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Wintek Corporation and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2013 and 2012 and Independent AuditorsReport

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Page 1: Wintek Corporation and Subsidiaries · 2014-03-20 · WINTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except

Wintek Corporation and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2013 and 2012 and Independent Auditors’ Report

Page 2: Wintek Corporation and Subsidiaries · 2014-03-20 · WINTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except

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DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The Companies required to be included in the consolidated financial statements of affiliates in accordance with

the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated

Financial Statements of Affiliated Enterprises” for the year ended December 31, 2013 are all the same as the

companies required to be included in the consolidated financial statements of parent and subsidiary companies

as provided in International Accounting Standard 27 “Consolidated and Separate Financial Statements.”

Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been

disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not

prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

WINTEK CORPORATION

By:

Hyley H. Huang

President

March 4, 2014

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders

Wintek Corporation

We have audited the accompanying consolidated balance sheets of Wintek Corporation (the “Corporation”) and

its subsidiaries (collectively referred to as the “Group”) as of December 31, 2013, December 31, 2012 and

January 1, 2012, and the related consolidated statements of comprehensive income, changes in equity and cash

flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the

responsibility of the Corporation’s management. Our responsibility is to express an opinion on these

consolidated financial statements based on our audits. However, we did not audit the financial statements of (a)

Wintek Electro-Optics Corporation, Wintek (Central Europe) GmbH as of and for the years ended December 31,

2013, December 31, 2012 and as of January 1, 2012; (b) Wintek Technology (India) Private Limited as of and

for the year ended December 31, 2012 and as of January 1, 2012; and (c) Wintek Vietnam Co., Ltd. as of

January 1, 2012. The carrying amounts of these subsidiaries’ total assets were 0.3% (NT$231,216 thousand),

0.5% (NT$412,869 thousand) and 7% (NT$6,096,546 thousand) of the consolidated total assets as of December

31, 2013, December 31, 2012 and January 1, 2012, respectively, and their net sales were 0.1% (NT$44,256

thousand) and 0.1% (NT$138,359 thousand) of the consolidated total net sales in 2013 and 2012, respectively.

These subsidiaries’ statements were audited by other auditors, whose reports have been furnished to us, and our

opinion, insofar as it relates to the amounts included for these subsidiaries as well as these subsidiaries’

information disclosed in Note 31 to the consolidated financial statements, is based solely on the reports of the

other auditors.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified

Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and

standards require that we plan and perform the audit to obtain reasonable assurance about whether the

consolidated 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 the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements

referred to above present fairly, in all material respects, the financial position of the Group as of December 31,

2013, December 31, 2012 and January 1, 2012, and their financial performance and their cash flows for the

years ended December 31, 2013 and 2012, in conformity with the Regulations Governing the Preparation of

Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International

Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed by the

Financial Supervisory Commission of the Republic of China.

The management’s plans on improving the Group’s financial and operation conditions are described in Note 1 to

the consolidated financial statements. The consolidated financial statements as of and for the year ended

December 31, 2013 do not include any adjustments that might result from the outcome of this uncertainty.

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We have also audited the financial statements of Wintek Corporation, the parent company, as of and for the

years ended December 31, 2013 and 2012, on which we have issued a modified unqualified report.

March 4, 2014

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial

position, financial performance and cash flows in accordance with accounting principles and practices

generally accepted in the Republic of China and not those of any other jurisdictions. The standards,

procedures and practices to audit such consolidated financial statements are those generally applied in the

Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial

statements have been translated into English from the original Chinese version prepared and used in the

Republic of China. If there is any conflict between the English version and the original Chinese version or any

difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and

consolidated financial statements shall prevail.

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31, 2013 December 31, 2012 January 1, 2012

ASSETS Amount % Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Note 6) $ 7,068,795 9 $ 5,941,016 7 $ 7,682,309 9

Financial assets at fair value through profit or loss - current (Note 7) 134,952 - 471 - 61,740 -

Available-for-sale financial assets - current (Note 8) 553,836 1 310,663 - 311,133 -

Debt investments with no active market - current (Notes 9 and 27) 312,375 - 148,081 - 181,650 -

Notes receivable 10,868 - 3,152 - 5,074 -

Trade receivables (Note 10) 11,629,191 14 13,405,267 15 15,503,482 17

Other receivables (Notes 10 and 21) 987,511 1 480,558 - 1,394,327 2

Inventories (Note 11) 9,260,172 11 11,429,764 13 11,647,296 13

Other current assets 2,052,478 3 3,508,977 4 1,883,201 2

Total current assets 32,010,178 39 35,227,949 39 38,670,212 43

NON-CURRENT ASSETS

Financial assets measured at cost - noncurrent (Note 12) 148,895 - 177,935 - 208,482 -

Debt investments with no active market - noncurrent (Notes 9 and 27) 149,025 - - - - -

Property, plant and equipment (Notes 13 and 27) 46,039,575 56 50,423,824 56 40,925,979 46

Investment properties (Notes 14 and 27) 67,318 - 67,403 - 71,988 -

Computer software 52,684 - 49,967 - 29,197 -

Goodwill 36,866 - 35,920 - 37,447 -

Deferred tax assets (Note 21) 1,279,634 2 1,206,044 1 980,072 1

Prepayments for equipment 1,006,942 1 2,371,962 3 6,819,076 8

Refundable deposits 75,243 - 81,187 - 81,297 -

Long-term prepayments for lease (Notes 15 and 27) 1,159,431 2 1,129,602 1 1,201,678 2

Other non-current assets (Note 18) 51,654 - 27,350 - 45,869 -

Total non-current assets 50,067,267 61 55,571,194 61 50,401,085 57

TOTAL $ 82,077,445 100 $ 90,799,143 100 $ 89,071,297 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 16) $ 21,617,807 26 $ 19,820,912 22 $ 14,636,338 17

Short-term bills payable (Note 16) 39,999 - 199,809 - 278,540 -

Financial liabilities at fair value through profit or loss - current

(Note 7) 12,732 - 37,792 - 23,753 -

Notes payable 205,814 - 14,300 - 14,116 -

Trade payables 11,705,765 14 10,634,965 12 13,714,923 15

Other payables (Note 17) 5,612,541 7 5,682,751 6 5,921,030 7

Current tax liabilities (Note 21) 61,218 - 163,181 - 92,453 -

Provisions - current 17,188 - 34,547 - 71,452 -

Current portion of long-term borrowings (Notes 16 and 27) 9,226,179 11 2,463,047 3 3,474,368 4

Other current liabilities - others 352,455 1 290,651 1 354,926 -

Total current liabilities 48,851,698 59 39,341,955 44 38,581,899 43

NON-CURRENT LIABILITIES

Long-term borrowings (Notes 16 and 27) 7,011,871 9 16,558,851 18 14,564,597 17

Deferred tax liabilities (Note 21) 17,388 - 19,954 - 11,656 -

Other non-current liabilities 12,883 - 4,970 - 4,469 -

Total non-current liabilities 7,042,142 9 16,583,775 18 14,580,722 17

Total liabilities 55,893,840 68 55,925,730 62 53,162,621 60

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT

Share capital

Common stock 18,477,784 23 18,477,784 20 16,477,784 19

Capital surplus

Additional paid-in capital from share issuance in excess of par 15,381,964 19 18,260,403 20 17,658,360 20

Treasury stock transactions 172,402 - 172,402 - 172,402 -

Difference between market price and carrying amount in acquisition or

disposal of subsidiaries 1,235 - 1,235 - - -

Merger 48,478 - 48,478 - 48,478 -

Others 318 - 318 - 318 -

Retained earnings

Legal reserve - - - - 1,576,205 2

Accumulated deficit (8,706,924) (11) (1,323,142) (1) (314,789) (1)

Other equity

Exchange differences on translating foreign operations 284,694 - (1,039,918) (1) - -

Unrealized gain on available-for-sale financial assets 370,440 1 136,890 - 128,986 -

Total equity attributable to owners of the parent 26,030,391 32 34,734,450 38 35,747,744 40

NON-CONTROLLING INTERESTS 153,214 - 138,963 - 160,932 -

Total equity 26,183,605 32 34,873,413 38 35,908,676 40

TOTAL $ 82,077,445 100 $ 90,799,143 100 $ 89,071,297 100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 4, 2014)

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Loss Per Share)

Year Ended December 31

2013 2012

Amount % Amount %

SALES $ 76,397,725 100 $ 102,178,051 100

COST OF GOODS SOLD (Notes 11 and 20) 79,640,376 104 99,702,585 97

GROSS PROFIT (LOSS) (3,242,651) (4) 2,475,466 3

OPERATING EXPENSES (Note 20)

Selling and marketing expenses 593,549 1 841,797 1

General and administrative expenses 1,854,795 2 1,688,644 2

Research and development expenses 1,449,836 2 1,506,327 1

Total operating expenses 3,898,180 5 4,036,768 4

OTHER OPERATING INCOME AND EXPENSES

(Note 13) (3,394,590) (5) (780,104) (1)

LOSS FROM OPERATIONS (10,535,421) (14) (2,341,406) (2)

NON-OPERATING INCOME AND EXPENSES

Interest income 37,407 - 56,882 -

Dividend income 21,738 - 18,918 -

Other income 362,730 1 249,183 -

Gain on disposal of investments 24,623 - 86 -

Net foreign exchange gain 541,642 1 173,251 -

Valuation gain on financial assets (liabilities) at fair

value through profit 257,051 - - -

Finance costs (Note 13) (916,985) (1) (866,462) (1)

Other expenses (630) - (2,558) -

Loss on disposal of property, plant and equipment (1,091) - (1,299) -

Valuation loss on financial assets (liabilities) at fair

value through loss - - (97,773) -

Total non-operating income and expenses 326,485 1 (469,772) (1)

LOSS BEFORE INCOME TAX (10,208,936) (13) (2,811,178) (3)

INCOME TAX EXPENSE (Note 21) 31,127 - 31,500 -

NET LOSS FOR THE YEAR (10,240,063) (13) (2,842,678) (3)

(Continued)

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Loss Per Share)

Year Ended December 31

2013 2012

Amount % Amount %

OTHER COMPREHENSIVE INCOME (LOSS)

Exchange differences on translating foreign

operations $ 1,324,612 2 $ (1,039,918) (1)

Unrealized gain on available-for-sale financial assets 233,343 - 7,924 -

Actuarial loss on defined benefit plans (Note 18) (7,700) - (32,836) -

Other comprehensive income (loss) for the year,

net of income tax 1,550,255 2 (1,064,830) (1)

TOTAL COMPREHENSIVE LOSS FOR THE YEAR $ (8,689,808) (11) $ (3,907,508) (4)

NET INCOME (LOSS) ATTRIBUTABLE TO:

Owners of the parent $ (10,254,316) (13) $ (2,881,517) (3)

Non-controlling interests 14,253 - 38,839 -

$ (10,240,063) (13) $ (2,842,678) (3)

TOTAL COMPREHENSIVE INCOME (LOSS)

ATTRIBUTABLE TO:

Owners of the parent $ (8,704,059) (11) $ (3,945,245) (4)

Non-controlling interests 14,251 - 37,737 -

$ (8,689,808) (11) $ (3,907,508) (4)

LOSS PER SHARE (Note 22)

Basic $ (5.55) $ (1.64)

Diluted $ (5.55) $ (1.64)

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 4, 2014) (Concluded)

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of the Parent

Other Equity

Exchange Unrealized

Retained Earnings (Note 19)

Differences on

Translating

Gain on

Available-for-

Share Capital

(Note 19)

Capital Surplus

(Note 19) Legal Reserve

Accumulated

Deficit

Foreign

Operations

sale Financial

Assets Total

Non-controlling

Interests Total Equity

BALANCE AT JANUARY 1, 2012 $ 16,477,784 $ 17,879,558 $ 1,576,205 $ (314,789) $ - $ 128,986 $ 35,747,744 $ 160,932 $ 35,908,676

Issuance of capital stock for GDRs - June 5, 2012 2,000,000 930,716 - - - - 2,930,716 - 2,930,716

Difference between market price and carrying amount in

acquisition or disposal of subsidiaries - 1,235 - - - - 1,235 (1,235) -

Cash dividends distributed by subsidiaries - - - - - - - (73,213) (73,213)

Offset of deficit against legal reserve - - (1,576,205) 1,576,205 - - - - -

Offset of deficit against capital surplus - (328,673) - 328,673 - - - - -

Decrease in non-controlling interests - - - - - - - 14,742 14,742

Net loss for the year ended December 31, 2012 - - - (2,881,517) - - (2,881,517) 38,839 (2,842,678)

Other comprehensive income (loss) for the year ended December

31, 2012, net of income tax - - - (31,714) (1,039,918) 7,904 (1,063,728) (1,102) (1,064,830)

Total comprehensive income (loss) for the year ended December

31, 2012 - - - (2,913,231) (1,039,918) 7,904 (3,945,245) 37,737 (3,907,508)

BALANCE AT DECEMBER 31, 2012 18,477,784 18,482,836 - (1,323,142) (1,039,918) 136,890 34,734,450 138,963 34,873,413

Offset of deficit against capital surplus - (2,878,439) - 2,878,439 - - - - -

Net loss for the year ended December 31, 2013 - - - (10,254,316) - - (10,254,316) 14,253 (10,240,063)

Other comprehensive income (loss) for the year ended December

31, 2013, net of income tax - - - (7,905) 1,324,612 233,550 1,550,257 (2) 1,550,255

Total comprehensive income (loss) for year ended December 31,

2013 - - - (10,262,221) 1,324,612 233,550 (8,704,059) 14,251 (8,689,808)

BALANCE AT DECEMBER 31, 2013 $ 18,477,784 $ 15,604,397 $ - $ (8,706,924) $ 284,694 $ 370,440 $ 26,030,391 $ 153,214 $ 26,183,605

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 4, 2014)

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Year Ended December 31

2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES

Loss before income tax $(10,208,936) $ (2,811,178)

Adjustments for :

Depreciation 8,503,301 8,455,684

Amortization 25,243 18,360

Impairment loss recognized on trade receivables 367 6,395

Net loss (gain) on fair value change of financial assets (liabilities)

designated as at fair value through profit or loss

(257,051) 97,773

Finance costs 916,985 866,462

Interest income (37,407) (56,882)

Dividend income (21,738) (18,918)

Loss on disposal of property, plant and equipment 1,091 1,299

Gain on disposal of investments (24,623) (86)

Write-down of inventories 1,416,204 1,042,713

Impairment loss recognized on property, plant and equipment 3,394,590 780,104

Net gain on foreign-currency exchange (568,581) (433,967)

Amortization of long-term prepayments for lease 24,721 33,375

Others (15) 28

Net changes in operating assets and liabilities

Financial instruments held for trading 97,792 (22,526)

Notes receivable (7,715) 1,968

Trade receivables 1,842,596 2,032,034

Other receivables (502,635) 936,430

Inventories 863,993 (1,001,280)

Other current assets 1,537,319 (1,704,642)

Notes payable 190,696 187

Trade payables 1,006,511 (2,998,589)

Other payables (120,290) (395,410)

Provisions (17,359) (36,905)

Other current liabilities 50,985 (39,548)

Cash generated from operations 8,106,044 4,752,881

Interest received 35,766 56,248

Interest paid (865,369) (866,204)

Income tax paid (214,315) (221,382)

Net cash generated from operating activities 7,062,126 3,721,543

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets (62,942) (110,025)

Proceeds of the sale of available-for-sale financial assets 107,523 128,101

Acquisition of debt investments with no active market (309,878) (15,884)

Proceeds of the sale of debt investments with no active market - 49,453

Proceeds of the return of capital on financial assets measured at cost - 19,717

Acquisition of property, plant and equipment (2,607,439) (13,445,927)

(Continued)

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WINTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Year Ended December 31

2013 2012

Proceeds of the disposal of property, plant and equipment $ 234,412 $ 83,173

Decrease in refundable deposits 6,438 -

Acquisition of computer software (27,819) (36,134)

Increase in other assets (4,458) (22,990)

Increase in prepayments for equipment (1,949,578) (1,918,443)

Other dividend received 21,738 18,918

Others 506 (771)

Net cash used in investing activities (4,591,497) (15,250,812)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds of short-term borrowings 1,386,304 5,982,513

Repayment of short-term bills payable (159,810) (78,731)

Proceeds of long-term borrowings 1,744,031 8,133,951

Repayment of long-term borrowings (4,798,035) (6,859,897)

Proceeds of guarantee deposits received 7,760 679

Dividends paid to non-controlling interests - (73,213)

Issuance of capital stock for GDRs - 2,930,716

Increase in non-controlling interests - 14,742

Net cash generated from (used in) financing activities (1,819,750) 10,050,760

EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF

CASH HELD IN FOREIGN CURRENCIES

476,900 (262,784)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS

1,127,779 (1,741,293)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR

5,941,016 7,682,309

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 7,068,795 $ 5,941,016

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ report dated March 4, 2014) (Concluded)

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WINTEK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Wintek Corporation (the “Corporation”) was incorporated on April 26, 1990. It manufactures and sells

liquid crystal displays (LCDs), liquid crystal modules (LCMs) and touch panels.

The Corporation’s shares have been listed on the Taiwan Stock Exchange (TSE) since December 19, 1998.

The consolidated financial statements are presented in the Corporation’s functional currency.

As of December 31, 2013, the Corporation’s accumulated deficit was $8,706,924 thousand, current

liabilities exceeded current assets by $16,841,520 thousand, and debt to total asset ratio was 68%. To repay

the Corporation’s debt, boost its working capital and strengthen its financial position, the management

plans to improve the Corporation’s operation results and financial condition; the plan includes the

following:

a. Capital increase: In their annual meeting in 2013, shareholders approved the issuance of 150 million to

200 million global depositary receipts (GDRs) and evaluated other long-term plans to raise capital.

These plans will be carried out vigorously in light of prevailing financial conditions to enhance the

Corporation’s financial structure and expand its working capital. The issuance of these GDRs was

approved by the Securities and Futures. Bureau on December 11, 2013. The date of issuance will

depend on the condition of capital market and the Corporation’s operation.

b. Strengthening revenue-generating capability: The Corporation continues to build on its superiority in its

one glass solution (OGS) technology and production capacity to win more customer orders. In addition,

the Corporation continues to apply it’s the capability maturity integration model to its full lamination

and display technology which provides cost saving to the Corporation, offers value-added service to its

customers and increase market share and revenue.

c. Cost saving strategy:To reduce fixed costs, lower the breakeven point, improve profitability and

increase cash flow, the Corporation intends to improve production management by centralizing plants

with low utilization rate and not cost-effective. The Corporation has centralized the front-end

production process of touch panels and the monthly cost-saving efficiency has reached 90% as of

December 31, 2013.

d. Shortening the cash conversion cycle: The Corporation actively strives for favorable terms of payment,

lower inventory balances and accounts receivable financing to shorten the cash conversion cycle and

increase benefit from capital use. As a result, the average collection days have reduced from 46 days to

39 days; days sales of inventory have reduced from 52 days to 39 days; days payable outstanding have

increased from 64 days to 75 days from the third quarter of 2013 to the fourth quarter of 2013 which

contributes to faster cash collection and improvement of the working capital.

Under performing those plans above, Management believed that the Corporation can increase its cash

inflow to repayment the current borrowings, obtain the opportunities to re-financing and effectively reduce

the Corporation’s operating cost, as well as improve its performance and financial structure. Therefore,

these consolidated financial statements as of and for the year ended December 31, 2013 does not include

any adjustments that might result from the outcome of this uncertainty.

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2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board and authorized for issue on March 4,

2014.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. New, amended and revised standards and interpretations (the “New Taiwan-IFRSs”) in issue but not yet

effective

The Corporation and entities controlled by the Corporation (the “Group”) have not applied the

following International Financial Reporting Standards (IFRS), International Accounting Standards

(IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) issued by the International

Accounting Standards Board (IASB). On January 28, 2014, the Financial Supervisory Commission

(FSC) announced the framework for the adoption of the updated IFRSs version in the Republic of

China (ROC). Under this framework, starting January 1, 2015, the previous version of IFRSs

endorsed by the FSC (the 2010 IFRSs version) currently applied by companies with shares listed on the

Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market

will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs version). However, as of the

date that the consolidated financial statements were authorized for issue, the FSC had not endorsed the

following new, amended and revised standards and interpretations issued by the IASB (the New

Taiwan-IFRSs”) included in the 2013 IFRSs version. Furthermore, the FSC has not yet announced the

effective date for the following New Taiwan-IFRSs that are not included in the 2013 IFRSs version.

Effective Date Announced by

IASB (Note 1)

The New IFRSs included in the 2013 IFRSs version not yet endorsed

by the FSC

Improvements to IFRSs (2009) - amendment to IAS 39 January 1, 2009 and January 1,

2010, as appropriate

Amendment to IAS 39 “Embedded Derivatives” Effective for annual periods

ending on or after June 30,

2009

Improvements to IFRSs (2010) July 1, 2010 and January 1,

2011, as appropriate

Annual Improvements to IFRSs 2009-2011 Cycle January 1, 2013

Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7

Disclosures for First-Time Adopters”

July 1, 2010

Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed

Dates for First-Time Adopters”

July 1, 2011

Amendment to IFRS 1 “Government Loans” January 1, 2013

Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and

Financial Liabilities”

January 1, 2013

Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets” July 1, 2011

IFRS 10 “Consolidated Financial Statements” January 1, 2013

IFRS 11 “Joint Arrangements” January 1, 2013

IFRS 12 “Disclosure of Interests in Other Entities” January 1, 2013

Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated

Financial Statements, Joint Arrangements and Disclosure of

Interests in Other Entities: Transition Guidance”

January 1, 2013

(Continued)

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Effective Date Announced by

IASB (Note 1)

The New IFRSs included in the 2013 IFRSs version not yet endorsed

by the FSC

Amendments to IFRS 10, IFRS 12 and IAS 27 “Investment Entities” January 1, 2014

IFRS 13 “Fair Value Measurement” January 1, 2013

Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012

Amendment to IAS 12 “Deferred Tax: Recovery of Underlying

Assets”

January 1, 2012

IAS 19 (Revised 2011) “Employee Benefits” January 1, 2013

IAS 27 (Revised 2011) “Separate Financial Statements” January 1, 2013

IAS 28 (Revised 2011) “Investments in Associates and Joint

Ventures”

January 1, 2013

Amendment to IAS 32 “Offsetting Financial Assets and Financial

Liabilities”

January 1, 2014

IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine” January 1, 2013

The New IFRSs not included in the 2013 IFRSs version

Annual Improvements to IFRSs 2010-2012 Cycle July 1, 2014 (Note 2)

Annual Improvements to IFRSs 2011-2013 Cycle July 1, 2014

IFRS 9 “Financial Instruments” Effective date not determined

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of

IFRS 9 and Transition Disclosures”

Effective date not determined

IFRS 14 “Regulatory Deferral Accounts” January 1, 2016

Amendment to IAS 19 “Defined Benefit Plans: Employee

Contributions”

July 1, 2014

Amendment to IAS 36 “Impairment of Assets: Recoverable Amount

Disclosures for Non-Financial Assets”

January 1, 2014

Amendment to IAS 39 “Novation of Derivatives and Continuation of

Hedge Accounting”

January 1, 2014

IFRIC 21 “Levies” January 1, 2014

(Concluded)

Note 1: Unless stated otherwise, the above New Taiwan-IFRSs are effective for annual periods

beginning on or after the respective effective dates.

Note 2: The amendment to IFRS 2 applies to share-based payment transactions for which the grant

date is on or after 1 July 2014; the amendment to IFRS 3 applies to business combinations for

which the acquisition date is on or after 1 July 2014; the amendment to IFRS 13 is effective

immediately; and the remaining amendments are effective for annual periods beginning on or

after July 1, 2014.

b. Significant impending changes in accounting policy resulting from the New Taiwan-IFRSs in issue but

not yet effective

Except for the following, the initial application of the above New Taiwan-IFRSs has not had any

material impact on the Group’s accounting policies:

1) IFRS 9 “Financial Instruments”

All recognized financial assets that are within the scope of IAS 39 “Financial Instruments:

Recognition and Measurement” are subsequently measured at amortized cost or fair value.

Specifically, financial assets that are held within a business model whose objective is to collect

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contractual cash flows that are solely payments of principal and interest on the principal outstanding

are generally measured at amortized cost at the end of subsequent accounting periods. All other

financial assets are measured at their fair values at the end of the reporting period. However, the

Group may irrevocably choose to present subsequent changes in the fair value of an equity

investment (that is not held for trading) in other comprehensive income, with only dividend income

generally recognized in profit or loss.

The mandatory effective date of IFRS 9, which was previously set at January 1, 2015, had been

canceled and will be reset once the standard is completed, with a new impairment model and

finalization of any limited amendments to the provisions classification and measurement.

2) IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value,

establishes a framework for measuring fair value, and requires disclosures about fair value

measurements. The disclosure requirements in IFRS 13 are more extensive than those required in

the current standards. For example, quantitative and qualitative disclosures based on the

three-level fair value hierarchy that are currently required for financial instruments only will be

extended by IFRS 13 to cover all assets and liabilities within its scope.

3) Amendment to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendment to IAS 1 requires items of other comprehensive income to be grouped into those

that (1) will not be reclassified subsequently to profit or loss; and (2) will be reclassified

subsequently to profit or loss when specific conditions are met. Income taxes on related items of

other comprehensive income are grouped on the same basis. Before this amendment, IAS 1 had

no such requirements.

4) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets”

In issuing IFRS 13 “Fair Value Measurement,” the IASB amended the disclosure requirements in

IAS 36 “Impairment of Assets,” introducing a requirement to disclose in every reporting period the

recoverable amount of an asset or each cash-generating unit. The amendment clarifies that the

disclosure of recoverable amounts is required only when an impairment loss has been recognized or

reversed during the period. Furthermore, the Group is required to disclose the discount rate used

in measuring recoverable amount based on fair value less costs of disposal and the valuation

technique used.

c. The impact of the application of the New Taiwan-IFRSs in issue but not yet effective on the Group’s

consolidated financial statements.

As of the date the consolidated financial statements were authorized for issue, the Group had been

continually assessing the possible impact that the application of the above New Taiwan-IFRSs would

have on the Group's financial position and operating result, and will disclose the relevant impact when

the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On May 14, 2009, the FSC announced the “Framework for the Adoption of IFRSs by the Companies in the

ROC.” In this framework, starting 2013, companies with shares listed on the Taiwan Stock Exchange or

traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their

consolidated financial statements in accordance with the Regulations Governing the Preparation of

Financial Reports by Securities Issuers and the IFRSs, IAS, IFRIC and SIC endorsed by the FSC.

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The Group’s consolidated financial statements for the year ended December 31, 2013 is its first IFRS

consolidated financial statements. The date of transition to Taiwan-IFRSs was January 1, 2012. Refer to

Note 33 for the impact of Taiwan-IFRS conversion on the Group’s consolidated financial statements.

Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing

the Preparation of Financial Reports by Securities Issuers and Taiwan-IFRSs as endorsed by the FSC.

Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial

instruments that are measured at fair value. Historical cost is generally based on the fair value of the

consideration given in exchange for assets.

The opening consolidated balance sheets as of the date of transition to Taiwan-IFRSs were prepared in

accordance with IFRS 1 “First-time Adoption of International Financial Reporting Standards.” The

applicable Taiwan-IFRSs have been applied retrospectively by the Group except for some aspects where

IFRS 1 prohibits retrospective application or grants exemptions to this general principle. For the

exemptions that the Group elected to use, refer to Note 33.

Classification of Current and Non-current Assets and Liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;

2) Assets expected to be realized within 12 months after the reporting period; and

3) Cash and cash equivalents, unless the asset is restricted from being exchanged or is used to settle a

liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;

2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to

refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and

before the consolidated financial statements are authorized for issue; and

3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12

months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

Basis of Consolidation

a. Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Corporation and the

entities controlled by the Corporation (i.e., its subsidiaries).

When necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policies into line with those used by the Corporation.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

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Attribution of total comprehensive income to non-controlling interests

Total comprehensive income of subsidiaries is attributed to the owners of the Corporation and to the

non-controlling interests even if this attribution results in the non-controlling interests’ having a deficit

balance.

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group’s losing

control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the

Group’s interests and the non-controlling interests are adjusted to reflect the changes in its interests in

the subsidiaries. Any difference between the amount by which the non-controlling interests are

adjusted and the fair value of the consideration paid or received is recognized directly in equity and

attributed to the owners of the Corporation.

b. Entities included in consolidated financial statements

The consolidated entities as of December 31, 2013, December 31, 2012, and January 1, 2012 were as

follows:

% of Ownership

Investor Investee Main Businesses

December 31,

2013

December 31,

2012

January 1,

2012

Wintek Corporation Wintek Technology (Cayman)

Corporation (“Wintek Technology

Cayman”)

Overseas reinvested holding

company

100 100 100

Masstop LLC Overseas reinvested holding

company

100 100 100

Wintek (B.V.I.) Corporation (“Wintek

BVI”)

Overseas reinvested holding

company

100 100 100

Wintek International Holding (Cayman)

Corporation (“Wintek International

Holding”)

Overseas reinvested holding

company

100 100 100

United Win Investment Corporation

(“United Win Investment”)

Investment 100 100 100

Wintek Electro-Optics Corporation

(“Wintek Electro-Optics”)

Sells LCD/LCM products 100 100 100

Wintek (Central Europe) GmbH

(“Wintek Central Europe”)

Sells LCD/LCM products 100 100 100

Mactech Corporation (“Mactech”) Manufactures machinery and

equipment

49 49 50.03

WinPower Optronics Corporation

(“WinPower”)

Design ICs 31 31 36

United Win Investment Mactech Manufactures machinery and

equipment

- - -

Wintek Technology Cayman United Win Technology (Cayman)

Corporation (“United Win Cayman”)

Overseas reinvested holding

company

100 100 100

United Win Cayman United Win (H.K.) Technology Limited

(“United Win HK”)

Overseas reinvested holding

company

100 100 100

Wintek Technology (H.K.) Limited

(“Wintek Technology HK”)

Overseas reinvested holding

company

100 100 100

United Win HK United Win (China) Technology

Limited (“United Win China”)

Manufactures and sells

electronic components,

accessories and related

products

100 100 100

Wintek Technology HK Wintek (China) Technology Ltd.

(“Wintek China”)

Manufactures and sells

electronic components,

accessories and related

products

83 100 100

Wintek BVI Wintek International (Samoa)

Corporation (“Wintek Samoa”)

Overseas reinvested holding

company

100 100 100

Wintek Samoa Wintek Vietnam Co., Ltd.(“Wintek

Vietnam”)

Manufactures and processes

LCD/LCM and touch panel

products

100 100 100

Masstop LLC Masstop Asia Pacific Ltd. (“Masstop”) Overseas reinvested holding

company and seller of

LCD/LCM products

100 100 100

Masstop Dongguan Masstop Liquid Crystal

Display Co., Ltd. (“Dongguan

Masstop”)

Manufactures and sells LCM

and touch panel products

100 100 100

(Continued)

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% of Ownership

Investor Investee Main Businesses

December 31,

2013

December 31,

2012

January 1,

2012

Dongguan Masstop DongGuan Sheng Feng Import and

Export Trading Co., Ltd.

(“DongGuan Innolife”)

Import and export trading 100 100 100

DongGuan Innolife Electronic

Technology Co., Ltd. (“Innolife”)

Manufactures and sells

owned-brand products

100 100 -

Wintek (China) Technology Ltd.

(“Wintek China”)

Manufactures and sells

electronic components,

accessories and related

products

17 - -

Wintek International Holding Wintek Far East (Cayman) Corporation

(“Wintek Far East”)

Overseas reinvested holding

company

82 81 81

Wintek Technology (India) Private

Limited (“Wintek India”)

Manufactures and sells

LCD/LCM products

- - -

Wintek Electro- Optics Wintek Far East Overseas reinvested holding

company

18 19 19

Wintek Far East Wintek India Manufactures and sells

LCD/LCM products

100 100 100

(Concluded)

The Corporation had control over Mactech and WinPower because the Corporation and its president

had appointed half of their respective board members; thus, these investees were deemed subsidiaries of

the Group.

Foreign Currencies

In preparing the financial statements of each group entity, transactions in currencies other than the entity's

functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of

the transactions. At the end of each reporting period, monetary items denominated in foreign currencies

are retranslated at the rates prevailing at that date. Nonmonetary items measured at fair value that are

denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value is

determined. Exchange differences arising on the retranslation of nonmonetary items are included in profit

or loss for the period, except for exchange differences arising from the retranslation of nonmonetary items,

in respect of which gains and losses are recognized directly in other comprehensive income; in this case, the

exchange differences are also recognized directly in other comprehensive income. Nonmonetary items

that are measured at historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items arising from settlement or translation are recognized in profit or

loss in the period in which they arise, except for exchange differences on transactions entered into in order

to hedge certain foreign-currency risks.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s

foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of the

reporting period. Income and expense items are translated at the average exchange rates for the period.

Exchange differences are recognized in other comprehensive income.

Inventories

Inventories consist of raw materials, supplies, work-in-process, finished goods and commodity. Inventories

are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except

where it may be appropriate to group similar or related items. Net realizable value is the estimated selling

price of inventories less all estimated costs of completion and costs necessary to make the sale.

Inventories are recorded at weighted-average cost on the balance sheet date.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent

accumulated impairment loss.

Properties under construction for production, supply or administrative purposes are carried at cost, less any

recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization.

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These properties are depreciated and classified to the appropriate categories of property, plant and

equipment when completed and ready for intended use.

Freehold land is not depreciated.

Depreciation is recognized using the straight-line method. Each significant item is depreciated separately.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each

reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is

determined as the difference between the sales proceeds and the carrying amount of the asset and is

recognized in profit or loss.

Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment

properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. After initial recognition,

investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation is recognized using the straight-line method.

Any gain or loss arising on the derecognition of the property is calculated as the difference between the net

disposal proceeds and the carrying amount of the asset and is included in profit or loss in the period in

which the property is derecognized.

Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition

of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units

(or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more

frequently when there is an indication that the unit may be impaired, by comparing its carrying amount,

including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a

cash-generating unit was acquired in a business combination during the current annual period, that unit

should be tested for impairment before the end of the current annual period. If the recoverable amount of

the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the

carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based

on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or

loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Intangible Assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and

subsequently measured at cost less accumulated amortization and accumulated impairment loss.

Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and

amortization method are reviewed at the end of each reporting period, with the effect of any changes in

estimate accounted for on a prospective basis. The residual value of an intangible asset with a finite useful

life is assumed to be zero unless the Group expects to dispose of the intangible asset before the end of its

economic life.

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Gains or losses arising from the derecognition of an intangible asset, measured as the difference between

the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the

asset is derecognized.

Impairment of Tangible and Intangible Assets Other Than Goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible

assets, excluding goodwill, to determine whether there is any indication of impairment loss. If any such

indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the

impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the

Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate

assets are allocated to the individual cash-generating units on a reasonable and consistent basis of

allocation.

Recoverable amount is the higher of fair value less costs to sell or value in use. If the recoverable amount

of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of

the asset or cash-generating unit is reduced to its recoverable amount.

When an impairment loss is reversed, the carrying amount of the asset or cash-generating unit is increased

to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would

have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior

years. A reversal of an impairment loss is recognized in profit or loss.

Financial Instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the

contractual provisions of these instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are

directly attributable to the acquisition or issue of financial assets and financial liabilities (other than

financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from

the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair

value through profit or loss are recognized immediately in profit or loss.

All regular way purchases or sales of financial assets and financial liabilities are recognized and

derecognized on a settlement date basis.

a. Measurement category

The categories of financial assets held by the Group are financial assets/liabilities at fair value through

profit or loss, available-for-sale financial assets, and loans and receivables.

Financial assets/liabilities at fair value through profit or loss

Financial assets/liabilities at fair value through profit or loss are stated at fair value, with any gains or

losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit

or loss incorporates any dividend or interest earned on the financial asset. Financial liabilities not

classified as at fair value through profit or loss are measured at amortized cost using the effective

interest method.

Available-for-sale financial assets

Available-for-sale financial assets are nonderivatives that either are designated as available for sale or

are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value

through profit or loss.

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Available-for-sale (AFS) financial assets are measured at fair value. Dividends on AFS equity

instruments are recognized in profit or loss. Changes in the carrying amounts of available-for-sale

financial assets are recognized in other comprehensive income and will be reclassified to profit or loss

when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale are recognized in profit or loss when the Group’s right to receive the

dividends is established.

Available-for-sale equity investments with no quoted market prices in an active market and whose fair

value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of

these unquoted equity investments are measured at cost less any identified impairment loss at the end of

each reporting period and are presented in a separate line item as financial assets carried at cost. If, in

a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets

are remeasured at fair value. The difference between carrying amount and fair value is recognized in

profit or loss or other comprehensive income on financial assets. Any impairment losses are

recognized in profit and loss.

Loans and receivables

Loans and receivables (including cash and cash equivalents, debt investments with no active market,

notes receivable, and trade and other receivables) are measured at amortized cost using the effective

interest method, less any impairment, except for short-term receivables when the effect of discounting

is immaterial.

Cash equivalents include time deposits that have original maturities within three months from the date

of acquisition, are highly liquid, are readily convertible to a known amount of cash and are subject to an

insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting

short-term cash commitments.

b. Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of

impairment at the end of each reporting period. Financial assets are considered impaired when there is

objective evidence that, as a result of one or more events that occurred after the initial recognition of the

financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, assets are assessed for impairment on a collective basis

even if they have been assessed as not impaired individually. Objective evidence of impairment for a

portfolio of receivables could include the Group's past experience of collecting payments and an

increase in the number of delayed payments in the portfolio past the average credit period, as well as

observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the

difference between the asset's carrying amount and the present value of estimated future cash flows,

discounted at the financial asset's original effective interest rate.

For financial assets measured at amortized cost, if 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 through profit or loss to the extent that the carrying amount of

the investment at the date the impairment is reversed does not exceed what the amortized cost would

have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the

security below its cost is considered an objective evidence of impairment. For all other financial

assets, objective evidence of impairment could include:

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- 20 -

Significant financial difficulty of the issuer or counterparty;

Breach of contract, such as a default or delinquency in interest or principal payments;

It becoming probable that the borrower will undergo bankruptcy or financial reorganization;

The disappearance of an active market for that financial asset because of financial difficulties.

When an available-for-sale financial asset is considered impaired, cumulative gains or losses previously

recognized in other comprehensive income are reclassified to profit or loss in the period.

For available-for-sale equity securities, impairment losses previously recognized in profit or loss are not

reversed through profit or loss. Any increase in fair value after an impairment loss is recognized in

other comprehensive income.

For financial assets carried at cost, impairment loss is measured as the difference between the asset's

carrying amount and the present value of the estimated future cash flows discounted at the current

market rate of return for a similar financial asset. This impairment loss will not be reversed in

subsequent periods.

The carrying amount of the financial asset is directly reduced by the impairment loss, except for trade

receivables, whose carrying amount is reduced through the use of an allowance account. When a trade

receivable is considered uncollectible, it is written off against the allowance account. Recoveries of

amounts previously written off are credited against the allowance account. Changes in the carrying

amount of the allowance account are recognized in profit or loss, and uncollectible trade receivables are

written off against the allowance account.

c. Derecognition of financial assets/liabilities

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the

asset expire, or when it transfers the financial asset and substantially all the risks and rewards of

ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount

and the sum of the consideration received and receivable and the cumulative gain or loss that had been

recognized in other comprehensive income is recognized in profit or loss.

The Group derecognizes financial liabilities only when the Group’s obligations are discharged or

cancelled or they expire. The difference between the carrying amount of the financial liability

derecognized and the consideration paid and payable is recognized in profit and loss.

d. Derivative financial instruments

To manage its exposure to interest rate and foreign exchange rate risks, the Group enters into a variety

of derivative financial instruments, including forward exchange contracts, interest rate swaps contracts,

cross-currency swap contracts, swap contracts and option contracts.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and

are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain

or loss is generally recognized in profit or loss immediately. When the fair value of derivative

financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of

derivative financial instruments is negative, the derivative is recognized as a financial liability.

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Provisions

Provisions are measured at the best estimate of the consideration required to settle the present obligation at

the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant

products, at the best estimate by the management of the Group of the expenditure required to settle the

Group’s obligation.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for

estimated customer returns, rebates and similar allowances. Sales returns are recognized at the time of

sale provided the seller can reliably estimate future returns and recognizes a liability for returns based on

previous experience and relevant factors.

a. Sale of goods

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed to the

buyers, at which time all the following conditions are satisfied:

The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

The Group retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold;

The amount of revenue can be measured reliably;

It is probable that the economic benefits associated with the transaction will flow to the Group; and

The transaction costs incurred or to be incurred can be measured reliably.

The Group does not recognize sales revenue on materials delivered to subcontractors because this

delivery does not involve a transfer of risks and rewards of materials ownership.

b. Dividend and interest income

Dividend income from investments is recognized when the shareholder's right to receive payment has

been established and if it is probable that the economic benefits will flow to the Group and the amount

of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will

flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a

time basis by referring to the principal outstanding at the effective interest rate applicable.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are

added to the cost of these assets, until the assets are substantially ready for their intended use or sale. All

other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with

the conditions attached to them and will receive the grants.

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Government grants are recognized in profit or loss on a systematic basis over the periods in which the

Group recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants to be received as compensation for expenses or losses already incurred or for the

purpose of giving immediate financial support to the Group with no future related costs are recognized in

profit or loss in the period in which they become receivable.

Retirement Benefit Costs

Payments to defined contribution retirement benefit plans are recognized as an expense when employees

have rendered services entitling them to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected

unit credit method. Actuarial gains and losses on the defined benefit obligation are recognized

immediately in other comprehensive income.

The retirement benefit obligation recognized in the consolidated balance sheets represents the present value

of the defined benefit obligation as reduced by the fair value of plan assets. Any asset resulting from this

calculation is limited to the present value of available refunds and reductions in future contributions to the

plan.

Employee Share Options

Employee share options to employees are measured at the fair value of the equity instruments at the grant

date.

The fair value determined at the grant date of the employee share options is expensed on a straight-line

basis over the vesting period, based on the Group's estimate of employee share options that will eventually

vest, with a corresponding increase in capital surplus - employee stock options. The fair value determined

at the grant date of the employee share options is immediately recognized as an expense in full at the grant

date.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

a. Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for

as income tax in the year the shareholders approve the retention of these earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current years’ tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and

liabilities in the consolidated financial statements and the corresponding tax bases used in the

computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable

temporary differences. Deferred tax assets are generally recognized for all deductible temporary

differences, unused loss carryforwards and research and development expenditures to the extent that it

is probable that taxable profits will be available against which these deductible temporary differences

can be used.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in

subsidiaries, except where the Group can control the reversal of the temporary difference and it is

probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets

arising from deductible temporary differences associated with such investments and interests are

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recognized only to the extent that it is probable that there will be sufficient taxable profits against which

to use the benefits of the temporary differences and these differences are expected to reverse in the

foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced

to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or

part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the

end of each reporting period and recognized to the extent that it has become probable that future taxable

profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply to the period in

which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been

enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax

liabilities and assets reflects the Group’s expectations, at the end of the reporting period, of tax

consequences based on the manner of recovery or settlement of an asset or liability.

c. Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are

recognized in other comprehensive income or directly in equity, in which case, the current and deferred

tax are also recognized in other comprehensive income or directly in equity, respectively. If current tax

or deferred tax arises from the initial accounting for a business combination, the tax effect is included in

the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Group's accounting policies, management is required to make judgments, estimates

and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other

sources. The estimates and associated assumptions are based on historical experience and other factors

that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the period in which the estimate is revised if the revision affects only that period,

or in the period of the revision and future periods if the revision affects both current and future periods.

Critical accounting judgments and key sources of estimation uncertainty are as follow:

a. Income tax

As of December 31, 2013, December 31, 2012 and January 1, 2012, the carrying amounts of deferred

tax assets in relation to unused tax losses were $446,888 thousand, $399,436 thousand, and $429,999

thousand, respectively. As of December 31, 2013, December 31, 2012 and January 1, 2012, no

deferred tax assets had been recognized on tax losses of $3,240,281 thousand, $435,127 thousand and

$456,507 thousand, respectively, because of the unpredictability of future profit streams. The

reliability of the deferred tax asset mainly depends on whether sufficient future profits or taxable

temporary differences will be available. In cases where the actual future profits generated are less than

expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or

loss for the period in which such a reversal takes place.

b. Impairment of property, plant and equipment

The impairment of equipment in relation to the production of touch panels and other module are based

on the recoverable amount of those assets, which is the higher of fair value less costs to sell or

value-in-use of those assets. Any changes in the market price or future cash flows will affect the

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recoverable amount of those assets and may lead to the recognition of additional, or reversal of,

impairment losses.

c. Write-down of inventory

The net realizable value of inventory is the estimated selling price in the ordinary course of business

less the estimated costs of completion and the estimated costs necessary to make the sale. The

estimation of net realizable value is based on current market conditions and the historical experience of

selling products of a similar nature. Changes in market conditions may have a material impact on the

estimation of net realizable value.

d. Recognition and measurement of defined benefit plans

Accrued pension liabilities and the resulting pension expense under defined benefit pension plans are

calculated using the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate,

rate of employee turnover, and long-term average future salary increase. Changes in economic

circumstances and market conditions will affect these assumptions and may have a material impact on

the amount of the expense and the liability.

6. CASH AND CASH EQUIVALENTS December 31, December 31, January 1,

2013 2012 2012

Cash on hand $ 14,956 $ 2,953 $ 4,315

Checking accounts and demand deposits 4,225,532 4,640,009 5,038,646

Cash equivalents

Commercial paper - interest at 0.68% - 60,013 40,033

Time deposits with original maturities of less

than three months 2,828,307 1,238,041 2,599,315

$ 7,068,795 $ 5,941,016 $ 7,682,309

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31, December 31, January 1,

2013 2012 2012

Financial assets held for trading

Derivative financial assets (not under hedge

accounting)

Forward exchange contracts $ 132,356 $ 91 $ 734

Swap contracts 2,596 380 1,540

Cross-currency swap contracts - - 54,847

Option contracts - - 4,619

Financial assets at fair value through profit or

loss-current $ 134,952 $ 471 $ 61,740

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December 31, December 31, January 1,

2013 2012 2012

Financial liabilities held for trading

Derivative financial liabilities (not under hedge

accounting)

Forward exchange contracts $ 392 $ 6,820 $ 1,042

Swap contracts 2,601 711 1,823

Interest rate swap contracts 9,739 14,442 20,888

Option contracts - 15,819 -

Financial liabilities at fair value through profit or

loss-current $ 12,732 $ 37,792 $ 23,753

The Group used forward exchange, swap, cross-currency swap, interest rate swap, and option contracts to

manage exposures to exchange rate and interest rate fluctuations of its foreign-currency assets or liabilities.

The financial risk management objective of the Group is to minimize risks due to changes in fair values or

cash flows. These contracts did not meet the criteria for hedge effectiveness and thus did not qualify for

hedge accounting.

a. Forward exchange contracts

At the end of the reporting period, outstanding forward exchange contracts not under hedge accounting

were as follows:

Currency Maturity Date Notional Amount

December 31, 2013

Sell/buy NT$/US$ January 15 to March 24, 2014 NT$9,389,640/US$319,000

Sell/buy US$/NT$ January 13 to March 24, 2014 US$631/NT$18,820

Sell/Buy US$/RMB January 9 to January 24, 2014 US$49,076/RMB303,084

Sell/Buy RMB/US$ January 15 to January 17, 2014 RMB152,681/US$25,076

December 31, 2012

Sell/buy US$/JPY January 4 to January 11, 2013 US$7,800/JPY657,576

Sell/buy NT$/US$ January 22 to February 5, 2013 NT$1,737,810/US$60,000

Sell/buy US$/NT$ January 22 to March 25, 2013 US$763/NT$22,254

Sell/buy NT$/JPY March 26, 2013 NT$5,681/JPY16,600

Sell/buy US$/RMB January 14, 2013 US$3,500/RMB21,871

January 1, 2012

Sell/buy US$/JPY January 4, 2012 US$4,000/JPY311,840

Sell/buy US$/NT$ January 4 to March 26, 2012 US$19,501/NT$588,983

Sell/buy JPY/NT$ February 14, 2012 JPY22,275/NT$8,656

Sell/buy NT$/JPY January 27 to March 2, 2012 NT$19,509/JPY49,861

b. Swap contracts

At the end of the reporting period, outstanding swap contracts not under hedge accounting were as

follows:

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Currency Maturity Date Notional Amount

December 31, 2013

Sell/Buy NT$/US$ March 18 to July 3, 2014 NT$534,310/US$18,000

December 31, 2012

Sell/buy NT$/US$ January 17 to March 7, 2013 NT$ 1,089,500/US$ 37,500

Sell/buy US$/NT$ January 28, 2013 US$21,800/NT$633,307

January 1, 2012

Sell/buy US$/NT$ January 12 to February 7, 2012 US$79,900/NT$2,418,513

c. Cross-currency swap contracts

At the end of the reporting period, outstanding cross-currency swap contracts not under hedge

accounting were as follows:

Contract Amount Maturity Date

Interest Rates

for Payment

(Receivables)

Range of Interest Rates

Receivables

January 1, 2012

US$16,500/NT$483,450 January 30, 2012 - USD Libor 1M+0.26%

US$10,000/NT$294,000 March 9, 2012 1.10% USD Libor 1M+0.50%

US$10,000/NT$290,000 May 23, 2012 0.90% USD Libor 3M+0.65%

US$6,000/NT$176,400 February 21, 2012 1.07% USD Libor 3M+1.20%

US$6,000/NT$176,358 February 22, 2012 1.05% USD Libor 3M+1.15%

US$10,000/NT$295,800 March 22, 2012 (1.00%) USD Libor 3M+1.00%

d. Interest rate swap contracts

The Corporation entered into interest rate swap contracts with financial institutions to hedge against

adverse fluctuations of the floating interest rates for its long-term borrowings. However, those

contracts did not meet the criteria hedge effectiveness and thus did not qualify for hedge accounting.

At the end of the reporting period, outstanding interest swap contracts not under hedge accounting were

as follows:

Contract Amount Maturity Date Interest Rates for Payment

Interest Rates

Receivables

December 31, 2013

US$10,000 July 20, 2015 2.05% (Yearly, ACT/360) LI USD 3M+0bp

(Quarterly, ACT/360)

December 31, 2012

US$10,000 July 20, 2015 2.05% (Yearly, ACT/360) LI USD 3M+0bp

(Quarterly, ACT/360)

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Contract Amount Maturity Date Interest Rates for Payment

Interest Rates

Receivables

January 1, 2012

NT$571,429 (Note) December 15, 2012 Daily range accrual, 2.35%+(3*TWD 90D

CP)*N/M

N is the number of days which TWD 5Y

CMS-TWD 1Y CMS≤ 0 in that calculation

period

90-day commercial

paper

US$10,000 July 20, 2015 2.05% (Yearly, ACT/360) LI USD 3M+0bP

(Quarterly, ACT/360)

Note: The principal amounts of the interest rate swap contracts decrease gradually as loans are repaid.

e. Option contracts

At the end of the reporting period, outstanding option contracts not under hedge accounting were as

follows:

December 31, 2012

Contract

Amount

Exercise Period

Exercise Price

Strike

Price

Long call US$1,000 October 30, 2012-October 24,

2013

JPY75.80-JPY79.00 JPY75.80

Long put US$1,000 October 30, 2012-October 24,

2013

JPY79.00- JPY84.50 JPY84.50

Short call US$2,000 October 30, 2012-October 24,

2013

More than JPY84.50 JPY84.50

Short put US$2,000 October 30, 2012-October 24,

2013

Less than JPY74.00 JPY75.80

As of December 31, 2011, United Win HK had a structured currency instrument. On each

predetermined trading date, the counterparty of United Win HK could exercise its right to buy a certain

amount of U.S. dollars at the rate of US$1.0:RMB6.7 if the exchange rate for US$1.00 was higher than

RMB6.7. The trading date was set for every month under a schedule specified in the contract. As of

September 30, 2012, the counterparty had lost its U.S. dollar buying right under the contract since the

exchange rate was lower than the agreed rate for five consecutive months.

Other major terms of the structured currency instrument are summarized as follows:

Contract Amount Maturity Exchange Rate

US$4,000 November 10, 2011-October 11, 2013 RMB6.7:US$1

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

December 31, December 31, January 1,

2013 2012 2012

Publicly listed stocks $ 511,254 $ 273,763 $ 248,631

Mutual funds 42,582 36,900 62,502

$ 553,836 $ 310,663 $ 311,133

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9. DEBT INVESTMENETS WITH NO ACTIVE MARKET

December 31, December 31, January 1,

2013 2012 2012

Current

Time deposits with original maturities of more

than three months $ 219,960 $ 132,197 $ 181,650

Mortgaged time deposits 89,415 15,884 -

Restricted deposits 3,000 - -

$ 312,375 $ 148,081 $ 181,650 Non-current

Restricted deposits $ 119,220 $ - $ -

Mortgaged time deposits 29,805 - -

$ 149,025 $ - $ -

Refer to Note 27 for information on debt investments with no active market pledged as security.

10. TRADE RECEIVABLES AND OTHER RECEIVABLES

December 31, December 31, January 1,

2013 2012 2012

Trade receivables

Trade receivables $ 11,655,318 $ 13,430,894 $ 15,522,764

Less: Allowance for impairment loss (26,127) (25,627) (19,282)

$ 11,629,191 $ 13,405,267 $ 15,503,482

Other receivables

Factored accounts receivable $ 532,690 $ 379,071 $ 716,089

Tax refund receivable 376,583 64,368 534,125

Others 78,238 37,119 144,113

$ 987,511 $ 480,558 $ 1,394,327

The average payment term for the sale of goods is 45 to 90 days. The Group recognizes an allowance for

doubtful accounts of 100% against all receivables that are probably not recoverable. It assesses the

impairment of trade receivable from major customers and customer groups located in different regions by

referring to both the amounts that are expected to be irrecoverable and the historical experience of default.

On the basis of historical collection experience, extensive analysis of the credit rating and defined credit

limits by customer, the Group believes most of the trade receivables are still considered recoverable.

As of December 31, 2013, December 31, 2012, and January 1, 2012, trade receivables from major

customers who each represent more than 10% of the consolidated total balance of trade receivables were as

follows:

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December 31, December 31, January 1,

2013 2012 2012

T Corporation $ 1,732,992 $ - $ -

U Corporation 1,621,582 995,443 1,796

V Corporation 1,538,751 3,084,818 -

W Corporation 1,218,423 3,988,900 7,215,042

X Corporation 981,508 1,743,238 2,358,913

Y Corporation 377,162 2,100,796 34,353

Z Corporation 221,282 98,702 3,406,355

Movements in the allowance for impairment loss recognized on trade receivables were as follows:

Year Ended December 30

2013 2012

Balance, at January 1 $ 25,627 $ 19,282

Impairment losses recognized 367 6,441

Effect of exchange rate changes 133 (96)

Balance, at December 31 $ 26,127 $ 25,627

On trade receivables, the Group recognized impairment losses of $8,563 thousand, $8,563 thousand and

$2,055 thousand as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively. These

amounts mainly pertained to trade receivables from customers that were in liquidation. The Group has no

collateral for these receivables.

Factored accounts receivable were as follows:

Counterparties

Receivables

Sold

Amounts

Collected

Advances

Received at

Year-end

Interest Rates

on Advances

Received (%) Credit Line

Year ended December 31, 2013

Ta Chong Commercial Bank US$ 270,210 US$ 188,340 US$ 69,590 1.80-2.83 US$ 90,000

Bank of Taiwan 79,806 23,887 50,327 2.02-2.65 79,000

Land Bank 26,790 26,790 - - -

Shanghai Commercial & Savings Bank 16,744 16,744 - - -

Ta Chong Commercial Bank 27,906 27,906 - - -

Yuanta Commercial Bank 16,744 16,744 - - -

China Development Industrial Bank 19,534 19,534 - - -

Taipei Fubon Bank 26,790 26,790 - - -

Industrial Bank of Taiwan 16,744 16,744 - - -

Bank of Taiwan 167,438 167,438 - - -

E. SUN Commercial Bank 26,790 26,790 - - -

Mega International Commercial Bank 16,744 16,744 - - -

DBS Bank 19,534 19,534 - - -

First Commercial Bank 33,488 33,488 - - -

Taishin Bank 541 541 - - -

US$ 765,803 US$ 628,014 US$ 119,917 US$ 169,000

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Counterparties

Receivables

Sold

Amounts

Collected

Advances

Received at

Year-end

Interest Rates

on Advances

Received (%) Credit Line

Year ended December 31, 2012

Land Bank US$ 49,518 US$ 41,097 US$ 7,579 1.17-2.25 US$ 9,600 Shanghai Commercial & Savings Bank 26,872 21,609 4,737 1.17-2.25 6,000

Ta Chong Commercial Bank 44,787 36,014 7,895 1.17-2.25 10,000

Yuanta Bank 47,471 42,207 4,737 1.17-2.25 6,000 China Development Industrial Bank 45,083 38,942 5,527 1.17-2.25 7,000

Taichung Bank 54,929 54,929 - - - Taipei Fubon Bank 64,967 56,545 7,580 1.17-2.25 9,600

Industrial Bank of Taiwan 26,872 21,609 4,737 1.17-2.25 6,000

Taiwan Business Bank 39,480 39,480 - - -

Bank of Taiwan 268,722 216,087 47,371 1.17-2.25 60,000

E.SUN Commercial Bank 64,967 56,545 7,580 1.17-2.25 9,600

Mega International Commercial Bank 26,872 21,609 4,737 1.17-2.25 6,000 Bank of Panhsin 10,299 10,299 - - -

DBS Bank 31,351 25,210 5,527 1.17-2.25 7,000

Bank of Kaohsiung 24,031 24,031 - - - Cathay United Bank 13,732 13,732 - - -

First Commercial Bank 74,343 63,816 9,474 1.17-2.25 12,000

Hua Nan Bank 27,465 27,465 - - - Far Eastern International Bank 24,031 24,031 - - -

Taishin Bank 21,710 21,710 - - 30,000

US$ 987,502 US$ 856,967 US$ 117,481 US$ 178,800

The above credit lines may be used on a revolving basis.

Based on the factoring agreements, losses from trade disputes (such as those on sales returns and discounts)

are borne by the Group while losses from credit risk are borne by the banks. As of December 31, 2013,

the Group had issued to the banks promissory notes with an aggregate amount of US$169,000 thousand as

collateral.

11. INVENTORIES

December 31, December 31, January 1,

2013 2012 2012

Finished goods $ 1,866,526 $ 2,647,305 $ 2,436,826

Work in process 5,592,232 5,566,615 5,959,531

Raw materials and supplies 1,797,430 3,213,773 3,249,563

Commodity 3,984 2,071 1,376

$ 9,260,172 $ 11,429,764 $ 11,647,296

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2013 and 2012

was $79,640,376 thousand and $99,702,585 thousand, respectively.

The cost of inventories recognized as cost of goods sold in the year ended December 31, 2013 and 2012

included inventory write-downs of $1,416,204 thousand and $1,042,713 thousand, respectively.

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12. FINANCIAL ASSETS MEASURED AT COST

December 31, December 31, January 1,

2013 2012 2012

Unlisted stocks

Kingpak Technology Corporation (“Kingpak”) $ 123,443 $ 123,443 $ 143,160

Hsin Chu Golf Country Club Co., Ltd. 9,260 9,260 9,260

Integrated Solutions Technology, Inc.

(“Integrated Solutions”) 6,818 6,818 6,818

Uniflex Technology Inc. (“Uniflex”) 6,434 6,434 6,434

Taichung International Country Club 2,940 2,940 2,940

FocalTech Corporation, Ltd. - 29,040 30,275

Transcom Corporation (“Transcom”) - - 9,595

Asia Pacific Microsystems, Inc.

(“Microsystems”) - - -

Andes Technology Corporation (“Andes”) - - -

IDesia Ltd. - - -

$ 148,895 $ 177,935 $ 208,482

Kingpak reduced its capital in August 2012 and returned $19,717 thousand to the Group.

FocalTech Systems Inc. was reorganized on December 21, 2012, and the related share swap between

FocalTech Corporation, Ltd. and FocalTech Systems Inc. was set at 1:1. Its shares became listed on the

Taiwan Stock Exchange in November 2013. Transcom’s share began to be traded on the Taiwan Gre Tai

Securities Market in December 2012. Thus, the Group reclassified these equity investments to available

for-sale-financial assets.

Management believed that the above unlisted equity investments held by the Group had fair values that

could not be reliably measured because there is a wide range of estimated fair values; thus, these

investments were measured at cost less impairment at the end of the reporting period.

13. PROPERTY, PLANT AND EQUIPMENT

Year Ended December 31, 2013

Beginning

Balance Additions Disposal

Reclassified

Amount

Translation

Adjustments

Ending

Balance

Cost

Land $ 2,900,269 $ 6,150 $ - $ - $ - $ 2,906,419

Buildings 15,416,358 601,543 (2,629 ) 3,564,544 456,692 20,036,508 Machinery and equipment 48,272,188 2,739,762 (5,822,553 ) (24,076 ) 1,791,148 46,956,469

Transportation equipment 65,102 4,591 (8,161 ) (441 ) 2,036 63,127

Furniture and fixtures 342,501 32,551 (25,638 ) (3,929 ) 10,917 356,402 Leasehold improvements 457,607 14,819 (83 ) - 26,565 498,908

Other equipment 7,574,660 1,308,260 (1,349,140 ) (10,314 ) 363,677 7,887,143

Construction in progress 5,362,862 1,165,971 - (3,564,587 ) 193,916 3,158,162 80,391,547 $ 5,873,647 $ (7,208,204 ) $ (38,803 ) $ 2,844,951 81,863,138

Accumulated depreciation

Buildings 3,809,612 $ 1,066,379 $ (2,629 ) $ (2 ) $ 96,743 4,970,103

Machinery and equipment 21,019,696 6,255,881 (5,581,486 ) (5,613 ) 657,506 22,345,984

Transportation equipment 32,842 9,175 (6,524 ) (126 ) 1,289 36,656 Furniture and fixtures 229,298 55,881 (24,289 ) (1,740 ) 6,480 265,630

Leasehold improvements 165,279 111,394 (83 ) - 11,182 287,772

Other equipment 3,867,704 1,002,738 (1,340,086 ) (3,774 ) 138,326 3,664,908 29,124,431 $ 8,501,448 $ (6,955,097 ) $ (11,255 ) $ 911,526 31,571,053

(Continued)

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Year Ended December 31, 2013

Beginning

Balance Additions Disposal

Reclassified

Amount

Translation

Adjustments

Ending

Balance

Accumulated impairment

Land $ 33,981 $ - $ - $ - $ - $ 33,981

Buildings 84,446 - - - (7,266 ) 77,180

Machinery and equipment 722,818 3,394,590 (17,603 ) - 39,377 4,139,182 Other equipment 2,047 - - - 120 2,167

843,292 $ 3,394,590 $ (17,603 ) $ - $ 32,231 4,252,510

$ 50,423,824 $ 46,039,575

(Concluded)

Year Ended December 31, 2012

Beginning

Balance Additions Disposal

Reclassified

Amount

Translation

Adjustments

Ending

Balance

Cost

Land $ 2,900,269 $ - $ - $ - $ - $ 2,900,269

Buildings 11,320,865 1,572,719 (292,506 ) 3,074,664 (259,384 ) 15,416,358 Machinery and equipment 43,390,512 12,454,086 (6,505,155 ) - (1,067,255 ) 48,272,188

Transportation equipment 57,068 21,349 (11,809 ) - (1,506 ) 65,102

Furniture and fixtures 312,475 67,282 (25,974 ) - (11,282 ) 342,501 Leasehold improvements 455,505 25,342 (5,823 ) - (17,417 ) 457,607

Other equipment 7,755,562 1,586,544 (1,556,637 ) - (210,809 ) 7,574,660

Construction in progress 3,830,385 4,779,692 - (3,074,664 ) (172,551 ) 5,362,862 70,022,641 $ 20,507,014 $ (8,397,904 ) $ - $ (1,740,204 ) 80,391,547

Accumulated depreciation

Buildings 3,394,406 $ 771,665 $ (290,507 ) $ - $ (65,952 ) 3,809,612

Machinery and equipment 20,841,768 6,474,442 (5,966,852 ) - (329,662 ) 21,019,696

Transportation equipment 37,599 7,999 (11,809 ) - (947 ) 32,842 Furniture and fixtures 216,236 46,243 (24,915 ) - (8,266 ) 229,298

Leasehold improvements 69,912 105,136 (5,829 ) - (3,940 ) 165,279 Other equipment 4,454,484 1,048,353 (1,548,508 ) - (86,625 ) 3,867,704

29,014,405 $ 8,453,838 $ (7,848,420 ) $ - $ (495,392 ) 29,124,431

Accumulated impairment

Land 33,981 $ - $ - $ - $ - 33,981

Buildings 4,292 83,605 - - (3,451 ) 84,446 Machinery and equipment 41,853 689,028 (7,314 ) - (749 ) 722,818

Other equipment 2,131 - (1 ) - (83 ) 2,047

82,257 $ 772,633 $ (7,315 ) $ - $ (4,283 ) 843,292

$ 40,925,979 $ 50,423,824

Under an operating lease, the Corporation rents the sites of its manufacturing facilities from the Ministry of

Economic Affairs (MOEA) under various contracts, with the latest expiry in April 2020. The monthly

rentals are $233 thousand.

Due to the change of the production technology and process, the Group recognized impairment losses of

$3,394,590 thousand for 2013 and $401,763 thousand for 2012 based on the carrying amounts of certain

old machinery and equipment.

There was a decline in the sales of no-touch LCD products, which caused a decrease in cash inflows from

the use of the related machinery and the recoverable amount of the machinery becoming lower than its

carrying amount; thus, the Group recognized an impairment loss of $287,265 thousand for 2012. The

recoverable amount of the machinery was based on its value in use, determined at a discount rate of 7.84%.

Wintek India recognized an impairment loss of $83,605 thousand for 2012 based on a building appraisal

report.

For its building expansion, Mactech entered into a contract to buy a 3,874-square meter lot located on

Tanxing Road in the Tanzi District in Taichung in December 2007. However, because this lot is classified

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as an agricultural land, the title to this lot is under the name of Mactech’s president. Nevertheless,

Mactech’s president has signed a trust deed assigning Mactech as the beneficiary of this lot.

Interest capitalization was as follows:

Year Ended December 31

2013 2012

Interest capitalized $ 179,506 $ 81,245

Interest rates 1.31%-5.91% 2.16%-2.94%

Property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives (in

years) of the assets, as follows:

Building

Main building 8-35

Electrical power equipment 5-6

Interior decoration 3-10

Others 3-6

Machinery and equipment 2-11

Transportation equipment 3-11

Furniture and fixtures 3-10

Leasehold improvements 2-10

Other equipment 2-15

Refer to Note 27 for the carrying amounts of the property, plant and equipment pledged by the Group for its

borrowings.

14. INVESTMENT PROPERTIES

December 31,

2013

December 31,

2012

January 1,

2012

Building

Cost $ 85,621 $ 83,423 $ 86,763

Less: Accumulated depreciation (18,303) (16,020) (14,775)

$ 67,318 $ 67,403 $ 71,988

The investment properties are depreciated on a straight-line basis over an estimated life of 46 years, in the

calculation of depreciation.

As of December 31, 2013, December 31, 2012 and January 1, 2012, the fair values of the investment

properties were $149,234 thousand, $137,379 thousand and $121,080 thousand, respectively. The

valuation was not based on an independent appraiser’s work but on market transaction prices for similar

properties.

All of the Group's investment properties were held under freehold interests. The carrying amounts of the

investment properties pledged by the Group for it borrowings are shown in Note 27.

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15. PREPAYAMENTS FOR LEASE

Location

Period for Use

(Years)

United Win China Suzhou Industrial Park, China 45-70

Dongguan Masstop Mulberry Industrial Park, China 50

Wintek China Dongguan Songshan Lake Sci&Tech Industry Park, China 50

Wintek India Nokia Telecom Special Economic Zone, India 33

Wintek Vietnam Quang Chau Industrial Park, Vietnam 43.75-44

Quang Chau New Urban Area, Vietnam 44

All of the acquired lots were used to build factories, office building and employee dormitories.

16. BORROWINGS

a. Short-term borrowings

Short-term borrowings were unsecured loans. Interest rates were 1.27% to 6.00%, 0.72% to 4.80%

and 0.82% to 3.97% as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively.

b. Short-term bills payable

Short-term bills payable consisted of commercial paper. These instruments were issued at annual

discount rates of 1.08%, 0.95% to 1.08% and 0.97% to 1.00% as of December 31, 2013, December 31,

2012 and January 1, 2012.

c. Long-term borrowings

December 31,

2013

December 31,

2012

January 1,

2012

Secured loans - repayable in installments

from March 2014 to October 2018

$ 9,670,124 $ 10,138,897 $ 8,326,110

Unsecured loans - repayable in installments

from April 2014 to September 2015

6,158,341 8,553,644 9,712,855

Other loans - loans from lease company,

repayable in installments from September

2015 to August 2016

409,585 329,357 -

16,238,050 19,021,898 18,038,965

Less: Current portion (9,226,179) (2,463,047) (3,474,368)

$ 7,011,871 $ 16,558,851 $ 14,564,597

Interest

Secured loans 1.65%-5.91% 1.71%-6.17% 1.46%-2.48%

Unsecured loans 2.17%-3.15% 2.02%-2.77% 1.46%-3.20%

Other loans 2.69%-4.07% 2.69%-3.26% -

The Corporation entered into loan agreement amounting to $6.5 billion in November 2010 with a

syndicate of banks led by Bank of Taiwan. These loans were for constructing plants and buying

equipment. The agreements provided that the Corporation (a) should maintain certain current,

debt-to-equity and interest coverage ratios based on the Corporation’s annual consolidated financial

statements; and (b) should not, without the prior written consent of the majority of the bank syndicate,

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sell important assets and royalties, buy back its own shares and reduce capital during the contract

period.

The arrangement fee of a syndicate of banks is recognized as a reduction of financial liabilities and

amortized using the straight-line method over the loan period.

To raise working capital, the Corporation entered into loan agreement with SinoPac Bank. Under the

agreement, the Corporation should maintain certain current, debt-to-equity and interest coverage ratios

based on the Corporation’s annual condensed consolidated financial statements during the contract

term.

In August 2011, Masstop and United Win HK entered into a US$200,000 thousand loan agreement with

a syndicate of banks led by Bank of Taiwan. The Corporation guaranteed this loan. Under the loan

agreement, the Corporation should (a) maintain certain current, debt and interest coverage ratios every

fiscal year based on the Corporation’s audited annual condensed consolidated financial statements and

(b) ensure that as a direct or indirect owner of more than 75% equity interest each in Masstop, United

Win HK, Dongguan Masstop and United Win China, it will maintain operating control over these four

subsidiaries.

As of December 31, 2013, the Group could not meet the some terms of the agreements that were

primarily related to the consolidated financial ratio of the Group. Nevertheless, as of March 4, 2014, the

date of the approval of the issuance date of the consolidated financial statements, the syndicate of banks

had agreed to waive its right to demand immediate payment. Thus, the loan had not been classified as a

current liability as of December 31, 2013.

In June 2012, Wintek China entered into a US$180,000-thousand syndicated loan agreement with China

Development Bank and Bank of China Limited - Dongguan Branch. Dongguan Masstop guaranteed

this syndicated loan and provided plant, property and equipment as loan collateral together with Wintek

China. Under the loan agreement, Wintek China should (a) maintain certain debt to asset, receivables

turnover and debt coverage ratios and (b) have annual gross sales of not less than RMB2,000,000

thousand at least after the third year of the loan agreement was signing. As of the December 31, 2013,

Wintek China did not breach the above loan agreement.

17. OTHER PAYABLES

December 31,

2013

December 31,

2012

January 1,

2012

Other accrued expenses $ 3,338,659 $ 2,835,105 $ 3,498,593

Payables for the purchase of equipment 1,193,381 1,241,502 987,566

Accrued payroll and bonus 1,080,501 1,606,144 1,434,871

$ 5,612,541 $ 5,682,751 $ 5,921,030

18. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation, Mactech, United Win Investment and WinPower have pension plans under the Labor

Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity

makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and

wages.

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United Win China, Dongguan Masstop, Wintek China, DongGuan Sheng Feng, DongGuan Innolife,

Masstop, Wintek Electro-Optics, Wintek India, Wintek Central Europe and Wintek Vietnam have

defined contribution plans under their respective local laws. The overseas reinvested holding

companies have no pension plans.

b. Defined benefit plan

The Corporation and Mactech have defined benefit plans under the Labor Standards Law, under which

pension benefits are calculated on the basis of the length of service and average monthly salaries of the

six months before retirement. The Corporation and Mactech contribute amounts equal to 2% of total

monthly salaries and wages to a pension fund administered by their pension fund monitoring

committees. Pension contributions are deposited in the Bank of Taiwan in the committees’ names.

The plan assets are invested in domestic (foreign) equity and debt securities, bank deposits, etc. The

investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the

mandated management. However, in accordance with Enforcement Rules of the Labor Pension Act,

the return generated by employees' pension contribution should not be below the interest rate for a

2-year time deposit with local banks.

The actuarial valuations of plan assets and the present value of the defined benefit obligations were

carried out by qualifying actuaries. The principal assumptions used in actuarial valuations were as

follows:

Valuation at

December 31,

2013

December 31,

2012

January 1,

2012

Discount rate 1.875% 1.625% 1.75%

Expected return on plan assets 2.00% 1.875% 2.00%

Expected rates of salary increase 3.00%-3.50% 3.00%-3.50% 3.00%-3.50%

The assessment of the overall expected rate of return was based on historical return trends and analysts’

predictions of the market for the asset over the life of the related obligation, by reference to the

aforementioned use of the plan assets and the impact of the related minimum return.

Amounts recognized in profit or loss on the defined benefit plans were as follows:

For the Year Ended December 31

2013 2012

Current service cost $ 2,556 $ 2,474

Interest cost 4,734 4,474

Expected return on plan assets (5,900) (5,938)

$ 1,390 $ 1,010

Actuarial gains and losses recognized in other comprehensive income for the years ended December 31,

2013 and 2012 was $7,700 thousand and $32,836 thousand, respectively. The cumulative amount of

actuarial gains and losses recognized in other comprehensive income as of December 31, 2013 and

2012 was $40,536 thousand and $32,836 thousand, respectively.

Included in the consolidated balance sheets were the following amounts arising from the Group's

obligation its defined benefit plans:

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December 31,

2013

December 31,

2012

January 1,

2012

Present value of the funded defined benefit

obligation

$ 300,897 $ 291,332 $ 255,617

Fair value of plan assets (322,624) (306,478) (288,400)

Net assets arising from the defined benefit

obligation (recorded under other

non-current assets)

$ (21,727) $ (15,146) $ (32,783)

Movements in the present value of defined benefit obligation were as follows:

Year Ended December 31

2013 2012

Opening defined benefit obligation $ 291,332 $ 255,617

Current service cost 2,556 2,474

Interest cost 4,734 4,474

Actuarial losses 5,779 29,762

Benefit paid (3,504) (995)

Closing defined benefit obligation $ 300,897 $ 291,332

Movements in the fair value of the plan assets were as follows:

Year Ended December 31

2013 2012

Opening fair value of plan assets $ 306,478 $ 288,400

Expected return on plan asset 5,900 5,938

Actuarial losses (1,921) (3,074)

Contribution from the employer 15,671 16,209

Benefit paid (3,504) (995)

Closing fair value of plan assets $ 322,624 $ 306,478

The major categories of the plan assets were as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Cash 23 25 24

Debt instruments 9 10 11

Fixed-revenue assets 18 16 16

Equity security 45 37 41

Short-term bills 4 10 8

Others 1 2 -

100 100 100

The Group chose to disclose the history of experience adjustments prospectively from the date of

transition to Taiwan-IFRSs (see Note 33), as follows:

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December 31,

2013

December 31,

2012

January 1,

2012

Experience adjustments on plan liabilities $ (16,258) $ (29,762) $ -

Experience adjustments on plan assets $ (1,921) $ (3,074) $ -

The Group expects to make contributions of $15,996 thousand and $16,209 thousand to the defined

benefit plans during the annual periods beginning after 2013 and 2012, respectively.

19. EQUITY

Share Capital

a. Common stock

December 31,

2013

December 31,

2012

January 1,

2012

Number of shares authorized (in thousands) 2,500,000 2,100,000 1,800,000

Shares authorized $ 25,000,000 $ 21,000,000 $ 18,000,000

Number of shares issued and fully paid (in

thousands) 1,847,778 1,847,778 1,647,778

Shares issued $ 18,477,784 $ 18,477,784 $ 16,477,784

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and the right to

dividends.

b. Common share issuance through private placement

In October 2006, the Corporation issued in accordance with Article 43-6 of the Securities and Exchange

Act - 32,444 thousand common shares at a par value of NT$10.00 through private placement. The

issuance price was NT$27.74 per share. These shares may be resold only after three years from the

delivery date (November 23, 2006). As of December 31, 2013, the shares had not been listed because

the Corporation had accumulated deficit for the most recent fiscal year and did not meet the

requirement for public listing under the Guidelines and Provisions in Article 12-1 of the Taiwan Stock

Exchange Corporation’s Rules for the Review of Securities Listings.

c. Issuance of global depositary receipts (GDRs)

The Corporation increased its capital by issuing GDRs. Each GDR represented the right to receive

five common shares. Other information on GDRs is as follows:

Issued Units

Issued Shares of

Stock (In Thousands) Issue Price (US$)

November 2002 16,000,000 80,000 $3.835

November 2004 19,000,000 95,000 5.24

October 2007 20,000,000 100,000 6.00

April 2010 30,000,000 150,000 4.07

January 2011 40,000,000 200,000 8.264

June 2012 40,000,000 200,000 2.50

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As of December 31, 2013, the GDR holders had exchanged GDRs amounting to US$728,626 thousand,

representing 847,091 thousand common shares, and the total outstanding GDRs were equal to 6

thousand common shares, or 0.0003% of total capital shares issued.

The GDR holders have the same rights as the Corporation’s shareholders. In addition, under the

related laws and depositary agreement, the GDR depositary will act on behalf of the GDR holders when

they:

1) Exercise voting rights;

2) Sell the securities of depositary receipts; and

3) Receive dividends and subscribe for capital stock.

Capital Surplus

The capital surplus arising from shares issued in excess of par (including share premium from the issuance

of common shares, conversion of bonds, treasury share transactions, and excess of the consideration

received over the carrying amount of the subsidiaries’ net assets during disposal or acquisition) and

donations may be used to offset a deficit. In addition, when the Corporation has no deficit, such capital

surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage

of the Corporation’s capital surplus and once a year).

The capital surplus from long-term investments, employee share options and share warrants, however, may

not be used for any purpose.

Retained Earnings and Dividends Policy

The Corporation’s Articles of Incorporation provide that after (a) the payment of all taxes required by law;

(b) the offset of deficit; and (c) the deduction of legal reserve and special reserve, the remaining earnings

will be reserved for the operating requirements of its business or allocated as follows:

1) Up to 2% as remuneration to directors and supervisors;

2) 15% as employees’ bonus; and

3) The remainder, as dividends.

The Corporation’s dividend policy takes the following aspects into consideration:

1) Investment environment;

2) Global competition;

3) Shareholders’ benefits;

4) Dividend stability; and

5) The Corporation’s capital expenditure budget, capital requirement and long-term financial plan.

Under the Corporation Law, the board of directors should draft a proposal on earnings distribution for

approval at the shareholders’ meeting. In principle, cash dividends should be more than 10% of total

dividends.

For the years ended December 31, 2013 and 2012, the Corporation had no profits; thus, it did not estimate

bonus to employees and remuneration to directors and supervisors.

Under Rule No. 100116 and Rule No. 0950000507 issued by the Financial Supervisory Commission (FSC),

an amount equal to the net debit balance of shareholders’ equity items (including exchange differences on

translating foreign operations, unrealized gain [loss] on available-for-sale financial assets, and the gain or

loss on the hedging instrument relating to the effective portion of a cash flow hedge) should be transferred

from unappropriated earnings to a special reserve before any appropriation of earnings generated before

January 1, 2012. Any special reserve appropriated may be reversed to the extent of the decrease in the net

debit balance.

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Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and

Answers for Special Reserves Appropriated Following the Adoption of Taiwan-IFRSs”, on the first-time

adoption of Taiwan-IFRSs, the Corporation should appropriate to a special reserve an amount that is the

same as these of unrealized revaluation increment and cumulative translation differences (gains) transferred

to retained earnings as a result of the Corporation’s use of exemptions under IFRS 1. However, at the date

of transition to Taiwan-IFRSs, if the increase in retained earnings that resulted from all Taiwan-IFRSs

adjustments is not sufficient for this appropriation, only the increase in retained earnings that resulted from

all Taiwan-IFRSs adjustments will be appropriated to special reserve. This special reserve may be

reversed in proportion to the usage, disposal or reclassification of the related assets and thereafter

distributed. The special reserve appropriated on the first-time adoption of Taiwan-IFRSs may be used to

offset deficits in subsequent years. No appropriation of earnings should be made until any shortage of the

foregoing special reserve is appropriated in subsequent years if the Corporation has earnings and the

original need to appropriate a special reserve is not eliminated.

Legal reserve should be appropriated from earnings until the legal reserve equals the Corporation’s paid-in

capital. Legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal

reserve has exceeded 25% of the Corporation’s capital, the excess may be transferred to capital or

distributed in cash.

Except for non-ROC resident shareholders, all shareholders receiving dividends are allowed a tax credit

equal to their proportionate share of the income tax paid by the Corporation.

The offset of the deficits for 2012 and 2011 was approved at the shareholders’ meetings in May 2013 and

June 2012, respectively. The appropriations of deficit were as follows:

Offset of Deficit

2012 2011

Offset of deficit against legal reserve $ - $ 1,576,205

Offset of deficit against capital surplus 2,878,439 328,673

The proposed offset of deficit for 2012 was based on the Corporation’s financial statements for the year

ended December 31, 2012, which were prepared in accordance with the Guidelines Governing the

Preparation of Financial Reports by Securities Issuers and the Generally Accepted Accounting Principles in

the Republic of China (ROC GAAP), and on the balance sheet for the year ended December 31, 2012,

which was prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by

Securities Issuers (revised) and Taiwan-IFRSs.

The offset of deficit for 2013 using $8,706,924 thousand of the capital surplus was proposed by the

Corporation’s board of directors on March 4, 2014.

Information on the bonus to employees, directors and supervisors proposed by the Corporation’s board of

directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

Special Reserve Appropriated Following the First-time Adoption of Taiwan-IFRSs

The Corporation had an accumulated deficit that resulted from all Taiwan-IFRSs adjustments; thus, no

special reserve was appropriated.

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20. EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES

Year Ended December 31

2013 2012

Operating

Costs

Operating

Expenses Total

Operating

Costs

Operating

Expenses Total

Short-term employee

benefits

$ 6,595,235 $ 1,190,507 $ 7,785,742 $ 7,981,437 $ 1,328,281 $ 9,309,718

Post-employment benefits

Defined contribution

plans

429,533 53,691 483,224 532,162 58,726 590,888

Defined benefit plans 2,032 (642) 1,390 1,689 (679) 1,010

Others 3,403,020 214,827 3,617,847 4,142,555 155,812 4,298,367

Depreciation 8,131,565 371,736 8,503,301 8,143,571 312,113 8,455,684

Amortization 6,262 18,981 25,243 6,770 11,590 18,360

21. INCOME TAXES

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Year Ended December 31

2013 2012

Current tax

Current year $ 104,716 $ 272,495

Income tax expense of unappropriated earnings 5,626 6,109

Prior years 2,415 (24,540)

112,757 254,064

Deferred tax

Current year (79,716) (223,225)

Prior years (1,914) 661

(81,630) (222,546)

Income tax expense recognized in profit or loss $ 31,127 $ 31,500

A reconciliation of loss before income tax and income tax expense recognized in profit or loss was as

follows:

Year Ended December 31

2013 2012

Income tax expense calculated at the statutory rate $ (3,035,509) $ (785,229)

Tax effect of adjusting items:

Nondeductible expense in determining taxable income (313,295) 483,060

Tax-exempt income (28,895) (22,135)

Tax of 10% on undistributed earnings 5,626 6,109

Unrecognized loss carryforwards 2,890,292 260,538

Unrecognized investment credits 6,087 (6,087)

Unrecognized temporary differences 488,574 100,669

Investment credits - (340)

Others 17,746 18,794

Adjustments for prior year’s tax 501 (23,879)

Income tax expense $ 31,127 $ 31,500

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The statutory tax rates above were 17% for the Group in the ROC and 25% for the subsidiaries in China.

The statutory tax rates used by group entities operating in other jurisdictions are based on the tax laws

in those jurisdictions.

b. Current tax assets and liabilities

December 31,

2013

December 31,

2012

January 1,

2012

Current tax assets

Tax refund receivable $ 3,233 $ 2,813 $ 2,087

Current tax liabilities

Income tax payable $ 61,218 $ 163,181 $ 92,453

c. The movements of deferred tax assets and liabilities

Year Ended December 31, 2013

Opening

Balance

Recognized in

Profit or loss Closing Balance

Deferred tax assets

Temporary differences

Inventories $ 395,655 $ (83,825) $ 311,830

Unrealized operation costs 46,276 (9,893) 36,383

Unrealized loss on exchange 137 3,520 3,657

Investments accounted for using equity

method 66,538 (10,552) 55,986

Provisions 5,873 (2,951) 2,922

Payable for employee welfare 1,972 - 1,972

Property, plant and equipment 205,985 145,814 351,799

Intangible assets 2,386 (81) 2,305

Payable for annual leave 8,099 707 8,806

Doubtful debts 601 34 635

Financial assets at fair value through profit

and loss 6,248 (6,248) -

Financial assets measured at cost 13,319 - 13,319

Prepayments for equipment - 34,743 34,743

Others 47,432 (39,043) 8,389

800,521 32,225 832,746

Loss carryforwards 399,436 47,452 446,888

Investment credits 6,087 (6,087) -

$ 1,206,044 $ 73,590 $ 1,279,634

Deferred tax liabilities

Temporary differences

Financial assets at fair value through profit

and loss $ - $ 17,388 $ 17,388

Unrealized gain on exchange 19,938 (19,938) -

Others 16 (16) -

$ 19,954 $ (2,566) $ 17,388

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Year Ended December 31, 2012

Opening

Balance

Recognized in

Profit or loss Closing Balance

Deferred tax assets

Temporary differences

Inventories $ 396,467 $ (812) $ 395,655

Unrealized operation costs 32,670 13,606 46,276

Unrealized loss on exchange - 137 137

Investments accounted for using equity

method 17,360 49,178 66,538

Provisions 12,147 (6,274) 5,873

Payable for employee welfare 1,972 - 1,972

Property, plant and equipment 9,328 196,657 205,985

Intangible assets 2,529 (143) 2,386

Payable for annual leave 7,042 1,057 8,099

Doubtful debts 626 (25) 601

Financial assets at fair value through profit

and loss - 6,248 6,248

Financial assets measured at cost 13,319 - 13,319

Others 56,613 (9,181) 47,432

550,073 250,448 800,521

Loss carryforwards 429,999 (30,563) 399,436

Investment credits - 6,087 6,087

$ 980,072 $ 255,972 $ 1,206,044

Deferred tax liabilities

Temporary differences

Financial assets at fair value through profit

and loss $ 5,673 $ (5,673) $ -

Unrealized gain on exchange 5,566 14,372 19,938

Others 417 (401) 16

$ 11,656 $ 8,298 $ 19,954

d. Items for which no deferred tax assets have been recognized

December 31,

2013

December 31,

2012

January 1,

2012

Loss carryforwards

Expiry in 2018 $ 220,204 $ - $ -

Expiry in 2019 249,194 258,501 273,130

Expiry in 2021 168,061 168,061 183,377

Expiry in 2022 8,560 8,565 -

Expiry in 2023 2,594,262 - -

$ 3,240,281 $ 435,127 $ 456,507

(Continued)

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December 31,

2013

December 31,

2012

January 1,

2012

Investment credits

Purchase of machinery and equipment $ 6,087 $ 61,734 $ 324,428

Research and development - 123,613 332,293

Personnel training - 2,628 2,935

$ 6,087 $ 187,975 $ 659,656

Deductible temporary difference

$ 716,658 $ 200,797 $ 108,786

(Concluded)

Unrecognized investment credits will expire in 2014.

e. Information on unused loss carryforwards

Loss carryforward as of December 31, 2013 comprised:

Unused

Amount Expiry Year

$ 2,870,524 2018

2,434,604 2019

988,595 2021

50,354 2022

15,260,364 2023

$ 21,604,441

f. Information on integrated income tax

December 31,

2013

December 31,

2012

January 1,

2012

Imputation credit account $ 249,264 $ 247,364 $ 225,527

The Corporation had no unappropriated earnings generated before January 1, 1998.

The Corporation had operating losses in 2012 and 2011; thus, the shareholders resolved not to make

appropriations for these years.

g. In November 2010, the Industrial Development Bureau (IDB) approved the tax credits for Emerging,

Important and Strategic Industries. The credits can be used to reduce the Corporation’s tax obligations

for five years from 2013.

h. Income tax returns through 2010 of the Corporation, 2011 of the Mactech and United Win Investment

had been assessed and cleared by the tax authorities.

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22. LOSS PER SHARE (EPS)

Number of

Shares Loss Per Share

Net Loss (In Thousands) (NT$)

For the year ended December 31, 2013

Basic and diluted $ (10,254,316) 1,847,778 $ (5.55)

For the year ended December 31, 2012

Basic and diluted $ (2,881,517) 1,759,254 $ (1.64)

If the Group offers to pay employee bonuses in cash or shares, the Group will assume that the entire amount

of the bonus will be settled in shares, and the resulting potential shares will be included in the weighted

average number of shares outstanding to be used in the computation of diluted earnings per share, if the

effect is dilutive. The dilutive effect of the potential shares is included in the computation of diluted

earnings per share until the shareholders resolve the number of shares to be distributed to employees at their

meeting in the following year.

Since the exercise price of the options issued by the Corporation exceeded the average market price of the

shares in the year ended December 31, 2013 and 2012, the options were anti-dilutive and excluded from the

computation of diluted EPS.

23. SHARE-BASED PAYMENT ARRANGEMENTS

Under stock option plans (the “Plans”), the Corporation issued to employees 29,000 units in August 2007;

Mactech, 2,000 units in July 2008; and WinPower, 1,111 units in November 2011. Each unit represents one

thousand common shares. Employees eligible to receive the Corporation’s options under the Plan are

full-time employees of both the Corporation and subsidiaries. Certain percentages of the options of the

Corporation and Mactech are exercisable two years from the grant dates, and those of WinPower are

exercisable one month from the grant date. The option certificate is valid for six years and the vested right

is exercisable on the basis of an employee’s service years. The exercise price of the Corporation’s stock

option is the closing price of its share on the grant date. If any change is made in the common stock

subject to the Plan, the exercise price of any Plan options outstanding will be appropriately adjusted in

accordance with a certain formula. The exercise prices of the stock options granted by Mactech and

WinPower were NT$10.00 per common share.

Other information on the Corporation’s employee stock options is as follows:

Year Ended December 31

2013 2012

Weighted Weighted

Average Average

Exercise Exercise

Price Price

Employee Stock Options Units (NT$) Units (NT$)

Balance, beginning of year 4,241 $ 28.30 4,657 $ 29.91

Options forfeited (4,241) 28.30 (416) 29.91

Balance, end of year - - 4,241 28.30

Options exercisable, end of year - - 4,241 28.30

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Information on outstanding options of the Corporation is as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Exercise Price (NT$) $ - $ 28.30 $ 29.91

Weighted-average Remaining Contractual Life

(Years)

- 0.67 1.67

The compensation cost recognized under the intrinsic value method for the years ended December 31, 2013

and 2012 was zero. Had the Corporation used the Black-Scholes Model to price the options granted, the

method, the assumptions and pro forma information, assuming the employee stock options were granted

before December 31, 2007, would have been as follows:

Black-Scholes Model

Assumptions

Risk-free interest rate 2.28%

Expected life 4 years

Expected volatility 44.06%

Expected dividend yield -

Year Ended December 31

2013 2012

Net loss

Pro forma $(10,254,316) $ 2,881,517

Loss per share (NT$)

Pro forma $(5.55) $(1.64)

Other information on Mactech’s employee stock options is as follows:

Year Ended December 31

2013 2012

Employee Stock Options Units

Weighted

Average

Exercise

Price

(NT$) Units

Weighted

Average

Exercise

Price

(NT$)

Balance, beginning of year 38 $10.00 618 $10.00

Options exercised - - (539) 10.00

Options forfeited (4) 10.00 (41) 10.00

Balance, end of year 34 10.00 38 10.00

Options exercisable, end of year 34 10.00 38 10.00

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Information on Mactech’s outstanding options is as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Exercise Price (NT$) $ 10.00 $ 10.00 $ 10.00

Weighted-average Remaining Contractual Life

(Years)

0.58 1.58 2.58

Other information on WinPower’s employee stock option is as follows:

Year Ended

December 31, 2012

Units

Weighted-

average

Exercise

Price (NT$)

Balance, beginning of year 1,059 10.00

Options exercised (935) 10.00

Options forfeited (124) 10.00

Balance, end of year - -

Options exercisable, end of year - -

24. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going

concerns while maximizing the return to shareholders through the optimization of the debt and equity

balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash

equivalents) and equity of the Group (comprising share capital, capital surplus, retained earnings and other

equity).

The directors of the Group review the capital structure quarterly. As part of this review, the directors

consider the cost of capital and the risks associated with each class of capital. On the basis of the

recommendations of the directors, to balance the overall capital structure, the Group may adjust the amount

of dividends for distribution, the number of new shares issued, or the amount of new debt issued or existing

debt redeemed. In addition, under certain loan agreements with a syndicate of banks, the Group should

not buy back its own shares and reduce capital during the contract period.

25. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments

1) Fair value of financial instruments not carried at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in

the consolidated financial statements approximate their fair values or the fair value cannot be

reliably a measured.

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2) Fair value measurements of financial instruments recognized in the consolidated balance sheets

Financial instruments that are measured subsequent to initial recognition at fair value are grouped

into Levels 1 to 3 based on the degree to which the fair value is observable, as follows:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active

markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included

within Level 1 and those that are observable for the asset or liability either directly (i.e., as

prices) or indirectly (i.e., derived from prices); and

Level 3 fair value measurements are those derived through valuation techniques, which include

inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

The Group’s financial instruments, available-for-sale financial assets and financial assets and

liabilities at fair value through profit or loss, are classified under Level 1 and Level 2, respectively.

There were no transfers between Level 1 and 2 for the years ended December 31, 2013 and 2012.

3) Valuation techniques and assumptions applied to measure fair value

The fair values of financial assets and financial liabilities are determined as follows:

The fair values of financial assets and financial liabilities with standard terms and conditions

and traded in active liquid markets are determined with reference to quoted market prices.

The fair values of derivative instruments are calculated using quoted prices. If quoted prices are

not available, a discounted cash flow analysis is done, using the applicable yield curve for the

duration of the instruments for non-optional derivatives, and option pricing models for optional

derivatives. Forward contracts are measured using quoted forward exchange rates and yield

curves derived from quoted interest rates matching maturities of the contracts. Interest rate

swaps are measured at the present value of future cash flows estimated and discounted on the

basis of the applicable yield curves derived from quoted interest rates.

b. Categories of financial instruments

December 31,

2013

December 31,

2012

January 1,

2012 Financial assets Fair value through profit and loss

Held for trading $ 134,952 $ 471 $ 61,740 Loans and receivables 20,157,765 19,978,074 24,766,842 Available-for-sale financial assets 702,731 488,598 519,615 Financial liabilities Fair value through profit and loss

Held for trading 12,732 37,792 23,753 Amortized cost 55,419,976 55,374,635 52,603,912

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Loans and receivables measured at amortized cost comprise cash and cash equivalents, debt

investments with no active market, notes and trade receivables and other receivables. Available-for-sale

financial assets included the carrying amount of available-for-sale financial measured at cost.

Financial liabilities measured at amortized cost comprise short-term loans, short-term bills payable,

notes and accounts payable, other payables and long-term borrowings.

c. Financial risk management objectives and policies

The Group’s major financial instruments include equity investments, trade receivables, trade payables

and borrowing. The Group’s Corporate Treasury provides services to the business, coordinates access

to domestic and international financial markets, manages and monitors the financial risks relating to the

operations of the Group through internal risk reports, which analyze exposures by degree and

magnitude of risks. These risks include market risk (including currency risk and interest rate risk),

credit risk and liquidity risk.

The Group seeks to minimize the effects of these risks by using derivative financial instruments to

hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved

by the Coporation’s board of directors. Compliance with policies and exposure limits is reviewed by

the internal auditors.

The Corporate Treasury reports quarterly to the Board of Directors.

1) Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency

exchange rates and interest rates. The Group uses a variety of derivative financial instruments to

manage its exposure to foreign currency risk and interest rate risk, including:

Forward exchange contracts to hedge against the exchange rate risk on imports and exports; and

Interest rate swaps to mitigate the risk of rising interest rates.

There had been no change to the Group’s exposure to market risks or the manner in which these

risks were managed and measured.

a) Foreign currency risk

Several subsidiaries of the Coporation have foreign currency sales and purchases, which expose

the Group to foreign currency risk. Exchange rate exposures are managed within approved

policy parameters through forward exchange contracts.

The carrying amounts of the Group’s foreign currency-denominated monetary assets and

monetary liabilities (including those eliminated on consolidation) at the end of the reporting

period are listed in Note 30.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar (USD). Assuming a 4% movement in the

levels of the NTD against the USD, the losses before income tax for the years ended December

31, 2013 and 2012 would have changed by $6,446 thousand and $66,676 thousand, respectively.

Assuming a 1% movement in the levels of the RMB against the USD, losses before income tax

for the years ended December 31, 2013 and 2012 would have changed by $203,314 thousand

and $29,848 thousand, respectively.

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The sensitivity rate is the rate used when reporting foreign currency risk internally to the

directors and represents the directors’ assessment of the reasonably possible change in foreign

exchange rates.

b) Interest rate risk management

The Group was exposed to interest rate risk because entities in the Group borrowed funds at

both fixed and floating interest rates. The risk is managed by the Group by maintaining an

appropriate mix of fixed and floating rate borrowings and by using interest rate swap contracts.

Hedging activities are evaluated regularly to align with interest rate views and defined risk

appetite, ensuring that the most cost-effective hedging strategies are applied.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to

interest rates on at the end of the reporting period were as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Fair value interest rate risk

Financial assets $ 2,873,290 $ 788,911 $ 1,833,507

Financial liabilities 18,880,123 13,611,900 8,503,954

Cash flow interest rate risk

Financial assets 4,660,755 5,334,506 6,101,450

Financial liabilities 19,025,472 25,445,161 24,470,777

Interest rate sensitivity analysis

The sensitivity analyses below were determined on the basis of the exposure to interest rates for

both derivative and nonderivative instruments at the end of the reporting period. For floating

rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the

end of the reporting period was outstanding for the whole year. A 0.3% increase or decrease was

used when reporting interest rate risk internally to the directors and represents the directors’

assessment of the reasonably possible change in interest rates.

Has interest rates been changed by 0.3% and all other variables been held constant, the Group’s

losses before income tax for the years ended December 31, 2013 and 2012 would have changed

by $57,076 thousand and $76,335 thousand, respectively.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations, resulting in

financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to

credit risk which will cause a financial loss to the Group due to failure of counterparties to

discharge an obligation could arise from the carrying amount of the respective recognized financial

assets as stated in the balance sheets.

The Group adopted a policy of only dealing with creditworthy counterparties. The Group has

credit policy and management procedures on trade receivables to ensure it can evaluate the debts

soundly and recover the receivables.

The Group’s concentrations of credit risk of 49%, 89% and 87% in total trade receivables as of

December 31, 2013, December 31, 2012 and January 1, 2012, respectively, pertained to the Group’s

the five largest customers.

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3) Liquidity risk management

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash

equivalents deemed adequate to finance the Group’s operations and mitigate the effects of

fluctuations of cash flows. In addition, the directors monitor the use of bank borrowings and

ensure compliance with loan covenants.

Liquidity and interest risk rate tables for nonderivative financial liabilities

The following tables detail the Group’s remaining contractual maturity for its nonderivative

financial liabilities with agreed repayment periods. The tables have been drawn up on the basis of

undiscounted cash flows of financial liabilities from the earliest date on which the Group can be

required to pay. Specifically, bank loans with a repayment on demand clause were included in the

“Less Than 1 Year” column below regardless of the probability of the banks choosing to exercise

their repayment rights in repayment periods of one year or longer. The maturity dates for other

nonderivative financial liabilities were based on the agreed repayment dates.

Less Than

1 Year 1-2 Years Over 2 Years

December 31, 2013

Noninterest bearing $ 15,291,209 $ 800,258 $ 98,579

Variable interest rate instruments 12,102,520 3,636,658 3,286,294

Fixed interest rate instruments 18,781,465 78,774 19,884

$ 46,175,194 $ 4,515,690 $ 3,404,757

December 31, 2012

Noninterest bearing $ 14,550,112 $ 122,040 $ 626

Variable interest rate instruments 8,966,320 10,270,737 6,208,104

Fixed interest rate instruments 13,517,448 47,880 46,572

$ 37,033,880 $ 10,440,657 $ 6,255,302

January 1, 2012

Noninterest bearing $ 18,027,145 $ 139,687 $ 498

Variable interest rate instruments 9,906,180 5,259,762 9,304,835

Fixed interest rate instruments 8,489,600 - 14,354

$ 36,422,925 $ 5,399,449 $ 9,319,687

Liquidity and interest risk rate tables for derivative financial liabilities

The following table details the Group's liquidity analysis for its derivative financial instruments.

The table was based on the undiscounted contractual net cash inflows and outflows on derivative

instruments that settle on a net basis and the undiscounted gross inflows and outflows on those

derivatives that require gross settlement. When the amount payable or receivable was not fixed,

the amount disclosed was determined by referring to the projected interest rates as illustrated by the

yield curves at the end of the reporting period.

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Less Than

1 Year 1-2 Years Over 2 Years

December 31, 2013

Net settled:

Interest rate swap $ - $ - $ (8,382)

Forward exchange 118,155 - -

$ 118,155 $ - $ (8,382)

Gross settled:

Forward exchange

Inflows $ 2,247,856 $ - $ -

Outflows (2,227,910) - -

19,946 - -

Swap

Inflows 536,490 - -

Outflows (534,310) - -

2,180 - -

$ 22,126 $ - $ -

December 31, 2012

Net settled:

Interest rate swap $ - $ - $ (12,833)

Forward exchange 4,590 - -

Currency option (12,284) - -

$ (7,694) $ - $ (12,833)

Gross settled:

Forward exchange

Inflows $ 350,030 $ - $ -

Outflows (355,987) - -

(5,957) - -

Swap

Inflows 1,722,307 - -

Outflows (1,722,572) - -

(265) - -

$ (6,222) $ - $ -

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Less Than

1 Year 1-2 Years Over 2 Years

January 1, 2012

Net settled:

Interest rate swap $ (8,135) $ - $ (17,699)

Cross-currency swap 57,441 - -

Forward exchange (638) - -

Currency option 4,892 - -

$ 53,560 $ - $ (17,699)

Gross settled:

Forward exchange

Inflows $ 315,708 $ - $ -

Outflows (315,866) - -

(158) - -

Swap

Inflows $ 2,418,513 $ - $ -

Outflows (2,418,973) - -

(460) - -

$ (618) $ - $ -

26. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the

Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of

transactions between the Group and other related parties are disclosed below.

Compensation of key management personnel

Year Ended December 31

2013 2012

Short-term employee benefits $ 77,971 $ 96,628

Post-employment benefits 1,128 1,199

$ 79,099 $ 97,827

The remuneration of directors and key executives was determined by the remuneration committee, taking

into consideration the performance of individuals and market trends.

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collaterals or guarantees to the Institute of Information Industry as

well as part of the requirements for the tariff of imported raw materials, letters of credit and long-term

borrowings:

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December 31,

2013

December 31,

2012

January 1,

2012

Property, plant and equipment $ 19,776,915 $ 17,162,772 $ 6,645,856

Investment properties 44,969 45,026 48,089

Prepayments for lease 649,118 626,551 -

Restricted deposit (classified under debt

investments with no active market) 122,220 - -

Mortgaged time deposits (classified under debt

investments with no active market) 119,220 15,884 -

$ 20,712,442 $ 17,850,233 $ 6,693,945

28. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

On March 4, 2014, the board of directors decided to change the useful life of equipment from 6 to 10 years

considering the practice among peers and evaluating the result from the appraisal company. These changes

are expected to reduce depreciation expenses by $2,622,656 thousand for the year ended December 31,

2014.

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. As of December 31, 2013, December 31, 2012 and January 1, 2012, unused letters of credit for the

purchases of raw materials and machinery and equipment amounted to $418,229 thousand, $518,022

thousand and $544,137 thousand, respectively.

b. Unrecognized commitments were as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Acquisition of property, plant and equipment $ 4,401,386 $ 2,138,121 $ 5,090,499

c. Under sales agreements expiring between 2014 and 2021, the Group should pay royalty fees at a

percentage of net sales of certain products or at a fixed amount. For the years ended December 31,

2013 and 2012, royalty expenses were $111,296 thousand and $146,879 thousand, respectively.

30. EXCHANGE RATES OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN

FOREIGN CURRENCIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

December 31, 2013 December 31, 2012 January 1, 2012

Foreign

Currency

Exchange

Rate

New Taiwan

Dollar

Foreign

Currency

Exchange

Rate

New Taiwan

Dollar

Foreign

Currency

Exchange

Rate

New Taiwan

Dollar

Financial assets

Monetary items

USD (USD/NTD) $ 850,848 29.81 $ 25,359,514 $ 898,580 29.04 $26,094,766 $ 1,098,462 30.28 $ 33,255,940

USD (USD/RMB) 529,438 6.10 15,779,885 523,342 6.29 15,197,850 536,952 6.30 16,256,209

JPY 289,698 0.28 82,245 107,101 0.34 36,029 121,042 0.39 47,278

Financial liabilities

Monetary items

USD (USD/NTD) 1,171,623 29.81 34,920,233 1,023,118 29.04 29,711,341 1,023,127 30.28 30,975,171

USD (USD/RMB) 1,187,584 6.10 35,395,933 1,166,297 6.29 33,869,257 962,688 6.30 29,145,372

JPY 1,523,708 0.28 432,581 2,143,797 0.34 721,173 1,469,220 0.39 573,877

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31. SEPARATELY DISCLOSED ITEMS

Information on significant transactions and investees:

a) Financing provided to others: Table 1

b) Endorsements/guarantees provided: Table 2

c) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled

entities): Table 3

d) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the

paid-in capital: Table 4

e) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital:

None

f) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital:

None

g) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the

paid-in capital: Table 5

h) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:

Table 6

i) Trading in derivative instruments: Table 7

j) Intercompany relationships and significant intercompany transactions: Table 7

k) Information on investees: Table 8

l) Information on investments in mainland China

1) Information on any investee company in mainland China, showing the name, principal business

activities, paid-in capital, method of investment, inward and outward remittance of funds,

ownership percentage, net income of investees, investment income or loss, carrying amount of the

investment at the end of the period, repatriations of investment income, and limit on the amount of

investment in the mainland China area: Table 9

2) Any of the following significant transactions with investee companies in mainland China, either

directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or

losses:

a) The amount and percentage of purchases and the balance and percentage of the related payables

at the end of the period: Table 5

b) The amount and percentage of sales and the balance and percentage of the related receivables at

the end of the period: Table 5

c) The amount of property transactions and the amount of the resulting gains or losses: None

d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the

end of the period and the purposes: Table 2

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e) The highest balance, the end of period balance, the interest rate range, and total current period

interest with respect to financing of funds: Table 1

f) Other transactions that have a material effect on the profit or loss for the period or on the

financial position, such as the rendering or receiving of services: Table 7

32. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and

assessment of segment performance focuses on types of goods or services delivered or provided.

Specifically, the Group’s reportable segments under IFRS 8 “Operating Segments” were touch panels and

others.

a. Segment revenues and results

Following is the analysis of the Group’s revenue and results by reportable segment:

Year Ended December 31

Segment Revenue Segment Profit

2013 2012 2013 2012

Touch panels $ 68,995,725 $ 91,123,178 $ (4,914,262) $ 3,302,315

Others 7,402,000 11,054,873 (3,766,364) (3,955,077)

Total $ 76,397,725 $102,178,051 (8,680,626) (652,762)

Foreign exchange gain, net 541,642 173,251

Interest income 37,407 56,882

Other income 409,091 268,187

General and administrative expenses (1,854,795) (1,688,644)

Finance costs (916,985) (866,462)

Valuation gain (loss) on financial

assets (liabilities) at fair value

through profit or loss through profit

or loss 257,051 (97,773)

Other expenses (1,721) (3,857)

Loss before income tax $ (10,208,936) $ (2,811,178)

Segment revenue reported above represents revenue generated from external customers. There were

no intersegment sales for the years ended December 31, 2013 and 2012.

Segment profit represents the profit before tax earned by each segment without the allocation of central

administration costs and directors’ salaries, interest income, gain or loss on disposal of assets, foreign

exchange gain or loss, valuation gain or loss on financial instruments, finance costs and income tax

expense. This was the measure reported to the chief operating decision maker for the purposes of

resource allocation and assessment of segment performance.

b. Geographical information

The Group mainly operates in three geographical areas: Taiwan, China and Vietnam. The Group’s

revenue from operations from external customers by location of operations and information on its

non-current assets by location of assets are shown below.

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Revenue from

External Customers Non-current Assets

Year Ended December 31 December 31, December 31, January 1,

2013 2012 2013 2012 2012

Taiwan $ 76,097,952 $ 101,839,242 $ 12,532,208 $ 15,124,295 $ 18,526,035

China 255,517 200,450 29,535,719 32,291,811 26,191,966

Vietnam - - 6,588,615 6,772,106 4,326,250

Other 44,256 138,359 131,091 176,938 376,762

$ 76,397,725 $ 102,178,051 $ 48,787,633 $ 54,365,150 $ 49,421,013

Noncurrent assets excluded those classified as deferred tax assets.

c. Information on major customers

Year Ended December 31

2013 2012

Customer Amount % Amount %

Corporation B $ 16,117,771 21 $ 65,086,972 64

Corporation C 15,593,417 20 2,965,524 3

Corporation D 13,337,969 18 9,420,931 9

Corporation A 7,380,247 10 10,273,530 10

$ 52,429,404 69 $ 87,746,957 86

33. FIRST-TIME ADOPTION OF Taiwan-IFRSs

a. Basis of the preparation of the financial information under Taiwan-IFRSs

The Group’s consolidated financial statements for the year ended December 31, 2013 were the first

Taiwan-IFRSs financial statements. The Group not only followed the significant accounting policies

stated in Note 4 but also applied the requirements under IFRS 1 “First-time Adoption of IFRS” as the

basis for the preparation.

b. Impact on the transition to Taiwan-IFRSs

After the transition to Taiwan-IFRSs, the impact on the Group’s consolidated balance sheets and

consolidated statements of comprehensive income is stated as follows:

1) Reconciliation of the consolidated balance sheet items as of January 1, 2012

Effect of

ROC GAAP Transition to Taiwan-IFRSs

Item Amounts Taiwan-IFRSs Amounts Item Note

Assets

Cash and cash equivalents $ 7,863,959 $ (181,650 ) $ 7,682,309 Cash and cash equivalents a)

Available-for-sale financial assets

- current

169,025 142,108 311,133 Available-for-sale financial assets

- current

k)

- - 181,650 181,650 Debt investments with no active

market - current

a)

Other receivables 1,392,079 2,248 1,394,327 Other receivables -

Other financial assets - current 80,442 (80,442 ) - - -

Deferred tax assets - current 486,264 (486,264 ) - - b) Other current assets 1,684,276 198,925 1,883,201 Other current assets d)

(Continued)

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Effect of

ROC GAAP Transition to Taiwan-IFRSs

Item Amounts Taiwan-IFRSs Amounts Item Note

Financial assets measured at cost -

noncurrent

$ 251,619 $ (43,137 ) $ 208,482 Financial assets measured at cost -

noncurrent

k)

Property, plant and equipment,

net

47,741,185 (6,815,206 ) 40,925,979 Property, plant and equipment c), h), i),

j)

- - 71,988 71,988 Investment properties h) Computer software - 29,197 29,197 Computer software c)

Land use rights 1,226,443 (1,226,443 ) - - d)

- - 1,201,678 1,201,678 Long-term prepayments for rent d) - - 6,819,076 6,819,076 Prepayments for equipment j)

Deferred tax assets - noncurrent 475,108 504,964 980,072 Deferred tax assets b), f)

Other assets - others 304,834 (258,965 ) 45,869 Other non-current assets c), e), i)

Liabilities

Accrued expense 4,899,712 1,021,318 5,921,030 Other payables f)

Payable for the acquisition of

equipment

987,566 (987,566 ) - - -

Other current liabilities 430,227 (70,832) 359,395 Other current and non-current

liabilities

l)

- - 71,452 71,452 Provisions - current l) Other liabilities - others 620 (620 ) - - -

Deferred tax liabilities -

noncurrent

- 11,656 11,656 Deferred tax liabilities b)

Equity

Capital surplus - long-term

investments

3,262 (3,262 ) - - g)

Capital surplus-Employee stock

options

3,264 (3,264 ) - - g)

Accumulated deficit (1,904,878 ) 1,590,089 (314,789 ) Accumulated deficit e), f), g)

Cumulative translation adjustments

1,670,453 (1,670,453 ) - Exchange difference on translating foreign operations

-

Unrealized gain on financial instruments

30,014 98,972 128,986 Unrealized gain on available-for-sale financial

assets

k)

Minority interest 158,695 2,237 160,932 Non-controlling interests e), f),g)

(Concluded)

2) Reconciliation of the consolidated balance sheet items as of December 31, 2012

Effect of

ROC GAAP Transition to Taiwan-IFRSs

Item Amounts Taiwan-IFRSs Amounts Item Note

Assets

Cash and cash equivalents $ 6,073,213 $ (132,197 ) $ 5,941,016 Cash and cash equivalents a)

Available-for-sale financial assets

- current

284,102 26,561 310,663 Available-for-sale financial assets

- current

k)

- - 148,081 148,081 Debt investments with no active

market - current

a)

Other receivables 477,676 2,882 480,558 Other receivables -

Other financial assets-current 87,908 (87,908 ) - - -

Restricted assets - current 15,884 (15,884 ) - - a)

Deferred tax assets - current 462,645 (462,645 ) - - b) Other current assets 3,390,334 118,643 3,508,977 Other current assets d)

Financial assets measured at cost - noncurrent

189,019 (11,084 ) 177,935 Financial assets measured at cost - noncurrent

k)

Property, plant and equipment,

net

52,805,031 (2,381,207 ) 50,423,824 Property, plant and equipment c), h), i),

j)

- - 67,403 67,403 Investment properties h)

Computer software 30,809 19,158 49,967 Computer software c)

Land use rights 1,153,525 (1,153,525 ) - - d) - - 1,129,602 1,129,602 Long-term prepayments for rent d)

- - 2,371,962 2,371,962 Prepayments for equipment j)

Deferred tax assets - noncurrent 715,347 490,697 1,206,044 Deferred tax assets b), f) Other assets others 203,735 (176,385 ) 27,350 Other non-current assets c), e), i)

(Continued)

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Effect of

ROC GAAP Transition to Taiwan-IFRSs

Item Amounts Taiwan-IFRSs Amounts Item Note

Liabilities

Accrued expense $ 4,399,001 $ 1,283,750 $ 5,682,751 Other payables f)

Payables for the acquisition of

equipment

1,241,502 (1,241,502 ) - -

Other current liabilities 333,624 (38,003 ) 295,621 Other current and non-current

liabilities

l)

- - 34,547 34,547 Provisions - current l) Deferred tax liability - noncurrent - 19,954 19,954 Deferred tax liability - noncurrent b)

Equity

Capital surplus - long-term

investments

4,482 (4,482 ) - - g)

Capital surplus - employee stock

options

381 (381 ) - - g)

- - 1,235 1,235 Difference between market price and carrying amount by

acquisition or disposal of

subsidiaries

g)

Accumulated deficit (2,878,439 ) 1,555,297 (1,323,142 ) Accumulated deficit e), f), g)

Cumulative translation

adjustments

629,875 (1,669,793 ) (1,039,918 ) Exchange difference on

translating foreign operations

Unrealized gain on financial

instruments

121,411 15,479 136,890 Unrealized gain on

available-for-sale financial

assets

k)

Minority interest 140,910 (1,947 ) 138,963 Non-controlling interests e), f), g)

(Concluded)

3) Reconciliation of the consolidated statement of comprehensive income for the year ended

December 31, 2012

Effect of

ROC GAAP Transition to Taiwan-IFRSs

Item Amounts Taiwan-IFRSs Amounts Item Note

Operating expenses $ 4,032,100 $ 4,668 $ 4,036,768 Operating expenses e), f) -

- 780,104 780,104 Other operating income and

expenses

m)

Impairent loss on assets 780,104 (780,104 ) - - m) Income tax expense 32,753 (1,253 ) 31,500 Income tax expense f)

Other comprehensive income

-

- - (1,039,918 )

Exchange differences on

translating foreign operations

-

- - 7,924 Unrealized valuation gain on

available-for-sale financial

assets

k)

- - - (32,836 ) Loss on benefit plan e)

4) Exemptions from IFRS 1

IFRS 1 “First-time Adoption of International Financial Reporting Standards” establishes the

procedures for the Group’s first consolidated financial statements prepared in accordance with

Taiwan-IFRSs. Under IFRS 1, the Group is required to determine the accounting policies under

Taiwan-IFRSs and retrospectively apply those accounting policies to its opening balance sheet at

the date of transition to Taiwan-IFRSs, January 1, 2012, except for optional exemptions and

mandatory exceptions to such retrospective application provided under IFRS 1. The major

optional exemptions the Group adopted are summarized as follows:

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a) Business combinations

The Group elected not to apply IFRS 3 “Business Combinations” retrospectively to business

combinations that occurred before the date of transition. Thus, the carrying amounts of

goodwill generated from past business combinations as well as the assets, liability, and

non-controlling interests in the consolidated balance sheet were the same as the carrying

amounts shown in the consolidated balance sheet as of December 31, 2011, which had been

prepared in accordance with ROC GAAP.

The election not to apply IFRS 3 was also true for investments in associates made in the past.

b) Share-based payment transactions

The Group elected to take the optional exemption from applying IFRS 2 “Share-based

Payment” retrospectively to shared-based payment transactions granted and vested before the

transition date.

c) Employee benefits

The Group elected to recognize all cumulative actuarial gains and losses on employee benefits

in accumulated earnings at the date of transition.

d) Cumulative translation differences

The Group elected to reset the cumulative translation differences to zero at the transition date

and adjusted accumulated earnings accordingly.

The effects of the above elections had been considered in Item 5 – “Explanations for significant

reconciling items in the transition to Taiwan-IFRSs.”

5) Explanations for significant reconciling items in the transition to Taiwan-IFRSs

Material differences between the accounting policies under ROC GAAP and the accounting policies

adopted under Taiwan-IFRSs were as follows:

a) Time deposits of more than three months

Under ROC GAAP, the term “cash and cash equivalents” used in the financial statements

includes cash on hand, demand deposits, check deposits, time deposits that are cancelable but

without any loss of principal and negotiable certificates of deposit that are readily sellable

without any loss of principal. Under Taiwan-IFRSs, cash equivalents are held for the purpose

of meeting short-term cash commitments rather than for investment or other purposes. An

investment normally qualifies as a cash equivalent only when it has a short maturity of three

months or less from the date of acquisition. Some certificates of deposit the Group held had

maturities of more than three months from the date of investment; thus they were reclassified

from cash and cash equivalents to debt investments with no active market - current.

b) Deferred tax asset/liability and valuation allowance

Under ROC GAAP, valuation allowances are provided to the extent, if any, that it is more likely

than not that deferred income tax assets will not be realized. Under Taiwan-IFRSs, an entity

recognizes deferred tax assets only if it is highly probable that taxable profits will be available

against which the deductible temporary difference can be used; thus a valuation allowance

account is not used.

In addition, under ROC GAAP, a deferred tax asset and liability is classified as current or

noncurrent in accordance with the classification of related asset or liability for financial

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reporting. But if a deferred income tax asset or liability does not relate to an asset or liability

in the financial statements, it is classified as current or noncurrent on the basis of the expected

length of the realization or settlement period. Under Taiwan-IFRSs, a deferred tax asset and

liability is classified as non-current.

Under ROC GAAP, the current deferred tax liabilities and assets of the same taxable entity

should be offset against each other and presented as a net amount; the same treatment is applied

to non-current deferred tax liabilities and assets.

Under Taiwan-IFRSs, an entity should offset deferred tax assets and deferred tax liabilities only

if:

i. The entity has a legally enforceable right to current tax assets against current tax liabilities;

and

ii. The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the

same taxation authority on either:

i) The same taxable entity; or

ii) Different taxable entities that intend either to settle current tax liabilities and assets on a

net basis, or to realize the assets and settle the liabilities simultaneously, in each future

period in which significant amounts of deferred tax liabilities or assets are expected to

be settled or recovered.

c) Classification of deferred charges

Under ROC GAAP, deferred charges are classified under other assets. Under Taiwan-IFRSs,

the items in deferred charges are classified as property, plant and equipment, intangible assets

and prepayments - noncurrent (classified under other assets) in accordance with their nature.

d) Land use rights

Under ROC GAAP, land use rights are classified under intangible assets. Under IAS 17

“Leases,” land use rights are classified as long-term prepayments for lease.

e) Employee benefits - defined benefit plans

Under ROC GAAP, unrecognized net transition obligations should be amortized on a

straight-line basis over the employees’ remaining service periods. Under Taiwan-IFRSs, as

the transitional provisions of IAS 19 “Employee Benefits” do not apply to a first-time adopter's

transition to Taiwan-IFRSs, the Group should recognize unrecognized net transition obligations

in unappropriated earnings at the transition date.

In addition, under ROC GAAP, it is not allowed to recognize actuarial gains and losses from

defined benefit plans directly to equity; instead, actuarial gains and losses should be accounted

for under the corridor approach, which requires the deferral of gains and losses. The corridor

approach requires the amortization of actuarial gains and losses over the expected average

remaining working lives of the participating employees.

Under IAS 19, the Group has elected to recognize actuarial gains and losses fully as other

comprehensive income and reported in retained earnings in the period in which they arise. The

subsequent reclassification to earnings is not permitted.

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f) Employee benefits - accumulated compensated absences

Accumulated compensated absences are not addressed in the ROC GAAP; thus, the Group has

not recognized at the end of reporting periods the expected cost of employee benefits in the

form of accumulated compensated absences. Under Taiwan-IFRSs, when the employees render

services that increase their entitlement to future compensated absences, an entity should

recognize the expected cost of employee benefits at the end of reporting periods.

g) Investments accounted for using the equity method

Subsidiary issues new shares but the Corporation does not buy new shares proportionately

The investor may subscribe for additional investees shares at a percentage different from its

existing ownership percentage, resulting in a change in the investor’s holding percentage in the

investee. Under ROC GAAP, the investor records this change as an adjustment to long-term

investments, with the corresponding amount charged or credited to capital surplus. Under

Taiwan-IFRSs, changes in a parent’s ownership interest in a subsidiary without the loss of the

parent’s control are accounted for as equity transactions.

In addition, according to the “Frequently Asked Questions Related to the IFRS Adoption”

issued by the Taiwan Stock Exchange, capital surplus items not addressed by Taiwan’s

Company Law and the rules issued by the Ministry of Economic Affairs should be adjusted on

the date of transition to Taiwan-IFRSs.

A subsidiary’s newly granted employee stock options

Under ROC GAAP, when the subsidiaries of the Corporation issue employee stock options,

there is a corresponding adjustment to capital surplus - employee stock options. In addition, the

Corporation records the changes in its equity in the investees’ net assets as an adjustment to

investments, with the corresponding amounts credited or charged to capital surplus.

Under Taiwan-IFRSs, the equity in a subsidiary, which cannot be attributed directly or

indirectly to the parent, is attributed to non-controlling interest.

h) Investment properties

Under ROC GAAP, property that is held by a lessor under an operating lease is classified under

property, plant and equipment. Under Taiwan-IFRSs, the property held to earn rentals or for

capital appreciation or both should be classified as investment properties.

i) The Group’s land registered under someone else’s name

Under the pre-revised Guidelines Governing the Preparation of Financial Reports by Securities

Issuers, land that is owned by the Group but registered under someone else’s name, is classified

under other assets. Under Taiwan-IFRSs, the land is classified as property, plant and

equipment depending on the purpose of landholding.

j) Prepayments for equipment

Under ROC GAAP, prepayments for equipment are classified as property, plant and equipment.

Under Taiwan-IFRSs, prepayments for equipment are classified as prepayments and presented

under non-current assets.

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k) Financial assets measured at cost - noncurrent

Under the Guidelines Governing the Preparation of Financial Reports by Securities Issuers,

investments in equity instruments with no quoted prices in an active market and with fair values

that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the

Emerging Stock Market, are classified as financial assets measured at cost.

Under Taiwan-IFRSs, nonderivative financial assets that are designated as available-for-sale

financial assets, or are not designated as at financial assets and liabilities at fair value through

profit or loss on initial recognition are classified as available-for-sale financial assets and are

initially measured at fair value.

l) Warranty reserves

Under ROC GAAP, warranty reserves are included in other current liabilities. Under

Taiwan-IFRSs, warranty reserves are listed as provisions.

m) Impairment loss of assets

Under the Guidelines Governing the Preparation of Financial Reports by Securities Issuers,

impairment loss on assets are recognized as non-operating expenses and losses. Under

Taiwan-IFRSs, impairment loss on assets is recognized as other operating income and expenses,

operating expenses or non-operating expense in accordance with their nature.

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TABLE 1

WINTEK CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Lender Borrower Financial Statement Account Related

Parties

Highest Balance for

the Period

Ending Balance

(Note 3)

Actual Borrowing

Amount Used

Range of Interest

Rate

Nature of

Financing

Business

Transaction

Amounts

Reasons for

Short-term

Financing

Allowance for

Impairment loss

Collateral Aggregate

Financing

Limits Item Value

1 United Win Technology

(Cayman) Corporation

United Win (H.K.) Technology

Limited (Note 4)

Receivables from related parties Yes US$ 3,000 US$ 3,000 US$ 3,000 - Note 1 $ - Operating capital $ - - - Note 2

United Win (China)

Technology Limited (Note 4)

Receivables from related parties Yes US$ 60,000 US$ - US$ - - Note 1 - Operating capital - - - Note 2

2 United Win (H.K.)

Technology Limited

United Win (China)

Technology Limited (Note 4)

Receivables from related parties Yes US$ 120,000 US$ 80,000 US$ 61,000 2.16%-2.22% Note 1 - Operating capital - - - Note 2

Wintek (China) Technology

Ltd. (Note 4)

Receivables from related parties Yes US$ 40,000 US$ 40,000 US$ 40,000 0.90%-1.74% Note 1 - Operating capital - - - Note 2

Wintek Corporation (Note 4) Receivables from related parties Yes US$ 19,000 US$ 19,000 US$ - - Note 1 - Operating capital - - - Note 2

3 Masstop Asia Pacific Ltd. Dongguan Masstop Liquid

Crystal Display Co., Ltd.

(Note 4)

Receivables from related parties Yes US$ 106,000 US$ 83,000 US$ 63,000 and

RMB$ 126,820

2.08%-3.28% Note 1 - Operating capital - - - Note 2

4 Wintek BVI Wintek Fra East (Cayman)

Corporation (Note 4)

Receivables from related parties Yes US$ 2,000 US$ - US$ - - Note 1 - Operating capital - - - Note 2

Sun Farm Corporation Other receivables No US$ 1,788 US$ 1,330 US$ 1,330 1.69%-2.19% Note 1 - Operating capital - - - Note 2

Wintek Corporation (Note 4) Receivables from related parties Yes US$ 11,000 US$ - US$ - - Note 1 - Operating capital - - - Note 2

5 Dongguan Masstop

Liquid Crystal Display

Co., Ltd.

Wintek (China) Technology

Ltd. (Note 4)

Receivables from related parties Yes RMB 833,850 RMB 380,000 RMB 380,000 5.40% Note 1 - Operating capital - - - Note 2

DongGuan Sheng Feng Import

and Export Trading Co., Ltd.

(Note 4)

Receivables from related parties Yes RMB 5,000 RMB 5,000 RMB 5,000 5.40% Note 1 - Operating capital - - - Note 2

6 Wintek Technology

(H.K.) Limited

Wintek (China) Technology

Ltd. (Note 4)

Receivables from related parties Yes US$ 6,600 US$ - US$ - - Note 1 - Operating capital - - - Note 2

7 Wintek Technology

Cayman

Wintek Corporation (Note 4) Receivables from related parties Yes US$ 5,000 US$ - US$ - - Note 1 - Operating capital - - - Note 2

Wintek Technology (H.K.)

Limited (Note 4)

Receivables from related parties Yes US$ 600 US$ 600 US$ 600 - Note 1 - Operating capital - - - Note 2

8 United Win Investment

Corporation

WinPower Optronics

Corporation (Note 4)

Receivables from related parties Yes $ 90,000 $ 90,000 $ 60,800 2.86% Note 1 - Operating capital - - - Note 2

Note 1: Necessary for short-term financing.

Note 2: For the financing provided by each subsidiary, the maximum amount should not exceed 25% of the net assets of the Corporation as of December 31, 2012 ($34,837,095 × 25% = $8,709,274).

Note 3: The ending balance amount has been approved by the board of directors.

Note 4: Significant intercompany accounts and transactions have been eliminated; please see Table 8.

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TABLE 2

WINTEK CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Endorser/Guarantor

Endorsee/Guarantee

Limits on

Endorsement/

Guarantee Given

on Behalf of

Each Party

Maximum

Amount

Endorsed/Guaran

teed During the

Period

Outstanding

Endorsement/

Guarantee at the

End of the Period

Actual Borrowing

Amount

Amount

Endorsed/

Guaranteed by

Collaterals

Ratio of

Accumulated

Endorsement/

Guarantee to Net

Equity In Latest

Financial

Statements

(%)

Aggregate

Endorsement/

Guarantee Limit

Endorsement/

Guarantee Given

by Parent on

Behalf of

Subsidiaries

Endorsement/

Guarantee Given

by Subsidiaries on

Behalf of Parent

Endorsement/

Guarantee Given

On behalf of

Companies in

Mainland China

Name Nature of

Relationship

0 Wintek Corporation (The

“Corporation”)

United Win (H.K.) Technology

Limited

Indirectly owned

subsidiary

Note 1 $ 4,011,438

(US$ 135,500)

$ 3,880,645

(US$ 131,000)

$ 3,557,160

(US$ 120,000)

$ - 13% Note 2 Y - -

Wintek Technology (H.K.)

Limited

Indirectly owned

subsidiary

Note 1 253,627

(US$ 8,000)

-

(US$ -)

-

(US$ -)

- - Note 2 Y - -

Wintek (China) Technology

Ltd.

Indirectly owned

subsidiary

Note 1 259,846

(RMB 55,000)

-

(RMB -)

-

(RMB -)

- - Note 2 Y - Y

Masstop Asia Pacific Ltd. Indirectly owned

subsidiary

Note 1 2,919,685

(US$ 98,500)

2,638,485

(US$ 89,000)

2,548,560

(US$ 86,000)

- 8.84% Note 2 Y - -

Dongguan Masstop Liquid

Crystal Display Co., Ltd.

Indirectly owned

subsidiary

Note 1 1,276,687

(US$ 5,000 and

RMB 250,000)

149,950

(US$ 5,000)

131,206

(US$ 4,375)

- 0.50% Note 2 Y - Y

Wintek Vietnam Co., Ltd. Indirectly owned

subsidiary

Note 1 651,010

( 115,000 and

US$ 18,000)

529,175

( 80,000 and

US$ 15,000)

68,598

(US$ 2,300)

- 1.77% Note 2 Y - -

Mactech Subsidiary Note 1 60,000 60,000 42,928 - 0.20% Note 2 Y - -

1 Dongguan Masstop Liquid Crystal

Display Co., Ltd.

Wintek (China) Technology

Ltd.

Investments

accounted for

using the equity

method

Note 1 6,475,273

(RMB 1,376,619)

6,475,273

(RMB 1,376,619)

5,284,937

(RMB1,123,558 )

6,475,273

(RMB 1,376,619)

21.68% Note 2 - - Y

Note 1: The maximum amount was 25% of the Corporation’s net assets as of December 31, 2012 ($34,837,095 × 25% = $8,709,274).

Note 2: The maximum amount was 50% of the Corporation’s net assets as of December 31, 2012 ($34,837,095 × 50% = $17,418,547).

Note 3: For the guarantees jointly provided by the Corporation and subsidiaries, the maximum amount of guarantee to each guaranteed party and total guarantee were 50% of the Corporation’s net assets as of December 31, 2012.

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TABLE 3

WINTEK CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Type and Name of Marketable

Securities

Relationship with the

Holding Company Financial Statement Account

December 31, 2013

Note Shares Carrying Amount

Percentage of

Ownership

Fair Value

(Note)

Wintek Corporation Capital stock

Sitronix Technology Co., Ltd. - Available-for-sale financial assets - current 2,207,657 $ 101,552 2 $ 101,552

Calin Technology Co., Ltd. - Available-for-sale financial assets - current 3,037,852 87,187 3 87,187

Transcom - Available-for-sale financial assets - current 1,324,166 20,882 5 20,882

Kingpak The president of Wintek

Corporation is a brother

of Kingpak’s president

Financial assets measured at cost - noncurrent 6,234,361 97,575 6 77,860

Integrated Solutions - Financial assets measured at cost - noncurrent 322,044 3,510 1 2,632

Uniflex - Financial assets measured at cost - noncurrent 384,860 3,176 1 4,506

Microsystems - Financial assets measured at cost - noncurrent 6,388,936 - 4 25,994

Andes - Financial assets measured at cost - noncurrent 1,156,955 - 2 3,143

Wintek Technology Cayman Capital stock

Focal Tech Corporation, Ltd. - Financial assets measured at cost - noncurrent 1,194,819 US$ 9,681 2 US$ 9,681

Share capital

IDesia Ltd. - Financial assets measured at cost - noncurrent 358,822 - 10 -

United Win Investment Mutual funds

Yuanta Wan Tai Money Markets

Fund

- Available-for-sale financial assets - current 677,860 10,038 - 10,038

HSBC China A-Share Focused - Available-for-sale financial assets - current 300,000 3,024 - 3,024

Franklin Templeton SinoAm Global

Aggregate Bond A Fund

- Available-for-sale financial assets - current 1,000,000 9,866 - 9,866

BNP Paribas TCB Elite Fd of EM

Market A Fund

- Available-for-sale financial assets - current 500,000 5,057 - 5,057

Allianz Glbl Inv All Seasons Hvst

FOBF A Fund

- Available-for-sale financial assets - current 444,496 4,963 - 4,963

(Continued)

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- 67 -

Holding Company Type and Name of Marketable

Securities

Relationship with the

Holding Company Financial Statement Account

December 31, 2013

Note Shares Carrying Amount

Percentage of

Ownership

Fair Value

(Note)

United Win Investment Capital stock

Taiwan Business Bank - Available-for-sale financial assets - current 1,081,600 $ 9,810 - $ 9,810

Calin Technology Co., Ltd. - Available-for-sale financial assets - current 72,000 2,066 - 2,066

Ultra Chip Inc. - Available-for-sale financial assets - current 83,325 1,209 - 1,209

Uniflex - Financial assets measured at cost - noncurrent 394,728 3,258 1 4,621

Andes - Financial assets measured at cost - noncurrent 1,735,434 - 4 4,714

Kingpak - Financial assets measured at cost - noncurrent 1,652,800 15,868 2 20,642

Hsin Chu Golf Country Club Co., Ltd. - Financial assets measured at cost - noncurrent 3 9,260 - 259

Microsystems - Financial assets measured at cost - noncurrent 622,736 - - 2,534

Integrated Solutions Technology Inc. - Financial assets measured at cost - noncurrent 322,044 3,308 1 2,632

Mactech Mutual funds

FSITC Global Socially Responsible

Investment Bond A Fund

- Available-for-sale financial assets - current 1,000,000 9,634 - 9,634

Capital stock

Taichung International Country Club - Financial assets measured at cost - noncurrent 3 2,940 - 501

(Concluded)

Note: The estimated fair values of the securities held with no quoted market prices were based on the investees’ net assets.

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TABLE 4

WINTEK CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED AT COST OR PRICES OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name

Type and Name of

Marketable

Securities

Financial Statement

Account Counterparty

Nature of the

Relationship

Beginning Balance (Note 1) Acquisition Disposal Ending Balance (Note 1)

Number of

Shares Amount

Number of

Shares Amount

Number of

Shares Amount

Carrying

Amount

Gain (Loss)

on Disposal

Number of

Shares Amount

Wintek Corporation Capital stock

Wintek Technology

Cayman (Note 2)

Investments accounted

for using the equity

method

Wintek Technology

Cayman

Investee 295,230,801 $ 14,039,352 19,830,000 $ 574,079 - $ - $ - $ - 315,060,801 $ 11,899,426

Wintek BVI

(Note 2)

Investments accounted

for using the equity

method

Wintek BVI Investee 282,730,328 7,708,588 16,009,672 479,579 - - - - 298,740,000 8,574,142

Wintek Technology

Cayman

Capital stock

United Win

Technology

(Cayman)

Corporation

(Note 2)

Investments accounted

for using the equity

method

United Win

Technology

(Cayman)

Corporation

Investee 291,372,030 US$ 485,960 19,830,000 US$ 19,830 - - - - 311,202,030 US$ 395,214

United Win

Technology

(Cayman)

Corporation

Capital stock

Wintek Technology

(H.K.) Limited

(Note 2)

Investments accounted

for using the equity

method

Wintek Technology

(H.K.) Limited

Investee 220,170,000 US$ 188,544 19,830,000 US$ 19,830 - - - - 240,000,000 US$ 196,786

Wintek Technology

(H.K.) Limited

Share Capital

Wintek (China)

Technology Ltd.

(Note 2)

Investments accounted

for using the equity

method

Wintek (China)

Technology Ltd.

Investee - US$ 188,602 - US$ 19,830 - - - - - US$ 197,366

Dongguan Masstop

Liquid Crystal

Display Co., Ltd.

Wintek (China)

Technology Ltd.

(Note 2)

Investments accounted

for using the equity

method

Wintek (China)

Technology Ltd.

Intercompany - - - US$ 49,000 - - - - - US$ 49,177

Wintek BVI Capital stock

Wintek International

(Samoa)

Corporation

(Note 2)

Investments accounted

for using the equity

method

Wintek International

(Samoa)

Corporation

Investee 279,000,000 US$ 257,202 23,000,000 US$ 23,000 - - - - 302,000,000 US$ 285,048

(Continued)

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- 69 -

Company Name

Type and Name of

Marketable

Securities

Financial Statement

Account Counterparty

Nature of the

Relationship

Beginning Balance (Note 1) Acquisition Disposal Ending Balance (Note 1)

Number of

Shares Amount

Number of

Shares Amount

Number of

Shares Amount

Carrying

Amount

Gain (Loss)

on Disposal

Number of

Shares Amount

Wintek International

(Samoa)

Corporation

Share Capital

Wintek Vietnam

Co., Ltd. (Note 2)

Investments accounted

for using the equity

method

Wintek Vietnam

Co., Ltd.

Investee - US$ 256,061 - US$ 23,006 - $ - $ - $ - - US$ 283,905

(Concluded)

Note 1: Beginning and ending balances included the share of subsidiary, foreign currency translation reserve and unrecognized gains and losses resulting from the transactions with the subsidiaries.

Note 2: Significant intercompany accounts and transactions have been eliminated.

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TABLE 5

WINTEK CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FORM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars)

Purchaser or Seller Related Party

Nature of Relationship

with the Purchaser or

Seller

Transaction Details Abnormal Transaction Notes and Accounts

Receivable (Payable) Note

Purchase

or Sale Amount

% to

Total Collection Terms Unit Price Collection Terms

Ending

Balance

%

to Total

Wintek Corporation Wintek (China) Technology

Ltd. (Note)

Indirectly owned subsidiary Sale $ (317,781) - T/T 60 days - - $ - -

United Win (China)

Technology Limited (Note)

Indirectly owned subsidiary Sale (290,026) - T/T 90 days - - - -

Dongguan Masstop Liquid

Crystal Display Co., Ltd.

(Note)

Indirectly owned subsidiary Sale (187,731) - T/T 60 days - - 6,428 -

Wintek (China)

Technology Ltd.

Wintek Corporation (Note) Ultimate Parent Purchase 317,781 2% T/T 60 days - - - -

United Win (China)

Technology Limited

Wintek Corporation (Note) Ultimate Parent Purchase 290,026 55% T/T 90 days - - - -

Dongguan Masstop Liquid

Crystal Display Co.,

Ltd.

Wintek Corporation (Note) Ultimate Parent Purchase 187,731 2% T/T 60 days - - (6,428) (5%)

Note: Significant intercompany accounts and transactions have been eliminated; please see Table 7.

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TABLE 6

WINTEK CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name Related Party Nature of Relationship Ending Balance Turnover

Rate

Overdue Amounts Received in

Subsequent Period

Allowance for

Doubtful Accounts Amount Action Taken

Wintek Corporation Wintek (China) Technology Ltd.

(Note 5)

Indirectly owned subsidiary $ 689,440

(Note 2)

- $ - - $ - $ -

Wintek Vietnam Co., Ltd. (Note 5) Indirectly owned subsidiary 252,216

(Note 2)

- - - - -

Dongguan Masstop Liquid Crystal

Display Co., Ltd.

Wintek Corporation (Note 5) Ultimate parent 2,407,432

(Note 3)

4.01 - - 2,407,432 -

United Win (China) Technology Limited Wintek Corporation (Note 5) Ultimate parent 7,094,142

(Note 1)

2.38 - - - -

Mactech Corporation Wintek Corporation (Note 5) Parent Company 549,962

(Note 1)

0.68 - - - -

Wintek (China) Technology Ltd. Wintek Corporation (Note 5) Ultimate parent 461,031

(Note 1)

7.61 - - 72 -

Wintek Vietnam Co., Ltd. Wintek Corporation (Note 5) Ultimate parent 22,219,533

(Note 2)

2.23 - - 37,647 -

United Win (H.K.) Technology Limited United Win (China) Technology Limited

(Note 5)

Parent Company US$ 61,000

(Note 4)

- - - US$ - -

Wintek (China) Technology Ltd.

(Note 5)

Intercompany US$ 40,000

(Note 4)

- - - US$ - -

Masstop Asia Pacific Ltd. Dongguan Masstop Liquid Crystal

Display Co., Ltd. (Note 5)

Ultimate parent US$ 63,000

(Note 4)

- - - US$ - -

RMB 126,820

(Note 4)

- - - RMB - -

Dongguan Masstop Liquid Crystal

Display Co., Ltd.

Wintek (China) Technology Ltd.

(Note 5)

Investments accounted for

using the equity method

RMB 380,000

(Note 4)

- - - RMB - -

Note 1: The ending balance was under trade receivables

Note 2: The ending balance was under other receivables.

Note 3: The ending balance was under trade receivables and other receivables.

Note 4: The ending balance was under other receivables from related parties.

Note 5: Significant intercompany accounts and transactions have been eliminated; please see Table 7.

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TABLE 7

WINTEK CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Numbers Company Name Counterparty Transaction Flow (Note)

Transactions

Account Amounts Terms Ratio to Consolidated

Sales or Consolidated Assets

0 Wintek Corporation United Win (China) Technology

Limited

1 Sales $ 302,266 T/T 90 days -

2 Cost of goods sold 3,018,055 T/T 60 days 4

2 Trade payable 7,094,142 T/T 60 days 9

Dongguan Masstop Liquid Crystal

Display Co., Ltd.

1 Sales 187,731 T/T 60 days -

2 Cost of goods sold 6,682,141 T/T 60 days 9

2 Other payables 2,407,432 T/T 60 days 3

Mactech Corporation 2 Non-operating income and expenses 204,370 90-120 days after the end of the

transaction month

-

2 Other payables 505,778 90-120 days after the end of the

transaction month

1

Wintek Vietnam Co., Ltd. 1 Other receivables 252,216 T/T 90 days -

1 Non-operation income and expenses 52,763 T/T 90 days -

2 Cost of goods sold 2,338,574 T/T 90 days 3

2 Trade payable 2,221,953 T/T 90 days 3

Wintek (China) Technology Ltd. 1 Sales 317,781 T/T 60 days -

1 Other receivables 689,440 T/T 60 days 1

2 Manufacturing overhead - outsourcing 5,133,436 - 7

2 Trade payable 461,031 T/T 90 days 1

1 United Win (China) Technology Limited Wintek (China) Technology Ltd. 3 Sales RMB 82,623 T/T 60 days 1

3 Other receivables RMB 62,700 T/T 60 days -

3 Cost of goods sold RMB 20,055 T/T 60 days -

2 Dongguan Masstop Liquid Crystal Display Co.,

Ltd.

Wintek (China) Technology Ltd. 3 Interest income RMB 35,988 - -

3 Sales RMB 51,256 T/T 60 days -

3 Trade receivables RMB 40,393 T/T 60 days -

3 Other receivables from related parties RMB 380,000 - 2

3 Cost of goods sold RMB 100,404 T/T 60 days 1

3 Other payables RMB 30,893 - -

3 Masstop Asia Pacific Ltd. Dongguan Masstop Liquid Crystal

Display Co., Ltd.

3 Interest income US$ 2,144 - -

3 Other receivables from related parties US$ 63,000 - 2

3 Other receivables from related parties RMB 126,820 - 1

4 United Win Technology (Cayman) Corporation United Win (H.K.) Technology

Limited

3 Other receivables from related parties US$ 3,000 - -

(Continued)

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- 73 -

Numbers Company Name Counterparty Transaction Flow (Note)

Transactions

Account Amounts Terms Ratio to Consolidated

Sales or Consolidated Assets

5 United Win (H.K.) Technology Limited United Win (China) Technology

Limited

3 Interest income US$ 1,703 - -

3 Other receivables from related parties US$ 61,000 - 2

Wintek (China) Technology Ltd. 3 Other receivables from related parties US$ 40,000 - 1

6 DongGuan Sheng Feng Import and Export

trading Co., Ltd.

Wintek Vietnam Co., Ltd. 3 Sales RMB 13,088 T/T 30 days -

7 United Win Investment WinPower 3 Other receivables from related parties RMB 60,800 - -

(Concluded)

Note 1: From the parent company to the subsidiary.

Note 2: From the subsidiary to the parent company.

Note 3: Between subsidiaries.

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TABLE 8

WINTEK CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company Investee Company Location Main Businesses and Products

Original Investment Amount As of December 31, 2013 Net Income (Loss)

of the Investee

Share of

profit (Loss) Note

December 31, 2013 December 31, 2012 Shares Percentage of

Ownership Carrying Amount

Wintek Corporation Wintek Technology Cayman (Note 2)

British Cayman Islands Overseas reinvested holding company $ 9,554,923 $ 8,980,844 315,060,801 100 $ 11,899,426 $ (3,794,540 ) $ (3,773,124 ) Subsidiary

Wintek BVI (Note 2) British Virgin Islands Overseas reinvested holding company 8,884,836 8,405,257 298,740,000 100 8,574,142 144,246 137,524 Subsidiary

Masstop LLC (Note 2) United States Overseas reinvested holding company 5,760,840 5,760,840 187,702,422 100 4,953,627 (1,444,084 ) (1,445,478 ) Subsidiary

Wintek Electro-Optics (Note 2) United States Sells LCD/LCM products 111,393 111,393 1,000 100 117,860 (28,829 ) (29,085 ) Subsidiary

United Win Investment (Note 2) Taichung, Taiwan Investment 339,000 242,000 34,404,000 100 238,032 (332 ) (332 ) Subsidiary

Mactech (Note 2) Taichung, Taiwan Manufactures machinery and equipment 54,581 54,581 18,323,187 49 168,023 (84,398 ) 52,455 Subsidiary Wintek Central Europe (Note 2) Germany Sells LCD/LCM products 53,475 53,475 - 100 132,701 685 685 Subsidiary

Wintek International Holding

(Note 2)

British Cayman Islands Overseas reinvested holding company 589,924 530,754 18,610,003 100 98,833 (38,025 ) (34,951 ) Subsidiary

WinPower (Note 2) Hsinchu Taiwan IC design 23,625 23,625 1,950,000 31 (12,921 ) (48,119 ) (14,835 ) Subsidiary

Wintek Technology Cayman United Win Technology (Cayman) Corporation (Note 2)

British Cayman Islands Overseas reinvested holding company US$ 311,202 US$ 291,372 311,202,030 100 US$ 395,214 US$ (123,777 ) (Note 1) Indirectly owned subsidiary

Apticon Inc. British Cayman Islands Overseas reinvested holding company US$ 6,000 US$ 6,000 3,333,333

23

US$ - US$ - (Note 1) Investments accounted

for by the equity method

United Win Technology (Cayman) Corporation

United Win (H.K.) Technology Limited

Hong Kong Overseas reinvested holding company US$ 71,202 US$ 71,202 554,637,266 100 US$ 164,169 US$ (107,053 ) (Note 1) Indirectly owned subsidiary

Wintek Technology (H.K.)

Limited (Note 2)

Hong Kong Overseas reinvested holding company US$ 240,000 US$ 220,170 240,000,000 100 US$ 196,786 US$ (17,152 ) (Note 1) Indirectly owned

subsidiary

Masstop LLC Masstop Asia Pacific Ltd.

(Note 2)

Hong Kong Overseas reinvested holding company and seller

of LCD/LCM products

US$ 187,702 US$ 187,702 1,460,304,927 100 US$ 167,371 US$ (48,555 ) (Note 1) Indirectly owned

subsidiary

Wintek BVI Wintek International (Samoa)

Corporation (Note 2)

Samoa Islands Overseas reinvested holding company US$ 302,000 US$ 279,000 302,000,000 100 US$ 285,048 US$ 4,847 (Note 1) Indirectly owned

subsidiary

Wintek International (Samoa)

Corporation

Wintek Vietnam Co., Ltd.

(Note 2)

Vietnam Manufactures and processes LCD/LCM and

touch panel products

US$ 300,880 US$ 277,874 - 100 US$ 283,905 US$ 4,838 (Note 1) Indirectly owned

subsidiary

Wintek International Holding Wintek Fra East (Cayman)

Corporation (Note 2)

British Cayman Islands Overseas reinvested holding company US$ 18,610 US$ 16,610 18,610,000 82 US$ 3,419 US$ (1,588 ) (Note 1) Indirectly owned

subsidiary Wintek Technology (India)

Private Limited (Note 2)

India Manufactures and sells LCD/LCM products US$ - US$ - 3 - US$ - US$ (1,588 ) (Note 1) Indirectly owned

subsidiary

Wintek Electro-Optics Wintek Fra East (Cayman)

Corporation

British Cayman Islands Overseas reinvested holding company US$ 4,000 US$ 4,000 4,000,000 18 US$ 735 US$ (1,588 ) (Note 1) Indirectly owned

subsidiary

Wintek Fra East (Cayman)

Corporation

Wintek Technology (India)

Private Limited (Note 2)

India

Manufactures and sells LCD/LCM products US$ 22,610 US$ 22,610 22,610,000 100 US$ 4,154 US$ (1,588 ) (Note 1) Indirectly owned

subsidiary

United Win Investment Mactech (Note 2) Taichung, Taiwan Manufactures machinery and equipment 18 18 1,000 - 18 (84,398 ) (Note 1) Subsidiary

Note 1: Under certain regulations, the net investment income recognized need not be disclosed.

Note 2: Significant intercompany accounts and transactions have been eliminated.

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TABLE 9

WINTEK CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars)

Investee Company Main Businesses and Products Paid-in Capital Method of

Investment

Accumulated

Outward

Remittance for

Investment from

Taiwan as of

January 1, 2013

Remittance of Funds Accumulated

Outward

Remittance for

Investment from

Taiwan as of

December 31, 2013

Net Income (Loss)

of the Investee

% Ownership of

Direct or Indirect

Investment

Investment

Gain (Loss)

(Note 5)

Carrying Amount

as of December 31,

2013

Accumulated

Repatriation of

Investment Income

as of December 31,

2013

Outward Inward

United Win (China)

Technology Limited

(Note 9)

Manufactures and sells electronic

components, accessories and

related products

$ 3,964,065 (Note 1) $ 2,113,532 $ - $ - $ 2,113,532 $ (3,187,893) 100% $ (3,141,763) $ 4,897,865 $ 476,880

Dongguan Masstop

Liquid Crystal

Display Co., Ltd.

(Note 9)

Manufactures and sells LCMs and

touch panel products

6,013,192 (Note 1) 5,445,433 - - 5,445,433 (1,476,733) 100% (1,426,380) 4,850,952 -

Apticon Technology

(Nanjing) Co., Ltd.

(Note 9)

Manufactures LCD back light

modules

497,773 (Note 2) (Note 4) - - - - 23% - - -

Wintek (China)

Technology Ltd.

(Note 9)

Manufactures and sells electronic

components, accessories and

related products

8,613,645 (Note 1) 6,562,167 591,033 - 7,153,200 (516,897) 100% (497,481) 6,101,964 -

DongGuan Sheng Feng

Import and Export

Trading Co., Ltd.

(Note 9)

Import and export trading 24,443 (Note 3) - - - - (10,085) 100% (10,085) (8,016) -

DongGuan Innolife

Electronic

Technology Co.,

Ltd. (Note 9)

Manufactures and sells self-

owned-brand products

97,771 (Note 3) - - - - 24,221 100% (24,221) 72,408 -

Accumulated Outward Remittance for Investment

in Mainland China as of December 31, 2013

Investment Amount Authorized by Investment

Commission, MOEA (Note 6)

Upper Limit on the Amount of Investment

Stipulated by Investment Commission, MOEA

$ 14,235,285 $ 22,640,325 (Note 7)

Note 1: The investment was made by establishing a corporation in a third country and then making the new corporation invest in companies located in Mainland China.

Note 2: The investment was made through a corporation established in a third country, which, in turn, invested in companies located in Mainland China.

Note 3: The investment in Mainland China was made by the subsidiary located in Mainland China directly.

Note 4: The investment in Mainland China was made by Apticon Inc., the investee of Wintek Technology Cayman, an investee of Wintek Corporation (the “Corporation”). The investment capital was provided Apticon Inc.

Note 5: Except for its investment in Apticon Technology (Nanjing) Co., Ltd., which had liquidated its operation, the Corporation recognized its equity in the net income (loss) of investees on the basis of financial statements audited by the Corporation’s independent CPA.

Note 6: The amount includes the investment amounts approved by the Investment Commission, MOEA but does not include the common stock issuance made by the Mainland China-based subsidiary from its earnings.

Note 7: According to the “Regulations for Screening of Application to Engage in Technical Cooperation in Mainland China” issued by the Investment Commission of the Ministry of Economic Affairs on August 29, 2008, there is no limit on the investment in Mainland China since the Corporation

had acquired the IDB approval of the Corporation’s establishment of operating headquarters in Taiwan.

Note 8: The foreign-currency amounts were translated into New Taiwan dollars at the exchange rates as of December 31, 2013.

Note 9: Significant intercompany accounts and transactions have been eliminated.