quanta computer inc. annual report 2012 - 廣達電腦 · crisis and market recovery in europe and...

Quanta Computer Inc.

Annual Report 2012

Report to Shareholders

Year 2012 was a difficult year filled with many challenges and uncertainties, including fiscal

cliff in the U.S., the European debt crisis, and unstable political conditions in the Middle East. The

series of events around the globe brought difficult challenges to the global economy. Despite the

challenging global environment we faced in 2012, Quanta Computer continues to deliver solid results

to our shareholders through endeavors of our employees. Quanta’s performance for FY2012 and

outlook for FY2013 are as follow:

I. Revenue and Income

Net revenue for the parent company in year 2012 slightly declined from the prior year to

NT$965.4MN, while the consolidated revenue sustained at NT$1.02TN. In addition, the non-NB

business continues to expand into servers, datacenters, tablets, networking and other cloud-related

business. The improved product mix into non-NB business resulted in margin improvement and

stable profitability. Net income after tax reached NT$23BN, a slight decline of 0.06% from the year

prior. EPS in 2012 was NT$6.01, while non-operating income and expenses were NT$10.5BN and

NT$857MN respectively.

The center of Quanta Computer’s R&D development efforts focuses on acting as a “System

Solution Provider” in Cloud Computing business through integrating “Cloud Computing”,

“Connectivity Technology”, and “Client Device”.

In terms of operations & management, Quanta Computer leverages our strength in logistics and

e-procurement system to further optimize our expertise and superior technology in developing and

manufacturing notebook computers. In addition to optimizing our strength in the traditional notebook

business, the Company further devotes research efforts in developing new technology and new

products. Our continued efforts to focus on expanding into servers, datacenters, tablets, networking

and other cloud related business creates a balanced product mix to improve our overall profitability.

It is our optimal objective to increase revenue contribution from non-NB business year after year.

II. Outlook in 2013

One common area of focus from various presidential elections across the globe in 2012,

including America, Japan and Korea is the topic of economy recovery and job creation. Looking into

2013, we expect the global economy to gradually regain strength from the recovery of Europe debt

crisis and market recovery in Europe and U.S.

Year 2013 is an important year for Quanta Computer to leverage our success from the past and

to explore new opportunities in the future. We continue to explore advanced technology, capture new

opportunity, seek new innovations and discover breakthrough developments. Thus, improving the

Company’s product quality, technology, management skills and performance. Four key areas of

focus are shown as below:

Superior Quality －

Continue to improve product quality and to advance further on the fundamentals and the

basis to ensure customers and end users are truly satisfied with Quanta’s products and

ultimately enhance our competitiveness.

Superior Technology －

Define year 2013 as the first year of automation and identify ways to improve existing

thought-process in manufacturing. Integrate automation in manufacturing process in order

to accelerate overall competitiveness in cost structure, capacity, technology and quality.

Superior Management －

Improve management methodology, inspire employees to be motivated, stimulate

innovations, discover potentials, maximize value and enhance collaboration.

Superior Outcome －

Recognize the true value of “winning” through perfection in all areas and deliver fruitful

results from the Company’s achievement to customers, suppliers, partners, employees and

shareholders.

The aforementioned four principles should serve as the fundamentals to guide the Company’s

long-term development and to fully utilize its competitive edge in global logistic capability, speed

and flexibility of delivery, as well as economy of scale. The optimal goal is to sustain our

competitiveness in conjunction with leading edge research & development skills and innovative

design capability.

Leveraging the principle of 3Rs, including “Re-think”, “Re-educate”, and “Re-invent” to act as

a forerunner in technology innovation and continue the sail into the new 3C milestone. Adopt

changes and transform business models when necessary to explore new business and to lead as a

smart integrator, value creator, and service provider. Furthermore, identify new business

opportunities in the area of 3Ss, including “System”, “Software”, and “Solution.”

Quanta actively practice the core corporate value of VPA – Vision, Passion, and Action –

through devoting resources and improving quality of our labor force to enhance the Company’s

overall competitiveness. Creating corporate culture that enables dream makers to pursue their

dreams, enjoy their work and proactively take actions to achieve their goals. Devoting resources into

the new 3C era of cloud computing and moving towards the ideology of “achieving dreams in cloud

computing business and creating bright future for human being.” Quanta is celebrating its 25th

years

of anniversary this year and the Company is grateful for its employees’ hardworking attitude and its

sustainable leadership position in the industry thanks to the strong technical expertise the Company

has accumulated over the years. Through endeavors of our employees, Quanta expects its employees

to continue follow through the principle of “Humble attitude”, “Hungry for knowledge” and

“Hardworking spirt” to create the new Quanta spirit and to build the next glory decades.

Chairman: Barry Lam

President: C.C. Leung

Chief Financial Officer: Elton Yang

* Note: ownership is 100% unless otherwise specified

99.97%

24.81% 75.19% 0.44%

29.78% 37%

9%

%

9%


Quanta Int’l Ltd. (QIL)

99.99%

36.76%

Quanta Storage

Inc.

0.81%

Quanta Venture Capital

Co., Ltd.

Gem-Tech Precision Mold Co.,

Ltd.

FaceVsion

(HK)

Technology

Ltd

FaceVsion

Technology

USA LLC

Quanta

Cloud

Tech-

nology

Inc.

FaceVsion (Changshu)

Trading Co., Ltd.

QCJ

FaceVsion Technology,

Inc.

RoyalTek Company

Ltd.

QCTI Ltd.

Royaltek

Trading (Changshu)

Co., Ltd.

TWDT Precision Co., Ltd.

Quanta

Micro-

Systems

Inc.

Fly Dragon

International

Ltd.

Dragon City

Metallic

(ChangShu)

Co., Ltd.

DTG

(BVI) Ltd

CloudCast

Tech-

nology Inc.

QMJ

RoyalTek Int’l Enterprises

Ltd.

（Ref. to Chart 2)

（Ref. to Chart 1)


60%

19%

95%

Chart 1

Access

Int’l Co.

(AIC)

QCE

Computer BV

(QCE)

Quanta Capital

Management

Ltd. (QCML)

Quanta Asia

Ltd.

(QAL)

QCT

LLC

(QCTU)

QCT

Cayman

Inc.,

THINKTECH

IND. E COM. DE

INFORMATICA

S.A.

Quanta

Development

Ltd.

(QDL)

Standard (Shanghai)

Energy Co., Ltd.

Q_Bus

Int’l

Ltd.,

Tech

Chain

Ltd.

Exmore

Services

Holding

Limited,

Tech Chain

(Hong Kong)

LTD

50%

Exmore Services

Holding

(Hong Kong) LD

Gem-Tech

(Shanghai)

Precision

Mold Co.,

Ltd.

Zhan Yun

(Changshu)

Electronics

Co., Ltd.

Zhan Yun

(Shanghai)

Electronics Co., Ltd.

Zhan Yun

(Chongqing)

Electronics

Co., Ltd.

Quanta Int’l

Technology

Ltd.

(QIT)

QCG

Computer

GMBH

Quanta

Research

Cambridge

Inc.

(QRC)

QCT

Korea

Inc.

Tech-

Wave

(Shang-

hai)

Warehous-

ing Co.,

Ltd.

(TWW)

Tech-

Wave

(Chong-

qing)

Warehous

-ing Co.,

Ltd.

(TWW)

Tech-

Full

(Chang-

shu)

Computer

Co., Ltd.

(TNC)

Quanta Int’l Ltd.

(QIL)

Kenseisha

Shanghai

P.M.P.

Co., Ltd.

(KSH)

Cloudex

（Shang

-hai）

Tech-

nology

Co., Ltd.

QCH

Inc.

(QCH)

Quanta

Manufac-

turing Inc.

(QMI)

Quanta

Service

Inc.

(QSI)

Quanta

Computer

USA, Inc

(QCA)

Quanta

Development

(Hong Kong) LTD

Tech-

Front

(Shang-

hai)

Computer

Co., Ltd.

(TFC)

Tech-

Com

(Shang-hai)

Computer

Co., Ltd. (TCC)

Tech-

Trend

(Shang-

hai)

Computer

Co., Ltd.

(TTC)

Tech-

Lead

(Shang-

hai)

Computer

Co., Ltd.

(TLC)

Tech-

Giant

(Shang-

hai)

Computer

Co., Ltd.

(TGC)

QMN

LLC

QCHN,

LLC.,

QSN,

LLC.,

QCN,

LLC

Tech-

Front

(Chong-

qing)

Computer

Co., Ltd.

(TFQ)

Cloudex

（Bei-

jing）

Tech-

nology

Co., Ltd.


Quanta

Research

Int’l Inc. (QRII)


Quanta Storage Inc.

Quanta Storage

International Lt.

（CAYMAN）

Quanta Storage

(BVI）Ltd.

Quanta Storage (Shanghai) Ltd.

Quanta Storage

Holding Ltd.

E-Forward

Technology Ltd.

Quanta Storage

Asia Ltd.

Quanta Storage

America, Inc.

Quanta Storage

Investment Ltd.

Techman Electronics

(Changshu) Co., Ltd.

Quanta Storage

Holding (HK)

Ltd.

Quanta Storage Investments (HK) Ltd.

Quanta Storage (Changshu)

Ltd.

Chart 2

(English Translation of Financial Report Originally Issued In Chinese)

Independent Auditors’ Report

To the Board of Directors and Shareholders of

Quanta Computer Inc.:

We have audited the accompanying consolidated balance sheets of Quanta Computer Inc. and its

subsidiaries (the Consolidated Company) as of December 31, 2012 and 2011, and the related

consolidated statements of income, changes in stockholders’ equity, and cash flows for the years then

ended. These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with “Rules Governing Auditing and Certification of

Financial Statements by Certified Public Accountants” and auditing standards generally accepted in

the Republic of China. Those regulations and standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free of material

misstatements. An audit includes examining, on a test basis, evidences supporting the amounts and

disclosures in the consolidated financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audits provide a reasonable basis for our

opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of Quanta Computer Inc. and its subsidiaries as of December 31, 2012

and 2011, and the results of its operations and its consolidated cash flows for the years then ended in

conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers,

and accounting principles generally accepted in the Republic of China

KPMG

CPA: Lin, Wan Wan

Chiang, Chung Yi

March 29, 2013

Note to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in

accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other

jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the

Republic of China.

The auditors’ report and the accompanying financial statements are the English translation of the Chinese version prepared and used in

the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language

auditors’ report and financial statements, the Chinese version shall prevail.

Amount % Amount %

ASSETS

Current Asset:

Cash and cash equivalents(Notes(2) and (4)(a)) $ 188,109,780 33 263,884,423 40

Financial assets reported at fair value through profit or loss － current (Notes(2) and (4)(b)) 380,015 - 355,316 -

Available-for-sale financial assets － current (Notes(2) and (4)(b)) 10,838,563 2 19,807,504 3

Held-to-maturity financial assets － current (Notes(2) and (4)(b)) 867,132 - 734,138 -

Notes receivable, net 1,451 - 20,964 -

Accounts receivable, net (Notes(2) and (4)(c))

－ Related parties (Note(5)) 292,626 - 214,678 -

－ Other customers 193,327,510 34 187,391,933 28

Other receivables, net

－ Related parties (Note(5)) 706 - 802 -

－ Non-related parties 2,009,436 - 2,069,338 -

Other financial asset － current 6,434,102 1 13,404,752 2

Inventories (Notes(2) and (4)(d)) 96,168,039 17 113,906,740 17

Prepayments (Note(5)) 2,642,106 1 1,165,239 -

Deferred income tax assets － current (Notes(2) and (4)(j)) 3,909,295 1 2,413,474 -

Other current assets (Note(5)) 1,006,793 - 826,112 -

505,987,554 89 606,195,413 90

Investments:

Financial assets reported at fair value through profit or loss － noncurrent

(Notes (2) and (4)(b)) 86,401 - - -

Available-for-sale financial assets － noncurrent (Notes(2) and (4)(b)) 127,548 - 204,011 -

Financial assets carried at cost － noncurrent (Notes(2) and (4)(b)) 7,251,614 2 7,385,277 1

Long-term investments at equity (Notes(2) and (4)(e)) 427,907 - 683,703 -

Other financial assets － noncurrent (Note(6)) 459,845 - 297,081 -

8,353,315 2 8,570,072 1

Property, Plant and Equipment at Cost (Note(2)) :

Land 2,999,883 1 2,999,883 1

Buildings 27,675,130 5 28,250,508 4

Machinery and equipment 40,209,110 7 39,550,107 6

Molds and tools 665,072 - 583,793 -

Transportation equipment 177,865 - 163,789 -

Furniture and office facilities 1,858,949 - 1,726,343 -

Leasehold improvements 1,175,337 - 1,638,937 -

Miscellaneous equipment 4,078,188 1 3,602,445 1

78,839,534 14 78,515,805 12

Less: Accumulated depreciation (28,493,657) (5) (25,487,715) (3)

Construction in progress 14,692 - 169,466 -

Prepayments for equipment 214,926 - 125,157 -

50,575,495 9 53,322,713 9

Intangible Assets (Note(2)) 1,665,237 - 1,724,178 -

Other Assets

Rental assets (Notes(2) and (4)(f)) 254,700 - 183,839 -

Idle assets (Notes(2)) - - 74,177 -

Deferred income tax assets －noncurrent (Notes(2) and (4)(j)) - - 88,418 -

Other assets (Note(2)) 788,792 - 749,912 -

1,043,492 - 1,096,346 -

TOTAL ASSETS $ 567,625,093 100 670,908,722 100

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

December 31, 2012 December 31, 2011

(English Translation of Financial Report Originally Issued in Chinese)

QUANTA COMPUTER INC. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2012 AND 2011

(All Amounts Expressed in Thousands of New Taiwan Dollars, Except for Share Data)

Amount % Amount %

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term debt (Note(4)(g)) $ 170,107,016 30 268,713,067 40

Financial liabilities reported at fair value through profit or loss － current (Notes(2) and (4)(b)) 28,165 - - -

Notes payable 16,380 - 21,515 -

Accounts payable

－ Related parties (Note(5)) 354,924 - 329,384 -

－ Vendors 191,555,109 34 197,546,768 29

Income tax payable (Notes(2) and (4)(j)) 6,682,477 1 8,726,279 1

Accrued expenses (Note(5)) 11,675,868 2 12,332,556 2

Other payables (Note(5)) 5,024,608 1 3,671,891 1

Other financial liabilities － current (Note(5)) 5,951,853 1 6,076,501 1

Current portion of long-term debt (Notes(2) and (4)(h)) 12,205,453 2 - -

Warranty reserve 8,220,151 2 11,238,049 2

Other current liabilities (Note(5)) 4,530,316 1 5,481,598 1

416,352,320 74 514,137,608 77

Long-Term Liabilities:

Long-term debt (Note(4)(h)) 18,631,519 3 32,679,957 5

Other financial liabilities － noncurrent 59,593 - 56,142 -

18,691,112 3 32,736,099 5

Other Liabilities:

Accrued pension cost (Notes(2) and (4)(e)) 78 - 1,603 -

Deferred income tax liabilities －noncurrent (Notes(2) and (4)(j)) 1,230,801 - - -

Other liabilities (Note(2)) 124,325 - 271,658 -

1,355,204 - 273,261 -

Total Liabilities 436,398,636 77 547,146,968 82

Stockholders' Equity:：

Common stock － authorized 4,200,000 thousand shares, 3,848,747 thousand shares issued and

outstanding in 2012; 3,841,059 thousand shares issued and outstanding in 2011 (Note(4)(k))

Advance receipts for common stock 4,288 - 6,243 -

Capital Surplus (Note(2)) :

Premium on stock issuance 13,530,689 2 13,356,022 2

Treasury stock 195,871 - 183,953 -

Donated surplus 44 - 44 -

Long-term investments at equity 520,161 - 520,167 -

14,246,765 2 14,060,186 2

Retained Earnings:

Legal reserve (Note(4)(l)) 20,911,902 4 18,606,648 3

Special reserve (Note (4)(m)) 4,027,178 1 - -

Retained earnings － unappropriated (Note(4)(o)) 50,945,110 9 49,620,745 7

75,884,190 14 68,227,393 10

Other Adjustments to Stockholders' Equity:

　 Cumulative translation adjustments (Note(2)) 1,995,066 - 2,552,491 -

　 Net loss not recognized as pension cost (Note(2)) - - (76) -

　 Unrealized (loss)gain on financial instruments (Note((2)) (6,465,322) (1) (6,579,593) (1)

　 Treasury Stock (Notes(2) and (4)(p)) (333,094) - (333,094) -

(4,803,350) (1) (4,360,272) (1)

Total Parent Company's Equity 123,819,367 22 116,344,144 17

Minority interest 7,407,090 1 7,417,610 1

TOTAL Stockholders' Equity 131,226,457 23 123,761,754 18

Commitments and Contingencies Liabilities (Note (7))

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 567,625,093 100 670,908,722 100

7 38,410,594 6

December 31, 2012 December 31, 2011


38,487,474



CONSOLIDATED BALANCE SHEETS (CONT'D)

DECEMBER 31, 2012 AND 2011


Amount % Amount %

Operating Revenues

Sales Revenue $ 1,024,265,268 101 1,119,323,317 101

Less: Sales returns (4,036,996) (1) (5,583,319) (1)

Sales allowances (2,683,735) - (4,012,137) -

Net sales 1,017,544,537 100 1,109,727,861 100

Cost of Goods Sold (Note (4)(d)) (978,338,311) (96) (1,067,204,135) (96)

Gross Margin 39,206,226 4 42,523,726 4

Unrealized gross profit－ end of the period (490) - (1,215) -

Realized gains profit－beginning of the period 1,215 - 302 -

39,206,951 4 42,522,813 4

Operating Expenses

Selling expenses (6,603,639) - (10,380,695) (1)

General and administrative expenses (7,563,521) (1) (7,086,025) (1)

Research and development expenses (9,866,996) (1) (9,171,294) (1)

(24,034,156) (2) (26,638,014) (3)

Income from Operations 15,172,795 2 15,884,799 1

Non-Operating Income

Interest income 14,920,843 1 7,336,340 1

Investment income recognized under equity method (Notes(2) and (4)(e)) - - 26,348 -

Dividend income 429,084 - 690,403 -

Gain on disposal of investments 312,079 - 2,023,279 -

Foreign exchange gains, net (Note(2)) 1,758,702 - 8,886,909 1

Gain on valuation of financial assets (Notes(2) and (4)(b)) 56,116 - 62,299 -

Miscellaneous income 7,359,879 1 4,151,970 -

24,836,703 2 23,177,548 2

Non-Operating Expenses

Interest expense (9,843,592) (1) (5,422,722) -

Investment loss recognized under equity method (Notes(2) and (4)(e)) (142,360) - - -

Impairment loss (Notes(2) and (4)(b)) (61,873) - (344,463) -

Loss on valuation of financial liabilities (Notes(2) and (4)(b)) (2,687) - (30,787) -

Miscellaneous disbursements (929,671) - (722,924) -

(10,980,183) (1) (6,520,896) -

Income before Income Tax 29,029,315 3 32,541,451 3

Income tax expense (Notes(2) and (4)(j)) (5,612,679) (1) (9,042,722) (1)

Consolidated Net Income $ 23,416,636 2 23,498,729 2

Income Attributable to :

Shareholders of parent company $ 23,039,047 2 23,052,536 2

Minority interest income 377,589 - 446,193 -

$ 23,416,636 2 23,498,729 2

Before Tax After Tax Before Tax After Tax

Earnings per share attributable to parent company (Notes(2) and (4)(r))

Primary earnings per share $ 7.14 6.01 7.16 6.02

Diluted earnings per share $ 7.04 5.92 7.06 5.93

Assuming that company shares held by its subsidiaries are not

regarded as treasury stock:

Pro-forma primary earnings per share $ 7.12 5.99 7.15 6.01

Pro-forma diluted earnings per share $ 7.03 5.91 7.05 5.92




2011

For The Years Ended December 31,

2012


CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

2012 2011

Amount Amount

Cash flows from operating activities:

Consolidated net income 23,416,636$ 23,498,729

Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities:

Depreciation 6,334,232 5,873,618

Amortization 745,589 613,389

(Reversal) Provision for doubtful accounts (86,870) 96,715

(Reversal) Provision for sales return and allowances (1,666,208) 2,100,951

Reversal for warranty reserve (2,974,669) (308,936)

Amortization of premium on financial assets 11 16

Provision for inventory market price decline and obsolescene 2,214,352 674,556

Investments loss (income) recognized under equtiy method 142,360 (26,348)

Cash dividends received from long-term investment at equity 26,735 89,351

Loss on disposal and retirement of property, plant and equipment 320,075 113,071

Expense reclassified from property, plant and equipment 3,300 4,127

Gain on disposal of intangible assets - (14)

Gain on disposal and retirement of idle assets - (19,570)

Gain on disposal of investements (298,736) (2,019,259)

Gain on disposal of long-term investment at equity (13,343) (4,019)

Unrealized valueation gain of financial assets and liabilities (2,997) (3,432)

Loss on impairment of financial assets 61,873 344,463

Reversal for impairment loss of non-financial assets (16,166) (79)

Unrealized gain of foreign-exchange - (3,240)

Effects of exchange rate change on long-term debt (831,450) 686,263

Others (177,031) (58,202)

Change in operating assets and liabilities:

Decrease in financial assets held for trading 5,896 148,704

Decrease (increase) in notes receivable 19,514 (12,640)

(Increase) decrease in accounts receivable (8,482,939) 2,306,963

Decrease (increase) in other receivables 30,783 (298,584)

Decrease (increase) in inventories 12,936,483 (28,992,820)

(Increase) decrease in prepayments (1,521,002) 427,208

Increase in other current assets (156,139) (167,161)

Decrease (increase) in other financial assets 5,872,436 (1,173,165)

Decrease (increase) in deferred income tax assets 345,482 (66,224)

Decrease in financial liabilities held for trading - (16,445)

(Decrease) increase in notes payable (5,014) 1,436

Increase (decrease) in accounts payable 1,942,856 (9,530,534)

(Decrease) increase in income tax payable (1,871,860) 4,199,714

(Decrease) increase in accrued expense (495,363) 762,688

Increase (decrease) in other payable 1,466,716 (395,862)

(Decrease) increase in other financial liabilities (222,624) 2,474,631

(Decrease) increase in other current liabilities (839,378) 1,027,138

Decrease in other operating liabilities (128,833) (120,625)

Net cash provided by operating activities 36,094,707 2,226,572



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



CONSOLIDATED STATEMENTS OF CASH FLOWS


2012 2011

Amount Amount

Cash flows from investing activities:

Acquisitions of available-for-sale financial assets (70,681,399) (116,169,492)

Proceeds from disposal of available-for-sale financial assets 80,133,428 129,535,974

Acquisitions of held-to-maturity financial assets (248,578) (545,919)

Proceeds from disposal of held-to-muturity financial assets 89,790 -

Acquisitions of financial assets carried at cost (228,934) (1,206,872)

Proceeds from disposal of financial assets carried at cost 41,398 147,175

Proceeds from return of capital by financial assets carried at cost 276,378 542,955

Proceeds from disposal of long-term investments at equity - 34,908

Acquision of subsidiray - (440,559)

Proceeds from return of capital by long-term investment at equity 5,809 40,324

Purchase of property, plant and equipment (5,763,101) (7,165,545)

Proceeds from disposal of property, plant and equipment 174,969 486,632

Purchase of rental assets (90) (188)

Purchase of intangible assets (160,862) (129,947)

Proceeds from disposal of intangible assets - 29,707

Decrease (increase) in other financial assets 447,193 (2,974,237)

Increase in other assets (645,447) (540,379)

Net cash provided by investing activities 3,440,554 1,644,537

Cash flows from financing activities:

(Decrease) increase in short-term debts (92,300,099) 123,418,211

Increase in long-term debts - 1,720,800

Repayment of long-term debts (544,781) (63,486)

Increase (decrease) in other financial liabilities 5,115 (10,356)

Distribution of cash dividends (15,520,026) (14,139,543)

Issuance of capital by cash - 204,260

Capital return - (138,734)

Conversion of employee stock options 249,592 234,316

Cost of treasury stocks bought back - (138,960)

Net cash (used in) provided by financing activities (108,110,199) 111,086,508

Foreign exchange rate effects (7,199,705) 11,883,627

Net increase in cash and cash equivalents (75,774,643) 126,841,244

Cash and cash equivalents, beginning of the period 263,884,423 137,043,179

Cash and cash equivalents, end of the period 188,109,780$ 263,884,423

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest 8,470,647$ 4,922,691

Income tax 6,325,191$ 4,719,627

Non-cash investing and financing activities:

Current portion of long-term debt 12,205,453$ -

Cash dividends payable 1,131,144$ 735,744

Financial assets carried at cost transferred to available-for-sale financial assets -$ 218,743

Purchase of property and equipment with cash and other payables:

Property, plant and equipment 5,677,358$ 6,865,261

Decrease (increase) in payables on equipment 85,743 300,284

Cash paid 5,763,101$ 7,165,545






CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)



CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)



2012 2011

Amount Amount

Acquisition of assets and liabilities of fair value of subsidiaries

Cash -$ 84,011

Notes receivable and accounts receivable - 345,362

Other receivables - 8,811

Other financial assets － current - 101,799

Inventories - 68,510

Prepayments - 3,621

Other current assets - 2,378

Property, plant and equipment - 1,272,888

Intangible assets - 29,848

Other assets - 1,901

Goodwill - 214,669

Short-term debts - (1,336,228)

Notes payable and accounts payable - (202,981)

Accrued expenses - (24,350)

Other payables - (45,228)

Other current liabilities - (441)

Purchase price on acquisition of subsidiaires - 524,570

Cash balance of subsidiaries at the acquisition date - (84,011)

Cash paid on acquisition of subsidiaries -$ 440,559




Common Advance Receipts Capital Legal Special

Unappropriated

Retained

Cumulative

Translation

Net Loss

not Recognized

Unrealized Gain or

Loss on Financial Minority Total

Stock for Common Stock Surplus Reserve Reserve Earnings Adjustments as Pension Cost Instruments Treasury Stock Interest

Balance as of January 1, 2011 $ 38,338,734 21,388 13,827,260 16,747,441 - 42,249,265 731,137 - 163,394 (475,840) 7,521,061 119,123,840

Conversion of empleyee stock options 71,860 (15,145) 177,601 - - - - - - - - 234,316

Disposal of company shares held by subsidiaries regarded as treasury stock transactions - - 31,902 - - - - - - 142,746 - 174,648

Dividends distributed to subsidiaries as an adjustment of capital surplus 10,729 - - - - - - - - 10,729

Consolidated net income for the year ended December 31, 2011 - - - - - 23,052,536 - - - - 446,193 23,498,729

2010 earnings distribution: (Note 1)

Legal reserve - - - 1,859,207 - (1,859,207) - - - - - -

Cash dividends - - - - - (13,821,849) - - - - - (13,821,849)

Effects of change in percentage of ownership in long-term equity investments - - 276 - - - - - - - - 276

Unrealized (loss)gain on available-for-sale financial assets - - - - - - - - (6,405,505) - - (6,405,505)

Changes in minority interests - - - - - - - - - - (549,644) (549,644)

Changes in equities of investee company under the equity method recognized according to ownership - - 12,418 - - - 1,821,354 (76) (337,482) - - 1,496,214

Balance as of December 31, 2011 38,410,594 6,243 14,060,186 18,606,648 - 49,620,745 2,552,491 (76) (6,579,593) (333,094) 7,417,610 123,761,754

Conversion of empleyee stock options 76,880 (1,955) 174,667 - - - - - - - - 249,592

Dividends distributed to subsidiaries as an adjustment of capital surplus - - 11,918 - - - - - - - - 11,918

Consolidated net income for the year ended December 31, 2012 - - - - - 23,039,047 - - - - 377,589 23,416,636

2011 earnings distribution: (Note 2)

Legal reserve - - - 2,305,254 - (2,305,254) - - - - - -

Special reserve - - - - 4,027,178 (4,027,178) - - - - - -

Cash dividends - - - - - (15,382,250) - - - - - (15,382,250)

Unrealized (loss)gain on available-for-sale financial assets - - - - - - - - 4,822 - - 4,822

Changes in minority interests - - - - - - - - - - (388,109) (388,109)

Changes in equities of investee company under the equity method recognized according to ownership - - (6) - - - (557,425) 76 109,449 - - (447,906)

Balance as of December 31, 2012 38,487,474$ 4,288 14,246,765 20,911,902 4,027,178 50,945,110 1,995,066 - (6,465,322) (333,094) 7,407,090 131,226,457

Note 1: Bonuses to employees amounted to 1,655,000 and emoluments to directors amounted to 42,000 had been charged against earnings.

Note 2: Bonuses to employees amounted to 2,070,000 and emoluments to directors amounted to 42,000 had been charged against earnings.

Retained Earnings Other Adjustment Item




CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


(All Amounts Expressed of New Taiwan Dollars in Thousands, Except for Share Data)

Capital Stock

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