614,212 Issuance of new shares for cash from minority stakeholders ,125 90,125 Cash dividends distributed by minority stakeholders (483,297) (483,297) Changes in minority interests ,751,276 1,751,276 Effects of change in percentage of ownership in long-term equity investments - 131, ,185 Cumulative translation adjustments , ,111 Cash dividends received by subsidiaries which company shares held by subsidiaries regarded as treasury stock - 13, ,479 Unrealized gains on available-for-sale financial assets ,340, ,340,971 Unrealized loss on percentage of ownership in investment in financial instruments (222,137) - - (222,137) Balance as of December 31, 2007 $ 34,752,682 7,267,826 10,649,548 29,215,289 (634,810) 5,184, ,074 7,353,210 94,743, earnings distribution: Legal reserve - - 1,844,653 (1,844,653) Remuneration to directors and supervisors (40,000) (40,000) Cash dividends (12,163,439) (12,163,439) Employee bonuses 700, (750,000) (50,000) Stock dividends 1,042, (1,042,580) Remuneration to directors and supervisors distributed by subsidiaries (9,872) (20,954) (30,826) Consolidated net income for the year ended December 31, ,229, ,059 21,125,381 Issuance of new shares for cash from minority stakeholders ,000 65,000 Cash dividends distributed by minority stakeholders (731,281) (731,281) Changes in minority interests (1,002,992) (1,002,992) Effects of change in percentage of ownership in long-term equity investments - (21,738) (21,738) Cumulative translation adjustments ,005,167-1,005,167 Cash dividends received by subsidiaries which company shares held by subsidiaries regarded as treasury stock - 19, ,213 Unrealized losses on available-for-sale financial assets ,764, (8,764,114) Purchase of treasury stocks ,338, (1,338,865) Company shares held by subsidiaries regarded as treasury stock , (68,550) Unrealized loss on percentage of ownership in investment in financial instruments , (111,715) Balance as of December 31, 2008 $ 36,495,262 7,265,301 12,494,201 33,594,067 (2,042,225) (3,691,498) 1,960,241 6,559,042 92,634,391 The accompanying notes are an integral part of the consolidated financial statements.

13 Headquarter No.211, Wen Hwa 2nd Rd., Kuei Shan Hsiang, Tao Yuan Shien, Taiwan, R.O.C. Taipei Office 9F., No.116, Hougang St., Shihlin District, Taipei City 111, Taiwan, R.O.C.