Yageo Corporation and Subsidiaries
Consolidated Financial Statements for the
Years Ended December 31, 2011 and 2010 and
Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Stockholders
Yageo Corporation
We have audited the accompanying consolidated balance sheets of Yageo Corporation (the
“Corporation”) and subsidiaries as of December 31, 2011 and 2010, and the related consolidated
statements of income, changes in stockholders’ equity and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the Corporation’s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. However, we did not audit the financial statements of a consolidated subsidiary, Yageo
Europe Holding B.V. (“Yageo Europe”) as of and for the years ended December 31, 2011 and 2010.
The total assets of this consolidated subsidiary were 14.90% (NT$7,168,455 thousand) and 14.05%
(NT$7,070,636 thousand) of the related consolidated totals as of December 31, 2011 and 2010,
respectively, and the total revenues of this consolidated subsidiary were 16.06% (NT$4,011,262
thousand) and 17.10% (NT$4,670,004 thousand) of the related consolidated totals in 2011 and
2010, respectively. We also did not audit the financial statements of Chilisin Electronics Corp.
and Global Testing Corporation Limited as of and for the years ended December 31, 2011 and
2010. The total investments in these two equity-method investees were 2.98% (NT$1,433,352
thousand) and 2.77% (NT$1,395,681 thousand) of the related consolidated assets as of December
31, 2011 and 2010, and the total investment incomes on these two investees were 0.03% (NT$688
thousand) and 1.88% (NT$92,372 thousand) of the related consolidated income before income tax
in 2011 and 2010, respectively. The financial statements of the consolidated subsidiary and the
other two equity-method investees were audited by other auditors, whose reports have been
furnished to us, and our opinion, insofar as it relates to the investees’ amounts included herein, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with the Rules Governing the Audit of Financial
Statements by Certified Public Accountants and auditing standards generally accepted in the
Republic of China. Those rules and standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
-1-
In our opinion, based on our audits and the reports of the other auditors, the consolidated financial
statements referred to in the first paragraph present fairly, in all material respects, the financial
position of Yageo Corporation and subsidiaries as of December 31, 2011 and 2010, and the results
of their operations and their cash flows for the years then ended, in conformity with Guidelines
Governing the Preparation of Financial Reports by Securities Issuers and accounting principles
generally accepted in the Republic of China.
March 22, 2012
Notice to Readers
The accompanying consolidated financial statements are intended only to present the financial
position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in the Republic of China and not those of any other jurisdictions.
The standards, procedures and practices to audit such consolidated financial statements are those
generally accepted and applied in the Republic of China.
For the convenience of readers, the auditors’ report and the accompanying consolidated financial
statements have been translated into English from the original Chinese version prepared and used
in the Republic of China. If there is any conflict between the English version and the original
Chinese version or any difference in the interpretation of the two versions, the Chinese-language
auditors’ report and consolidated financial statements shall prevail.
-2-
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Par Value)
2011
Amount
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2 and 5)
Notes receivable (Notes 2 and 3)
Accounts receivable, net of allowance for doubtful accounts of $62,515
thousand in 2011 and $68,561 thousand in 2010 (Notes 2 and 3)
Accounts receivable from related parties (Notes 2, 3 and 23)
Income tax refund receivable (Notes 2 and 20)
Other receivables
Inventories, net (Notes 2 and 7)
Deferred income tax assets (Notes 2 and 20)
Other current assets
$
2010
Amount
%
8,096,620
14,260
268,994
17
1
6,246,532
67,813
3,453
90,154
5,009,390
137,019
278,134
20,212,369
$
8,700,536
6,078
36,287
17
-
13
10
1
6,260,735
75,717
6,064
120,582
5,207,918
158,111
555,954
13
11
1
42
21,127,982
42
CURRENT LIABILITIES
Short-term loans (Note 13)
Short-term bills payable, net (Note 14)
Financial liabilities at fair value through profit or loss (Notes 2 and 5)
Notes payable
Accounts payable
Accounts payable to related parties (Note 23)
Income tax payable (Notes 2 and 20)
Accrued expenses (Note 17)
Cash dividend payable (Note 17)
Other current liabilities
LONG-TERM INVESTMENTS (Notes 2, 5, 6, 8, 9 , 10, 20 and 24)
Investments accounted for by the equity method
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Financial assets carried at cost
Bond investments with no active market
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11, 15 and 24)
Cost
Land
Buildings
Machinery and equipment
Other equipment
Total cost
Less - accumulated depreciation
Less - accumulated impairment
Construction in progress and prepayments for equipment
Net property, plant and equipment
INTANGIBLE ASSETS
Land use rights
Goodwill (Note 2)
Total intangible assets
OTHER ASSETS
Assets leased to others, net (Notes 2, 11, 12 and 24)
Idle assets (Notes 2,11 and 12)
Refundable deposits
Deferred income tax assets (Notes 2 and 20)
Miscellaneous (Note 2)
Total other assets
2,528,334
53,921
2,573,634
323,227
50,000
5
6
1
-
2,545,788
308,690
3,456,658
335,494
50,000
5
7
1
-
2
2
6
1
3
2
7,505,259
LONG-TERM LIABILITIES
Bonds payable (Notes 2 and 16)
Long-term bank debt (Notes 15 and 24)
Total long-term liabilities
5,529,116
12
6,696,630
13
OTHER LIABILITIES
Accrued pension costs (Notes 2 and 22)
Guarantee deposits received
Total other liabilities
734,691
8,615,446
24,365,077
1,921,445
35,636,659
19,713,548
205,540
15,717,571
1,769,942
1
18
51
4
74
41
1
32
4
734,464
8,075,939
22,729,759
1,825,050
33,365,212
17,124,614
206,783
16,033,815
996,338
1
16
45
4
66
34
32
2
17,487,513
36
17,030,153
34
94,572
2,474,408
5
89,323
2,458,287
5
2,568,980
5
2,547,610
5
61,079
539,150
21,188
1,247,555
458,808
1
3
1
60,279
581,148
20,797
1,643,483
604,497
1
4
1
2,327,780
5
2,910,204
6
Total liabilities
STOCKHOLDERS’ EQUITY OWNED BY THE PARENT COMPANY
Capital stock - NT$10.00 par value
Authorized- 4,000,000 thousand share
Issued and outstanding - 2,205,308 thousand shares in 2011 and 2,201,708
thousand shares in 2010
Capital surplus
Additional paid-in capital from share issuance in excess of par
Additional paid-in capital from conversion of convertible bonds
Treasury stock transactions
Long-term investments
Equity component of convertible bonds
Total capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Cumulative translation adjustments
Net loss not recognized as pension cost
Unrealized loss on financial instruments
Total other equity
Total stockholders’ equity owned by the parent company
MINORITY INTEREST
Total stockholders’ equity
TOTAL
$ 48,125,758
100
$ 50,312,579
100
TOTAL
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 22, 2012)
-3-
$
2010
Amount
%
745,000
999,316
765
2,265
3,092,002
344,693
238,843
1,306,914
775,461
Total current liabilities
Total current assets
2011
Amount
LIABILITIES AND STOCKHOLDERS’ EQUITY
%
1,416,620
544,846
163,701
4,543
4,644,031
271,240
272,834
1,309,895
329,163
1,075,415
3
1
9
1
3
1
2
16
10,032,288
20
6,349,816
300,000
13
1
5,912,025
2,200,000
12
4
6,649,816
14
8,112,025
16
267,166
15,326
-
267,296
29,934
1
-
282,492
-
297,230
1
14,437,567
30
18,441,543
37
22,053,084
46
22,017,084
44
1,000,765
29,138
121,617
700,145
1,157,631
3,009,296
2
2
2
6
999,865
29,138
121,617
676,316
1,157,631
2,984,567
2
2
2
6
988,504
384,635
7,241,848
8,614,987
2
1
15
18
573,751
6,593,957
7,167,708
1
13
14
437,596
(3,335)
(512,790)
(78,529)
1
(1)
-
$
%
(802,642)
(3,566)
421,573
(384,635)
(2)
1
(1)
33,598,838
70
31,784,724
63
89,353
-
86,312
-
33,688,191
70
31,871,036
63
$ 48,125,758
100
$ 50,312,579
100
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2011
Amount
GROSS SALES
2010
Amount
%
%
$ 25,803,026
103
$ 28,060,598
103
SALES RETURNS
128,793
-
191,539
1
SALES ALLOWANCES
701,136
3
555,236
2
NET SALES (Notes 2, 23 and 29)
24,973,097
100
27,313,823
100
COST OF SALES (Notes 7, 21 and 23)
19,668,084
79
19,589,288
72
GROSS PROFIT
5,305,013
21
7,724,535
28
OPERATING EXPENSES (Note 21)
Selling
General and administrative
Research and development
1,384,615
956,285
403,156
5
4
2
1,429,123
1,027,780
381,529
5
4
1
2,744,056
11
2,838,432
10
2,560,957
10
4,886,103
18
191,928
1
76,680
-
93,345
-
146,362
66,726
1
-
129
12,915
29,345
15,955
123,819
1
4,283
127,222
20,240
257,706
81,894
1
1
-
467,436
2
781,113
3
246,728
1
231,935
1
61,753
-
-
-
2,857
-
(Continued)
LESS:
Total operating expenses
OPERATING INCOME
NONOPERATING INCOME AND GAINS
Interest income (Note 10)
Investment income recognized under the equity
method, net (Notes 2 and 8)
Dividend income
Gain on disposal of property, plant and equipment,
net (Note 2)
Gain on sale of investments, net (Note 2)
Exchange gain, net (Notes 2 and 16)
Rental revenue (Note 23)
Valuation gain on financial assets (Notes 2 and 5)
Valuation gain on financial liabilities (Notes 2 and 5)
Miscellaneous income (Note 17)
Total nonoperating income and gains
NONOPERATING EXPENSES AND LOSSES
Interest expense (Notes 2, 11 and 16)
Investment loss recognized under the equity method,
net (Notes 2 and 8)
Loss on disposal of property, plant and equipment,
net (Note 2)
-4-
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2011
Amount
Loss on sale of investments, net (Notes 2, 5 and 6)
Exchange loss, net (Notes 2 and 16)
Valuation loss on financial liabilities (Notes 2 and 5)
Miscellaneous expenses
$
Total nonoperating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 2 and 20)
2010
Amount
%
161,599
166,718
1
639,655
$
%
6,838
261,583
250,127
1
1
2
750,483
3
2,388,738
10
4,916,733
18
698,123
3
740,632
3
NET CONSOLIDATED INCOME
$
1,690,615
7
$
4,176,101
15
NET INCOME ATTRIBUTED TO:
Stockholders of parent company
Minority interest
$
1,667,810
22,805
7
-
$
4,147,537
28,564
15
-
$
1,690,615
7
$
4,176,101
15
2011
2010
Before
After
Before
After
Income Tax Income Tax Income Tax Income Tax
EARNINGS PER SHARE (NEW TAIWAN
DOLLARS; Note 19)
Basic
Diluted
$
$
1.07
0.96
$
$
0.76
0.71
$
$
2.22
1.56
$
$
1.89
1.34
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 22, 2012)
-5-
(Concluded)
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
Capital Stock Issued
and Outstanding
(Notes 16, 17 and 18)
Thousand Share
Amount
BALANCE, JANUARY 1, 2010
Share Issuance
in Excess of Par
$
999,865
Capital Surplus (Notes 2, 8, 16, 17 and 18)
Additional
Paid-in
Capital from
Conversion of
Convertible
Treasury Stock
Long-term
Bonds
Transactions
Investments
Equity
Component of
Convertible
Bonds
Retained Earnings (Notes 2, 17, and 20)
Unappropriated
Legal Reserve
Special Reserve
Earnings
$
$
$
2,194,862
$ 21,948,623
22,291
$
121,617
$
670,091
1,169,325
506,363
$
-
Decrease in minority interest
-
-
-
-
-
-
-
-
-
Appropriation of the 2009 earnings
Legal reserve
Cash dividends - NT$ 0.15 per share
-
-
-
-
-
-
-
67,388
-
-
Net consolidated income for the year ended
December 31, 2010
-
-
-
-
-
-
-
-
-
6,846
68,461
-
6,847
-
-
-
Changes in unrealized gain on available-for-sale
financial assets
-
-
-
-
-
-
-
Effect of changes in percentages of ownership of
investees
-
-
-
-
-
3,134
Equity in the changes in capital surplus reported by
equity-method investees
-
-
-
-
-
Equity in the changes of unrealized gain on financial
instrument reported by equity-method investees
-
-
-
-
Equity in the changes in net loss not recognized as
pension cost reported by equity-method investees
-
-
-
Change in translation adjustments
-
-
2,201,708
$
2,843,037
Cumulative
Translation
Adjustments
(Notes 2 and 8)
$
$
(5,713 )
Unrealized Gain
(Loss) on
Financial
Instruments
(Notes 2, 6 and 8)
$
58,684
Minority Interest
$
76,345
$ 29,963,403
-
-
-
-
-
-
4,147,537
-
-
-
28,564
4,176,101
-
-
-
-
-
-
63,614
-
-
-
-
-
208,228
-
208,228
-
-
-
-
-
-
-
-
3,134
3,091
-
-
-
-
-
-
-
-
3,091
-
-
-
-
-
-
-
-
154,661
-
154,661
-
-
-
-
-
-
-
-
2,147
-
-
2,147
-
-
-
-
-
-
-
-
(2,355,517 )
-
-
22,017,084
999,865
29,138
121,617
676,316
1,157,631
573,751
-
6,593,957
(802,642 )
-
-
-
-
-
-
-
-
-
-
-
-
-
3,600
36,000
900
-
-
-
-
-
-
-
-
-
-
-
36,900
Appropriation of the 2010 earnings
Legal reserve
Special reserve
Cash dividend - NT$0.1 per share
-
-
-
-
-
-
-
414,753
-
384,635
-
-
-
-
-
(220,531 )
Net consolidated income for the year ended
December 31, 2011
-
-
-
-
-
-
-
-
-
1,667,810
-
-
-
22,805
Changes in unrealized loss on available-for-sale
financial assets
-
-
-
-
-
-
-
-
-
-
-
-
Effect of changes in percentages of ownership of
investees
-
-
-
-
-
21,747
-
-
-
-
-
-
Equity in the changes in capital surplus reported by
equity-method investees
-
-
-
-
-
2,082
-
-
-
-
-
-
Equity in the changes of unrealized loss on financial
instrument reported by equity-method investees
-
-
-
-
-
-
-
-
-
-
-
-
Equity in the changes in net loss not recognized as
pension cost reported by equity-method investees
-
-
-
-
-
-
-
-
-
-
-
231
-
-
231
Changes in translation adjustments
-
-
-
-
-
-
-
-
-
-
1,240,238
-
-
4,358
1,244,596
2,205,308
$ 22,053,084
89,353
$ 33,688,191
BALANCE, DECEMBER 31, 2010
Decrease in minority interest
Conversion of employee stock options
BALANCE, DECEMBER 31, 2011
$
1,000,765
$
29,138
$
121,617
$
700,145
(11,694 )
$
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 22, 2012)
-6-
1,157,631
$
988,504
$
384,635
(67,388 )
(329,229 )
(414,753 )
(384,635 )
(220,531 )
$
7,241,848
$
437,596
(3,566 )
$
(3,335 )
(10,192 )
Total
Stockholders'
Equity
-
Conversion of convertible bonds
-
1,552,875
Net Loss Not
Recognized as
Pension
Cost
(Notes 2 and 8)
421,573
(2,363,922 )
86,312
31,871,036
(24,122 )
1,690,615
-
(928,521 )
-
-
21,747
-
-
2,082
-
(5,842 )
(5,842 )
$
(329,229 )
(8,405 )
(24,122 )
(928,521 )
(10,192 )
(512,790 )
$
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net consolidated income
Adjustments to reconcile net consolidated income to net cash provided
by operating activities:
Depreciation and amortization
Loss (gain) on disposal of property, plant and equipment, net
Valuation loss (gain) on financial instruments, net
Allowance for loss on inventories
Investment loss (gain) recognized under the equity method, net
Loss (gain) on sale of investments, net
Cash dividends received from equity method investees
Exchange loss (gain) on foreign-currency financial instruments, net
Amortization of discount on available-for-sale debt instruments
Interest expense on bonds payable
Deferred income taxes
Others
Net changes in operating assets and liabilities:
Financial assets and liabilities at fair value through profit or loss
Notes receivable
Accounts receivable
Accounts receivable from related parties
Income tax refund receivable
Other receivables
Inventories
Other current assets
Notes payable
Accounts payable
Accounts payable to related parties
Income tax payable
Accrued expenses
Other current liabilities
Accrued pension costs
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds of the disposal of available-for-sale financial assets
Acquisition of available-for-sale financial assets
Acquisition of investments accounted for by the equity method
Return of capital on investments accounted for by the equity method
Return of capital on the liquidation of financial assets carried at cost
Proceeds of the disposal of property, plant and equipment
Acquisition of property, plant and equipment
-7-
2011
2010
$ 1,690,615
$ 4,176,101
2,825,237
2,857
(45,300)
55,157
61,753
(129)
96,932
233,709
(10,773)
204,082
376,527
-
3,224,246
(4,283)
3,877
39,394
(146,362)
6,838
52,979
(579,481)
(10,504)
213,379
291,687
(66)
128,982
(232,707)
14,203
7,904
2,611
30,428
143,371
277,820
(2,278)
(1,552,029)
73,453
6,502
(2,981)
(20,115)
(130)
83,756
1,604
(688,399)
40,097
(864)
(43,559)
(1,995,396)
(65,320)
(38,932)
1,146,186
140,864
85,768
246,818
20,653
(33,420)
4,365,701
6,167,661
556,129
(556,000)
18,000
26,989
(2,520,885)
343,035
(444,484)
(6,080)
32,129
59,431
(3,109,618)
(Continued)
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
2011
Increase in refundable deposits
Increase in other assets
$
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term loans
Increase (decrease) in short-term bills payable
Increase in long-term bank debts
Decrease in long-term bank debts
Increase (decrease) in guarantee deposits received
Cash dividends paid
Cash dividends paid to minority interest
Issuance of common stock on the exercise of employee stock options
Net cash provided by (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid
Less: Capitalized interest
Net interest paid excluding capitalized interest
Income tax paid
INVESTING ACTIVITIES AFFECTING BOTH CASH AND
NONCASH ITEMS
Proceeds of the disposal of available-for-sale financial assets
Decrease in payables for the disposal of available-for-sale financial
assets
Cash received for the disposal of available-for-sale financial assets
-8-
$
(1,484)
(499,263)
(2,747,111)
(3,626,334)
(671,620)
454,470
300,000
(2,200,000)
(14,608)
(549,694)
(24,122)
36,900
(19,004)
(420,104)
2,200,000
(4,500,000)
16,405
(10,192)
-
(2,668,674)
(2,732,895)
446,168
(1,136,253)
(603,916)
(1,327,821)
8,700,536
10,028,357
$ 8,096,620
$ 8,700,536
$
50,584
7,106
43,478
285,130
$
$
$
38,046
18,017
20,029
359,842
$
40,363
-
$
$
$
$
92,830
329,163
63,614
$
556,129
$
253,216
$
556,129
89,819
$ 343,035
(Continued)
$
$
NONCASH INVESTING AND FINANCING ACTIVITIES
Deferred expense reclassified to property, plant and equipment
Assets leased to others reclassified to idle assets
Cash dividend payable
Conversion of bonds payable
(391)
(270,953)
2010
YAGEO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
Acquisition of property, plant and equipment
Decrease (increase) in payables for equipment purchased (recognized
under other current liabilities)
Cash paid for the acquisition of property, plant and equipment
2011
2010
$ 2,241,046
$ 3,730,867
279,839
$ 2,520,885
(621,249)
$ 3,109,618
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 22, 2012)
-9-
(Concluded)
YAGEO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Exchange Rate and Unless Stated Otherwise)
1. ORGANIZATION AND OPERATIONS
Yageo Corporation (the “Corporation”) was incorporated in 1987 in the Republic of China (ROC). The
Corporation’s shares are traded on the Taiwan Stock Exchange.
The Corporation manufactures and sells passive components. It also produces and sells equipment used to
manufacture passive components.
The Corporation and the consolidated subsidiaries (the “Group”) had 8,100 and 10,419 employees as of
December 31, 2011 and 2010, respectively.
The Corporation’s subsidiaries were as follows:
a. Subsidiaries that manufacture and market passive components - Ferroxcube Taiwan, Ltd. (“Ferroxcube
Taiwan”), Yageo Electronics (Dongguan) Co., Ltd. (“Yageo Dongguan”), Yageo Electronics (China)
Co., Ltd. (“Yageo China”), Ferroxcube Electronics (Dongguan) Co., Ltd. (“Ferroxcube Dongguan”),
Yageo Components (Su Zhou) Co., Ltd., Yageo SZ Trade Co., Ltd., Yageo USA (H.K.) Limited,
Compostar Technology (Dongguan) Co., Ltd. (“Compostar Dongguan”), Compostar Technology (Su
Zhou) Co., Ltd. (“Compostar Su Zhou”), Ko-E Corp. (“Ko-E”), Ko-E (H.K.) Limited (“Ko-E H.K.”),
Ko-E Technology (Shenzhen) Co., Ltd. (“Ko-E Shenzhen”), Vitrohm Portuguesa LDA (“Vitrohm
Portuguesa”), Yageo Europe Holding B.V. (“Yageo Europe”), Ferroxcube International Holding B.V.
(“Ferroxcube”), Yageo Korea, Yageo Japan, Yageo America Corporation, Yageo Corporation (South
Asia) PTE. LTD., and Phycomp Malaysia SDN. BHD. Phycomp Malaysia SDN. BHD. was liquidated
in 2011.
b. Investment holding subsidiaries - Yageo Holding (Bermuda) Limited (“Yageo Holding Bermuda”),
Ko-E Holding (Cayman Islands) (“Ko-E Holding Cayman”), Ltd., Vitrohm Holding GmbH, Kuo Shin
Investment Limited (“Kuo Shin Investment”), Ferroxcube Holding (Samoa), Ltd. (“Ferroxcube Holding
Samoa”), Hsu Tai International (H.K.) (“Hsu Tai H.K.”), Compostar Technology (Cayman), Ltd.
(“Compostar Cayman”), Yageo (Hong Kong) Limited (“Yageo Hong Kong”), Ferroxcube Technology
(H.K.), Ltd. (“Ferroxcube Technology H.K.”), Compostar Technology (H.K.) Co., Ltd. (“Compostar
H.K.”) and Rextron International. Compostar Cayman and Compostar H.K. were liquidated in 2011.
The organization chart of the Group as of December 31, 2011 is shown as Table 10.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in conformity with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers, and accounting principles generally
accepted in the Republic of China (ROC).
For readers’ convenience, the accompanying consolidated financial statements have been translated into
English from the original Chinese version prepared and used in the ROC. If inconsistencies arise between
the English version and the Chinese version or if differences arise in the interpretations between the two
versions, the Chinese version of the financial statements shall prevail.
- 10 -
Significant accounting policies are summarized as follows:
Foreign-currency Transactions
Nonderivative foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in
effect when the transactions occur. Exchange differences arising from the settlement of foreign-currency
assets and liabilities are recognized in profit or loss.
At the balance sheet date, foreign-currency monetary assets and liabilities are revalued at prevailing
exchange rates, and the exchange differences are recognized as gain or loss.
At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities
that are measured at fair value are revalued using prevailing exchange rates, with the exchange differences
treated as follows:
a. Recognized in stockholders’ equity if the changes in fair value are recognized in stockholders’ equity;
b. Recognized in profit and loss if the changes in fair value are recognized in profit or loss.
Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange
rates at trade dates.
If the functional currencies of equity-method investees are foreign currencies, translation adjustments will
result from the translation of the investees’ financial statements into the reporting currency of the parent
company. These adjustments are accumulated and reported as a separate component of stockholders’
equity.
Accounting Estimates
Under the above guidelines and principles, certain estimates and assumptions have been used for the
allowance for doubtful accounts; allowance for loss on inventories; depreciation and impairment of
property, plant, and equipment; assets leased to others and idle assets; impairment of intangible assets;
income tax; pension cost; bonuses to employees; remuneration to directors and supervisors; etc. Actual
results may differ from these estimates.
Current and Noncurrent Assets and Liabilities
Current assets include cash and cash equivalents and those assets held primarily for trading purposes or to
be realized, sold or consumed within one year from the balance sheet date. All other assets such as
property, plant and equipment and intangible assets are classified as noncurrent. Current liabilities are
obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All
other liabilities are classified as noncurrent.
Basis for Consolidation
The accompanying consolidated financial statements include the accounts of all directly and indirectly
subsidiaries of the Corporation.
All significant intercompany balances and transactions are eliminated upon consolidation. Goodwill is the
acquisition cost of the investment in excess of the Group’s proportionate equity in the fair value of the
subsidiary’s identifiable net assets. Goodwill will be tested for impairment at least annually. If an event
or circumstance shows that it is more likely than not that goodwill is impaired, an impairment test is made.
- 11 -
For consolidated subsidiaries with financial statements not expressed in New Taiwan dollars, those
financial statements were translated into New Taiwan dollars for consolidation purposes at the following
foreign exchange rates: (a) assets and liabilities - prevailing exchange rates on the balance sheet dates, (b)
stockholders’ equity - historical rates, and (c) profit and loss accounts - weighted average rates for the year.
The 2011 and 2010 consolidated financial statement include the Corporation, Ferroxcube Taiwan, Yageo
Dongguan, Yageo China, Ferroxcube Dongguan, Yageo Components (Su Zhou) Co., Ltd., Yageo SZ Trade
Co., Ltd., Yageo USA (H.K.), Compostar Cayman, Compostar Dongguan, Compostar Su Zhou, Vitrohm
Portuguesa, Yageo Europe, Ferroxcube, Yageo Korea, Yageo Japan, Yageo America Corporation, Yageo
Corporation (South Asia) PTE. LTD., Phycomp Malaysia SDN. BHD., Yageo Holding Bermuda, Vitrohm
Holding GmbH, Kuo Shin Investment, Yageo Hong Kong, Compostar H.K., Ferroxcube Holding Samoa,
Ferroxcube Technology H.K., Hsu Tai H.K., Ko-E Holding Cayman, Ko-E, Ko-E H.K., Ko-E Shenzhen
and Rextron International.
Phycomp Malaysia SDN. BHD., Compostar Cayman and Compostar H.K. were liquidated in 2011.
Cash Equivalents
Cash equivalents (commercial paper) are highly liquid financial instruments with maturities of three months
or less when acquired and with carrying amounts that approximate their fair values.
Financial Instruments at Fair Value Through Profit or Loss
Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss
(FVTPL) include financial assets or financial liabilities held for trading and those designated as at FVTPL
on initial recognition. The Group recognizes a financial asset or a financial liability in its balance sheet
when the Group becomes a party to the contractual provisions of the financial instrument. A financial
asset is derecognized when the Group loses control of its contractual rights over the financial asset. A
financial liability is derecognized when the obligation specified in the relevant contract is discharged,
canceled or expired.
Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit
or loss. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities
at FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss in the
year in which they arise. Cash dividends received subsequently (including those received in the year of
investment) are recognized as income for the year. On derecognition of a financial asset or a financial
liability, the difference between its carrying amount and the sum of the consideration received and
receivable or consideration paid and payable is recognized in profit or loss. All regular way purchases or
sales of financial assets are recognized and derecognized on a settlement date basis.
A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a
financial liability held for trading. If the fair value of the derivative is positive, the derivative is
recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows:
Publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds - at prices
quoted by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted
prices in an active market - at values determined using valuation techniques.
- 12 -
Available-for-sale Financial Assets
Available-for-sale financial assets are initially measured at fair value plus transaction costs that are directly
attributable to the acquisition.
At each balance sheet date subsequent to initial recognition,
available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized in
equity until the financial assets are disposed of, at which time, the cumulative gain or loss previously
recognized in equity is included in profit or loss for the year. All regular way purchases or sales of
financial assets are recognized and derecognized on a settlement date basis.
The recognition, derecognition and the fair value basis of available-for-sale financial assets are the same
with those of financial assets at FVTPL.
Cash dividends are recognized on the ex-dividend date, except for dividends distributed from the
pre-acquisition profit, which are treated as a reduction of investment cost. Stock dividends are not
recognized as investment income but are recorded as an increase in the number of shares. The total
number of shares subsequent to the increase is used for the recalculation of cost per share. The difference
between the initial cost of a debt instrument and its maturity amount is amortized using the effective interest
method, with the amortized interest recognized in profit or loss.
An impairment loss is recognized when there is objective evidence that the financial asset is impaired.
Any subsequent decrease in impairment loss for an equity instrument classified as available-for-sale is
recognized directly in equity. If the fair value of a debt instrument classified as available-for-sale
subsequently increases as a result of an event which occurred after the impairment loss was recognized, the
decrease in impairment loss is reversed to profit.
Impairment of Accounts Receivable
An allowance for doubtful accounts is provided on the basis of a review of the collectability of accounts
receivable. This review involves the aging analysis of the outstanding receivables, credit evaluation and
assessment of relevant economic circumstances.
As discussed in Note 3 to the financial statements, the Group early adopted the third-time revised Statement
of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition and
Measurement.” One of the main revisions is that the impairment of receivables originated by the Group
should be covered by SFAS No. 34. Accounts receivable are assessed for impairment at the end of each
reporting period and considered to be impaired when there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the accounts receivable, the estimated future cash
flows of the asset have been affected. Objective evidence of impairment could include:
 Significant financial difficulty of the debtor;
 The accounts receivable becoming overdue; or
 Probability that the debtor will enter into bankruptcy or undergo financial reorganization.
Accounts receivable that are assessed as not impaired individually are further assessed for collective
impairment. Objective evidence of impairment for a portfolio of accounts receivable could include the
Group’s past difficulty in collecting payments and an increase in the number of delayed payments as well as
observable changes in national or local economic conditions that correlate with defaults on receivables.
The impairment loss recognized is the difference between the asset carrying amount and the present value
of estimated future cash flows, after taking into account the related collaterals and guarantees, discounted at
the receivable’s original effective interest rate. The carrying amount of the accounts receivable is reduced
through the use of an allowance account. When accounts receivable are considered uncollectible, they are
written off against the allowance account. Recoveries of amounts previously written off are credited to the
allowance account. Changes in the carrying amount of the allowance account are recognized as bad debt
in profit or loss.
- 13 -
Inventories
Inventories consist of raw materials, supplies, finished goods, merchandise and work-in-process and are
stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where
it may be appropriate to group similar or related items. Net realizable value is the estimated selling price
of inventories less all estimated costs of completion and costs necessary to make the sale. Inventory costs
are determined using the weighted-average method.
Investments Accounted for by the Equity Method
Investments in which the Group holds 20 percent or more of the investees’ voting shares or exercises
significant influence over the investees’ operating and financial policy decisions are accounted for by the
equity method. Under the equity method, the Group’s investment is stated at cost on the acquisition date
and subsequently adjusted for the proportionate share of the Group in the net income or net loss of the
investees. Any cash dividends received from the investees are accounted for as a reduction of the carrying
value of the investments.
Under the equity method, the acquisition cost is analyzed, and the acquisition cost in excess of the Group’s
share of the fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill is not
amortized but instead is tested for impairment annually or whenever there are indications that the
investments are impaired.
When the Group subscribes for its investee’s newly issued shares at a percentage different from its
percentage of ownership in the investee, the Group records the change in its equity in the investee’s net
assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus.
When the adjustment should be debited to capital surplus, but the capital surplus arising from long-term
investments is insufficient, the shortage is debited to retained earnings.
When an indication of impairment is identified in an investment, the carrying amount of the investment is
reduced, with the related impairment loss charged to current income. For long term equity investments on
which the Group has significant influence but over which it has no controlling interests, the carrying
amount (including goodwill) of each investment is compared with its own recoverable amount for
impairment testing.
Stock dividends are not recognized as investment income but are recorded as an increase in the number of
shares. The total number of shares subsequent to the increase is used for recalculation of cost per share or
book value. Costs of investments sold are determined using the weighted-moving-average method.
If the Group loses its significant influence over equity-method investments with no quoted market prices in
an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks
and stocks traded in the Emerging Stock Market, the carrying values of the investments will be reclassified
to financial assets measured at holding cost.
Financial Assets Carried at Cost
Investments in equity instruments with no quoted prices in an active market and with fair values that cannot
be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market,
are measured at their original cost. The accounting treatment for dividends on financial assets carried at
cost is the same as that for dividends on available-for-sale financial assets. An impairment loss is
recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss
is disallowed.
- 14 -
Bond Investments with No Active Market
Bond investments with fixed or determinable payments and with no quoted prices in an active market are
carried at amortized cost using the effective interest method and are without restriction on the timing of
disposal. Bond investments with no active market are initially measured at fair value plus transaction
costs that are directly attributable to the acquisition. Profit or loss is recognized when the financial assets
are derecognized, impaired or amortized. All regular way purchases or sales of financial assets are
accounted for using a trade date basis.
An impairment loss is recognized when there is objective evidence that the investment is impaired. The
impairment loss is reversed if an increase in the investment’s recoverable amount is due to an event that
occurred after the impairment loss was recognized; however, the adjusted carrying amount of the
investment may not exceed the carrying amount that would have been determined had no impairment loss
been recognized for the investment in prior years.
Property, Plant and Equipment and Assets Leased to Others
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation
and accumulated impairment losses. Borrowing costs directly attributable to the acquisition or
construction of property, plant and equipment and assets leased to others are capitalized as part of the cost
of those assets. Major additions and improvements to property, plant and equipment and assets leased to
others are capitalized, while costs of repairs and maintenance are expensed currently.
Depreciation is provided on a straight-line basis over estimated useful lives as follows: buildings - 3 to 55
years; and machinery and other equipment - 1 to 15 years. Property, plant and equipment and assets
leased to others that have reached their full residual values but are still being used by the Group are
depreciated over their newly estimated service lives.
An impairment loss should be recognized whenever the carrying amount of assets leased to others exceeds
their recoverable amount, and this impairment loss should be charged to current income. An impairment
loss recognized in prior years could be reversed if there is a recovery in the estimates used to determine
recoverable amount since the last impairment loss was recognized. However, an impairment loss is
reversed only to the extent that it does not increase the carrying amount of an asset above the carrying
amount that would have been determined for the asset (net of depreciation) had no impairment loss been
recognized in prior years. A reversal of an impairment loss should be recognized in the income statement
for assets carried at cost and treated as a revaluation increase for assets carried at the revalued amount.
The accounting treatment of the impairment of property, plant and equipment is the same as that of asset
impairment.
The related cost, accumulated depreciation and accumulated impairment losses of an item of property, plant
and equipment and assets leased to others are derecognized from the balance sheet upon its disposal. Any
gain or loss on disposal of the asset is included in nonoperating gains or losses in the year of disposal.
Idle Assets
These assets are stated at the lower of recoverable amount or carrying value.
Deferred Expenses
Deferred expenses refer to product molds, which are initially recorded at cost when acquired and are
amortized over their estimated economic useful lives using the straight-line method.
- 15 -
An impairment loss should be recognized if the recoverable amount of the deferred expenses as of the
balance sheet date is estimated to be less than its carrying amount, and this impairment loss should be
charged to current income. An impairment loss recognized in prior years could be reversed if there is a
subsequent recovery in the estimates used to determine recoverable amount since the last impairment loss
was recognized. However, an impairment loss is reversed only to the extent that it does not increase the
asset carrying amount that would have been determined had no impairment loss on the asset been
recognized in prior years.
Asset Impairment
The Group determine the cash-generating unit to which tangible and intangible asset belong in accordance
with Statement of Financial Accounting Standards No. 35 - “Accounting for Asset Impairment” before an
impairment test is done. An impairment loss should be recognized whenever the aggregate carrying
amount of specific cash-generating units exceeds their recoverable amount, and this impairment loss should
be charged to current income. For the reduction of the carrying amounts of the assets of cash-generating
units, the impairment loss should be allocated in the following order:
a. Unidentifiable intangible assets (goodwill) should be allocated to the cash-generating unit, if any; and
b. The sum of the amounts of all identifiable intangible and tangible assets of the unit should be allocated
pro rata on the basis of the carrying amount of each asset in the unit.
An impairment loss recognized in prior years may be reversed if there is a recovery in the estimates used to
determine the recoverable amount since the last impairment loss was recognized. However, an
impairment loss is reversed only to the extent that it does not increase the carrying amount of an asset above
the carrying amount that would have been determined for the asset (net of depreciation) had no impairment
loss been recognized in prior years. Reversal of a previously recognized impairment loss on goodwill is
prohibited.
The estimated loss on fixed assets arising from accidents is recognized as asset impairment. Subsequent
major improvements or renewals are capitalized.
Convertible Bonds
For convertible bonds issued on or after January 1, 2006, the Group first determines the carrying amount of
the liability component by measuring the fair value of a similar liability that does not have an associated
equity component, then determines the carrying amount of the equity component, representing the equity
conversion option, by deducting the fair value of the liability component from the fair value of the
convertible bonds as a whole. The liability component (excluding embedded derivatives) is measured at
amortized cost using the effective interest method, while the embedded non-equity derivatives are measured
at fair value. Upon conversion, the Group uses the aggregate carrying amount of the liability and equity
components of the bonds at the time of conversion as a basis to record the common shares issued.
Based on a newly released Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial
Instruments: Recognition and Measurement,” transaction costs of bonds issued on or after January 1,
2006, net of related income tax benefit, are allocated in proportion to the liability and equity components of
the bonds.
Pension Costs
Pension cost under a defined benefit plan of the Group is determined by actuarial valuations. Curtailment
or settlement gains or losses on the defined benefit plan are recognized as part of the net pension cost for
the year. Contributions made under a defined contribution plan of the Group are recognized as pension
cost during the year in which employees render services.
- 16 -
Income Tax
Deferred tax assets are recognized for the tax effects of deductible temporary difference, unused operating
loss carryforwards, and unused income tax credits, and deferred tax liabilities are recognized for the tax
effects of taxable temporary differences. A valuation allowance is recognized for deferred income tax
assets when it is more than 50% probable that these assets will not be realized. Deferred tax assets or
liabilities are classified as current or noncurrent on the basis of the classification of the related assets or
liabilities for financial reporting. A deferred tax liability or asset that cannot be related to an asset or
liability for financial reporting, including deferred tax assets related to net loss carryforwards, is classified
on the basis of the expected realization date of the temporary difference.
If the Group can control the timing of the reversal of a temporary difference arising from the difference
between the book value and the tax basis of a long-term equity investment in a foreign subsidiary or joint
venture and if the temporary difference is not expected to reverse in the foreseeable future and will, in
effect, exist indefinitely, then a deferred tax liability or asset is not recognized.
Tax credits for purchases of machinery, equipment and technology, research and development expenditures
and personnel training expenditures and investments in shares of stock are recognized using the
flow-through method.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
Based on the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as
income tax in the year the stockholders approve the retention of these earnings.
Compensatory Stock Option Plan
Employee stock options granted after January 1, 2008 are accounted for in accordance with statement of
Financial Accounting Standards No. 39 - “Share-based Payment.”.
Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for under
the interpretations issued by the Accounting Research and Development Foundation (ARDF). The Group
adopted the intrinsic value method, under which compensation cost was recognized on a straight-line basis
over the vesting period. In addition, under the ARDF letter 96-330, if the employee stock option plan is
changed in accordance with the terms and conditions of the original compensation agreement, the
compensation cost under the original stock option plan is maintained if (a) the total intrinsic value after the
plan change is not greater than that before the plan change; and (b) the ratio of exercise price to market
price is not lowered. If these two conditions are not met at the same time, it is deemed that a new stock
option plan has replaced the original plan, and the additional compensation cost incurred should be
calculated using the intrinsic value method, and costs incurred are recognized as expense over the years of
service under the employee stock option plan.
Revenue Recognition
Revenue from sales of goods is recognized when the Group has transferred to the buyer the significant risks
and rewards of ownership of the goods because the earnings process has been completed and the economic
benefits associated with the transaction have been realized or are realizable.
Revenue is measured at the fair value of the consideration received or receivable and represents amounts
agreed between the Group and the customers for goods sold in the normal course of business, net of sales
discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as
the nominal value of the consideration to be received approximates its fair value and transactions are
frequent, fair value of the consideration is not determined by discounting all future receipts using an
imputed rate of interest.
- 17 -
Reclassifications
Certain accounts in the consolidated financial statements as of and for the year ended December 31, 2010
have been reclassified to be consistent with the presentation of the consolidated financial statements as of
and for the year ended December 31, 2011.
3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES
Financial Instruments
On January 1, 2011, the Group adopted the newly revised Statement of Financial Accounting Standards
(SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” The main revisions include
(1) impairment of finance lease receivables being now covered by SFAS No. 34; (2) amendment of the
scope of the applicability of SFAS No. 34 to insurance contracts; (3) inclusion of loans and receivables
originated by the Group in the items covered by SFAS No. 34; (4) the requirement to disclose additional
guidelines on impairment testing of financial assets carried at amortized cost if the asset issuer or obligor
has financial difficulties and the terms of obligations on the assets have been modified; and (5) the
requirement to disclose the Group’s accounting treatment for modifications in the terms of its obligations.
This accounting change had no significant impact on the Group’s financial statements as of and for the year
ended December 31, 2011.
Operating Segments
On January 1, 2011, the Group adopted the newly issued SFAS No. 41 - “Operating Segments.” SFAS No.
41 regulates the disclosure of segment information that management uses to make decisions on operating
matters. It requires the identification of operating segments on the basis of internal reports that are
regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the
segments and assess their performance. This statement supersedes SFAS No. 20 - “Segment Reporting.”
For this accounting change, the Group restated its segment disclosures as of and for the year ended
December 31, 2010 to conform to the disclosures as of and for the year ended December 31, 2011.
4. CASH AND CASH EQUIVALENTS
2011
Cash
Cash on hand
Checking and demand deposits
Time deposits - yield rate 0.20%-7.00% in 2011 and 0.45%-4.26%
in 2010
Cash equivalents
Short-term notes and bills - yield rate 0.34%-0.75% in 2011 and
0.41%-0.47% in 2010
- 18 -
$
1,739
2,236,001
2010
$
2,075
4,884,678
5,798,968
3,514,015
59,912
299,768
$ 8,096,620
$ 8,700,536
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS CURRENT
2011
2010
Financial assets held for trading purpose
Stock option
Forward exchange contracts
$
53,921
14,260
68,181
53,921
$ 308,690
6,078
314,768
308,690
$
14,260
$
$
765
Less: Stock options
6,078
Financial liabilities held for trading purpose
Forward exchange contracts
$ 163,701
The Corporation and Kuo Shin Investment bought the five-year, zero-coupon, third domestic unsecured
convertible bonds of Chilisin Electronics Corp. (“Chilisin Electronics”) on the GreTai Securities Market in
2008 and 2009 for NT$531,457 thousand. The convertible bonds issued by Chilisin Electronics are a
hybrid product, that is, bonds with the embedded conversion and buyback options. Because the
Corporation and Kuo Shin Investment classify these convertible bonds as available-for-sale financial assets
and the economic characteristics and risk of the embedded options are not closely associated with the
convertible bonds, the embedded derivatives and the bonds are recognized by valuation techniques at the
amounts of NT$36,345 thousand and NT$495,112 thousand, respectively. The Corporation and Kuo Shin
Investment also recognized an option valuation loss of NT$254,769 thousand in 2011 and an option
valuation gain of NT$89,510 thousand in 2010. (The accumulated option valuation gain was NT$17,576
thousand at the end of 2011.)
The Corporation bought the five-year, zero-coupon, first domestic unsecured convertible bonds of Foxconn
Technology Co., Ltd., in June 2009 for NT$20,302 thousand. The Corporation treated this hybrid product
as a financial asset at fair value through profit or loss and recognized in 2010 a valuation loss of NT$280
thousand based on the bond market price. The bonds were fully disposed of in 2010, with a disposal gain
of NT$489 thousand.
The Group entered into derivative contracts in 2011 and 2010 to manage exposures due to exchange rate
and interest rate fluctuations. The financial risk management objective of the Group is to minimize risks
due to changes in fair value or cash flows. However, since certain financial assets and liabilities are not
qualified for hedge accounting, those financial assets and liabilities are categorized as financial assets and
liabilities held for trading. The fair values are estimated using valuation techniques, and the changes in
fair values are charged to current income.
- 19 -
There was no open foreign-currency option contract as of December 31, 2011.
exchange contracts as of December 31, 2011 and 2010 are summarized as follows:
The open forward
a. Forward exchange contracts
Currency
Maturity
Contract Amount
(In Thousands)
December 31, 2011
Financial assets at fair value through
profit or loss - current
Sell
Sell
Sell
Sell
Sell
Sell
Sell
Sell
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Financial liabilities at fair value
through profit or loss - current
Sell
Buy
EUR/NTD
EUR/JPY
EUR/NTD
EUR/USD
EUR/USD
USD/JPY
USD/JPY
EUR/PLN
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
January 17, 2012
January 20, 2012
February 21, 2012
March 30, 2012
March 30, 2012
January 04, 2012
February 02, 2012
January 31, 2012
January 10, 2012
January 10, 2012
January 10, 2012
January 17, 2012
January 13, 2012
January 06, 2012
January 06, 2012
January 06, 2012
January 06, 2012
January 06, 2012
January 13, 2012
EUR3,000/NTD118,374
EUR1,500/JPY152,325
EUR2,000/NTD79,120
EUR2,000/USD2,617
EUR1,000/USD1,308
USD1,000/JPY79,050
USD1,000/JPY78,000
EUR700/PLN3,131
USD3,000/NTD 90,516
USD5,000/NTD150,860
USD5,000/NTD150,860
USD5,000/NTD150,750
USD5,000/NTD150,750
USD10,000/NTD301,650
USD15,000/NTD452,475
USD15,000/NTD452,475
USD10,000/NTD301,680
USD10,000/NTD301,850
USD10,000/NTD302,560
USD/PLN
USD/NTD
January 31, 2012
January 17, 2012
USD150/PLN499
USD20,000/NTD605,600
EUR/JPY
EUR/JPY
EUR/NTD
EUR/NTD
EUR/NTD
EUR/JPY
USD/NTD
January 18, 2011
January 18, 2011
January 21, 2011
February 18, 2011
February 18, 2011
February 25, 2011
January 24, 2011
EUR1,000/JPY115,040
EUR1,000/JPY110,400
EUR1,000/NTD40,230
EUR1,000/NTD39,285
EUR1,000/NTD39,264
EUR1,000/JPY108,870
USD3,000/NTD88,209
(Continued)
December 31, 2010
Financial assets at fair value through
profit or loss - current
Sell
Sell
Sell
Sell
Sell
Sell
Sell
- 20 -
Currency
Financial liabilities at fair value
through profit or loss - current
Sell
Sell
Sell
Sell
Sell
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
USD/NTD
Contract Amount
(In Thousands)
Maturity
January 31, 2011
January 31, 2011
January 31, 2011
January 31, 2011
January 31, 2011
April 22, 2011
April 22, 2011
May 16, 2011
April 22, 2011
April 25, 2011
May 16, 2011
April 25, 2011
April 25, 2011
May 16, 2011
April 22, 2011
May 16, 2011
January 31, 2011
USD2,000/NTD58,322
USD2,000/NTD58,200
USD4,000/NTD116,280
USD2,000/NTD58,262
USD2,000/NTD58,220
USD5,000/NTD157,105
USD10,000/NTD314,210
USD10,000/NTD316,050
USD5,000/NTD157,105
USD5,000/NTD157,050
USD5,000/NTD158,155
USD5,000/NTD157,050
USD5,000/NTD157,050
USD5,000/NTD158,155
USD10,000/NTD314,210
USD5,000/NTD158,025
USD3,000/NTD87,885
(Concluded)
On financial instruments at fair value through profit or loss, the Group incurred a net gain of
NT$45,300 thousand in 2011 and a net loss of NT$3,388 thousand in 2010.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Foreign common stock with quoted market price
SHS KOA Corp.
Domestic common stock with quoted market price
TA-I Technology Co., Ltd.
Domestic convertible bonds
Chilisin - third issue
2011
2010
$ 1,487,233
$ 2,095,646
642,988
1,172,368
443,413
188,644
$ 2,573,634
$ 3,456,658
2011
2010
$ 3,197,087
366,221
1,338,318
63,648
44,116
$ 3,458,565
525,352
1,137,262
55,854
30,885
$ 5,009,390
$ 5,207,918
7. INVENTORIES, NET
Finished goods
Work in process
Raw materials
Supplies
Goods in transit
- 21 -
As of December 31, 2011 and 2010, the allowances for loss were NT$368,099 thousand and NT$312,942
thousand, respectively.
The cost of inventories recognized as cost of goods sold in 2011 was NT$19,668,084 thousand, which
included an allowance for loss of NT$55,157 thousand. The cost of inventories recognized as cost of
goods sold in 2010 was NT$19,589,288 thousand, which included an allowance for loss of NT$39,394
thousand.
8. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD
2011
Carrying
% of
Value
Ownership
Equity method (with quoted market
prices):
Chilisin Electronics Corporation
Global Testing Corporation Limited
(GTCL)
Ralec Electronic Corp.
Teapo Electronics Corporation
Equity method (with no quoted market
prices):
Strong Components Co., Ltd.
Belkin International
Guo Chuang Electronics (Dongguan)
Co., Ltd.
Greater China Distributors Ltd.
(B.V.I.)
$
731,895
21.2
701,457
497,990
395,069
2010
Carrying
% of
Value
Ownership
$
689,144
21.2
25.3
15.9
21.0
706,537
489,599
447,373
23.9
15.9
21.0
92,722
71,137
31.4
46.0
102,249
75,977
31.4
46.0
38,064
35.0
34,851
35.0
-
27.2
58
27.2
$ 2,528,334
$ 2,545,788
The fair values of listed equity-method investments calculated at their closing prices as of December 31,
2011 and 2010 were as follows:
2011
$
Chilisin Electronics Corp.
Global Testing Corporation Limited (GTCL)
Ralec Electronic Corp.
Teapo Electronics Corp.
409,945
253,572
343,366
162,317
$ 1,169,200
2010
$
920,352
343,678
566,795
346,788
$ 2,177,613
The investment in Ralec Electronic Corp. was accounted for by the equity method since the Group had
significant influence over it.
Numbers of the above companies’ outstanding shares changed because these companies continuously
bought back their own stock, convertible bonds and employee stock options convertible to common stock in
2011 and 2010. The subsidiary Kuo Shin Investment acquired 218 thousand shares of Chilisin Electronics
in 2010, thus, the percentage of ownership owned by the Group changed.
The Corporation pledged 2,052 thousand shares of Chilisin Electronics to the National Tax Administration
of the Northern Taiwan Province under the Ministry of Finance as collaterals for the petition case on its
2007 income tax return.
- 22 -
9. FINANCIAL ASSETS CARRIED AT COST
Stock with no quoted market prices:
Luminous Town Electric Co., Ltd.
Parawin Venture Capital Corp.
Xmholder Technology Co., Ltd.
HuaYi HK Technology Co., Ltd.
King Power International Co., Ltd.
SEMR China Technology Co., Ltd.
Fubon Venture Capital Corp.
Others
2011
Carrying
% of
Value
Ownership
2010
Carrying
% of
Value
Ownership
$ 100,870
76,628
46,308
42,446
33,622
10,871
12,482
$ 100,870
76,628
42,594
40,838
33,622
10,460
18,000
12,482
15.8
10.0
17.0
17.0
16.6
17.0
-
$ 323,227
15.8
10.0
17.0
17.0
16.6
17.0
20.0
-
$ 335,494
The above investments, which had no quoted market prices in an active market and had fair values that
could not be reliably measured, were carried at their original cost.
Fubon Venture Capital Corp. was fully liquidated in April 2011 and had returned a capital of NT$18,000
thousand to the Group.
10. BOND INVESTMENTS WITH NO ACTIVE MARKET
In November 2006, Kuo Shin Investment Limited purchased subordinated bonds issued at par with an
aggregate value of NT$50,000 thousand. The subordinated bonds were issued by Ta Chong Bank with no
maturity due date. Among the bond terms is that Ta Chong Bank can exercise its redemption right at the
bond principal amount, with interest payable from November 2016. The interest payable is calculated at
5.5% per annum for 10 years after the bond issuance. If, after 10 years from the date of issuance, Ta
Chong Bank does not redeem the bonds, the coupon interest rate will rise to 6.5% per annum. If Ta
Chong Bank does not make profits within a year as stated in its financial report and cannot issue common
dividends, Ta Chong Bank may be exempted from paying interest payments, as stated in the bond
agreement. As a result, any interest payments not received by Kuo Shin Investment were not accounted
for by Kuo Shin Investment. Under the bond contract, Ta Chong Bank paid interest on the bond of
NT$2,750 thousand each in 2011 and 2010.
11. PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation and accumulated impairment consisted of:
2011
Accumulated depreciation
Buildings
Machinery and equipment
Miscellaneous equipment
$
2,983,270
15,435,921
1,294,357
$ 19,713,548
- 23 -
2010
$
2,574,825
13,370,964
1,178,825
$ 17,124,614
(Continued)
2011
Accumulated impairment
Land
Building
Machinery and equipment
Miscellaneous equipment
2010
$
3,808
46,680
153,171
1,881
$
3,808
46,680
154,243
2,052
$
205,540
$
206,783
(Concluded)
Depreciation expenses for property, plant and equipment, properties leased to others and idle assets were
NT$2,430,289 thousand in 2011 and NT$2,852,387 thousand in 2010.
In 2011 and 2010, interest expenses before capitalization were NT$253,834 thousand and NT$249,952
thousand, respectively, while capitalized interests were NT$7,106 thousand and NT$18,017 thousand,
respectively, and capitalization rates ranged from 2.29% to 2.74% and from 2.15% to 2.63%, respectively.
The Corporation’s capacitor plant in Dahe Hsiang in Kaohsiung had a fire on September 25, 2006. The
loss recognized in connection with partially damaged fixed assets consisted of the expected repair and
maintenance expenditure, which was estimated at NT$307,795 thousand, and accumulated impairment was
also recognized in the Corporation’s property, plant, and equipment account. The Corporation’s increased
accumulated impairment increased by NT$65,804 thousand because of the Corporation’s merger with
Composter Electronics and Chipcera Technology in 2008, with the Corporation as survivor entity. As of
December 31, 2009, the Corporation recognized estimated impairment losses of NT$66,311 thousand on a
building and NT$33,689 thousand on machinery and equipment, which corresponded to a future production
plan adjustment. As of December 31, 2011, the Corporation had disposed of a portion of partially
damaged fixed assets and thus deducted the corresponding accumulated impairment of NT$268,059
thousand from property, plant, and equipment. As of December 31, 2011, the balance of the accumulated
impairment of property, plant and equipment was NT$205,540 thousand.
12. ASSETS LEASED TO OTHERS
Land
Buildings
Less: Accumulated depreciation
2011
2010
$ 22,474
59,239
20,634
38,605
$ 22,474
56,325
18,520
37,805
$ 61,079
$ 60,279
Yageo Dongguan leased a factory building to Teapo Electronics Dongguan and terminated the rental
agreement in 2010. Thus, Yageo Dongguan reclassified this building from leased to others to idle assets.
13. SHORT-TERM LOANS
Short-term loans were unsecured bank credit loans. Interest rates on these loans were from 1.0264% to
1.2800% and from 0.70% to 0.95% as of December 31, 2011 and 2010, respectively.
- 24 -
14. SHORT-TERM BILLS PAYABLE, NET
Bank-guaranteed commercial paper with less than one-year maturities were issued by the Group at discount
rates of 1.088% to 1.328% and of 0.69% as of December 31, 2011 and 2010, respectively.
As of December 31, 2011 and 2010, the carrying values of the commercial paper issued were net of
unamortized discounts of NT$684 thousand and NT$154 thousand, respectively.
15. LONG-TERM BANK DEBTS
2011
Secured bank loans
Less: Current portion
2010
$
300,000
-
$ 2,200,000
-
$
300,000
$ 2,200,000
For long-term financial planning, replenishing working capital and meeting the need for capital expenditure,
the Group obtained medium and long-term loans from several banks, summarized below:
a. The Corporation signed a NT$6,500,000 thousand syndicated loan agreement with Hua Nan
Commercial Bank and nine other financial institutions on September 21, 2010. The balances of the
bank loan were NT$300,000 thousand in 2011 and NT$2,200,000 thousand in 2010. The terms of the
loans are summarized as follows:
Credit Lines
Credit Period
$ 6,500,000
Five years after the date
of contract
Interest Rate
Repayment Agreement
Fixed rate (0.60%) based Eight quarterly installments
on a specific average
from the third month of the
rate of notes
third year after the contract
transacted in Taiwan.
signing date
Under the loan agreement, the Corporation should collateralize the office building, machinery and
equipment of a factory located in the Administrative office in Hsin Tien in New Taipei City and in the
Nan-Zi Branch and a capacitor-line factory in a village in Dashe in Kaohsiung City. The Corporation
will have to maintain the its interim and annual current ratios, debt ratios and interest coverage ratios at
percentages specified in the agreement.
b. The Corporation signed a NT$4,500,000 thousand syndicated loan agreement with Hua Nan
Commercial Bank and 11 other financial institutions (collectively, the “banking syndicate”) on January
22, 2007. The terms of the loans are summarized as follows:
Credit Lines
Credit Period
$ 4,500,000
Five years after the date
of contract
Interest Rate
Repayment Agreement
Fixed rate (0.65%) based Eight quarterly installments
on a specific average
from the third month of the
rate of notes
third year after the contract
transacted in Taiwan.
signing date
- 25 -
Under the loan agreement, the Corporation should collateralize the building and machinery and
equipment of a factory located in the Nan-Zi Branch, a capacitor-line factory in a village in Dashe in
Kaohsiung City and some of the common stocks held by the Group. In addition, in June 2009, the
Corporation was approved by the banking syndicate to provide a building and machinery and
equipment of the main office building located in Hsin Tien in New Taipei City as collateral for
retrieving the common stocks held by the Group. The Corporation should also maintain its interim
and annual current ratios, debt ratios and interest coverage ratios at percentages specified in the
agreement. The Corporation requested an early termination of the loan agreement in September 2010
and hence completed the related procedures and retrieved all the collaterals and documents.
16. BONDS PAYABLE
The fourth unsecured zero-coupon foreign convertible bonds
2011
2010
$ 6,349,816
$ 5,912,025
On June 11, 2007, the Corporation issued seven-year unsecured zero-coupon foreign convertible bonds with
an aggregate face value of US$230,000 thousand. The bonds have a par value of US$100 thousand or
integer multiples of US$100 thousand and were subscribed mainly by the affiliates of the Corporation’s
strategic investor, Kohlberg Kravis Roberts & Co. Under the terms of issue, the bondholders may convert
the bonds into common shares at the fixed exchange rate of NT$33.01 to US$1.00, and then at the
conversion price from July 12, 2007 to June 1, 2014, except during title transfer suspension periods. Upon
any dilutive events or any capital restructuring events that will cause the outstanding shares of the
Corporation to change, including the issue of new shares, recapitalization of retained earnings and similar
transactions affecting the common shares, the conversion price will be decreased in accordance with the
indenture (that is, the Corporation may not increase the conversion price). If the average of the trading
prices in 14 consecutive trading days (which do not fall within a title transfer suspension period)
immediately prior to any anniversary of the issuance of the bonds (a “reset date”) is less than the adjusted
conversion price prevailing at this time, the adjusted conversion price should be adjusted to the reset trading
price. At any time after the issuance of the bonds, if the Corporation distributes any cash dividends, the
conversion price should be adjusted on the basis of the then conversion price minus 90% of per share cash
dividend. On (a) the fourth anniversary of the issue date, when the closing price of the shares for each
trading day during 14 consecutive trading days is at least 145% of the adjusted conversion price, and (b)
when the closing prices of the shares for each trading day during 14 consecutive trading days are at least
120%, 130% and 140% of the adjusted conversion price in the fifth, sixth, and seventh years, respectively,
of the issue date, the Corporation is entitled to redeem the bonds from the bondholders at face value up to
the agreed amount specified in contract terms and conditions. The Corporation should redeem all the
bonds outstanding at face value upon maturity on June 11, 2014.
Based on the terms of issuance, the conversion price on the date of bond issue (June 11, 2007) was
NT$16.15. In 2007 and 2008, the conversion price decreased to NT$12.21 because of the Corporation’s
distribution of cash dividends and reset of the conversion price based on the issuance terms.
The Corporation separated the conversion option embedded in the convertible bonds from their debt feature
to present the equity component and liability component, respectively. The equity component amounting
to NT$2,749,975 thousand represents the bond initial carrying value less the fair value of the liability
component, net of the allocated bond issue costs, and is classified as capital surplus - warrant. The
liability component is the host debt instrument and the price-reset derivative financial instrument. The
host debt instrument was initially recognized at NT$4,326,375 thousand, its fair value on June 11, 2007
(issue date), net of the allocated bond issue costs. The effective interest rate is 8.06%. The price-reset
derivative instrument was initially recognized at NT$509,789 thousand, which was the fair value on the
issue date and was recorded under long-term liabilities - financial liabilities at fair value through profit or
loss.
- 26 -
Under interpretation 98-046 issued by the Accounting Research and Development Foundation (ARDF) on
January 21, 2009, the Corporation in its 2008 consolidated financial statements revalued and disclosed the
convertible bonds it had issued between January 1, 2006 and December 31, 2008, which, under the related
agreement, would have their conversion prices adjusted on the basis of market price, in accordance with
Points 2 and 3 of ARDF interpretation 97-331, starting from the issue date. The Corporation then
combined the conversion right and call option, both with reset terms, and recognized them as financial
liability held for trading purposes amounting to NT$3,455,107 thousand and recognized the principal debt
instruments as bonds payable amounting to NT$4,131,032 thousand with an effective interest rate of
8.71%, but the Corporation did not recognize any equity instruments. The Corporation also restated the
consolidated financial statements of the prior year. From January 1, 2009 to June 16, 2009, the
Corporation recognized (a) NT$196,797 thousand as the bond discount amortized to interest expenses; (b) a
foreign exchange gain of NT$760 thousand due to exchange rate fluctuations; and (c) a financial liability
valuation gain of NT$179,620 thousand. As of June 16, 2009, a valuation gain of NT$794,563 thousand
had been recognized, and the fair value of the convertible bonds was NT$2,660,544 thousand.
At the end of November 2008, the Corporation had a negotiation with the creditors and the parties agreed to
revise some issue terms of the convertible bonds. The major revisions agreed upon by the Corporation
and creditors were as follows:
a. The conversion price was changed to NT$11.18, which was not to be subject to resets (the conversion
price was adjusted to NT$11.09 in July 2009, NT$10.955 in December 2010, and NT$10.865 in
September 2011) because of the Corporation’s distribution of cash dividends).
b. Between the date of issue and the fourth anniversary of issue, (a) if the closing price of the
Corporation’s common shares traded on the Taiwan Stock Exchange reaches at least 280% of the
conversion price for 14 consecutive trading days, and (b) if on the fifth, sixth and seventh year of issue,
the closing prices of the shares reach at least 240%, 250% and 260%, respectively, of the then
conversion price for 14 consecutive trading days, the Corporation is entitled to redeem the bonds from
the bondholders at par value to the extent of the amount as agreed upon in the terms and conditions of
issuance.
All the above modifications were approved by the board of directors, creditors and stockholders on March
30, April 30 and June 16 of 2009 The modifications resulted in a difference of 10.5% between (a) the
current value of the bonds payable (the current value of future cash flows was calculated at the original
effective rate) after the modification and (b) the current value of the bonds payable (the current value of the
residual future cash flows was calculated using the original effective rate) before the modification; thus, the
Corporation deemed this difference as significant. For this reason, the Corporation recognized the new
convertible bonds and eliminated the original one on June 16, 2009. The Corporation then separated the
call option and debt feature of the bonds and recognized them as equity component and liability component,
respectively. The equity component amounted to NT$1,169,325 thousand, which represented the fair
value of the convertible bonds NT$7,563,550 thousand less the fair value of the liability component of
NT$6,394,225 thousand. The liability component is a debt instrument, with an effective rate of 3.36%.
The Corporation recognized the bond discount amortized to interest expenses at NT$204,082 thousand in
2011 and NT$213,379 thousand in 2010. Exchange rate fluctuations resulted in a loss of NT$233,709
thousand in 2011 and a gain of NT$579,481 thousand in 2010.
In 2010, the convertible bonds with a par value of US$2,300 thousand (the carrying value less the
unamortized discount was NT$63,614 thousand) were converted to 6,846 thousand common shares with the
price of NT$11.09. The bonds payable at the end of 2011 and 2010 amounted to NT$6,349,816 thousand
and NT$5,912,025 thousand, respectively.
- 27 -
17. STOCKHOLDERS’ EQUITY
On August 3, 2001, the Corporation issued 40,000 thousand global depositary receipts (GDRs) representing
200,000 thousand new common shares, with net proceeds of NT$4,573,292 thousand. As of December
31, 2011, there were 173 thousand units of GDRs outstanding.
Based on the Corporation’s Articles of Incorporation, annual earnings should be appropriated in the
following order:
a. Income tax;
b. Prior years’ deficits;
c. 10% of remainder as legal reserve;
d. At least 2% of the remainder plus the reversal of prior years’ special capital reserves as employees’
bonus, subject to the approval at the stockholders’ meeting;
e. Up to 2% of the remainder plus the reversal of prior years’ special capital reserves as remuneration of
directors and supervisors, subject to the approval at the stockholders’ meeting;
f. The remainder plus accumulated unappropriated earnings as dividends, as proposed by the board of
directors and approved at the stockholders’ meeting.
The Corporation’s dividend policy takes into account the Corporation’s current and future competitiveness
in the domestic and foreign markets, the investment environment and cash requirements. The policy
provides that above 80% of any earnings distribution could be in the form of shares if the Corporation
needs to undertake a major expansion project; otherwise, earnings distribution may be in cash.
For 2011, the bonus to employees and the remuneration to directors supervisors were estimated at
NT$36,143 thousand each. For 2010, the bonus to employees and the remuneration to directors and
supervisors were estimated at NT$66,963 thousand each. These estimates were based on the
Corporation’s Articles of Incorporation and past experience. Material differences between these estimates
and the amounts proposed by the Board of Directors in the following year are adjusted for in the current
year. If the actual amounts subsequently resolved by the stockholders differ from the proposed amounts,
the differences are recorded in the year of stockholders’ resolution as a change in accounting estimate. If
bonus shares are resolved to be distributed to employees, the number of shares is determined by dividing
the amount of bonus by the closing price (after considering the effect of cash and stock dividends) of the
shares of the day preceding the stockholders’ meeting.
A special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity
(for example, unrealized loss on financial instrument, cumulative translation adjustments and net loss not
recognized as pension cost), should be made from unappropriated earnings in accordance with regulations.
Any special capital reserve appropriated may be reserved to the extent that the net debit balance reverses.
Under relevant regulations, capital surplus may be used to offset deficit. Additional paid-in capital from
the issue of stock in excess of par value and donated surplus may be capitalized (distributed as stock
dividends). Under the revised Company Law issued on January 4, 2012, the foregoing capital surplus may
also be distributed in cash. However, capital surplus from long-term equity investments accounted for by
the equity method cannot be used for any purpose.
The Company Law provides that legal reserve should be appropriated until the reserve equals the
Corporation’s paid-in capital. This reserve may only be used to offset a deficit. Under the revised
Company Law issued on January 4, 2012, when the legal reserve has exceeded 25% of the Company’s
paid-in capital, the excess may be transferred to capital or distributed in cash.
- 28 -
Under the Integrated Income Tax System, which took effect on January 1, 1998, ROC resident stockholders
are allowed a tax credit for their proportionate share of income tax paid by the Corporation on earnings
generated since January 1, 1998. An imputation credit account is maintained by the Corporation to
monitor income taxes paid and the tax credit allocable to each stockholder.
The stockholders approved the Corporation’s appropriations from the earnings of 2010 and 2009 on June
10, 2011 and June 18, 2010, respectively. These appropriations are summarized as follows:
Appropriation
2010
2009
Legal reserve
Special reserve
Cash dividends
$ 414,753
384,635
220,531
$
Earnings Per Share
2010
2009
67,388
329,229
$
0.10
$
0.15
The above appropriations approved at the stockholders’ meeting were the same as those approved by the
board of directors on April 28, 2011 and March 25, 2010. Of the distributed cash dividends at less than
NT$1.00 per share, NT$66 thousand was reclassified to other revenue, and the rest of the cash dividends of
NT$329,163 thousand were distributed in January 2011.
The bonus to employees and the remuneration to directors and supervisors of NT$66,963 thousand each
were approved in the stockholders’ meeting on June 10, 2011. The bonus to employees and the
remuneration to directors and supervisors of NT$12,130 thousand each were approved in the stockholders’
meeting on June 18, 2010. The approved amounts of bonus to employees and remuneration to directors
and supervisors were the same as the accrual amounts reflected in the financial statements for 2010 and
2009.
A proposal to raise funds through a private issuance of common stock was approved in the Corporation’s
stockholders’ meeting on June 18, 2010, but this proposal was canceled at the board of directors’ meeting
on March 18, 2011, and this cancellation was approved in the 2011 stockholders’ meeting. At the same
board of directors’ meeting on March 18, 2011, for increasing the Corporation’s working capital and
enhancing its financial structure, a proposal was made to issue up to 500,000 thousand domestic common
shares for cash through private placement after evaluating the fund condition in the market, effectiveness of
fund-raising and the issuance cost, and the stockholders approved this proposal at their meeting in 2011.
However, this resolution had not yet been implemented by the Corporation as of December 31, 2011.
The appropriations from the 2011 earnings were proposed in the board of directors’ meeting on March 22,
2012. The appropriations and dividends per share were as follows:
Appropriation
of Earnings
Legal reserve (reversal)
Special reserve
Cash dividends
$ (306,106)
166,781
-
Dividends Per
Share (NT$)
$
-
To increase its working capital and enhance its financial structure, the Corporation planned to issue up to
500,000 thousand domestic common shares for cash through private placement after evaluating the fund
condition in the market, effectiveness of fund-raising and the issuance cost, and this plan was proposed at
the board of directors’ meeting on March 22, 2012.
The private fund-raising was proposed in the board of directors’ meeting on March 22, 2012, and the
appropriations from the 2011 earnings of the bonus to employees and remuneration to directors and
supervisors will be resolved by the stockholders in their meeting on June 13, 2012.
- 29 -
Information on the earnings distribution, bonus to employee, remuneration to directors and supervisors and
related information on the issuance of common stock through private placement can be accessed online
through the Market Observation Post System on the Web site of the Taiwan Stock Exchange Corporation.
18. EMPLOYEE STOCK OPTION PLANS
Upon the approval by the board of directors on August 18, 2003, the Corporation adopted a stock option
plan (the “Plan”) to grant employees 150,000 thousand units of stock options. The Plan was approved by
the Securities and Futures Bureau and the Financial Supervisory Commission (previously the Securities and
Futures Commission, Ministry of Finance). Stock options consisting of 100,000 thousand units and
50,000 thousand units had been issued on September 15, 2003 and March 31, 2004, respectively, with each
unit representing one share of the Corporation’s common stock and the exercise prices at NT$13.8 and
NT$17.9, respectively, which were later revised to NT$13.6 and NT$17.5 in 2005, respectively. Based on
the Corporation’s Employee Stock Option Issuance and Subscription Rules, the vesting period of these
options is six years. Employees may exercise up to half of these options vested after two years from the
grant date, or all options vested may be exercised after three years from the grant date. If the number of
the Corporation’s common shares changes, the exercise price will be adjusted, as required under the Plan
terms.
On November 30, 2007, the Corporation’s board of directors again approved the issue of an additional
100,000 thousand units of stock options, which had been approved by the Securities and Futures Bureau
under the Financial Supervisory Commission of Executive Yuan. The Corporation issued the entire
100,000 thousand units on December 20, 2007. Each option represents one share of the Corporation’s
common stock, and the exercise price per share is NT$10.25. The vesting period of these options is 10
years. Qualified employees may exercise up to 10%, 20%, 40% and 70% of the vested options after two
years, three years, four years and five years, respectively, from the grant date. All options vested may be
exercised after six years from the grant date. If the number of the Corporation’s common shares changes,
the exercise price will be revised, as required under the Plan terms. As of December 31, 2011, there 3,600
thousand units of employee stock options exercised and converted to 3,600 thousand common shares.
The Corporation’s stock options in 2011 and 2010 were as follows:
Stock Option
2011
Weightedaverage
Exercise
Thousand
Price
Units
(In Dollars)
2010
Weightedaverage
Exercise
Thousand
Price
Units
(In Dollars)
Outstanding units - beginning of year
Granted units
Exercised units
Eliminated units
Forfeited units
90,000
(3,600)
-
$10.25
10.25
-
131,834
(41,834)
$12.55
17.50
Outstanding units - end of year
86,400
10.25
90,000
10.25
Exercisable units, end of year
32,400
- 30 -
18,000
The Corporation calculated the fair value of the 50,000 thousand units of the stock options granted in 2004
and 100,000 thousand units granted in 2007 using the Black-Scholes model. The valuation results and
related assumptions used were as follows:
50,000 Thousand Units of
Stock Options Granted in
2004
Fair value
Exercise price
Risk-free rate
Weighted average remaining life (in
years)
Expected volatility of the Corporation’s
stock price
Expected dividend yield
100,000 Thousand Units of
Stock Options Granted in
2008
$286,000 thousand
$17.90 (in dollars) per share
prior to amendment
2.01%
4.25 years
$319,000 thousand
$10.25 (in dollars) per share
prior to amendment
2.48%
7.30 years
51.66%
48.60%
5.15%
4.87%
Stock options outstanding as of December 31, 2011 and 2010 are summarized as follows:
Exercise Price
$10.25 (in dollars)
Exercise Price
$10.25 (in dollars)
Outstanding Stock Options as of
December 31, 2011
Anticipated WeightedWeightedaverage
average
Exercise
Thousand
Existence
Price
Units
Years
(In Dollars)
86,400
3.30 years
$10.25
Outstanding Stock Options as of
December 31, 2010
Anticipated WeightedWeightedaverage
average
Exercise
Thousand
Existence
Price
Units
Years
(In Dollars)
90,000
4.30 years
$10.25
Exercisable Stock Options
as of December 31, 2011
Weightedaverage
Exercise
Thousand
Price
Units
(In Dollars)
32,400
$10.25
Exercisable Stock Options
as of December 31, 2010
Weightedaverage
Exercise
Thousand
Price
Units
(In Dollars)
18,000
$10.25
There was no compensation cost based on the intrinsic value method in 2011 and 2010. Had the
Corporation used the fair value method, the pro forma consolidated net income and basic and diluted
earnings per share (EPS) would have been as follows:
(In Thousands of Dollars, Except Per Share Information)
Consolidated net income
Earnings per share - basic (in dollars)
Earnings per share - diluted (in dollars)
Actual
Pro forma
Actual
Pro forma
Actual
Pro forma
- 31 -
2011
2010
$ 1,667,810
1,622,307
0.76
0.74
0.71
0.69
$ 4,147,537
4,092,320
1.89
1.86
1.34
1.32
19. EARNINGS PER SHARE
The data used in calculating earnings per share were as follows:
Income
Before
Income Tax
Net Income
Weightedaverage
Number of
Outstanding
Shares
(Thousands)
$ 2,361,796
$ 1,667,810
2,204,283
437,791
-
398,060
-
687,718
13,939
7,116
$ 2,799,587
$ 2,065,870
$ 4,887,165
$ 4,147,537
Income
Per Share (In Dollars)
Income
Before
Income
Net
Tax
Income
Year ended December 31, 2011
Basic
Consolidated net income attributed to the
Corporation’s stockholders
Dilutive effect of common stock equivalent
Zero-coupon foreign convertible bonds
Employee stock options
Employee bonus
Diluted
Consolidated net income attributed to the
Corporation’s stockholders plus the effect
of common stock equivalent
$
1.07
$
0.76
2,913,056
$
0.96
$
0.71
2,196,607
$
2.22
$
1.89
$
1.56
$
1.34
Year ended December 31, 2010
Basic
Consolidated net income attributed to the
Corporation’s stockholders
Dilutive effect of common stock equivalent
Zero-coupon foreign convertible bonds
Employee stock options
Employee bonus
Diluted
Consolidated net income attributed to the
Corporation’s stockholders plus the effect
of common stock equivalent
(366,102)
-
$ 4,521,063
(267,590)
-
$ 3,879,947
691,216
2,077
5,555
2,895,455
If the Corporation decides to settle the bonus to employees by cash or shares, the Corporation should
presume that the entire amount of the bonus will be settled in shares, and the resulting potential shares
should be included in the weighted average number of shares outstanding used in the calculation of diluted
EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the entire amount
of the bonus by the closing price of the shares at the balance sheet date. The dilutive effect of the potential
shares should be included in the calculation of diluted EPS until the stockholders resolve the number of
shares to be distributed to employees at their meeting in the following year.
20. INCOME TAX
a. Income tax expense consisted of the following:
2011
2010
Income tax expense - current
Income tax expense - deferred
Adjustment for prior years’ tax
$ 398,312
379,172
(79,361)
$ 499,602
270,033
(29,003)
Income tax expense
$ 698,123
$ 740,632
- 32 -
Under Article 10 of the Statute for Industrial Innovation (SII) passed by the Legislative Yuan in April 2010,
a profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its
income tax payable for the fiscal year in which these expenditures are incurred, but this deduction should
not exceed 30% of the income tax payable for that fiscal year. This incentive is effective from January 1,
2010 till December 31, 2019.
In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which
reduced a profit-seeking enterprise’s income tax rate from 20% to 17%, effective January 1, 2010.
The Group recalculated the deferred tax assets and liabilities in accordance with the above law revision and
reclassified the difference of NT$179,129 thousand as deferred income tax expense in 2010.
b. Current and noncurrent net deferred taxes assets (liabilities) comprised the following:
2011
Current
Investment tax credits
Deferred income
Allowance for loss on inventories
Unrealized compensation loss
Unallocated overheads
Loss carryforwards
Unrealized exchange gains
Valuation loss on financial instruments, net
Others
$
115,094
25,092
20,502
15,897
10,865
(57,014)
(2,205)
11,410
139,641
2,622
$
143,556
44,180
16,223
15,897
4,067
69,025
(105,528)
26,912
9,384
223,716
65,605
$
137,019
$
158,111
$
430,665
309,806
299,031
166,286
$
479,592
307,866
286,810
435,598
Less: Valuation allowance
Noncurrent
Impairment loss on assets
Loss carryforwards
Loss on foreign investments
Investment tax credits
Difference in estimated useful lives of depreciation and
amortization
Accrued pension costs
Deferred income
Others
Less: Valuation allowance
- 33 -
2010
154,723
20,885
6,740
2,928
1,391,064
143,509
178,995
21,078
9,888
12,609
1,732,436
88,953
$ 1,247,555
$ 1,643,483
As of December 31, 2011, investment tax credits and loss carryforwards were as follows:
Regulatory Basis of
Investment Tax
Credits
Entity
Yageo Corporation
(the “Corporation”)
Statute for Upgrading
Industries
Tax Effect
of Unused
Investment Expiry
Tax Credits Year
Item
Machinery and equipment
Machinery and equipment
Machinery and equipment
R&D and personnel training
R&D and personnel training
$
4,454
24,168
31,559
19,832
201,367
2012
2013
2014
2012
2013
$ 281,380
Entity
Year of Loss
Yageo Corporation (the “Corporation”)
2008
2009
2003
2004
2008
2011
2009
2010
Ferroxcube Taiwan
Kuo Shin Investment
Tax Effect of
Unused Loss
Carryforwards
$
2,171
118,197
13,176
3,310
381
407
40,852
2,013
Expiry Year
2018
2019
2013
2014
2018
2021
2019
2020
$ 180,507
The loss carryforwards of Ferroxcube (Spain-based factory) of NT$129,299 thousand included deferred
income tax assets - noncurrent. Their expiry is in the 15th year from the year of loss incurrence.
The Corporation’s income tax returns through 2008 had been examined by the tax authorities. The
Corporation filed administrative appeals on the results of the tax return examinations in 2007 and 2008.
The case on the 2008 tax return was awaiting reexamination as of December 31, 2011. In February
2012, the Ministry of Finance (MOF) revoked the result of the examination on the 2007 tax return and
remanded the case to the tax authorities for the reexamination of this return. Under the conservative
principle, the Corporation adjusted relevant accounts in accordance with the verbal discussions with the
tax authorities as well as the results of the authorities’ tax return examination.
Compostar Technology Co., Ltd., Chipcera Technology Co., Ltd. and Kuo Chung Development
Limited merged with the Corporation in 2008, with the Corporation as the survivor entity; these
companies’ income tax returns through 2008 had all been examined and cleared.
c. Information on the integrated income tax is as follows:
Balance of the imputation credit account (ICA) of the
Corporation
- 34 -
2011
2010
$ 192,165
$ 216,753
The creditable ratios for the distribution of the earnings of 2011 and 2010 were 4.26% (estimate) and
3.40%, respectively. Since the imputed credit allocable to the stockholders is based on the balance as
of the date of the earnings distribution, the expected imputed credit rate may differ from the actual
imputed credit rate. The expected creditable ratio for the 2011 earnings may differ from the actual
ratio depending on the ICA balance on the dividend distribution date.
As of December 31, 2011 and 2010, there were no unappropriated retained earnings generated before
January 1, 1998.
21. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES
Personnel
Depreciation
Amortization
Personnel
Depreciation
Amortization
Cost of
Good Sold
2011
Operating
Expense
Total
$ 2,830,531
$ 2,210,713
$ 356,419
$ 1,315,196
$ 180,850
$
38,529
$ 4,145,727
$ 2,391,563
$ 394,948
Cost of
Good Sold
2010
Operating
Expense
Total
$ 2,853,128
$ 2,620,893
$ 328,083
$ 1,341,846
$ 196,063
$
43,776
$ 4,194,974
$ 2,816,956
$ 371,859
22. PENSION PLANS
The Labor Pension Act provides for a defined contribution plan featuring a portable pension. The
Corporation and subsidiaries Ferroxcube Taiwan and Ko-E have made monthly contributions at 6% of
monthly salaries and wages to the pension fund. The pension costs recognized by the foregoing entities
were NT$70,355 thousand in 2011 and NT$65,707 thousand in 2010.
Under the Labor Standards Law, the Corporation and its subsidiary, Ferroxcube Taiwan Ltd.
“Ferroxcube”), have defined benefit plans. The benefits under the plan are based on length of service and
average basic pay of the final six months of employment. The Corporation and Ferroxcube make monthly
contributions to a pension fund. The fund is administered by the employees’ pension fund committee and
deposited in the committee’s name in the Bank of Taiwan.
a. The components of net pension costs under the defined benefit plan were as follows:
2011
2010
Service cost
Interest cost
Projected return on plan assets
Amortization
$
5,894
7,023
(4,042)
537
$
6,718
6,786
(4,200)
537
Net pension costs
$
9,412
$
9,841
- 35 -
b. The reconciliation of the funded status of the defined benefit plan was as follows:
2011
Benefit obligation
Vested benefit obligation
Non-vested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Fair value of plan assets
Funded status
Unrecognized net transitional obligation
Unamortized pension loss
Accrued pension cost
c. Vested obligation
$
20,056
200,811
220,867
74,104
(189,576)
105,395
40,787
2010
$
23,553
245,550
269,103
82,044
(196,634)
154,513
(537)
(6,506)
$ 146,182
$ 147,470
2011
2010
$
26,047
$
30,929
d. The actuarial assumptions used in determining net periodic pension costs were as follows:
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
2011
2010
2.00%
2.25%
2.00%
2.00%
2.00%
2.00%
2011
2010
$ 10,700
$ 20,148
$ 11,252
$ 20,535
e. The changes in pension funds were:
Contributions to the fund
Payments from the fund
Some employees of Ferroxcube and all the employees of Vitrohm Holding GmbH and Yageo Korea have
defined benefit plans. As of December 31 2011 and 2010, the pension liabilities amounted to NT$120,984
thousand and NT$119,826 thousand, respectively, shown as accrued pension costs.
Yageo Dongguan, Yageo China, Ferroxcube Dongguan, Yageo Components (Su Zhou) Co., Ltd., Yageo
SZ Trade Co., Ltd., Yageo USA (H.K.) Limited, Yageo Europe, Ferroxcube (except for employees under
defined benefit plan as described above), Vitrohm Portuguesa, Yageo Japan, Yageo America Corporation,
Yageo Corporation (South Asia) PTE. LTD., Phycomp Malaysia SDN. BHD., Compostar Dongguan,
Compostar Su Zhou, Ko-E H.K., and Ko-E Shenzhen have defined contribution plans and make
contributions based on a fixed rate of salaries and wages. Yageo Holding Bermuda, Kuo Shin Investment,
Ferroxcube Holding Samoa, Compostar Cayman, Hsu Tai H.K., Ko-E Holding Cayman, Yageo Hong
Kong, Ferroxcube Technology H.K., Compostar H.K. and Rextron International do not have pension plans.
- 36 -
23. RELATED-PARTY TRANSACTIONS
a. The Group has transactions with related parties in the normal course of business.
summarized as follows:
Related Party
The relationships are
Relationship with the Group
Chilisin Electronics Corp.
Chilisin International Ltd.
Chilisin Su Zhou Ltd.
Teapo Electronics Corp.
Teapo Electronics (H.K.)
Luxen Electronics Corporation (Dongguan)
Teapo Electronics (Su Zhou)
Teapo Electronics (Dongguan)
Ralec Electronic Corp.
Ralec Technology (Kunshan) Co.
Strong Components Co., Ltd.
Belkin International
Equity-method investee of the Corporation
Subsidiary of Chilisin Electronics Corp.
Indirect subsidiary of Chilisin Electronics Corp.
Equity-method investee of the Corporation
Subsidiary of Teapo Electronics Corp.
Indirect subsidiary of Teapo Electronics Corp.
Indirect subsidiary of Teapo Electronics Corp.
Indirect subsidiary of Teapo Electronics Corp.
Equity-method investee of the Corporation
Indirect subsidiary of Ralec Electronic Corp.
Equity-method investee of the Corporation
Equity-method investee of Yageo Holding (Bermuda)
Limited
Horstrong Limited
Subsidiary of Belkin International
Chengxin (Dongguan)
Subsidiary of Horstrong Limited
Guo Chuang Electronics (Dongguan) Co., Ltd. Equity-method investee of Yageo Hong Kong
b. The transactions with the foregoing related parties are summarized as follows:
2011
Amount
2010
Amount
%
%
For the year
Sales
Strong Components Co., Ltd.
Horstrong Limited
Ralec Technology (Kunshan) Co.
Ralec Electronic Corp.
Others
Purchases
Belkin International
Chilisin International Ltd.
Chilisin Electronics Corp.
Teapo Electronics Corp.
Chilisin Su Zhou Ltd.
Teapo Electronics (H.K.)
Luxen Electronics Corporation (Dongguan)
Chengxin (Dongguan)
Ralec Electronic Corp.
Teapo Electronics (Su Zhou)
- 37 -
$
12,175
9,507
6,702
1,094
2
-
$
16,913
35,848
1,696
2
-
$
29,480
-
$
54,459
-
$
360,578
258,830
138,069
104,145
89,960
54,171
10,834
9,501
5,485
1,772
2
1
1
1
-
$
505,692
170,485
93,869
16,653
36,438
17,272
35,894
108
75,092
3
1
1
-
$ 1,033,345
5
$
951,503
5
2011
Amount
Rental revenue
Teapo Electronics Corp.
Guo Chuang Electronics (Dongguan) Co.,
Ltd.
Chilisin Electronics Corp.
Teapo Electronics (Dongguan)
Belkin International
$
2010
Amount
%
2,667
21
2,258
720
-
17
6
-
$
5,645
44
$
790
1
8,277
1,571
733
1,002
$
%
4,064
20
2,444
666
4,387
216
12
3
22
1
$
11,777
58
$
2,943
4
13
2
1
1
6,328
2,601
264
8
4
-
869
864
1
1
134
1,571
40
2
-
53,707
80
61,836
82
$
67,813
100
$
75,717
100
$
153,382
70,205
54,701
37,832
22,192
2,471
2,273
1,571
66
45
20
16
11
6
1
1
-
$
87,938
69,846
44,145
18,081
16,416
40
12,732
6,328
15,714
32
26
16
7
6
5
2
6
$
344,693
100
$
271,240
100
As of December 31
Receivables from related parties
Notes receivable
Strong Components Co., Ltd.
Accounts receivable
Ralec Technology (Kunshan) Co.
Horstrong Limited
Strong Components Co., Ltd.
Other
Other receivable
Chilisin Electronics Corp.
Belkin International
Other
Payment on behalf of others
Guo Chuang Electronics (Dongguan) Co.,
Ltd.
Payables to related parties
Accounts payable
Belkin International
Chilisin International Ltd.
Chilisin Electronics Corp.
Chilisin Su Zhou Ltd.
Teapo Electronics Corp.
Ralec Electronic Corp.
Teapo Electronics (H.K.)
Chengxin (Dongguan)
Teapo Electronics (Su Zhou)
The payment terms for the receivables from (payables to) the related parties were based on the terms of
the related contracts. Other related-party transactions were conducted under normal terms.
c. Compensation of directors, supervisors and management personnel:
2011
Salaries
Incentives
Bonus
$
40,053
28,789
43,371
$ 112,213
- 38 -
2010
$
36,889
32,801
75,963
$ 145,653
The above management compensation amounts, which were estimated on the basis of the Corporation’s
Articles of Incorporation, may differ from the actual appropriation.
24. MORTGAGED OR PLEDGED ASSETS
As of December 31, 2011 and 2010, in addition to those mentioned in Note 8, the following assets of the
Group had been pledged as collateral for bank loans:
Property, plant and equipment, net
Assets leased to others, net
2011
2010
$ 4,308,431
46,831
$ 5,208,227
47,319
$ 4,355,262
$ 5,255,546
25. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
In addition to the transactions disclosed in other notes to the financial statements, the other commitments
and contingent liabilities as of December 31, 2011 were as follows:
a. Unused letters of credit were about NT$30,392 thousand.
b. Contracts for the purchase of machinery and equipment not yet received totaled NT$215,631 thousand.
c. Guarantees the Corporation provided for Yageo Holding (Bermuda) Limited amounted to
NT$1,492,495 thousand.
d. The Securities and Future Investors Protection Center (SFIPC) alleged that Far Eastern Air Transport
Ltd. (FEATL) had been involved in exaggerating the turnover and accounts receivable. The SFIPC
charged that FEATL window-dressed its financial reports and thus harmed its investors’ welfare.
Under these investors’ authorization, the SFIPC sued 33 defendants, including FEATL and its
management, directors and supervisors, certified public accountant, its accounting firm, etc., (excluding
the Corporation) and filed a civil action lawsuit to demand compensation for damages with the district
court of Taipei on June 23, 2009.
In January 2010, the SFIPC included in its lawsuit the Corporation and two other companies because
they were FEATL’s directors and supervisors from 2004 to 2007. Since the joint defendants increased
to 36, SFIPC appealed for a compensation amounted of NT$297,061 thousand. But because this case
was still under court review as of December 31, 2011, the Corporation could not determine the outcome
of this case. Nevertheless, since the Corporation has business liability insurance, the Corporation
believes that if the court’s ruling is not favorable to the Corporation, the compensatory damages would
not significantly affect its finance and business status.
e.
The Corporation terminated the position of its staff, Employee L, in July 2010. However, Employee L
disagreed with the Corporation’s decision and applied for voluntary retirement. Employee L alleged
that the Corporation did not follow the Labor Standards Act and had thus terminated his employment
contract improperly. Employee L filed a lawsuit against the Corporation with the Taipei District Court
and demanded retirement payments along with other expense payables, which all totaled about
NT$19,997 thousand. However, the Corporation considered Employee L’s contract as that with a
contractual employee rather than a regular employee. Under the Labor Standards Act, a contractual
employee is not entitled to retirement payments. Hence, the Corporation claimed it had no
responsibility to make retirement payments to Employee L.
- 39 -
26. FINANCIAL INSTRUMENTS
a. The fair values of financial instruments
2011
Carrying
Value
2010
Fair Value
Carrying
Value
Fair Value
$ 8,096,620
268,994
6,246,532
67,813
90,154
2,573,634
323,227
50,000
21,188
$ 8,096,620
268,994
6,246,532
67,813
90,154
2,573,634
50,000
21,188
$ 8,700,536
36,287
6,260,735
75,717
120,582
3,456,658
335,494
50,000
20,797
$ 8,700,536
36,287
6,260,735
75,717
120,582
3,456,658
50,000
20,797
745,000
999,316
2,265
3,092,002
344,693
1,306,914
6,349,816
300,000
15,326
745,000
999,316
2,265
3,092,002
344,693
1,306,914
6,349,816
300,000
15,326
1,416,620
544,846
4,543
4,644,031
271,240
1,309,895
329,163
5,912,025
2,200,000
29,934
1,416,620
544,846
4,543
4,644,031
271,240
1,309,895
329,163
5,912,025
2,200,000
29,934
53,921
53,921
308,690
308,690
5,443
5,443
1,670
1,670
-
-
104,008
104,008
8,817
8,817
4,408
4,408
765
765
59,693
59,693
Nonderivative financial instruments
Assets
Cash and cash equivalents
Notes receivable
Accounts receivable, net
Accounts receivable from related parties
Other receivables
Available-for-sale financial assets - noncurrent
Financial assets carried at cost - noncurrent
Bond investments with no active market
Refundable deposits
Liabilities
Short-term loans
Short-term bills payable, net
Notes payable
Accounts payable
Accounts payable to related parties
Accrued expenses
Cash dividends payable
Bonds payable
Long term bank debt
Guarantee deposits received
Classification of derivative instruments by
counter-party’s geographic location
Domestic
Financial assets at fair value through profit or
loss - stock option
Financial assets at fair value through profit or
loss - forward exchange contracts
Financial liabilities at fair value through profit or
loss - forward exchange contracts
Foreign
Financial assets at fair value through profit or
loss - forward exchange contract
Financial liabilities at fair value through profit or
loss - forward exchange contracts
b. Methods and assumptions used to estimate the fair values of financial instruments are as follows:
1) The fair values of some financial instruments are estimated on the basis of their carrying values in
the balance sheet. Because the maturity periods of those instruments are short or their future
receipts/payments are similar to their carrying values, their carrying values provide reasonable basis
for the estimation of fair value.
2) The fair values of the financial assets measured at fair value through profit or loss and
available-for-sale financial assets - the domestic and foreign common stocks of listed companies
and convertible bonds - are based on their quoted market prices.
3) Financial assets carried at cost are investments in unquoted shares, which have no quoted prices in
an active market and entail an unreasonably high cost to obtain verifiable fair values. Thus, no fair
value is presented.
- 40 -
4) The fair values of bond investments with no active market are based on the fair values provided by
issuers.
5) The fair values of refundable deposits and guarantee deposits received approximate their carrying
amounts because there are no definite receipt or payment terms.
6) The fair values of long-term bank debts are estimated using discounted cash flow analysis based on
current interest rates for borrowings with similar maturities. If the interest rate of the
similar-maturity borrowings is close to the interest rate of long-term bank debts, the fair value is
based on the carrying amounts of loans
7) The fair values of the bonds payable are estimated using discounted cash flow analysis based on
current interest rates for borrowings with similar maturities. If the interest rate of the
similar-maturity borrowings is close to the interest rate of long-term bank debts, the fair value is
based on the carrying amounts of loans.
8) The fair values of derivatives with quoted market prices in active markets are based on their quoted
market prices, or, if quoted market prices are not available, are determined using the valuation
techniques. The estimations and assumptions incorporated in the valuation techniques by the
Group are the same as those used by participants in the market, which can be obtained by the
Group.
c. Financial assets and liabilities with fair values based on quoted market prices or on estimates made
using valuation techniques were as follows:
Quoted Market Prices
2011
2010
Valuation-technique Estimates
2011
2010
Assets
Financial assets at fair value through profit or loss current
Financial assets at fair value through profit or loss noncurrent
Available-for-sale financial assets - noncurrent
$
-
$
-
$
14,260
$
6,078
2,130,221
3,268,014
53,921
443,413
308,690
188,644
-
-
765
163,701
Liabilities
Financial liabilities at fair value through profit or
loss - current
d. On financial instruments with fair values estimated using valuation techniques, there were a net gain of
NT$45,300 thousand in 2011 and a net loss of NT$3,877 thousand in 2010.
e. As of December 31, 2011 and 2010, the financial assets exposed to fair value interest rate risks
amounted to NT$6,352,293 thousand and NT$4,052,427 thousand, respectively, and the financial
liabilities exposed to fair value interest rate risks amounted to NT$2,044,316 thousand and
NT$4,161,466 thousand, respectively. The financial assets exposed to cash flow interest rate risks
amounted to NT$2,236,001 thousand and NT$4,884,678 thousand as of December 31, 2011 and 2010,
respectively.
f. Financial risks
1) Market risk
a) Foreign exchange risk: The foreign exchange rate fluctuations would result in the exposure of
the Group’s foreign-currency-dominated assets and liabilities, open forward exchange contracts
and foreign exchange option to fair value risk and cash flow risk.
- 41 -
b) Price risk: The fluctuations in market price would result in changes in the fair values of the
Group’s financial instruments at fair value through profit or loss and available-for-sale financial
assets.
2) Credit risk
Credit risk represents the potential loss that would be incurred by the Group if counter-parties
breach financial instrument contracts. The amount of the largest credit risk of financial
instruments held by the Group is the same as their carrying amount.
3) Liquidity risk
The Group has sufficient working capital to meet the cash needs upon settlement of contracts are
publicly-traded. Therefore, no material liquidity risk was anticipated.
The Group’s available-for-sale financial instruments are publicly-traded in an active market and
may readily be sold at prices approximating heir fair values in the market; thus, no material liquidity
risk is anticipated. Financial assets carried at cost and bond investments have no quoted market
prices in an active market; thus, they have material liquidity risk. On forward contracts, those
outstanding as of December 31, 2011 were anticipated to generate cash inflows of US$116,925
thousand, JPY309,375 thousand, PLN3,630 thousand and NT$197,494 thousand, and cash outflows
would amount to EUR10,200 thousand, US$2,150 thousand and NT$3,412,026 thousand. In
addition, the exchange rates of forward exchange contracts have been determined; thus, no material
cash flow risk on these contracts is anticipated.
27. SIGNIFICANT FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES
Significant financial assets and liabilities in foreign currency were as follows:
Unit:
In thousands of Foreign Currencies/New Taiwan Dollars
December 31
2011
Exchange
Rate
New Taiwan
Dollars
Foreign
Currencies
224,799
983,735
42,647
140,726
811,498
8,654
467,791
30.2900
4.8125
39.1104
3.8991
0.3902
8.8869
0.0261
$ 6,809,158
4,734,226
1,667,941
548,704
316,646
76,907
12,209
$
3,811,466
13,674
9,622
0.3902
3.8991
4.8125
25,507
7,909
30.2900
4.8125
Foreign
Currencies
2010
Exchange
Rate
New Taiwan
Dollars
261,639
580,502
37,022
248,898
2,451,772
12,200
1,246,637
29.1650
4.4258
38.8682
3.7518
0.3583
9.8182
0.0261
$ 7,630,710
2,569,184
1,438,966
933,815
878,470
119,782
32,537
1,487,233
53,317
46,308
5,848,850
13,673
9,624
0.3583
3.7518
4.4258
2,095,646
51,298
42,594
772,594
38,064
26,833
7,875
29.1650
4.4258
782,572
34,851
Financial assets
Monetary items
USD
RMB
EUR
HKD
JPY
PLN
KRW
Nonmonetary items
JPY
HKD
RMB
Investments accounted for
by the equity method
USD
RMB
$
(Continued)
- 42 -
December 31
Foreign
Currency
2011
Exchange
Rate
New Taiwan
Dollars
30.2900
4.8125
0.3902
39.1104
3.8991
8.8869
$ 7,934,904
1,373,119
662,815
126,501
211,947
37,325
Foreign
Currency
2010
Exchange
Rate
New Taiwan
Dollars
29.1650
4.4258
0.3583
38.8682
3.7518
9.8182
$ 8,544,476
1,378,607
1,403,122
271,643
164,647
87,765
Financial liabilities
Monetary items
USD
RMB
JPY
EUR
HKD
PLN
$
261,964
285,324
1,698,656
3,234
54,358
4,200
$
292,970
311,493
3,916,053
6,989
43,885
8,939
(Concluded)
28. ADDITIONAL DISCLOSURES
a. Following are the additional disclosures required by the Securities and Futures Bureau for the group:
1) Financing provided: Table 1 (attached)
2) Endorsement/guarantee provided: Table 2 (attached)
3) Marketable securities held: Table 3 (attached)
4) Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% of
the capital stock: Table 4 (attached)
5) Acquisition of individual real estates at costs of at least $100 million or 20% of the capital stock:
None
6) Disposal of individual real estates at prices of at least $100 million or 20% of the capital stock:
None
7) Total purchase from or sale to related parties amounting to at least $100 million or 20% of the
capital stock: Table 5 (attached)
8) Receivables from related parties amounting to at least $100 million or 20% of the capital stock:
Table 6 (attached)
9) Names, locations, and related information of investees on which the Corporation exercises
significant influence: Table 7 (attached)
10) Information of derivative transactions:
Notes 5 and 26
b. Investment in Mainland China
1) Investee company name, the description of the primary business activity and products, issued
capital, nature of the relationship, capital inflow or outflow, ownership interest, gain or loss on
investment, amounts received on investment, and the limitation on investment: Table 8 (attached)
- 43 -
2) Significant direct or indirect transactions with the investee company, prices, payment terms, loans,
guarantee and unrealized gain or loss:
a) Purchase, purchase percentage and related ending balance, percentage of accounts payable:
Tables 5 and 6 (attached)
b) Sales, sales percentage and related ending balance, percentage of accounts receivable: Tables
5 and 6 (attached)
c) The amount of property transactions and related transaction’s gain or loss:
the consolidated statements
Eliminated from
d) Providing collaterals or endorsements, the ending balance and purpose: Table 2 (attached)
e) Financing to others, related information including highest balance, ending balance, interval of
interest rate and total current interest: Table 1 (attached)
f) Other transactions that significantly impacted current period’s profit or loss or financial
position: For example, professional services provided or received: None
c. Intercompany relationships and significant transactions: Table 9 (attached)
29. OPERATING SEGMENT FINANCIAL INFORMATION
a. Basic information
1) Classification of operating segment
The Group’s reportable segments under Statement of Financial Accounting Standards No. 41 “Operating Segments” are as follows:
a) Resistors business segment
b) Capacitors business segment
c) Ferrite business segment
d) Other electronic components business segment
2) Principles for measuring operating segments’ profit or loss, assets and liabilities
Significant accounting policies used for each operating segments are consistent with the policies
stated in Note 2 to the financial statements.
- 44 -
b. Segment revenues and results
The analysis of the Group’s operating revenue and results by reportable segment was as follows:
Segment Revenue
Year Ended December 31
2011
2010
Resistors business segment
From outside customers
From intersegment sales
Capacitors business segment
From outside customers
From intersegment sales
Ferrite business segment
From outside customers
From intersegment sales
Other electronic components segment
From outside customers
From intersegment sales
Elimination
$ 9,990,052
11,063,515
$ 10,318,154
8,970,614
10,067,298
16,949,429
11,470,284
17,277,301
2,387,733
674,779
2,664,230
1,820,676
2,528,014
498,538
(29,186,261)
$ 24,973,097
Administrative expense
Operating income
Interest income
Dividend income
Gain (loss) on sale of investments
Valuation gain (loss) on financial
instruments
Interest expense
Investment gain (loss) recognized
under the equity method, net
Gain (loss) on disposal of property,
plant and equipment, net
Exchange gain (loss), net
Miscellaneous expenses, net
Profit before income tax
2,861,155
514,630
(28,583,221)
$ 27,313,823
Segment Profit
Year Ended December 31
2011
2010
$ 2,474,955
$ 3,438,486
412,198
1,598,360
545,290
661,702
84,799
215,335
3,517,242
(956,285)
2,560,957
191,928
93,345
129
5,913,883
(1,027,780)
4,886,103
76,680
66,726
(6,838)
45,300
(246,728)
(3,877)
(231,935)
(61,753)
146,362
(2,857)
(161,599)
(29,984)
4,283
127,222
(147,993)
$ 2,388,738
$ 4,916,733
The measure of the operating segments’ profit or loss is profit or loss controlled by management.
c. Segment assets and liabilities
December 31
2011
2010
Resistors business segment
Capacitors business segment
Ferrite business segment
Other electronic components business segment
Other shared assets
$ 12,173,044
10,847,978
2,132,871
165,133
22,806,732
$ 10,613,722
12,105,760
2,234,103
240,922
25,118,072
Total of consolidated assets
$ 48,125,758
$ 50,312,579
The measure of the Group’s operating assets are the assets controlled by management. The measure of
operating liabilities is the Group’s capital budget and capital demand that are not allocated by to
individual operating segments. Thus, the operating liabilities are not subject to segment performance
evaluation consideration.
- 45 -
d. Other segment information
December 31
2011
2010
Depreciation and amortization
Resistors business segment
Capacitors business segment
Ferrite business segment
Other electronic components business segment
Other shared assets
$
876,254
1,675,050
233,428
40,505
-
$ 2,825,237
$
849,485
2,108,113
231,268
35,380
-
$ 3,224,246
The increase in noncurrent assets is not reviewed regularly by the chief operating decision maker for the
purpose of resource allocation and assessment of segment performance. Thus, noncurrent assets are
not disclosed in the operating segments.
e. Revenue from major products
The following is an analysis of the Group’s operating revenue from the sale of its major products:
December 31
2011
Resistors
Capacitors
Ferrite
Other
$
2010
9,990,052
10,067,298
2,387,733
2,528,014
$ 10,318,154
11,470,284
2,664,230
2,861,155
$ 24,973,097
$ 27,313,823
f. Geographical information
The Group’s revenue from external customers based on its operating branch locations and information
on its noncurrent assets based on assets’ geographical location are shown below:
Revenue from
External Customers
December 31
2011
2010
Taiwan
Europe
Asia
Other
$
4,881,302
4,445,419
15,646,376
-
$ 24,973,097
$
5,935,403
5,117,392
16,261,028
-
$ 27,313,823
Noncurrent Assets
December 31
2011
2010
$
$ 21,115,530
Noncurrent assets excluded financial instruments and deferred tax assets.
- 46 -
8,076,068
4,512,215
8,512,685
14,562
$
8,670,912
4,630,630
7,509,684
12,461
$ 20,823,687
g. Major customers
The Group did not have any customers representing at least 10% of the consolidated gross sales in 2011
and 2010.
30. PLAN FOR THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
Under Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010,
the Group discloses its plan on the adoption of International Financial Reporting Standards (IFRSs) as
follows:
a. On May 14, 2009, the FSC announced the “Framework for the Adoption of International Financial
Reporting Standards by Companies in the ROC.” In this framework, starting 2013, companies with
shares listed on the Taiwan Stock Exchange (TSE) or traded on the Taiwan GreTai Securities Market or
Emerging Stock Market should prepare their financial statements in accordance with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers and the International Financial
Reporting Standards, International Accounting Standards, and the Interpretations as well as related
guidance translated by the Accounting Research and Development Foundation (ARDF) and issued by
the FSC. To comply with this framework, the Group set up a project team and made a plan to adopt
the IFRSs. Leading the implementation of this plan is Mr. J.K. Yen. The main contents of the plan,
responsible department, schedule and status of execution as of December 31, 2011 were as follows:
Contents of Plan
Responsible Department
Status of Execution
1) Establish the IFRSs task force
Finance division
Completed
2) Establish an IFRSs implementation
plan
Finance division
Completed
3) Identify the differences between ROC
GAAP and IFRSs
Finance division
Completed
4) Identify the consolidated entities under
IFRSs
Finance division
Completed
5) Evaluate the impact of optional
exemptions under IFRS 1 - “First-time
Adoption of International Financial
Reporting Standards”
Finance division
Completed
6) Evaluate the possible impact of IFRS
adoption on the IT systems
Finance and information
technology divisions
Completed
7) Determine which internal controls may
require modification
Finance and internal audit
divisions
Completed
8) Select accounting policies under IFRS
that apply to the Group
Finance division
Completed
(Continued)
- 47 -
Contents of Plan
9) Determine which optional exemptions
under IFRS 1 apply to the Group
Responsible Department
Status of Execution
Finance division
Completed
10) Prepare the opening balance sheet in
conformity with IFRSs
Finance division
In progress
11) Prepare comparative financial
information under IFRSs for 2012
Finance division
In progress
12) Complete the modification of relevant
internal controls
Finance division
In progress
(Concluded)
b. As of December 31, 2011, the Group had assessed the material differences, shown below, between the
Republic of China’s generally accepted accounting policies (ROC GAAP) and the accounting policies
to be adopted under IFRSs:
Accounting Issues
Foreign operating functional currency
Description of Differences
Under ROC GAAP, functional currency is determined
after various factors are taken into consideration.
Based on the IFRSs, specifically IAS 21 - “The Effects
of Changes in Foreign Exchange Rates,” the factors for
determining functional currency are classified into
primary and secondary on the basis of management’s
weighing the importance of these factors. Under
ROC GAAP, there is no assigning of priority to some
factors over other factors.
Classification of deferred income tax assets 1) Under ROC GAAP, a deferred tax asset or liability is
or liabilities and valuation allowance for
classified as current or noncurrent in accordance with
deferred income tax assets
the classification of the related asset or liability for
financial reporting. However, if a deferred income
tax asset or liability does not relate to an asset or
liability in the financial statements, it is classified as
current or noncurrent on the basis of the expected
length of time before it is realized or settled. Under
IFRSs, a deferred tax asset or liability is classified as
noncurrent.
2) Under ROC GAAP, valuation allowances are
provided to the extent, if any, that it is more likely
than not that deferred income tax assets will not be
realized. Under IFRSs, deferred tax assets are
recognized to the extent that it is highly probable that
taxable profits will be available against which the
deductible temporary differences can be used; thus,
contrary to the ROC GAAP, a valuation allowance
account is not needed.
(Continued)
- 48 -
Accounting Issues
Description of Differences
Share-based payment
The intrinsic value method should be applied to the
employee stock options granted between January 1,
2004 and December 31, 2007, as required under
relevant interpretations released by the Accounting
Research and Development Foundation (ARDF).
Under IFRS 2 - “Share-based Payment,” an entity is
required to account for its stock option compensation
costs at their fair value unless it is not practicable to
estimate the fair value.
Employee benefit
1) Under ROC GAAP, actuarial gains and losses should
be amortized over the expected average remaining
service years of the participating employees.
Under IFRSs, the Group should immediately
recognize the full amounts of actuarial gains and
losses in the period in which they occur as other
comprehensive income. The subsequent
reclassification to earnings is not permitted.
2) Under ROC GAAP, in estimating the discount rate
used for the measurement of projected, accumulated
and vested benefit obligations, service costs and
interest costs, the following factors should be
considered: (a) long-term average of the rates
adopted by the institution designated to have custody
of and manage the pension fund; (b) rates of return on
relatively high-safety fixed-income investments
currently available and expected to be available until
maturity of the pension benefits; and (c) rates implicit
in annuity contracts purchased from the insurance
company and used to settle pension benefits. 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. However, when there is no deep
market for corporate bonds, an entity should use
market yields on government bonds instead. The
currency and the estimated range of interest rates for
the corporate bonds or the government bonds should
be consistent with those of the pension plans.
(Continued)
- 49 -
Accounting Issues
Description of Differences
3) Under ROC GAAP, there are no specific
requirements for recognizing compensated absences,
such as paid vacation and sick leaves. Companies
usually recognize the related costs when the
employees actually go on leave. Under IFRSs, The
expected cost of short-term cumulative compensated
absences (paid vacation leaves) should be recognized
as the employees render services that increase their
entitlement to these compensated absences.
Euro-convertible bond (ECB)
Under ROC GAAP, the conversion price for ECB is
based on the New Taiwan dollar. An entity is
required to exchange the bonds at a fixed rate of a
foreign currency into New Taiwan dollars. A
contract that will be settled by the entity delivering a
fixed number of ECB in exchange for a fixed number
of common shares is an equity instrument. Based on
the IFRSs, ECB recorded in foreign currency uses a
fixed amount of equity instrument in exchange for an
uncertain amount of cash (foreign currency is fixed,
yet after the exchange into the functional currency, the
amount is not fixed). Thus, the conversion is
accounted for under financial liabilities measured at
fair value through profit or loss.
Land use rights
Under ROC GAAP, the land use rights are recorded as
intangible assets. Under IFRSs, the land use rights
will be reclassified to long−term prepayment for lease.
The classifications of leased assets and idle
assets
Under IFRSs, the assets leased to others and idle assets
are classified as property, plant and equipment
according to their nature. Assets leased to others are
mainly spaces leased to other companies for uses of
plants or offices. The plants and offices leased to
other companies are not classified as investment
properties since they cannot be sold separately and
comprise only an insignificant portion of the plants and
buildings.
Deferred expenses:
Under ROC GAAP, deferred expenses are classified
under other assets. Under IFRSs, the nature of
deferred expenses will determine their classification as
property, plant and equipment or long-term
prepayment expenses.
(Continued)
- 50 -
Accounting Issues
Capital surplus adjustment
Description of Differences
Under ROC GAAP, if an investee company issues new
shares and the original stockholders do not purchase or
acquire new shares proportionately, the investment
percentage as well as the equity in net assets of the
investment will change. This change will be used to
adjust the “Capital Surplus - Long term investment”
account and the “Long-term Equity Investments”
account. Under IFRSs, any changes in equity
investments that do not result in loss of significant
influence on the investee are deemed acquisition or
deemed disposal of the shares in the invested
associates. Transactions that result in changes in
share percentage of the subsidiaries but do not cause
loss of control over the investees are considered equity
transactions.
In addition, based on the “Q&A for Adoption of the
IFRS” issued by the Taiwan Stock Exchange (TWSE),
capital surplus items not covered by IFRS regulations,
the ROC Company Law or the relevent interpretations
by the Ministry of Econimic Affairs (MOEA) are
subject to adjustment on the date of conversion.
(Concluded)
The above differences may not have existed had the Group chosen to apply the IFRS 1 optional
exemptions to some of the foregoing accounting issues
c. The Group has prepared the above assessments in compliance with (a) the 2010 version of the IFRSs
translated by the ARDF and issued by the FSC and (b) the Guidelines Governing the Preparation of
Financial Reports by Securities Issuers amended and issued by the FSC on December 22, 2011. These
assessments may be changed as the FSC may issue new rules governing the adoption of IFRSs, and as
other laws and regulations may be amended to comply with the adoption of IFRSs. Actual results may
differ from these assessments.
- 51 -
TABLE 1
YAGEO CORPORATION AND SUBSIDIARIES
FINANCING PROVIDED
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
No.
Financing Name
Counter-party
0
Yageo Corporation
Yageo Holding (Bermuda) Ltd.
1
Yageo Holding (Bermuda) Ltd.
Hsu Tai International (H.K.)
Financial Statement Account
Loans receivable from related
parties.
Financing Limit
for Each
Borrowing
Company
(Note 1)
Collateral
Maximum Balance
for the Year
Ending Balance
$
-
Interest Rate
Nature of
Financing
(Note 3)
1.5
2
NT$ 13,439,535
US$
13,000
Loans receivable from related
parties.
Hsu Tai International (H.K.)
Loans receivable from related
parties.
Yageo USA (H.K.) Limited
Loans receivable from related
parties.
Yageo Japan
Loans receivable from related
parties.
Yageo America
Loans receivable from related
parties.
Ferroxcube Holding (Samoa) Ltd.
Loans receivable from related
parties.
Vitrohm Holding
Loans receivable from related
parties.
Yageo Europe Holding B.V.
Loans receivable from related
parties.
Yageo Europe Holding B.V.
Loans receivable from related
parties.
Yageo Europe Holding B.V.
Loans to subsidiaries considered
as a component of investment
Ferroxcube International Holding B.V. Loans receivable from related
parties.
Ferroxcube International Holding B.V. Loans receivable from related
parties.
Ferroxcube International Holding B.V. Loans to subsidiaries considered
as a component of investment
US$
919,793
US$
8,659
US$
8,659
-
US$
919,793
HK$
14,926
HK$
14,926
US$
919,793
US$
85,000
US$
US$
919,793
JPY
36,906
US$
919,793
US$
US$
919,793
US$
Transaction
Amount
$
Financing Reasons
-
For revolving fund
2
-
-
2
85,000
-
JPY
36,906
9,742
US$
US$
3,423
919,793
EUR
US$
919,793
US$
Allowance for
Bad Debt
$
Item
-
None
For revolving fund
-
-
For revolving fund
2
-
-
2
9,742
-
US$
3,423
3,105
EUR
US$
10,238
919,793
EUR
US$
919,793
US$
Total Maximum
Amount of
Financing Allowed
for Financier
(Note 2)
Value
$
-
NT$ 13,439,535
None
-
US$
919,793
-
None
-
US$
919,793
For revolving fund
-
None
-
US$
919,793
-
For revolving fund
-
None
-
US$
919,793
2
-
For revolving fund
-
None
-
US$
919,793
-
2
-
For revolving fund
-
None
-
US$
919,793
3,105
2.0
2
-
For revolving fund
-
None
-
US$
919,793
US$
10,238
-
2
-
For revolving fund
-
None
-
US$
919,793
6,439
EUR
6,439
-
2
-
For revolving fund
-
None
-
US$
919,793
EUR
177,656
EUR
177,656
-
2
-
For revolving fund
-
None
-
US$
919,793
919,793
US$
2,290
US$
2,290
-
2
-
For revolving fund
-
None
-
US$
919,793
US$
919,793
EUR
23,128
EUR
23,128
-
2
-
For revolving fund
-
None
-
US$
919,793
US$
919,793
EUR
20,688
EUR
20,688
-
2
-
For revolving fund
-
None
-
US$
919,793
167,086
2
Ferroxcube Holding (Samoa) Ltd.
Ferroxcube Electronic (Dongguan)
Co., Ltd.
Loans receivable from related
parties.
RMB
167,086
US$
4,300
US$
4,300
-
2
-
For revolving fund
-
None
-
RMB
3
Yageo (Hong Kong) Limited
Yageo Electronics (China) Co., Ltd.
Loans receivable from related
parties.
Loans receivable from related
parties.
HK$ 3,394,302
US$
80,000
US$
80,000
-
2
-
For revolving fund
-
None
-
HK$ 3,394,302
HK$ 3,394,302
US$
5,000
US$
5,000
-
2
-
For revolving fund
-
None
-
HK$ 3,394,302
RMB
6,600
-
2
Yageo Trade Co., Ltd. (Suzhou)
4
Yageo Electronics (China) Co., Ltd. Yageo Trade Co., Ltd. (Suzhou)
Loans receivable from related
parties.
RMB 1,888,400
RMB
43,500
5
Yageo Trade Co., Ltd. (Suzhou)
Yageo Electronics (China) Co., Ltd.
Loans receivable from related
parties.
RMB
RMB
25,000
-
-
2
-
For revolving fund
-
None
-
6
Compostar Technology (Cayman),
Ltd.
Yageo Holding (Bermuda) Ltd.
Loans receivable from related
parties.
US$
2,509
-
-
2
-
For revolving fund
-
None
-
95,773
(Note 6)
For revolving fund
None
RMB 1,888,400
RMB
95,773
(Note 6)
Note 1:
For the corporation to the business relationship, financing limited for each borrowing company is limited to the amounting of business operation (base on the previous year’s actual sales and purchase amount when the loan contract award). The financing limited to the counterparty which has the short-term loan necessary is
limited to 40% of its net worth presented in the latest financial statements audit or review by auditor. According to the financing procedure for Corporation’s oversea investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd., Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited,
Yageo Electronics (China) Co., Ltd., Yageo Trade Co., Ltd. (Suzhou and Compostar Technology (Cayman), Ltd. are limited to 100% of each net worth presented in the latest financial statements audit or review by auditor.
Note 2:
For the Corporation, the financing amount to each counterparty is limited to 40% of its net worth presented in the latest financial statements audit or review by auditor. According to the financing procedures for Corporation’s oversea investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd.,
Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited, Yageo Electronics (China) Co., Ltd., Yageo Trade Co., Ltd. (Suzhou) and Compostar Technology (Cayman), Ltd. are limited to 100% of each net worth presented in the latest financial statements audit or review by auditor.
Note 3:
Reasons for financing are as follows:
1.
2.
Business relationship.
For financing.
- 52 -
Note 4:
The currency rate on December 31, 2011, state on Taiwanese dollars to HKD, USD, JPY, EUR and RMB are 1:3.8991, 1:30.29, 1:0.3902, 1:39.1104 and 1:4.8125, respectively; state on U.S. dollars to HKD, JPY, EUR, and RMB are 1:0.1287, 1:0.0129, 1:1.2912 and 1:0.1589, respectively.
Note 5:
Maximum balance for the year and ending balance are the financing limit that the board of directors approved.
The ending balance of financing limit and actual using amount are the same, except the listed below:
The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Yageo (Hong Kong) Limited is US$74,700 thousand. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Ferroxcube Holding (Samoa) Ltd. is US$0. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Virtrohm holding
is EUR0. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Yageo Europe Holding B.V. are US$8,351 thousand, EUR4,039 thousand and EUR174,955 thousand. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Ferroxcube International Holding B.V. are US$0, EUR22,629 thousand
and EUR20,688 thousand. The actual using amount that Yageo (Hong Kong) Limited loan to Yageo Electronics (China) Co., Ltd.is US$71,000 thousand.
Note 6:
Compostar Technology (Cayman), Ltd. was dissolved in 2011.
Note 7:
The aforestated financing transactions were fully offset at the time the consolidated financial statements were prepared.
(Concluded)
- 53 -
TABLE 2
YAGEO CORPORATION AND SUBSIDIARIES
ENDORSEMENT/GUARANTEE PROVIDED
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Counter-party
No.
0
Endorsement/Guarantee
Provider
Yageo Corporation
Name
Nature of
Relationship
Limits on Each
Counter-party’s
Endorsement/
Guarantee Amounts
(Note 1)
Yageo Holding (Bermuda) (Yageo
Holding (Bermuda) Ltd.
guaranteed the loans of Yageo
Electronics (China) Co., Ltd.,
Yageo Electronics (Dongguan)
Co., Ltd., and Ferroxcube
Electronics (Dongguan) Co., Ltd.)
(Note 3)
Yageo Holding (Bermuda) Ltd.
Subsidiary
$ 33,598,838
Subsidiary
33,598,838
Kuo Shin Investment Limited
Subsidiary
33,598,838
Maximum
Balance for the Year
Ending Balance
$
302,900
(US$ 10,000)
$
302,900
(US$ 10,000)
1,189,595
(US$34,050,
EUR2,000 and
80,000)
150,000
Ratio of Accumulated
Maximum
Value of Collaterals Amount of Collateral
Collateral/Guarantee
Property, Plant, or
to Net Equity of the
Amounts Allowable
Equipment
Latest Financial
(Note 2)
Statement
$
1,189,595
(US$34,050,
EUR2,000 and
80,000)
-
-
0.90
$ 50,398,257
-
3.54
50,398,257
-
-
50,398,257
Note 1: For the Corporation, endorsement or guarantee to each counterparty is limited to 100% of its net worth presented in the latest financial statements. According to the endorsement/guarantee procedure for Corporation’s overseas investees,
endorsement/guarantee made by Yageo Holding (Bermuda) for each party is limited to 100% of its net worth presented in the latest financial statements.
Note 2: Maximum endorsement/guarantee allowed for the Corporation is 150% of its net worth presented in the latest financial statements. According to the endorsement/guarantee procedure for Corporation’s overseas investees, maximum
endorsement/guarantee that can be made by Yageo Holding (Bermuda) is limited to 150% of its net worth presented in the latest financial statements.
Note 3: The endorsement/guarantee limit to each counterparty and endorsement/guarantee limit of the Company are US$919,793 thousand and US$1,379,690 thousand, respectively.
Note 4: The endorsement/guarantee was based on the currency rate at the end of December 2011.
Stated one Taiwanese dollars to USD and EUR are 1:30.29 and 1:39.1104, respectively.
- 54 -
TABLE 3
YAGEO CORPORATION AND SUBSIDIARIES
LONG-TERM AND SHORT-TERM INVESTMENTS
DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
December 31, 2011
Holding Company Name
Yageo Corporation
Ko-Shin Investment Ltd.
Type and Issuer/Name of Securities
Stock
Chilisin Electronics Corp.
GTCL
Ralec Electronic Corp.
Teapo Electronics Corp.
Yageo Holding (Bermuda) Ltd.
Ko-Shin Investment Ltd.
Ferroxcube Holding (Samoa) Ltd.
Strong Components Co., Ltd.
Ferroxcube Taiwan, Ltd.
Yageo Europe Holding B.V.
Yageo America
TA-I Technology Co., Ltd.
Relationship with the
Holding Company
Equity-method investee
Equity-method investee
Equity-method investee
Equity-method investee
Subsidiary
Subsidiary
Subsidiary
Equity-method investee
Subsidiary
Subsidiary
Subsidiary
-
SHS KOA Corp.
-
Luminous Town Electric Co., Ltd.
-
Linko International Golf & Country Club
-
Financial Statement
Account
Shares or Units
(All Common
Shares Unless
Stated Otherwise)
(Thousands)
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Other liabilities
Other liabilities
Available-for-sale financial
assets
Available-for-sale financial
assets
Financial assets carried at
cost
Financial assets carried at
cost
26,775
164,648
7,457
32,585
90,000
151,700
1,000
6,530
372
747
1
22,903
Carrying Value
$
570,804
565,285
408,365
331,543
27,860,538
1,259,336
804,099
92,722
12,841
(2,785,925)
(299,930)
680,922
Percentage of
Ownership (%)
17.5
20.7
12.3
17.0
100.0
100.0
100.0
31.4
100.0
100.0
100.0
9.8
Market Value or
Net Asset Value
(Note 1)
$
338,698
207,272
264,714
131,317
27,860,538
1,259,336
804,099
92,722
12,841
(2,916,580)
(299,930)
404,237
1,250
288,523
3.4
331,076
10,553
100,870
15.8
115,553
-
482
0.1
667
Note
Note 2
Note 3
Note 3
Limited company
Yageo Corporation (South Asia)
Subsidiary
Equity-method investments
-
127,650
100.0
127,650
Bond
Chilisin - 3rd
Equity-method investee
Available-for-sale financial
assets
3
291,119
-
242,574
Note 3
Available-for-sale financial
assets
Equity-method investments
Equity-method investments
13,527
510,755
5.8
238,751
Note 3
5,632
36,779
161,091
126,275
3.7
4.6
71,247
46,300
Stock
TA-I Technology Co., Ltd.
Chilisin Electronics Corp.
GTCL
Equity-method investee
Equity-method investee
(Continued)
- 55 -
December 31, 2011
Holding Company Name
Type and Issuer/Name of Securities
Ralec Electronic Corp.
Teapo Electronics Corp.
Parawin Venture Capital Corp.
Hsin Bung International Co., Ltd.
Jihsun Securities Investment Trust Co.,
Ltd.
Relationship with the
Holding Company
Equity-method investee
Equity-method investments
Equity-method investee
Equity-method investments
Member of the board of directors Financial assets carried at
cost
Financial assets carried at
cost
Financial assets carried at
cost
Bond
Ta Chong subordinated debt
Chilisin - 3rd
Financial Statement
Account
Equity-method investee
Bond investments with no
active market
Available-for-sale financial
assets
Shares or Units
(All Common
Shares Unless
Stated Otherwise)
(Thousands)
2,216
7,692
10,000
Carrying Value
$
Percentage of
Ownership (%)
Market Value or
Net Asset Value
(Note 1)
89,625
63,526
76,628
3.6
4.0
10.0
2,761
33,622
16.6
60,888
1,560
12,000
4.0
31,938
-
50,000
-
50,000
2
234,761
-
200,839
Note 3
436,932
17,831
100.0
27.2
5.3
US$
436,932
16,846
Note 3
100.0
77.2
100.0
100.0
46.0
100.0
100.0
100.0
US$
US$
US$
US$
US$
US$
US$
US$
13,517
9,996
7,773
2,593
2,349
1,405
106
(1,746)
Yageo Holding (Bermuda) Stock
Ltd.
Yageo (Hong Kong) Limited
GCD
SHS KOA Corp.
Subsidiary
Equity-method investee
-
Equity-method investments
Equity-method investments
Available-for-sale financial
assets
1,030,499
3,438
1,926
US$
Limited company
Yageo USA (H.K.) Limited
Ko-E Holding (Cayman)
Vitrohm Holding
Rextron International
Belkin International
Yageo Korea
Yageo Japan
Hsu Tai International (H.K.)
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Equity-method investee
Subsidiary
Subsidiary
Subsidiary
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Equity-method investments
Other liabilities
-
US$
US$
US$
US$
US$
US$
US$
US$
13,517
9,996
7,773
2,593
2,349
1,405
106
(1,746)
US$
$
Note
US$
78,652
31,000
66,930
Hsu Tai International
(H.K.)
Stock
SHS KOA Corp.
-
Available-for-sale financial
assets
872
HK$
68,769
2.4
HK$
59,261
Note 3
Rextron International
Stock
SHS KOA Corp.
-
Available-for-sale financial
assets
286
US$
2,718
0.8
US$
2,500
Note 3
Equity-method investments
Equity-method investments
Equity-method investments
-
HK$ 2,330,783
HK$ 868,457
HK$ 118,213
100.0
100.0
100.0
Yageo (Hong Kong)
Limited
Limited company
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (Dongguan)
Yageo Trade Co., Ltd. (Suzhou)
Subsidiary
Subsidiary
Subsidiary
HK$ 2,330,783
HK$ 868,457
HK$ 118,213
(Continued)
- 56 -
December 31, 2011
Holding Company Name
Type and Issuer/Name of Securities
Yageo Components (Suzhou) Co., Ltd.
Compostar Technology (Dongguan) Co.,
Ltd.
Guo Chuang Electronics (Dongguan)
Co., Ltd.
Compostar Technology (Su Zhou) Co.,
Ltd.
Relationship with the
Holding Company
Financial Statement
Account
Shares or Units
(All Common
Shares Unless
Stated Otherwise)
(Thousands)
Carrying Value
Percentage of
Ownership (%)
Market Value or
Net Asset Value
(Note 1)
Subsidiary
Subsidiary
Equity-method investments
Equity-method investments
-
HK$
HK$
65,617
18,485
100.0
100.0
HK$
HK$
65,617
18,485
Equity-method investee
Equity-method investments
-
HK$
9,762
35.0
HK$
9,762
Subsidiary
Equity-method investments
-
HK$
3,815
100.0
HK$
3,815
Ferroxcube Holding
(Samoa) Ltd.
Stock
Ferroxcube Electronics (H.K.) Limited
Subsidiary
Equity-method investments
165,777
US$
21,087
100.0
US$
21,087
Ko-E Holding (Cayman)
Stock
Ko-E Corp.
Subsidiary
Equity-method investments
4,500
US$
1,737
100.0
US$
1,737
Limited company
Ko-E (H.K.) Limited
Subsidiary
Equity-method investments
-
US$
11,447
100.0
US$
11,447
Equity-method investments
Financial assets carried at
cost
Financial assets carried at
cost
-
HK$
HK$
49,502
10,888
100.0
17.0
HK$
HK$
49,502
10,888
-
HK$
2,789
17.0
HK$
2,789
-
RMB
9,624
17.0
RMB
2,694
Ko-E (H.K.) Limited
Ko-E Corp. (Shenzhen)
Yageo Europe Holding
B.V.
Ferroxcube International
Holding B.V.
Limited company
Ko-E Technology (Shenzhen) Co., Ltd.
HK Wahyi Electronic Limited
Subsidiary
-
SEMR China Technology Co., Ltd.
-
Stock
Xiamen Holder Electronic Co., Ltd.
-
Financial assets carried at
cost
Limited company
SHS KOA Corp.
-
1,280
EUR
6,107
3.5
EUR
8,670
Ferroxcube International Holding B.V.
-
Available-for-sale financial
assets
Equity-method investments
39
EUR
19,977
100.0
EUR
19,013
Limited company
Feroxcube Electronic (Dongguan) Co.,
Ltd.
-
Equity-method investments
-
EUR
20,097
100.0
EUR
20,097
Note 1: The listed common stocks and bonds are valued by their closing price at the end of December, 2011. The bonds did not have quoted market is valued by the evaluated information of issuing housing.
shared ratio of the latest financial statements acquired.
Note
Note 3
The unlisted stock is valued by the
Note 2: The Parent Company pledged 2,052 thousand stock of Chilisin Electronics Corp. as collaterals for the 2007 income tax filing petition case to the National Tax Administration of Northern Taiwan Province, Ministry of Finance.
Note 3: The carrying value is the holding cost unadjusted by market value.
Note 4: The investments’ long-term equity investment and subsidiaries’ equity were fully offset in the consolidated financial statements.
(Concluded)
- 57 -
TABLE 4
YAGEO CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Company Name
Yageo Corporation
Securities Type and Name
Open-end mutual funds
Yuanta Wan Tai Money Market Fund
Financial Statement Account
Counter-party
Nature of
Relationship
Available-for-sale financial assets
- current
-
-
Beginning Balance
Shares/Units
Amount
(Thousands)
-
$
- 58 -
Acquisition
Shares/Units
Amount
(Thousands)
-
34,394
$ 500,000
Disposal
Shares/Units
(Thousands)
34,394
Amount
Carrying Value
$ 500,082
$ 500,000
Gain (Loss) on
Disposal
$
82
Adjustment
Amount
$
-
Ending Balance
Shares/Units
Amount
(Thousands)
-
$
-
TABLE 5
YAGEO CORPORATION AND SUBSIDIARIES
TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE CAPITAL STOCK
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Transaction Details
Company Name
Yageo Corporation
Related Party
Yageo Electronics (Dongguan)
Yageo Electronics (China) Co., Ltd.
Yageo Europe B.V.
Ko-E (H.K.) Limited
Yageo Corporation (South Asia)
Yageo USA (H.K.) Limited
Nature of Relationship
Purchase/
Sale
Amount
A subsidiary of Yageo Holding Sale
(Bermuda) Ltd.’s subsidiary
Purchase
A subsidiary of Yageo Holding Sale
(Bermuda) Ltd.’s subsidiary
Purchase
Subsidiary
Sale
A subsidiary of Yageo Holding Sale
(Bermuda) Ltd.’s subsidiary
Subsidiary
Sale
Subsidiary of Yageo Holding
Sale
(Bermuda) Ltd.
$
% to
Total
Abnormal Transaction
Payment Terms
(2,866,213)
(26)
Offset account T/T 90 days
209,957
(2,124,281)
4
(19)
370,295
(638,202)
(664,191)
Unit Price
$
Payment Terms
Notes/Accounts (Payable) or
Receivable
% to
Ending Balance
Total
-
-
$
-
Offset account T/T 90 days
T/T 90 days
-
-
(802,838)
461,131
(23)
9
7
(6)
(6)
T/T 90 days
T/T 45 days
T/T 60 days
-
-
(1,382,662)
100,783
168,582
(40)
2
3
(536,912)
(380,433)
(5)
(3)
T/T 90 days
Offset account T/T 90 day
-
-
140,362
3,338,401
3
68
Yageo USA (H.K.) Limited
Yageo Trade Co., Ltd. (Suzhou)
Ko-E (H.K.) Limited
Belkin International
Affiliate
Affiliate
Affiliate
Sale
Sale
Purchase
HK$
HK$
HK$
(613,501)
(234,202)
94,667
(21)
(8)
3
T/T 90 days
T/T 90 days
T/T 60 days
-
-
HK$
HK$
HK$
Ferroxcube Holding (Samoa) Ltd.
Ferroxcube H.K. Ltd.
Affiliate
Sale
RMB (126,467)
(87)
T/T 60 days
-
-
RMB
7,306
84
Yageo Trade Co., Ltd. (Suzhou)
Ko-E Technology (Shenzhen) Co., Ltd.
A subsidiary of Yageo Holding Sale
(Bermuda) Ltd.’s subsidiary
RMB (372,134)
(69)
T/T 65 days
-
-
RMB
225,824
79
Yageo Electronics (China) Co., Ltd.
Ko-E (H.K.) Limited
RMB
(82,601)
(4)
T/T 65 days
-
-
RMB
30,042
5
Yageo Europe B.V.
A subsidiary of Yageo Holding Sale
(Bermuda) Ltd.’s subsidiary
Affiliate
Sale
RMB
(47,437)
(2)
T/T 90 days
-
-
RMB
4,816
1
Chilisin International Ltd.
Affiliate
HK$
56,059
6
T/T 65 days
-
-
HK$
(13,866)
5
Ko-E (H.K.) Limited
Note:
Purchase
Except for transactions with Belkin International and Chilisin International Ltd., all the other transactions were fully offset at the time the consolidated financial statements were prepared.
- 59 -
206,277
117,133
(39,334)
-
21
12
4
Note
TABLE 6
YAGEO CORPORATION AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF CAPITAL STOCK
DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Company Name
Related Party
Nature of Relationship
Ending Balance
$
Yageo Corporation (South Asia)
Yageo Europe B.V.
Yageo Holding (Bermuda) Ltd.’s subsidiary
Yageo Holding (Bermuda) Ltd.’s indirect
subsidiary
Yageo Holding (Bermuda) Ltd.’s indirect
subsidiary
Subsidiary
Subsidiary
Hsu Tai International (H.K.)
Yageo (Hong Kong) Limited
Yageo America
Yageo Europe Holding B.V.
Subsidiary
Subsidiary
Subsidiary of Yageo Corporation
Subsidiary of Yageo Corporation
US$
US$
US$
US$
Ferroxcube International Holding B.V.
Affiliate
US$
Yageo Electronics (China) Co., Ltd.
Yageo Corporation
Ko-E (H.K.) Limited)
Parent company
Subsidiary of Yageo Holding (Bermuda) Ltd.
Yageo Trade Co., Ltd. (Suzhou)
Ko-E Technology (Shenzhen) Co., Ltd.
Yageo Electronics (Dongguan)
Yageo Corporation
Yageo USA (H.K.) Limited
Yageo Electronics (China) Co., Ltd.
Turnover Rate
3,338,401
461,131
3.66
4.53
168,582
3.68
140,362
100,783
4.74
12.01
10,580
78,685
9,742
239,468
(Note 1)
55,931
(Note 1)
RMB
RMB
Subsidiary of Yageo Holding (Bermuda) Ltd.
Yageo Corporation
Yageo USA (H.K.) Limited
Amounts Received in
Subsequent Period
-
-
-
153,068
-
(Note 4)
(Note 4)
-
-
98,751
100,783
-
-
(Note 2)
(Note 3)
(Note 2)
(Note 2)
-
-
154
-
-
(Note 2)
-
-
-
-
287,306
30,042
3.72
3.03
(Note 4)
-
-
RMB
RMB
188,301
10,882
-
RMB
225,824
2.26
-
-
RMB
44,058
-
Parent company
RMB
166,823
8.37
-
-
RMB
166,823
-
Yageo Trade Co., Ltd. (Suzhou)
Ko-E (H.K.) Limited
Affiliate
Affiliate
HK$
HK$
206,277
117,133
3.56
1.77
-
-
HK$
HK$
150,841
41,441
-
Ferroxcube H.K. Ltd.
Ferroxcube International Holding B.V.
Affiliate
HK$
163,805
-
(Note 5)
-
-
-
-
Ferroxcube Holding (Samoa) Ltd.
Feroxcube Electronic (Dongguan) Co., Ltd.
Affiliate
US$
4,300
-
(Note 2)
-
-
-
-
Yageo USA (H.K.) Limited
Yageo Electronics (China) Co., Ltd.
Yageo Trade Co., Ltd. (Suzhou)
Subsidiary
Subsidiary
US$
US$
71,000
5,000
-
(Note 2)
(Note 2)
-
-
-
-
Yageo Holding (Bermuda) Ltd.
Note 1:
Loans to subsidiaries considered a component of investment.
Note 2:
Considered financing.
Note 3:
Considered financing, and other receivable.
Note 4:
The turnover rate was calculated by using purchase/sales price before offsetting in the consolidation financial statement.
Note 5:
Considered receivables of selling Feroxcube Electronic (Dongguan) Co., Ltd. to Ferroxcube International Holding B.V.
Note 6:
The aforestated receivables were fully offset at the time the consolidated financial statements were prepared.
- 60 -
(Note 4)
$
$
US$
1,313,580
295,692
Allowance for
Bad Debts
-
Ko-E (H.K.) Limited)
(Note 4)
Overdue
Action Taken
Amount
$
-
TABLE 7
YAGEO CORPORATION AND SUBSIDIARIES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCE
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Investment Amount
Investor
Yageo Corporation
Investee
Location
Chilisin Electronics Corp.
Hsinchu
GTCL
Ralec Electronic Corp.
Singapore
Kaohsiung
Teapo Electronics Corp.
New Taipei City
Yageo Holding (Bermuda) Ltd.
Ko-Shin Investment Ltd.
Ferroxcube Holding (Samoa)
Ltd.
Strong Components Co., Ltd.
Bermuda
Taipei
West Samoa
Ferroxcube Taiwan, Ltd.
Hsinchu
Yageo Europe Holding B.V.
Yageo America
Netherlands
America
Compostar Technology
(Cayman), Ltd.
Phycomp Malaysia
Cayman Islands
Kaohsiung
Malaysia
Yageo Corporation (South Asia) Singapore
Ko-Shin Investment Ltd.
Yageo Holding (Bermuda)
Ltd.
Chilisin Electronics Corp.
Hsinchu
GTCL
Ralec Electronic Corp.
Singapore
Kaohsiung
Teapo Electronics Corp.
New Taipei City
Yageo USA (H.K.) Limited
Ko-E Holding (Cayman)
Belkin International
Vitrohm Holding
Yageo Korea
GCD
Yageo USA (H.K.) Limited
Hsu Tai International (H.K.)
Yageo Japan
Hong Kong
Cayman Islands
Samoa
Germany
Korea
B.V.I.
Hong Kong
Hong Kong
Japan
Rextron International
B.V.I.
Main Businesses and Products
Capacitor manufacture and
marketing
Holding company
Resistor manufacture and
marketing
Capacitor manufacture and
marketing
Investment
Investment
Investment
Electronic component
manufacture and marketing.
Ferrite core manufacture and
marketing
Holding company
Electronic component
manufacture and marketing
Investment
Electronic component
manufacture and marketing
Electronic component
manufacture and marketing
Balance as of December 31, 2011
Shares
Percentage of
December 31, 2011 December 31, 2010
(Thousands)
Ownership
$
492,955
26,775
17.5
400,313
376,858
400,313
376,858
164,648
7,457
20.7
12.3
565,285
408,365
1,195,547
1,195,547
32,585
17.0
462,747
2,236,059
US$
25,433
90,000
151,700
1,000
79,384
79,384
16,175
US$
462,747
2,236,059
US$
25,433
US$
US$
147,757
2,347
$
US$
US$
$
570,804
Net Income (Loss)
of the Investee
$
$
Notes
Equity-method investee
(181,604)
231,787
(36,698)
28,442
Equity-method investee
Equity-method investee
331,543
(381,099)
(62,134)
Equity-method investee
100.0
100.0
100.0
27,860,538
1,259,336
804,099
1,214,586
(78,465)
-
1,214,586
(78,465)
-
6,530
31.4
92,722
(42,380)
(13,316)
16,175
372
100.0
12,841
(1,132)
(1,132)
147,757
2,347
747
1
100.0
100.0
235,778
-
-
(2,785,925)
(299,930)
215,696
Investment Gain
(Loss)
37,661
US$
-
Subsidiary
Subsidiary
Subsidiary
Equity-method investee
Subsidiary
660,581
2,725
660,581
2,725
Subsidiary
Subsidiary
-
(225,780)
(225,780)
Subsidiary
-
(395)
(395)
Subsidiary
-
MYR
759
-
-
780
SGD
780
-
100.0
127,650
19,700
19,700
116,807
116,807
5,632
3.7
161,091
215,696
7,923
Equity-method investee
125,963
62,907
125,963
62,907
36,779
2,216
4.6
3.6
126,275
89,625
(181,604)
231,787
(8,198)
8,450
Equity-method investee
Equity-method investee
129,692
129,692
7,692
4.0
63,526
(381,099)
(13,729)
Equity-method investee
HK$ 1,688,970
US$
4,500
US$
1,104
EUR
15,849
US$
236
US$
3,551
HK$
8,000
US$
2,400
US$
339
HK$ 1,688,970
US$
4,500
US$
1,104
EUR
15,849
US$
236
US$
3,551
HK$
8,000
US$
2,400
US$
339
1,030,499
3,438
-
100.0
77.2
46.0
100.0
100.0
27.2
100.0
100.0
100.0
US$
US$
US$
US$
US$
29,224
2,623
(348)
3,024
26
(2)
5,219
213
86
Subsidiary
Subsidiary
Equity-method investee
Subsidiary
Subsidiary
Equity-method investee
Subsidiary
Subsidiary
Subsidiary
US$
US$
-
100.0
US$
SGD
Capacitor manufacture and
marketing
Holding company
Resistor manufacture and
marketing
Capacitor manufacture and
marketing
Investment
Holding company
Investment
Investment
Resistor marketing
Investment
Passive Component marketing
Investment
Resistor manufacture and
marketing
Investment
492,955
Carrying Value
3,643
3,643
US$
US$
US$
436,932
9,996
2,349
7,773
1,405
13,517
(1,746)
106
2,593
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
29,224
3,396
(880)
3,024
26
(6)
5,219
213
86
66
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
66
Subsidiary
Subsidiary
(Continued)
- 61 -
Investment Amount
Investor
Investee
Yageo (Hong Kong) Limited Yageo Electronics (China) Co.,
Ltd.
Yageo Electronics (Dongguan)
Location
Balance as of December 31, 2011
Shares
Percentage of
December 31, 2011 December 31, 2010
(Thousands)
Ownership
Carrying Value
Net Income (Loss)
of the Investee
Investment Gain
(Loss)
Notes
HK$ 1,701,350
HK$ 1,701,350
-
100.0
HK$ 2,330,783
HK$
203,456
HK$
203,456
Subsidiary
HK$
555,010
HK$
555,010
-
100.0
HK$
868,457
HK$
7,837
HK$
7,837
Subsidiary
Compostar Technology (Suzhou) China
Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd. China
Passive Component sales and
marketing
Passive Component sales and
marketing
Passive Component sales and
marketing
Passive Component marketing
HK$
40,582
HK$
40,582
-
100.0
HK$
65,617
HK$
3,346
HK$
3,346
Subsidiary
HK$
38,799
HK$
38,799
-
100.0
HK$
118,213
HK$
13,999
HK$
13,999
Subsidiary
Compostar Technology (Su
Zhou) Co., Ltd.
Compostar Technology
(Dongguan) Co., Ltd.
Guo Chuang Electronics
(Dongguan) Co., Ltd.
Resistor and capacitor
manufacture and marketing
Resistor and capacitor
manufacture and marketing
Passive Component manufacture
and marketing
HK$
13,703
HK$
13,703
-
100.0
HK$
3,815
(2,806)
HK$
(2,806)
Subsidiary
HK$
17,259
HK$
-
-
100.0
HK$
18,485
HK$
416
HK$
416
HK$
6,458
HK$
6,458
-
35.0
HK$
9,762
HK$
121
HK$
42
Investment
HK$
161,184
HK$
161,184
165,777
100.0
US$
21,087
Ferroxcube Holding (Samoa) Ferroxcube Electronics (H.K.)
Ltd.
Limited
China
Main Businesses and Products
China
China
China
China
Hong Kong
HK$
-
Subsidiary
Equity-method investee
-
Subsidiary
Yageo Europe Holding B.V.
Ferroxcube International Holding Netherlands
B.V.
Holding company
EUR
3,663
EUR
3,663
39
100.0
EUR
19,977
EUR
11,557
EUR
11,557
Subsidiary
Ferroxcube International
Holding B.V.
Feroxcube Electronic
(Dongguan) Co., Ltd.
China
Core manufacture and marketing
EUR
14,972
EUR
14,972
-
100.0
EUR
20,097
EUR
964
EUR
964
Subsidiary
Compostar Technology
(Cayman), Ltd.
Compostar Technology (Hong
Kong) Co., Ltd.
Hong Kong
Investment
-
US$
5,036
-
-
-
US$
(1,760)
US$
(1,760)
Subsidiary
Ko-E Holding (Cayman)
Ko-E Corp.
Ko-E (H.K.) Limited)
New Taipei City
Hong Kong
Electronic components marketing
Electronic components marketing
US$
US$
1,393
4,662
US$
US$
1,393
4,662
4,500
-
100.0
100.0
US$
US$
1,737
11,447
US$
US$
41
3,363
US$
US$
41
3,363
Subsidiary
Subsidiary
Ko-E (H.K.) Limited)
Ko-E Technology (Shenzhen)
Co., Ltd.
China
Electronic components marketing
US$
4,661
US$
4,661
-
100.0
HK$
49,502
HK$
11,874
HK$
11,874
Subsidiary
Note: The carrying value of long-term equity investments, recognized investment gain (loss) and investees’ profit (loss) of the Corporation and subsidiaries were fully offset at the time the consolidated financial statements were prepared.
(Concluded)
- 62 -
TABLE 8
YAGEO CORPORATION AND SUBSIDIARIES
INVESTMENT IN MAINLAND CHINA
YEAR ENDED DECEMBER 31, 2011
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Investee
Company Name
Main Businesses and Products
Total Amount of
Paid-in Capital
Investment Type
(e.g., Direct or
Indirect)
Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2011
Investment Flows
Outflow
Investment Gain
(Loss)
-
US$
($
33,931
1,027,770)
100%
HK$
($
7,837
29,671)
HK$
($
868,457
3,386,201)
Inflow
-
$
Carrying Value as of
December 31, 2011
Yageo Electronics (Dongguan)
Co., Ltd.
Manufacture and marketing of
passive components
US$
($
38,931
1,179,220)
Indirect: Through a
company registered in
a third region
US$
($
33,931
1,027,770)
Yageo Electronics (China) Co.,
Ltd.
Manufacture and marketing of
passive components
US$
($
155,977
4,724,543)
Indirect: Through a
company registered in
a third region
US$
($
155,977
4,724,543)
-
-
US$
($
155,977
4,724,543)
100%
HK$
($
203,456
770,284)
HK$
($
2,330,783
9,087,756)
Feroxcube Electronic (Dongguan) Manufacture and marketing of
Co., Ltd.
Ferrite
US$
($
21,133
640,119)
Indirect: Through a
company registered in
a third region
US$
($
21,133
640,119)
-
-
US$
($
21,133
640,119)
100%
EUR
($
964
39,536)
EUR
($
20,097
786,041)
Guo Chuang Electronics
(Dongguan) Co., Ltd.
Manufacture and marketing of
passive components
US$
($
1,709
51,766)
Indirect: Through a
company registered in
a third region
US$
($
789
23,899)
-
-
US$
($
789
23,899)
35%
HK$
($
42
159)
HK$
($
9,762
38,063)
Compostar Technology (Suzhou)
Co., Ltd.
Manufacture and marketing of
passive components
US$
($
5,000
151,450)
Indirect: Through a
company registered in
a third region
US$
($
5,000
151,450)
-
-
US$
($
5,000
151,450)
100%
HK$
($
3,346
12,668)
HK$
($
65,617
255,847)
Ko-E Technology (Shenzhen) Co., Manufacture and marketing of
Ltd.
Electronic components
US$
($
3,500
106,015)
Indirect: Through a
company registered in
a third region
US$
($
3,150
95,414)
-
-
US$
($
3,150
95,414)
77%
HK$
($
9,167
34,706)
HK$
($
38,216
149,008)
Guo Ray Electronics Co., Ltd.
US$
($
1,000
30,290)
Indirect: Through a
company registered in
a third region
US$
($
460
13,933)
-
-
US$
($
460
13,933)
46%
US$
($
(89)
-2,623)
US$
($
654
19,810)
Chen-Xin Electronic (Chiao-Tao) Production of passive components
Co., Ltd.
HK$
($
1,000
3,899)
Indirect: Through a
company registered in
a third region
US$
($
59
1,787)
-
-
US$
($
59
1,787)
46%
US$
($
(236)
-6,955)
US$
($
817
24,747)
Chen Xin (Dongguan)
Production of passive components
US$
($
1,000
30,290)
Indirect: Through a
company registered in
a third region
US$
($
230
6,967)
-
-
US$
($
230
6,967)
46%
US$
($
(123)
-3,625)
US$
($
411
12,449)
Yageo Trade (Su Zhou) Co., Ltd.
Marketing of passive components
US$
($
5,000
151,450)
Indirect: Through a
company registered in
a third region
US$
($
5,000
151,450)
-
-
US$
($
5,000
151,450)
100%
HK$
($
13,999
53,000)
HK$
($
118,213
460,924)
Compostar Technology
(Dongguan) Co., Ltd.
Manufacture and marketing of
passive components
US$
($
1,502
45,496)
Indirect: Through a
company registered in
a third region
US$
($
1,502
45,496)
-
-
US$
($
1,502
45,496)
100%
HK$
($
416
1,575)
HK$
($
18,485
72,075)
Compostar Technology (Su Zhou) Manufacture and marketing of
Co., Ltd.
passive components
US$
($
5,036
152,540)
Indirect: Through a
company registered in
a third region
US$
($
5,036
152,540)
-
-
US$
($
5,036
152,540)
100%
HK$
($
(2,806)
-10,624)
HK$
($
3,815
14,875)
Manufacture and marketing of
passive components
$
Accumulated
% Ownership
Outflow of
of Direct or
Investment from
Indirect
Taiwan as of
Investment
December 31, 2011
Accumulated Inward
Remittance of
Earnings as of
December 31, 2011
US$
($
7,751
234,778)
(Continued)
- 63 -
Accumulated Investment in Mainland China as of
December 31, 2011
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
US$
($
33,931
1,027,770)
155,977
4,724,543)
21,133
640,119)
789
23,899)
5,000
151,450)
3,150
95,414)
460
13,933)
59
1,787)
230
6,967)
5,000
151,450)
1,502
45,496)
5,036
152,540)
Investment Amounts Authorized by Investment
Commission, MOEA
US$
47,590
(Note2)
US$
192,977
(Note2)
US$
26,660
US$
2,926
US$
5,000
US$
3,150
US$
736
US$
59
US$
560
US$
5,000
US$
1,164
US$
5,150
Upper Limit on Investment
Note 1
$33,688,191 × 60% ＝ $20,212,914
Note 1:
Based on “Audit procedure of mainland china investment” on August 29, 2008, there is 60% cap on the amount of the Group’s investment.
Note 2:
The transfer of capital surplus to earning amount approved by MOEA of Yageo Electronics (Dongguan) and Yageo Electronics (China) Co., Ltd. are US$6,740 thousand and US$37,000 thousand.
Note 3:
Recognition of gains/losses was based on the following financial statements
Note 4:
1.
Financial statements of these companies, which were audited by an international accounting firm with a cooperative relationship with an ROC accounting firm:
None.
2.
Financial statements of these companies, which were audited by the Company’s accounting firm: Yageo Electronics (Dongguan), Yageo Electronics (China) Co., Ltd., Feroxcube Electronic (Dongguan) Co., Ltd., Yageo Components (Suzhou) Co., Ltd., Ko-E Technology (Shenzhen)
Co., Ltd., Yageo SZ Trade Co., Ltd., Compostar Technology (Dongguan) Co., Ltd. and Compostar Technology (Su Zhou) Co., Ltd.
3.
Others:
Guo Chuang Electronics (Dongguan) Co., Ltd., Guo Ray Electronics (Dongguan) Co., Ltd., Chen-Xin Electronic (Chiao-Tao) Co., Ltd. and Chen Xin (Dongguan).
Those subsidiaries hold the shares up to 50% by indirect method, their profits and losses and ending balances were fully offset.
(Concluded)
- 64 -
TABLE 9
YAGEO CORPORATION AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
YEARS ENDED DECEMBER 31, 2011 AND 2010
(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)
Transaction Details
Year
2011
No.
0
Company Name
Yageo Corporation
Related Party
Nature of Relationship
(Note)
Yageo Holding (Bermuda) Ltd.
1.
Yageo Holding (Bermuda) Ltd.
Yageo Components (Su Zhou) Co., Ltd.
Yageo Components (Su Zhou) Co., Ltd.
1.
1.
1.
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
1.
1.
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
1.
1.
1.
1.
Ko-E Corp
1.
Ko-E Corp
Yageo America
1.
1.
Yageo Korea
1.
Yageo Corporation (South Asia)
Yageo Corporation (South Asia)
1.
1.
Yageo Japan
Yageo Japan
1.
1.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
1.
1.
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
1.
1.
1.
Vitrohm Portuguesa
1.
Financial Statement Account
Accounts and notes receivable from
related parties
Interest revenue
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Rental revenue
Service income
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Rental revenue
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Sales
Accounts and notes receivable from
related parties
Sales
Amount
$
Payment Terms
% to
Total Sales or
Assets
530
T/T 30 days
-
902
43,002
4,104
Financing
T/T 90 days
T/T 90 days
-
Offset account T/T 90 days
Offset account T/T 90 days
2
7
664,191
1,688
19,803
168,582
T/T 60 days
T/T 60 days
T/T 60 days
T/T 60 days
3
-
28
T/T 30 days
-
T/T 30 days
Offset account T/T 120 days
-
Prepaid
-
536,912
140,362
T/T 90 days
T/T 90 days
2
-
1,983
207
T/T 90 days
T/T 90 days
-
2,124,281
461,131
T/T 90 days
T/T 90 days
9
1
2,866,213
58,270
22,885
Offset account T/T 90 days
T/T 90 days
T/T 90 days
380,433
3,338,401
369
11,234
408
8,868
T/T 90 days
11
(Continued)
- 65 -
Transaction Details
Year
No.
1
Company Name
Yageo Holding (Bermuda) Ltd.
Related Party
Nature of Relationship
(Note)
Vitrohm Portuguesa
1.
Yageo Europe B.V.
Yageo Europe B.V.
1.
1.
Ferroxcube
1.
Ferroxcube H.K. Ltd.
1.
Ferroxcube
Yageo Europe Holding B.V.
Yageo America
Yageo Hong Kong
Yageo Hong Kong
3.
3.
3.
1.
1.
Hsu Tai International (H.K.)
Yageo Japan
Financial Statement Account
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Amount
$
Payment Terms
% to
Total Sales or
Assets
1,725
T/T 90 days
-
638,202
100,783
T/T 45 days
T/T 45 days
3
-
42
Prepaid
-
26
Prepaid
-
1,694,143
7,253,490
295,090
2,262,663
120,707
Financing
Financing
Financing
Financing
Prepaid
4
15
1
5
-
1.
1.
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Accounts and notes receivable from
related parties
Loans receivable from related parties
Loans receivable from related parties
320,458
14,421
Financing
Financing
1
-
Financing
Financing
4
-
2
Yageo Hong Kong
Yageo Electronics (China) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
1.
1.
Loans receivable from related parties
Loans receivable from related parties
2,151,019
151,480
3
Yageo Electronics (China) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
3.
3.
1,226
50,945
T/T 90 days
Prepaid
-
Yageo Trade (Su Zhou) Co., Ltd.
Ko-E (H.K.) Limited)
Ko-E (H.K.) Limited)
3.
3.
3.
31,763
376,567
144,579
Financing
T/T 65 days
T/T 65 days
2
-
Yageo Europe B.V.
Yageo Europe B.V.
3.
3.
216,259
23,179
T/T 90 days
T/T 90 days
1
-
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
Loans receivable from related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
370,295
1,382,662
T/T 90 days
T/T 90 days
1
3
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Electronics (Dongguan) Co., Ltd.
3.
3.
2,322,713
804,296
T/T 60 days
T/T 60 days
9
2
Ko-E (H.K.) Limited)
Ko-E (H.K.) Limited)
Ko-E (H.K.) Limited)
3.
3.
3.
48,773
886,687
456,712
T/T 90 days
T/T 90 days
T/T 90 days
4
1
4
Yageo USA (H.K.) Limited
Sales
Accounts and notes receivable from
related parties
Service income
Sales
Accounts and notes receivable from
related parties
(Continued)
- 66 -
Transaction Details
Year
No.
Company Name
Related Party
Nature of Relationship
(Note)
Financial Statement Account
5
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
6
Ferroxcube Holding (Samoa) Ltd.
Ferroxcube (Dongguan) Co., Ltd.
Ferroxcube H.K. Ltd.
Ferroxcube H.K. Ltd.
3.
3.
3.
Loans receivable from related parties
Sales
Accounts and notes receivable from
related parties
7
Ferroxcube Taiwan, Ltd.
Ferroxcube H.K. Ltd.
3.
Commission income
8
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
3.
3.
Ko-E Corp. (Shenzhen)
Ko-E Corp. (Shenzhen)
Ko-E Corp. (Shenzhen)
3.
3.
3.
Sales
Accounts and notes receivable from
related parties
Service income
Sales
Accounts and notes receivable from
related parties
Yageo Europe B.V.
Yageo Europe B.V.
3.
3.
Yageo Electronics (Dongguan) Co., Ltd.
3.
Yageo Corporation
Yageo Corporation
2.
2.
9
Yageo Components (Su Zhou) Co., Ltd.
Amount
$
Payment Terms
% to
Total Sales or
Assets
209,957
802,838
T/T 90 days
T/T 90 days
1
2
130,247
576,552
35,162
Financing
T/T 60 days
T/T 60 days
2
-
8,404
T/T 60 days
-
28,635
34,675
T/T 90 days
T/T 90 days
-
67,490
1,696,521
1,086,779
T/T 65 days
T/T 65 days
T/T 65 days
7
2
Sales
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
24,042
2,655
T/T 90 days
T/T 90 days
-
Prepaid
-
72,805
18,314
T/T 90 days
T/T 90 days
-
378
10
Yageo Korea
Yageo Corporation
Yageo Corporation
2.
2.
Commission income
Accounts and notes receivable from
related parties
30,629
24,264
T/T 30 days
T/T 30 days
-
11
Yageo Japan
Yageo Holding (Bermuda) Ltd.
Yageo Holding (Bermuda) Ltd.
2.
2.
Commission income
Accounts and notes receivable from
related parties
33,308
3,214
T/T 30 days
T/T 30 days
-
12
Vitrohm Holding GmbH
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
3.
3.
2,178
66
T/T 90 days
T/T 90 days
-
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
1,130
477
T/T 90 days
T/T 90 days
-
Ferroxcube
3.
Accounts and notes receivable from
related parties
638,692
Sale of long-term investment
1
13
Ferroxcube H.K. Ltd.
(Continued)
- 67 -
Transaction Details
Year
No.
Related Party
Financial Statement Account
14
Ko-E Corp. (Cayman)
Ko-E (H.K.) Limited)
1.
Accounts and notes receivable from
related parties
15
Ko-E (H.K.) Limited
Yageo USA (H.K.) Limited
3.
Ko-E Corp. (Shenzhen
3.
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Ko-E (H.K.) Limited)
2.
Ko-E Corp. (Cayman)
2.
16
2010
Company Name
Nature of Relationship
(Note)
Ko-E Corp. (Shenzhen)
17
Yageo America
Yageo Corporation
2.
0
Yageo Corporation
Yageo Holding (Bermuda) Ltd.
1.
Yageo Holding (Bermuda) Ltd.
1.
Yageo Holding (Bermuda) Ltd.
Yageo Components (Su Zhou) Co., Ltd.
Yageo Components (Su Zhou) Co., Ltd.
1.
1.
1.
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
1.
1.
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
1.
1.
1.
1.
Ko-E Corp.
Yageo America
1.
1.
Yageo Corporation (South Asia)
Yageo Corporation (South Asia)
1.
1.
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
1.
1.
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
1.
1.
1.
Vitrohm Portuguesa
1.
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
Commission income
Accounts and notes receivable from
related parties
Loans receivable from related parties
and interest receivable
Interest revenue
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Rental revenue
Service income
Accounts and notes receivable from
related parties
Rental revenue
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Sales
Accounts and notes receivable from
related parties
Sales
Amount
$
Payment Terms
% to
Total Sales or
Assets
72,431
Prepaid
-
1,603
Prepaid
-
58,155
Prepaid
-
4,399
Prepaid
-
2,560
Prepaid
-
T/T 90 days
-
Prepaid
-
Financing
1
Financing
T/T 90 days
T/T 90 days
-
Offset account T/T 90 days
Offset account T/T 90 days
1
5
T/T 60 days
T/T 30 days
T/T 60 days
T/T 60 days
4
-
T/T 30 days
Offset account T/T 120 days
-
687,853
230,846
T/T 90 days
T/T 90 days
3
-
2,203,941
476,794
T/T 90 days
T/T 90 days
8
1
2,386,484
65,342
7,180
Offset account T/T 90 days
T/T 90 days
T/T 90 days
9
-
T/T 90 days
-
70,900
748
351,116
1,876
47,780
1,935
353,862
2,496,627
972,750
1,701
30,678
192,463
432
40,787
12,540
(Continued)
- 68 -
Transaction Details
Year
No.
Company Name
Related Party
Nature of Relationship
(Note)
Vitrohm Portuguesa
1.
Yageo Europe B.V.
Yageo Europe B.V.
1.
1.
Yageo Japan
1.
Financial Statement Account
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Amount
$
Payment Terms
% to
Total Sales or
Assets
2,971
T/T 90 days
-
674,200
58,408
T/T 45 days
T/T 45 days
2
-
91
T/T 90 days
-
1
Yageo Holding (Bermuda) Ltd.
Ferroxcube
Yageo Europe Holding B.V.
Ferroxcube Holding (Samoa) Ltd.
Yageo America
Yageo Hong Kong
Hsu Tai International (H.K.)
Yageo Japan
Vitrohm Holding
3.
3.
3.
3.
1.
1.
1.
1.
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Loans receivable from related parties
Receivable from affiliates and related
parties and interest receivable
1,769,871
7,360,721
99,831
284,130
1,712,023
308,514
13,239
122,470
Financing
Financing
Financing
Financing
Financing
Financing
Financing
Financing
4
15
1
3
1
-
2
Yageo Hong Kong
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (Dongguan) Co., Ltd.
1.
1.
Loans receivable from related parties
Loans receivable from related parties
1,604,075
145,825
Financing
Financing
3
-
3
Yageo Electronics (China) Co., Ltd.
Ko-E Corp. (Shenzhen)
Ko-E Corp. (Shenzhen)
3.
3.
6,905
177
T/T 65 days
T/T 65 days
-
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
3.
3.
496,432
108,603
T/T 65 days
T/T 65 days
2
-
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
3.
3.
16,732
42,330
T/T 90 days
T/T 90 days
-
Yageo Europe B.V.
Yageo Europe B.V.
3.
3.
319,062
48,717
T/T 90 days
T/T 90 days
1
-
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
797,515
1,445,025
T/T 90 days
T/T 90 days
3
3
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Trade (Su Zhou) Co., Ltd.
3.
3.
1,523,778
517,581
T/T 60 days
T/T 60 days
6
1
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
Ko-E (H.K.) Limited
3.
3.
3.
65,556
1,222,356
554,366
T/T 90 days
T/T 90 days
T/T 90 days
4
1
Yageo Electronics (China) Co., Ltd.
3.
130,013
T/T 90 days
-
4
Yageo USA (H.K.) Limited
Sales
Accounts and notes receivable from
related parties
Service income
Sales
Accounts and notes receivable from
related parties
Sales
(Continued)
- 69 -
Transaction Details
Year
No.
Company Name
Related Party
Nature of Relationship
(Note)
Financial Statement Account
5
Yageo Electronics (Dongguan) Co., Ltd.
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
6
Ferroxcube Holding (Samoa) Ltd.
Ferroxcube (Dongguan) Co., Ltd.
Ferroxcube H.K. Ltd.
Ferroxcube H.K. Ltd.
3.
3.
3.
Loans receivable from related parties
Sales
Accounts and notes receivable from
related parties
7
Ferroxcube Taiwan, Ltd.
Ferroxcube H.K. Ltd.
3.
8
Compostar Technology (Suzhou) Co., Ltd. Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
9
Compostar Technology (Cayman), Ltd.
10
11
Yageo Trade (Su Zhou) Co., Ltd.
Yageo Components (Su Zhou) Co., Ltd.
Amount
$
Payment Terms
% to
Total Sales or
Assets
340,750
642,511
T/T 90 days
T/T 90 days
1
1
125,406
847,838
157,230
Financing
T/T 60 days
T/T 60 days
3
-
Commission income
14,706
T/T 60 days
-
3.
3.
Sales
Accounts and notes receivable from
related parties
177
18,014
T/T 90 days
Prepaid
-
Compostar Technology (Suzhou) Co., Ltd.
3.
37,554
Prepaid
-
Yageo Bermuda
3.
Accounts and notes receivable from
related parties
Loans receivable from related parties
73,177
Financing
-
Yageo Electronics (China) Co., Ltd.
Yageo Electronics (China) Co., Ltd.
3.
3.
17,214
6,228
T/T 90 days
T/T 90 days
-
Ko-E Corp. (Shenzhen)
Ko-E Corp. (Shenzhen)
3.
3.
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
1,207,402
460,683
T/T 65 days
T/T 65 days
4
1
Yageo Europe B.V.
Yageo Europe B.V.
3.
3.
34,614
6,729
T/T 90 days
T/T 90 days
-
Yageo Corporation
Yageo Corporation
2.
2.
Sales
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
91,158
26,003
T/T 90 days
T/T 90 days
-
12
Yageo Korea
Yageo Corporation
Yageo Corporation
2.
2.
Commission income
Accounts and notes receivable from
related parties
34,479
1,598
T/T 30 days
T/T 30 days
-
13
Yageo Japan
Yageo Holding (Bermuda) Ltd.
Yageo Holding (Bermuda) Ltd.
2.
2.
Commission income
Accounts and notes receivable from
related parties
36,656
2,867
T/T 30 days
T/T 30 days
-
14
Vitrohm Holding GmbH
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
3.
3.
1,956
563
T/T 90 days
T/T 90 days
-
Yageo Corporation
2.
Sales
Accounts and notes receivable from
related parties
Sales
1,460
T/T 90 days
(Continued)
- 70 -
Transaction Details
Year
No.
Related Party
Financial Statement Account
Yageo Corporation
2.
Accounts and notes receivable from
related parties
Amount
$
127
Payment Terms
% to
Total Sales or
Assets
T/T 90 days
-
15
Ko-E Corp. (Cayman)
Ko-E (H.K.) Limited)
1.
Accounts and notes receivable from
related parties
45,630
Prepaid
-
16
Ko-E (H.K.) Limited
Yageo USA (H.K.) Limited
3.
1,542
Prepaid
-
Ko-E Corp. (Shenzhen)
Ko-E Corp. (Shenzhen)
1.
1.
2,275
1,005
T/T 90 days
T/T 90 days
-
Ko-E Corp. (Shenzhen)
1.
Accounts and notes receivable from
related parties
Sales
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
6,151
Prepaid
-
Ko-E (H.K.) Limited
2.
1,137
Prepaid
-
Ko-E Corp. (Cayman)
2.
Accounts and notes receivable from
related parties
Accounts and notes receivable from
related parties
2,354
Prepaid
-
Sold of long-term investment
1
T/T 90 days
T/T 90 days
T/T 90 days
-
17
Note 1
Company Name
Nature of Relationship
(Note)
Ko-E Corp. (Shenzhen)
18
Ferroxcube H.K. Ltd.
Ferroxcube
3.
Accounts and notes receivable from
related parties
614,564
19
Yageo America
Yageo Corporation
Yageo USA (H.K.) Limited
Yageo USA (H.K.) Limited
2.
3.
3.
Commission income
Commission income
Accounts and notes receivable from
related parties
47,945
14,285
13,165
The flow of related-party transactions is as follows:
1. From the parent company to its subsidiary.
2. From a subsidiary to its parent company.
3. Between subsidiaries.
Note 2: The foretasted intercompany transactions were fully offset at the time the consolidated financial statements were prepared.
(Concluded)
- 71 -
TABLE 10
YAGEO CORPORATION AND SUBSIDIARIES
THE GROUP’S ORGANIZATION CHART
DECEMBER 31, 2011
Yageo Corporation
100%
100%
Yageo America
Corporation
100%
100%
100%
Yageo Japan
Yageo
Corporation
(South Asia)
PTE. LTD
Yageo
Holding
(Bermuda)
Kuo Shin
Investment
Limited
Yageo USA
(H.K.) Limited
100%
100%
Yageo Korea
Yageo Hong
Kong
77%
100%
100%
Vitrohm Holding
GmbH
Ko-E Corp.
(Cayman)
100%
Hsu Tai
International
(H.K.)
100%
Vitrohm
Portuguesa
100%
Compostar
Technology
(Suzhou)
100%
Compostar
Technology
(Dongguan)
100%
Yageo Trade
(Su Zhou)
Co., Ltd.
100%
Yageo
Electronics
(Dongguan)
Co., Ltd.
100%
Yageo
Electronics
(China) Co.,
Ltd.
100%
Yageo
Components
(Su Zhou)
Co., Ltd.
100%
Ko-E Corp.
100%
Ko-E (H.K.)
Limited
100%
Ko-E Corp.
(Shenzhen)
- 72 -
100%
Rextron
International
100%
Ferroxcube
Taiwan, Ltd.
100%
100%
Ferroxcube
Holding
(Samoa), Ltd.
100%
Yageo
Europe
Ferroxcube
H.K. Ltd.
Ferroxcube
100%
100%
Ferroxcube
(Dongguan)
Co., Ltd.