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Contents
Letter to Shareholders 2
Introduction to MTI Products and Market Outlook 5
Financial Review 10
Selected Financial Data 10
Consolidated Results of Operations 11
Report of Independent Accountant 13
Consolidated Financial Statements 15
Notes to Consolidated Financial Statements 21
Corporate Directory 79
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I. Letter to Shareholders
Dear Shareholders:
First of all, we would like to thank you for your long-term support of Microelectronics
Technology Inc. Looking back on 2012, our consolidated operating revenue was
NT$7.561 billion at 13% growth rate compared to 2011, driven by the high demand in
two-way satellite broadband VSAT transceiver with over 60% growth in 2012 due to
the customer's new satellite launched in October 2011. The low-noise block down
converter (LNB) for satellite TV reception also grew by 30%, as we are the main
supplier for the two major North America customers. Consolidated gross profit was
NT$517 million and the gross profit margin rebounded to 7% compared to 2011.
Overall gross profit was not satisfactory due to new products still in the introductory
phase and not yet up to economic scale. In addition, we have been investing in the
R&D projects towards 4G LTE communication technology products, thus our
consolidated net loss for 2012 was NT$1.035 billion, or NT$3.82 net loss per share
after tax. The management team takes full responsibility for the company's
performance, and all employees will make all efforts to turn the Company into profit in
this fiscal year.
Overcoming Challenges and Pursuing New Opportunities
In 2012, satellite communication products contributed the highest percentage at 61%
of our total revenue. The two-way satellite broadband VSAT transceiver was in high
demand for 2012 and grew by more than 60%. For this year, VSAT Ka Band product
shipments will continue to grow driven by the high demand in broadband satellite
applications. The newer high-end LNB for satellite TV reception will be launched this
year to further expand the market share and improve profit margins.
For the terrestrial microwave backhaul products, we have already developed the
hardware/software designs for remote radio head (RRH) equipment targeted at
various bands and output power levels in response to customers’ demand. Integrated
with the high-speed optical fiber interface, our DSP technology not only improves
power efficiency, but also enhances the product differentiation and competitiveness.
We have successfully introduced the RRH equipment developed for a wide range of
3G/LTE networking infrastructures. Our RRH product range has transitioned from 3G
RRH to LTE RRH with simultaneous support for FDD and TDD LTE standards. As a
result, we are very optimistic about the shipment of LTE RRH products.
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R&D for Innovation
In 2012, Microelectronics Technology Inc. was awarded with nine utility patents and
one design patent. In addition, the UHF Band RFID Reader won the 21st Taiwan
Excellence Award in 2013. These accolades are further proof of Microelectronics
Technology's strength in technology and research development.
The emerging 4G LTE networking market in 2013 will continue to drive demand and
innovation for more competitiveness in RRH equipment regarding DPD/CFR DSP
Technology with high bandwidth and linearity. This will also lay down the roadmap for
the LTE-A standard to boost our lead in the RRH market. Our microwave digital
technology for shared Ku/Ka band in Very Small Aperture Terminal (VSAT) satellite
ground stations will contribute much to the development of the new high-end LNB
products.
Strategic Alliances for Competitiveness
CyberTAN Technology and Foxconn Group have become our strategic investors
since the second half of last year. The additional fund from our partners strengthened
the company's working capital and financial structure. MTI will leverage its
microwave, satellite communication technology and customer resources, together
with CyberTAN's networking expertise, as well as Foxconn's supply chain
management system and manufacturing capability, to further reduce the production
costs and enhance the operating scale, and ultimately expand the business
successfully in the near future.
Looking to the Future
In 2013, MTI will continue to strengthen the competitiveness of our core business,
enhance our existing product platform, and grow together with our customers. The
strategic alliance with Foxconn and CyberTAN will also bring remarkable benefits.
We can expect the significant growth both in revenue and profit margin.
Once again we would like to express our sincere gratitude to our shareholders and all
our employees for their long-standing support and contributions. We would also like to
thank our board members, supervisors, customers, and our partners for their
continuous support, encouragement, contributions, and efforts. We will continue to
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uphold our corporate philosophy of honesty, refinement, and sustainability. We will
persist with our best efforts to overcome all challenges and march towards the
milestone of the next NT$10 billion revenue.
Sincerely,
Patrick Wang
Chairman of the Board
Chi-Chia Hsieh
Vice Chairman of the Board
Allen Yen
President and CEO
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II. Overview of Operations
1. Business Scope
(a) Main Business and Percentage of Revenues by Product
(Financial data taken from our audited financial statements)
MTI’s main business in 2012 included satellite communication products and
telecommunication products. Satellite communication products include satellite TV
receiving equipments and Very Small Aperture Terminal (VSAT) systems.
Telecommunication products include point-to-point and point-to-multipoint microwave
radios, mobile base station power amplifiers, and wireless LAN equipment. In 2012,
satellite communication products made up 61% of total revenue while the rest went to
telecommunication products at 39%.
(b) Industry Overview
Below we provide analyses of satellite communications systems and telecommunication
systems and equipment as well as an overview of their respective markets:
Satellite Communications Systems and Equipment
With the demand for high-definition television
(HDTV) sets and HDTV programming constantly
increase and the rapid growth of regional and
multilingual channels, direct broadcast satellite TV
operators currently offer close to a thousand TV
channels and a substantial number of broadcast
channels. This has undoubtedly created a
significant demand for satellite transponders and
satellite TV receivers. Direct-to-Home (DTH)
satellite TV services have always done well in the
US, European, and Japanese markets.
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While in recent years, emerging markets such as
India and Latin America are expanding faster than
ever. North America is still the world's largest
market (approx. 46%) with the Dish Network and
Direct TV as the largest satellite TV broadcast
operators. The European market comes in
second at approximately 20%. At the end of 2012,
Direct TV has reached 35.56 million subscribers
(including Latin America), whereas Dish Network
has 14.06 million subscribers. The growth of
subscribers has been stable.
In contrast, there are marked differences in TV
programming among European countries, and
subscriber bases are smaller by comparison. As a
result, satellite TV operators and TV content
providers are independent from one another.
In recent years they have begun to emulate their
counterparts in North America. BBC's
HD programming broadcast is also gradually
opening up demand for HD set-top boxes (STB)
and high-end low-noise block downconverters
(LNB) to replace existing units in the local
markets.
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For Very Small Aperture Terminal (VSAT)
equipment, their main area of applications is to
provide high-speed two-way satellite broadband
internet access to users in remote locations
where there is no access to cable modem and
DSL services. The Ka satellite band is used by
ViaSat and HughesNet in their satellite
broadband services in the North American market.
ViaSat-1 is the world's most advanced
communication satellite with the highest bandwidth capacity. The ViaSat Exede
Internet is serviced through this satellite, reaching 285,000 subscribers just one year
after the satellite's launch in October 2011, and will continue to gain more subscribers
in the future.
While HughesNet boasts 659,000 broadband
subscribers at the end of 2012, it is also
enlisting the service of the Spaceway 3 satellite
for additional coverage in conjunction with
the EchoStar 17/Jupiter. In Europe, several new
broadband satellite projects are currently
underway, including the Kasat satellite
of Eutelsat, Astra2 connect satellite of SES and
Hylas satellite of Avanti. With the impetus
provided by these projects, it is expected
that Europe will become the world's second
largest satellite broadband services market in 2012. NSR, Broadband Satellite
Markets, reports that there will be 3.8 million satellite broadband subscribers
worldwide in 2021.
Source: NSR, Broadband Satellite Markets,
11th Edition Market Forecast from 2011 to 2019
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Terrestrial Microwave Backhaul Equipment
In recent years, wireless applications have turned
to WiMAX and LTE standards with the
development of high-speed packet access and
maturing technologies. Mobile networks are
clearly moving in the direction of
end-to-end Ethernet networks. Bandwidth of the
backhaul network infrastructure has already been
saturated by the increasing number of connected
smart devices on the market. System operators
must act fast in setting up the fourth generation of mobile networks to accommodate
for the inevitable explosive demand with regards to the mobile broadband services.
The number of LTE subscribers in the past
three years has grown exponentially
reaching 68 million worldwide users at the
end of 2012. The number will reach 600
million in 2016 with the highest number of
users in the Asia region.
2012 global LTE base station revenue was still
centered on the major suppliers. Infonetics
Research's latest report has shown that up until
2012 Q3, Ericsson remains the revenue leader
in LTE equipment. Nokia Siemens leap-frogged
both Alcatel-Lucent and Huawei became the
second largest LTE equipment supplier in the
world. For the individual regions, the US, Japan,
and South Korea had all demonstrated strong
Source: GSA, 2013/2 DIGITIMES, 2013/3
Source: Infonetics Research 2012 Q3 global LTE
supplier ranking
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LTE developments in Q3 of 2012. Global revenue of LTE equipment also grew by
30% in the third quarter.
However, market share and ranking of each supplier are subject to further changes as
newer operators venture into the LTE market along with new projects opening up in all
regions. New generation of base stations are trending towards the multi standard
radio (MSR) and software defined radio (SDR) infrastructures to effectively reduce
costs and improve compatibility with a wide range of technologies and standards.
An increasing number of telecom operators around the world have been actively
involved in the implementation of 4G/LTE networks. According to statistics from Global
Mobile Suppliers Association (GSA), there are a total of 327 worldwide operators with
investments in LTE commercial services at the end of June 2012. There are a total of
38 nations with LTE commercial services in operation, 267 networks under
construction in 86 countries, and at least 144 commercial networks going online at the
end of 2012.
(c) Technology and Research and Development Overview
1) Our R&D investment is focused on core technologies in RF and DSP, while our
two main product lines are developed in conjunction to the growing sales:
Satellite Communications Systems and Equipment
� Low-noise block downconverters (LNB)
� Very Small Aperture Terminal (VSAT)
Terrestrial Microwave Backhaul Equipment
� Point-to-Point Microwave Systems (Digital Radio)
� Terrestrial Microwave Backhaul Equipment for Base Station Wireless
Communication
� - Power Amplifier (PA)
� - 3G/LTE Remote Radio Head (Remote Radio Head)
� UHF Band RFID Reader and System Integration (UHF Band RFID Reader)
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Financial Review
The following sections review the consolidated financial results of Microelectronics Technology, Inc. and its subsidiaries for the year 2012 and 2011.
Selected Financial Data (consolidated)
2012 2011
(Expressed in thousands of New Taiwan dollars, except earnings per share data)
Income Statement Data:
Sales revenues 7,561,289 6,678,293
Cost of Goods Sold (7,044,138) (6,385,368)
Gross profit 517,151 292,925
Operating expenses (1,572,956) (1,850,669)
Operating income (1,055,805) (1,557,744)
Non-operating income (expenses) 2,269 (376,986)
Income before income tax (1,053,536) (1,934,730)
Income tax income (expense) 18,908 157,323
Minority interest 2,205 1,522
Net income (1,032,423) (1,775,885)
Earnings Per Share Data:
Net earnings per share (NT$) (1) (3.82) (6.58)
Balance Sheet Data
Current Assests 5,650,315 6,220,303
Investment 330,029 355,664
Fixed Assets 1,092,421 1,300,193
Intangibles 599,210 635,064
Other Assets 441,121 365,259
Total assets 8,113,096 8,876,483
Current liabilities 4,200,679 4,919,328
Long-term liabilities 224,914 950,380
Other liabilities 233,489 226,371
Stockholders' equity 3,454,014 2,780,404
Total Liabilities and Equities 8,113,096 8,876,483
(1) Based on weighted average outstanding common shares.
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Consolidated Results of Operations
The following discussion should be read in conjunction with the Company's consolidated
financial statements, together with the notes thereto, included elsewhere in this report.
Sales Revenue
The consolidated net revenue reached NT$7,561 million. Our satellite communications sector
which includes LNB and VSAT, contributed 61 percent of total revenue. Telecommunication
contains Mobile (includes RRH and PA), Radio and other sector, contributed 39 percent of
total revenue.
Gross Profit
The consolidated gross profit in 2012 was NT$517 million, which was 7% of the total
consolidated operating revenue. Compared to 2011, the consolidated gross profit ratio of net
sales increased by 3 percent.
Operating Expenses and Income
Consolidated operating expenses in 2012 were NT$1,573 million. Sales and marketing
expenses, general and administrative expenses and research and development expenses
accounted for 5%, 4%, and 12% of sales revenue, respectively. The operating expenses ratio
is 21% of sales revenue, mainly due to the development of fourth generation mobile
communications technology and LTE related products, this is a reflection of our endeavor to
safeguard our technological advantages and enhance our market position. Consolidated
operating loss in 2012 was NT$1,056 million.
Non-Operating Income and Loss
With regard to consolidated non-operating income, there was a gain of NT$2 million in 2012.
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Taxation
MTI carried forward deferred income tax assets of NT$392 million as of December 31, 2012.
There was NT$19 million income tax benefit in 2012.
Net Income After Tax
MTI’s consolidated net loss after tax in 2012 was NT$1,032 million, equivalent to basic earnings
per common share of loss NT$ 3.82, compared to loss NT$ 6.58 per share in 2011.
Liquidity and Capital Structure
As of December 31 2012, our total assets were NT$8,113 million and total liabilities
were NT$4,659 million. Total liabilities to total assets ratio was 57 percent in 2012. Current
ratio was 135% in 2012, reflecting a healthy balance sheet with substantial liquidity. MTI with a
solid consolidated balance sheet includes NT$1,539 million of cash and cash equivalents at
the end of year 2012.
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~13~
REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
PWCR12000355
To the Board of Directors and Stockholders of
Microelectronics Technology, Inc.
We have audited the accompanying consolidated balance sheets of Microelectronics Technology, Inc.
and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of
income, of changes in stockholders’ equity and of cash flows for the years then ended, expressed in
thousands of New Taiwan dollars. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with the “Rules Governing the Examination of Financial
Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic
of China. Those rules and standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Microelectronics Technology, Inc. and its subsidiaries as of
December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then
ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities
Issuers” and generally accepted accounting principles in the Republic of China.
Microelectronics Technology expects to adopt International Financial Reporting Standards,
International Accounting Standards, and Interpretations developed by the International Financial
Reporting Interpretations Committee or the former Standing Interpretations Committee (collectively
referred herein as the IFRSs) as recognized by the Financial Supervisory Commission (FSC) and the
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“Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be applied in
2013 in the preparation of consolidated financial statements of Microelectronics Technology and its
subsidiaries starting from January 1, 2013. Information relating to the adoption of IFRSs by
Microelectronics Technology is disclosed in Note 13 in accordance with Jin-Guan-Zheng-Shen-Zi
Letter No. 0990004943 of the FSC, dated February 2, 2010. The IFRSs may be subject to changes
during the time of transition; therefore, the actual impact of IFRSs adoption on Microelectronics
Technology and its subsidiaries may also change.
PricewaterhouseCoopers, Taiwan
March 21, 2013
------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31 (Expressed in thousands of New Taiwan dollars)
2012 2011
ASSETS Notes AMOUNT % AMOUNT %
~15~
Current Assets
Cash and cash equivalents 4(1) $ 1,539,379 19 $ 1,852,273 21
Financial assets at fair value through profit or loss -
current
4(2)
11,269 - 203,743 2
Accounts receivable, net 4(3) and 6 1,320,204 16 1,650,924 19
Other receivables 106,674 2 124,992 1
Inventories, net 4(4) 1,560,057 19 2,020,398 23
Prepaid expenses 31,762 1 44,476 -
Prepayments 66,821 1 168,952 2
Deferred income tax assets - current 4(19) 99,831 1 139,949 2
Restricted current assets 4(13) and 6 914,318 11 14,596 -
Total current assets 5,650,315 70 6,220,303 70
Funds and Investments
Financial assets carried at cost - non-current 4(5) 330,029 4 355,664 4
Property, Plant and Equipment 4(6) and 6
Costs
Buildings 795,527 10 793,634 9
Machinery and equipment 2,010,221 25 2,264,836 26
Transportation equipment 3,527 - 3,662 -
Office equipment 127,092 1 124,899 1
Leased assets 15,470 - - -
Leasehold improvements 136,351 2 138,381 2
Cost and revaluation increments 3,088,188 38 3,325,412 38
Less: Accumulated depreciation ( 2,146,482 ) ( 26 ) ( 2,183,350 ) ( 25 )
Construction in progress and prepayments for
equipment
150,715 2 158,131 2
Total property, plant and equipment, net 1,092,421 14 1,300,193 15
Intangible Assets
Goodwill 4(7) 364,355 4 373,741 4
Deferred pension costs 4(18) 58,693 1 4,182 -
Other intangible assets 4(7) 176,162 2 257,141 3
Total intangible assets 599,210 7 635,064 7
Other Assets
Assets leased to others 6 34,068 - 35,357 1
Refundable deposits 7,507 - 8,623 -
Deferred expenses 107,873 1 115,767 1
Deferred income tax assets - non-current 4(19) 291,673 4 205,512 2
Total other assets 441,121 5 365,259 4
TOTAL ASSETS $ 8,113,096 100 $ 8,876,483 100
(Continued)
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31 (Expressed in thousands of New Taiwan dollars)
2012 2011
LIABILITIES AND STOCKHOLDERS' EQUITY Notes AMOUNT % AMOUNT %
The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 21, 2013.
~16~
Current Liabilities
Short-term loans 4(9) $ 1,939,556 24 $ 2,117,740 24
Financial liabilities at fair value through profit or
loss - current
4(10)
1,520 - - -
Accounts payable 1,261,408 16 1,464,419 16
Income tax payable 4(19) - - 509 -
Accrued expenses 4(11) 374,736 5 472,978 5
Other payables 4(4) 160,901 2 232,356 3
Receipts in advance 33,749 - 46,625 1
Long-term liabilities - current portion 4(12) and 6 384,355 5 479,053 5
Lease payable - current 4(6) 5,602 - - -
Accrued warranty liabilities 30,759 - 96,220 1
Other current liabilities 8,093 - 9,428 -
Total current liabilities 4,200,679 52 4,919,328 55
Long-term Liabilities
Long-term loans 4(12) and 6 214,200 2 810,156 9
Long-term accounts payable - - 136,938 2
Long-term lease payable 4(6) 10,714 - 3,286 -
Total long-term liabilities 224,914 2 950,380 11
Other Liabilities
Accrued pension liabilities 4(18) 231,624 3 225,146 3
Guarantee deposits received 1,865 - 1,225 -
Total other liabilities 233,489 3 226,371 3
Total liabilities 4,659,082 57 6,096,079 69
Stockholders' Equity
Parent Company Stockholders' Equity
Capital 4(14)
Common stock 4,153,372 51 4,130,372 46
Capital Surplus 4(15)
Paid-in capital in excess of par value of common
stock
- - 59,920 1
Premium on conversion of convertible bonds - - 28,676 -
Capital reserve from long-term investments 2,538 - 2,538 -
Stock warrants 4(13) 1,779,300 22 - -
Retained Earnings 4(16)
Legal reserve - - 160,405 2
Accumulated deficit ( 2,473,799 ) ( 30 ) ( 1,688,077 ) ( 19 )
Other Stockholders' Equity Adjustments
Cumulative translation adjustments 25,706 - 87,592 1
Unrecognized pension cost 4(18) ( 35,383 ) - ( 5,645 ) -
Total Parent Company Stockholders' Equity 3,451,734 43 2,775,781 31
Minority interest 2,280 - 4,623 -
Total stockholders' equity 3,454,014 43 2,780,404 31
Commitments And Contingent Liabilities 7
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
$ 8,113,096 100 $ 8,876,483 100
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of New Taiwan dollars, except loss per share amounts) 2012 2011
Notes AMOUNT % AMOUNT %
The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 21, 2013.
~17~
Operating Revenue Sales $ 7,593,313 100 $ 6,732,672 101 Sales returns ( 29,713 ) - ( 45,873 ) ( 1 ) Sales discounts ( 2,311 ) - ( 8,506 ) - Net Sales 7,561,289 100 6,678,293 100 Operating Costs 4(4)(21) Cost of goods sold ( 7,044,138 ) ( 93 ) ( 6,385,368 ) ( 96 ) Gross profit 517,151 7 292,925 4 Operating Expenses 4(21) Sales and marketing expenses ( 412,153 ) ( 5 ) ( 372,580 ) ( 6 ) General and administrative expenses ( 265,203 ) ( 4 ) ( 321,382 ) ( 5 ) Research and development expenses ( 895,600 ) ( 12 ) ( 1,156,707 ) ( 17 ) Total Operating Expenses ( 1,572,956 ) ( 21 ) ( 1,850,669 ) ( 28 ) Operating loss ( 1,055,805 ) ( 14 ) ( 1,557,744 ) ( 24 ) Non-operating Income and Gains Interest income 11,033 - 20,655 - Dividend income 7,291 - - - Gain on disposal of property, plant and
equipment
2,827 - - - Gain on disposal of investments 4(5) - - 6,057 - Gain on valuation of financial assets 4(2) 6,835 - - - Gain on valuation of financial liabilities 4(10) - - 2,478 - Other non-operating income 4(4) 84,103 1 37,900 1 Non-operating Income and Gains 112,089 1 67,090 1 Non-operating Expenses and Losses Interest expense ( 64,164 ) ( 1 ) ( 40,615 ) ( 1 ) Loss on disposal of property, plant and
equipment
- - ( 4,250 ) - Loss on disposal of investments ( 4,652 ) - - - Foreign exchange loss, net ( 11,020 ) - ( 3,332 ) - Impairment loss on assets 4(5)(8) ( 14,896 ) - ( 5,933 ) - Loss on valuation of financial assets 4(2) - - ( 11,468 ) - Loss on valuation of financial liabilities 4(10) ( 1,520 ) - - - Other non-operating losses 4(4) ( 13,568 ) - ( 378,478 ) ( 6 ) Non-operating Expenses and Losses ( 109,820 ) ( 1 ) ( 444,076 ) ( 7 ) Loss from continuing operations before
income tax
( 1,053,536 ) ( 14 ) ( 1,934,730 ) ( 30 ) Income tax benefit 4(19) 18,908 - 157,323 3 Consolidated net loss ( $ 1,034,628 ) ( 14 ) ( $ 1,777,407 ) ( 27 ) Attributable to: Equity holders of parent company ( $ 1,032,423 ) ( 14 ) ( $ 1,775,885 ) ( 27 ) Minority interest ( 2,205 ) - ( 1,522 ) - ( $ 1,034,628 ) ( 14 ) ( $ 1,777,407 ) ( 27 ) Before Tax After Tax Before Tax After Tax Basic loss per share (in dollars) Net loss 4(20) ( $ 3.95 ) ( $ 3.82 ) ( $ 6.89 ) ( $ 6.58 ) Diluted loss per share (in dollars) Net loss 4(20) ( $ 3.95 ) ( $ 3.82 ) ( $ 6.89 ) ( $ 6.58 )
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 (Expressed in thousands of New Taiwan dollars)
Capital reserves Retained earnings
Common stock
Paid-in capital in excess of par value of common
stock
Capital reserve from conversion of convertible bonds
Capital reserve from long-term investments
Capital reserve from stock warrants
Legal reserve
(Accumulated deficit)
undistributed earnings
Cumulative translation adjustments
Unrecognized pension
cost Minority interest Total
The accompanying notes are an integral part of these consolidated financial statements.
See report of independent accountants dated March 21, 2013.
~18~
Year 2011 Balance at January 1, 2011 $ 4,129,682 $ 59,451 $ 28,676 $ 8,326 $ - $ 160,405 $ 87,808 $ 4,795 ($ 15,797 ) $ 41,931 $ 4,505,277
Net loss for 2011 - - - - - - ( 1,775,885 ) - - ( 1,522 ) ( 1,777,407 )
Issuance of stock from employee stock options exercised 690 469 - - - - - - - - 1,159
Adjustment arising from subsidiaries' share-based payment-cash-settled - - - ( 5,788 ) - - - - - - ( 5,788 )
Unrecognized pension cost - - - - - - - - 10,378 - 10,378
Proportionate share in adjustment of subsidiaries' unrecognized pension cost - - - - - - - - ( 226 ) - ( 226 )
Translation adjustments of long-term investments - - - - - - - 82,797 - 373 83,170
Purchase of minority interest - - - - - - - - - ( 36,159 ) ( 36,159 )
Balance at December 31, 2011 $ 4,130,372 $ 59,920 $ 28,676 $ 2,538 $ - $ 160,405 ($ 1,688,077 ) $ 87,592 ($ 5,645 ) $ 4,623 $ 2,780,404
Year 2012 Balance at January 1, 2012 $ 4,130,372 $ 59,920 $ 28,676 $ 2,538 $ - $ 160,405 ($ 1,688,077 ) $ 87,592 ($ 5,645 ) $ 4,623 $ 2,780,404
Net loss for 2012 - - - - - - ( 1,032,423 ) - - ( 2,205 ) ( 1,034,628 )
Private-placement mandatory convertible bonds - - - - 1,800,000 - - - - - 1,800,000
Conversion of convertible bonds 23,000 - ( 2,300 ) - ( 20,700 ) - - - - - -
Capital reserve and legal reserve used to cover accumulated deficit - ( 59,920 ) ( 26,376 ) - - ( 160,405 ) 246,701 - - - -
Unrecognized pension cost - - - - - - - - ( 29,738 ) - ( 29,738 )
Translation adjustments of long-term investments - - - - - - - ( 61,886 ) - ( 138 ) ( 62,024 )
Balance at December 31, 2012 $ 4,153,372 $ - $ - $ 2,538 $ 1,779,300 $ - ($ 2,473,799 ) $ 25,706 ($ 35,383 ) $ 2,280 $ 3,454,014
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars)
2012 2011
~19~
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net loss ( $ 1,034,628 ) ( $ 1,777,407 )
Adjustments to reconcile consolidated net loss to net cash used in
operating activities
Provision for loss on inventory obsolescence and market price
decline 12,230 102,032
Provision for bad debts 1,454 2,682
Depreciation 245,568 219,880
Amortization 142,275 141,179
(Gain) loss on disposal of property, plant and equipment, net ( 2,827 ) 4,250
(Gain) loss on valuation of financial assets, net ( 6,835 ) 11,468
Loss (gain) on disposal of investments 4,652 ( 6,057 )
Impairment loss on financial assets, net 12,000 5,933
Impairment loss on property, plant and equipment, net 2,896 -
Loss (gain) on valuation of financial liabilities, net 1,520 ( 2,478 )
Loss on compensation for damage - 355,822
Gain on reversal of compensation loss ( 51,335 ) -
Foreign currency exchange loss (gain) on restricted current
assets 278 ( 192 )
Foreign currency exchange (gain) loss on long-term loans ( 15,679 ) 3,033
Changes in assets and liabilities
Financial assets at fair value through profit or loss 191,817 ( 125,199 )
Accounts receivable 301,529 21,321
Other receivables 2,897 ( 66,093 )
Inventories 432,959 ( 388,105 )
Prepaid expenses 20,838 ( 12,865 )
Prepayments 96,064 ( 96,121 )
Other current liabilities ( 1,404 ) -
Deferred income tax assets ( 38,286 ) ( 175,282 )
Accounts payable ( 172,415 ) 161,122
Income tax payable ( 509 ) ( 15,578 )
Accrued expenses ( 90,455 ) ( 21,887 )
Other payables ( 125,874 ) ( 21,446 )
Receipts in advance ( 24,846 ) 37,799
Accrued warranty liabilities ( 65,117 ) 67,704
Other current liabilities ( 1,987 ) 3,556
Accrued pension liabilities ( 77,771 ) ( 2,557 )
Net cash used in operating activities ( 240,991 ) ( 1,573,486 )
(Continued)
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars)
2012 2011
The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated March 21, 2013.
~20~
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in restricted current assets ( $ 900,000 ) $ -
Decrease in financial assets carried at cost - 3,047
Acquisition of property, plant and equipment ( 75,316 ) ( 378,666 )
Proceeds from disposal of property, plant and equipment 7,684 63
Decrease (increase) in refundable deposits 959 ( 3,623 )
Increase in deferred charges ( 53,887 ) ( 76,052 )
Net cash used in investing activities ( 1,020,560 ) ( 455,231 )
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term loans ( 158,163 ) 790,778
Proceeds from long-term loans - 785,898
Repayment of long-term loans ( 672,379 ) -
Decrease in capital lease payables - non-current ( 2,108 ) ( 2,094 )
Increase (decrease) in guarantee deposits received 640 ( 250 )
Purchase of minority interest - ( 61,698 )
Proceeds from exercise of employee stock options - 1,159
Proceeds from private-placement mandatory convertible bonds 1,800,000 -
Net cash provided by financing activities 967,990 1,513,793
Effect of change in exchange rates ( 19,333 ) 46,544
Decrease in cash and cash equivalents ( 312,894 ) ( 468,380 )
Cash and cash equivalents at beginning of year 1,852,273 2,320,653
Cash and cash equivalents at end of year $ 1,539,379 $ 1,852,273
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ 65,856 $ 36,308
Income tax paid $ 19,821 $ 20,986
INVESTING ACTIVITIES PARTIALLY PAID BY CASH:
Increase in property, plant and equipment $ 72,294 $ 323,837
Less: Payable for equipment at the end of the year ( 6,603 ) ( 24,832 )
Add: Payable for equipment at the beginning of the year 24,832 79,661
Less: Lease payable at the end of the year ( 15,207 ) -
Net cash paid $ 75,316 $ 378,666
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MICROELECTRONICS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012 AND 2011
(expressed in thousands of New Ta iwan dol lar s, except as otherwise indicated)
1. HISTORY AND ORGANIZATION
(1) The Company was approved under the "Sta tute for t he Establ ishment and Administ ra t ion of
Science -Based Indus tr ia l Park" in September 1982 and was incorporated on March 31, 1983 under
the provis ions of the Company Law of the Republic of China (R.O.C.) . The Company c ommenced
i t s operat ions on Apri l 29, 1983.
The Compan y is mainly engaged in the design and manufacture of wire less communicat ion
produc ts and s tandard products , inc luding microwave products , d igita l microwave radio
transceivers and sys tems, VSAT, TVRO/DBS products and microwave components . The Compan y
also manufactures cus tom des igned produc ts sui ted to the specif ic requi rements of i t s customers '
var ious microwave systems.
On Januar y 1 , 2011, the Company merged with a subsidia ry – Global PCS Inc. . The Compan y
became the surviving company and Global PCS Inc . became the dissolved company.
As of December 31, 2012, the Compan y and i t s subsidiar ies had 1,934 employees.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompan ying financia l s tatements of the Company and i ts subsidiar ies ( together r eferred
herein a s the Group) are prepa red in accordance with the “Rules Governing the Prepara t ion
of Financ ia l Sta tements by Secur i t ies Issue rs” and account ing pr inc iples general ly accepted in
the Republic of China. The Group’s account ing pol ic ie s are summar ized be low:
(1) Principles of consol ida tion
A. All ma jor i ty- owned subsidiar ies and cont rol led enti t ies a re inc luded in the consol idated
financia l s ta tements. The Group prepares quar te r ly consol ida ted f inancia l sta tements which
include the subs idiar ies in which the Company owns more than 50% of vot ing r ights or has
effect ive cont rol . Al l s igni f icant inte rcompany accounts and transact ions are el iminated in
the consol ida ted f inancial s tatements.
B. Subs idiar ies inc luded in the consol idated f inancia l sta tements and the ir changes in 2012 and
2011:
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Primary
Investor Company name business 2012 2011 Note
Microelectronics Sasson International Note 1 100% 100%
Technology, Inc. Holdings Inc.
Sasson International Welltop Technology Notes 1 and 3 100% 100%
Holdings Inc. Co., Ltd.
" Jupiter Network Corp. Note 1 100% 100%
Corp. (Jupiter)
Welltop Technology
Co. , Ltd
MTI Laboratory, Inc. Note 3 100% 100%
" MTI Network, Inc. Note 2 100% 100%
" RadioComp ApS Note 2 100% 100%
Jupiter Network Jupiter Technology Note 3 100% 100%
Corp. (Jupiter) (Wuxi) Inc.
Sasson International Greast Communication Note 4 81.94% 81.94%
Technology Co., Ltd.
Percentage of
direct
ownership
Note 1: Investment planning and consult ing.
Note 2: Manufacture of advanced personal communication products and wirele ss access products.
Note 3: Sa tel l i te and microwave communicat ion and consul t ing services.
Note 4: Research, development, design, production, manufactur ing and sa les of WCDMA
technique and radio f requenc y sub-syst em.
C. Subs idiar ies not inc luded in the consol ida ted f inancia l s tatements : None.
D. Adjustments for subsidiaries wi th di fferent balance sheet da tes: None.
E. Specia l operat ing ri sks in foreign subsidiar ies: None.
F. Nature and extent of the rest ric t ions on fund remit tance f rom subsidiari es to the parent
company: None.
G. Contents of subsidiar ies ' secur i t ies i ssued by the pa rent company: None.
H. Informat ion on conver t ible bonds and new shares i ssued by subs idiar ies : None.
(2) Trans la t ion of f inancia l s tatements of fore ign subsidiar ie s in to New Taiwan dol lar s
Asse ts and l iabi l i t ies of fore ign subsidiar ies are trans lated into New Taiwan dol la rs a t the
exchange ra tes prevai l ing at t he ba lance sheet date ; equity accounts a re transla ted at h is tor ica l
ra tes , except for beginning re ta ined earnings which i s t r ansferred f rom prior years’s ending
re ta ined earnings ; and income and expense accounts a re trans lated into New Taiwan dol lars a t the
average ra tes of exchange prevail ing dur ing the year. Transla t ion adjustments are taken direct ly
to a separa te component of s tockholders’ equi ty, “cumulat ive translat ion adjustment .”
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(3) Trans la t ion of fore ign currenc y t ransactions
A. Transactions denominated in foreign currencies are translated into functional currency at the spot exchange rates
prevailing at the transaction dates.
B. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates prevailing at
the balance sheet date. Exchange gains or losses are recognized in profit or loss.
(4) Classif icat ion of current and non-current i tems
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as
non-current assets:
(a)Assets arising from operating activities that are expected to be realized or consumed, or are intended to be sold
within the normal operating cycle;
(b)Assets held mainly for trading purposes;
(c)Assets that are expected to be realized within twelve months from the balance sheet date;
(d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or
used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as
non-current liabilities:
(a)Liabilities arising from operating activities that are expected to be paid off within the normal operating cycle;
(b)Liabilities arising mainly from trading activities;
(c)Liabilities that are to be paid off within twelve months from the balance sheet date;
(d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the
balance sheet date.
(5) Financial asse t s and f inancia l l iabil i t ies a t f air va lue through prof i t or loss
A. Financial assets and financial liabilities at fair value through profit or loss are initially recognized at fair value. Those
in the form of equity securities are accounted for using the trade date accounting, while those in the form of debt
securities, beneficiary certificates, and derivative instruments are accounted for using settlement date accounting.
B. These financial instruments are subsequently remeasured and stated at fair value, and the gain or loss is recognized in
profit or loss. The fair value of listed equity securities, closed-end funds and beneficiary certificates are determined
by the closing prices at the balance sheet date. The fair value of open-end funds is determined by the net asset value
at the balance sheet date.
C. When a derivative is an ineffective hedging instrument, it is initially recognized at fair value on the date a derivative
contract is entered into and is subsequently remeasured at its fair value. If a derivative is a non-option derivative, the
fair value initially recognized is zero.
(6) Financial asse t s carr ied at cos t
A. Financial assets carried at cost are initially recognized at fair value plus transaction costs and are accounted for using
trade date accounting.
B. Impairment loss is recognized when there is objective evidence that the assets are impaired. Reversal of the
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foregoing impairment loss is not allowed.
(7) Notes, accounts and other receivables
A. Notes and accounts receivable are claims resulting from the sale of goods or services. Receivables arising from
transactions other than the sale of goods or services are classified as other receivables. Notes, accounts and other
receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest method, less provision for impairment.
B. The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. If such evidence exists, a provision for impairment of financial asset is
recognized. The amount of impairment loss is determined based on the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
When the fair value of the asset subsequently increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed to the
extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the
asset’s carrying amount greater than its amortized cost where no impairment loss was recognized. Subsequent
recoveries of amounts previously written off are recognized in profit or loss.
(8) Inventor ies
The perpetual inventor y sys tem is adopted for inventor y recogni t ion. Inventor ies are s tated a t
cos t . The cos t is de termined using the weighted-average method. Fixed manufac tur ing overhea d
is a l loca ted on the basis of the normal capaci ty of the produc t ion equipment . At the end of
per iod, inventor ie s a re eva luated at the lower of cost or ne t real izable va lue, and the individual
i tem approach i s used in the comparison of cos t and net rea l izable value . The ca lcula t ion of ne t
real izable va lue i s based on the est ima ted sel l i ng pr ice in the normal course of business , ne t of
es t imated cost s of comple t ion and est ima ted se l l ing expenses.
(9) Proper ty, plant and equipment
A. Property, plant and equipment are stated at cost. Depreciation is provided under the straight-line method based on the
assets’ estimated economic service lives. Salvage value of the fully depreciated assets that are still in use is
depreciated based on the re-estimated economic service lives.
B. The estimated useful lives are 40 years for buildings and improvements and 3 to 8 years for other fixed assets.
C. Major improvements and renewals are capitalized and depreciated accordingly. Maintenance and repairs are
expensed as incurred.
(10) Intangible assets
A. The excess of acquisition costs over the fair value of identifiable net tangible assets is recognized as goodwill
and is reviewed for impairment testing annually.
B. Intangible assets, mainly technology know-how, are amortized on a straight-line basis over 5 years.
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(11) Deferred charges
Deferred charges, mainly land-use r ight and computer sof tware expenditures , are s tated a t
cos t and amor tized over the est imated l ife of 50 and 3 years, respective ly, us ing the
s traight - l ine method.
(12) Impairment of non-financia l asse ts
The Group recognizes impa irment loss when the re i s indica tion that the recoverable amount of
an asse t i s less than i t s carrying amount. The recoverable amount is the highe r of the fa ir
va lue less cos ts to se l l and value in use. The fa ir va lue less costs to se l l i s the amount
obtainable f rom the sale of the asse t in an arm’s length t ransact ion af ter deduct ing any direc t
incremental di sposa l costs . The value in use i s the present value of est imated future cash
f lows to be derived f rom cont inuing use of the asse t and f rom it s disposa l a t the end of i ts
useful l i fe . When the impa irment no longer exis ts , the impairment los s recognized in pr ior
yea rs shal l be recovered.
The recove rable amount of goodwill shal l be evaluated pe riodica lly. Impairment loss wi l l be
recognized wheneve r there is indica t ion tha t the recoverable amount of these assets i s less
than thei r respect ive carr ying amount . Impairment loss of goodwil l recognized in pr ior
yea rs i s not recoverable in the fol lowing years .
(13) Bonds payable
For the bonds pa yable with conversion opt ion, put opt ion and cal l opt ion i ssued af ter Januar y
1, 2006, the Company c lassif ies the instrument, or i t s component par ts , on ini t ia l r ecogni t ion
as a f inancial asse t , a f inancia l l iabi l i t y, or shareholders’ equi ty (capita l re serve f rom stoc k
warrants) in accordance with the substance of the cont rac tua l arrangement . These bonds are
accounted for as fol lows:
A. The difference between the issue price and face value of the bonds is accounted for as premium or discount
which is required to be amortized over the period from the date of issuance to maturity date using the interest
method and is recorded as ‘interest expense’.
B. The value of put option and call option embedded in the bonds payable is recognized as ‘financial assets or
financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value
on each balance sheet date, and the gain or loss is recognized in ‘gain or loss on valuation of financial assets or
financial liabilities’. At the maturity of the redemption period, if the market value of common stock exceeds the
agreed-upon redemption price, the fair value of the put option is all reclassified to ‘capital reserve’; however, if the
market value of common stock is lower than the agreed-upon redemption price, the fair value of the put option is
recognized in profit or loss.
C. Conversion option embedded in the bonds is recognized in ‘capital reserve from warrants’ if it meets the
definition of equity. When a bondholder exercises his/her conversion option, the liability component of the bonds
(including corporate bonds and embedded derivatives) shall be revalued at fair value on the conversion date, and
the resulting difference shall be recognized in profit or loss. The book value of the common stocks issued due to
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the conversion shall be based on the adjusted book value of the above-mentioned liability component plus the book
value of the stock warrants.
D. Costs incurred on issuance of convertible bonds are proportionally charged to the liabilities and equities of the
underlying instruments based on initial recognition costs.
(14) Reserve for product war ranty
Under the warranty provi sions of i t s sa les cont rac ts, the Group i s obl iga ted to correc t any
def ic iencie s in i t s product s that occur under norma l opera t ion wi thin a cer ta in per iod af ter the
da te of sa le . The Group provides a reserve for produc t warranty based on a cer tain percentage
of the sa les va lue of each product l i ne, taking into account histor ica l exper ience.
(15) Retirement plan and net per iodic pension cos t
Under the def ined benefi t pension plan, ne t per iodic pension costs a re recognized in
accordance with the actuar ia l calcula t ions. Net per iodic pension cost s include service cost ,
in terest cos t , and expected re turn on plan a sse ts , and amor tiza t ion of unrecognized ne t
t ransi t ion obl iga tion and ga ins or l osses on plan assets . Unrecognized net t ransi t ion
obl iga tion i s amor tized on a s tra ight - l ine basis over 12 years.
Under the def ined cont r ibut ion pension plan, ne t per iodic pension costs a re recognized as
incurred.
(16) Income tax
A. Provision for income tax includes deferred income tax resulting from temporary differences, investment tax
credits and loss carryforward. Valuation allowance on deferred tax assets is provided to the extent that it is more
likely than not that the tax benefit will not be realized. Over or under provision of prior years’ income tax liabilities
is included in current year’s income tax. When a change in the tax laws is enacted, the deferred tax liability or asset
is recomputed accordingly in the period of change. The difference between the new amount and the original amount,
that is, the effect of changes in the deferred tax liability or asset, is recognized as an adjustment to current income
tax expense (benefit).
B. Investment tax credits arising from expenditures incurred on acquisitions of equipment or technology, research
and development, employees’ training, and equity investments are recognized in the year the related expenditures
are incurred.
C. An additional 10% tax is levied on the inappropriate retained earnings and is recorded as income tax expense in
the year the stockholders resolve to retain the earnings.
(17) Share-based payment - employee compensa tion p lan
A.The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in
accordance with EITF 92-070, EITF 92-071 and EITF 92-072 “Accounting for Employee Stock Options”, as
prescribed by the Accounting Research and Development Foundation, R.O.C., dated March 17, 2003. Under the
share-based employee compensation plan, compensation cost is recognized using the intrinsic value method and
pro forma disclosures of net income and earnings per share are prepared in accordance with the R.O.C. SFAS No.
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39, “Accounting for Share-based Payment”.
B. For the grant date of the share-based payment agreements set on or after January 1, 2008, the Company shall
measure the services received during the vesting period by reference to the fair value of the equity instruments
granted and account for those amounts as payroll expense during that period.
(18) Employees’ bonuses and direc tor s’ and supervisors’ remunera tion
Effec t ive Januar y 1 , 2008, pursuant to EITF 96-052 of the Account ing Research and
Development Foundation, R.O.C., da ted March 16, 2007, “Account ing for Employees’
Bonuses and Director s’ and Supervisors’ Remuneration” , t he costs of employees’ bonuses and
di rec tors’ and supervisors’ remunerat ion are accounted for as expenses and l iabil i t ies,
provided that such recogni t ion i s required unde r legal or const ruc tive obl iga t ion and those
amounts can be es t imated reasonably. However, i f the accrued amounts for employees’
bonuses and direc tor s’ and supervisors’ remunera t ion a re s ignif icantly di fferent f rom the
ac tua l di str ibuted amounts resolved by the s tockholders at their annual s tockholders’ meet ing
subsequently, the differences shal l be recognized as ga in or loss in the following yea r. In
addit ion, according to EITF 97-127 of the Account ing Research and Development Foundat ion,
R.O.C., da ted March 31, 2008, “Cr iter ia for Listed Companies in Calculat ing the Number of
Shares of Employees’ Stock Bonus”, the Company ca lculates the number of shares of
employees’ s tock bonus based on the clos ing price of the Compan y’s common s tock at the
previous day of the stockholders’ meeting he ld in the year fol lowing the f inancial r eport ing
year, and af ter taking into account the effects of ex-r ights and ex-dividends.
(19) Revenues, cos ts and expenses
A. Revenues are recognized when the earning process is substantially completed and are realized or realizable.
Costs and expenses are recognized as incurred.
B. The Company sells raw materials to certain factories for processing. Most of the finished goods are then
repurchased by the Company directly from the subsidiary and sold to customers. Although the ownership of raw
materials is transferred during the sale, the risk is not transferred in substance. Pursuant to the ruling letter Tai
Tsai Sheng 6 No. 00747 issued by the Securities and Futures Bureau of the Financial Supervisory
Commission, Executive Yuan on March 18, 1998, such transactions shall not be recorded as sales and purchases.
Accordingly, raw materials sold to processing factories that are not yet processed at year-end are reclassified back
to inventories from accounts receivable.
(20) Capita l expendi tures
Cos ts and expenditures that have future economic benef i t s are capi ta l ized as asse ts.
Otherwise they are expensed when incurred.
(21) Use of es t imates
The prepara tion of f inancia l s tatements in conformity wi th genera lly accepted account ing
pr inciple s requires management to make est imates and a ssumpt ions tha t a ffec t the amounts of
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asse ts and l iabi l i t ies and the disc losures of cont ingent asse ts and l iabil i t ies at the da te of the
f inancia l s ta tements and the amounts of r evenues and expenses dur ing the repor t ing per iod.
Actual r esult s could differ f rom those assumpt ions and est imates .
(22) Set t lement da te account ing
If an ent i ty recognizes f inancial asse ts using se t t lement da te account ing, any change in the
fair va lue of the asse t to be received during the period between the trade date and the
se t t lement da te/ba lance sheet dat e i s not r ecogn ized for assets carr ied a t cos t or amort ized
cos t . For f inanc ial assets or f inancia l l iabi l i t ies cl ass if ied as a t fa ir value through prof i t or
loss, the change in fa ir va lue i s r ecognized in prof i t or loss. For avai lable-for- sale financia l
asse ts , the change in fai r value i s recognized direct ly in equi ty.
(23) Operating segments
Opera ting segments are repor ted in a manner consis tent with the internal repor t ing provided
to the chief operating dec ision-maker. The chief opera ting decision-maker, who is
responsible for al loca t ing resources and assessing performance of the operat ing segments,
has been ident if ied as the Genera l Manager who makes stra tegic decis ions.
In accordance with R.O.C. SFAS No. 41, “Operat ing Segment s”, segment informat ion i s
disclosed in the consol idated f inancial s ta tements ra ther than in the separa te f inancia l
s tatements of the Company.
3. CHANGES IN ACCOUNTING PRINCIPLES
(24) Notes, accounts and other rece ivables
Effec t ive Januar y 1 , 2011, the Group adopted the amendments to R.O.C. SFAS No. 34,
“Financ ial Inst ruments : Recogni t ion and Measurement”. A provision for impairment (bad
debts) of notes , accounts and other receivab les i s recognized when there i s object ive
evidence that t he rece ivable s are impaired. This change in account ing pr inc iple had no
s igni f icant e ffec t on the Group’s f inanc ia l s ta tements as of and for the year ended December
31, 2011.
(25) Operating segments
Effec t ive January 1 , 2011, the Group adopted R.O.C. SFAS No. 41, “Operating Segments” in
place of the or igina l R.O.C. SFAS No. 20, “Segment Report ing”. In accordance wi th such
s tandard, the Company r es tated the segment informat ion for 2010 upon the fi rs t adopt ion of
R.O.C. SFAS No. 41. This change in accounting pr inciple had no effect on net loss and loss
per share for t he year ended December 31, 2011.
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4. DETAILS OF SIGNIFICANT ACCOUNTS
(26) Cash and cash equiva lents
2012 2011
Cash on hand 568$ 590$
Checking accounts 1,263 727
Savings accounts 812,974 453,161
Time deposits 724,574 1,397,795
1,539,379$ 1,852,273$
December 31,
(27) Financia l asse ts a t fa ir va lue through prof i t or loss - current
2012 2011
Financial assets held for trading-beneficiary certificates 13,661$ 213,175$
Fair value adjustment 2,392)( 15,130)(
11,269 198,045
Fair value adjustment-financial derivatives - 5,698
11,269$ 203,743$
December 31,
A. In 2012 and 2011, loss recognized for the changes in fair values of the financial assets at fair value through profit or
loss amounted to $6,835 (which consists of gain on valuation of beneficiary certificates of $12,533 and loss on
valuation of financial derivatives of $5,698) and $11,468 (which consists of loss on valuation of beneficiary
certificates of $7,551 and loss on valuation of financial derivatives of $3,917), respectively.
B. The nature and cont rac tua l t erms of der iva tives are as fol lows:
Contract Amount Fair Value Contract Period
Forward exchange contracts USD 10,000 thousand 2,320$ 2011.10.27~2012.05.10
(Buy USD sell NTD)
Forward exchange contracts EUR 2,050 thousand 3,378 2011.10.05~2012.04.12
(Sell EUR buy USD)
5,698$
December 31, 2011
The derivative financial instruments held by the Company are primarily forward selling foreign exchange contracts,
which are intended to hedge exchange rate risk of export proceeds. However, these forward foreign exchange
contracts are not used for hedge accounting purposes.
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(28) Notes and accounts r ece ivable , ne t
2012 2011
Notes receivable 1,386$ 1,441$
Accounts receivable 1,323,748 1,652,765
1,325,134 1,654,206
Allowance for doubtful accounts 4,930)( 3,282)(
1,320,204$ 1,650,924$
December 31,
On September 28 and October 1, 2011, the Company entered into an agreement with HSBC Bank (Taiwan) and Taishin
International Bank, respectively, to sell its accounts receivable. Under the agreements, the Company is not required to
bear uncollectible risk of the underlying accounts receivable, but is liable for the losses incurred on any business dispute;
the two banks should pay the Company consideration in the specified periods; the Company should issue a promissory
note with par value of US$5,600 thousand to Taishin International Bank, and Taishin International Bank may request
damages by cashing the promissory note when, and only when, the business dispute is attributed to the Company. These
accounts receivable meet the derecognition criteria for financial assets. The Company has derecognized the accounts
receivable sold to HSBC Bank (Taiwan) and Taishin International Bank, net of the losses estimated for possible
business disputes.
As of December 31, 2012 and 2011, the outs tanding accounts receivable sold to HSBC Bank
(Taiwan) and Taishin Internationa l Bank were a s fol lows:
Purchaser of Accounts Amount Amount
accounts receivable receivable sold derecognized Limit advanced Interest rate
Taishin International Bank 140,607$ 140,607$ 203,280$ 100,070$ 1.66%
December 31, 2012
Purchaser of Accounts Amount Amount
accounts receivable receivable sold derecognized Limit advanced Interest rate
HSBC Bank (Taiwan) 54,933$ 54,933$ 127,155$ 16,344$ 1.05%
Taishin International Bank 152,566 152,566 151,375 110,196 1.62%
207,499$ 207,499$ 278,530$ 126,540$
December 31, 2011
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(29) Inventor ies , ne t
Cost Allowance Book value
Raw materials 744,146$ 106,839)($ 637,307$
Work in process 262,367 31,959)( 230,408
Finished goods 755,455 64,750)( 690,705
Inventory in transit 1,637 - 1,637
Total 1,763,605$ 203,548)($ 1,560,057$
Cost Allowance Book value
Raw materials 1,195,171$ 125,762)($ 1,069,409$
Work in process 437,635 7,203)( 430,432
Finished goods 620,789 100,728)( 520,061
Inventory in transit 496 - 496
Total 2,254,091$ 233,693)($ 2,020,398$
December 31, 2012
December 31, 2011
Expense and loss incurred on inventor ies for the years ended December 31, 2012 and 2011 were
as fol lows:
2012 2011
Cost of inventories sold 6,895,459$ 6,165,693$
Provision for loss on inventory obsolescence
and market price decline 12,230 102,032
Others 107,864 21,399)(
Related inventory loss 92,426 135,477
7,107,979$ 6,381,803$
For the years ended December 31,
The Compan y detec ted some potentia l r i sk in a cer ta in model of base s ta t ion power ampl if ie rs. For
the future appl ica t ion of th is product and a respons ible a t t i tude toward customers, the Company
reca lled those amplif ier s and made the necessary repairs . As a result of the product defects and
repair costs , the Company had accrued the possible effec t of th is event in the f inancia l sta tements
for the s ix-month per iod ended June 30, 2011, inc luding loss on inventor y obsolescence and
market pr ice decl ine, repair and maintenance costs , and other losses tota l ing $454,154. Through a
re-assessment of the effec t of th is event on the Company’s f inances, the Company reve rsed other
losses by $51,335 ( recorded in ‘other income’) for the yea r ended December 31, 2012. As of
December 31, 2012 and 2011, the pa yables re lat ing to other losses accrued were $152,716 and
$347,572 ( inc luding payables of $136,938 due af ter one year) , respect ive l y.
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(30) Finanica l asse ts carr ied a t cos t
Ownership
percentage Amount
Ownership
percentage Amount
Taicom Capital Inc. 11.43% 213,740$ 11.43% 234,940$
Optical Scientific Inc. 6.02% 57,821 7.94% 60,280
Firetide Inc. 1.67% 29,040 1.67% 30,275
Intelligent Epitaxy Technology, Inc. 1.93% 17,424 1.92% 18,165
Taiwan Aerospace Corp. 0.48% 11,138 0.48% 11,138
Others Note 866 Note 866
330,029$ 355,664$
December 31,
2012 2011
A. Impairment loss of $12,000 and $5,933 was recognized on the shares of the investee – Taicom Capital Ltd., which
were carried at cost, for the years ended December 31, 2012 and 2011.
B. The funds of NAVF II-GP and NAVF II-LP held by the Company had matured on June 26, 2011, and underwent fund
liquidation and dissolution procedures. The Company received liquidation cash distribution amounting to US$220
thousand, and recognized gain on disposal of such investments amounting to $6,057.
C. All shares of Intelligent Epitaxy Technology Inc., Bayspec Inc. and some shares of Taicom Capital Ltd. are preferred
stocks.
D. The above financial assets are not traded in active markets and their fair values cannot be reliably measured.
Note: As the book values of the investments in TRANSCOM, INC. and Applied Wireless Identifications Group, Inc.
were minor, they were both presented in “Others”.
(31) Proper ty, plant and equipment, net
2012 2011
Buildings 795,527$ 793,634$
Machinery and equipment 2,010,221 2,264,836
Transportation equipment 3,527 3,662
Furniture and fixutures 127,092 124,899
Leased assets 15,470 -
Leasehold improvements 136,351 138,381
3,088,188 3,325,412
Less: Accumulated depreciation 2,146,482)( 2,183,350)(
Prepayments for equipment and
construction in progress 150,715 158,131
1,092,421$ 1,300,193$
December 31,
P roper ty, p lant and equipment were pledged as secur i ty for long- term loans. Please refer Note
6 for det ai ls .
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In August , 2012, t he Company signed a two-year equipment lea se contract wi th another
company under a capi tal lease, with the te rm expir ing on August 25, 2014. The rent payable for
the f ir s t s ix months is $438 per month, and for the 7 t h to 24 t h months i s $824 per month. The
Company may purchase the equipment for $5,600 on the expiry da te of the lease. The rent
payable i s as fol lows:
2012 2011
Total rent payable 20,875$ -$
Less: Unamortized interest 5,668)( -
15,207 -
Less: Book value of rent payable-current 5,602)( -
Book value of rent payable 9,605$ -$
Notes payable for the lease 20,875$ -$
December 31,
(32) Intangible assets
2012 2011
Cost:
Goodwill - Greast Communication Technology Co. Ltd. $ 94,693 $ 98,720
Goodwill - Global PCS Inc. 29,450 29,450
Goodwill - TelASIC and RadioComp 240,212 245,571
Other intangible assets 404,895 404,895
769,250 778,636
Accumulated amortization ( 228,733) ( 147,754)
540,517$ 630,882$
December 31,
A.To enhance international competitiveness and global market share of broadband wireless products, the Company
acquired jointly with its overseas subsidiary - MTI Laboratory Inc. (MTI-Lab.) the tangible, intangible assets and
R&D team of TelASIC Communications Inc. (U.S.) (TelASIC) on May 22, 2009. Total acquisition cost (inclusive of
MTI-Lab.) was US$8,633 thousand, comprising of intangible assets (expertise of US$5,480 thousand) and tangible
assets (fixed assets of US$518 thousand MTI’s portion) and goodwill of US$2,635 thousand that was the excess of
the acquisition cost over the acquired net asset value.
B.To improve the Company’s operating performance and pursue its maximum long-term benefits, the Company
acquired the intellectual property rights from RadioComp ApS in October, 2010 in the amount of US$6,828
thousand, and acquired indirectly 100% share ownership of RadioComp Aps amounting to $4,702 thousand through
its overseas subsidiary-Welltop Technology Co., Ltd. with the acquisition cost of US$5,645 thousand (including the
part of its subsidiary). The excess of the acquisition cost over the acquired net asset value of RadioComp ApS
amounting to US$5,282 thousand (including the part of its subsidiary) was recognized as goodwill.
C.To effectively integrate the Group’s resources, reduce administrative costs and increase profitability, the Board of
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Directors of the Company adopted a resolution on November 26, 2010 to merge with a subsidiary – Global PCS Inc.
in accordance with Article 19 of Business Mergers And Acquisitions Act, “Simple merger”. The acquisition cost of
the minority shares of Global PCS Inc. was $61,698. The excess of the acquisition cost over the acquired net asset
value of Global PCS Inc., amounting to $29,450, was recognized as goodwill. After the merger, the Company
became the surviving company and Global PCS Inc. became the dissolved company. The merger effective date
was on January 1, 2011.
D. Goodwill impairment test was conducted in accordance with the R.O.C. SFAS No. 35, “Impairment of Assets”. On
December 31, 2012 and 2011, the Company evaluated the recoverable amount of assets used for operations and
goodwill based on their value in use. The value in use is the present value of estimated future cash flows to be
derived from continuing use of the asset and goodwill and from their disposal at the end of their useful life, which is
based on the five-year financial forecast with the discount rate of 9.9% and 5.3%, respectively. The following sets
forth the methods and assumptions used to estimate the recoverable amount of assets and goodwill:
(a)Estimated operating revenue: it is calculated based on industrial and market information and the Company’s
future operations and sales planning.
(b)Estimated operating cost: it is calculated based on the estimated gross profit margin, which is derived from prior
years’ operating costs and the Company’s future operations and sales planning.
(c)Estimated operating expense: it is calculated based on prior years’ operating expenses and the Company’s future
operations and sales planning.
The recoverable amount calculated based on the foregoing assumptions is higher than the sum of carrying value of
identifiable assets and goodwill on December 31, 2012 and 2011. Therefore, no impairment loss was recognized.
(33) Idle asse ts
2012 2011
Cost 149,129$ 132,551$
Less: Accumulated depreciation 98,790)( 85,108)(
Accumulated impairment 50,339)( 47,443)(
-$ -$
December 31,
Impairment loss of $2,896 was recognized on the id le asse ts tha t had no value in use for the
year ended December 31, 2012.
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(34) Short- te rm loans
2012 2011
Materials, L/C loans 182,696$ 886,030$
Credit loans 1,212,520 888,815
Pre-export loans 428,180 342,895
Accounts receivable factoring 116,160 -
1,939,556$ 2,117,740$
Interest rate per annum 1.12%~2.61% 1.47%~3.75%
December 31,
(35) Financia l l iabi l i t ies at fa ir va lue through prof i t or loss – current
2012 2011
Fair value adjustment-financial derivatives 1,520$ -$
December 31,
A. In 2012 and 2011, loss and gain recognized for the changes in the fair values of the financial liabilities at fair value
through profit were $1,520 and $2,478, respectively.
B. The nature and contractual terms of derivatives are as follows:
Contract amount Fair value Contract period
Forward exchange contracts USD 2,000 thousand 186$ 2012.12.21~2013.01.03
(Sell USD buy NTD)
Forward exchange contracts EUR 2,050 thousand
(Sell EUR buy USD) 1,334 2012.10.09~2013.07.02
1,520$
December 31, 2012
The purpose of the forward exchange contracts is to hedge the change of exchange rate due to export transactions,
without adopting hedge accounting.
(36) Accrued expenses
2012 2011
Accrued payroll and bonus 135,828$ 130,538$
Accrued human resource outsourcing expense 12,767 56,724
Other miscellaneous purchases payable 43,722 82,071
Accrued shipment fees 20,420 30,927
Others 161,999 172,718
374,736$ 472,978$
December 31,
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(37) Long- term loans
Interest rate
Bank name and type of loan and repayment term 2012 2011
Mega International
Commerical Bank 357,000$ 500,000$
Syndicated loan Floating rate-equal semiannual
installments starting April 2012
and ending April 2015
Syndicated loan Floating rate-equal annual 241,555 486,459
installments ending
April 2013
HSBC Bank (Taiwan)
Limited Project loan Floating rate-equal semiannual - 302,750
installments ending June 2015
598,555 1,289,209
Current portion 384,355)( 479,053)(
214,200$ 810,156$
Interest rate per annum 1.51%~2.63% 1.35%~2.50%
December 31,
A.The syndicated loan led by Mega International Commercial Bank was obtained to finance working capital. Under
the terms of the loan agreement, the Company is required to maintain certain annual consolidated financial ratios,
including current ratio, liability ratio, and interest coverage ratio.
B. Please refer to Note 6 for guarantees provided for long-term loans.
(38) Mandator y-conversion conver t ib le bonds
A. Domestic convertible bonds issued by the Company
(a)The terms of the domestic unsecured mandatory-conversion convertible bonds issued by the Company are as
follows:
1.In 2012, the Company issued $900,000, 0%, first domestic unsecured mandatory-conversion convertible bonds
through private placement. The bonds mature 3 years from the issue date (September 24, 2012 ~ September
23, 2015). At maturity, the bonds will not be redeemed in cash, but will be converted into common shares of
the Company in a mandatory manner based on the then conversion price.
2.The bondholders have the right to ask for conversion of the bonds into common shares of the Company during
the period from September 25, 2012 to 10 days before the maturity date, except the stop transfer period as
specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares
converted from the bonds are the same as the issued and outstanding common shares.
3.The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject
to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will
be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms.
The initial conversion price was $9 per share.
(b)The terms of the domestic secured mandatory-conversion convertible bonds issued by the Company are as
follows:
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1. In 2012, the Company issued $900,000, 0%, second domestic secured mandatory-conversion convertible bonds
through private placement. The bonds mature 1 year from the issue date (September 28, 2012 ~ September 27,
2013). At maturity, the bonds will not be redeemed in cash, but will be converted into common shares of the
Company in a mandatory manner based on the then conversion price.
2. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during
the period from September 29, 2012 to 10 days before the maturity date, except the stop transfer period as
specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares
converted from the bonds are the same as the issued and outstanding common shares.
3. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject
to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will
be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms.
The initial conversion price was $9 per share.
4. The bonds are fully secured with time deposit of $900,000 (shown under ‘restricted assets’), which is pledged to
the trustee-Chinatrust Commercial Bank.
5. As of December 31, 2012, the bonds had been converted into 2,300 thousand shares of the Company’s common
shares, which had been registered.
B. Since, the bonds above will not be redeemed in cash at maturity, but will be converted into common shares at
maturity of the Company in a mandatory manner based on the then conversion price, they are attributed to equity
and as of December 31, 2012, the amount of $1,779,300 was recognized in ‘capital reserve from stock warrants’.
(39) Common s tock
(a)Voting
Holders of GDRs have no right to directly exercise voting rights or attend the Company's shareholders' meeting.
A holder or holders together holding at least 51% of the GDRs outstanding at the relevant record date of the
shareholders' meeting may instruct the Depositary to vote in the same direction in respect of one or more
resolutions to be proposed at the meeting.
(b)Sale and withdrawal of GDRs
Under the current R.O.C. law, the shares represented by the GDRs may not be withdrawn by holders of GDRs
commencing three months after the initial issue of GDRs. A holder of GDR may, provided that the Company
has delivered to the custodian physical share certificates in respect of the Deposited Shares, request the
Depositary to sell or cause to be sold on behalf of such holder the shares represented by such GDRs.
(c)Dividends
GDR holders are entitled to receive dividends to the same extent as the holders of common stock subject to the
terms of the Deposit Agreement and applicable laws of the R.O.C.
As of December 31, 2012, the Company had 18,335 units of GDRs outstanding.
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In 2011, the Company issued 69,000 shares of new common stock at $16.8 (in dollars) per share, due to the exercise
of employee stock options of 69,000 units. The effective date of the capital increase was March 16, 2011. The capital
increase had been registered.
In the fourth quarter of 2012, the Company issued 2,300 thousand shares of common shares for the conversion of
convertible bonds, with the conversion price of $9 per share. The effective date of the share capital increase was on
December 5, 2012. The share capital increase had been registered.
As of December 31, 2012, the Company's authorized share capital was 700 million common shares (of which 50
million shares are reserved for corporate bonds with subscription right, stock warrants and special shares with
subscription right issued) with a par value of NT$10 (in dollars) per share. As of December 31, 2012, the total issued
and outstanding common shares were 415,337 thousand shares.
To improve the Company’s financial structure, the shareholders at the extraordinary shareholders’ meeting
on November 27, 2012 made a resolution to cover accumulated deficits of $1,439,076 by reducing share capital on the
effective date of January 10, 2013, which would retire 143,907,678 shares outstanding (including 143,110,764 shares
of listed common shares and 796,914 shares of private-placement common shares). The share capital reduction had
been registered on January 17, 2013.
(40) Capita l r eserves
A. Pursuant to the R.O.C Securities and Exchange Law, capital reserve shall be exclusively used to cover accumulated
deficit or to increase capital and shall not be used for any other purpose. However, capital reserve arising from
paid-in capital in excess of par value on issuance of common stock and donations can be capitalized once a year,
provided that the Company has no accumulated deficit and the amount to be capitalized does not exceed 10% of
the paid-in capital.
B. Information on the ‘capital reserve from warrants’ is provided in Note 4(13).
(41) Reta ined earnings
A. The R.O.C. Company Law requires that at least 10% of the net income each year, less losses of prior years, shall be
set aside as legal reserve until the accumulated reserve equals the total registered capital of the Company and can
be used to offset against accumulated deficit.
B. In accordance with the R.O.C. Securities and Exchange Act, the Company allocates a certain portion of earnings as
special reserve and shown as deduction in stockholders’ equity.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share
ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of
stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the
reserve exceeds 25% of the Company’s paid-in capital.
D. In accordance with the Company's Articles of Incorporation, 1% and no less than 7% of net income, after deducting
legal reserve and special reserve, shall be distributed as directors' and supervisors' remuneration and employees'
bonus, respectively, at the time dividends are declared.
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E.As the Company operates in the stable growth stage, the residual dividend policy is adopted taking into
consideration the Company’s funding requirements, future capital expenditures and long-term financial plans.
According to the dividend policy adopted by the Board of Directors, 30% ~ 100% of the Company’s total dividends
distributed shall be first appropriated as cash dividends; the remaining will then be appropriated as stock dividends.
The dividends appropriation, including appropriation terms, timing, amount and types, is adjusted based on
economic and industrial developments and the Company’s profitability and shall be proposed by the Board of
Directors and resolved by the stockholders.
F. The proposal for covering of accumulated deficits of 2011 and 2010 was passed by the stockholders at their
stockholders’ meeting on May 4, 2012 and June 9, 2011, respectively. There was no earnings distribution for 2011
and 2010.
The covering of accumulated deficits of 2011 and 2010 was in agreement with that proposed by the Board of
Directors on March 22, 2012 and March 17, 2011, respectively.
G. The Company did not accrue employees’ bonus and directors’ and supervisors’ remuneration for 2012 and 2011 as
it incurred losses in that year.
H. Information on the appropriation of the Company’s employees’ bonus and directors’ and supervisors’ remuneration
as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation
Post System” at the website of the Taiwan Stock Exchange.
(42) Share-based payment-employee compensation p lan
A.As of December 31, 2011, the Company's share-based payment transactions are set forth below:
Type of
arrangement Grant date
Quantity
granted
(In thousands of
shares)
Contract
period
Vesting
conditions
Third Employee stock option 2007.12.26 17,800 8 years Note 1
Cash Settled-
Incentive Compensation Agreement 2010.10.01 5,000 5.25 years Note 2
Cash Settled-
Incentive Compensation Agreement 2010.12.31 700 5 years Note 3
Note 1: Professional: 25% can be exercised after 3 years of grant; 50% can be exercised after 4 years of grant; 75%
can be exercised after 5 years of grant; 100% can be exercised after 6 years of grant.
Management: 25% can be exercised after 4 years of grant; 50% can be exercised after 5 years of grant;
75% can be exercised after 6 years of grant; 100% can be exercised after 7 years of grant.
Note 2: 25% can be exercised after 1 year of grant; 50% can be exercised after 2 years of grant; 75% can be
exercised after 3 years of grant; 100% can be exercised after 4 years of grant.
Note 3: 50% can be exercised after 1 year of grant; 100% can be exercised after 2 years of grant.
B. Details of the employee stock options are set forth below:
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No. of
shares
Weighted-
average
exercise price
No. of
shares
Weighted-
average
exercise price
(in thousands) (in dollars) (in thousands) (in dollars)
Options outstanding at
beginning of year
17,731 $ 16.80 17,800 $ 16.80
Options granted - - - -
Options waived - - - -
Forfeited for resignation ( 3,080) - - -
Options exercised - - ( 69) 16.80
Options revoked - - - -
Options outstanding at
end of year 14,651 16.80 17,731 16.80
Options exercisable at
end of year 10,159 2,921
December 31, 2012 December 31, 2011
(a)As of December 31, 2012 and 2011, the exercise price of stock options outstanding was $16.80 (in dollars),
respectively, and the remaining contract period was 3 years and 4 years, respectively.
(b)The following sets forth the pro forma net income and earnings per share based on the assumption that the
compensation cost is accounted for using the fair value method for the stock options granted before the
affectivity of R.O.C. SFAS No. 39 “Accounting for Share-based Payment”:
2012 2011
Net loss Net loss stated
in the statement of income
1,032,423)($ 1,775,885)($
Pro forma net loss 1,046,225)( 1,803,896)(
Basic loss per
share (LPS) (in dollars)
LPS stated in the
statement of income
3.82)( 6.58)(
Pro forma LPS 3.87)( 6.68)(
Diluted loss per
share (LPS) (in dollars)
LPS stated in the
statement of income
3.82)( 6.58)(
Pro forma LPS 3.87)( 6.68)(
For the years ended December 31,
(c)For the stock options granted before January 1, 2008 with the compensation cost accounted for using the fair
value method, their fair value on the grant date is estimated using the Black-Scholes option-pricing model. The
weighted-average parameters used in the estimation of the fair value are as follows:
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Exercise Expected Fair value
price Expected Expected dividend Risk-free per unit
Type of Grant (in price vesting yield interest (in
arrangement date dollars) volatility period rate rate dollars)
Employee
stock options
2007.12.26 18.45$ 49.51% 6.3 years 0% 2.44% 9.35$
Employee
stock options
2007.12.26 18.45$ 50.93% 6.8 years 0% 2.44% 9.87$
C.Details of the Incentive Compensation Agreement are set forth below:
No. of
shares
Weighted-average
exercise price
No. of
shares
Weighted-average
exercise price
(in thousands) (in dollars) (in (in dollars)
Options outstanding at
beginning of year
5,700 $ 16.76 5,700 $ 16.76
Options granted - - - -
Options waived - - - -
Options exercised - - - -
Options revoked - - - -
Options outstanding at
end of year 5,700 16.76 5,700 16.76
Options exercisable at
end of year 3,200 -
December 31, 2012 December 31, 2011
(a) As of December 31, 2012 and 2011, the exercise price of stock options outstanding was $16.76 (in dollars) and
the weighted-average remaining vesting period was 3 years and 4 years, respectively.
(b)Under the Company’s “Incentives Compensation Agreement”, the incentive rewards for the employees are
calculated based on the spread between the average closing price of the Company’s common stock for the 30
successive Taiwan stock trading days before the exercise date and the exercise price are paid by cash. Any
active employee can receive the incentive rewards on the vesting date. Their fair value on the grant date is
estimated using the Black-Scholes option-pricing model. The weighted-average parameters used in the
estimation of the fair value are as follows:
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December 31, 2012
Exercise Expected Fair value
price Expected Expected Expected dividend Risk-free per unitType of Grant (in price (in price vesting yield interest (in
arrangement date dollars) dollars) volatility period rate rate dollars)
Incentive
Compensation
Agreement 2010.10.01 13.15$ 16.80$ 7.78% 1.59 years 0% 0.97% -$
Incentive
Compensation
Agreement 2010.12.31 13.15$ 16.50$ 7.05% 1.25 years 0% 0.93% -$
December 31, 2011
Exercise Expected Fair value
price Expected Expected Expected dividend Risk-free per unitType of Grant (in price (in price vesting yield interest (in
arrangement date dollars) dollars) volatility period rate rate dollars)
Incentive
Compensation
Agreement 2010.10.01 5.56$ 16.80$ 7.78% 2.59 years 0% 0.97% -$
Incentive
Compensation
Agreement 2010.12.31 5.56$ 16.50$ 7.05% 3.25 years 0% 0.93% -$
(c)Expenses incurred on share-based payment transactions are shown below:
2012 2011
Cash-settled-Incentive Compensation Agreement -$ 1,884)($
December 31,
(d)Liabilities arising from share-based payment transactions are shown below:
2012 2011
Liabilities on cash-settled share-based payment -$ -$
Total intrinsic value where vesting conditions
have been met -$ -$
December 31,
D.As of December 31, 2012 and 2011, Global PCS Inc.’s, a subsidiary now merged with the Company, share-based
payment transactions are set forth below:
Type of
Quantity
granted Contract Vesting
arrangement Grant date (in thousands) period conditions
Second employee stock 2009.09.01 1,614 6 years Note
options
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Note: 50% can be exercised after 2 years of grant; 75% can be exercised after 3 years of grant; and 100% can be
exercised after 4 years of grant.
Details of the employee stock options are set forth below:
No. of
Weighted-
average
exercise price No. of
Weighted-
average
exercise price
shares (in dollars) shares (in dollars)
Options outstanding at beginning of year - $ - 1,614 $ 10.00
Options granted - - - -
Distribution of stock dividends /
adjustments for number of shares
granted for one unit of option
- - - -
Options waived - - - -
Options exercised - - ( 1,614) 23.70
Options revoked - - - -
Options outstanding at end of year - - - -
Options exercisable at end of year - -
Options approved but not yet issued
at the end of the year - -
December 31, 2012 December 31, 2011
E. Under the original second share-based employee compensation plan, the weighted-average remaining vesting
period of stock options outstanding was 4.42 years. However, since Global PCS Inc. merged with Microelectronic
Technology, Inc., as resolved by the Board of Directors on November 26, 2010, Global PCS Inc. has stipulated
additional regulations on the employee stock options in case of business merger as follows:
When another company merges with Global PCS Inc., Global PCS Inc. may decide to retrieve and retire all the
stock options that have been issued but have not had the right to be exercised, and the other company will pay the
compensation to the holders of the stock options that were retired. The compensation amount is calculated based on
the cash distributed to the stockholders upon merger. The holders of the stock options must pay the taxes on the
compensations on their own.
(十一)The Company merged with Global PCS Inc. on January 1, 2011. The employee stock options as stated above
had been fully taken back and retired. The Company paid compensation amounting to $15,711.
(43) Pension expense
A. The Company has a non-contributory and funded defined benefit pension plan in accordance with the Labor
Standards Law, covering all regular employees. Employees are entitled to 2 base units for each year of service for
the first 15 years and 1 base unit for each additional year thereafter, up to a maximum of 45 units. The benefits
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provided are based on the length of service and the average salaries of the last six months prior to retirement. Under
the plan, the Company contribute 2% of monthly salaries to an independent pension fund deposited with the Bank
of Taiwan. The funded status of the pension plan of the Company are as follows:
(a) Actuarial assumptions - Microelectronics Technology, Inc.
2012 2011
Discount rate 1.75% 1.90%
Future salary increase rate 2.50% 2.50%
Expected rate of return on plan assets 1.75% 1.90%
(b)The funded status of the pension plan is as follows:
2012 2011
Benefit obligation
Vested benefit obligation 92,655)($ 31,876)($
Non-vested benefit obligation 244,322)( 315,587)(
Accumulated benefit obligation 336,977)( 347,463)(
Additional benefits based on future salaries 132,787)( 127,711)(
Projected benefit obligation 469,764)( 475,174)(
Plan assets at fair value 107,198 113,693
Funded status 362,566)( 361,481)(
Unrecognized transition obligation 8,079 9,234
Unrecognized prior service cost 50,614 5,052)(
Unrecognized net actuarial loss 168,170 141,928
Additional accrued pension liabilities 94,076)( 18,399)(
Next adjustment 1,845)( 8,624
Accrued pension liabilities 231,624)( 225,146)(
Vested benefit 86,635$ 34,923$
Deferred pension costs 58,693$ 4,182$
Unrecognized pension cost 35,383$ 5,645$
December 31,
(c)The Company recognized net pension cost based on the actuarial report. Net pension cost components are as
follows:
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2012 2011
Service cost 7,297$ 8,062$
Interest cost 9,028 8,685
Expected return on plan assets 2,160)( 2,080)(
Amortization of unrecognized
net transition obligation 1,154 1,154
Unrecognized prior service cost 1,684)( 1,684)(
Unrecognized pension loss 6,744 7,642
Next adjustment 1,897 768)(
Net periodic pension cost 22,276$ 21,011$
For the years ended December 31,
B. Effective July 1, 2005, under the new “Labor Pension Act” (the “Act”), the Company set up a defined contribution
pension plan. Under the Act, current employees have the option to participate in the defined contribution pension
plan. The Company contributes monthly an amount of at least 6% of the employees’ monthly salaries and wages to
the employees’ individual pension accounts at the Bureau of Labor Insurance. Benefits accrued are portable upon
termination of employment. Pensions are paid by monthly installments or in lump sum based on the accumulated
balance of the employees’ individual pension accounts. The pension costs of $22,757 and $22,345 under the
defined contribution pension plan for the years ended December 31, 2012 and 2011, respectively, were recognized
by the Company’s subsidiary -Sasson International Holdings Inc.
C. The Company’s subsidiaries, Jupiter Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd., are
required to participate in a government pension scheme whereby it shall pay monthly an amount of 20% of the
employees’ monthly salaries and wages to the employees’ individual pension accounts to a government-managed
fund. Under the scheme, retirement benefits of existing and retired employees are to be provided by the
government-managed fund and the said subsidiaries have no further obligations beyond the monthly contributions.
The net pension costs recognized under the defined contribution plan for the years ended December 31, 2012 and
2011 were $28,843 and $51,296, respectively.
D. The Company’s subsidiaries, MTI Laboratory Inc., Optical Microwave Network Inc., and RadioCompApS
maintain a 401(k) retirement/savings plan (the Plan) for all employees who are over the age of 21 and have
completed three months of service. Participants may make voluntary contributions up to the maximum amount
allowable by law. Those subsidiaries may make a discretionary matching contribution equal to the percentage of
each participant’s contributions up to a maximum of 2.25% of participant’s compensation. No contributions were
made to the Plan for the years ended December 31, 2012 and 2011.
(44) Income tax
A. Details of deferred income tax assets are as follows:
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2012 2011
Deferred income tax assets – current 171,477$ 203,623$
Less: Valuation allowance 71,646)( 63,674)(
99,831$ 139,949$
Deferred income tax assets – non-current 511,285$ 340,685$
Less: Valuation allowance 219,612)( 135,173)(
291,673$ 205,512$
December 31,
B.Details of temporary differences, loss carryforwards and investment tax credits resulting in deferred income tax
assets are as follows:
Amount Tax effect Amount Tax effect
Current items:
Temporary differences
Warranty provision 30,571$ 5,730$ 96,089$ 17,298$
Allowance for doubtful accounts 7,478)( 1,186)( 5,868)( 848)(
Provision for inventory loss 278,967 51,083 305,410 53,766
Unrealized losses 155,642 26,459 344,918 58,636
Others 80,117 17,745 43,224 9,819
99,831 138,671
Investment tax credits 71,646 64,952
Loss: Valuation allowance 71,646)( 63,674)(
99,831 139,949
Non-current items:
Temporary differences
Loss on idle assets 50,339$ 8,558 47,446$ 8,066
Accrued pension liabilities 137,458 23,383 215,319 36,604
Foreign investment income
accounted for under the
equity method 551,843)( 93,813)( 574,872)( 97,728)(
Others 134,179 32,164 104,330 24,702
29,708)( 28,356)(
Investment tax credits - 71,646
Loss carryforwards 3,079,492 546,258 1,686,199 315,335
Less: Valuation allowance 219,612)( 135,173)(
296,938 223,452
Cumulative translation
adjustments 30,971 5,265)( 105,532)( 17,940)(
391,504$ 345,461$
December 31, 2012 December 31, 2011
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C. Income tax benefit and income tax payable are reconciled as follows:
2012 2011
Income tax at the statutory tax rate 14,336$ 19,098$
Foreign income tax expense 5,485 -
Tax effect of permanent differences 174,887 49,691)(
Over provision of prior year's income tax 509)( 1,139)(
Tax effect of loss carryforwards 305,518)( 278,065)(
Tax effect of valuation allowance 92,411 152,474
Income tax benefit 18,908)( 157,323)(
Add: Net change of deferred income tax assets 50,895 157,342
Tax effect of cumulative translation adjustments - 17,940
Unpaid amount on income tax payable of
consolidated entities - 1,686
Over provision of prior year's income tax 509 1,139
Less: Payment on behalf of Global PCS Inc. for its tax
on unappropriated earnings for 2009 - 1,177)(
Tax effect of cumulative translation adjustments 12,675)( -
Foreign income tax paid 5,485)( -
Prepaid and withholding taxes 14,336)( 19,098)(
Income tax payable -$ 509$
December 31,
D.The Company is eligible for income tax exemption for a period of the five consecutive years due to an expansion of
production equipment through increase in capital. The effective date of this exemption is to be decided by the
Company within two years from the start of operation of the new machinery and equipment. The deferral of the
five-year tax holiday shall not exceed four years. The details are as follows:
Capital increase method Tax-exempt period
Unappropriated earnings and employees'
bonus capitalized in 2002
January 1, 2010~December 31, 2014
E.The Company’s subsidiaries, Jupiter Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd., are
foreign-invested manufacturing enterprises established in the People’s Republic of China (PRC). Under the PRC
tax regulations, they are exempt from corporate income tax for the first and second profit-making years and are
subject to a 50% reduction of corporate income tax from the third through fifth profit-making years. Jupiter
Technology (Wuxi) Inc. and Greast Communication Technology Co., Ltd. are eligible for the tax exemption starting
from 2006 and 2008, respectively.
F.As of December 31, 2012, the Company’s income tax returns through 2010 have been assessed and approved by the
Tax Authority; Global PCS Inc.’s income tax returns through 2010 have been assessed and approved by the Tax
Authority; Millennium Telecom, Inc.’s income tax returns (period of liquidation) through 2011 have been assessed
and approved by the Tax Authority.
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G.As of December 31, 2012, the details of unused investment tax credits and loss carryforwards are as follows:
Year of expiration Investment tax credits
2013 71,646$
Year of expiration Loss carryforwards
2019 31,953$
2021 208,787
2022 234,439
2016 71,079
546,258$
H.As of December 31, 2012 and 2011, the Company’s deductible credit account balance for stockholders’ income tax
was $61,820 and $62,367, respectively.
Note: The Company incurred operating losses both in 2011 and 2010. There was no earnings distribution for 2011
and 2010, as resolved by the stockholders at their stockholders’ meeting on May 4, 2012 and June 9, 2011,
respectively.
I. There was no undistributed retained earnings as of December 31, 2012 and the undistributed retained earnings as of
December 31, 2011 have been earned before 1998.
(45) Loss per share
Weighted-
average
Loss outstanding Loss
before common before
income Net shares income Net
tax loss (in thousands) tax loss
Consolidated net loss 1,053,536)($ 1,034,628)($
Basic loss per share:
Net loss 1,066,451)($ 1,032,423)($ 270,033 3.95)($ 3.82)($
Weighted-
average
Loss outstanding Loss
before common before
income Net shares income Net
tax loss (in thousands) tax loss
Consolidated net loss 1,934,730)($ 1,777,407)($
Basic loss per share:
Net loss 1,858,747)($ 1,775,885)($ 269,926 6.89)($ 6.58)($
Amount share (in dollars)
For the year ended December 31, 2012
Loss per
Amount share (in dollars)
For the year ended December 31, 2011
Loss per
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The above weighted-average outstanding common shares of 2012 and 2011 have been
adjus ted ret roact ive ly in proport ion to the reduct ion of capi tal to cover accumulated
def ic i t s on January 10, 2013.
For the years ended December 31, 2012 and 2011, as employee s tock options and
domestic conve rt ible bonds i ssued by the Company had anti-di lut ive effec t , the y
were not included in the calcula t ion of di luted loss per share.
Effec t ive Januar y 1 , 2008, as employees’ bonus could be dis tr ibuted in the form of
stoc k, the di luted EPS computat ion shal l inc lude those est imated shares tha t would
be increased f rom employees’ stock bonus i ssuance in the ca lcula t ion of the
weighted-average number of common shares ou ts tanding dur ing the repor t ing year,
taking into account the di lut ive effects of stock bonus on potential common shares ;
whereas , basic EPS shall be calcula ted based on the weighted-average number of
common shares outstanding dur ing the repor t ing year tha t inc lude the shares of
employees’ s tock bonus for the appropr iat ion of pr ior yea r earnings , which have
already been resolved a t the s tockholders’ meet ing he ld in the repor t ing year. S ince
capi tal iza t ion of employees’ bonus no longer be longs to dis tr ibution of stoc k
dividends, the ca lcula t ion of basic EPS and di luted EPS for a l l per iods presented
sha ll not be adjusted re t roact ive ly.
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(46) Personnel expenses , depreciat ion and amort iza t ion
Operating
costs
Operating
expenses
Non-
operating
expenses Total
Operating
costs
Operating
expenses
Non-
operating
expenses Total
Personnel expenses
Salary 535,371$ 391,915$ -$ 927,286$ 535,109$ 394,815$ -$ 929,924$
Labor and health insurance 21,337 27,094 - 48,431 20,348 26,256 - 46,604
Pension 19,850 54,026 - 73,876 18,939 75,713 - 94,652
Others 124,430 46,310 - 170,740 159,694 44,672 - 204,366
Depreciation 193,052 49,912 2,604 245,568 165,919 52,129 1,832 219,880
Amortization 16,242 126,033 - 142,275 8,948 132,231 - 141,179
For the years ended December 31,
2012 2011
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5. RELATED PARTY TRANSACTIONS
(47) Name and re la t ionship of rela ted par ty: None
(48) The rewards information of ke y management is as fol lows:
2012 2011
Salaries 60,194$ 59,872$
Bonuses 5,256 17,204
Service execution fees 8,135 8,791
Total 73,585$ 85,867$
For the years ended December 31,
A. Salaries include regular wages, special responsibility allowances, pensions, severance pay, etc.
B. Bonuses include various bonus and rewards.
C. Service execution fees include trade allowances, housing and vehicle benefits, etc.
D. The relevant information above will be posted in the Group's annual report.
6. PLEDGED ASSETS
Assets 2012 2011 Purpose of pledge
Buildings (Note 1) 352,300$ 369,681$ Long-term loans
Time deposits (Note 2) 914,318 14,596 Collateral for lawsuits and
private-placement convertible bonds
Account receivable 173,356 - Collateral for short-term loans
1,439,974$ 384,277$
December 31,
Note 1: Including leased asse ts.
Note 2: Recognized a s restr ic ted asse ts.
7. COMMITMENTS AND CONTINGENT LIABILITIES (49) The Company leases land under a non-cancelable opera t ing lease agreement . As of December
31, 2012, the future minimum lease payments under th is lease are as fol lows:
Period Rental payable Present value
January 2013~December 2017 77,036$ 67,801$
January 2018~December 2026 138,665 77,661
215,701$ 145,462$
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(50) On Oc tober 21, 2004, the Company was informed tha t European agent, FTA, sued the
Company wi th the Luxembourg Court for the business dispute occurr ing in the agency. The
Company had appointed at torne ys tending to th is case . On June 29, 2011, Luxembourg Cour t
dismissed the indemnity reques t of FTA in the lawsui t through the fi rs t t r ia l judgment. The
lawsui t i s current ly under the judicia l proceedings ; the possible e ffects of the lawsui t on the
Company’s business and f inance depend on i t s fur ther re sul ts . However, the Company bel ieves
the lawsuit wi l l not have any s igni ficant e ffec t on i t s f inance and opera tions.
(51) On December 5, 2011, Powerwave Technologies , Inc . sued the Company with the Cal i fornia
Cour t , al leging infr ingement of i t s pa tent by the Compan y and i t s subsidiary - MTI-Lab. The
Company has appointed at torneys to take legal ac t ions agains t Powerwave Technologies , Inc. The
Company bel ieves tha t this case wil l not have any signif icant e ffect on i t s f inance and opera tions .
8. SIGNIFICANT CATASTROPHE
None.
9. SUBSEQUENT EVENTS
None.
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10. OTHERS (52) Financia l s tatement pre senta t ion
Cer ta in accounts in the 2011 f inanc ia l s ta tements have been rec lassif ied to conform to the 2012 f inanc ial s ta tement presentat ion. (53) Fair va lue of f inancia l instruments
Book value Market Estimate Book value Market Estimate
Non-derivative financial instruments
Financial assets
Financial assets with fair values equal to book values 3,888,082$ -$ 3,888,082$ 3,651,408$ -$ 3,651,408$
Financial assets at fair value through profit or loss 11,269 11,269 - 198,045 198,045 -
Financial assets carried at cost-noncurrent 330,029 - - 355,664 - -
4,229,380$ 4,205,117$
Financial liabilities
Financial liabilities with fair values equal to book values 3,754,782)($ -$ 3,754,782)($ 4,428,942)($ -$ 4,428,942)($
Long-term loans 598,555)( - 598,555)( 1,289,209)( - 1,289,209)(
4,353,337)($ 5,718,151)($
Derivative financial instruments
Financial assets
Forward exchange contracts -$ -$ -$ 5,698$ -$ 5,698$
Financial liabilities
Forward exchange contracts 1,520)($ -$ 1,520)($ -$ -$ -$
December 31, 2012 December 31, 2011
Fair value Fair value
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The methods and assumptions used to e st imate the fa ir va lues of the above financia l
instruments are summar ized be low:
A.Financia l assets / l iabil i t ies with fa ir va lue equal to book value: The carr ying amounts of these
asse ts / l iabil i t ie s approximate fair va lues due to the ir shor t maturi t ies . Thi s applies to cash and
cash equiva lents , accounts rece ivable, other receivables, res tr icted current assets , r efundable
deposi t s, shor t- te rm loans, accounts payable, accrued expenses, other payables and guarantee
deposi t s rece ived.
B.Financial assets at f air va lue through prof i t or loss (non-der iva tive f inancia l instruments) :
Instruments classif ied in this ca tegory are ma inly inves tments in open-ended mutual funds. The
fa ir va lue i s de termined by the ne t asse t va lue at the ba lance sheet da te .
C.For long- term loans with f loat ing interes t ra te s, the fa ir va lues are based on the ir book value. For
long- term loans with f ixed interes t rates , f air va lue i s est imated based on the discounted future
cash f lows. Di scount ra te i s determined based on the Company’s credi t adjus ted bor rowing rate,
which approximate the f loa t ing interest r ates .
D.Deriva tive f inancia l instruments: Fa i r va lue i s est imated based on the amount receivable f rom or
payable to the counterpar ty assuming the cont rac ts a re terminated a t the balance sheet da te,
which inc ludes the cont racts’ unrea l ized gain or loss . (54) Informat ion of signi f icant income ( loss) on f inanc ia l instruments and equi ty i tems
In 2012 and 2011, the loss or ga in recognized f rom the changes in fair values de termined us ing the
foregoing evaluat ion t echniques amounted to $7,218 and $1,439, r espective ly. (55) Informat ion on interest ra te f luc tua tion
As of December 31, 2012 and 2011, f inancia l asse ts tha t are exposed to fair va lue interes t rate r i sk
are $714,632 and $1,352,251, r espect ive ly; f inancia l assets tha t are exposed to cash f low int erest
rate r i sk are $1,737,234 and $513,301, respect ive ly; and f inancia l l iabi l i t ies that are exposed to
cash f low interest ra te r i sk are $2,538,111 and $3,406,949, re spect ively. (56) Financia l r i sk management
The Group, in accordance wi th i t s pol icy on the acquisi t i on and disposa l of f inancia l der iva t ives,
has es tabl i shed a r isk management program to eva luate and manage the rela ted r isk assessment of
individual transact ions. (57) Informat ion on signi fi cant f inancial r i sk
A. Market risk The Group’s activities involve some non-functional currency operations (the Group’s functional currency is New Taiwan dollars). The information on assets and liabilities denominated in foreign currency whose values would be materially affected by the fluctuations of the foreign exchange rates is as follows:
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Foreign Exchange Foreign Exchange
Financial assets currency rate currency rate
Monetary items
USD:NTD 71,118$ 29.04 71,048$ 30.28
EUR:NTD 443 38.49 2,357 39.18
USD:CNY 1,409 6.2855 29,696 6.3009
Financial liabilities
Monetary items
USD:NTD 37,205$ 29.04 71,017$ 30.28
EUR:NTD 160 38.49 1,890 39.18
USD:CNY 24,868 6.2855 31,077 6.3009
December 31,
2012 2011
(a)Foreign exchange risk The majority of the sales and purchases of the Group is denominated in U.S. dollars. Therefore the fair value of the related assets and liabilities are exposed to foreign exchange rate risk. The Group monitors the fluctuations in foreign exchange rates and adjusts the net positions in each foreign currency, enters into forward contracts, if necessary, to reduce the market rate risk.
(b)Price risk The bond fund investments (shown in “financial assets at fair value through profit or loss”) are determined based on the net asset value of open-end funds. The Group evaluates related investment performances on a periodic basis and does not expect to have significant market risk in these financial assets.
B. Credit risk
(a)The counterparties of the financial derivatives and beneficiary certificates are reputable financial institutions and the Group also deals with multiple counterparties to diversify the credit risk. The Group believes its exposure to potential default risk is low. The maximum loss to the Group is the book value.
(b)The Company has lower significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to customers with an appropriate credit history. The maximum loss to the Group is the book value of accounts receivable.
(c)Loan guarantees provided by the Group are in compliance with the Group’s “Procedures for Provision of Endorsements and Guarantees” and are only provided to affiliated companies which the Group owns directly. As the Group is fully aware of the credit conditions of these related parties, it has not asked for collateral for the loan guarantees provided. In the event that these related parties fail to comply with loan agreements with banks, the maximum loss to the Group is the total amount of loan guarantees as listed above.
C. Liquidity risk
(a)The Group has lower significant concentrations of liquidity risk for forward exchange contracts since the exchange rate was known.
(b)For financial assets carried at cost, the Group is exposed to a higher liquidity risk since there is no active market. However, the Group has no intention to hold these financial assets for trading and does not expect to sell these financial assets frequently. Therefore, the exposure to liquidity risk would be effectively reduced.
(c)The Group also expects no significant liquidity risk since it has sufficient working capital.
D. Cash flow interest rate risk The Group’s interest rate risk arises from short-term and long-term borrowings issued at variable rates which expose the Group to cash flow interest rate risk.
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11. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU (1) Rela ted information of s ignif icant tr ansact ions
The informat ion about the inves tees was prepared based on the ir audi ted f inanc ial s tatements . The tr ansact ions be tween the Company and i ts
subsidiar ies had been e l imina ted when prepar ing the consol idated f inancia l s ta tements; the y are disc losed below onl y for reference:
a. Loans granted during the year ended December 31, 2012: None.
b. Endorsements and guarantees provided by the Company to others as of December 31, 2012:
Ratio of
Limit of Maximum outstanding Outstanding Amount of accumulated guarantee Ceiling of the
Relationship with guarantee guarantee amount guarantee amount guarantee with amount to net asset outstanding guarantees
Guarantor Name the Company for such party during 2012 (Note) at Dec. 31, 2012 collateral placed value of the Company for the respective party(Note)
Microelectronics
Technology, Inc.
Jupiter Technology
(Wuxi) Inc.
100% owned subsidiary 3,451,734$ 798,660$ 377,520$ None 10.94% 3,451,734$
" Greast Communication
Technology Co., Ltd.
81.94% owned subsidiary 3,451,734 44,820 - None - 3,451,734
" MTI Laboratory, Inc. 100% owned subsidiary 3,451,734 960 929 None 0.03% 3,451,734
(Note):The upper limits on total guarantees and endorsements provided by the Company to a single party and all parties are both based on the net assets value of the Company as per its most recent financial statements.
Company being guaranteed
c. Details of marketable securities held as at December 31, 2012:
Relationship of
Type of marketable Marketable the securities issuers General ledger
Investor securities securities with the Company accounts Number of shares Book value Percentage Market value (Note)
Microelectronics
Technology, Inc.
Stock Sasson International Holdings Inc. Wholly-owned subsidiary Long-term equity
investments accounted for
under the equity method
3,920 1,727,205$ 100.00% 1,727,205$
" " Taiwan Aerospace Corp. None Financial assets carried at
cost-noncurrent
648,576 11,138 0.48% -
" " Transcom Inc. " " 200,000 866 0.08% -
(Note):The market value of investments accounted for under the equity method was based on the net asset value of the investee company.
December 31, 2012
d. Acquisition or sale of the security with the accumulated cost exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None.
e. Acquisition of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None. f. Disposal of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None.
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g. Purchases from and sales to related parties exceeding $100 million or 20% of the Company’s paid-in capital during the year ended December 31, 2012:
Percentage of Percentage of
Relationship Purchases purchases accounts receivable
Company Counterparty with the Company (sales) Amount (sales) Term Unit price Credit term Balance (payable) Note
Microelectronics
Technology, Inc.
Jupiter Technology
(Wuxi) Inc.
Wholly-owned subsidiary Purchases 3,384,436$ 56% 90 days N/A N/A 471,173)($ 45% -
" MTI Network, Inc. Wholly-owned subsidiary Sales 1,090,206 15% 30 days N/A N/A 112,489 9% -
Differences in transaction terms
Transactions compared to third party transactions Accounts receivable (payable)
h. Receivables from related parties exceeding $100 million or 20% of the Company’s paid-in capital as at December 31, 2012.
Company Counterparty
Relationship
with the
Company
Accounts
receivable
Other
receivables Total
Turnover
rate Amount
Action adopted
for overdue
accounts
Subsequent
collection
Allowance for doubtful
accounts provided
Microelectronics
Technology, Inc.MTI Network, Inc.
The Company’s
indirect subsidiary 112,489$ -$ 112,489$ 11.97 -$ N/A -$ -$
I. Derivative financial instruments undertaken during the year ended December 31, 2012: Refer to Notes 4(2), 4(10) and 10.
Balance of receivable from related parties Overdue receivables
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(2) Disclosure information of investee company a.
Net income Net income
Main Number (loss) of the (loss) recognized
Investor Investee Location activities 2012 2011 of shares Percentage Book value investee by the Company Note
Microelectronics
Technology, Inc.
Sasson
International
Holdings Inc.
BVI Investment
planning
and consulting
1,159,643$ 1,159,643$ 3,920 100.00% 1,727,205$ 23,029)($ 23,029)($ Note 1
Sasson
International
Holdings Inc.
Welltop
Technology
Co., Ltd.
BVI " US$7,834,000
(in dollars)
US$7,834,000
(in dollars)
7,834,000 100.00% 220,841 12,508 12,508 Note 2
" Jupiter
Network Corp.
BVI " US$21,071,800
(in dollars)
US$21,071,800
(in dollars)
21,071,800 100.00% 555,386 3,782 3,782 Note 2
" Greast
Communication
Technology
Co., Ltd.
Nanjing,
China
Communications US$3,970,000
(in dollars)
US$3,970,000
(in dollars)
- 48.42% 38,092 12,292)( 5,952)( Note 2
Welltop
Technology
Co., Ltd.
MTI Laboratory,
Inc.
California,
USA
" US$1,500,000
(in dollars)
US$1,500,000
(in dollars)
1,500,000 100.00% 66,641 406 406 Note 2
" MTI Network, Inc. Delaware,
USA
" US$100,000
(in dollars)
US$100,000
(in dollars)
100,000 100.00% 9,069 5,143 5,143 Note 2
" RadioComp ApS Denmark " US$4,702,000
(in dollars)
US$4,702,000
(in dollars)
1,527,944 100.00% 144,308 7,028 7,028 Note 2
Jupiter
Network Corp.
Jupiter Technology
(Wuxi) Inc.
Wuxi,
China
" US$21,000,000
(in dollars)
US$21,000,000
(in dollars)
- 100.00% 554,861 3,849 3,849 Note 2
Related information on companies for the year ended December 31, 2012:
Initial investment amount Shares held as at December 31, 2012
December 31,
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Net income Net income
Main Number (loss) of the (loss) recognized
Investor Investee Location activities 2011 2010 of shares Percentage Book value investee by the Company Note
Jupiter Technology
(Wuxi) Inc.
Greast
Communication
Technology
Co., Ltd.
Nanjing,
China
" CNY
$15,954,000
(in dollars)
CNY
$15,954,000
(in dollars)
- 33.52% 67,029 12,292)( 4,120)( Note 2
Note 1: Subsidiary of the Company.
Note 2: Indirect subsidiary of the Company.
December 31,
Initial investment amount Shares held as at December 31, 2011
b. Loans granted during the year ended December 31, 2012:
Item Value
Sasson International
Holdings Inc.
Jupiter Techology
(Wuxi) Inc.
Other
receivables 479,840$ 464,640$ - b Note Operations -$ Note -$ 711,721$ 711,721$
MTI Laboratory, Inc. MTI Network, Inc.
Other
receivables 16,577 16,171 3% b Note Operations - Note - 29,040 29,040
Note1: a. Business transaction.
b. Short-term financing.
Note2: If the nature of the loans belongs to business association, the loans granted to others should be equivalent to the business association amount; if the nature of the loans belongs to short-term financing, both limit on
loans granted to a single party and ceiling on total loans granted to all parties should not exceed 40% of the net assets value of the creditor company as per its most recent financial statements. The ceiling on total
loans granted by the Company’s subsidiary to all parties should not exceed 40% of the net assets value of the Company as per its most recent financial statements. However, the ceiling on total loans granted by
Sasson International Holdings Inc. to all wholly-owned foreign subsidiaries of parent company is not subject to the restriction above.
Maximum
outstanding
guarantee
amount during
2012 (Note 2)
Allowance for
bad debts
CollateralLimit on
loans granted
to a single partyCreditor Borrower
General ledger
account
Maximum
outstanding
balance
during 2012
Balance at
December
31, 2012 Interest rate
Nature of
loan (Note 1)
Amount of
transactions
with the
borrower
Reason of
short-term
financing
c. Endorsements and guarantees provided during the year ended December 31, 2012: None.
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d. Marketable securities as at December 31, 2012:
Type of marketable Relationship of the securities Number of Book Ownership Market
Securities held by securities Marketable securities issuers with the Company General ledger accounts shares value (%) value (Note)
Sasson International
Holdings Inc.
Stock Welltop Technology Co., Ltd. Wholly-owned
subsidiary
Long-term equity
investments accounted for
under the equity method
7,834,000 220,841$ 100.00% 220,841$
" " Jupiter Network Corp. " " 21,071,800 555,386 100.00% 555,386
" " Greast Communication Technology Co., Ltd. Investee accounted for
under the equity method
" - 38,092 48.42% 38,092
" " Optical Scientific, Networks Inc. None Financial assets carried at
cost-noncurrent
16,023 57,821 6.02% -
" " Taicom Capital Ltd. " " 20,000 213,740 11.43% -
" " Intelligent Epitaxy Technology, Inc. " " 500,001 17,424 1.93% -
" " Applied Wireless Identification Group, Inc. " " 187,784 - 0.41% -
" " Firetide Inc. " " 1,333,360 29,040 1.66% -
" " Ishares A50 (2823, HK) " Financial assets at fair
value through profit
or loss-current
270,000 11,269 - 11,269
Welltop
Technology
Co., Ltd.
Stock MTI Laboratory, Inc. Wholly-owned
subsidiary
Long-term equity
investments accounted for
under the equity method
1,500,000 66,641 100.00% 66,641
" " MTI Network, Inc. " " 100,000 9,069 100.00% 9,069
" " RadioComp Aps " " 1,527,944 144,308 100.00% 144,308
Jupiter Network Corp. " Jupiter Technology (Wuxi) Inc. " " - 554,861 100.00% 554,861
Jupiter Technology
(Wuxi) Inc.
" Greast Communication Technology Co., Ltd. Investee accounted for
under the equity method
" - 67,029 33.52% 67,029
Note : The market value of financial assets at fair value trough profit or loss is based on latest quoted fair prices of the accounting period.
The market value of investments accounted for under the equity method is based on the net asset value of the investee company.
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e. Acquisition or sale of the security with the accumulated cost exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None.
f. Acquisition of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None.
g. Disposal of real estate properties exceeding $100 million or 20% of the Company's paid-in capital during the year ended December 31, 2012:None.
h. Purchase from or sales to related parties exceeding $100 million or 20% of the Company's paid-in during the year ended December 31,2012:Refer to Note 11(1)g.
i. Receivables from related parties over $100 million or 20% of the Company's capital stock as of December 31, 2012:
Company Counterparty
Relationship
with the
Company
Accounts
receivable
Other
receivables Total
Turnover
rate Amount
Action adopted
for overdue
accounts
Subsequent
collection
Allowance for doubtful
accounts provided
Jupiter Technology
(Wuxi) Inc.
Microelectronic
Technology Inc. Parent company 471,173$ -$ 471,173$ 7.47 -$ N/A -$ -$
Balance of receivable from related parties Overdue receivables
j . Informa tion on der iva tive tr ansactions : None.
(3) Disclosure of information on indirec t inves tments in Mainland China
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a. Basic information, change in investment balance and profits/losses recognized from the indirect investment:
Investee in Investment
Accumulated
amount of
remittance
to Mainland
China as of
Amount
remitted to
Mainland China
Amount
remitted back
to Taiwan
Accumulated
amount of
remittance to
Mainland
China as of
December
Ownership
held by the
Company
(direct
Investment
income (loss)
recognized by
the Company
for the
year ended
December 31,
2012
Book value
of investments
in Mainland
China as of
December
Accumulated
amount of
investment
income
remitted back
to Taiwan as
of December
Mainland China Main activities Paid-in capital method January 1, 2012 during the year during the year 31, 2012 and indirect) (Note) 31, 2012 31, 2012
Jupiter
Technology
(Wuxi) Inc.
Satellite
communication,
microwave
communication
and consulting
services
$ 609,840 Invest in
Mainland
China
through set
up of a new
company
in third area
$ 609,840 -$ -$ $ 609,840 100.00% 3,849$ 554,861$ -$
Greast
Communication
Technology
Co., Ltd.
Design and
manufacture of
W-CDMA and
Base band RF
Sub-system
110,237 Invest in
Mainland
China
through
activating
a company
in third area
115,289 - - 115,289 81.94% 10,072)( 105,121 -
Note: Profit (loss) was recognized based on the financial statements audited by the Company's independent auditors.
Ceiling of investment in Mainland China
$ 725,129 $ 842,392
Ending balance of investment from Taiwan as of Approved investment amount by Ministry of
December 31, 2012 (in dollars) Economic Affairs R.O.C. (in dollars)
$ 2,078,131
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B.Significant transactions with the direct and indirect investments in Mainland China (the amount represents the figures prior to eliminating the purchases and sales transactions between the Company and the investee companies in China through its subsidiaries.)
(a) Purchases
Amount % Amount %
Jupiter Technology (Wuxi) Inc. 3,497,470$ 58 2,253,616$ 35
(b) Sales
Amount % Amount %
Jupiter Technology (Wuxi) Inc. 113,034$ 2 442,218$ 7
(c) Accounts receivable
Amount % Amount %
Jupiter Technology (Wuxi) Inc. -$ - 11,127$ 1
(d) Other receivables
Amount % Amount %
Jupiter Technology (Wuxi) Inc. 10,917$ 15 212,454$ 356
(e) Accounts payable
Amount % Amount %
Jupiter Technology (Wuxi) Inc. 472,258$ 45 434,643$ 31
December 31,
2012 2011
For the years ended December 31,2012 2011
For the years ended December 31,2012 2011
December 31,
2012 2011
December 31,2012 2011
(f)Property transactions
Item Amount Gain Amount Gain
Jupiter Technology (Wuxi) Inc. Sales of Machinery 5,248$ 156$ 5,302$ 818$
Jupiter Technology (Wuxi) Inc. Purchase of 9,047)( - - - machinery and
equipment
The disposals are approximately at book value.
For the years ended December 31,
2012 2011
(g)Loans to subsidiaries in other countries: Please refer to Note 11.
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(h)Edorsements and quarantees provided by the Company to Mainland China subsidiaries:
Subsidiary name Line of credit
Outstanding
balance
of credit line
December 31, 2012
Jupiter Technology (Wuxi) Inc. 377,520$ 377,520$
December 31, 2011
Jupiter Technology (Wuxi) Inc. 817,425$ 787,150$
Greast Communication Technology Co., Ltd. 45,413 14,415
862,838$ 801,565$
(i)Other significant transactions which affect current income or financial conditions: None.
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(4) Signif icant in tercompany t ransactions f or the year ended December 31, 2012
Number
(Note a) Company Name Counterparty
Relationship
(Note b)
General ledger
account Amount Transaction terms
Percentage of consolidated total
operating revenues or total assets
0 Microelectronics
Technology, Inc.
Jupiter Technology (Wuxi), Inc. 1 Purchases and manufacturing 3,384,436$ Similar with general transactions 44.76%
0 " " 1 Other receivables 4,922 Net 90 days 0.06%
0 " " 1 Loss of disposal of property,
plant and equipment
156 Similar with general transactions 0.00%
0 " " 1 Accounts payable 471,173 Net 30 days 5.81%
0 " MTI Laboratory, Inc. 1 Research and development
expenses
309,608 Similar with general transactions 4.09%
0 " " 1 Sales and marketing expenses 6,549 " 0.09%
0 " " 1 Accrued expenses 17,424 Net 30 days 0.21%
0 " Welltop Technology Co., Ltd. 1 Sales revenue 1,465 Similar with general transactions 0.02%
0 " " 1 Accounts receivable 1,418 Net 30 days 0.02%
0 " Greast Communication Technology
Co., Ltd.
1 Research and development
expenses 6,300 Similar with general transactions 0.08%
0 " RadioComp ApS 1 Purchases and manufacturing 5,319 " 0.07%
" " 1 Research and development
expenses
191,320 " 2.53%
0 " MTI Network, Inc. 1 Sales revenue 1,090,206 " 14.42%
" " 1 Accounts receivable 112,489 Net 30 days 1.39%
0 " Sasson International Holdings Inc. 1 other payables 464,640 For operations; to transact
with contract
5.73%
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Number
(Note a) Company Name Counterparty
Relationship
(Note b)
General ledger
account Amount Transaction terms
Percentage of consolidated total
operating revenues or total assets
1 Jupiter Technology (Wuxi),
Inc.
Microelectronics Technology, Inc. 2 Sales revenue 3,384,436$ Similar with general transactions 44.76%
1 " " 2 Accounts payable 4,922 Net 90 days 0.06%
1 " " 2 General and administrative
expense
156 Similar with general transactions 0.00%
1 " " 2 Accounts receivable 471,173 Net 30 days 5.81%
2 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Sales revenue 316,157 Similar with general transactions 4.18%
2 " " 2 Accounts receivable 17,424 Net 30 days 0.21%
2 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing 1,465 Similar with general transactions 0.02%
3 " " 2 Accounts payable 1,418 Net 30 days 0.02%
4 Greast Communication
Technology Co., Ltd.
Microelectronics Technology, Inc. 2 Sales revenue 6,300 Similar with general transactions 0.08%
5 RadioComp Aps Microelectronics Technology, Inc. 2 Sales revenue 196,639 " 2.60%
6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing 1,090,206 " 14.42%
6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Accounts payable 112,489 Net 30 days 1.39%
7 Sasson International Holdings
Inc.
Jupiter Technology (Wuxi)
Inc.
3 Other receivables 464,640 For operations; to transact
with contract
5.73%
8 Jupiter Technology (Wuxi),
Inc.
Greast Communication
Technology Co., Ltd.
3 Sales revenue 5,743 Similar with general transactions 0.08%
8 Jupiter Technology (Wuxi),
Inc.
Greast Communication
Technology Co., Ltd.
3 Accounts receivable 5,224 Net 180 days 0.06%
8 Jupiter Technology (Wuxi),
Inc.
Greast Communication
Technology Co., Ltd.
3 Other receivable 715 Net 180 days 0.01%
8 Jupiter Technology (Wuxi),
Inc.
Greast Communication
Technology Co., Ltd.
3 Technology service revenue 883 Similar with general transactions 0.01%
8 Jupiter Technology (Wuxi),
Inc.
Greast Communication
Technology Co., Ltd.
3 Other receivable 16,171 For operations; to transact
with contract
0.20%
Transaction
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Number
(Note a) Company Name Counterparty
Relationship
(Note b)
General ledger
account Amount Transaction terms
Percentage of consolidated total
operating revenues or total assets
9 Greast Communication
Technology Co., Ltd.
Jupiter Technology (Wuxi),
Inc.
3 Purchases and manufacturing 5,743$ Similar with general transactions 0.08%
9 Greast Communication
Technology Co., Ltd.
Jupiter Technology (Wuxi),
Inc.
3 Accounts payable 5,939 Net 180 days 0.07%
9 Greast Communication
Technology Co., Ltd.
Jupiter Technology (Wuxi),
Inc.
3 Other revenue 883 Similar with general transactions 0.01%
9 Greast Communication
Technology Co., Ltd.
Jupiter Technology (Wuxi),
Inc.
3 Other payable 16,171 For operations; to transact
with contract
0.20%
10 Greast Communication
Technology Co., Ltd.
Sasson International Holdings
Inc.
3 Other revenue 12,661 Similar with general transactions 0.17%
11 Sasson International Holdings
Inc.
Greast Communication
Technology Co., Ltd.
3 Technology service revenue 12,661 Similar with general transactions 0.17%
Transaction
(5) Signifi cant i n tercompany t ransac tions for the year ended December 31, 2011
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Number
(Note a) Company Name Counterparty
Relationship
(Note b)
General ledger
account Amount Transaction terms
Percentage of consolidated total
operating revenues or total assets
0 Microelectronics
Technology, Inc.
Jupiter Technology (Wuxi), Inc. 1 Purchases and manufacturing 1,811,398$ Similar with general transactions 27.12%
0 " " 1 Accounts receivable 2 Net 90 days 0.00%
0 " " 1 Other receivables 8,327 " 0.09%
0 " " 1 Loss of disposal of property,
plant and equipment
818 Similar with general transactions 0.01%
0 " " 1 Accounts payable 434,643 Net 30 days 4.90%
0 " " 1 Accrued expenses 3 " 0.00%
0 " MTI Laboratory, Inc. 1 Research and development
expenses
385,667 Similar with general transactions 5.77%
0 " " 1 Sales and marketing expenses 6,405 " 0.10%
0 " " 1 Accrued expenses 3,633 Net 30 days 0.04%
0 " Welltop Technology Co., Ltd. 1 Sales revenue 9,440 Similar with general transactions 0.14%
0 " " 1 Accounts receivable 1,835 Net 30 days 0.02%
0 " " 1 Other receivables 1,008 " 0.01%
0 " Greast Communication Technology
Co., Ltd.
1 Research and development
expenses 4,610 Similar with general transactions 0.07%
0 " RadioComp ApS 1 Research and development
expenses
191,042 " 2.86%
0 " MTI Network, Inc. 1 Sales revenue 192,893 " 2.89%
0 " " 1 Accounts receivable 69,693 Net 30 days 0.79%
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Number
(Note a) Company Name Counterparty
Relationship
(Note b)
General ledger
account Amount Transaction terms
Percentage of consolidated total
operating revenues or total assets
1 Jupiter Technology (Wuxi),
Inc.
Microelectronics Technology, Inc. 2 Sales revenue 1,811,398$ Similar with general transactions 27.12%
1 " " 2 Accounts payable 2 Net 90 days 0.00%
1 " " 2 Accrued expenses 8,327 " 0.09%
1 " " 2 General and administrative
expense
818 Similar with general transactions 0.01%
1 " " 2 Accounts receivable 434,643 Net 30 days 4.90%
1 " " 2 Other receivables 3 Similar with general transactions 0.00%
2 MTI Laboratory, Inc. Microelectronics Technology, Inc. 2 Sales revenue 392,072 " 5.87%
2 " " 2 Accounts receivable 3,633 Net 30 days 0.04%
3 Welltop Technology Co., Ltd. Microelectronics Technology, Inc. 2 Purchases and manufacturing 9,440 Similar with general transactions 0.14%
3 " " 2 Accounts payable 1,835 Net 30 days 0.02%
3 " " 2 Accrued expenses 1,008 " 0.01%
4 Greast Communication
Technology Co., Ltd.
Microelectronics Technology, Inc. 2 Sales revenue 4,610 Similar with general transactions 0.07%
5 RadioComp Aps Microelectronics Technology, Inc. 2 Sales revenue 191,042 " 2.86%
6 MTI Network, Inc. Microelectronics Technology, Inc. 2 Purchases and manufacturing 192,893 " 2.89%
6 " " 2 Accounts payable 69,693 Net 30 days 0.79%
Transaction
Note a : The tr ansaction informat ion of the Company and consol ida ted subsidiar ies i s noted in column "Number ". The number means: 1.Number 0 represents the Company. 2.The consol ida ted subs idiar ies a re in order f rom number 1. Note b: The relat ionship wi th the tr ansac tion par t ie s are as fol lows: 1.The Company to the consol ida ted subsidiar y. 2.The consol ida ted subs idiary to the Company. 3.The consol ida ted subs idiary to the consol idated subsidiar y. Note c : Rat io of asse t / l iabil i t y i s divided by consol ida ted tota l asse ts , and rat io of prof i t / loss accounts i s divided by consol ida ted sa les revenues.
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12. SEGMENT INFORMATION
General information Management has de termined the repor table opera ting segments based on the repor ts r eviewed by the General Manage r that a re used to make s trategic decis ions. The General Manager eva luates the business f rom a product per spect ive.
Measurement of segment informat ion The General Manager assesses the performance of the opera ting segments based on the income ( loss) before tax.
Informat ion on segment prof i t ( loss) , asse ts and l iabi l i t ies
The segment informat ion provided to the General Manage r for the repor table segments for the years
ended December 31, 2012 and 2011 is as fol lows:
For the year ended
December 31, 2012
Telecommunication
segment
Satellite
communication
segment Total
Revenue from external customers 2,961,899$ 4,599,390$ 7,561,289$
Inter-segment revenue -$ -$ -$
Segment loss 845,453)($ 197,177)($ 1,042,630)($
Segment assets - inventory 886,784$ 673,273$ 1,560,057$
For the year ended
December 31, 2011
Telecommunication
segment
Satellite
communication
segment Total
Revenue from external customers 3,477,092$ 3,201,201$ 6,678,293$
Inter-segment revenue -$ -$ -$
Segment loss 1,455,293)($ 463,673)($ 1,918,966)($
Segment assets - inventory 1,038,811$ 981,587$ 2,020,398$
Reconci l iat ion for segment prof i t ( loss ) and assets
Sales be tween segments are carr ied out at arm’s- length. The revenue f rom external par t ies r epor ted
to the Genera l Manager is measured in a manner cons istent with tha t in the income sta tement. A
reconcil iat ion of to tal segments prof i t ( loss ) to prof i t ( loss) before tax and discont inued opera tions
is provided as fol lows:
2012 2011
Total segments loss ($1,042,640.00) ($1,918,966.00)
Unallocated items (10,906) (15,764)
Loss before tax and discontinued operations ($1,053,546.00) ($1,934,730.00)
The amounts provided to the Genera l Manager with respec t to total a ssets are measured in a manner
consis tent with that in the ba lance sheet . ‘Repor table segments’ assets a re reconc iled to to ta l
asse ts a s fol lows:
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December 31, 2012 December 31, 2011
Segment assets for reportable segments 1,560,057$ 2,020,398$
Unallocated items 6,553,039 6,856,085
Total assets per balance sheet 8,113,096$ 8,876,483$
Revenue information by categor y
Revenues from external customers are a l l derived f rom the sales of goods. Breakdown of the
revenue from a l l sources is as fol lows:
2012 2011
Sales of goods 7,561,289$ 6,678,293$
Revenue informa tion by geographic area
Revenue informa tion by geographic area for 2012 and 2011 is as fol lows:
Revenue Non-current assets Revenue Non-current assets
USA 5,751,273$ 35,989$ 4,090,410$ 50,120$
Taiwan 45,368 789,199 190,545 928,306
Mainland China 369,627 575,694 394,378 715,894
Finland 94,477 - 535,386 -
Thailand 186,209 - 341,653 -
France 273,141 - 192,168 -
Italy 38,195 - 163,173 -
Singapore 63,735 - 158,809 -
Denmark - 17,089 - 22,701
Others 739,264 60 611,771 60
7,561,289$ 1,418,031$ 6,678,293$ 1,717,081$
2012 2011
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Sa les to major customers
Customer name Amount Department Amount Department
D customer 1,983,998$ Telecommunication 1,739,096$ Telecommunication
A customer 1,434,409 Satellite communication 1,455,687 Satellite communication
G customer 1,407,040 Satellite communication 699,613 Satellite communication
I customer 1,177,662 Satellite communication 202,190 Satellite communication
For the years ended December 31,
2012 2011
13. Disc losures re la t ing to the adopt ion of IFRSs
Pursuant to the regula t ions of the Financia l Supervisory Commiss ion, Execut ive Yuan, R.O.C. ,
ef fec tive Januar y 1 , 2013, a public company whose s tock i s l i sted on the Taiwan Stock Exchange
Corpora tion or t raded in the GreTa i Secur i t ie s Marke t should prepare f inancial s tatements in
accordance wi th the International Financia l Repor t ing Standards, International Account ing
Standards, and Interpre ta t ions /bul let ins (col lec t ively referred here in as the IFRSs) as recognized
by the Financial Supervisor y Commission, Execut ive Yuan, R.O.C. and the “Rules Governing the
Preparat ion of Financia l Sta tements by Secur i t ies Issuers” tha t a re expected to be applicable in
2013.
The Compan y di scloses the fol lowing information in advance pr ior to the adopt ion of IFRSs under
the requirements of J in-Guan-Zheng-Shen-Zi Order No. 0990004943 of the Financ ial Supervisor y
Commiss ion, da ted Februar y 2 , 2010: A. Major contents and status of execution of the Company’s plan for IFRSs adoption:
The Company has formed an IFRSs group headed by the Company’s Chief Financial Off icer,
which i s respons ible for se t t ing up a plan re lat ive to the Company’s transi t ion to IFRSs. The
major contents and s tatus of execution of th is plan are out l ined below:
Working Items for IFRSs Adoption Status of Execution
1. Formation of an IFRSs group Done
2. Setting up a plan relative to the Company’s transition to IFRSs Done
3. Identification of the differences between current accounting policies
and IFRSs
4. Identification of consolidated entities under the IFRSs framework Done
5. Evaluation of the impact of each exemption and option on the
Company under IFRS 1 – First-time Adoption of International
Financial Reporting Standards
6. Evaluation of needed information system adjustments Done
7. Evaluation of needed internal control adjustments Done
8. Establish IFRSs accounting policies Done
9. Selection of exemptions and options available under IFRS 1 – First-
time Adoption of International Financial Reporting Standards
10.Preparation of statement of financial position on the date of transition
to IFRSs
11.Preparation of IFRSs comparative financial information for 2012 On schedule
12.Completion of relevant internal control (including financial reporting
process and relevant information system) adjustments
Done
Done
Done
Done
Done
B. Material differences that may arise between current accounting policies used in the preparation of financial statements and IFRSs and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be used in the preparation of financial statements in the future:
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The Company uses the IFRSs already ratified currently by the Financial Supervisory Commission and the “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be applied in 2013 as the basis for evaluation of material differences in accounting policies as mentioned above. However, the Company’s current evaluation results may be different from the actual differences that may arise when new issuances of or amendments to IFRSs are subsequently ratified by the Financial Supervisory Commission or relevant interpretations or amendments to the “Rules Governing the Preparation of Financial Statements by Securities Issuers” come in the future. Material differences identified by the Company that may arise between current accounting policies used in the preparation of financial statements and IFRSs and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that will be used in the preparation of financial statements in the future are set forth below:
different accounting policies adopted as at January 1, 2012:Accounting
Standards in
R.O.C.
Adjustment IFRSs Remark
Deferred income tax assets
- current
$ 139,949 ($ 139,949) $ - (1)
Financial assets carried at
cost - current
355,664 ( 307,224) 48,440 (2)
Available-for-sale
financial assets - non -
- 307,224 307,224 (2)
Fixed Assets 1,300,193 24,535 1,324,728 (3)
Deferred pension costs 4,182 ( 4,182) - (5)
Other intangible assets 257,141 88,258 345,399 (3)(4)
Assets leased to others 35,357 ( 35,357) - (3)
Deferred expenses 115,767 ( 114,306) 1,461 (4)
Deferred income tax assets
- non-current
205,512 256,933 462,445 (1)
Other assets - non-current - 36,870 36,870 (4)
Others 6,462,718 - 6,462,718
Total assets $ 8,876,483 $ 112,802 $ 8,989,285
Deferred income tax assets
- non-current
- 116,984 116,984 (1)
Accrued pension liabilities 225,146 151,399 376,545 (5)
Others 5,870,933 - 5,870,933
Total liabilities $ 6,096,079 $ 268,383 $ 6,364,462
Cumulative translation
adjustments
87,592 ( 87,592) - (6)
Unrecognized pension ( 5,645) 5,645 - (5)
Capital surplus-employee
stock options
- 64,910 64,910 (7)
Capital surplus-long-term
investments
2,538 ( 2,538) - (8)
Accumulated deficit ( 1,688,077) ( 136,006) ( 1,824,083) (5)(6)
(7)(8)
Others 4,383,996 - 4,383,996
Total stockholders’ equity $ 2,780,404 ($ 155,581) $ 2,624,823
(a)Reconciliation of balance sheet accounts with material differences between
Reconciliation item:
1.Tax In accordance with current accounting standards in R.O.C., a deferred tax asset or liability should, according to
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the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting, should be classified as current or noncurrent according to the expected time period to realise a deferred tax asset or liability. On the date of transition to IFRSs, deferred tax assets and liabilities should all be classified as noncurrent, and a deferred tax asset and liability can be offset only when they meet certain criteria. Therefore, the Company decreased deferred tax assets-current by $139,949, and increased deferred tax assets-noncurrent and deferred tax liabilities by $256,933 and $116,984, respectively, on the date of transition to IFRSs.
2. Financial assets measured at cost-noncurrent In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” before amendment on July 7, 2011, unlisted stocks and emerging stocks held by the Company were measured at cost and recognised as ‘Financial assets measured at cost’. However, in accordance with IAS 39, ‘Financial Instruments: Recognition and Measurement’, they should be measured at fair value. Therefore, the Company decreased financial assets measured at cost-noncurrent by $307,224 and increased available-for-sale financial assets-noncurrent by $307,224 on the date of transition to IFRSs.
3. Assets leased to others and prepayments on equipment As the Company’s assets leased to others did not meet the definition of investment property under IFRSs, the Company decreased assets leased to others by $35,357, increased fixed assets by $24,535 and increased other intangible assets by $10,822 on the date of transition to IFRSs.
4. Deferred expenses In accordance with current accounting standards in R.O.C., the use right of land is classified as deferred expenses. However, in accordance with IAS 17, ‘Leases’, it should be presented in ‘Long-term prepayments’. The Company accounted for computer software in ‘deferred expenses’ in accordance with current accounting standards in R.O.C., but reclassified it to ‘other intangible assets’ on the date of transition to IFRSs.
Therefore, the Company decreased deferred expenses by $114,306, increased other non-current assets by $36,870 and increased other intangible assets by $77,436 on the date of transition to IFRSs.
5. Pensions
The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan. In accordance with current accounting standards in R.O.C., the unrecognized transitional net benefit obligation should be amortized on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognized transitional net benefit obligation should be recognized as an expense immediately at the date of adoption. In accordance with current accounting standards in R.O.C., the excess of the accumulated benefit obligation over the fair value of the pension plan (fund) assets at the balance sheet date is the minimum amount of pension liability that is required to be recognized on the balance sheet (“minimum pension liability”). However, IAS 19, “Employee Benefits”, has no regulation regarding the minimum pension liability. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Company is recognized in net pension cost of current period using the ‘corridor’ method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognized immediately in other comprehensive income. Therefore, the Company increased accrued pension liabilities and accumulated loss by $151,399 and $161,226, respectively, and decreased net loss not recognized as pension cost and deferred pension cost by $5,645 and $4,182, respectively, on the date of transition to IFRSs.
6. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”.
Therefore, the Company decreased cumulative translation adjustment and accumulated loss both by $87,592, on the date of transition to IFRSs.
7. Capital reserve-employee stock options
The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in
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accordance with ARDF Interpretation 92-070, ARDF Interpretation 92-071 and ARDF Interpretation 92-072, ‘Accounting for Employee Stock Options’, dated March 17, 2003. Compensation cost of such employee stock options is recognised as an expense using the intrinsic value method. However, according to IFRS 2, ‘Share-based Payment’, the cost of the share-based payment arrangements stated above should be expensed at the fair value of the equity instruments over the vesting period. Therefore, the Company increased capital reserve-employee stock options and accumulated loss both by $64,910, on the date of transition to IFRSs.
8. Capital reserve-long-term investments The Company elected the exemption for previous business combinations, and adjusted capital reserve for the previous ROC GAAP capital reserve that did not meet the regulations of IFRSs. Therefore, the Company decreased capital reserve-long-term investments and accumulated loss both by $2,538, on the date of transition to IFRSs.
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different accounting policies adopted as at December 31, 2012:Accounting
Standards in
R.O.C.
Adjustment IFRSs Remark
Deferred income tax assets
- current
$ 99,831 ($ 99,831) $ - (1)
Financial assets carried at
cost - current
330,029 ( 283,565) 46,464 (2)
Available-for-sale
financial assets - non -
- 283,565 283,565 (2)
Fixed Assets 1,092,421 26,392 1,118,813 (3)
Deferred pension costs 58,693 ( 58,693) - (5)
Other intangible assets 176,162 79,516 255,678 (3)(4)
Assets leased to others 34,068 ( 34,068) - (3)
Deferred expenses 107,873 ( 106,536) 1,337 (4)
Deferred income tax assets
- non-current
291,673 200,361 492,034 (1)
Other assets - non-current - 34,696 34,696 (4)
Others 5,922,346 - 5,922,346
Total assets $ 8,113,096 $ 41,837 $ 8,154,933
Deferred income tax assets
- non-current
- 100,530 100,530 (1)
Accrued pension liabilities 231,624 93,433 325,057 (5)
Others 4,427,458 - 4,427,458
Total liabilities $ 4,659,082 $ 193,963 $ 4,853,045
Cumulative translation
adjustments
25,706 ( 87,592) ( 61,886) (6)
Unrecognized pension ( 35,383) 35,383 - (5)
Capital surplus-employee
stock options
- 69,787 69,787 (7)
Capital surplus-long-term
investments
2,538 ( 2,538) - (8)
Accumulated deficit ( 2,473,799) ( 167,166) ( 2,640,965) (5)(6)
(7)(8)
Others 5,934,952 - 5,934,952
Total stockholders’ equity $ 3,454,014 ($ 152,126) $ 3,301,888
(a)Reconciliation of balance sheet accounts with material differences between
Reconciliation item:
1. Tax In accordance with current accounting standards in R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or noncurrent. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting, should be classified as current or noncurrent according to the expected time period to realise a deferred tax asset or liability. On the date of transition to IFRSs, deferred tax assets and liabilities should all be classified as noncurrent, and a deferred tax asset and liability can be offset only when they meet certain criteria. Therefore, the Company decreased deferred tax assets-current by $99,831, and increased deferred tax assets-noncurrent and deferred tax liabilities by $200,361 and $100,530, respectively.
2. Financial assets measured at cost-noncurrent In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” before amendment on July 7, 2011, unlisted stocks and emerging stocks held by the Company were measured at cost and recognised as ‘Financial assets measured at cost’. However, in accordance with IAS 39, ‘Financial
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Instruments: Recognition and Measurement’, they should be measured at fair value. Therefore, the Company decreased financial assets measured at cost-noncurrent by $283,565 and increased available-for-sale financial assets-noncurrent by $283,565.
3. Assets leased to others and prepayments on equipment As the Company’s assets leased to others did not meet the definition of investment property under IFRSs, the Company decreased assets leased to others by $34,068, increased fixed assets by $26,392 and increased other intangible assets by $7,676.
4. Deferred expenses
In accordance with current accounting standards in R.O.C., the use right of land is classified as deferred expenses. However, in accordance with IAS 17, ‘Leases’, it should be presented in ‘Long-term prepayments’. The Company accounted for computer software in ‘deferred expenses’ in accordance with current accounting standards in R.O.C., but reclassified it to ‘other intangible assets’ on the date of transition to IFRSs. Therefore, the Company decreased deferred expenses by $106,536, increased other non-current assets by $34,696 and increased other intangible assets by $71,840.
5. Pensions The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan. In accordance with current accounting standards in R.O.C., the unrecognized transitional net benefit obligation should be amortized on a straight-line basis over the average remaining service period of employees still in service and expected to receive benefits. However, in accordance with IAS 19, “Employee Benefits”, the unrecognized transitional net benefit obligation should be recognized as an expense immediately at the date of adoption. In accordance with current accounting standards in R.O.C., the excess of the accumulated benefit obligation over the fair value of the pension plan (fund) assets at the balance sheet date is the minimum amount of pension liability that is required to be recognized on the balance sheet (“minimum pension liability”). However, IAS 19, “Employee Benefits”, has no regulation regarding the minimum pension liability. In accordance with current accounting standards in R.O.C., actuarial pension gain or loss of the Company is recognized in net pension cost of current period using the ‘corridor’ method. However, IAS 19, “Employee Benefits”, requires that actuarial pension gain or loss should be recognized immediately in other comprehensive income.
6. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”. Therefore, the Company decreased cumulative translation adjustment and accumulated loss both by $87,592, on the date of transition to IFRSs.
7. Capital reserve-employee stock options The employee stock options granted from January 1, 2004 through December 31, 2007 are accounted for in accordance with ARDF Interpretation 92-070, ARDF Interpretation 92-071 and ARDF Interpretation 92-072, ‘Accounting for Employee Stock Options’, dated March 17, 2003. Compensation cost of such employee stock options is recognised as an expense using the intrinsic value method. However, according to IFRS 2, ‘Share-based Payment’, the cost of the share-based payment arrangements stated above should be expensed at the fair value of the equity instruments over the vesting period. Therefore, the Company increased capital reserve-employee stock options and accumulated loss by $69,787 and $64,910, respectively, and increased operating expense by $4,877, on the date of transition to IFRSs.
8. Capital reserve-long-term investments
The Company elected the exemption for previous business combinations, and adjusted capital reserve for the previous ROC GAAP capital reserve that did not meet the regulations of IFRSs. Therefore, the Company decreased capital reserve-long-term investments and accumulated loss both by $2,538, on the date of transition to IFRSs.
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C. Reconciliation of income statement accounts with material differences between different accounting policies :
Accounting
Standards in
R.O.C.
Adjustment IFRSs Remark
Operating income 1,572,956)($ 5,147$ 1,567,809)($ (1)
Other 538,328 - 538,328
Loss before income tax ($ 1,034,628) $ 5,147 ($ 1,029,481)
Reconciliation item:
1. Computing share-based payment transactions and reversing pension expenses in accordance with IFRSs.
The Company has elected the following exemptions in accordance with IFRS 1, “First-time Adoption of International Financial Reporting Standards” and “Rules Governing the Preparation of Financial Statements by Securities Issuers” that are expected to be applicable in 2013: Business combinations The Company has elected not to apply the requirements in IFRS 3, “Business Combinations”, retrospectively to business combinations that occurred prior to transition to IFRSs. Share-based payment transactions The Company has elected not to apply the requirements in IFRS 2, “Share-based Payment”, retrospectively to equity instruments that were vested arising from share-based payment transactions prior to transition to IFRSs. Employee benefits The Company has elected to recognize all cumulative actuarial gains and losses for all employee benefit plans in ‘retained earnings’ at the opening IFRS balance sheet date, and to disclose the information of present value of defined benefit obligation, fair value of plan assets, gain or loss on plan assets and experience adjustments under the requirements of paragraph 120A (P), IAS 19, “Employee Benefits”, based on their prospective amounts for financial periods from the opening IFRS balance sheet date. Cumulative translation differences The Company has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign entities under ROC GAAP to zero at the opening IFRS balance sheet date, and to deal with translation differences arising subsequent to the opening IFRS balance sheet date in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”. Compound financial instruments The Company has elected not to segregate between liability components and equity components of compound financial instruments whose liability components were not outstanding at the opening IFRS balance sheet date. Designation of previously recognized financial instruments The Company has elected to designate certain financial assets carried at cost as ‘Available-for-sale financial assets’ at the opening IFRS balance sheet date. The selection of exemptions above may be different from the actual selection at the date of transition to IFRSs due to the issuance of related regulations by competent authorities, changes in economic environment, or changes in the evaluation of the impact of the Company’s selection of exemptions.
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Corporate Directory
Directors and Executive Officers
Patrick Wang Chairman of the Board
Chi-Chia Hsieh Vice-Chairman of the Board
Lee Ting Director of the Board
Wayne Chan Director of the Board
Andrew Chu Supervisor
Sue-Fung Wang Supervisor
Allen Yen Director of the Board , President and Chief Executive Officer
Allen Chen Vice President, GM of Radio Division
Shu-Huei Fuong Vice President
Hualin Chi Chief Financial Officer
Location Headquarter
Microelectronics Technology Inc. No.1, Innovation Road II Hsinchu Science Park, Taiwan Tel: 886-3-577-3335 Fax: 886-3-577-0688 MTI laboratory Inc. 201 Continental Boulevard #300, El Segundo, CA 90245 Tel: 1-310-955-3700 Fax: 1-310-955-3770 Radiocomp MTI Krakasvej 17, DK-3400 Hillerød, Denmark Tel: +45-70-23-10-24 Overseas Manufacturing Sites
Jupiter Technology (Wuxi) Co., Ltd. No.13 Minjiang Rd. Wuxi State High & New Technology Industry Development Zone, Jiangsu Province, China Tel: 86-510-8522-8800 Fax: 86-510-8522-9892