NO: 2313
2012 ANNUAL REPORT
COMPEQ MANUFACTURING CO., LTD.
Publication:
Website:
2013. 4.30
http://newmops.twse.com.tw
http://www.compeq.com.tw
■ Spokesperson
Andrew Chen
Senior Vice President
(886-3) 323-1111
andrewchen@compeq.com.tw
■ Co-Spokesperson
Andrew Lin
Manager
(886-3) 323-1111
andrewlin@compeq.com.tw
■ Company Contact Information
※Headquarter & Luchu Plant (CM site)
91, Lane 814, Ta-Hsin Rd., Hsin-Chuang Village, Lu-Chu Hsiang, Taoyuan, Taiwan,
R.O.C.
(886-3) 323-1111
※Tayuan Plant (CT site)
275, Chung-Shan N. Rd., Ta-Yuan Industrial Park, Ta-Yuan Hsiang, Taoyuan,
Taiwan, R.O.C.
(886-3) 386-3000
※COMPEQ International Corporation (CI site or USA site)
620 North John Glenn Road, Salt Lake City, Utah 84116 U.S.A
(1-801) 990-2000
※COMPEQ Manufacturing (Huizhou) Co., Ltd. (CC site)
168, Huguang Rd., Huzhen Town, Boluo County, Huizhou, Guangdong, China
(86-752) 630-1111
※COMPEQ Manufacturing (Suzhou) Co., Ltd. (SMT Site)
Block 20th, Suchun Industrial, Square, Xing Long Street No.428, Suzhou Industrial
Park, China
(86-512) 628-6001
※COMPEQ Technology (Huizhou) Co., Ltd. (FPC site)
168, Huguang Rd., Huzhen Town, Boluo County, Huizhou, Guangdong, China
(86-752) 630-1111
■ Security Dealing Institute
Taiwan Securities Co., Ltd.
7F, 96 Jian-Guo N. Rd., Sec. 1, Taipei, Taiwan, R.O.C.
(886-2) 2504-8125 (ext. 6301~6306)
http://www.tsc.com.tw
■ CPA Auditors
Hung-Shun Ting & Kuo-Fu Tseng
Clock & Co., CPAs.
14F, No.111, Sec. 2, Nan-Gin E. Rd., Taipei, Taiwan R.O.C.
(886-2) 2516-5255
http://www.clockcpa.com.tw
■ For more Information
To learn more about Compeq, visit our site on the World Wide Web
http://www.compeq.com.tw
I.
Letter to Our Shareholders
1
II.
Company Overview
4
III. Operation Highlights
12
IV. Financial Statements
20
V.
66
Special Catalog
I. Letter to Our Shareholders
Dear Shareholders:
During 2012, the global economic growth was slowing down. Compared to 2011, the
PCB industry showed slight retreat, and the competition remain intense. With competitive
business strategy, our management team delivered effective results. For 2012, our
combined revenue was NT$ 26.8 billion and profit before tax was NT$ 13.6 billion; achieved
a 12% annual growth. Foreseeing 2013 global economic still soft, this Company will
continue to enhance our competitiveness, and expect the revenue and profit on PCB and
SMT to grow furthermore.
Last year, we carried on fulfilling our social responsibility, esteem human right and
focus on reduction of waste and energy consumption, not only to meet government
regulation but also to meet customers and shareholders’ expectation. This year, we will
continue to respect workers’ human right, minimize carbon emission and increase recycle
to enthusiastically protect our living environment.
1. 2012 OPERATING REPORT
(1) Operating Report
A. Consolidate Statements of Income
Our 2012 profit before tax was NT$ 1.36 billion; about 90 million less than that of
in 2011. However, there was an one-time NT$ 310 million side business
investment profit buried in the 2011 revenue. Discount that income, the 2011
profit before tax was NT$ 1.13 billion, therefore, our 2012 core business profit
before tax was NT$ 230 million more than that of in 2011 (see in Table 1).
Table 1. Profit before tax exclude side business investment income
Description (Thousands of NTD)
2012
2011
Difference
Profit before tax exclude investment
1,361,425
1,130,517
230,908
income
2012 income tax expense was NT$ 490 million, including China’s tax expense
NT$ 0.27 billion, and Taiwan's tax expense NT$ 220 million. But according to
the Taiwan’s tax regulation, Taiwan's tax expense was deductible; therefore,
Taiwan’s tax expense was not accounted as cash out. Adding 0.87 billion NT$
net profit, the total capital contribution for 2012 was 1.09 billion NT$ (see in Table
2).
Table 2. 2012 Consolidate profit and loss summary
Variation Rate
Description (Thousands of NTD)
2012
2011
/ Difference
Operating Revenues
26,795,371
23,869,485
12%
Gross Margin
3,437,377
2,970,909
466,468
Consolidated Net Income Before Tax
1,361,425
1,447,216
-85,791
867,754
971,690
-103,936
Consolidated Net Income
1
B. The Implementation Statements of Budget
Our major products are PCB and SMT assembly service. We have PCB
manufacturing sites on Taiwan (Luchu、Tayuan) and China (Huizhou, including
FPC). Total PCB capacity was 31.2 million square feet annually, the expecting
sales was 26.7 million square feet, actual sales was 22.9 million square feet. The
SMT manufacturing sites locate on China (Suzhou and Huizhou).
C. Analysis of Consolidate Benefit Ability
Description
2012
2011
Rate of return on asset (%)
3.02
3.35
Rate of return on stock equity (%)
5.60
6.52
14.94
11.52
11.42
12.14
Net income to sales (%)
3.24
4.07
Earnings per share (NTD)
0.73
0.82
Ability to Operating income to capital (%)
Benefit Income before tax to capital (%)
Our 2012 earnings per share was NT$ 0.73, which was NT$ 0.14 more than that
in 2011 (exclude the investment income), showed a better performance.
Description
2012
2011
Difference
Profit before tax exclude
investment income (Thousands of
1,361,425
1,130,517
230,908
NTD)
Profit after tax exclude investment
867,754
708,830
158,924
income (Thousands of NTD)
Earnings per share exclude
0.73
0.59
0.14
investment income(NTD)
D. Technology Development
We are focusing on core business products developments on Anylayer PCB、high
layer counts、Rigid-Flex PCB for smart phone、tablet PC、and high end servers
and data storage, etc.. We will continue to devote on new process development
technologies, such as ultra thin dielectric、fine lines、build up & sequential
lamination、precision registration、microvias filling plating、low loss material、
copper coin…etc.
For SMT technology, we will continue on development of portable power
management, camera modules and automotives accessories.
2. THE OPERATING PLAN IN 2013
(1) Management Guidelines
A. Continuous improvement for refining competitive operating system.
B. Guided by manufacturing orientated operation, we are aiming for extreme
competitiveness, to become the most competitive supplier on selective market
and products.
2
C. By enhancing process set up, plant management, improving the stability of
process, and product management to provide the highest quality products to our
customers
D. To expand customer base and avoid any factory being dominated by a single
customer. Establish robust operation for ultimate quality and value engineering
for competitive yield.
E. Continue to sincerely realize our social responsibility and commitment to
government, customers, society, and employee. Keep on protecting
environmental, respect human rights, and improve our employee’s quality of life.
To become a perpetual forever green enterprise.
(2) Sale Volume Projection
Our major products are print circuit boards. Among all of the production sites, the
anticipated sale’s volume is 28 million square feet in 2013. On SMT operation, we
expect to output 150 Million units.
(3) Important Production and Marketing Policy
To participate the substantial growth on the communication market, we will focus on
the PCB demands on personal consumer products, and infrastructure products for
network communications. Taiwan site will focus on high-end products, China site
focus on mid-range and elevate to high ends. The SMT factories in the Suzhou and
Huizhou, will follow the plan and policy to expand customer base in the future.
Chairman
Charles C. Wu
President
P. K. Chiang
3
II. Company Overview
1. INTRODUCTION
Established at Taoyuan Lu-Chu village in August 1973, Compeq Manufacturing Co.,
Ltd. was the first specialized printed-circuit board (PCB) manufacturing company in Taiwan
to support the government’s policy in developing the high-tech industry. Beginning with
producing single-sided and doubled-sided printed circuit boards, and progressing by
persistent dedication to technology research and development, Compeq then started mass
production of 6-layer printed circuit boards for computers in 1983, leading Taiwan PCB
industry into the new stage for multi-layer board production.
Since the foundation, Compeq has been focusing on PCB industry as our core
business. Under the trend of globalization, Compeq later established the Utah plant,
Compeq International Corp., in the United States in 1989 to approach the center of the
world’s primary electronics consumer market, bridging Compeq to the world’s latest product
trend and enabling Compeq to provide direct local services to North American customers.
Subsequently, Mainland China sharply raised her economy strength and became the hot
spot for global manufacturer’s production logistics, the China Huizhou site was established
in 1996, after the government began to allow investment in China, in order to strengthen
Compeq’s overall global coverage, satisfy customers’ demand and access the advantages
of manufacturing cost savings and potential local markets. To meet the production
condition requirement for advanced high precision products, Compeq set up an advanced
plant with class 1000 clean room in the Tayuan industrial park, Taiwan in 1998 as the
development and production base. Furthermore, Compeq set up Compeq Technology
(Huizhou) Co. Ltd., and Compeq Manufacturing (Suzhou) Co. Ltd., in 2004, supplying flex
PCB and small quantity part assembly services to provide total solution for our clients.
Moreover, to successfully capture the market opportunities and fulfill consumers’
needs under the rapid diversification of electronics products and advancement of
technologies, Compeq accordingly adjusted the product matrix and operation strategies.
Currently, the appliances for Compeq’s PCB include computer (notebook, server and
peripheral, etc), telecommunication (cellular phone, base station, etc), network (switch,
router, storage device, etc) and consumer electronics (PDA, LCD, Game Console, DSC,
etc) products. In the meantime, Compeq integrates cross-national production facilities,
service offices, and enterprise supporting resource to strengthen flexibility and
competitiveness for providing customer an integral service from product development to
after service.
4
Compeq’s competitiveness strength has been the leading-edge technology capability
and endeavor to develop new products and advanced technologies: the company
decreased the trace width/spacing to 25 μm, copper fill and stack via to developed high
accurate and complex HDI boards (4+N+4, 2+N+N+2, HDI+IVH, and HDI+HLC, etc.), flex
PCB and rigid-flex PCB technologies to meet the trend of thin and compact electronic
products; secondly, derived high-layer count products (currently up to 26 layers), high
aspect ratio plating technology and low Dk/Low Df and high Tg applications to meet the
high reliability requirement for high-end networking equipment and servers.
Having been a pioneer for environmental protection in PCB industry, Compeq took the
initiative to invest in building a professional PCB wastewater treatment plant in 1991 and
received ISO-14001 certification in 1997. Compeq also successfully developed lead-free
and halogen-free applications for PCB products to meet the global standard of
environmental protection and our clients’ green partner. In the future, Compeq will keep our
promises as a global citizen and continue sharing the responsibilities in environmental
protection.
Insisting on the principle of “Highest Quality” and “Customer First”, Compeq continues
devoting itself to process improvement and technology development. We have received the
ISO-9002, QS-9000, ISO-9001, and TS 16949 certifications, and our complete quality
control system is recognized to assure our products are meeting customer standards and
needs. To enhance our customer services, Compeq also established cross-national service
offices in Europe, Japan, Singapore, Malaysia, the United States and Mainland China to
offer on-site services to our customers. With better understanding of customers’ various
needs in product design, manufacturing and quality, Compeq is able to stay ahead in
developing new products and becoming good partners with our customers.
Recognizing to provide a safe working environment is the company’s moral and the
foundation of stable operation. Compeq has received OHSAS 18001 certification in 2005,
and we endeavor to enforce the safety design and working discipline at shop floor to ensure
the employee safety and avoid damage to the company.
When facing the rigorous and intense global competition, not only will we continue to
enhance the partnerships with our valued customers to develop cutting-edge products and
capture market opportunities, but also, through planned actions and optimized
management synergy, play a key role in overall industry upgrades and realize the vision to
learn and grow with all electronic manufacturers around the world.
5
2. COMPEQ MILESTONES
1973
1974
1982
1983
1987
1989
1990
1991
1993
1995
1996
1997
1998
1999
Founded on Aug. 30, Compeq Manufacturing Co., Ltd. was the first mass
production PCB (Printed Circuit Board) manufacturer in Taiwan.
Completed construction of Luchu plant. Started fabricating single-side and
double-side PCBs.
Received UL-94V-0 certification.
Became the first IBM certified PCB suppliers in Taiwan. Actively developed
precise process technologies and expanded facilities for producing
multi-layer PCBs.
Expanded facilities; began the mass production of 6 layer PCBs for
desktop PC.
Started a joint venture with Matsushita Electric Works to establish TNPL
(which had renamed as PEWEMT in 2005), a copper clad laminate factory
(in Hsinchu) to secure stable source of quality materials.
Established Compeq International Corp. (Utah, USA) as the forefront to
approach American market.
Initial public offering of Compeq stocks in Taiwan Stock Exchange on 24th,
July.
Constructed the first PCB wastewater treatment plant in Taiwan.
Began to produce 8-layer PCBs used by notebook PC at Luchu plant.
Invested NT$1.9 million in Wei-Hua Recycled PCB Co., Ltd.
Received ISO-9002 certification.
Established Huaton Holdings Limited (in British Virgin Islands) to invest in
Mainland China indirectly.
Established Compeq Manufacturing (Huizhou) Co., Ltd. (in Guangdong,
China) to expand global production allocation.
Established Pelican Cove Investment Ltd., (in British Virgin Islands) to
engage in international trade affairs and investments.
Established GMEM (in Guangdong, China), another joint venture with
Matsushita for supplying quality CCL to Compeq China.
Pioneered in applying laser drilling in producing HDI PCB, major
application was micro-via technology used in high-end telecommunication,
networking and cellar phone products.
Received ISO-14001 certification.
Established Tayuan plant as a dedicated manufacturing facility for
advanced PCBs.
Annual sales revenues exceeded NT$10 billion.
Entered the telecom market by implementing HDI technology on cellular
phone and base station products.
Received QS-9000 certification.
6
2002
2003
2004
2005
2006
2007
2008
2009
2011
Annual shipment of cellular phone boards exceeded 61 million pieces,
stood for 15% world’s overall output of cellular phone board.
Received ISO-9001 certification.
Established Compeq Manufacturing (Suzhou) Co., Ltd., which was
capitalized by Huaton Holdings Limited (spun out from Compeq) to provide
small quantity assembly services for customers’ new product
development.
Established Compeq Technology (Huizhou) Co., Ltd., supplying flex-PCBs
for existing customers.
Received OHSAS 18001 certification.
Monthly shipment of cellular phone boards reached 20 million pieces.
Completed rigid-flex PCB development and began to mass production.
Established Liton Holdings Ltd. (in British Virgin Islands) to engage in
investment logistics.
Established Huanein Holdings Ltd. to overall arrange investment business.
Established Vecreation Co., Ltd. (in Jiangsu, China) to engage in China
trade affairs.
Established Compeq Manufacturing (Suzhou) Service Ltd. to purchase
components for customers in east China.
Established Compeq Overseas Holdings Ltd. (in British Virgin Islands) and
Max Innovation Holdings Ltd. (in British Virgin Islands) to integral overseas
investment operation.
Received TS 16949 certification.
Established Hong Kong Compeq Huizhou Trading Company Ltd. (in Hong
Kong) to engage in China trade affairs.
Received IECQ QC080000 certification.
Received OHSAS 18001:2007 certification.
Received TOSHMS certification.
Received SA8000 certification.
Received GRI report certification.
(Note: Up to the annual report published date, none of the major stockholder with more
than 10% shareholding, members of the board, and controllers had large quantity stock
transfer. Neither the ownership nor the business model and content had major change.)
7
3. ORGANIZATION
(1) Organization Chart
Shareholders
Board of Directors
General Counsel
Executive Officer
Internal Auditing Office
Chairman of the Board
President
Human Resource & Organization
Development Division
Product Strategy
Development Department
Material Division
Product Development
Division
I
Division
Division
Engineering Department
Sales
Sales
Finance Division
Vice President
M.I.S. Department
Vice President
R&D Department
Quality Management Division
Dayuan Plant
Tayuan Plant
Compeq Manufacturing(Huizhou)
Co., Ltd.
Compeq Manufacturing(Suzhou)
Co., Ltd.
Compeq Manufacturing(Huizhou)
Co., Ltd.
Compeq International Corp.(Utah,
U.S.A.)
Vice President
I
I
I
Operating Officer
(2) Directors and Supervisors
Title
Name
Date
Share Held when Current Shares
Elected
Holding
Term
Spouse and
Minor Current
Shares holding
Elected
(Year)
2011.6.10
3
37,578,243 3.15
36,678,243 3.08
30,330,149 2.54
Vice
Chairman of T.L. Liu
the Board
2011.6.10
3
1,526,565 0.13
1,526,565 0.13
53,723 0.00
Director
K.S. Peng
2011.6.10
3
8,995,186 0.75
8,615,186 0.72
2,115,113 0.18
Director
P.Y. Wu
2011.6.10
3
41,058,499 3.45
40,518,499 3.40
7,302,800 0.61
2011.6.10
3
634,668 0.05
634,668 0.05
16,000 0.00
Chairman of
the Board
Director
Charles Wu
Andrew
Chen
Shares
%
Shares
%
Shares
%
Supervisor
S.D. Hung
2011.6.10
3
1,815,027 0.15
1,815,027 0.15
197,696 0.02
Supervisor
S.M. Yang,
on behalf of
Chang-Zhi
Investment
Co., Ltd.
2011.6.10
3
13,663,000 1.15
14,273,000 1.20
0 0.00
8
Title
Name
Experience
Concurrent Position
The Spouse or the two degree
relative who are directors, general
counsel, or managerial personnel
Title
Chairman of
Charles Wu
the Board
Vice
Chairman of T.L. Liu
the Board
Director
K.S. Peng
Director
P.Y. Wu
Director
Andrew
Chen
Supervisor
S.D. Hung
Supervisor
S.M. Yang,
on behalf of
Chang-Zhi
Investment
Co., Ltd.
Chairman of Time
Enterprises Co., Ltd.
Director of Robina
Finance & Leasing
Co., Ltd.
CEO of COMPEQ
Manufacturing Co., Ltd.
Chairman of Chang-Zhi
Investment Co., Ltd.
President of
COMPEQ
Manufacturing
Co., Ltd.
Vice CEO of COMPEQ
Manufacturing Co., Ltd.
Chairman of Huaton
Holdings Limited
Chairman of Compeq
Manufacturing (Huizhou)
Co., Ltd.
Director of Compeq
Technology (Huizhou)
Co., Ltd.
Chairman of Compeq
Manufacturing
(Chongging) Co., Ltd.
Director
-
Director of Ming Yu
None
Enterprises Co., Ltd.
Senior Vice President of
Compeq Manufacturing
Co., Ltd.
Director of Compeq
General Manager
Manufacturing (Huizhou)
of Rigid-Flex
Co., Ltd.
Product Group,
Chairman of Compeq
Chairman
COMPEQ
Technology (Huizhou)
Manufacturing
Co., Ltd.
Co., Ltd.
Chairman of Compeq
Manufacturing
(Suzhou) Co., Ltd.
Director of Chang-Zhi
Investment Co., Ltd.
Senior Vice President of
Compeq Manufacturing
Co., Ltd.
Chairman of COMPEQ
International Corp.
Director of Compeq
Manager of Du Pont
Manufacturing (Huizhou)
Taiwan Ltd.
Co., Ltd.
Director of Compeq
Manufacturing (Suzhou)
Co., Ltd.
Director of Compeq
Manufacturing
(Chongging) Co., Ltd.
Chairman of Haliteq
Chairman of Haliteq
International Co.,
International Co. Ltd.
Ltd.
Vice President of
Finance Division,
Supervisor of Abnova
Compeq
Corporation
Manufacturing Co.,
Ltd.
9
Name Relationship
P.Y. Wu Filiation
-
-
-
-
Charles
Filiation
Wu
-
-
-
-
-
-
(3) Major managerial personnel
Name
Current Shares Holding
Date
Current Position
Effective
Shares
%
Charles Wu
CEO
2012.10
36,678,243
3.08
T.L. Liu
Vice CEO
2012.10
1,526,565
0.13
P.K. Chiang
President
2012.10
503,450
0.04
Andrew
Chen
Senior Vice President, Global Sales & Marketing
2005.7
634,668
0.05
Robert Wang Senior Vice President, Manufacturing
2005.7
845,000
0.07
P.Y. Wu
Senior Vice President, Product General Manager
2012.10
40,518,499
3.40
R.H. Chung
Vice President, Resource & Organization
Development Division
2009.10
267,761
0.02
Y.C. Huang
Vice President, Finance Division
2009.10
50,343
0.00
Victor Lu
General Manager, Taiwan Sites
2009.9
18,729
0.00
4. Capital Stock
(1) Capital and Shares
Type
Outstanding Shares
Common Stock
1,191,820,589
(2) Shareholder composition
(As of 2013.04.15)
Authorized Shares
Notation
1,600,000,000
(As of 2013.04.15)
Item
Type Government
Agencies
Financial
Institutions
Other Juridical
Persons
Domestic
Nature
Persons
Foreigner
Institutions
and Nature
Persons
154
Head count
1
16
63
60,199
Shares
907
2,083,360
43,046,879
984,744,987
Share Ratio
0.00%
0.17%
3.61%
82.63%
Sum
60,433
161,944,456 1,191,820,589
13.59%
100%
(3) Major Shareholders
(As of 2013.04.15)
Shareholders
Shares owned
Ownership (%)
P.H. Wu
44,060,857
3.70%
P.Y. Wu
40,518,499
3.40%
Charles Wu
36,678,243
3.08%
Y.C. Wu
35,361,106
2.97%
F.M. Peng
30,330,149
2.54%
M.D. Chang
29,829,434
2.50%
27,537,000
2.31%
M.W. Chang
22,221,902
1.86%
Labor Pension Fund
21,368,000
1.79%
Dimensional Emerging Markets Value Fund
19,820,000
1.66%
JPMorgan Chase Bank N.A. Taipei Branch in custody for
Emerging Markets Growth Fund, Inc.
10
5. SHARE DURING THE LAST TWO YEARS
Unit: NT $
Year
2011
2012
Highest
21.00
15.70
Market Price per Share Lowest
8.04
9.05
Average
14.29
12.29
Before Distribution
13.07
12.93
After Distribution
12.57
N.A.
1,191,820,589
1,191,820,589
Item
Net Worth Per Share
Weighted Average (Shares)
Earnings Per Share
Dividends Per Share
Earnings Per Share
0.82
0.73
Cash Dividends
0.50
0.50
Stock
From Retained Earnings
--
--
Dividend
From Capital Surplus
--
--
--
--
Price/Earnings Ratio
17.43
16.84
Price/Cash Dividends Ratio
28.58
24.58
3.50
4.07
Accumulated Non-Payment Dividends
Return on Investment
Cash Dividend Yield Ratio(%)
11
III. Operation Highlights
1. BUSINESS ACTIVITIES
(1) Business Scope
Compeq has been devoted in the production of PCBs (Printed Circuit Boards) related
industrial field. Being a key component of various electronic products, PCBs act as a
carrier for electronic components and the interconnection between components.
Compeq’s major products include regular multi-layered PCB, H.D.I. (High Density
Interconnection), H.L.C. (High Layer Count), F.P.C. (Flexible PCB) and Rigid-Flex
PCB; in the meantime, Compeq also provides the service of module assembly to
customer.
(2) Industry Overview
In 2012, the global economy was worse than expected. In America and Europe,
Governments face to three plights, huge debt, banks were poorly run and economic
was growing weakness. The economics of advanced countries were to week to
decreased unemployment rate, and the slight expansion was from the fiscal and
monetary policy of central bank. Emerging countries such as China, India and Brazil
were still leading the economic expansion. However, the weekly growth and
uncertainty in global advanced economies impacted emerging markets and
developing countries through trade and financial channels. Overall, the global
economic growth rate was 3.5% in 2012. The global PCB output value reached 54.41
billion USD, the annual reduction rate of 1.8%.
Looking to 2013, the euro zone economic is still at risk of recession, but the situation
is tending towards stability. Because of strong domestic demand and monetary policy,
the emerging economies are expected to turn for the better. However, the growth of
economy may be limited by the European debt crisis and the potential pressure of
high oil price. In order to renew economic global central banks adopt loose monetary
policy, but may lead to debt monetization and devaluation contests.
Smart devices and LTE next-generation mobile communications market still has
significant growth will be able to bring about high added value for PCB demands.
Enterprise of electronic terminal products will also announce new smart devices in
2013. Global PCB market growth rate will increase to 2.9%, which is about $ 55.96
billion.
In 2012, China is the largest PCB production country. China's economic growth rate
of 7.8%, PCB output value reached 21.66 billion USD, compared with the output
value in 2011 Declined 1.75%. China PCB industry growth forecast in 2013 will grow
by 4.5%, the output value reached 22.63 billion USD. Taiwan PCB production value
growth is 2.23% in 2012, approximately $ 17.8 billion.
12
According to estimation, global economic gentle, the economic growth rate will reach
3.5%, but the electronic terminal products with growth potential will be Taiwan's PCB
industry strengths, Taiwan's PCB production value will grow by 5.7%.
(3) Research & Development
A. R&D Expenditure for the Past Five Years
Year
Expenditure
(NT$ 1,000)
2008
2009
2010
2011
2012
140,687
144,968
237,071
271,501
272,873
B. R&D Items and Achievements
a. Products
Complete anylayer fine line and high registration product development and
mass production.
Complete PCB for micro-wave application development.
High end Lead free/Mid loss materials qualification and HVM readiness.
Embedded copper coin technology development
Button plate process development for high end high density system products.
Partial Hybrid lamination process flow study and production development.
Complete 3+2F+3 BMU Rigid Flex product model development & HVM
Complete 5+2F+5 with ACF Rigid Rlex product model development.
b. Production Processes
30um fine line tent & etching technology development.
Photoimagine polymer wave guide process development
Aerosol jet conductive circuit development
Aerosol jet solder mask development.
Edge Plating routing process development and mass production.
New ENEPIG process development and mass production
Special cavity technology development for system product.
Backdrill D+6 Process Technology implementation.
Develop A/R 15 copper plating process flow
Sequential Lamination process development.
Complete UV half-cutting de-cap process module development & HVM.
Complete three-dimensional SUS stiffener pre-lam. & lamination process
module set up to HVM.
Complete alignment D+5 process module set up to HVM
Complete Soft Ni-ENIG process module set up.
c. Equipments
New generation Laser Direct imagine machine for patterning
Vacuum etching equipment evaluation
High end registration drilling machine application.
Complete New Laser Direct imagine machine set up.
13
Complete AVI machine set up
d. Materials
Laser direct imagine (LDI) dry film evaluation
High Frequency material evaluation and production.
Ceramics base material evaluation and production.
Low Dk Material Evaluation and production.
Copper Foil for 40 micron line and spacing study.
Complete New type PI protect film evaluation and set up to HVM.
C. Future R&D Projects
a. Products
New Product Development with Low Dk material
Cavity product development
Anylayer 14L product development
Partial Hybrid lamination process flow development
Low loss material qualification & HVM readiness
Press Fit type copper coin technical development
Back PNL Product evaluation & development
5+2F+5 with ACF & Edge Plating Rigid Flex product model development &
HVM
3+6F+3 with ACF & Edge Plating Rigid Flex product model development &
HVM
2+2F+2 Anylayer Rigid Flex product model development.
b. Production Processes
Fine line 30~25um tent & etching technology development
60um via fill plating process development.
30/30um fine line process development other than T&E.
High efficiency Loss measurement process development.
Low etching amount copper surface pretreatment technology development
and mass production.
New Eless Pd metal finish technology development..
Mass production for precision pattern control product.
PP with 1027/1015 glass cloth lamination process development.
Alignment D+3/D+4 process module set up.
Thick Pd-ENEPIG process module set up.
c. Equipments
3rd generation high speed and high resolution LDI for pattern
Hybrid etching
Press Fit type maching development and HVM readiness.
Solder Resist DI exposure machine evaluation.
EzAutocoupon design software evaluation.
14
Mesh Cu impedance simulation software evaluation.
d. Materials
Anisotropic etching solution
Low Exposure energy solder mask.
Thin dielectric material (1027,1017,PI) development.
Megtron 6 grade Low Loss materials development.
Evaluation of Thermal management material.
Complete Photo-sensetive Coverlay Ink (PI base) evaluation
Low Dk FPC material evaluation.
New Black Coverlay evaluation.
(4) Long/Short Term Business Development Plans
In the short term, Compeq will still take the strategy of full product lines to provide our
customer the regular multi-layer PCB, H.D.I. boards, H.L.C. boards, F.P.C. boards,
Rigid-Flex boards, and SMT service. Compeq will devote to new PCBs technology
development continuously.
For the long run, with growth still mainly from consumer electronic products (smart
phone, laptop, Tablet, game console, portable device, etc.), etc.), and Network
communications products, (base station, server, etc.), Compeq shall concentrate on
developing related PCBs. We will continuously dedicate our resources on R&D,
production and customer service to provide the best quality PCB products and
services to our customers. Scheduling the timing to put in resource to develop and
provide related products and services.
2. MARKETS AND SUPPLY OVERVIEW
(1) Market Analysis
A. Cellular phone：
In 2012, smart phone sustained high growth, and global sales shipments reached
710 million, and the share of global mobile phone shipments is 41% , the
year-to-year growth rate is 45%, compared with the growth rate of the overall
mobile phone is 1.2%. China is the largest growth market, smart phone annual
growth rate of 158% in 2012.
Looking ahead to 2013, worldwide mobile phone sales shipments will grow by 4.3%,
to 1.81 billion, the main impetus for economic growth from smart phone, it will reach
910 million in emerging market demand parity driven under growth rate is forecast
to reach 44 %, beyond 50% of the overall mobile phone shipments.
B. Laptop：
In 2012, the notebook computer industry continued to be affected by the global
economic weakly growth, as well as tablet PCs sales shipments increased
substantially in emerging, U.S. and European markets sales, the annual growth
rate is nearly 0%, sales shipments approximately 192 million units. The global NB
15
shipments of approximately 312 million units (include tablet PCs shipments), the
growth rate will reach 20.46%.
In Products, tablet PCs and Ultrabook are the star products in PC. Global tablet
PCs sales shipments about 122 million units, the growth rate reached 90% in 2012.
Predicting the 2013, the number of brand manufacturers will release low price
7-inch tablet PCs. We estimate shipments will reach 180 million units, a 48%
growth.
Ultrabook is limited by the high cost components (such as the metal chassis, thin
panel, solid-state drives), the price could not been accepted by most consumers.
Ultrabook shipments only reach 11 million units in 2012. In 2013, Ultrabook
expected sales shipments may exceed 30 million units that benefited from key
components costs decline.
C. Base Station：
In 2012, the number of mobile Internet users continues to rise. Global
telecommunications operators must to enhance active infrastructure for 4G LTE
and WiFi base stations for solving the problem of 3G Network congestion.
In 2013, enter the global 4G communications era. According to study, the global
LTE 4G infrastructure spending in 2012 is $ 8.7 billion, and it probably to reach $
36.1 billion in 2015.
D. Server：
In 2012, Global IT spending growth was 3.6 trillion USD, compared with the output
value in 2011 increase 1.7%.
Predicting the 2013, the global economic boom is beginning to grow slowly. The
uncertainties of the euro zone crisis, the U.S. financial cliff, and the economic
situation of the China is expected to be eliminated.
The expectation of global IT spending will reach $ 3.7 trillion, annual growth rate will
reach 4.2%in 2013. Because of cloud computing industry demand and the huge
amount of data, the estimated annual growth rate will be 5%.
(2) Applications and Production Flow of Major Products
A. Application of main products
The main applications of PCBs manufactured by Compeq can be categorized into
four major segments:
a. Cellular phone related PCBs
Major application is such as cellular phone.
b. Telecommunication Network related PCBs
Major applications are telecommunication and networking related equipment
such as base-station, router, hub, switch, etc.
c. PC related PCBs
Major applications are server, workstation, notebook PC, Tablet and PC
peripheral products.
16
d. Consumer electronics related PCBs
Major applications are consumer products such as LCD TV, Audio, DSC, DVC,
and other portable multimedia devices.
B. Manufacturing process of the major products
The major products of Compeq are printed circuit boards (PCB). The basic
production process for rigid PCBs is shown as below.
Issue
Innerlayer
Pattern
Plating
Outerlayer
dry film
Black Oxide
Panel
Plating
Plating
Through Hole
Legend
Print
Conformal
Mask
Mechanical Drill
Desmear
Laser Drill
Routing
Immersion Siliver
Immersion Gold
Routing
Selective
Immersion Gold
Organic Surface
Preservative
Immersion Tin
Routing
Inspection/Bake/
Package
Solder
Mask
Etching
Lamination
(3) Major Supplies and Material Market Situation
A. The key material of PCB are Laminate / Prepreg/Copper foil/Dry Film and various
plating chemistry. The supply source of Compeq are famous companies in each
field and has set up a long term relationship and stable supply channel.
B. The price of PCB key material fluctuated in 2012 due to metal price fluctuation and
the unbalance of demand and supply. It's expected the key material price will be
still unstable in 2013.
(4) The Production of the Last Two Years
Volume unit：1,000 square foot；value unit：NT$ 1,000
2012
Major Products
Capacity
PCB
Production
volume
10,800
2011
Output
value
Capacity
7,213 10,157,906
Production
volume
12,000
Output
value
6,796 10,756,322
(5) The Sales of the Last Two Years
Volume unit：1,000 square foot；value unit ：NT$ 1,000
2012
Domestic
Sales
Volume
PCB
Others
Total
Sales
Amount
158
225,455
43
33,873
201
259,328
2011
Export
Sales
Volume
Sales
Amount
19,181 18,729,496
－
108,955
19,181 18,838,451
17
Domestic
Sales
Volume
Sales
Amount
181 359,894
61
95,040
242 454,934
Export
Sales
Volume
Sales
Amount
17,403 18,307,579
－
68,600
17,403 18,376,179
3. BREAKDOWN EMPLOYEE DATA FOR THE PAST TWO YEARS
Year
2012
2011
Direct labor
3,879
3,907
678
687
4,557
4,594
Average Age
36.7
35
Average Years of Service
9.3
8.3
Ph. D.
3(0.1%)
3(0.1%)
Master
156(3.4%)
156(3.4%)
861(18.9%)
840(18.3%)
Senior High School
2,065(45.3%)
2,129(46.3%)
Junior High School
1,472(32.3%)
1,466(31.9%)
Employees
Indirect labor
Total
Educational
Background
Associate / Baccalaureate
4. EMPLOYEES RELATIONS
(1) Compeq values employee benefits and employee education and always follows the
related labor laws to protect employees’ rights and interests.
A. Employee Benefits: Compeq exercises stock bonus sharing and stock option plans
for employees. We also provide free meals, accommodations, shuttle bus, night
taxi delivery services, and subsidies for holidays or special events.
B. Employee Education and Training: Headquarter and each site have departments
specialized in employee training. Compeq arranges and organizes different
training programs for different types of job, and encourages employees to
participate advanced study programs.
C. Retirement: Compeq provides employee retirement pension plans that comply with
labor laws and regulations and periodically allocate reserved funds to employees’
retirement accounts.
(2) Thanks to the sound organization of the labor union and the smooth internal
communication channels, Compeq has never had any major labor disputes.
A. Labor Union: The labor union, organized by all Compeq employees, has its own
governors/supervisors and managing governors/supervisors to serve a term of
three years, and hold meetings every month. The labor union is well organized
and operated smoothly.
B. Communication Channel: In addition to the labor union, Compeq also sets up
channels for suggestions and complete petition systems in each department.
Supervisors are also required to identify problems proactively. Therefore, most
labor issues are resolved through prior and adequate communication and
consultation.
18
(3) In addition to our continued adherence to the principles of sincere and honest
communication in formulating our labor policy, we will also take the following actions
to create a win-win situation for both the company and the employees.
A. Comply with the Labor Standard Law and other related regulations to ensure
maximum protection for the employees.
B. Actively encourage the employees to participate in the formulation of all
labor-related management system.
C. Adequately disseminate information about the company's operating status and
major actions in advance to ensure the full understanding and support of the
employees.
19
IV. Financial Statements
COMPEQ MANUFACTURING CO., LTD.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
INDEPENDENT AUDITORS' REPORT
NO.00151010EA
To the Board of Directors of
Compeq Manufacturing Co., Ltd.
We have audited the accompanying balance sheets of Compeq Manufacturing Co., Ltd. as
of December 31, 2012 and 2011, and the related statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial statements
are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the financial
statements of Compeq International Corporation (as of October 1, 2010 to September 30,
2011), certain long-term investments in the financial statements amounting to $55,844
thousand as of December 31, 2011, and reflect total assets constituting 0%, and related
investment income of $74,927 thousand, and reflect income before income tax constituting
6% for the years then ended. That statements was audited by other auditors whose report
has been furnished to us and our opinion, insofar as it related to the amounts included for
Compeq International Corporation is based solely on the report of other auditors.
We conducted our audits in accordance with Republic of China “Guidelines for Certified
Public Accountants Examinations and Reports on Financial Statements” and Republic of
China generally accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of other auditors, the financial
statements referred to in the first paragraph present fairly, in all material respects, the
financial position of Compeq Manufacturing Co., Ltd. as of December 31, 2012 and 2011,
and the results of its operations and its cash flows for the years then ended, in conformity
20
with the Republic of China generally accepted accounting principles.
Compeq Manufacturing Co., Ltd. has prepared a consolidated financial statement of itself
and its subsidiaries as of and for the year ended December 31, 2012 and 2011. We have
expressed an unqualified opinion and a modified unqualified opinion on the consolidated
financial statement for the Company’s reference.
Baker Tilly Clock & Co
Hung-Hsun Ting, CPA
Kuo-Fu Tseng, CPA
March 22, 2013
21
COMPEQ MANUFACTURING CO., LTD.
BALANCE SHEETS
DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
ASSETS
２０１２
NOTES
CODE
DESCRIPTION
Amount
％
11xx CURRENT ASSETS
$ 9,796,959
34
1100
Cash and cash equivalents
4
2,185,067
8
1310
Financial assets measured at fair
2, 5
1,597
－
value through profit or loss
1120
Notes receivable – net
2, 6
482
－
1140
Accounts receivable – net
2, 7
5,270,042
18
1150
Receivables from related parties
22
178,821
1
1160
Other receivables
263,055
1
1210
Inventories
2, 8
1,699,196
6
1250
Prepaid expenses
27,133
－
1280
Other current assets
7,005
－
1286
Deferred income tax assets
2,18
164,561
－
14xx FUNDS AND INVESTMENTS
11,081,463
39
1450
2, 9
16,560
－
Available-for-sale financial assets
1421
2,10
11,064,903
39
Long-term Investments under equity method
15xx FIXED ASSETS – NET
2,11
7,450,008
26
Cost
1501
Land
674,929
2
1521
Buildings and structures
3,361,732
12
1531
Machinery and equipment
9,634,990
34
1544
Computer equipment
108,289
－
1545
Testing equipment
1,727,305
6
1546
Pollution prevention equipment
410,098
2
1551
Transportation equipment
34,677
－
1561
Office equipment
62,414
－
1681
Other facilities
3,154,939
11
15x9 Less accumulated depreciation
(11,596,399)
(41)
1599 Less accumulated impairment
(331,589)
(1)
1671 Constructions in progress
208,623
1
17xx INTANGIBLE ASSETS
2
33,775
－
1750
Computer software cost
33,775
－
18xx OTHER ASSETS
221,797
1
1820
Guarantee deposits paid
12
5,261
－
1830
Deferred charges
2
4,930
－
1860
Deferred income tax assets
2,18
204,189
1
1888
Other assets
7,417
－
TOTAL ASSETS
$ 28,584,002
100
２０１１
Amount
$ 10,595,692
3,685,248
－
％
36
13
－
935
4,540,177
390,268
209,531
1,675,352
30,868
8,833
54,480
10,592,360
29,000
10,563,360
7,485,512
－
15
1
1
6
－
－
－
36
－
36
26
674,929
3,267,722
9,861,144
126,400
1,942,378
436,117
33,923
63,197
3,077,551
(11,742,545)
(436,666)
181,362
23,061
23,061
489,356
16,094
7,569
454,716
10,977
2
11
34
－
7
1
－
－
11
(40)
(1)
1
－
－
2
－
－
2
－
$ 29,185,981
LIABILITIES AND STOCKHOLDERS' EQUITY
２０１２
NOTES
CODE
DESCRIPTION
Amount
21xx CURRENT LIABILITIES
$ 5,456,368
2100
Short-term loans
13
－
2180
Financial liabilities measured at fair
2,5
－
value through profit or loss
2140
Accounts payable
1,340,099
2150
Accounts payables - related parties
22
1,157,570
2170
Accrued expenses
1,213,538
2210
Other payables
447,147
2260
Advance receipts
－
2270
Current portion of long-term liabilities
14
1,208,333
2280
Other current liabilities
89,681
24xx LONG-TERM LIABILITIES
6,625,000
2420
Long-term loans
14
6,625,000
28xx OTHER LIABILITIES
1,089,229
2810
Accrued pension liabilities
2,21
1,071,575
2820
Guarantee deposits received
7,540
2880
Deferred intercompany profits
10,114
2xxx TOTAL LIABILITIES
13,170,597
3110 CAPITAL STOCK
15
11,918,206
32xx CAPITAL SURPLUS
16
1,016,593
3213
Additional paid in capital-bond conversion
935,127
3281
Accrued interest-premium of convertible bonds
30,609
3282
Other
50,857
33xx RETAINED EARNINGS
17
2,069,221
3310
Legal reserve
379,878
3350
Unappropriated retained earnings
1,689,343
34xx STOCKHOLDER’S EQUITIESADJUSTMENTS
409,385
3420
751,622
Cumulative translation adjustments
3430
2,21
(342,637)
Net loss not recognized as pension cost
3450
2,9
Unrealized gain or loss on financial
instruments
400
3xxx TOTAL STOCKHOLDERS' EQUITY
15,413,405
TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY
100
The accompanying notes are an integral part of the financial statements.
22
$ 28,584,002
２０１１
Amount
6,362,594
100,000
5,955
％
22
－
－
5
4
4
2
－
4
－
23
23
4
4
－
－
46
42
3
3
－
－
7
1
6
2
3
(1)
1,761,261
1,736,501
1,152,663
710,809
10,814
835,998
48,593
6,179,667
6,179,667
1,062,433
1,035,286
5,140
22,007
13,604,694
11,918,206
1,016,593
935,127
30,609
50,857
1,797,377
282,709
1,514,668
849,111
1,112,745
(276,474)
6
6
4
3
－
3
－
21
21
4
4
－
－
47
41
3
3
－
－
6
1
5
3
4
(1)
－
54
12,840
15,581,287
－
53
100
$ 29,185,981
100
％
19
－
－
$
COMPEQ MANUFACTURING CO., LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
CODE
２０１２
DESCRIPTION
4000 OPERATING REVENUES
$
4110 Sales
２０１１
％
Amount
19,097,779
100
19,471,429
102
％
Amount
$
18,831,113
100
19,089,099
101
4170 Sales return
(352,836)
(2)
(196,871)
(1)
4190 Sales allowance
(100,469)
－
(142,930)
－
4100 Net sales
19,018,124
100
18,749,298
100
79,655
－
81,815
－
5000 OPERATING COST
17,756,761
93
17,782,702
94
5110 Cost of goods sold
17,718,866
93
17,752,055
94
37,895
－
30,647
－
1,341,018
7
1,048,411
6
4800 Other operating revenues
5800 Other operating cost
5910 GROSS PROFIT FROM OPERATIONS
5920
UNREALIZED (GAIN) ON INTER-AFFILIATE
ACCOUNTS
5930
REALIZED GAIN (LOSS) ON INTER-AFFILIATE
ACCOUNTS
(31,421)
－
6,645
－
237
－
1,316,242
7
1,042,003
6
1,154,957
6
1,176,502
6
6100 Selling expense
450,710
2
485,699
3
6200 General & administrative expenses
431,374
2
419,302
2
6300 Research & development expenses
272,873
2
271,501
1
6900 OPERATING INCOME (LOSS)
161,285
1
(134,499)
－
REALIZED GROSS PROFIT
6000 OPERATING EXPENSES
7100 NON-OPERATING INCOME AND GAINS
7130 Gain on disposal of fixed assets
－
1,408,988
7
1,843,366
9
8,132
－
7,206
－
973,795
5
1,266,240
7
12,391
－
8,141
－
－
－
27,210
－
7110 Interest income
7121 Investment gain recognized under equity method
(6,645)
7140 Gains on sale of investments
－
－
90,302
－
7,552
－
－
－
7480 Miscellaneous income
407,118
2
444,267
2
7500 NON-OPERATING EXPENSES AND LOSSES
479,005
2
502,643
3
7510 Interest expense
7160 Foreign exchange gains
7310 Revaluation gain on financial assets
139,177
1
124,918
1
7530 Loss on disposal of fixed assets
49,757
－
41,037
－
7560 Foreign exchange losses
84,675
－
－
－
－
－
33,942
－
7650 Revaluation loss on financial liabilities
7880 Miscellaneous disbursements
7900 CONTINUING OPERATIONS’ INCOME
BEFORE INCOME TAX
8110 INCOME TAX EXPENSE (Note 2,18)
9600 NET INCOME
$
205,396
1
302,746
2
1,091,268
6
1,206,224
6
223,514
1
234,534
1
867,754
5
971,690
5
Before
Income Tax
9750 Basic
9850 Diluted
EARNINGS PER SHARE (Note 20)
$
Net of Tax
Before
Income Tax
Net of Tax
$ 0.92
$ 0.73
$ 1.01
$ 0.82
$ 0.91
$ 0.73
$ 1.01
$ 0.81
Dollars
Dollars
Dollars
Dollars
The accompanying notes are an integral part of the financial statements.
23
COMPEQ MANUFACTURING CO., LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
RETAINED EARNINGS
CAPITAL
DESCRIPTION
Balance, January 1, 2011
EQUITIES ADJUSTMENTS
CAPITAL
STOCK
SURPLUS
$11,918,206
$ 1,016,593
Legal
Reserve
$
282,709
Unappropriated
Retained
Earnings
$
542,978
Cumulative
Translation
Adjustments
$
658,394
Unrealized
Net Loss Not
Gains or Losses
Recognized As
on Financial
Pension Cost
Instruments
$
(237,849) $
971,690
Net income for 2011
454,351
454,351
(38,625)
Changes in net loss not recognized as pension cost
Changes in unrealized gain or losses on
available-for-sale financial assets
(38,625)
(28,700)
11,918,206
1,016,593
282,709
$14,222,571
971,690
Changes in translation adjustment of foreign
financial statements
Balance, December 31, 2011
41,540
TOTAL
1,514,668
1,112,745
(276,474)
12,840
(28,700)
15,581,287
－
Appropriations of prior year’s earnings
97,169
Legal reserve
(97,169)
Cash dividends
(595,910)
(595,910)
Net income for 2012
867,754
867,754
Changes in translation adjustment of foreign
financial statements
(361,123)
(361,123)
(66,163)
Changes in net loss not recognized as pension cost
Changes in unrealized gain or losses on
available-for-sale financial assets
Balance, December 31, 2012
(66,163)
(12,440)
$11,918,206
$ 1,016,593
$
379,878
$ 1,689,343
$
751,622
The accompanying notes are an integral part of the financial statements.
24
$
(342,637) $
400
(12,440)
$15,413,405
COMPEQ MANUFACTURING CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
２０１２
DESCRIPTION
２０１１
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
867,754
$
971,690
Adjustments
Depreciation expense
923,979
872,550
Amortization expense
11,874
11,864
178
－
37,366
32,896
Provision for bad debt expense
Net loss on disposal of fixed assets
－
Gain on disposal of investments
Investment income recognized under the equity method
(27,210)
(973,795)
Cash dividends received from investments accounted for under equity
method
(1,266,240)
－
Unrealized revaluation gain on financial assets
33,734
－
(7,552)
Unrealized revaluation loss on financial liabilities
－
33,942
Other adjustments to reconcile net income
－
19,793
453
3,146
Changes in assets and liabilities:
Notes receivable
Accounts receivable
(730,043)
396,798
Receivables from related parties
211,447
(120,008)
Other receivables
(53,524)
13,253
Inventories
(23,844)
253,830
Prepaid expenses
7,295
(9,997)
－
Prepayments
Other current assets
35
1,828
Deferred tax assets - current
(4,098)
(110,081)
60,354
324,491
168,545
Accounts payable
(421,162)
417,300
Accounts payables - related parties
(578,931)
(45,908)
Accrued expenses
60,875
(37,680)
Other payables
13,855
(11,154)
(10,814)
10,814
41,088
2,430
(29,874)
(20,518)
(5,196)
6,408
Deferred tax assets - noncurrent
Receipts in advance
Other current liabilities
Accrued pension liabilities
Deferred intercompany profits
Net Cash Provided by (Used in) Operating Activities
$
25
(442,333)
$
1,766,569
COMPEQ MANUFACTURING CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
２０１２
DESCRIPTION
２０１１
CASH FLOWS FROM INVESTING ACTIVITIES
Capital reduction of investment accounted for under equity method
$
37,165
$
92,911
－
Proceeds from disposal of investments accounted for by equity method
Purchase of fixed assets
523,745
(1,251,046)
Proceeds from disposal of fixed assets
Increase in intangible assets
(1,727,166)
40,991
72,747
(19,949)
(2,485)
－
Increase in deferred charges
(2,353)
Increase in refundable deposits – current
(1,075)
(11,510)
Decrease in refundable deposits – noncurrent
11,908
1,112
Net Cash Used in Investing Activities
(1,182,006)
(1,052,999)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
550,686
2,107,162
Decrease in short-term loans
(650,686)
(2,507,162)
Proceeds from long-term loans
3,500,000
7,550,000
Repayments of long-term loans
(2,682,332)
(6,336,834)
Cash dividends
－
(595,910)
Increase in guarantee deposits received
2,400
600
－
Decrease in guarantee deposits received
Net Cash Provided by Financing Activities
(85)
124,158
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
813,681
(1,500,181)
1,527,251
3,685,248
2,157,997
$
2,185,067
$
3,685,248
$
138,048
$
124,877
SUPPLEMENTAL CASH FLOW INFORMATION
Interest expense paid (excluding capitalized interest)
Income tax paid
9,922
6,347
(12,440)
(28,700)
NON-CASH INVESTING AND FINANCING ACTIVETIES
Available for sale financial assets noncurrent
Current portion of long-term debts
1,208,333
Translation adjustments
835,998
(435,087)
682,263
CASH PAID FOR ACQUISITION OF FIXED ASSETS
Acquisition of fixed assets
$
Decrease in payable for equipment purchased
973,529
$
277,517
Cash paid for acquisition of fixed assets
$
1,251,046
363,246
$
The accompanying notes are an integral part of the financial statements.
26
1,363,920
1,727,166
COMPEQ MANUFACTURING CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Amounts are expressed in thousands of New Taiwan dollars,
unless otherwise stated)
1. GENERAL
Compeq Manufacturing Co., Ltd. (the Company) was established in August 1973. It is
engaged in the manufacture and sale of PCB (Printed Circuit Boards) for computer use.
In January 1990, the Company's stocks were approved by the Securities and Futures
Bureau (SFB) for listing on the Taiwan Stock Exchange.
Employee size for the periods ended December 31, 2012 and December 31, 2011, was
5,121 and 5,123 employees, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers, Business
Accounting Law, Guidelines Governing Business Accounting relevant to financial
accounting standards, and accounting principles generally accepted in the Republic of
China (ROC).
The major accounting policies are enumerated below:
(1) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and reported
amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
(2) Current and Noncurrent Assets and Liabilities
Current assets include cash and cash equivalent, assets held primarily for trading,
and assets expected to be converted to cash, sold or consumed within 12 months
from the balance sheet date. Assets that do not belong to current assets are called
non- current assets. Current liabilities are obligations incurred for trading purposes
and obligations expected to be settled within 12 months from the balance sheet
date. Liabilities that do not belong to current liabilities are called noncurrent
liabilities.
(3) Cash and Cash Equivalents
Cash and cash equivalents, consisting of cash on hand, petty cash, bank deposit
that are not restricted in use, commercial paper, bank acceptances and repurchase
27
agreements collateralized by bonds, are highly liquid financial instruments with
maturities of three months or less when acquired and with carrying amounts that
approximate their fair values.
(4) Notes, Accounts and Other Receivable
Notes and accounts receivable are amounts owed to a business by a customer as a
result of a purchase of goods or services from it on a credit basis. Other receivables
are any receivable not classified in notes and accounts receivable category.
Prior to December 31, 2010, recognition of an allowance for doubtful accounts was
based on historical experience in analyzing the aging and determining the
collectability of notes, accounts and other receivables as of the balance sheet date.
On January 1, 2011, the Company 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 Company 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. Accounts receivable that are assessed not to be impaired individually are
further assessed for impairment on a collective basis.
Objective evidence of
impairment for a portfolio of accounts receivable could include the Company’s past
experience of collecting payments, an increase in the number of delayed payments,
as well as observable changes in national or local economic conditions that
correlate with defaults on receivables.
The amount of the impairment loss
recognized is the difference between the asset carrying amount and the present
value of estimated future cash flows, after taking into account the related collateral
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. If, in a
subsequent period, the amount of the impairment loss decreases, and the decrease
can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed and recognized
through profit or loss. The reversal shall not result in a carrying amount of notes,
accounts and other receivables that exceeds what the amortized cost would have
28
been had the impairment not been recognized at the date the impairment is
reversed.
(5) Financial instruments at fair value through profit or loss
Financial instruments at fair value through profit or loss have two categories: (1)
financial assets or financial liabilities held for trading and (2) designated on initial
recognition as at fair value through profit or loss.
These financial instruments are
initially recognized at fair value. The transaction costs with the financial instruments
are expensed currently. When subsequently remeasured at fair value, the changes
in fair value are recognized in current income (expense). A regular way purchase or
sale of financial assets is recognized and derecognized using trade date accounting.
Derivatives that do not meet the criteria for hedge accounting are treated as
financial assets or liabilities held for trading. When the fair value is a positive
number, the financial instrument is listed as a financial asset; when the fair value is
a negative number, the financial instrument is listed as a financial liability. Fair value
of derivatives with no active market fair value is estimated using valuation
techniques.
Fair values for beneficiary certificates of open-end funds and publicly traded stocks
are determined using the net assets value and the closing-price at the balance
sheet date, respectively. For financial assets with no active market, fair value is
determined using valuation techniques.
(6) Available-for-sale financial assets
Investments designated as available-for-sale financial assets include equity
securities. Available-for-sale financial assets are initially recognized at fair value
plus transaction costs that are directly attributable to the acquisition. When
subsequently measured at fair value, the changes in fair value are excluded from
earnings and reported as a separate component of shareholders’ equity. The
accumulated gains or losses are recognized in earnings when the financial asset is
derecognized from the balance sheet. A regular way purchase or sale of financial
assets is recognized and derecognized using trade date accounting.
Cash dividends are recognized as investment income upon resolution of the
shareholders of an investee but are accounted for as reductions to the original cost
of investment if such dividends are declared on the earnings of the investees
attributable to periods prior to the purchase of the investments. Stock dividends are
recorded as an increase in the number of shares held and do not affect investment
income. The cost per share is recalculated based on the new number of shares. Any
difference between the initial carrying amount of a debt security and its amount at
maturity is amortized and recognized in earnings using the effective interest method.
29
If there is objective evidence that a financial asset is impaired, a loss is recognized.
If, in a subsequent period, the amount of the impairment loss decreases, for equity
securities, the previously recognized impairment loss is reversed and recorded as
an adjustment to shareholders’ equity.
(7) Inventories
Inventories are stated at the lower of cost or market value, cost being determined by
the weighted-average method. Before January 1, 2009, inventories were stated at
the lower of cost or market value.
Any write-down was made on an item by
total-inventory basis. Market value for raw materials and supplies are based on
replacement cost, while finished goods, work in process, merchandise and
by-products are based on their net realizable value.
On January 1, 2009, inventories are stated at the lower of cost or net realizable
value. Inventory write-downs are made item by item, except where it may be
appropriate to group similar or related items. Net realizable value is the estimated
selling price of inventories less all estimated costs of completion and costs
necessary to make the sale. Inventories are recorded at standard cost and adjusted
to approximate weighted-average cost on the balance sheet date.
(8) Investments accounted for using equity method
Investments in companies wherein the Company exercises significant influence on
the operating and financial policy decisions are accounted for using the equity
method.
When equity investments were made, the difference, if any, between the cost of
investment and the Company’s share of the investee’s net equity was previously
amortized using the straight-line method over five years and was also recorded in
the “investment income/losses of equity method investees, net” account. Effective
January 1, 2006, pursuant to the revised SFAS No. 5 “Long-term Investments in
Equity Securities”, investment premiums, representing goodwill, are no longer being
amortized; while discounts on acquisition continue to be amortized over the
remaining periods. 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.
When the Company subscribes for additional investee’s shares at a percentage
different from its existing ownership percentage of equity interest, the resulting
carrying amount of the investment in the investee differs from the amount of the
Company’s share in the investee’s net equity. The Company records such
difference as an adjustment to long-term investments with the corresponding
amount charged or credited to capital surplus.
30
On the balance sheet date, the Company evaluates investments for any impairment.
An impairment loss is recognized and charged to current income if the investment
carrying amount as of the balance sheet date exceeds the expected recoverable
amount. Investments in which the Company has significant influence over investees
are tested for impairment separately at their carrying amounts.
(9) Financial assets carried at cost
Investment that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured are carried at original cost, such as
non-publicly traded stocks. The cost of funds and non-publicly traded stocks are
determined using the weighted-average method. If there is objective evidence that a
financial asset is impaired, a loss is recognized. No recording of a subsequent
recovery in the fair value is allowed.
The accounting treatment for cash dividends and stock dividends arising from
financial assets carried at cost is the same as that for cash and stock dividends
arising from available-for-sale financial assets.
(10) Fixed assets
Fixed assets are recorded at cost. Major improvements, renewals and replacements
are capitalized, while repairs and maintenance are expensed currently. When
assets are disposed of, the cost and related accumulated depreciation are removed
from the accounts and any gain or loss is credited or charged to income.
Depreciation is computed by the straight-line method over the estimated useful lives.
The primary useful live of the assets are as follow:
Buildings: 5-35 years; machinery and equipment: 6-10 years; computer equipment:
3-8 years; testing equipment: 5-8 years; pollution-prevention equipment: 3-10 years;
transportation equipment: 5 years; furniture and fixtures: 5-8 years; other equipment:
5-15 years. Upon expiry of the original useful life, the residual value of depreciable
asset is depreciated over its re-estimated useful life.
(11) Intangible assets
Intangible assets are recorded at cost and amortized by the straight-line method
over 1 to 7 years.
(12) Deferred charges
Deferred charges are amortized by the straight-line method over 5 years.
(13) Pensions
The Company adopted Statement of Financial Accounting Standards No.18
"Accounting for Pensions". Net periodic pension cost and accrued pension cost are
actuarially determined. The Company carries out an actuarial valuation of pension
liability on the balance sheet date. If the accumulated benefit obligation exceeds the
31
fair value of the retirement plan’s assets, a minimum pension liability will be
recognized in the balance sheet. Net periodic pension costs are recognized based
on the actuarial report and include service costs.
In order to coordinate to the enforcement of the “Labor Pension Act” (hereinafter
referred to as the “New System”) beginning from July 1, 2005, for any original
employee who is currently subject to the application of the said regulations (the
original retirement plan) but has elected to adopt the application of the service
seniority computation method after the effective date of the New System, or for any
employee to be employed after the effective date of the New System whose service
seniority shall be subject to the application of the fixed pension fund allocation
system, a pension fund in an amount equal to at least 6% of the amount of his/her
monthly salary shall be set aside (withheld) by the company and deposited into the
exclusive labor retirement account of each employee, and the amount of the labor
retirement reserve so appropriated shall be included as a current expense in the
financial statement of the company.
(14) Revenue Recognition and Allowance for Sales Returns and Discounts
Revenues of the company are recognized based on the following recognition
conditions:
a. The presence of a persuasive supporting document proving the existence of such
transaction.
b. Instrument has been turned over, moreover risk and returns have been
transferred; service or asset has been turned over to another party’s benefit.
c. Price is fixed or determinable.
d. Price realizability could be rationally confirmed.
e. For the merchandise has been sold without continuing involvement in
management and did not maintain effective control.
Allowance for sales returns and discounts are based on history of customer
complaints, historical experiences, management’s judgment and any other known
factors that might significantly affect collectability. Such allowances are recorded in
the same period in which sales and made.
(15) Income tax
The Company adopted Statement of Financial Accounting Standards No.22
"Accounting for Income Tax" for interperiod tax allocation. The tax effects of taxable
temporary differences are recognized as deferred tax liabilities, while those of
deductible temporary differences are recognized as deferred tax assets. The
valuation allowance is provided on the basis of the estimated realizability of deferred
tax assets. Deferred tax assets and liabilities are classified as current or noncurrent
32
based on the classification of the related assets or liabilities, and those with no
related to assets or liabilities are classified as current or noncurrent based on the
expected period of reversal.
The Company adopted Statement of Financial Accounting Standard NO.12
"Accounting for Income Tax Credits" for income tax credits.
The Company adopts
the flow-through method for income tax credits resulting from the purchase of
equipment assets, research and development expenditures, personnel training and
investments in equity stock.
Additional 10% of Income tax on unappropriated earnings of the company is
included in the current year’s tax on the date of the conference of stockholders
resolving appropriated earnings.
The R.O.C. government enacted the Alternative Minimum Tax Act (the AMT Act),
which became effective on January 1, 2006. The alternative minimum tax (AMT)
imposed under the AMT Act is a supplemental tax levied at a rate of 10% which is
payable if the income tax payable determined pursuant to the Income Tax Law is
below the minimum amount prescribed under the AMT Act. The taxable income for
calculating the AMT includes most of the income that is exempted from income tax
under various laws and statutes. The Company has considered the impact of the
AMT Act in the determination of its tax liabilities.
Adjustments of prior years' tax liabilities are included in the current year's tax
provision.
(16) Employee Bonuses and Remunerations Paid to Directors and Supervisors
In
accordance
with
Accounting
Research
and
Development
Foundation
Interpretation No.2007-052 “Accounting for Employee Bonuses and Remunerations
to Directors and Supervisors” effective from January 1, 2008, employee bonuses
and remunerations paid to directors and supervisors are charged to expense at fair
value and no longer accounted for as an appropriation of retained earnings.
If the
actual amounts were modified by the shareholders’ meeting in the following year,
the adjustment will be regarded as a change in accounting estimate and will be
reflected in the statement of income in the following year.
(17) Foreign-currency transactions
Transactions in currencies other than the New Taiwan dollars are recorded at the
rates of exchange prevailing on the dates of the transactions. On the balance sheet
date, monetary items denominated in foreign currencies are translated at prevailing
rates. Exchange differences arising on the settlements of the monetary items and on
the retranslation of monetary items are included in earnings for the period.
Foreign-currency transactions, except derivative transactions, are recorded in New
33
Taiwan dollars at the rates of exchange in effect when the transactions occur. Gains
or losses caused by the application of prevailing foreign exchange rates when cash
in foreign currency is converted into New Taiwan dollars or when foreign-currency
receivables and payables are settled, are credited or charged to income in the
period of conversion or settlement. The balances of foreign-currency nonmonetary
assets and liabilities recognized at fair value as of balance sheet date (such as
equity instrument) are adjusted to reflect the prevailing exchange rates, and the
resulting differences are recorded as follows: (a) those pertaining to changes of fair
value which belongs to adjustments of stockholders’ equity – as adjustments under
stockholders’ equity; (b) those pertaining to changes of fair value which are charged
to current income – as current income; (c) those measured at cost are measured at
historical exchange rates on transaction date.
At period-end, the balances of foreign-currency long-term stock investments
accounted for by equity method are restated at prevailing exchange rates and the
resulting differences are recorded as cumulative translation adjustment under
stockholders’ equity.
The prevailing exchange rate stated above is evaluated on the basis of major
correspondent banks’ average price.
(18) Asset Impairment
The Company adopted the Republic of China Statement of Financial Accounting
Standards No. 35 “Accounting for Asset Impairment”. The Company shall recognize
devaluation loss when the environment changes or a certain event occurs to show
that retrievable value of certain assets owned by a company is less than book value.
Retrievable value refers to net fair value or use value, whichever is higher, of assets.
Net fair value refers to acquirable value of assets during a general trading after the
cost of assets has been deducted from the sales of assets. Use value refers to
prospective cash flows discounted present value that expected to be generated by
assets.
When the situation under which the accumulative impairment loss
recognized in the previous year does not exist any more or has improved,
accumulative impairment loss may be reversed to the extent of the amount of such
loss recognized in the previous year.
On the balance sheet date, the Company evaluates financial assets for any
impairment. And the Company adopted the Republic of China Statement of Financial
Accounting Standards No. 34 “Accounting for Financial Instruments”.
3. ACCOUNTING CHANGES
(1) On January 1, 2011, the Company adopted the newly revised SFAS No. 34,
“Financial Instruments.” If there is objective evidence that an impairment loss has
34
occurred, the notes, accounts and other receivable should be recognized as an
impairment loss (bad debt). This change in accounting principles had no significant
effect on net income and earnings per share for the year ended December 31, 2011.
(2) On January 1, 2011, the Company adopted the newly issued SFAS No. 41,
“Operating Segments.” The statement requires that segment information be
disclosed based on the information about the components of the Company that
management uses to make operating decisions. SFAS No. 41 requires identification
of operating segments on the basis of internal reports that are regular reviewed by
the Company’s chief operating decision maker in order to allocate resources to the
segments and assets their performance. This statement supersedes SFAS No. 20,
“Segment Reporting.” For this accounting change, the Company restated the
segment information 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. This change in
accounting principles had no significant effect on net income and earnings per share
for the year ended December 31, 2011.
4. CASH AND CASH EQUIVALENTS
December 31,
2012
Cash on hand
$
2,016
Checking accounts
Demand deposits
$
$
2,442
3,433
294,209
1,572,118
2,388,597
607,500
1,000,000
Time deposits
Total
2011
2,185,067
$
3,685,248
5. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR
LOSS-CURRENT
The information of derivatives is stated as follows:
December 31,
2012
2011
Financial assets held for trading
Forward exchange contracts
$
1,597
$
－
$
－
$
5,955
Financial liabilities held for trading
Forward exchange contracts
The Company entered into forward exchange contract transactions and interest rate
swap contract transactions during the years ended December 31, 2012 and 2011 to
hedge its exposures to fluctuations of foreign-exchange rates and interest rates on its
foreign-currency assets or liabilities.
The contracts resulted in net gain of $38,097 thousand (including realized gain $30,545
thousand and the appraisal gain $7,552 thousand) in 2012 and net loss of $48,037
35
thousand (including realized loss $14,095 thousand and the appraisal loss $33,942
thousand) in 2011.
Outstanding forward exchange contracts as of December 31, 2012 and 2011 were as
follows:
Currency
Maturity
Contract Amount
December 31, 2012
Sell
US$／NT$
January 4, 2013 toApril 15, 2013 US$
Currency
Maturity
54,000,000
Contract Amount
December 31, 2011
Sell
US$／NT$
January 6, 2012 toApril 24, 2012 US$
54,000,000
6. NOTES RECEIVABLE
December 31,
2012
Notes receivable
$
2011
482
$
935
－
Less allowance for doubtful accounts
Net
$
482
－
$
935
7. ACCOUNTS RECEIVABLE
December 31,
2012
Accounts receivable
$
2011
5,335,894
$
4,614,916
Less: allowance for doubtful accounts
(20,062)
(19,884)
Less: allowance for sales returns and
discounts
(45,790)
(54,855)
Net
$
5,270,042
$
4,540,177
8. INVENTORIES
December 31,
2012
Raw materials
$
282,371
2011
$
303,697
Supplies
112,731
104,075
Work in process
506,819
433,951
Finished goods
711,810
636,272
Less: allowance for loss
Sub-total
Merchandise
Less: allowance for loss
711,699
636,272
86,066
197,889
(490)
Sub-total
Total
－
(111)
(532)
85,576
$
36
1,699,196
197,357
$
1,675,352
(1) As of December 31, 2012 and 2011, the allowance for inventory devaluation was
$601 thousand and $532 thousand, respectively.
(2) The cost of inventories recognized as cost of sales for the years ended December
31, 2012 and 2011 were as follows:
The cost of goods sold
2012
2011
$ 17,581,860
$ 17,624,895
Provision for (Reversal of) loss on
inventories
69
Loss (gain) on physical inventory
591
795
220,373
291,603
(162,774)
(183,149)
116,642
84,090
Loss on scrapped inventories
Income from scrap sales
Idle capacity cost
Total
$
17,756,761
(35,532)
$
17,782,702
As of December 31, 2011, the Company’s gain on inventory net realization value
were due to a better end product structure and rise of capacity utilization.
(3) The insurance coverage as of December 31, 2012 and 2011 approximates
$1,360,369 thousand and $1,405,000 thousand, respectively. In addition, the current
period’s goods transportation insurance for the Company’s offshore warehouse cost
the Company $208,016 thousand and $382,846 thousand, respectively.
9. AVAILABLE-FOR-SALE FINANCIAL ASSETS-NONCURRENT
December 31, 2012
Loss on impairment and
unrealized gains on financial
instruments
Cost
Total
Publicly listed stocks
Victory Circuit Co., Ltd.
$
48,000
$
(31,440)
$
16,560
December 31, 2011
Loss on impairment and
unrealized gains on financial
instruments
Cost
Total
Publicly listed stocks
Victory Circuit Co., Ltd.
$
48,000
$
(19,000)
$
29,000
The Company unrealized gains on financial instrument for 2012 and 2011 were
$(12,440) thousand and $(28,700) thousand, respectively, and were been included
under the stockholders’ equity.
37
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
December 31, 2012
Book Value
Shareholding Ratio
Non-publicly trade stocks
Compeq International Corporation
$
Huaton Holdings Limited
Pelican Cove Investment Ltd.
Hua Nian Investment Ltd.
Liton Holdings Limited
Total
$
8,013
70.48％
10,686,509
100.00％
323,490
100.00％
44,374
100.00％
2,517
100.00％
11,064,903
December 31, 2011
Book Value
Shareholding Ratio
Non-publicly trade stocks
Compeq International Corporation
$
Huaton Holdings Limited
Pelican Cove Investment Ltd.
Hua Nian Investment Ltd.
Liton Holdings Limited
Total
$
55,844
70.48％
10,166,470
100.00％
300,349
100.00％
37,977
100.00％
2,720
100.00％
10,563,360
(1) Each invested company adopting the equity valuation method will obtain the
investment loss and profit data included in the current financial statements duly
audited and certified by a certified public accountant. The book balances of those
investments accounted for by the equity method were computed on the basis of the
investees' audited financial statements and the Company's shareholding ratios. The
investment income recognized under the equity method for 2012 and 2011 were
investment income $973,795 thousand and $1,266,240 thousand, respectively.
(2) Compeq International Corporation return of Capital reduction for 2012 and 2011
were $37,165 thousand and $92,911 thousand,respectively.
38
11. FIXED ASSETS
December 31, 2012
Land
$
Cost
Accumulated
Depreciation
674,929
$
－
Accumulated
Impairment
－
$
Net
$
674,929
Buildings and structures
3,361,732
2,174,609
－
1,187,123
Machinery and
equipment
9,634,990
5,426,182
115,058
4,093,750
108,289
82,886
－
25,403
1,727,305
992,421
214,429
520,455
410,098
334,227
388
75,483
Transportation equipment
34,677
25,170
－
9,507
Office equipment
62,414
58,278
－
4,136
3,154,939
2,502,626
1,714
650,599
208,623
－
－
208,623
$ 19,377,996
$ 11,596,399
Computer equipment
Testing equipment
Pollution Prevention
equipment
Other facilities
Construction in progress
Total
$
331,589
$
7,450,008
December 31, 2011
Land
$
Cost
Accumulated
Depreciation
674,929
$
－
Accumulated
Impairment
$
－
Net
$
674,929
Buildings and structures
3,267,722
2,079,718
－
1,188,004
Machinery and
equipment
9,861,144
5,594,470
159,531
4,107,143
126,400
99,586
－
26,814
1,942,378
1,084,775
273,160
584,443
436,117
355,717
388
80,012
Transportation equipment
33,923
28,335
－
5,588
Office equipment
63,197
58,425
－
4,772
3,077,551
2,441,519
3,587
632,445
181,362
－
－
181,362
$ 19,664,723
$ 11,742,545
Computer equipment
Testing equipment
Pollution Prevention
equipment
Other facilities
Construction in progress
Total
$
436,666
$
7,485,512
(1) Depreciation for 2012 and 2011 were $923,979 thousand and $872,550 thousand,
respectively.
(2) The capitalized interest for 2012 and 2011 were $4,225 thousand and $7,740
thousand, respectively.
(3) The capitalized interest rates for 2012 and 2011 were 1.926%~1.988% and
1.644%~1.976%.
(4) The interest expense before capitalized for 2012 and 2011 were $143,402 thousand
and $132,658 thousand, respectively.
39
(5) The information for assets mortgaged as collaterals please refer to Note 23.
(6) The insurance coverage as of December 31, 2012 and 2011 approximates
$6,278,666 thousand and $6,494,290 thousand, respectively.
(7) At December 31, 2012, construction in progress and prepayment on equipment were
purchases of break-down circulation system, dry film laminator system, auto
shear/beveling line and expansion of plant etc..
12. GUARANTEE DEPOSITS PAID
December 31, 2012
Current
Rent of deposits
Noncurrent
－
$
December 31, 2011
$
4,183
Current
－
$
Noncurrent
$
4,612
Oil deposits
－
1,075
－
1,067
Government grants
－
－
－
10,380
Other
－
3
－
35
Total
－
$
$
5,261
－
$
$
16,094
13. SHORT-TERM LOANS
December 31, 2012
December 31, 2011
Credit loan－
Land Bank of Taiwan
Interest Rate
－
$
－
$
100,000
1.1554%
14. LONG-TERM LOANS
Mega International Commercial Bank
Chang Hwa Bank
Land Bank of Taiwan
Jin Sun International Bank
China Development Industrial Bank
DBS Bank
Far Eastern International Bank
Bank of Panhsin
En Tie Commercial Bank
Taichung Commercial Bank
Shin Kong Bank
Bank of Taiwan
Land Bank of Taiwan (Union loan)
Total
Less: Current portion of long-term loans
Net
Interest Rate
No.
1
2
2
3
4
5
6
7
8
9
10
8
11
40
December 31, 2012
Amount
Expiry Date
$
150,000
03/28/2015
400,000
08/10/2015
400,000
09/28/2015
300,000
01/17/2014
250,000
07/11/2014
300,000
07/24/2014
250,000
08/04/2014
200,000
01/23/2015
300,000
07/18/2015
200,000
07/23/2015
200,000
09/21/2015
300,000
10/22/2015
4,583,333
01/28/2016
7,833,333
(1,208,333)
$
6,625,000
1.70%∼2.4947%
Mega International Commercial Bank
Land Bank of Taiwan
Chang Hwa Bank
China Development Industrial Bank
Jin Sun International Bank
Bank of Panhsin
Shin Kong Bank
DBS Bank
Taichung Commercial Bank
China Development Industrial Bank
Land Bank of Taiwan (union loan)
Total
Less: Current portion of long-term loans
Net
Interest Rate
No.
1
2
2
12
3
13
14
5
15
4
11
December 31, 2011
Amount
Expiry Date
$
128,000
06/29/2012
400,000
03/31/2013
400,000
08/10/2013
41,665
06/29/2012
150,000
01/27/2013
100,000
03/21/2013
146,000
03/21/2013
300,000
07/25/2013
100,000
03/21/2014
250,000
07/11/2014
5,000,000
01/28/2016
7,015,665
(835,998)
$
6,179,667
1.65％∼2.57％
No.1 ： Three-year term loan, repayable after 2 year grace period in 2 quarterly
installments, interest to be paid monthly.
No.2：Three-year term loan, become due once repay, interest to be paid monthly.
No.3：One-year and ten months term loan, repayable after 1 year grace period in 4
quarterly installments, interest to be paid monthly.
No.4：Three-year term loan, repayable in 6 semiannual installments, interest to be paid
monthly.
No.5：Two-year term loan, become due once repay, interest to be paid monthly.
No.6：Three-year and one month term loan, become due once repay, interest to be
paid monthly.
No.7：Two-and-a-half-year term loan, repayable after 18 month grace period in 4
quarterly installments, interest to be paid monthly.
No.8：Three-year term loan, repayable after 18 month grace period in 6 quarterly
installments, interest to be paid monthly.
No.9：Three-year term loan, repayable after 18 month grace period in 7 quarterly
installments, interest to be paid monthly.
No.10 ： Three-year term loan, repayable after 15 month grace in 8 quarterly
installments, interest to be paid monthly.
No.11 ： Five year term loan, repayable after one year grace in 8 semiannual
installments, 1-4 installments $416,667 thousand, 5~8 installments $833,333
thousand, interest to be paid monthly.
41
Also, as agreed, within the loan
duration, specific current ratio, debt ratio and times of interest earned shall be
maintained in accordance with the yearly and half yearly consolidated financial
statements.
No.12：Three-year term loan, repayable in 6 semiannual installments, interest to be
paid monthly.
No.13 ： Two-year term loan, repayable after 1 year grace period in 4 quarterly
installments, interest to be paid monthly.
No.14：Two-year term loan, repayable after 4 month grace period in 7 quarterly
installments, interest to be paid monthly.
No.15：Three-year term loan, repayable after 9 month grace period in 9 quarterly
installments, interest to be paid monthly.
15. CAPITAL STOCK
(1) Capital and shares
December 31,
2012
2011
Authorized capital
16,000,000,000 dollars
16,000,000,000 dollars
Paid-in capital
11,918,205,890 dollars
11,918,205,890 dollars
Authorized shares
1,600,000,000 shares
1,600,000,000 shares
Outstanding shares
1,191,820,589 shares
1,191,820,589 shares
(2) The capital stock represents common stock with 10 dollars par value.
(3) The Company’s authorized capital was $16,000,000 thousand by Ministry of
Economic Affairs, including 100,000 thousand shares reserved for the conversion
of employee’s stock warrants and 308,179 thousand shares of convertible bonds
payable, which have not been issued.
16. CAPITAL SURPLUS
Capital surplus can be used to offset a deficit under the Company Law. However, the
capital surplus generated from donations and the excess of the issuance price over the
par value of capital stock (including the stock issued for new capital, mergers,
convertible bonds and the surplus from treasury stock transactions) may be
appropriated as stock dividends, which are limited to a certain percentage of the
Company’s paid-in capital. In addition, the capital surplus from long-term investments
may not be used for any purpose. However, according to the revised Company Law,
effective January 2012, the aforementioned capital surplus generated from donations
and the excess of the issuance price over the par value of capital stock can also be
used to distribute cash in proportion to original shareholders’ holding.
42
17. RETAINED EARNINGS
(1) The board of directors meeting has passed stock dividend policy as follows:
The environment that the Company encounters is technology industry.
Life circle
of an enterprise emphasizes the stage of growth. In order to consider the perfect
cooperate finance structure, condition of the transport business earnings and
expansion transport business scale for future. To draft uses the surplus dividend
policy, with continues forever the management growth by the perfect company.
(2) According to the Company’s Articles of Incorporation, earnings shall be used first to
pay the profit-seeking business income tax and make up the previous loss. And
10% of the earnings left after the annual accounting settlement shall be
appropriated for legal earning surplus. Besides, special earning surplus shall be
appropriated the same as the amount of the subtraction item for shareholders’
equity.
After deducts the above project, if any, the Company expect the earnings per share
has not amounted to NT$1 dollar, the board of directors depend on the retained
earnings advanced unassigned and resolved by the meeting of shareholders
based on actual benefit and rests on the following principle the earning allocation
shall be proposed by the board of directors and resolved by the meeting of
shareholders based on actual benefit:
A. Based on future operating planning, investment plan and capital budget planning,
the Company will first determine the appropriate capital and investment budget,
followed by finalizing the capital required by the appropriate capital and
investment budget, then decide the portion of the required capital to be retained
from earnings in which the retained earnings are not distributed.
If there was
no surplus after deducting the retained earnings, no distribution will be made.
B. If there was surplus after deducting the retained earnings, the Company shall
contribute 5% of no less than 50% of the remaining earnings as the employee
bonus while the remaining surplus will be distributed as the shareholder bonus.
The employee bonus of the Company shall be released in the form of cash or
stocks, and the release of stock bonus was only limited to the employees meeting
the given terms. The given terms and forms were to be enacted by the board of
directors.
The shareholder bonus of the Company shall be released in the form of cash or
stock in which the shareholder cash bonus shall be, in principle, distributed no less
than 50% of total shareholder bonuses. The shareholder cash bonus distribution
43
ratio may be adjusted according to the capital requirement and operating planning
of the year in question.
(3) According to the revised Company Law, effective January 2012, the appropriation
for legal capital reserve shall be made until the reserve equals the Company’s
paid-in capital. The reserve may be used to offset a deficit, or be distributed as
dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if
the Company incurs no loss.
(4) During the year ended December 31, 2012 and 2011, the amounts of the employee
bonuses and remunerations to directors and supervisors are $31,364 thousand
and $31,364 thousand, respectively.
The amounts were estimated based on past
experiences. If the actual amounts were modified by the shareholders’ meeting in
the following year, the adjustment will be regarded as a change in accounting
estimate and will be reflected in the statement of income in the following year.
(5) The appropriations of earnings for 2012 had been proposed in the meeting of
Board of Directors held on March 22, 2013. The appropriations and dividends per
share were as follow:
Appropriation of Earnings
Legal reserve
$
Cash dividends
Total
86,775
595,910
$
Dividends per Share (NT$)
0.5
682,685
The Board of Directors also proposed to appropriate profit sharing to employees to
be paid in cash $31,364 thousand for 2012.
(6) The information about the proposals passed by the board of directors, the
employees’ bonus resolved by the board of shareholders, remuneration to
directors/auditors and earning allocation was available at the “public information
station” of Taiwan Stock Exchange Corporation.
(7) The Company’s earning allocation for the previous year (2011) was approved in the
regular meeting of shareholders on June 5, 2012. The actual allocation of
employees’ bonus and remuneration to director auditors is the same as the
proposed allocation passed by the board of directors. The appropriations and
dividends per share were as follow:
Appropriation of Earnings
Legal reserve
$
Cash dividends
Total
97,169
595,910
$
Dividends per Share (NT$)
0.5
693,079
The Board of Directors also proposed to appropriate profit sharing to employees to
be paid in cash $31,364 thousand for 2011.
44
18. INCOME TAX
(1) Income tax payable
2012
Continuing operations’ income before income tax
$1,091,267
Investment gain recognized under equity method
(973,795)
2011
$1,206,224
(1,266,240)
－
Gain on sale of investment
(27,210)
Revaluation (gain) loss on financial assets and
liabilities
(7,552)
33,942
Deferred intercompany (profit) loss
18,079
(3,831)
Pension cost in excess of tax limit
(29,450)
(22,336)
26,288
35,424
(35,424)
(132,514)
48,877
155,026
Unrealized exchange loss
Realized exchange loss
Loss on scrapped inventories
Provision (reversal) of loss on inventories
69
Loss on assets impairment
(35,533)
(12,075)
(46,263)
Loss on indemnity
37,941
(32,715)
Other adjustments
58,999
75,845
223,224
(60,181)
Income
Less: Accumulated tax credit loss carryforwards
－
(223,224)
Taxable income
$
－
$
Income tax
$
－
$
(60,181)
－
Less: Investment tax credit
－
－
Current tax expense
－
－
Add: Additional 10% of Income tax on
Unappropriated earnings
－
－
Less: Prepaid income tax
(820)
(712)
Income tax payable
$
－
$
－
Tax refund receivable
$
820
$
712
The Company's income tax returns for all the fiscal years up to 2010 have been
assessed and approved by the tax authority.
(2) Deferred tax assets and liabilities
a. Deferred tax assets and liabilities:
December 31,
2012
(a) Total deferred tax assets
(b) Valuation allowance for deferred tax assets
(c) Total deferred tax liabilities
2011
$ 448,508
$ 756,305
78,187
119,353
1,571
127,756
(d) Temporary differences of investment tax credit, accumulated loss tax credit
and resulting deferred tax assets or liabilities
45
December 31,
2012
Temporary
Difference
Pension cost in excess of tax
Limit
$
720,476
2011
Temporary
Difference
Tax Effect
$
122,481
$
Tax Effect
749,926
$
127,487
Unrealized exchange gain
(9,240)
(1,571)
(27,099)
(4,607)
Unrealized exchange loss
35,528
6,040
62,523
10,629
(1,651,243)
(280,711)
(724,408)
(123,149)
267,521
45,479
(248,789)
(42,294)
Unrealized net investment
loss (gain)
Others
Investment tax credit
135,014
212,022
Accumulated loss tax
credit
420,205
448,461
Total
$
446,937
$
628,549
In May 2010, the Legislative Yuan passed the amendment of Article 5 of the
Income Tax Law, which reduces a profit-seeking enterprise’s income tax rate
from 20% to 17%, effectively on January 1, 2010.
December 31,
2012
b. Deferred tax assets – current
$
2011
166,132
$
－
Valuation allowance
Net deferred tax assets-current
(60,432)
166,132
Deferred tax liabilities-current
59,076
(1,571)
Net
$
164,561
119,508
(4,596)
$
54,480
December 31,
2012
c. Deferred tax assets-noncurrent
$
2011
282,376
$
636,797
Valuation allowance
(78,187)
(58,921)
Net deferred tax assets-noncurrent
204,189
577,876
－
Deferred tax liabilities-noncurrent
Net
$
204,189
(123,160)
$
454,716
d. The reduction in income tax expenses of the year about the laws and decrees,
items, income tax credits and expiry date of unused income tax credits were as
follows:
46
Laws and
Decrees
Income tax
Credits
Items
Enforcement Rules
Equipment
of The Statute For
assets
Upgrading
expenditures
industries
$
10,690
Unused Income
Tax Credits
$
Expiry Date
10,690
2013
〃
Research and
development
expenditures
20,839
20,839
2013
〃
Equipment
assets
expenditures
76,880
76,880
2014
〃
Equipment
assets
expenditures
26,605
26,605
2015
e. Loss carryforwards as of December 31, 2012 comprised of.
The year in which loss occurred
Unused Amount
Expiry Year
2004
$
732,896
2014
2005
183,484
2015
2009
729,679
2019
2010
778,279
2020
2011
47,457
2021
$
2,471,795
(3) Income tax Expense
2012
Current tax expense
$
Additional 10% of Income tax on
unappropriated earnings
37,948
2011
$
5,635
27,861
－
149,724
215,766
Investment tax credit
7,981
13,133
Income tax expense
$ 223,514
$ 234,534
Deferred tax expense
(4) As of December 31, 2012 and 2011, the shareholders’ imputation credit account
balance and estimated imputation creditable ratio were as follows:
a. Unappropriated retained
earnings balance:
2012
2011
Prior to 1997
$
－
$
－
During and after 1998
1,689,343
1,514,668
Total
$
1,689,343
$
1,514,668
b. The shareholders’ imputation
credit account balance
$
161,645
$
297,974
c. Estimated (actual) imputation
9.57%
19.67%
creditable ratio
47
19. USER DEPRECIATION DEPLETION AND AMORTIZATION
2012
Cost of
goods sold
Labor cost
Operating
expenses
Total
$ 2,659,368
$ 619,725
$ 3,279,093
1,519,093
－
1,519,093
Salaries
674,833
546,803
1,221,636
Insurance expenses
200,546
31,117
231,663
Pensions
138,913
26,189
165,102
Other user expense
125,983
15,616
141,599
Depreciation
908,759
15,220
923,979
Amortization
4,419
7,455
11,874
Direct labor
2011
Cost of
goods sold
Labor cost
$ 2,831,738
Operating
expenses
626,650
$ 3,458,388
1,671,185
－
1,671,185
Salaries
693,092
548,185
1,241,277
Insurance expenses
193,000
34,364
227,364
Pensions
136,280
29,282
165,562
Other user expense
138,181
14,819
153,000
Depreciation
856,587
15,963
872,550
Amortization
5,680
6,185
11,865
Direct labor
$
Total
20. EARNINGS PER SHARE
2012
Weighted-Average
Outstanding
Common Stock
Amount
Before
Income Tax
Earnings
per Share (Dollars)
Before
Income Tax
Net of Tax
Net of Tax
Basic earnings per
share:
Net income
$ 1,091,267
$ 867,754
1,191,820,589shares
$ 0.92
$ 0.73
$ 0.91
$ 0.73
Effect of potential
common shares with
diluted effect
Employee bonus
－
－
2,611,465shares
Diluted earning per
shares:
Net income of common
stockholders with
$ 1,091,267
diluted effect on stock
equivalents
$ 867,754
48
1,194,432,054shares
2011
Weighted-Average
Outstanding
Common Stock
Amount
Before
Income Tax
Net of Tax
Earnings
per Share (Dollars)
Before
Income Tax
Net of Tax
$ 1.01
$ 0.82
$ 1.01
$ 0.81
Basic earnings per share:
Net income
$1,206,224
$ 971,690
1,191,820,589shares
－
－
3,560,011shares
$1,206,224
$ 971,690
1,195,380,600shares
Effect of potential common
shares with diluted effect
Employee bonus
Diluted earning per shares:
Net income of common
stockholders with diluted
effect on stock equivalents
If the Company may settle the obligation by cash, by issuing shares, or in combination
of both cash and shares, profit sharing to employees which will be settled in shares
should be included in the weighted average number of shares outstanding in
calculation of diluted EPS, if the shares have a dilutive effect. The number of shares
was estimated by dividing the amount of profit sharing to employees in stock by the
closing price (after considering the dilutive effect of dividends) of the common shares
on the balance sheet date. Such dilutive effect of the potential shares need to be
included in the calculation of diluted EPS until the shares of profit sharing to employees
were resolved in the shareholders’ meeting in the following year.
21. PENSION PLAN
(1) The company has put into place the regulations governing the defined benefit
pension system in accordance with the “Labor Standard Law” which applies to the
years of service of all permanent employees before the implementation of the
“Labor Pension Act” on 1 July 2005 and those employees who opt for the
subsequent years of service under the Labor Standard Law after the
implementation of the “Labor Pension Act”. Pursuant to the regulations, each year
of service is converted into two base points, and one base point is credited to any
employee who has rendered services for 15 years for his/her complete year of
service. The maximum base points may not exceed to 45 base points. Employees
who are forced to retire, become insane or disable due to their execution of duties
will receive an additional 20% of the base points.
The Company as a pension plan for all regular employees. Benefits under this plan
are based on length of service and average basic pay of the six months before
retirement. The Company contributes monthly 2.5% of salaries and wages to a
pension fund, which is administered by the employees’ pension fund committee. As
from August 2009 and from March 2011, the Company has monthly contributed 4%
and 5% of its employee’s salary as the pension reserve and deposited it into the
Bank of Taiwan in the name of Supervisory Committee of Labor Pension Reserve,
respectively.
49
(2) The net periodic pension cost consists of the following:
2012
Service cost
$ 35,977
Interest cost
32,873
Actual return on plan
$ (4,140)
$
assets
Gain or loss on plan assets
(4,577)
Expected return on plan
(8,717)
assets
Amortization
17,933
Net periodic pension cost
$ 78,066
2011
$ 38,230
34,788
(4,292)
(2,883)
(7,175)
$
15,820
81,663
(3) Actuarial assumptions:
2012
2011
Discount rate
1.75%
2.00%
Future salary increase rate
1.00%
1.00%
Expected long-term rate of return on plan
assets
1.75%
2.00%
(4) The Company's contributions to the pension fund are deposited in the Committee's
name with the Bank of Taiwan. The reconciliation of the funded status of the plan
and accrued pension cost were as follows:
2012
2011
Benefit obligation
Vested benefit obligation
$
(465,017)
$
(306,307)
Nonvested benefit obligation
(1,047,954)
(1,142,703)
Accumulated benefit obligation
(1,512,971)
(1,449,010)
(217,142)
(212,469)
(1,730,113)
(1,661,479)
Effect of future salary's increase
Projected benefit obligation
Fair value of plan assets
441,396
Funded status
413,724
(1,288,717)
Unrecognized pension (gain) loss
Net loss not recognized as pension cost
Accrued pension cost
$
(1,247,755)
559,779
488,943
(342,637)
(276,474)
(1,071,575)
$
(1,035,286)
(5) The vested benefits were $548,794 thousand and $365,815 thousand as of
December 31, 2012 and 2011.
(6) Changes in the pension fund were summarized as follows:
2012
2011
Beginning balance
$
Contributions
Interest earned
Benefits paid
Ending balance
$
50
413,723
$
336,370
107,652
102,180
4,140
4,292
(84,119)
(29,119)
441,396
$
413,723
(7) Beginning from July 1, 2005, the Company will implement a fixed rate pension fund
appropriation method, established in accordance with the “Labor Pension Act”,
which method will be applicable to all local (native) employees.
In pursuance of
the labor retirement fund management system established by the Company and
elected by the employees for application, the Company will set aside a sum of
labor pension fund for each employee at a rate of not less than 6% of the amount
of his/her monthly salary and will subsequently deposit into an exclusive labor
retirement fund account of each labor maintained by the Council of Labor Affairs.
Payment of the labor retirement fund will be effected by allowing each employee to
draw, either on a monthly basis or on a lump sum basis, from the balance
(including the aggregate amount of his/her retirement pay plus the aggregate
amount of the income accrued there-from) maintained in his/her exclusive labor
retirement fund account. Up to December 31, 2012 and 2011, the aggregate
amount of the principal of the labor pension fund declared and confirmed by the
Company in accordance with the foregoing labor retirement fund management plan
was $87,036 thousand and $83,899 thousand, respectively.
22. RELATED PARTY TRANSACTIONS
(1) Related parties and relationship:
Related Party
Relationship
Investee company accounted for by the
Panasonic Electric Works Electronic equity method.
Materials Taiwan Co., Ltd. (PEWEMT) (All the shares have been disposal in
November 2011)
company accounted for by the
Compeq International Corporation. (CI) Investee
equity method.
Huaton Holdings Limited (HHL)
Investee company accounted for by the
equity method.
Pelican Cove Investment Ltd. (PCI)
Investee company accounted for by the
equity method.
Compeq Manufacturing (Huizhou) Co., HHL’s subsidiary.
Ltd.(CC)
Compeq Manufacturing (Suzhou) Co., HHL’s subsidiary.
Ltd. (CS)
Compeq Technology (Huizhou) Co.,
Ltd. (CF)
HHL’s subsidiary.
Compeq Manufacturing (Suzhou)
Service Ltd. (SS)
CS’s subsidiary (Dissolution completed
on September, 2012)
Hong Kong Compeq Huizhou Trading
Company Limited (CHK)
CC’s subsidiary
Directors, supervisors, general
managers, vice general managers
across the board
The Company’s major management
executives
51
(2) Related party transactions other than long-term investments in stock were as
follows:
a. Purchases
2012
2011
Amount
％
Amount
％
－
－
360,430
3
－
－
4,569
－
HHL
5,597,270
47
5,802,628
49
PCI
1,602,104
14
1,217,880
10
CS
109,410
1
122,870
1
CF
556
－
2,522
－
PEWEMT
$
CI
Total
$ 7,309,340
62
$
$ 7,510,899
63
(a) The purchase prices from PEWEMT were similar to those prices from other
suppliers.
(b) The purchase price from CI was similar to those prices from other suppliers.
(c) Mainly go through HHL and PCI to purchase goods indirect from CC and CF,
purchase work in process for sales to the other mainland China, the purchase
prices from HHL are based on the mutual agreement.
(d) The purchase price from CS and CF are similar to those prices from other
suppliers.
b. Accounts payable
December 31,
2012
2011
Amount
％
Amount
％
－
－
15
－
HHL
891,591
36
1,674,217
48
PCI
265,979
10
62,269
2
CI
Total
$
$ 1,157,570
46
$ 1,736,501
The payment terms were similar to those terms of other suppliers.
c. Net sales
2012
2011
Amount
％
Amount
CI
$
－
－
$
122,579
HHL
13,644
－
1,165
PCI
－
－
1,598
CC
305,838
2
81,742
CS
438,003
2
517,759
CF
297,083
2
358,705
SS
－
－
2,359
Total
$ 1,054,568
6
$ 1,085,907
52
50
％
－
－
－
－
2
2
－
4
(a) Sales to CI mainly are PCB. The selling prices were based on the mutual
agreement.
(b) Sales to CC、CF、CS、PCI and SS, the selling prices were based on the mutual
agreement.
d. Accounts receivable
December 31,
CC
CS
CF
Total
$
$
2012
Amount
74,192
90,406
14,223
178,821
％
1
2
－
3
$
$
2011
Amount
13,630
91,144
285,494
390,268
％
－
2
6
8
The collection terms were similar to those terms to other customers.
e. Other receivables
December 31,
HH
CC
CS
CF
Total
$
$
2012
Amount
27,928
139,832
9
－
167,769
％
12
59
－
－
71
$
$
2011
Amount
41,664
92,355
－
4,325
138,344
％
20
44
－
2
66
The other receivables were commission, patent license, and income from scrap
sales.
f. Accrued expenses
December 31,
2012
CI
$
CF
PCI
Total
$
2011
Amount
％
Amount
％
－
－
5,935
－
55,349
5
3,379
－
－
－
1
－
55,349
5
9,315
－
$
$
Primarily loss on indemnity.
g. Sales of fixed assets (machinery and other equipment)
2012
2011
Price
Cost
Price
HHL
$
20,800
$
22,442
$
56,249
$
The selling prices were based on the mutual agreement.
53
Cost
60,409
h. Purchases of fixed assets (construction in progress)
2012
2011
Amount
％
Amount
CI
$
－
－
$
2,169
％
－
i. Miscellaneous income
CC
HHL
PCI
CS
Total
$
$
2012
Amount
143,307
166,394
－
－
309,701
％
35
41
－
－
76
$
$
2011
Amount
88,859
119,692
11,214
26
219,791
％
20
27
3
－
50
Primarily patent and technical service income 、 commission income and
compensation income. The fees were based on the mutual contract.
j. Miscellaneous disbursements
CI
CC
CF
CS
Total
$
$
2012
Amount
－
5,905
57,274
135
63,314
％
－
3
28
－
31
$
$
2011
Amount
3,440
15,106
17,960
2,472
38,978
％
1
5
6
1
13
Primarily loss on indemnity.
k. Refer to Note 24 (2) for guaranties on the bank credit.
l. The Company goes to the material processing to CC and CF are through HH, the
related income and cost were reversed in the statement of income.
m. Compensation of directors, supervisors and management personnel:
(1)
2012
2011
Amount
Amount
Bonus to directors and
$
480
$
5,334
supervisors
Salaries
47,401
32,223
Incentives and special
7,907
1,071
compensation etc.
Total
$
55,788
$
38,628
(2) Please refer to Annual Report for related information. Total compensation
expense for the year ended December 31, 2012 includes estimated profit
sharing to employees and bonus to directors of the Company that relate to
2013 but will be paid in the following year. The actual amount will be finalized
and approved upon the resolution of the shareholders’ meeting 2013.
54
23. MORTGAGED OR PLEDGED ASSETS
2012
Fixed Assets
Land
Buildings
$
2011
630,242
571,533
$
630,242
615,135
24. COMMITMENTS AND CONTINGENT LIABILITIES
(1) As of December 31, 2012, the outstanding letters of credit for imported materials
and machinery aggregate US$2,114,350 、 JP￥1,070,000 、EUR　58,500 and
$119,411 thousand.
(2) As of December 31, 2012, the Company has provided part of its deposits as
collaterals to secure the bank credit lines of US$67,000,000、US$74,667,000、
US$15,000,000、US$9,000,000 and US$3,000,000 extended to Huaton Holdings
Limited、Compeq Manufacturing (Huizhou) Co., Ltd.、Compeq Technology (Huizhou)
Co., Ltd.、Compeq Manufacturing (Suzhou) Co., Ltd. and Hong Kong Compeq
Huizhou Trading Company Limited.
25. Related Information about Financial Instruments
(1) Fair values of financial instruments were as follows:
December 31,
2012
Non-derivative financial instruments
Book value
2011
Fair
Market value
Book value
Fair
Market value
Financial Assets
The fair value equal to book value
$ 7,897,467
$ 7,897,467
$ 8,826,159
$ 8,826,159
16,560
16,560
29,000
29,000
5,261
5,261
16,094
16,094
The fair value equal to book value
4,248,035
4,248,035
5,509,827
5,509,827
Long-term loans (including current portion)
7,833,333
7,833,333
7,015,665
7,015,665
7,540
7,540
5,140
5,140
Available-for-sale financial assets- noncurrent
Guarantee deposits paid (including current portion)
Financial Liabilities
Guarantee deposits received
December 31,
2012
Derivative financial instruments
Book value
2011
Fair
Market value
Book value
Fair
Market value
Financial Assets
Financial assets at fair value through profit or loss
$
1,597
$
1,597
$
－
$
－
Financial Liabilities
－
Financial liabilities at fair value through profit or
loss
55
－
5,955
5,955
December 31,
2012
Excluded balance sheet of
financial instruments
Guarantee provided – US dollars
Book value
Fair
Market value
2011
Book value
Fair
Market value
$ 4,898,090 $ 4,898,090 $ 5,227,493 $ 5,227,493
(US$168,667 (US$168,667 (US$172,667 (US$172,667
thousand)
thousand)
thousand)
thousand)
(2) The methods and assumptions employed in calculation of the fair values of
financial instruments were summarized as follows:
A. For short-term financial instruments, the fair value shall be estimated based on
the book value of the balance sheet. These methods were applied to Cash and
cash Equivalents, Note Receivable, Accounts Receivable, Other Receivable,
short-term loans, Notes payable, Accounts Payable, Accrued expenses, Other
payables and other Current Liabilities.
B. If the financial assets at fair value through profit or loss and the
available-for-sale financial assets have active market and quotation price, the
price will be the fair value; if not, valuation technique was used. The estimation
and hypotheses the Company uses in the valuation method were consistent
with the information used for estimation and hypotheses by market participants
when they price financial products.
The information refers to what can be
acquired by the Company.
C. If the derivative financial instruments have active market and quotation price, the
price will be the fair value; if not, valuation technique was used. If there was a
valuation technique commonly used by market participants to price the
instrument and that technique has been demonstrated to provide reliable
estimates of priced obtained in actual market transactions, the Company uses
that technique.
D. The fair value of financial assets carried at cost and investments accounted for
using equity method was not measured, since they didn’t have active market
and quotation price or significant cost will be incurred to verify the fair value in
practice.
E. Refundable deposits and Guarantee deposits received were unexpected for
collect and payment, the fair value shall be estimated based on the book value.
F. The interest rate of long-term debts approximates to market rate; the discount
value (fair value) of future cash flow is roughly the same as book value.
(3) The fair value of the Company’s financial instruments that used the active market
quotation price and the valuation technique was as follows:
56
Quotation Price
Valuation Technique
2012
2011
2012
2011
Fair Value
Amount
Fair Value
Amount
－
$ 7,897,467
$ 8,826,159
－
－
1,597
－
16,560
29,000
－
－
－
－
5,261
16,094
－
－
4,248,035
5,509,827
－
－
5,955
Financial Assets
The fair value equal to book value
Financial assets at fair value through profit or loss
Available-for-sale financial assets-noncurrent
Guarantee deposits paid (including current
portion)
$
－
$
Financial Liabilities
The fair value equal to book value
Financial liabilities at fair value through profit or
loss
Long-term loans (including current portion)
－
－
7,833,333
7,015,665
Guarantee deposits received
－
－
7,540
5,140
－
－
Excluded balance sheet of financial instruments
Guarantee provided –US dollars
4,898,090
5,227,493
(US$168,667 (US$172,667
thousand)
thousand)
(4) The credit risk of derivative financial instrument besides the balance sheet: Refer to
Note 25.
(5) Transaction risks
A. Credit risks
Credit risks refer to the risk that the transaction counterparty was not able to fulfill
a contract according to the agreed terms. The Company’s potential credit risk
mainly stems from cash, cash equivalents and derivative financial instruments.
The Company’s trading counterparts were mostly the financial institutions having
excellent credit reputation. To compound matters, the Company has dealt with
several financial institutions to diversify its risk, so it shall have no significant
credit risk concentration on a single financial institution.
B. Market risks
Refer to the risk resulting from change of market exchange rates. The
Company’s goods purchase and sales were mostly denominated in the U.S.
dollar whereas the fair value fluctuates mainly with change of market exchange
rates, so the foreign currency asset and liability positions held by the Company
can partially cancel each other out. In the case that there was a short term net
position gap, the Company will use currency forwards to hedge the possible risk
of market exchange rates. Hence, the Company shall have no significant market
risk.
C. Cash flow risks resulting from interest rate volatility
The Company’s short term loans are mostly expired within one year, and its
liabilities can be flexibly adjusted, so, as evaluated in this spirit, the Company
shall have no significant cash flow risk resulting from change of interest rates.
57
The Company’s mid and long term loans are liabilities with the floating rate, so,
as evaluated in this spirit, it was possible for the Company to have cash flow risk
due to change of interest rates. Hence, according to the trend of interest rates,
the company has flexibly hedged the interest rate risk, so as to reduce the cash
flow risk resulting from change of interest rates.
(6) Liquidity risks
The Company’s working capital was sufficient, so there will be no liquidity risks
caused by the failure in raising capital to perform a contract’s obligations. And the
Company has mostly invested financial assets carried at cost-noncurrent and in
equity products which are valuated by cost measure and equity method and can not
activate the market, so it was still possible for the Company to have major liquidity
risks.
(7) Cash flow and demand
The purpose of currency forwards engaged by the Company is to hedge the
exchange rate volatility risk of net assets. Since correspondent cash will be flown
in or out on maturity, the Company shall have no significant demand for extra cash.
26. OTHER
The exchange rate used to translate assets and liabilities denominated in foreign
currencies were disclosed as follows:
December 31, 2012
Foreign Currency
Exchange Rate
$ 220,724,915
29.04
6,983
38.49
December 31, 2011
Amount
Foreign Currency
Exchange Rate
Amount
Financial Assets
Monetary Items
USD
$ 6,409,852
$ 201,149,660
30.275
269
101,657
JPY
126,717,765
0.3364
42,628
386,381,242
0.3906
150,921
CNY
30,257,208
4.6202
139,794
19,154
4.8049
92
EUR
39.18
$ 6,089,806
3,983
Long-term investment
under equity method
USD
379,494,799
29.04
11,020,529
347,659,218
30.275
10,525,383
82,062,164
29.04
2,383,085
106,755,046
30.275
3,232,009
293,439
38.49
11,294
293,439
426
658,257,642
5,049
258,001
Financial Liabilities
Monetary Items
USD
EUR
JPY
1,266,000
0.3364
HKD
1,347,372
3.747
39.18
0.3906
3.897
11,497
257,115
1,005
27. OPERATING SEGMENT INFORMATION
The Company adopted the newly issued R.O.C. SFAS 41. The Company’s operating
segment information has been disclosed in the consolidated financial statements.
28. THE AUTHORIZATION OF FINANCIAL STATEMENTS
The financial statements were approved by the Board of Directors and authorized for
issue on March 22, 2013.
58
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
INDEPENDENT AUDITORS' REPORT
NO.00151010ECA
To the Board of Directors of
Compeq Manufacturing Co., Ltd.
We have audited the accompanying consolidated balance sheets of Compeq
Manufacturing Co., Ltd. and its subsidiaries as of December 31, 2012 and
2011, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Compeq International
Corporation, a wholly owned subsidiary, which statements reflect total assets
amounting to $27,062 thousand, and constituting 0.08%, and operating
revenues $318,982 thousand, and constituting 1.34%, of the related
consolidated totals for 2011.
Those statements were audited by other
auditors whose report has been furnished to us and our opinion, insofar as it
relates to the amounts included for Compeq International Corporation, is
based solely on the report of other auditors.
We conducted our audits in accordance the Republic of China “Guidelines for
Certified Public Accountants Examinations and Reports on Financial
Statements” and Republic of China generally accepted auditing standards.
Those 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 consolidated 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 other auditors provide a reasonable basis for our
opinion.
59
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to in the first paragraph present
fairly, in all material respects, the consolidated financial position of Compeq
Manufacturing Co., Ltd. and its subsidiaries as of December 31, 2012 and
2011, and the consolidated results of their operations and their cash flows for
the years then ended, in conformity with the Republic of China generally
accepted accounting principles.
Baker Tilly Clock & Co
Hung-Hsun Ting, CPA
Kuo-Fu Tseng, CPA
March 22, 2013
60
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
ASSETS
CODE
DESCRIPTION
11xx CURRENT ASSETS
1100
Cash and cash equivalents
1310
Financial assets measured at fair value
through profit or loss
1120
Notes receivable – net
1140
Accounts receivable – net
1160
Other receivables
1210
Inventories
1250
Prepaid expenses
1260
Prepayments
1280
Other current assets
1286
Deferred income tax assets
14xx FUNDS AND INVESTMENTS
1450
Available-for-sale financial assets
1480
Financial assets carried at cost
15xx FIXED ASSETS – NET
Cost
1501
Land
1521
Buildings and structures
1531
Machinery and equipment
1544
Computer equipment
1545
Testing equipment
1546
Pollution prevention equipment
1551
Transportation equipment
1561
Office equipment
1681
Other facilities
15x9 Less accumulated depreciation
1599 Less accumulated impairment
1671 Construction in progress
1672 Prepayments for equipment
17xx INTANGIBLE ASSETS
1750
Computer software cost
1782
Land use right
18xx OTHER ASSETS
1820
Guarantee deposits paid
1830
Deferred charges
1860
Deferred income tax assets
1888
Others assets
TOTAL ASSETS
２０１２
AMOUNT
$ 18,680,460
5,118,430
5,377
％
52
14
－
２０１１
AMOUNT
$ 18,364,394
7,364,334
8,175
％
53
21
－
334,462
8,651,168
357,694
3,761,473
95,118
8,909
183,268
164,561
16,560
16,560
－
16,127,123
1
24
1
11
－
－
1
－
－
－
－
46
130,882
6,524,579
348,914
3,701,267
89,312
10,099
107,466
79,366
36,000
29,000
7,000
15,598,674
－
19
1
12
－
－
－
－
－
－
－
45
720,721
7,309,927
21,598,824
114,415
1,797,559
410,098
57,417
195,884
5,107,100
(20,237,226)
(1,519,041)
565,044
6,401
167,067
49,182
117,885
322,140
32,676
13,662
268,385
7,417
2
21
61
－
5
1
－
1
14
(57)
(4)
2
722,669
7,111,660
21,613,794
126,400
1,942,378
436,117
57,319
204,802
5,002,521
(20,676,318)
(1,624,119)
664,726
16,725
155,134
29,137
125,997
541,237
54,564
17,186
458,510
10,977
1
21
62
－
6
1
－
1
15
(59)
(5)
2
－
－
－
－
2
－
－
2
－
$ 35,313,350
1
－
1
1
－
－
1
－
100
$ 34,695,439
LIABILITIES AND STOCKHOLDERS’ EQUITY
CODE
DESCRIPTION
21xx CURRENT LIABILITIES
2100
Short-term loans
2180
Financial liabilities measured at fair value
through profit or loss
2120
Notes payable
2140
Accounts payable
2160
Income tax payable
2170
Accrued expenses
2210
Other payables
2260
Advances receipts
2270
Current portion of long-term liabilities
2280
Other current liabilities
24xx LONG-TERM LIABILITIES
2420
Long-term loans
28xx OTHER LIABILITIES
2810
Accrued pension liabilities
2820
Guarantee deposits received
2xxx TOTAL LIABILITIES
3110 CAPITAL STOCK
32xx CAPITAL SURPLUS
3213
Additional paid in capital-bond conversion
3281
Accrued interest-premium of convertible bonds
3282
Other
33xx RETAINED EARNINGS
3310
Legal reserve
3350
Unappropriated retained earnings
34xx STOCKHOLDER’S EQUITIES ADJUSTMENTS
3420
Cumulative translation adjustments
3430
Net loss not recognized as pension cost
3450
Unrealized gains or losses on financial instruments
3xxx TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND
STOCKHOLDER’ EQUITY
100
61
２０１２
AMOUNT
10,472,170
1,641,727
－
％
29
5
－
２０１１
AMOUNT
$ 9,923,600
1,159,625
5,955
％
29
3
－
148,026
3,881,218
76,997
1,765,369
1,200,486
63,094
1,604,052
91,201
8,316,870
8,316,870
1,110,905
1,071,575
39,330
19,899,945
11,918,206
1,016,593
935,127
30,609
50,857
2,069,221
379,878
1,689,343
409,385
751,622
(342,637)
400
15,413,405
－
11
－
5
3
－
5
－
24
24
3
3
－
56
34
3
3
－
－
6
1
5
1
2
(1)
－
44
141,178
3,894,116
7,327
1,605,075
1,413,840
14,990
1,620,121
61,373
8,125,340
8,125,340
1,065,212
1,035,286
29,926
19,114,152
11,918,206
1,016,593
935,127
30,609
50,857
1,797,377
282,709
1,514,668
849,111
1,112,745
(276,474)
12,840
15,581,287
1
11
－
5
4
－
5
－
23
23
3
3
－
55
34
3
3
－
－
5
1
4
3
3
－
－
45
$ 35,313,350
100
$ 34,695,439
100
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
CODE
4000
4110
4170
4190
4100
4800
5000
5110
5800
5910
6000
6100
6200
6300
6900
7100
7110
7121
7122
7130
7140
7160
7310
7480
7500
7510
7530
7560
7630
7640
7650
7880
7900
DESCRIPTION
OPERATING REVENUES
Sales
Sales return
Sales allowance
Net sales
Other operating revenues
OPERATING COST
Cost of goods sold
Other operating cost
GROSS PROFIT FROM OPERATIONS
OPERATING EXPENSES
Selling expense
General & administrative expenses
Research & development expenses
OPERATING INCOME
NON-OPERATING INCOME AND GAINS
Interest income
Investment gains recognized under equity method
Dividend income
Gain on disposal of fixed assets
Gains on sale of investments
Foreign exchange gains
Revaluation gain on financial assets
Miscellaneous income
NON-OPERATING EXPENSES AND LOSSES
Interest expense
Loss on disposal of fixed assets
Foreign exchange loss
Loss on assets impairment
Revaluation loss on financial assets
Revaluation loss on financial liabilities
Miscellaneous disbursements
２０１２
AMOUNT
$ 26,795,372
27,285,173
(423,342)
(173,740)
26,688,091
107,281
23,357,995
23,224,305
133,690
3,437,377
1,657,062
650,837
733,352
272,873
1,780,315
207,487
54,364
－
6,480
12,672
209
－
7,921
125,841
626,377
226,702
155,131
65,555
－
－
－
178,989
CONTINUING OPERATIONS' CONSOLIDATED
INCOME BEFORE INCOME TAX
8110 INCOME TAX EXPENSE
9600 CONSOLIDATED NET INCOME
EARNINGS PER SHARE
9750 Basic
9850 Diluted
$
％
100
102
(2)
－
100
－
87
87
－
13
6
2
3
1
7
－
－
－
－
－
－
－
－
－
2
1
1
－
－
－
－
－
1,361,425
5
493,671
867,754
2
3
Before
Income Tax
$ 1.14
Net of Tax
２０１１
AMOUNT
$ 23,869,485
24,155,191
(238,049)
(170,541)
23,746,601
122,884
20,898,576
20,782,077
116,499
2,970,909
1,598,395
651,725
675,169
271,501
1,372,514
946,637
60,042
53,850
7,000
8,300
316,699
249,765
－
250,981
871,935
180,910
147,367
－
178,442
160
33,942
331,114
$
％
100
101
(1)
(1)
99
1
87
87
－
13
7
3
3
1
6
4
－
－
－
－
2
1
－
1
4
1
1
－
1
－
－
1
1,447,216
6
475,526
971,690
2
4
Net of Tax
$ 0.73
Before
Income Tax
$ 1.22
$ 1.14
$ 0.73
$ 1.21
$ 0.81
Dollars
Dollars
Dollars
Dollars
62
$ 0.82
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
RETAINED EARNINGS
CAPITAL
CAPITAL
DESCRIPTION
Balance, January 1, 2011
STOCK
SURPLUS
$11,918,206
$ 1,016,593
Legal
Reserve
$
282,709
Consolidated net income for 2011
Unappropriated
Retained Earnings
$
542,978
EQUITIES ADJUSTMENTS
Cumulative
Translation
Adjustments
$
658,394
Unrealized
Net Loss Not
Gains or losses
Recognized As
on Financial
Pension Cost
Instruments
$
(237,849)
$
454,351
454,351
Changes in net loss not recognized as pension cost
(38,625)
(38,625)
Changes in unrealized gain or losses on
available-for-sale financial assets
(28,700)
11,918,206
1,016,593
282,709
$14,222,571
971,690
Changes in foreign exchange gain or loss due to
the translation of foreign currency financial
statements
Balance, December 31, 2011
41,540
971,690
TOTAL
1,514,668
1,112,745
(276,474)
12,840
(28,700)
15,581,287
Appropriations of prior year’s earnings
Legal reserve
97,169
Cash dividends
Consolidated net income for 2012
－
(97,169)
(595,910)
(595,910)
867,754
867,754
Changes in foreign exchange gain or loss due to
the translation of foreign currency financial
statements
(361,123)
(361,123)
Changes in net loss not recognized as pension cost
(66,163)
(66,163)
Changes in unrealized gain or losses on
available-for-sale financial assets
Balance, December 31, 2012
(12,440)
$11,918,206
$ 1,016,593
$
379,878
63
$ 1,689,343
$
751,622
$
(342,637)
$
400
(12,440)
$15,413,405
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
２０１２
DESCRIPTION
２０１１
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income
$
867,754
$
971,690
Adjustments
Depreciation expense
1,888,828
1,559,254
Amortization expense
28,616
29,379
6,104
16,277
142,459
139,067
Provision for bad debt expense
Net loss (gain) on disposal of fixed assets
Gain on disposal of investments
(209)
(316,699)
Investment income recognized under the equity method
－
(53,850)
Cash dividends received from investments accounted for under equity
method
－
33,734
Exchange loss (gain) on long-term debts
75,346
－
Loss on assets impairment
(106,130)
178,442
Unrealized revaluation loss (gain) on financial assets
(6,324)
160
Unrealized revaluation loss (gain) on financial liabilities
(1,597)
33,942
Other adjustments to reconcile net income
－
19,793
4,973
18,875
Changes in assets and liabilities:
Financial instruments held for trading
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepaid expenses
(212,247)
(10,963)
(2,235,915)
(263,760)
(21,468)
149,786
(143,255)
91,548
(7,877)
(17,325)
Prepaid prepayments
3,958
1,843
Other current assets
(49,590)
20,184
Deferred tax assets – current
(85,731)
63,934
Deferred tax assets – noncurrent
262,880
164,860
12,491
106,137
4,308
303,286
Notes payable
Accounts payable
－
Payables to related parties
(127,558)
Income tax payable
71,169
1,189
Accrued expenses
186,794
(4,620)
Other payables
13,855
(11,154)
Receipts in advance
49,302
12,633
Other current liabilities
39,606
1,449
(29,874)
(20,517)
Accrued pension liabilities
Net Cash Provided by Operating Activities
$
64
864,356
$ 2,984,886
COMPEQ MANUFACTURING CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)
２０１２
DESCRIPTION
２０１１
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from return of liquidation by investee
$
7,000
$
－
Proceeds from disposal of long-term investments under equity method
Purchase of fixed assets
1,279,452
(3,110,923)
Proceeds from disposal of fixed assets
7,322
(3,126,471)
53,151
59,489
Increase in intangible assets
(33,946)
(3,326)
Increase in deferred charges
(8,605)
(2,353)
(33,947)
(59,738)
23,181
31,959
Increase in refundable deposits - current
Decrease in refundable deposits - noncurrent
Net Cash Used in Investing Activities
(3,104,089)
(1,813,666)
Increase in short-term loans
2,609,583
3,043,017
Decrease in short-term loans
(2,023,984)
(3,467,205)
Proceeds from long-term loans
4,164,875
7,770,500
Repayments of long-term loans
(3,887,381)
(6,743,534)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends
－
(595,910)
Increase in guarantee deposits received
2,927
3,262
Decrease in guarantee deposits received
(1,834)
(2,814)
Net Cash Provided by Financing Activities
268,276
603,226
(274,447)
220,805
(2,245,904)
1,995,251
7,364,334
5,369,083
$ 5,118,430
$ 7,364,334
$
$
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
SUPPLEMENTAL CASH FLOW INFORMATION
Interest expense paid (excluding capitalized interest)
Income tax paid
226,330
179,622
220,046
271,788
(12,440)
(28,700)
NON-CASH INVESTING AND FINANCING ACTIVITIES
Available for sale financial assets noncurrent
Current portion of long-term debts
1,604,052
Translation adjustments
(435,087)
1,620,121
682,263
CASH PAID FOR ACQUISITION OF FIXED ASSETS
Acquisition of fixed assets
Decrease in payable for equipment purchased
Cash paid for acquisition of fixed assets
65
$ 2,914,472
$ 3,009,570
196,451
116,901
$ 3,110,923
$ 3,126,471
V. Special Catalog -- RELATED PARTIES INFORMATION
1. ORGANIZATION CHART
COMPEQ MANUFACTURING CO., LTD.
(2)
(1)
HUATON
HOLDINGS LTD.
(11)
COMPEQ
INTERNATIONAL
CORPORATION
(4)
(12) PELICAN COVE
INVESTMENT
LTD.
(7)
(8)
COMPEQ
MANUFACTURING
(SUZHOU) CO., LTD.
(3)
COMPEQ
MANUFACTURING
(HUIZHOU) CO., LTD.
HUANEIN
HOLDINGS
LTD.
(5)
LITON
HOLDINGS
LTD.
(9)
(6)
COMPEQ
OVERSEAS
HOLDINGS
LTD.
(10)
COMPEQ
MANUFACTURING
(CHONGGING)
CO., LTD.
COMPEQ
TECHNOLOGY
(HUIZHOU) CO., LTD.
(13)
HONG KONG
COMPEQ HUIZHOU
TRADING COMPANY
LTD.
SHARE
NOTE
PARENT COMPANY
SUBSIDIARY
RATIO
(1)
COMPEQ MANUFACTURING CO., LTD.
HUATON HOLDINGS LTD.
(2)
COMPEQ MANUFACTURING CO., LTD.
COMPEQ INTERNATIONAL CORPORATION
(3)
COMPEQ MANUFACTURING CO., LTD.
PELICAN COVE INVESTMENT LTD.
100%
(4)
COMPEQ MANUFACTURING CO., LTD.
HUANEIN HOLDINGS LTD.
100%
(5)
COMPEQ MANUFACTURING CO., LTD.
LITON HOLDINGS LTD.
100%
(6)
COMPEQ MANUFACTURING CO., LTD.
COMPEQ OVERSEAS HOLDINGS LTD.
100%
(7)
HUATON HOLDINGS LTD.
COMPEQ MANUFACTURING (HUIZHOU) CO., LTD.
100%
(8)
HUATON HOLDINGS LTD.
COMPEQ MANUFACTURING (SUZHOU) CO., LTD.
100%
(9)
HUATON HOLDINGS LTD.
COMPEQ MANUFACTURING (CHONGGING) CO., LTD.
100%
(10) HUATON HOLDINGS LTD.
COMPEQ TECHNOLOGY (HUIZHOU) CO., LTD.
100%
(11) HUATON HOLDINGS LTD.
COMPEQ INTERNATIONAL CORPORATION
6.65%
(12) PELICAN COVE INVESTMENT LTD.
COMPEQ INTERNATIONAL CORPORATION
22.87%
HONG KONG COMPEQ HUIZHOU TRADING
COMPANY LTD.
100%
(13)
COMPEQ MANUFACTURING (HUIZHOU)
CO., LTD.
66
100%
70.48%
2. General Information
RELATED PARTY
SETUP
DATE
LOCATION
COMPEQ MANUFACTURING
CO., LTD.
1973.08.30 TAIWAN
COMPEQ INTERNATIONAL
CORPORATION
1989.05.05 U.S.A.
HUATON HOLDINGS LTD.
1995.07.01
COMPEQ MANUFACTURING
(HUIZHOU) CO., LTD.
1995.11.21 CHINA
COMPEQ MANUFACTURING
(CHONGGING) CO., LTD.
2012.05.16 CHINA
COMPEQ MANUFACTURING
(SUZHOU) CO., LTD.
2004.05.19 CHINA
COMPEQ TECHNOLOGY
(HUIZHOU) CO., LTD.
2004.07.15 CHINA
PAID-IN
CAPITAL
TWD
BUSINESS
SEGMENT
11,918,206
Thousands
CORRELATION
PCB manufacturing Integral related parties’ management.
and sales
Advanced PCBs manufacturing
US$
PCB manufacturing PCB manufacturing and sales for
61,200,000 and sales
North-West American market
Investment and
BRITISH VIGIN US$
210,886,000 trading
ISLANDS
Mainly in charge of Investment and
trading in China
Mainly in charge of the
CNY
PCB manufacturing
manufacturing and sales of advanced
938,975,100 and trading
and matured PCBs in China
Mainly in charge of the
CNY
PCB manufacturing
manufacturing and sales of advanced
44,313,500 and sales
and matured PCBs in China
CNY
PCB design and
91,374,043 SMT service
Mainly in charge of low volume SMT
service in East China
CNY
Mainly in charge of the
manufacturing and sales of FPCBs
FPCB design and
282,268,150 manufacturing
PELICAN COVE INVESTMENT
BRITISH VIGIN US$
Investment and
1997.02.05
LTD.
ISLANDS
17,700,000 trading
TWD 30,000
Investment
Thousands
Trade with related parties in China
and global investment
HUANEIN HOLDINGS LTD.
2007.04.23 TAIWAN
LITON HOLDINGS LTD.
2007.03.28
BRITISH VIGIN US$
Investment
ISLANDS
5,100,000
Mainly in charge of Investment and
trading in China
COMPEQ OVERSEAS
HOLDINGS LTD.
2007.10.02
BRITISH VIGIN
ISLANDS
Global investment.
HONG KONG COMPEQ
HUIZHOU TRADING
COMPANY LTD.
2009.12.15 HONG KONG
_ Investment
USD 300,000 Trading
Domestic investment and trading.
Electronic components trading in
China.
3.Boards and Directors Information
Related Parties
COMPEQ
MANUFACTURING CO.,
LTD.
Title
Chairman of the Board
Charles Wu
Vice Chairman of the
Board
T.L. Liu
Director
K.S. Peng
Director
P.Y. Wu
Director
Andrew Chen
Supervisor
S.D. Hung
Supervisor
S.M. Yang, on behalf of Chang-Zhi
Investment Co., Ltd.
President
P.K. Chiang
Chairman of the Board
Compeq Manufacturing Co., Ltd.
Delegation: Robert Wang
Huaton Holdings Ltd.
Delegation: Andrew Chen
Pelican Cove Investment Ltd.
Delegation: Y.C. Huang
Sam, Pirayesh
Compeq Manufacturing Co., Ltd.
Delegation: T.L. Liu
President
Y.C. Huang
Director
COMPEQ INTERNATIONAL
CORPORATION
Chairman of the Board
Director
President
HUATON HOLDINGS LTD.
Representative
67
Shares and Capital
Shares
Share Ratio
36,678,243
3.08%
1,526,565
0.13%
8,815,186
0.74%
40,518,499
3.40%
634,668
0.05%
1,815,027
0.15%
14,273,000
123,918
1.20%
0.00%
343,450
0.03%
4,313,298
0
406,915
0
1,399,787
0
0
210,886,000
0
70.48%
0.00%
6.65%
0.00%
22.87%
0.00%
0.00%
100.00%
0.00%
0
0.00%
COMPEQ
MANUFACTURING
(HUIZHOU) CO., LTD.
COMPEQ
MANUFACTURING
(SUZHOU) CO., LTD.
COMPEQ TECHNOLOGY
(HUIZHOU) CO., LTD.
HUANEIN HOLDINGS LTD.
LITON HOLDINGS LTD.
COMPEQ OVERSEAS
HOLDINGS LTD.
Director and President
Delegation: Steve Chen
0
0.00%
Director
Delegation: Andrew Chen
0
0.00%
Director
Delegation: Robert Wang
0
0.00%
Director
Delegation: P.K. Chiang
0
0.00%
Director
Delegation: P.Y. Wu
0
0.00%
Director
Delegation: Y.C. Huang
0
0.00%
Chairman of the Board
Huaton Holdings Ltd.
Delegation: P.Y. Wu
Director
Delegation: Andrew Chen
Director
Delegation: Steve Chen
Chairman of the Board
and President
Huaton Holdings Ltd.
Delegation: P.Y. Wu
Director and President
Delegation: Steve Chen
HONG KONG COMPEQ
HUIZHOU TRADING
COMPANY LTD.
US$ 11,290,000(Paid-in)
0
0
0
US$25,000,000(Paid-in)
0
0
Delegation: T.L. Liu
100.00%
0.00%
0.00%
0.00%
100.00%
0.00%
0.00%
0
0.00%
17,700,000
0
100.00%
0.00%
100.00%
0.00%
Chairman of the Board
Compeq Manufacturing Co., Ltd.
Delegation: Y.C. Huang
Compeq Manufacturing Co., Ltd.
Delegation: Robert Wang
Director
Delegation: Albert Chen
0
0.00%
Director
Delegation: Mark Chang
0
0.00%
Supervisor
Delegation: Y.C. Huang
Chairman of the Board
Chairman of the Board
Chairman of the Board
3,000,000
Compeq Manufacturing Co., Ltd.
Delegation: Y.C. Huang
Compeq Manufacturing Co., Ltd.
Delegation: T.L. Liu
Chairman of the Board Huaton Holdings Ltd.
and President
Delegation: T.L. Liu
COMPEQ
MANUFACTURING
(CHONGGING) LTD.
100.00%
0.00%
Huaton Holdings Ltd.
Delegation: T.L. Liu
Director
PELICAN COVE
INVESTMENT LTD.
US$
115,000,000(Paid-in)
0
Chairman of the Board
0
0.00%
5,100,000
0
100.00%
0.00%
100.00%
0.00%
US$ 7,000,000(Paid-in)
0
100.00%
0.00%
Director
Delegation: Andrew Chen
0
0.00%
Director
Delegation: Steve Chen
0
0.00%
Supervisor
Delegation: Robert Wang
0
0.00%
Director
COMPEQ MANUFACTURING
(HUIZHOU) CO., LTD.
Delegation: Steve Chen
68
US$
300,000(Paid-in)
0.00%
COMPEQ MANUFACTURING CO., LTD.
Chairman
Charles C. Wu