2008 Annual Report

Transcription

2008 Annual Report

Stock No: 2315
2008 Annual Report
MiTAC International Corporation
April 30, 2009 printed
Website: http://newmops.tse.com.tw
www.mitac.com
1
1.
Spokesman of MiTAC:
Spokesman: Billy Ho / General Manager
Acting spokesman: Justine / Senior Manager of Public Relations Dep.
Tel.:886-3-396-2888 / 886-2-2652-5888
E-mail: [email protected]
[email protected]
2.
MiTAC International Corp.
Headquarters & Factory
No.1, Yuan-Far 2nd Rd., Hsinchu Science Park, Hsinchu County, Taiwan (R.O.C.)
Tel.:886-3-577-9250
Linko Branch
No.200, Wunhua 2nd Rd., Gueishan Township, Taoyuan County, Taiwan (R.O.C.)
Tel.:886-3-396-2888
Nangang Office
6F., Building B, No.209, Sec. 1, Nangang Rd., Nangang Dist., Taipei City, Taiwan (R.O.C.)
Tel.:886-2-2652-5888
3.
Stock agent (Stock agency)
Name: Chinatrust Commercial Bank, Stock agent
Address: 5F, No.83, Sec. 1, Chung-Chin S. Rd., Taipei City, Taiwan (R.O.C.)
Tel.: 886-2-2181-1911
Website: http://www.chinatrust.com.tw
4.
CPAs
CPAs: Yu-Kuan, Lin and Wei-Cheng, Wang
CPA Firm: PricewaterhouseCoopers
Address: 27F, No.333, Sec. 1, Keelung Road, Taipei City, Taiwan (R.O.C.)
Tel.: 886-2-2729-6666
Website: http://www.pwc.com/tw/
5.
Offshore marketable security trade: None
6.
Website: http://www.mitac.com
2
Content
I.
Page
To Shareholders .................................................................................................................5
II. Company overviews
1. Date of Establishment ....................................................................................................8
2. Company profile ............................................................................................................8
III. Business Operation Report
1. Organizational structure...............................................................................................11
2. Information of Directors, Supervisors, General Manager, Vice GMs, Assistant
GMs and managers ......................................................................................................13
3. Corporate Governance Status ......................................................................................24
4. CPA’s dues...................................................................................................................34
5. New CPAs....................................................................................................................34
6. The Company’s Chairman, General Manager, Finance or Accounting manager
who had worked for CPA’s firm or its affiliates within one year................................34
IV. Funds Raising
1. Capital and stock..........................................................................................................34
2. Debenture issuance ......................................................................................................39
3. Preferred stock issuance...............................................................................................40
4. Overseas depository receipt .........................................................................................40
5. Employee’s stock option..............................................................................................47
6. New bonus shares for merger or accepting stock shares from another
company.......................................................................................................................57
7. Status for funds operation ............................................................................................57
V. Operations overview
1. Operation report ...........................................................................................................58
2. Market and Sales overview..........................................................................................59
3. Workforce ....................................................................................................................77
4. Expenses incurred to address environmental protection issues ...................................77
5. Labor/Management Relations......................................................................................80
6. Major contracts ............................................................................................................82
3
VI. Financial Standing
1. Balance Sheet and Income Statement in most recent five years..................................83
2. Financial analysis in most recent five years ................................................................85
3. Supervisors’ Report of the most recent year................................................................87
4. MiTAC International Corp. Consolidated Financial Statements and Report of
Independent Accountants .............................................................................................88
5. MiTAC and related enterprises had difficulties in cash flow and affected MiTAC
Corp. up to the publication date of this annual report................................................155
VII. Assessment of financial conditions operational results and potential risks
1. Financial status, discussion and analysis ...................................................................156
2. Analysis of business results .......................................................................................157
3. Cash flow analysis .....................................................................................................158
4. Influence of major capital expenditures in the most recent year on financial
condition ....................................................................................................................158
5. Reinvestment policy in the most recent year, causes for reinvestment income and
loss, remedial measures and the investment plan within the year .............................158
6. Risk management.......................................................................................................159
7. Other important events...............................................................................................163
VIII. Special events of record
1. Information of affiliates .............................................................................................164
2. Subscription of marketable securities in most recent year and up to the publication
of this annual report ...................................................................................................174
3. MiTAC’s stocks held or disposed by its subsidiaries in most recent year and up to
the publication of this annual report ..........................................................................174
4. Supplementary disclosure ..........................................................................................174
5. In most recent year and the present year to the publication date of this annual
report, occurrence of events that might have a significant impact on shareholder
rights or stock prices, as defined in Article 36, item 2, Part 2 of the “Securities
and Exchange Law” ...................................................................................................174
4
I. To Shareholders
Dear Shareholders:
Thanks you for your encouragement and support throughout last year.
All IT and communication technology industries have faced touch challenges due to
economic recession last year. MiTAC Corp. has always expected ourselves to be the “Best
Regional Partner” for clients and consumers. In 2008, we survived recession due to an innovative,
holistic technology and an all-in-one providing chain. As always, we provided the most
appropriate solutions, products and services worldwide even in the midst of a global economic
recession.
Sales revenues and profitability
MiTAC’s sales revenue in 2008 was NT$ 60.809 billion, a 26% decrease from 82,074
billion in 2007. The gross profit before tax was NT$ 635 million and the EPS was NT$ 0.31.
Since MiTAC did not release a financial forecast in 2007, there was no need to meet the forecast.
Responding to business environment and products R&D
In 2008, the IT and communication industries encountered the biggest recession since 1940.
The global recession has caused most consumers to think twice before they purchase, which
directly impacted the high-tech products market. However, MiTAC applied multiple approaches
in order to keep more business; for the purpose of making more money for shareholders, we
adopted detailed management, cost control, expanded sources of income and increased
customers’ satisfaction in order to get their next purchase. In ODM and our own brand
companies, MiTAC focused on predicting end-users’ needs so we could customize and localize
for ODM clients to augment our competitive edge.
The growth of the IT industry had slowed down, but Portal Navigation Device (PND) with
GPS had maintained its growth. According to the estimate of Canalys, a market research institute,
PND produced 41 million units, compared with 35 million units in 2007, an increase of 17 %.
Canalys also estimated that the production units in 2009 will be 42.8 million.
Under these circumstances, MiTAC will keep focusing on PND, which is comprised of
entertainment, Internet and digital mobility. To better fulfill our missing parts for our GPS
subsidiaries: besides Mio and Navman, MiTAC acquired Magellan’s GPS consumer product
5
divisions, including the brand name, Magellan, and its related technology and net assets to
enhance the competence in North American market and global navigation devices market.
Furthermore, the advantages of Magellan made MiTAC competitive in outdoor navigation and
all satellite GPS lines.
Concerning environmental protection, because global warming has been an increasing
concern, MiTAC reacted to the Greenhouse Gas Control Act and the reduction of Green House
Gas (GHG) and has been retrieving GHG since August 2007. Furthermore, in 2008, Energy
Efficiency Act had influenced our standard procedures. These standard procedures include to use
recycling energies-solar energy, to recycle the recyclables, and reduce energies in economizing
electricity and the management of summer air conditioning and lighting. Our goal was to reduce
the emission of carbon dioxide. Furthermore, regarding R&D of server products, environmental
topics were also the top priority and the target was to boost the efficiency of space and
consumption.
Innovation and R&D
On the topic of innovation and R&D, MiTAC has always budgeted at least 2 % of annual
income to reinforce its abilities. MiTAC had 161 patents approved in 2008 and was the ninth
place in Taiwan.
To ensure our leading edge, MiTAC has always exploited our best advantages, strategic
planning and efficiently financial operation to manage major clients in different areas, and gather
all possible resources to develop our strategic products. The integration of clients and resources
from all areas is to propose proper and customized technologies, services and solutions for every
part of MiTAC Corp.
Prospective of 2009
In 2009, MiTAC will strengthen the existing GPS and Internet devices and develop
enterprise markets, including servers and storage devices. Based on the successful experience of
2008, in 2009, we will continue to tailor-make for individual needs and we wish to continue to be
the Best Regional Partner for advanced technology and solutions worldwide.
About wireless communication products, we will stay on the top three, and we will explore
all hand-held GPS devices and GPS smart mobile phones. The purpose is to design complete
navigating software with all the great features with the Internet services. We wish to be a market
leader in the mobile communication market. Additionally, we will use division strategy on the
6
three brands: Mio, Navman and Magellan; therefore, we will maintain the biggest market share
in each division. We estimate that our PND shipment in 2009 will grow compare to 2008.
In the development of client system business products, we will actively develop compact
computers, tailor-made products and X86 workstation series products, as well as mobile online
niche market. We hope these lines will maintain our usual shipment volume. In the meantime, we
will work on different targeted audiences to expand our market. To develop enterprise products,
we not only work on servers to keep our edge, but also work on storage devices to develop new
clients and increase shipment volume, as well as the market share of TYAN and channel
coverage rate. Meanwhile, on high-level server products, we target on high-speed computing
clusters and their applications and we will research and develop more high-density and energy
efficient Rack-mounted Server Quasi-system.
In the next year, MiTAC Corp. will fulfill all of our customers’ needs based upon our core
values of “Innovation, Change and Teamwork” and our excellent operation and information
systems. We will also create and satisfy our clients by customized products and services. We are
to be the “Best Regional Partner: in your area. And we will remain to be one of the leading
companies in the world.
Best Regards
Matthew Miau
The Chairman of MiTAC
Billy Ho
The General Manager of MiTAC
7
II. Company overview
1. Date of establishment: Dec. 8, 1982
2. Company profile
(1) Company milestones:
2002 MiTAC International Group celebrated its twentieth anniversary, establishing
its business operations headquarters in Taiwan.
MiTAC International became the first domestic vendor in Taiwan to apply for
and complete certification under the government’s “Plan B,” and received an
award from the Ministry of Economic Affairs’ Development of Industrial
Technology.
Received “Supplier Meritorious Performance” Award from Sun Microsystems,
Inc. for the second time.
Selected by the Institute for Information Industry as one of the six companies in
2002 with the richest portfolios of intellectual property assets, and was ranked
#7 for the number of patent approvals.
MiTAC International Group added a new member-“Tyan Computer”, a
specialist in the design of high-end motherboards. Tyan formally established its
business headquarters in Taiwan, in addition to Tyan’s resources enabling
MiTAC International’s high-end product lines to be more comprehensive, and
allowing joint work to expand their customer bases.
MiTAC (Canton) ranked as the #5 exporter in the Canton Province and the # 18
exporter nationwide.
Co-established “Y.S. Educational Foundation” with subsidiaries in MiTAC
Incorporated Group.
2003 Announced the world’s first flip smart phone; launched the world’s first
“dual-wireless”, “dual-slot” Pocket PC, and the first Pocket PC with an
integrated camera. To publish the world’s first product to combine a GPS
navigation system and PDA functionality for cars: Mio 168 palm size GPS.
Won the Symbol of Excellence Award.
SYNNEX Corporation under MiTAC Corp. in the United States had its IPO on
the New York Stock Exchange on November 25.
2004 Published MiTAC’s Book “98/2: Vitamin Plan”, to share MiTAC’s experience
in digital operations. This book also received the “Golden Book Prize 2004” by
the Ministry of Economic Affairs.
Won the “Service Excellence Award 2004” by Marketing Consultancy
Accenture and local Commonwealth magazine.
Launched Taiwan’s first smart phone with Microsoft’s newest operating system:
Windows MobileTM 2003 Software and launched a widescreen, easy-to-use
GPS navigation system with a built-in exclusive travel e-book.
Won the 13th Symbol of Excellence Award.
The production of GPS navigation climbed up to #3 in the world.
2005 Indirect investment of US$4.2 million in MiTAC Research (Shanghai) to
strengthen its R&D capabilities and raise its overall competitiveness.
Indirect investment of US$5.5 million in MiTAC Technology (Suzhou) Co.,
Ltd. to strengthen its vertically integrated capabilities and increase its
competing ability.
To handle the second underwriting at SYNNEX Corporation, an American
8
based subsidiary of MiTAC, and realized its gains. MiTAC disposed of a
portion of its stocks, which value was approximately US$38 million.
Ranked #67 by Business Week for the Tech 100 list.
Awarded the “Best Quality Supplier of the Year” by Dell Computer, “Best
Supplier Performance” by Fujitsu Siemens, and “Supplier Excellence Award”
by NEC.
2006 Ranked #71 by Business Week for the Tech 100 listing.
Awarded the “Preferred Quality Supplier Award” by Intel.
Awarded the “Supplier Meritorious Performance Award” by Sun Microsystems
Inc.
Incorporated Mio Technology, Korea to enter Korean market.
Mio DigiWalker H610 was awarded with the “iF design Award China 2006”.
8.5” portable TV MPV-800 was awarded with the “iF Product Design Award
2007”.
Mio DigiWalker H610 was ranked on “The Best 20 Products in 2006” by
Business Week.
Mio DigiWalker H610 was listed by Times magazine at the “Cool Gear 2006
Tech Buyer’s Guide”.
2007 In order to upgrade the competitive advantage of wireless satellite navigation
system and global market share, MiTAC had merged the Navman trademark of
the Brunswick Corporation and its operating assets and liabilities (excluding
cash) and all equipment at Navman Europe Ltd., Naviart Ltd., and Naviart
Information Technology (Shanghai) Co. Ltd.
Incorporated Navman Technology Australia PTY Ltd. in Sydney, Australia for
entering local market.
Incorporated Navman Technology NZ Ltd. in Oakland, New Zealand to enter
local market.
Established the mobile communication R&D Centers in Cheng Du City in
Mainland China and in Taiwan to reinforce its R&D capability.
Incorporated Tyan Computer Corp., ,a solution plan supplier of HPC system.
Tyan then became a new business division of MiTAC International for products
R&D, logistic accesses and sales.
Awarded the “Supplier Meritorious Performance Award” by Sun Microsystems
Inc.
Mio won its fourth “Excellent Brand of Taiwan” award from Taiwan External
Trade Development Council.
Mio C720t won the “Best Choice of Computex Taipei 2007.
Mio A702 & P560 won the “iF Design Award China 2007” award.
9
Being selected as the excellent vendor of “Potential 99 -- Taiwan” by the
ETtoday TV channel.
Canalys data indicated that “Mio” brand became worldwide top 3 of navigation
products suppliers.
Globally first launched the HPC-flex BLADE bare-bones system for
workgroups. Using an upgraded cooling mechanism design and noise control to
upgrade the HPC server’s work environment to an ordinary office and realized
the personal HPC idea.
Launched the first global AMD Opteron Double 1U server, which associates
two server motherboards into one 1U rack to maximize the space density of the
rack-based servers.
Exclusively acquired the Intel Qualified Server Board (IQSB) certification on
high-end servers, and became the only vendor of IQSB plan.
2008 MiTAC signed the contract to be the ONLY navigation devices sponsor in
2010 Shanghai EXPO.
Mio C230 awarded the “iF Design Award 2008”.
Mio Leap K1Moov380 and G50 awarded the “iF Design Award 2009”.
Motherboards TN28 and B4988 of Tyan were the 16th and the 20th places at
Supercomputer Institute Top 500 respectively.
NASA chose the Thunder N 6659 W s2915 of Tyan.
Awarded the “Excellent Supplier” by Sun Microsystems Inc.
Awarded the “Outstanding Supplier” by HP.
To expand the portable navigation devices and to open new markets, MiTAC
acquired Magellan’s GPS consumer products divisions, including the brand
name, Magellan, and its related technology and net assets.
2009Established the North American Office- MiTAC Digital Corp. to enter the
portable navigation devices market.
10
III. Business Operation Report
1. Organizational structure
(1) Organizational chart (April 30, 2009)
11
2. Responsibilities of major departments
Major Departments
Responsibilities
Examine and evaluate internal control mechanisms to ensure they are
Audit Office
thorough
and
effective;
provide
analysis,
evaluations,
and
recommendations.
Financial operations and planning.
Financial Center
Perform research to assess domestic and overseas investment opportunities.
Capital planning and accounting and tax procedures handling.
Coordination of board of directors and shareholder meetings.
Draft and review contracts.
Legal Affairs Center
Provide legal consulting services and support and handle other legal
matters.
Human Resources
Strategy stipulation and management of human resources and administrative
Development Center
affairs.
Public Relations
Draft and review contracts.
Provide legal consulting services and support and handle other legal
Department
matters.
MIS Center
Promote digitalized operations of global branches and headquarters.
Administration and maintenance of the company’s internal system and
network environment.
Corporate knowledge
Improvement of workflow and e-commerce.
Management Center
Technical Support &
Service Center
After-sale customer service.
Overseas technical support.
Procurement Center
In charge of strategy development and management for procurement center.
Engineering R&D Center
Provides safety certification and EMI compatibility support.
Advanced Technologies
In charge of research and development for future products technologies and
R&D Center
specifications.
Engineering Design
In charge of test of R&D design for compatibility and reliability.
Validation Division
Mobile Communications
In charge of R&D, sales, and promotion for mobile and wireless
Products Business Unit
communications products.
Client System Business
In charge of R&D, sales, and promotion for computer products audio/video
multimedia products and Digital home products.
Unit
Enterprise Products
Business Unit
In charge of R&D, sales, and promotion for enterprise professional system
products.
12
2. Information on Directors, Supervisors, General Manager, Vice GMs, Assistant GMs, and managers of each department and division
(1) Directors and Supervisors
Apr. 12, 2009
Titles
Names
Chairman Mathew Miau
Date Elected Term
Date First
Elected
Shares held at time of
election
Shares
Stake
Shares currently
Shares held under
Number of shares held held by spouse or
other name
dependents
Shares
Stake Shares Stake Shares
Stake
06.12. 2007
3-y
05.17. 1986
18,192,800
1.42%
21,805,999
1.42%
0
0%
0
Director
Billy Ho
06.12. 2007
3-y
05.18. 2004
3,572,158
0.28%
4,823,727
0.31%
0
0%
0
Director
MiTAC Inc.
06.25.2008
3-y
06.25.2008
117,747,205
8.08%
122,456,572
7.97%
0
0%
0
Director
UPC Technology
Corp.
Rep.Yung-Do
Way
Director
UPC Technology
Corp.
Rep. Simon Wu
Supervisor Arthur Chiao
Lien Hwa
Industrial Corp.
Supervisor
Rep: Hu-Shi,
Charles Ching
06.12.2007
3-y
02.29.1989
115,493,040
9.01%
06.12.2007.
3-y
02.29. 1989
115,493,040
9.01%
06.12.2007
3-y
05.18. 2004
0
0%
06.12.2007
3-y
06.17.1986
81,634,160
6.37%
129,628,156
8.44%
0
0%
0
Spouse or kin within two degrees of
Positions currently held at MiTAC consanguinity who is executive,
Education and Experience
or other companies
director, supervisor
Title
Name
Relationship
CEO MiTAC International Corp.
Santa Clara University,
Chairman, MiTAC Inc.
EMBA
Chairman, SYNNEX International
California BERKLEY
0%
None
None
None
Corp.
University,
Chairman, Lien Hwa Industrial Corp.
Bachelor, Electrical
Engineering
Chairman, UPC Group
MIS in Computer Science, GM, MiTAC International Corp.
Director, MiTAC Precision
Fairleigh-Dickinson
Technology Corp.
University
Director, Harbinger Venture Capital
Master UC San Diego
None
0%
None
None
Marketing Manager, Pao
Director, 3-Probe Technologies Co.,
Hwa
Ltd.
Trading Co., Ltd.
Director, MiTAC Investment
Chairman, MIO Technology Corp.
0% None
0%
8.44%
0
0%
0
0%
0 0.00%
0
0%
0
0%
129,628,156
91,625,310
5.97%
0
13
0%
0
0%
MBA of Georgia
University
BA of Accountancy,
Soochow University
Director of Deloitte China
Director of DTT
CEO of Deloitte
MBA, University of Dallas
CFO, Acer Group affiliated
company
Executive VP for Finance
Best Power Technology
(U.S.)
MSEE and researcher in
Business Administration,
Washington University
Master of Engineering at
National Tsing Hua
University
Council for Economic
Planning and Development
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Independent Director of Delsolar
Co., Ltd
Assistant GM, UPC Technology
President of Wei Chen Investment
Co.
President of Walsin Lihwa
President of Winbon
President and GM of Lien Hwa
Industrial Corp.
Director of Synnex Technology
International Corp.
2) Information of Directors and Supervisors
With qualifications below and
five-year above experiences
Qualifications
Work
College
Judge, Prosecutor, Experience in
Instructors in Lawyer, CPA or business, law
affairs,
accounting,
other national
accountancy or
finance, law
certified
Names
and Business
specialists
other company
sales
Chairman
Mathew Miau
Director
Billy Ho
Director
MiTAC Inc.
Rep. Yun Kuo
Director
UPC Technology Corp.
Rep. Yung-Do Way
Director
Rep. Simon Wu
Supervisor
Lien Hwa Industrial Corp.
Rep: Charles Ching
Supervisor
Arthur Chiao
-
-
-
-
Independency(Note )
1
2
3
-
-
-
-
-
-
4
-
5
6
-
-
-
-
-
-
7
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
People in
charge of
other
public
10
companies
-
-
-
1
-
-
-
-
Notes: Please check under each box when all Directors and Supervisors fit the descriptions two years before elected and during the term.
If:
1. Not an employee of MiTAC and any of the company’s affiliates.
2. Not a director or supervisor of the company or any of the company’s affiliates (except for the independent directors of the company or
the parent company of the company and the subsidiary invested by the company directly or indirectly with over 50% shareholding).
3.Not an individual shareholder owning more than 1% of the company’s outstanding shares nor one of the company’s ten largest
shareholders.
4. Not the spouse or relative within two degrees of lineal consanguinity with any person described by conditions [1] or [2].
5. Not a director, supervisor, or employee of an institutional shareholder of the company directly or indirectly owning more than 5% of
the company’s outstanding shares of one of the company’s five largest institutional investors.
6. Not a director, supervisor, or manager of, nor a shareholder owning more than 5% of the outstanding shares of, any companies or
institutions that have a financial or business relationship with the company.
7. Not an individual who has provided financial, business, or legal services or consultancy to the company during the past year, nor the
owner, partner, director, supervisor, or manager [or spouse of any of the foregoing] of any sole proprietor, partner, company, or
institution that has provided financial, business, or legal services or consultancy to the company during the past year.
8. Not the spouse or relative within two degrees of lineal consanguinity with any director.
9. Not committing an act that is defined by Section 30 of the Company Law, Republic of China.
10. Not a legal entity [institution] or representative as defined by Section 27 of the Company Law, Republic of China.
14
3) General Manager, Vice GM, Assistant GM, and managers
Titles
Names
Dates took
Shares held
position
Shares
CEO
Matthew Miau
General
Billy Ho
Manager
Senior Vice
Samuel Wang
GM
Senior Vice C. J. Lin
GM
Vice GM Percy Chen
09.01.1998
03.27.2000
02.23.2005
06.15.2007
03.20.1997
21,805,999
4,823,727
3,615,085
137,180
900,626
Stake
1.42%
0.31%
0.42%
Shares held
Shares held
by spouse or
under other
dependents
name
Shares Stake Shares
0
0
0
0.01% 1,102
0.06%
Apr 12, 2009
0
0%
0%
0%
0%
0%
0
0
0
0
0
Education and experience
Positions currently held at
MiTAC or other companies
Stake
Spouse or kin within two
degrees of consanguinity
who is manager
Title Name Relationship
Santa Clara University, EMBA
Chairman, MiTAC Inc.
California BERKLEY University, Chairman, SYNNEX Technology
Bachelor, Electrical Engineering International Corp.
0%
Chairman, Lien Hwa Industrial Corp.
Chairman, UPC Group
MIS in Computer Science,
Fairleigh-Dickinson University
Master UC San Diego Marketing
0%
Manager, Pao Hwa Trading Co.,
Ltd.
Director, Harbinger Venture Capital
Chairman, MIO Technology Corp.
Director, 3-Probe Technology Co.,
Ltd.
Director, MiTAC Investment
GM of Mio Technology
MBA of National Taiwan U
BA of EE of National Taiwan U. Director of DLC Technology Corp.
0% Senior Engineer, Longshine
Electronics Corp.
BA of EE of National Taiwan U.
GM of MiTAC International Co.
0% Deputy Chairman of MiTAC
Computer (ShunDe) Ltd.
Department of Business
Management, National Sun
Yat-Sen U.
0%
Department of Electronics,
National Taipei U.
Manager, MiTAC Inc.
(CONTINUED)
15
None
None None
None
None None
None
None None
None
None None
None
None None
None
Director of Mio Technology
Director of 3 Probes Technologies
Apr 12, 2009
Titles
Names
Dates took
Shares held by
spouses or
dependents
Shares Held
Shares held
under other
name
Education and experiences
position
Shares
Stakes
Shares
Stakes Shares Stakes
Vice GM
James Yuan
06.06,1997
338,003
0.02%
0
0%
0
Vice GM
Ted Chang
09.01,1999
5
0%
0
0%
0
Vice GM
Stone Chen
07.01,2002
1,573,310
0.10%
0
0%
0
Vice GM
Michael Lin
07.01,2002
2,269,408
0.15%
11,420
0%
0
Vice GM
Jack Kuo
03.27,2002
729,039
0.05%
0
0%
0
Vice GM
C.P. Lee
02.25,2004
684,756
0.04%
0
0%
0
Ph.D., School of Law, Rutgers U.
0% MJ of Washington University
Baker & McKenzie
Department of Medical
Engineering, Chung Yuan
0% Christian U.
Engineer, Shen-Jar Engineering
Co.
MBA, National Chengchi U.
B.S., Dept. of Electrical
Engineering, National Chiao
Tung U.
0%
Office Manager, Nexcom
International Co., Ltd.
Manager, TeleSynery Research
Inc.
MBA of National Chiao Tung U
0% Dept. of Electrical Engineering,
National Taiwan U.
EMBA of National Taiwan U
MA in EE, National Taiwan U
0% Vice GM, Clevc Computer Co.
Deputy Office Manager, Tatung
Inc.
MBA of National Chiao Tung U.
Lecturer, National Defense
0%
College
Sales Director, MiTAC Inc.
(CONTINUED)
16
who is manager
Title
Name Relationship
None
None None
None
None
None None
None
None
None None
None
None
None None
None
None
None None
None
None
None None
None
Apr 12, 2009
Titles
Names
Dates took
position
Shares Held
Shares
Stakes
Shares held by
spouses or
dependents
Shares held
under other
name
Stakes Shares Stakes
Shares
Vice GM James Wu
11.04,2004
349,259
0.02%
9,982
0%
0
Vice GM
Alice Fang
02.23,2005
736,483
0.05%
0
0%
0
Vice GM
Robert Yang
07.19,2005
32,548
0.00%
0
0%
0
Johnson Wang 12.19,2007
199,532
0.01%
5,884
0%
0
Vice GM
Education and experiences
Crystal Yang
Vice GM (Took position
on 02.17,2009)
02.17,2009
50,868
0.00%
0
0%
0
Tracy Ting
Accounting
(Took position
Manager
on 02.17,2009)
02.17,2009
454
0.00%
0
0%
0
MA of EE, Tatung U
Two years of PhD research, EE,
Tatung U.
Certified Electrical Engineer
0%
None
Office Manager, Department of
R&D,
Marketing and Product Planning,
Tatung Corp.
MA of Technology Management, Director of Shen-Tong
0% National Chengchi U.
Construction & Development
Co., Ltd.
BA in EE, National Cheng Kong
U.
Vice President, Portable
Computer Second Business
0%
None
Dept., FIC
Senior Vice GM, Electrical Dept.
and Portable Chassis Dept.,
Cheming Mold Corp.
0% MBA, Duland University
None
Director of Harbinger Venture
MBA of National Taiwan U
Sr. Director of MiTAC Finance Management
Supervisor of Shen-Tong
Consulting Center
0% Finance, Sales and Project
Construction & Development
Manager of Hwa-Hsia Leasing & Co., Ltd.
Supervisor of Synnex
Financial Corp
Technology International Corp.
BA in Accounting at TamKang U
0% Sr. Specialist at Acer Inc.
None
17
who is manager
Title
Name Relationship
None None
None
None None
None
None None
None
None None
None
None None
None
None None
None
(3) Remuneration for directors, supervisors, General Manager, and vice General Manager
Compensation for Directors:
Unit: NT$ Thousand/1,000 shares
Compensation for Directors
Compensation (A)
Titles
Pensions (B)
Allocated
earnings
(C) (Note 1)
Names
MiTAC
Occupational
Compensation
(D)
Total amount
Salaries, prize
(A+B+C+D)
as a percentage of
monies, and
2008 net income special allowances
(%)
(E)
Part-time Employee bonuses
Total amount
Number of shares (A+B+C+D+E+
F+G) as a
obtained as
Employee bonuses (G)
Compensation
Pensions (F)
from
(Note 1)
employee stock percentage of 2008
(Note 4)
net income (%)
investment
options (H)
other than
In the
MiTAC
In the
In the
In the
consolidated
subsidiary
consolidate MiTAC
consolidate
consolidate
financial
In the
In the
In the
In the
In the
In the
consolidate
consolidate
consolidate
consolidate
consolidate
consolidate
MiTAC
MiTAC
MiTAC
MiTAC
MiTAC
MiTAC
d financial
d financial
d financial
d financial
d financial
d financial
d financial
statement
statement
statement
statement
statement
statement
statement
statement
Cash Stocks Cash Stocks
MiTAC
d financial
statement
MiTAC
d financial
statement
Chairman Matthew Miau
Director Billy Ho
UPC
Technology
Corp.
Director Rep. Yung-Do,
Way(Change
Rep. on July 2,
2008)
402
402
1600
1600
80
80
0.45% 0.45% 14,314 20,104
112
112
628 - 628
6,000
6,000 3.73% 4.99%
Yes
UPC
Technology
Director
Corp.
Rep. Simon Wu
Xiang-Chung
Director Xue (quit on
May 6, 2008)
MiTAC Inc.
Director
Rep. Yun Kuo
Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholders’ Meeting for approval.
Note 2: The total remuneration amount of MiTAC and the companies in the consolidated financial statements this year amounting to 0.45% of net income is higher than the 0.09% in 2007, but the overall compensation is lower due to the low
profits than before.
Note 3: The Statement of Retained Earnings is prepared for the distribution of remuneration to the directors and is submitted to the Board of Directors meeting and the Shareholder’s meeting for distribution. The amount the Board approves is
based upon the company charter and the standard in the industry.
Note 4: Pensions funded according to the applicable law.
(CONTINUED)
18
Table of Remuneration
Directors
Total amount (A+B+C+D)
In the consolidated
MiTAC
financial statements
(I)
Matthew Miau / Billy Ho / UPC
Matthew Miau / Billy Ho /
Technology Corp. Rep. Yung-Do
UPC Technology Corp. Rep.
Way, Simon Wu / Xiang-Chung Xue Yung-Do Way, Simon Wu /
/ MiTAC Inc. Rep. Yun Kuo
Xiang-Chung Xue / MiTAC
Inc. Rep. Yun Kuo,
5,000,000
10,000,000
15,000,000
30,000,000
50,000,000
100,000,000
6
6
2,000,000 (included)
10,000,000 (included)
15,000,000 (included)
30,000,000 (included)
50,000,000 (included)
Over 100,000,000
Total
Below 2,000,000
Remuneration
Ranking to
MiTAC’s directors
19
Total amount (A+B+C+D+E+F+G)
In the consolidated
MiTAC
(J)
UPC Technology Corp. UPC Technology Corp.
Rep. Yung-Do Way,
Rep.Yung-Do Way,
Simon Wu / Xiang-Chung Simon Wu / Xiang-Chung
Xue / MiTAC Inc. Rep. Xue / MiTAC Inc. Rep.
Yun Kuo
Yun Kuo
Matthew Miau/ Billy Ho
Matthew Miau/ Billy Ho
6
6
Compensation for Supervisors
Unit: NT$ Thousand
Titles
Names
Supervisor Compensation
Allocated earnings
Compensation (A)
(C) (Note 1)
In the
In the
In the
consolidated
consolidated
consolidated
MiTAC financial MiTAC financial
MiTAC
financial
statement
statement
statement
Pensions
(B)
Occupational
compensations (D)
In the
consolidated
MiTAC
financial
statement
as a percentage
of 2008 net income (%)
MiTAC
In the
consolidated
financial
statement
0.13%
0.13%
Compensation
from
investment
other than
MiTAC’s
subsidiaries
Supervisor Arthur Chaio
Lien Hwa Industrial
Supervisor Corp. Rep: Charles
144
144
-
-
400
400
32
32
Yes
Ching
Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholders’ Meeting for approval.
Note 2: The total remuneration amount of MiTAC and the company in the consolidated financial statement this year amounting to 0.13% of net income is higher than the 0.02% in 2007, but the
overall compensation is lower due to the low profits than before.
Note 3: The Statement of Retained Earnings is prepared for the distribution of remuneration to supervisors and is submitted to the Board of Directors meeting and the Shareholder’s meeting for
distribution. The amount the Board approves is based upon the company charter and the standard in the industry.
Supervisors
Remuneration Ranking to
MiTAC’s supervisors
5,000,000
10,000,000
15,000,000
30,000,000
50,000,000
100,000,000
10,000,000 (included)
15,000,000 (included)
30,000,000 (included)
50,000,000 (included)
Over 100,000,000
Total
Below 2,000,000
MiTAC
Arthur Chiao / Lien Hwa
Industrial Corp.
Rep. Charles Ching
2
20
In the consolidated
statement (E)
Arthur Chiao / Lien Hwa
Industrial Corp.
Rep. Charles Ching
2
Compensations for General Manager and Vice GM
Salaries (A)
Titles
Names
MiTAC
CEO
General
Manager
Senior
Vice GM
Senior
Vice GM
Vice GM
Pensions (B)
(note 5)
Prize monies & special
allowances (C)
In the
In the
consolidated
consolidated
MiTAC
MiTAC
financial
financial
statements
statements
In the
consolidated
financial
statements
Employee bonuses from allocated earnings
(D) (Note 1)
In the consolidated
MiTAC
Cash
Cash
Stocks
Stocks
Total
amount(A+B+C+D)
as a percentage
of 2008 net income(%)
In the
consolidated
MiTAC
financial
statements
Unit: NT$ Thousand / 1,000 shares
Number of shares
obtained as employee
stock options
MiTAC
Compensation
from
investment
In the
other than
MiTAC‘s
consolidated
subsidiaries
financial
statements
Matthew Miau
Billy Ho
Samuel Wang
C.J. Lin
21
Percy Chen
Gino Chang
Vice GM (retired on Feb
29, 08)
Vice GM James Yuan
Vice GM Ted Chang
Vice GM Stone Chen
Vice GM Michael Lin
36,543
38,967
6,621
6,621
29,590
40,880
2,008
2,008
16.28%
19.26%
18,785
18,785
Yes
Stone Lin
Vice GM (Retired on
Mar 9, 09)
Vice GM Jack Kuo
C.S. Chen
Vice GM (Retired on Feb
17, 09)
Vice GM C.P. Lee
Vice GM James Wu
King Chen
Vice GM (Quit on Oct 1,
08)
Vice GM Alice Fang
Vice GM Robert Yang
Vice GM Johnson Wang
Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’s Meeting for approval.
Note 2: The total remuneration amount of MiTAC this year amounting to 16.28% of net income is higher than 3.71% in 2007, but the overall compensation is lower due to the low profits than before.
Note 3: The total remuneration amount of the company in the consolidated financial statements this year amounted to 19.26% of net income is higher than the 3.64% in 2007, but the overall compensation is lower due to the low profits.
Note 4: The remuneration to General Manager and Vice GM depends on their performance and contribution to the company and the standard of the industry.
Note 5: Total paid pension is NT$ 5,123 thousand.
Remuneration ranking to GM & Vice GM
Below 2,000,000
5,000,000
5,000,000 (included) 10,000,000
10,000,000 (included) 15,000,000
15,000,000 (included) 30,000,000
30,000,000 (included) 50,000,000
50,000,000 (included) 100,000,000
Over 100,000,000
Total
General Manager & Vice GM
In the consolidated financial statements
C.J. Lin/Percy Chen/James Yuan/ Ted Chang/Stone
C.J. Lin/Percy Chen/James Yuan/ Ted Chang/Stone Chen/
Chen/ Michael Lin/Stone Lin/Jack Kuo/C.S. Chen/C.P.
Michael Lin/Stone Lin/Jack Kuo/C.S. Chen/C.P. Lee/James
Lee/James Wu/King Chen /Alice Fang/ Robert
Wu/King Chen /Alice Fang/ Robert Yang/Johnson Wang
Yang/Johnson Wang
Matthew Miau / Billy Ho / Samuel Wang / Gino Chang
Matthew Miau / Gino Chang
Billy Ho/ Samuel Wang
19
19
MiTAC
-
22
Managers Receiving Employee Bonuses
Unit: NT$ Thousand
Titles
CEO
General
Manager
Senior Vice GM
Senior Vice GM
Vice GM
Vice GM
Names
Stock bonuses
Cash bonuses
Total
Total as a percentage of
2008 net income (%)
Matthew Miau
Billy Ho
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(retired on Feb. 29,
2008)
Vice GM
James Yuan
Vice GM
Ted Chang
Manager
Vice GM
Stone Chen
2,008
2,008
0.44 %
Vice GM
Michael Lin
Vice GM
Stone Lin (Retired
on Mar. 9, 2009)
Vice GM
Jack Kuo
Vice GM
C.S. Chen (Retired
on Feb. 17, 2009)
Vice GM
C.P. Lee
Vice GM
James Wu
Vice GM
King Chen (Quit
on Oct. 1, 08)
Vice GM
Alice Fang
Vice GM
Robert Yang
Vice GM
Johnson Wang
Note: Distribution of retained earnings was proposed by the Board of Directors before presenting it to the Shareholders’
Meeting.
23
3. Corporate Governance Status
a. Meetings held by the Board of Directors: the Board of Directors held 12 (A) meetings
(4 times before by-election) in 2008. The attendance is as follows:
Titles
Chairman
Director
Names
Frequency
Actual
attendance (B) of proxy
Actual attendance rate
(B/A) (%)
Matthew Miau
12
0
100%
Billy Ho
11
1
91.67%
Director
MiTAC Inc.
Rep. Yun Kuo
8
0
100%
Director
Rep. Simon Wu
11
1
91.67%
Director
Rep. Yung-Do Way
6
2
75%
Director
Rep. Yun Kuo
4
0
100%
Director
Xiang-Chung Xue
2
1
66.67%
Remarks
By-elected by the
shareholders
meeting on June
25, 2008. Newly
elected.
Changed
Representative on
July 2, 2008.
Newly elected
Changed
Representative on
July 2, 2008. Old
elected
Quit on May 6,
2008
Other Remarks:
1.
2.
3.
For the occurrence of events that are stated in Article 14.3 of Securities and Exchange Law and
resolutions of the Board of Directors meeting that have the objection or reservation of independent
directors documented or in writing - The date and term of the Board of Directors’ meeting, the
content of proposal, the opinions of all independent directors, and the response of the company to the
opinions of all independent directors must be detailed: None.
For directors who have they excused from the discussions with conflicting interest, the name of the
directors, the content of proposal, and reason for conflicting interest, and voting must be detailed:
None.
The evaluation and the reinforcement of the functions of the Board of Directors in the year and in
recent years (i.e., setup an Auditing Committee and improving data transparency): MiTAC completed
a “Regulations Governing Procedure for Board of Directors Meetings” and have been put into
practice. The attendance and on-the-job training of directors and supervisors are disclosed
periodically on MOPS for the realization of data in time and transparency. The job functions of the
Board of Directors will be reinforced at any time in accordance with the requirement of laws and
business management of the company.
b. The Auditing Committee: MiTAC has no Auditing Committee.
24
c. Supervisors’ participation of Meeting Held by the Board of Directors: The Board of Directors
held 12 (A) meetings in 2008. The attendance is as follows:
Titles
Names
Actual attendance
(B)
Actual attendance rate
(%) (B/A)
Supervisor
Arthur Chiao
9
75%
Supervisor
Rep: Charles Ching
11
91.67%
Remarks
Other Remarks:
1. Supervisor’ s chosen and their duties:
a. Communication with staff and shareholders: in addition to people in charge of reporting to
supervisors periodically, all Supervisors are entitled to contact any employee for information.
b. Communication with the internal auditors and CPAs: Supervisors are entitled to investigate
company’s operation and finance and to require the Board of Directors and Managers for reports
and can contact CPAs when necessary; all internal auditors will report to all Supervisors
periodically.
2. When appearing at a Board meeting, any Supervisor makes a statement during the meeting; the
statement will be listed in the minutes and along with the meeting date, quarter, agenda, agreement and
the actions for Supervisor’s statements: None.
25
d. Enforcement of Corporate Governance Implemented by the Company and Reasons for Differences
Items
1. The company’s equity structure and
shareholder rights
(1) The company’s approach to handling
shareholder’s recommendations or
disputes.
(2) Information held on the identities of
major shareholders and their ultimate
controlling person.
(3) The establishment of risk control
mechanism and firewalls with affiliate.
Status
Differentiation with other publicly-traded companies and why
(1) The company has a spokesperson to handle shareholder’s
recommendations, questions, and disputes.
(2) The company controls the list of major shareholders and the
people who control them. And by the “Securities and
Exchange Law”, the company reports the number of shares
held by the directors, supervisors, and major shareholders.
(3) The company has a strong internal control and has been
executing it. Besides the implementation of self checks, the
Board and the management review the audit reports and the
results of self check regularly and irregularly in order to put
the internal control system into practice. With the auditing
system, we comply with the requirement of the complete
finances, sales, and accounting for a public firm and we
reinforce the regulation and the management of affiliates to
lower the operation risks. Our relationship with affiliates is
fair and reasonable. All procedures for financial and sales
activities with affiliates follow the written regulations.
2. Constitution of the Board of directors
and their responsibilities
(1) The election of independent directors.
(2) The regular evaluation by the
independent CPA.
(1) The company does not have independent supervisors. But all
directors execute by law, the company charter, and
shareholders’ meeting agreements.
(2) The company evaluates the CPA’s independency annually and
considers the need to replace a new CPA every five years. All
CPAs are appointed by the Board and have no common
interests with the company. Additionally, all appointed CPAs
are from professional and independent CPA firm in Taiwan.
3. The situation to build the communication Parties whose interests are affected by the actions of the company can
with stakeholders
contact the company through MiTAC spokesperson or his/her proxy
at any time. The hotlines are: 886-3-396-2888 / 886-2-2652-5888,
email: [email protected] /[email protected]
(CONTINUED)
26
No substantial differences.
(1) MiTAC has not yet reached the standard to have an independent
Director according to the Securities and Exchange Law or Letter
of (95) Tai-Zheng-Shang No.0950001616.
(2) When an independent director becomes necessary, the company
will follow the “Corporate Governance Best-Practice Principles
for TSEC/GTSM Listed Companies” and relevant law.
Fits the operation and concept of the “Corporate governance
practices for publicly listed companies” and relevant law.
Items
4. Information transparency
(1) Set up a website showing information
about the company’s finances and
corporate governance policies.
(2) The company use of other means (i.e.
the setup of an English website, the
designation of a specialist to collect and
disseminate company information,
implement a spokesperson system,
publication of procedures for
institutional investors’ meeting on
company’s website).
5. If the company establishes a nomination
committee or remuneration committee
Status
(1) The company’s official website is http://www.mitac.com, and
designed a section to release financial and sales data for
investors.
(2) The company has a spokesperson and an acting spokesperson.
(3) All Information disclosed by law is posted on the “Market
Observation Post System” for investors.
The company does not have a nomination committee or a
remuneration committee.
Fits the operation and concept of the “Corporate Governance
Best-Practice Principles for TSEC/GTSM Listed Companies” and
relevant law.
When law or reality requires it, the company will follow “Corporate
Governance Practices for Publicly Listed Companies” and the
relevant law.
6. If the company has a guideline referred by the “Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies”, please specify the differences between its
actual operation and the guidelines: The company did not have the guideline but all Directors and Supervisors follow the law.
7.Other important information helped to understand the company’s operation, i.e. employee rights, care, relationship with investors and suppliers, the rights with stakeholders,
on-the-job trainings for Directors and Supervisors, risk management execution and evaluation, customers’ policies execution and liability insurance for Directors and Supervisors.
(1) Employee rights: We believe that employees are the dynamics of the corporation; hence we take great care of staff rights in an extra high standard with legality and even more.
1. Systems: a. insurances, pension plan, staff on-the job training, safety and health precaution and equal gender employment.
b. Provide great benefits: group accidental insurance, free health check, travel subsidiaries, and gymnasiums.
2. Execution: a. All rights regulated are followed.
b. Designated people are in charge of staff benefits.
c. The company also takes care of individual needs by the Staff Relations specialists.
(2) Employee care:
1. Systems: We designated a group of Staff Relations specialists to in charge the employee care. Their services include emergency assistance, employee complaint handling, care
when employees are hospitalized, problem assistance, prevention of workplace sexual harassment, and complaints and career development counseling. We even
cooperate with contractors to lead EAP into the Company. We hope to take care of both staff’s physical and mental health by counseling, and giving financial and
legal assistance.
2. Execution outcomes: Among all cases dealt last year, we used high standard to both assist employees’ work and life problems based on a win-win concept. The employee care
had been effective.
(3) Relationship with investors: We strongly believe in honesty and information disclosure; we manage the company transparently so we release operational and financial
information to shareholders. We also have a spokesperson and an acting spokesperson. Meanwhile, we have an email account designated for
investors.
(4) Relationships with suppliers and rights of stakeholders: We work with all suppliers in long-term relationship to ensure the abundance of materials.
(5) On-the-job training for Directors and Supervisors: All Directors are professionals and all training is released to Public Information Observation.
(6) Risk measurement standard and its execution: We have included these in internal handbooks for management and evaluation.
(CONTINUED)
27
Items
Status
(7) How Directors avoid the conflict of interests: not join voting.
(8) Customer policies: We maintain a good and long-term relationship with customers.
(9) Liability Insurances purchase for Directors and Supervisors: All insurances are purchased and posted to Public Information Observation by the “Corporate Governance
Best-Practice Principles for TSEC/GTSM Listed Companies”.
(10) All Directors and Supervisors are responsible and are good administrators.
(11) We drafted a code of Board Meetings and have been practicing it.
(12) To more efficiently manage the company, Board meetings are held at least once quarterly.
(13) Status of Managers participating in educational training:
Manager
Institute
Course name
Hours
Vice GM
C.S. Chen
Accounting Research
and Development
Foundation in Taiwan
Nov. 6, 2008 The stock transfer and tax plan
for directors and supervisors and major
shareholders
4
8. If with a self-evaluation or evaluation from other professional institute, please describe the results and major flaws and suggestions: None.
e. Social contribution to environmental protection, community involvement, contributions, services, welfare, consumer rights, human rights, safety and
hygiene and other social responsibilities and their implementation:
1) Environmental protection
A. Systems: a. In response to RoHS/WEEE direction, the company has established a management system for green products and green supply chains.
b. For corporate social responsibility, we will regulate the company by a self claimer in products.
B. Outcome: a. In order to fulfill the responsibility of the electronics industry, the company is in the down-stream of the supply chain; therefore, the company is able to
demand suppliers to widely use green materials to reduce or stop using hazardous substances by being certified as a green plant, i.e. GPMS or QC80000.
b. Has already announced the self claimer of EU’s environmental requirement for PND products. The result of MiTAC’s environmental protection has
appeared and promoted MiTAC’s honesty and competition.
2) Community involvement
A. System: Encourage employees to start charitable clubs and sponsor and participate in charities.
B. Outcome: Employee clubs collect and donate materials to needed groups, including women, children, disabled, abused and people receiving life-support.
3) Social services:
A. System: a. Sponsor Y.S. Design Award to nurture domestic designers.
b. Provide internships for students.
c. Provide different industrial conferences to share managerial and industrial experiences.
B. Outcome: a. Y.S. Design Award is open for products for the sixth year and the fifth year’s finale. There are two awards: website design and industrial design. The
purpose is to cultivate potential designers, and increase competing abilities. We invite famous designers to share their experiences via blogs and
conferences.
b. Provide awards for corporate internships and encourage other excellent students to apply for intern opportunities.
4) Social Services: We devote ourselves to community service. The Earth Day- beach cleaning in April 2008 had a great response.
28
5) Charity:
A. System: Actively sponsor charitable organizations to give back to society.
B. Outcome: a. Sponsored Chinese Taipei to 2008 Beijing Olympic Games.
(CONTINUED)
b. Sponsored visually-impaired Polish cycle racers in the Beijing Paralympics’ Games for two years.
c. Sponsored in the Taiwan Cyclist Federation for the Mio Cyclist Competition at Alishan and set an example for this green activity.
6) Consumer rights:
A. System: to better service consumers, MiTAC is dedicated to developing innovative and complex system management and to promoting this concept to all affiliates
worldwide.
B. Outcome: Our GPS brands have services for consumers: a. Mio fix: fix machines at any place and any time. b. Mio camp: Clients bought Mio can have a free course
and tea time at a five-star hotel. c. Mio Express: with more than 300 stores in Taiwan, clients can update maps and get free product instruction.
7) Safety and Hygiene:
A. System: In order to increase precautions and prevent vocational hazards, death and protests, MiTAC has been certified as ISO 14001 and OHSAS 18001 and been
audited periodically.
B. Outcome:
a. In order to protect employees’ safety and health, and to prevent vocational hazards and diseases from happening, MiTAC encourages employees to join the
improvement committee.
b. Continuously improve environmental safety and hygiene: Audit and assess all investments to promote continuous improvement.
f. Disclose the query for corporate governance and relevant regulations: None.
g. Information that helps to understand corporate governance: None.
29
h. Internal control system
1) Declaration of internal control System
Declaration of the Internal Control System
Date: April 24, 2009
The company has the following declaration made for the internal control system valued in
the period of January 1 and December 31, 2008:
1. The company is aware that internal control system is the Board of Directors and the
management’s responsibility to establish, enforce, and maintain. The company has
systems set up to reasonably assure the operating effectiveness and efficiency in
profitability, performance, and assets safety, the reliability of financial statements and
regulation.
2. The internal control system has its limitations; no matter how perfect an internal control
system is designed, an effective system provides only a reasonable assurance of the
aforementioned three objectives. Moreover, the effectiveness of the internal control
system may be affected by the change of environment and situation. The company’s
internal control system has a self-supervision mechanism; therefore, the company is able
to act immediately once any nonconformity is identified.
3. The Company evaluates the design and operating effectiveness of its internal control
system based on the criteria provided in the “Regulations Governing Establishment of
Internal Control Systems by Public Companies” (hereinafter, the “Regulations”). The
criteria adopted by the Regulations identify five constituent elements of internal control
based on the process of management control: (1) control environment, (2) risk
assessment, (3) control activities, (4) information and communication, and (5)
monitoring. Each constituent element further contains several items. Please refer to the
Regulations for details.
4. The company has applied the aforementioned internal control criteria to examine the
design and performance of the system.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, the
Company believes that, during the year 2008, its internal control system (including its
supervision of subsidiaries), as well as its internal controls to monitor the achievement
of its objectives concerning operational effectiveness and efficiency, reliability of
financial reporting, and compliance with applicable laws and regulations, were effective
in design and operation, and reasonably assured the achievement of the achievement of
the above-stated objectives.
6. The declaration will be included in the annual report and all information will be released
to the public. Any false-hood or concealment will cause a violation against Article 20,
Article 32, Article 171, and Article 174 of Securities and Exchange Law and will be held
responsible by law.
7. The Board of Directors approved the declaration unanimously on April 24, 2009 in the
presence of five directors.
Chairman : Matthew Miau
General Manager : Billy Ho
2) CPA’s audit report for special audit of the internal control system: None.
30
i. The status that the company and its employees are punished by law, and/or the
company punished its internal staff for preaching the internal control system, the
major nonconformities, and corrective actions in recent years and up to the
publication date of the annual report:
1) The company and its employees are punished by law , the major nonconformities, and
corrective actions :
Follow the Letter of Jin-Guan-Zheng-Liu-Fa No. 09700128831 (Apr 14, 2008),
announced by the Financial Supervisory Commission, Executive Yuan, regarding MiTAC
providing US$1,846,600 for the endorsement to the TOP WISDOM INTERNATIONAL
CORP. (TOP WISDOM Co.) during Feb 8, 2007 ~ Aug 16, 2007; since MiTAC had no
business connections with the TOP WISDOM or direct or indirect parent-subsidiary
corporate relation for more than 50% of share holding, nor conforming to the regulation of
endorsing proportional to each shareholder’s shareholding rate as defined in Item 2,
Article 5 of the “ Regulation Governing Loaning of Funds and Making of Endorsement /
Guarantees by Public Companies”. Therefore, the person-in-charge of MiTAC was fined
for NT$ 240 thousand, according to the “Securities and Exchange Law”.
MiTAC has offered no further endorsement to TOP WISDOM Co. since Aug 16,
2007.
The person in charge of MiTAC raised a petition to the Executive Yuan. The petition
was disputed, thus the person-in-charge has applied an administrative litigation to
withdraw the first measure to the Taipei High Administration Court.
2) The status of MiTAC punishes employees’ breach of the internal control system, and the
major flaws and corrections: None.
j. Important resolutions reached at shareholders’ meetings or board meetings in recent
years and up to the publication date of this annual report:
1) Shareholder’s meeting
Meeting
Motions
Date
2008.6.25 1. Recognized the distribution of retained
earnings in 2007:
Shareholders’ bonus:
Cash dividend NT$1.4 per share and stock
dividend NT$0.4 per share.
Employees’ bonus: Cash NT$ 305,006
thousand and stock NT$ 203,337 thousand
Director and Supervisors’ bonus:
NT$ 6,000 thousand.
2.Amend MiTAC’s “Procedures for
Derivatives Trading”
3. Re-elect directors.
4. To release the non-competition restriction
of directors.
Resolutions
Execution
Unanimously Dividend benchmark date: August 23, 2008,
and cash and stock dividend distributed in
mid September.
Unanimously Have been operated by the updated
procedures..
Unanimously Re-selected 1 director.
Unanimously Have been followed according to the
resolution.
2) Board of Directors
Meeting
Date
2008.1.29
2008.3.14
Motions
1. Edited "The 11th Share Re-Purchase for Employees’ Stock Plan”.
Resolutions
Unanimously
2. Determined to purchase own stocks for 5,000 shares between NT$22 to NT$28 in Unanimously
order to transfer shares to employees.
1. Investment in Mainland China: Invested Mio Technology Corp., China with less than Unanimously
US$7.5 million.
2. Planned shareholders’ meeting dates in 2008 and their objectives.
3. Revised MiTAC’s “Regulations Governing Procedures for Board of Directors’ meetings”. Unanimously
31
Meeting
Date
2008.4.21
2008.5.14
2008.7.18
2008.7.30
2008.8.26
2008.9.10
2008.10.20
2008.12.14
2008.12.18
2009.1.13
2009.2.3
2009.2.17
2009.3.10
Motions
1. Drafted up distribution of retained earnings for 2007.
Shareholders’ Bonus: NT$1.4 cash bonus per share and NT$ 0.4 stock bonus per share.
Employees’ bonus: cash - NT$305,006 thousand and stocks - NT$ 203,337 thousand.
Supervisor and Directors’ bonus: NT$6,000 thousand.
2. Recapitalization of surplus with stock shares issued.
3. To release the non-competition restriction of directors.
4. Revised MiTAC’s “Procedure for Derivatives Trading”.
5. Revised the reason for the call for shareholders’ meeting in 2008: the need to amend
“MiTAC’s Procedure for Derivatives Trading” for legal regulation.
6. Determined the issuing date: April 21, 2008 for employees’ stock option; from the 1st
Quarter in 2008, 482,113 shares of common stock had been requested.
7. Decided to change CPAs from Fang-Yu Wen & Yu-Kuan Lin of the PriceWaterhouse
Coopers since 2007 to Wei-Cheng Wang and Yu-Kuan Lin due to their internal
organization change.
1. Decided to by-elect one director.
3. Amended reasons for calling for a shareholders’ meeting in 2008: Added by-election
for director into agenda.
1. Changed the supervisor for Internal Auditing.
Resolutions
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
Unanimously
2. Stock dividend and cash dividend baseline date: August 23, 2008
Unanimously
1. Determined the issuing date: August 23, 2008 for employees’ stock option; from
April 1 to July 27, 2008, 159,912 shares of common stock had been requested.
Unanimously
2. Decided to adjust dividend rate: Due to the change of stock shares, the distribution
rate of dividend was adjusted from NT$0.4 per share to NT$0.3999955; also, the
distribution rate of cash dividend was adjusted from NT$1.4 per share to NT$1.3998
per share.
3. Decided to adjust the converting price of domestic 3rd convertible corporate
Unanimously
debenture: Due to the issuance of new stocks, the converting price was adjusted from
NT$39.4 to NT$37.4 on August 23, 2008.
Unanimously
Approved the financial reports of 1H, 2009.
th
Determined to release 85,000 units of 8 employees’ stock options and 85,000 thousand Unanimously
shares of common stock for subscribing.
Determined the issuing date: October 20, 2008 for employees’ stock option; from July Unanimously
28 to Sep 30, 2008, 36,702 shares of common stock had been requested.
Decided to purchase Magellan Navigation Inc., its consumer satellite navigation Unanimously
equipment and its subsidiaries and related asset and liabilities with our overseas
subsidiary for an amount less than US$ 96 million
1. Determined to release stock options 43,000 units for the 9th time and 43,000 thousand Unanimously
shares of common stock for subscribing.
2. Determined to invest within US$ 20 million to establish MiTAC Digital Corp.
Unanimously
through overseas holding company.
Unanimously
Determined the issuing date: Jan 13, 2009 for employees’ stock option; from the 4th
Quarter in 2008, 7,936 shares of common stock had been requested.
Determined to subscribe common stocks privately for the price of NT$2.5 per share of Unanimously
Loyalty Founder Enterprise Co., Ltd. within the budget of NT$150 million.
1. Hired new vice GM: Hire Ms. Crystal, Yang to be the new Vice GM for the Finance Unanimously
Center to replace the retired one.
2. Appointed Tracy, Ting to be the Head Accountant.
Unanimously
1. Decided the shareholders’ meeting date and agenda in 2009.
Unanimously
32
Meeting
Date
2009.3.10
2009.4.24
Motions
Resolutions
2. Determined to sell Nei-Hu Office Building to MiTAC Inc. for more than Matthew Miau
and Yuan Kuo
NT$590,000 thousand.
are the
stakeholders so
they avoided the
discussion and
voting and the
rest of directors
agreed on
unanimously
1. Drafted up distribution of retained earnings for 2008.
Shareholders: NT$0.2 for cash bonus per share.
Unanimously
Employees: NT$20,773 thousand in cash.
Directors and Supervisors: NT$2 million.
Unanimously
3. Revised MiTAC’s “Procedures Governing Lending of Capital to Others” and
Unanimously
“Procedures Governing Endorsement and Guarantee”.
4. Determined the issuing date: April 24, 2009 for employee’s stock option; from
Unanimously
quarter 1, 2009, 581,782 shares of common stock had been requested.
k. Directors or supervisors who raised objections to the resolutions reached in the Board
meeting that are documented or in writing in recent years or up to the publication
date of the annual report: None.
l. Resignation and discharge of personnel related to financial statements (including
Chairman, General Manager, Accounting Officer, and Internal Auditor Officer) in
recent years or up to the publication date of the annual report:
Titles
Internal Auditing
Officer
Vice GM
Names
Assuming Dates
Releasing Dates
Mark, Wu
Aug. 16,2004
Jul. 31,2008
C.S. Chen
Mar. 27,1996
Feb. 17,2009
33
April 30, 2009
Reason for
Releasing Duties
Changed Position
Retirement
4. CPA’s dues
(1) If the fees paid to CPA’s firm or its affiliates are more than a quarter of the auditing fees, the company needs to disclose the service content
of both auditing and non-auditing fees:
Unit: NT$ Thousand
CPA Firm
CPAs
Fees
(2008)
Pricewaterhouse
Coopers
Wei-Chang Yu-Kuan
Wang
Lin
Is the audition for the
Fees other than auditing fees (2008)
Auditing
System Commercial
design
service
Human
resources
entire fiscal year?
Others Subtotal Yes
No
Remarks
Audited
period
2008.1.1 ~ Non-auditing fees –tax
6,020
-
924
-
1,214
2,138
2008.12.31 consulting and advisory
services
(2) If changing a CPA firm and the auditing fees paid in the fiscal year is less than the previous year, disclose the reason, amount and ratio
of auditing fees reduced: None
(3) If the auditing fees paid in this fiscal year are 15% or more less than the previous year, disclose the reason, amount and ratio of
auditing fees reduced: None
5. New CPAs: None
6. The company’s Chairman, General Manager, Finance or Accounting manager who had worked for the CPA firm or its affiliates in
the recent year: None
34
IV. Fund Raising
1. Capital and stocks
1) The capital of stocks
Apr.12, 2009 Unit: Shares
Authorized Capital Stock
Outstanding
Un-issued
Total
shares (Note)
shares
Stock
type
Common
stock
1,536,021,043 663,978,957
Remarks
2,200,000
thousand
Under process of authorization for stock capital:
70,000 thousand shares are reserved for conversion
of corporate debenture bonds;
250,000 thousand shares are reserved for
redemption of stock option vouchers by employees.
Note: Outstanding stock shares are listed stock before deducting 10,000 thousand shares of Treasury Stock.
2) The Structure of Shareholders
Apr. 12, 2009
Structure of
shareholders
Government Financial
institutions institutions
Other
institutions
Individuals
QTY
Number of
Shareholders
Number of
shares held
Percentage of
total shares
6
37
7,968 56,902,731
0.00%
3.70%
194
Qualified
Foreign
institutional
investors
124,231
373
Reserved
Shares
Total
1
124,842
470,812,855 750,984,353 247,313,136 10,000,000 1,536,021,043
30.65%
48.90%
16.10%
0.65%
100.00%
3) Stock shares
(1) Common stocks (Par Value of NT$10 for Each Share)
Level of holdings
1-999
1,000-5,000
5,001-10,000
10,001-15,000
15,001-20,000
20,001-30,000
30,001-40,000
40,001-50,000
50,001-100,000
100,001-200,000
200,001-400,000
400,001-600,000
600,001-800,000
800,001-1,000,000
Over 1,000,001
Total
Number of Shareholders
45,075
49,531
13,765
6,692
2,601
2,959
1,270
679
1,268
570
221
66
31
16
98
124,842
(2) Preferred stock: None
35
Shares Held
13,524,144
111,138,760
94,213,874
76,862,934
45,351,128
69,825,530
42,977,572
30,510,301
86,212,763
76,308,354
59,841,889
32,589,568
21,173,118
14,696,129
760,794,979
1,536,021,043
Apr 12, 2009
Ratio to total
0.88%
7.24%
6.13%
5.00%
2.95%
4.55%
2.80%
1.99%
5.61%
4.97%
3.90%
2.12%
1.38%
0.96%
49.52%
100.00%
4) Major shareholders
Apr. 12, 2008
Shares held
Shares Held
Name of major shareholders
Ratio
129,628,156
8.44%
MiTAC Inc.
122,456,572
91,625,310
7.97%
5.97%
Note: The number of shareholders with over 5% of shareholding: 3.
5) Information for market price per share, net worth, earnings, and dividend
Years
Items
Highest
Market
price per
share
Lowest
2007
2008
Before
After
Before
After adjustment
adjustment adjustment adjustment
49.80
44.56
33.1
30.21
27.50
27.50
Note 8
9.50
9.50 Note 8
Jan 1 to April
30, 2009
(Note 6)
16.6
10.7
Average (Note 2)
39.86
22.04
13.54
Net worth
Before distribution
23.69
20.72
20.99
per share
After distribution
22.06
20.50 (Note1)
-
Earnings Weighted average shares 1,388,016 1,463,033 1,502,941 1,502,941 Note1
per share
1,502,354
Earnings per share
4.07
3.86
0.31
0.31 Note1
Cash dividend
1.3998
1.3280
0.2
0.2 ( Note1)
-
0.39995
-
-
-
-
-
-
-
-
P/E ratio (Note 3)
9.54
65.94
(23.30) (Note7)
Return on
Dividend yield (Note 4)
27.73
102.2 Note1
investment
Cash dividend yield
3.61%
0.98% Note1
Retained stock
Dividend
per share
Stock
earnings
grants
Additional
paid-in capital
Cumulatively unpaid
dividend
(Note 5)
(0.14)
-
-
Note 1: The allocation of earnings for 2008 has approved by the Board of Directors, but need to be recognized by
shareholders’ meeting.
Note 2: Average market price is calculated by the trade amount and shares each year.
Note 3: Price/Earnings ratio = Yearly average closing price/Earnings per share.
Note 4: Price/Dividend ratio = Yearly average closing price /Cash dividend per share.
Note 5: Cash dividend yield rate = Cash dividend per share/ Yearly average closing price.
Note 6: Net worth and earnings per share must be stated in the financial statements audited (reviewed) by CPAs; other
columns should be filled with same year data in the annual report up to the publication of this report.
Note 7: The earnings per share from the 1st quarter of 2009 need to be conversed to the whole year for comparison.
Note 8: The lowest market price per share is the price after ex-right day, so no adjustment required.
36
6) Dividend policy and its implementation
(1) Company dividend policy:
The company is in a growing industry; hence the life cycle of the company
grows with the industry. In order to take our industry’s conditions, long-term
financial planning, and future cash flow into consideration, and also to satisfy
shareholders’ demand for cash inflow, the company has withdrawn 10% of its
earnings as a legal reserve. This 10 %, after making up for deficits of previous
years and tax deductibles, will have 5% leftover for employees’ bonus. The
other, with remaining amounts from previous years, will be distributed after
approval during the Board of Directors’ and the shareholders’ meeting.
If the bonus is decided to be distributed in stocks, any employee who fits the
profiles, which are set by the CEO, will be entitled to receive the bonus.
The ratio of cash and stocks allocation will be decided by the Board of
Directors from different aspects: financial structure, future cash flow, and
profitability. The cash bonus will not exceed 10% of the stocks bonus. But the
number needs to be approved by the shareholders.
(2) The resolution for dividend distribution at the shareholders’ meeting:
Based on the principles above, the Board of Directors drafted a proposal for
dividend distribution at its meeting on Apr 24, 2009. This proposal covers
dividends for the fiscal year of 2008 and the dividend per share is NT$0.2. The
proposal will be presented for approval at the shareholder’s meeting on June 10,
2009.
(3) Expected change of dividend policy: None.
7) Impact on the company’s performance and earnings per share at stock grants set for
the consideration of this year’s shareholders’ meeting: N/A.
8) Employee bonuses and Remuneration for Directors and Supervisors:
(1) Percentage of employees’ bonuses and remuneration for directors and supervisors
as set forth in the company charter:
A. Employee bonus: Where the company has earnings at the end of a business year,
after all tax deductibles and cumulative deficits from past year, a ten percent of
legal reserve, plus special earnings surplus and payment of interest on stocks, a
minimum of 5% of the remainder will be the employees’ bonus.
B. Percentage of remuneration for directors and supervisors: not specified in the
company charter.
(2) Information on the proposed scheme for distribution of employees’ bonus as
approved by the Board of Directors:
On Apr. 24, 2009, the Board of Directors passed a resolution on the
distribution of earnings in 2008, the details are as follows:
A. Employees’ cash bonuses: NT$20,772,910 and Supervisor and Directors’
remuneration: NT$ 2,000 thousand.
B. After-tax basic earnings per share is NT$ 0.31 after accounting for employees’
bonus and remuneration for directors and supervisors.
37
(3) Use of previous year’s earning (2007) for employees and directors and
supervisors’ compensations
Actually approved
distribution by the
Shareholders’ meeting
(1) Distribution:
Employees’ cash bonuses
Employees’ stock bonuses
A. Number of shares
B. Value
Directors and supervisors’ compensation
(2) EPS
Original EPS
Projected EPS (Note)
Originally approved
distribution by the Board
Meeting
NT$ 305,006 thousand
20,334 thousand shares
NT$ 6,000 thousand
20,334 thousand shares
NT$ 6,000 thousand
NT$ 4.07
NT$ 4.07
NT$ 3.70
NT$ 3.70
Note: The formula for projected EPS = (Net profits for current period – employees’ bonuses – directors
and supervisors’ compensation) / Weighted average of outstanding share volume of the calendar
year)
9) Status of Retrieving the Company’s Stocks:
April 30, 2009
Units: NT$ Thousand / thousand shares
11th
Retrieval Times
Dates of the Directors’ resolution
Purpose of Retrieval
Duration of Retrieval
Price range
Dec.19, 2007
12th
Jan.29, 2008
Transfer to employees
Transfer to employees
Dec. 20, 2007 to Jan 29, 2008 Jan. 30, 2008 to Feb. 19, 2008
NT$28 ~32
NT$22~28
Estimated retrieval types and quantity
5,000 common stocks
5,000 common stocks
Retrieved types and quantity
5,000 common stocks
5,000 common stocks
Worth of retrieved amount
131,837
124,579
Average cost of retrieval
NT$26.4
NT$24.9
Reason for incompletion of buying
treasure stocks per the Board’s resolution
-
Cancelled and transferred stocks
0
0
Accumulation for stocks held
5,000
10,000
Percentage of accumulation of stock held
to public stocks
0.33%
0.66%
38
-
2. Debenture issuance
Types of debentures
Issuing (processing) date
Face value
Issuing location and trade
location
Issuing price
Total amount
Interest rate
Domestic 1st guaranteed corporate
debenture bond
May 25, 2004 ~ May 26, 2004
NT$5 million
Taiwan
Face value
NT$2 billion
A Bond and B Bond are offered by
guaranteeing bank, in which, A Bond includes
AA bond and AB bond while B Bond includes
BA bond and BB bond. A Bond and B Bond
are issued for an amount of NT$500 million,
each.
AA bond, BA bond, and BB bond: Face rate
1.60%
AB bond: If the floating rate <1.10%, face rate
is a floating rate; if floating rate 2.00% and
1.10%, face rate is 3.00%; if floating rate is
>2.00%, face rate is 4.50% minus floating rate;
moreover, the face rate may not go below 0%.
5-year; due date: 5.25.2009 ~ 5.26.2009
A Bond: Taipei Bank
B Bond: Bank of Communications
Trust Department of SinoPac Bank
April 30, 2009
Domestic 3rd convertible corporate
debenture bond
August 12, 2005
NT$100 thousand
Taiwan
Face value
NT$3 billion
0%
Validity
Guarantor
Trustee
Underwriter
Attorney
CPA
Sinking fund
None
H.G. Kuo
Fang-Yu Wen, Ying-fei Liu
A Bond: In a lump sum on the due date
B Bond: 50% refund each in the 4th year and
5th year from the issuing date
NT$ 1.5 billion
Understanding principal
Redemption or liquidation before
due date clause
Restrictive clauses
None
Rating service, rating date, and
None
corporate debenture bond rating
Converted (exchanged
or subscribed) amount
of common stock, GDR
N/A
or marketable security
Other
up to the publication
rights
date of the annual report
Issuance & Conversion
Act (exchange or
N/A
option)
Issuance & conversion, exchange
or stock option act, issuance
N/A
conditions causing stock dilution
and affecting shareholder’s equity
Depository service for the
N/A
exchange
-
5-year; due date: Aug 11, 2010
None
Wealth Management Business Trust Division of
the First Bank
Yuanta Securities Group
B.H. Kao
Ying-fei Liu, Wei-cheng Wang
Please refer to Article 6 of the Corporate
Debenture Bond Issuance and Conversion Act
Please refer to Article 17 of the Corporate
Debenture Bond Issuance and Conversion Act
None
None
None
Please refer to the Corporate Debenture Bond
Issuance and Conversion Act
Based on the total stock issuance of NT$
240,500 thousand and NT$29.9 per share,
8,043,000 common stock shares are issued that
is 0.52% of the current issuance.
N/A
39
Debenture Conversion
Domestic 3rd convertible corporate debenture bond
Type of debentures
Years
Items
Debenture converting
market prices
Max.
Min.
Average
Converting prices
2007
2008
Up to April 30, 2009
120.85
98
109.43
107
93
100
99.8
94
96.9
1. 01.01, 2007~08.15, 2007: 43.8 1. 01.01, 2008.~08.22, 2008: 39.4
2. 08.06, 2007~10.15, 2007: 40 2. 08.23, 2008 ~12.31, 2008: 29.9
3. 10.16, 2007~12.31, 2007 39.4
Issuing date: 8.12, 2005
Converting price: 48
Issuing new stocks
Issuing date and converting prices
Fulfilling conversion obligation
3. Preferred stock issuance: None.
4. Overseas depository receipt: None.
40
29.9
Regulations Governing Domestic 3rd Convertible Corporate Debenture Bond Issuance
and Conversion
1. Bonds
The Domestic 3rd Convertible Corporate Debenture Bond (referred to as “the convertible
bond” hereinafter) of MiTAC (referred to as “the Company” hereinafter).
2. Issuing date
August 12, 2005 (referred to as the “issuing date” hereinafter).
3. Total issuance amount and par value
Total issuance amount is for NT$3 billion at NT$100,000 par and it is issued at face value.
4. Issuance period
Issuance period is for 5-year from August 12, 2005 to August 11, 2010 (referred to as the
“due date” hereinafter).
5. Bond face rate
Face rate is 0%.
6. Sinking fund and date
Bondholders may have the bond converted to common stock shares of the Company
according to Article 10 of the Governing Regulations or exercise the Put right according to
Article 18 of the Governing Regulations, or, the Company exercises the Call right before
due date according to Article 17 of the Governing Regulations, or, redeems the bond in a
lump sum at face value on the due date.
7. Collateral
This convertible bond is a bond without collateral. Upon the issuance of the convertible
bond, if the Company has other guaranteed bond with option or convertible bond issued,
this convertible bond will be processed equivalently as the guaranteed bond with option or
convertible bond with equivalent credit or collateral right.
8. Converting object
The Company will have new stock shares issued for the conversion to common stock.
9. Converting period
Except for the period from the three business days prior to the book closure period, book
closure ex-right date while the Company contacting Stock Exchange Corporation for stock
dividend, book closure ex-dividend date for cash dividend, and book closure ex-right date
for recapitalization of cash to the distribution date, bondholders may inform Taiwan
Depository & Clearing Corporation (referred to as “the TDCC” hereinafter) by brokers to
contact the underwriting office of the Company to have the convertible bonds converted to
the common stock of the Company in accordance with Article 10, Article 11, and Article 15
of the Governing Regulations since the day after the issuance of this convertible bond for
one month till ten days before the due date.
10. Converting procedure
(1) Bondholders fill out the “Convertible Bond Bank Account Conversion / Redemption /
Put Application Form” (remarked “conversion”) at the security brokers and then the
security broker is to have an application filed to the depository & clearing company.
The depository & clearing company is to have the application forwarded to the
underwriting office of the Company for immediate conversion and it cannot be
withdrawn. The conversion process will be completed in five business days upon
receiving and with common stock of the Company deposited into the account of the
bondholders.
(2) Overseas Chinese and foreigners who have applied to have the convertible bond
41
converted to the common stock of the Company are to have the process arranged by
bank transfer.
11. Converting price and price adjustment
(1) Converting price
The price of the convertible bond is based on the cutoff date of July 28, 2005.The
converting price (rounded up to the first decimal of New Taiwan Dollar) of the
Company’s convertible bond is based on the average closing price of the Company’s
common stock on the prior business day, prior three business days, or on the prior five
business days by 112% converting premium rate. For any Ex-right and Ex-dividend
enforced before the cutoff date, the sampled closing price for calculating the converting
price must be translated to the Ex-right or Ex-dividend price. If there is any Ex-right or
Ex-dividend enforced after determining the converting price and before the issuance
date, the converting price is to be adjusted accordingly. The bond converting price is
NT$48 per share.
(2) Converting price adjustment
1) Except for the Company’s marketable securities with debt-for-equity SWAP or stock
option exchanged for common stock and private marketable security, upon the
issuance of the converting bond by the Company, converting price is to be adjusted
according to the following equation (rounded up to the first decimal of New Taiwan
Dollars) while there is additional common stock shares issued (recapitalization of
cash, surplus, additional paid-in capital, employee’s bonus, issuing new stock shares
for merger or accepting stock shares of another company, stock split and
recapitalization of cash for attending global depository receipt) by the Company; also,
please contact GreTai Securities Market (referred to as “GreTai” hereinafter) to have
the converting price announced and adjusted on the Ex-right cut-off date for new
bonus shares:
Proceeds
Converting price
Outstanding
New
before
×
collected per ×
Adjusted
stock shares
shared
adjustment
share
converting price
Outstanding stock sharesnew bonus shares
bonus
Note 1: The outstanding shares are the net of the Treasury stock shares that are not
yet cancelled or transferred.
Note 2: The proceeds collected per share are zero for stock dividend or stock split.
Note 3: The proceeds collected per share of the new bonus shares recapitalization of
merger is the certified net worth per share of the discontinued company
before the merger cutoff date by SWAP ratio. The proceeds collected per
share of the new bonus shares for the shares accepted from the other
company are the certified or reviewed net worth per share of the said
company by SWAP ratio.
Note 4: If the price of new bonus shares is adjusted on the Ex-right cut-off date of the
recapitalization of cash, it is to be adjusted according to the updated new
bonus share price and the aforementioned equation. If the updated
converting price is lower than the converting price announced prior to the
Ex-right cut-off date, please contact the GreTai to have the updated
converting price announced.
Note 5: If it is a recapitalization of merger, the converting price is to be adjusted on
42
the merger cut-off date. If it is a recapitalization of stock split, the
converting price is to be adjusted on the stock split cut-off date. If the
recapitalization of cash is by pricing and purchasing or if the recapitalization
of cash is by attending global depository receipt, since there is not an
Ex-right cut-off date designated, the converting price is to be adjusted upon
the completion of stock issuance.
2) Upon the issuance of the convertible debenture bond, if the Company has marketable
securities with debt-for-equity SWAP or stock option issued at the price lower than
the transfer price per share (Note 1) or stock option price, or, if debt-for-equity
SWAP is offered to others for a reason other than the recapitalization of cash,
converting price is to be adjusted according to the following equation (rounded up to
the first decimal of New Taiwan Dollar) also, please contact the GreTai to have the
converting price adjusted on the issuance date of the marketable security or stock
option:
Adjusted
converting
price
Converting shares or
stock option shares of
× newly issued marketable
security or stock option
Outstanding stock shares + Converting shares or stock option shares of newly issued
marketable security or stock option
Converting
price before ×
adjustment
Outstanding
stock shares
Converting price or stock
option price of new bonus
shares or stock option
Note 1: The market price per share is the average closing price of the Company’s
common stock share for one business day, three business days, or five
business days prior to the cutoff date of the marketable security with
debt-for-equity swap or stock option.
Note 2: The outstanding shares are net of the Treasury stock shares that are not yet
cancelled or transferred.
Note 3: If the marketable security with debt-for-equity swap or stock option is paid
for with the Treasury stock, the outstanding stock shares in the equation are
net of the new bonus shares for the newly issued marketable security or
stock option.
3) Upon the issuance of the convertible debenture bond, if the outstanding common
stock shares are reduced for a reason other than the cancellation of Treasury stock,
the converting price is to be adjusted according to the equation below; also, please
contact the GreTai to have it adjusted on the recapitalization cutoff date:
Adjusted converting price=Converting price before adjustment×
Outstanding common shares before decapitalization
Outstanding common shares after decapitalization
Note 1: The outstanding shares are net of the Treasury stock shares that are not yet
cancelled or transferred.
(3) Converting price reset
In addition to having the converting price adjusted according to the aforementioned
anti-dilution clause, the Company is to have the price reset on the date when it is issued
for six months and the stock dividend ex-right cutoff date or ex-dividend cutoff date
(whichever is later) from 2007 to 2010.If there is no stock dividend or cash dividend
distributed in the year, the converting price (no adjustment is needed if it is higher than
the converting price of the year before the price reset) is to be reset on the cutoff date of
July 5th according to the pricing model for converting price in clause (1).The adjusted
43
converting price may not be lower than an amount equivalent to 80% of the converting
price at the time of issuance (adjustment can be made while the total amount of
common stock changed); also, please inform GreTai in writing to announce the updated
converting price. The regulation of converting price reset does not apply to the request
for conversion made before or on the cutoff date.
(4) Converting price adjustment on the ex-dividend date
Upon the issuance of the converting bond, if the ratio of cash dividend distributed for
the Company’s common stock to common stock capital exceeds 15%, the converting
price should be adjusted proportionally to the part beyond 15% on the ex-dividend
cutoff date; also, please inform GreTai in writing to announce the updated converting
price. The said regulation of having converting price adjusted down does not apply to
the request for conversion made before the ex-dividend cutoff date. The equation of
adjustment is illustrated as follows:
Adjusted converting price = Converting price before adjustment – (The ratio of cash
dividend distributed for the Company’s common stock to common stock capital-15%) x
10
12. OTC and off OTC of converting debenture bond
The converting bond is traded over-the-counter once an application is filed to the GreTai
before the issuance date and it is off OTC trade once the Company converts it to common
stock or call or buyback entirely.
13. New bonus shares
The common stock of the Company that is traded for the converting bond will be traded in
the stock market from the date the common stock delivered. The Company will contact
the Stock Exchange Corporation to have the said arrangement announced. If the Company
has the common stock issued virtually, it is to be traded virtually in the stock market from
the delivery date.
14. Registration of stock capital change
The Company is to have the stock shares and stock value issued for the conversion of the
converting bond in the last quarter announced in 15 days at the end of the quarter.
Moreover, an application for stock capital change is to be filed to the competent
authorities at least once quarterly.
15. Conversion of odd shares
For debt-for-equity swap, the Company will pay cash for anything less than one share
(rounded up to New Taiwan Dollars).
16. Rights and obligations after conversion
The rights and obligations of the common stock of the debt-for-equity swap are identical
to the common stock shares issued originally by the Company.
17. Call right of the Company for the convertible bond
The Company may exercise Call right against the convertible bond in the following (1)
and (2) situations:
(1) Since the day after the issuance of this convertible bond for one month till forty days
before the due date, if the Company’s common stock closing-price is over 50% higher
than the converting price for thirty business days consecutively, the Company may
have a “bond Calls notice” sent to bondholders (to the address stated in the creditor
log five days prior to the mailing service; also, the investors who have acquired the
convertible bond by trade or other means are to be informed by announcement) by
certified mail in the following thirty business days and please inform the GreTai in
writing to have it announced.
(2) Since the day after the issuance of this convertible bond for one month till forty days
44
before the due date, if the outstanding convertible bond value is lower than 10% of the
total issuance value, the Company may have a “bond Calls notice” sent to bondholders
(to the address stated in the creditor log five days prior to the mailing service; also, the
investors who have acquired the convertible bond by trade or other means are to be
informed by announcement) by certified mail at any time and please inform the GreTai
in writing to have it announced.
The Company has the bond call cutoff date set on the date thirty days after the “bond calls
notice” is mailed. For bondholders who have the underwriting office of the Company
informed in writing to have the calls made with cash prior to the bond calls cutoff date
(effective upon arrival according to the postal mark), the Company will have the
convertible bond called in five business days from the calls cutoff date at the face value.
For bondholders who have not had the underwriting office of the Company informed in
writing to have the calls made with cash prior to the bond calls cutoff date, the Company
may have the convertible bond converted to the common stock on the bond calls cutoff
date according to the converting price at the time.
18. Put rights of bondholders
The Company has the convertible bond Put cutoff date set on the date three years after the
issuance date. The Company may have a “bond Puts notice” sent to bondholders by
certified mail thirty days before the Put cutoff date and please inform the GreTai in
writing to have it announced. Bondholders may inform Taiwan Depository & Clearing
Corporation or the Company’s underwriting office (effective upon arrival by postal mark
and it may not be withdrawn) by brokers in writing within thirty days upon announcement
to demand the Company to have the convertible bonds redeemed at the face value in cash.
19. Cash dividend and stock dividend in the converting year
(1) Cash dividend
Bondholders who have applied for bond conversion in the period from January 1 to
three business days prior to the book closure ex-dividend date for cash dividend with
Stock Exchange Corporation are entitled to the cash dividend of the prior year
resolved in the shareholder’s meeting.
Bondholders who have applied for bond conversion the day after the cash dividend
ex-dividend cutoff day to December 31 of the year are not entitled to the cash dividend
of the prior year resolved in the shareholder’s meeting but are entitled to the cash
dividend of next year resolved in the shareholder’s meeting.
(2) Stock dividend
Bondholders who have applied for bond conversion in the period from January 1 to
three business days prior to the book closure ex-right date for stock dividend with
Stock Exchange Corporation are entitled to the stock dividend of the prior year
resolved in the shareholder’s meeting.
Bondholders who have applied for bond conversion the day after the stock dividend
ex-right cutoff day to December 31 of the year are not entitled to the stock dividend of
the prior year resolved in the shareholder’s meeting but are entitled to the stock
dividend of the next year resolved in the shareholder’s meeting.
20. The convertible bond that is call (including the call from GreTai), paid, or converted by
the Company will be cancelled and will not be sold or issued again along with the
conversion right.
21. The convertible bond and the bonus common stock shares are ordered. The booking,
registration of change, mortgage, and loss of the convertible bond and the bonus shares
are to be processed according to the “Regulations Governing IPO Underwriting” and
Company Law; moreover, the bond trade tax is to be processed according to the Tax Law.
45
22. Bondholders have the convertible bond trusted to the First Bank. The First Bank is to
audit and supervise the Company in performing the convertible bond on behalf of the
bondholders.
Bondholders who have acquired the convertible bond at its initial public offering or during
the process agree to the trust agreement signed between the Company and the trustee, the
rights and obligations of trustee, and the issuance and conversion guidelines; also,
authorize the trustee to represent them and agree not to have the authorization revoked
throughout the process. Bondholders may have the content of the trust agreement
examined during the Company’s or the trustee’s office hours.
23. The underwriting office of the Company is authorized to have the principal, interest, and
conversion of the convertible bond processed.
24. According to Article 8 of the Stock Exchange Law, no physical bond will be prepared for
the converted bond.
25. The events that are not covered in the Regulations Governing Convertible Bond Issuance
and Conversion are to be processed according to the relevant regulations.
46
5. Employees’ stock options
(1) Employees’ stock option processed
Types of employees’ stock
options
2nd employees’ stock options
(1st time after merging from
Tyan Computers Corp. shares)
April 30, 2009
3rd employees’ stock option
(1st term)
(2nd time after merging Tyan
Computer Corp. shares)
3rd employees’ stock option
(2nd term)
(2nd time after merging Tyan
4th employees’ stock option
(1st term)
(3rd time after merging Tyan
(2nd term)
(3rd time after merging Tyan
03, 31, 2006
Date approved by authorities
01.04,2005
08.16, 2005
08.16, 2005
03.31, 2006
12.31, 2003
08.31, 2005
03.10, 2006
06.30, 2006
03.19, 2007
139,672 units (Note 2)
1,297.348 units (Note 2)
489.278 units (Note 2)
0.00%
0.08%
0.03%
0.03%
0.05%
Issuance (Note 1)
Ratio of stock option to
outstanding shares
Valid duration
6 years
6 years
6 years
6 years
6 years
Performance
Issue new stock shares
Employees hold stock options
over two years can exercise
their options until ten days
before their expiration, except
for any suspension by law.
Time
Exercise percentage
02.01.2007
50%
02.01.2008
75%
02.01.2009
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Limited stock option period and
ratio (%)
Stock shares exercised
65,463 shares
88,154 shares
129,953 shares
0 share
0 share
Stock value exercised
NT$ 591,178
NT$ 1,259,668
NT$ 2,495,098
NT$ 0
NT$ 0
Unexercised stocks (note 3)
63,892 shares
694,805 shares
159,922 shares
273,807 shares
711,895 shares
Stock option price of outstanding
stock option
NT$ 8.0
NT$ 13.3
NT$ 16.9
NT$ 20.6
NT$ 20.2
Ratio of outstanding stock option
to outstanding shares (%)
0.00%
0.05%
0.01%
0.02%
0.05%
All employees cannot exercise All employees cannot exercise All employees cannot exercise All employees cannot exercise
their stock options for two
Impact on shareholder’s equity
years; therefore, it does not
cause significant dilution effect cause significant dilution effect cause significant dilution effect cause significant dilution effect
on shareholder’s equity.
Note 1: Each stock option can exercise 1,000 common shares of MiTAC.
Note 2: Followed the merger agreement to make the shares-subscription amount and price per unit in a ratio of (MiTAC: Tyan = 1: 1.26).
Note 3: After deduction of given-up shares.
47
All employees cannot exercise
cause significant dilution effect
April 30, 2009
Type of employees’ stock
options
th
th
th
th
(4th time after merging Tyan
5 employees’ stock option
(1st term)
(2nd term)
12.01,2006
12.01, 2006
04.16, 2007
04.16, 2007
08.24, 2007
12.07,2006
01.11,2007
07.30, 2007
08.17, 2007
09.26, 2007
Issuance (Note 1)
32,000 units
32,000 units
32,000 units
32,000 units
1,245.222 units (Note 2)
2.08%
2.08%
2.08%
2.08%
0.08%
Ratio of stock option to outstanding
shares
Valid Duration
(1st term)
(2nd term)
6 years
6 years
6 years
6 years
6 years
Issue stock shares
Issue stock shares
Issue stock shares
Issue stock shares
Issue stock shares
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
0
0
0
0
0
0
0
0
0
0
19,238,000 shares
19,238,000 shares
18,918,000 shares
18,908,000 shares
1,245,222 shares
NT$ 30.4
NT$ 29.9
NT$ 35.2
NT$ 31.9
NT$ 19.9
1.25%
1.25%
1.23%
1.23%
0.08%
Performance
Limited stock option period and ratio
(%)
Stock option price of outstanding stock
option
Ratio of outstanding stock option to
outstanding shares (%)
All employees cannot exercise All employees cannot exercise All employees cannot exercise All employees cannot exercise
cause significant dilution
effect on shareholder’s equity. effect on shareholder’s equity. effect on shareholder’s equity. effect on shareholder’s equity.
48
effect on shareholder’s equity.
April 30, 2009
Type of employees’ stock
options
(1st term)
(2nd term)
(1st term)
09.30, 2008
09.30, 2008
01.06, 2009
10.13, 2008
10.27, 2008
04.29, 2009
Issuance (Note 1)
42,500 units
42,500 units
21,500 units
2.77%
2.77%
1.4%
Ratio of stock option to outstanding
shares
Valid Duration
Performance
6 years
6 years
6 years
Issue stock shares
Issue stock shares
Issue stock shares
Employees hold stock
options over two years can
exercise their options until
ten days before their
expiration, except for any
suspension by law.
Time
Exercise Percentage
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
over two years can exercise their
options until ten days before
their expiration, except for any
suspension by law.
Exercise Percentage
Time
More than 2 years
25%
More than 3 years
50%
More than 4 years
100%
over two years can exercise their
options until ten days before
their expiration, except for any
Limited stock option period and ratio suspension by law.
Time
Exercise Percentage
(%)
More than 2 years
50%
More than 3 years
75%
More than 4 years
100%
0
0
0
0
0
0
42,500,000 shares
42,500,000 shares
21,500,000 shares
Stock option price of outstanding
stock option
$13.2
$11.35
$14.3
Ratio of outstanding stock option to
outstanding shares (%)
2.77%
2.77%
1.40%
All employees cannot
exercise their stock options
for two years; therefore, it
does not cause significant
dilution effect on
shareholder’s equity.
49
April 30, 2009
Titles
CEO
GM
Senior
Vice GM
Senior
Vice GM
Vice GM
Vice GM
5th Employees’ Stock Options (1st Term)
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Shares of
obtained
stock
options
P e r c e n t a ge
of obtained
stocks to
outstanding
shares
Exercised
Quantity
Unit price
(NT$)
0
33.4
30.4
Units
(2) Names, acquisition and subscription of the managers with employees’ stock options and employees who are top ten employees with stock options
and obtained for more than NT$30 million
NT$ Thousand/ Shares
Unexercised
Percentage of
Total amount Exercised options to
outstanding shares
Quantity
(Note 1)
Unit price
(NT$)
Total
amount
Percentage of
unexercised
options to
outstanding shares
100,000
30.4
3,040
0.01%
Matthew Miau
Billy Ho
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(Retired on Feb 29,
2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin (Retired on
Mar 9, 2009)
5,740,000
Jack Kuo
C.S. Chen (Retired
on Feb 17, 2009 )
C.P. Lee
James Wu
King Chen (Resigned
on Oct 1, 2008)
Alice Fang
Robert Yang
Johnson Wang
0.37%
0
Crystal Yang
(Took position on
Feb 17, 2009)
Tracy Ting
Head
Accountant (Took position on
Feb 17, 2009)
50
0.00%
Titles
CEO
GM
Senior Vice
GM
Senior Vice
GM
Vice GM
Vice GM
5th Employees’ Stock Options (2nd Term)
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Shares
of
obtained
stock
options
P e r c e n t a ge
of obtained
stocks to
outstanding
shares
Quantity
Unit price
(NT$)
Total amount
0
32.9
29.9
0
Percentage of
Exercised options Q u a n t i t y
to o u t s t a n d i n g ( N o t e 1 )
shares
Matthew Miau
Billy Ho
Units NT$ Thousand/ Shares
Unexercised
Percentage of
unexercised
Unit price
Total
options to
(NT$)
amount
outstanding
shares
April 30, 2009
Exercised
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(Retired on Feb
29, 2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin (Retired
on Mar 9, 2009)
Jack Kuo
5,740,000
C.S. Chen
(Retired on Feb
17, 2009 )
C.P. Lee
James Wu
King Chen
(Resigned on Oct
1, 2008)
Alice Fang
Robert Yang
Johnson Wang
0.37%
Crystal Yang
(Took position on
Feb 17, 2009)
Tracy Ting
Head Accountant (Took position on
Feb 17, 2009)
51
0.00%
100,000
29.9
2,990
0.01%
Titles
CEO
GM
Senior Vice
GM
Senior Vice
GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Matthew
Miau
Billy Ho
P e r c e n t a ge o f
Shares of
obtained
obtained
stocks to
stock
outstanding
options
shares
Quantity
Unit price
(NT$)
0
38.5
35.2
Percentage of
Exercised
options to
Total amount
outstanding
shares
Quantity
(Note 1)
Unit price
(NT$)
Total
amount
Percentage of
unexercised options to
outstanding
shares
75,000
35.2
2,640
0.00%
C.J. Lin
Percy Chen
Gino Chang
(Retired on
Feb 29, 2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin
(Retired on
Mar 9, 2009)
Jack Kuo
6,015,000
C.S. Chen
(Retired on
Feb 17, 2009 )
C.P. Lee
James Wu
King Chen
(Resigned on
Oct 1, 2008)
Alice Fang
Robert Yang
Johnson
Wang
0.39%
0
(Took
position on
Feb 17, 2009)
Tracy Ting
Head Accountant
NT$ Thousand/Shares
Samuel Wang
Crystal Yang
Vice GM
April 30, 2009 Units
Unexercised
Exercised
(Took
position on
Feb 17, 2009)
52
0.00%
April 30, 2009
Units NT$ Thousand/Shares
Unexercised
Percentage of
Unit price
Total
outstanding
(NT$)
amount
shares
Titles
CEO
GM
Senior Vice
GM
Senior Vice
GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Shares of
obtained
obtained
stocks to
stock
outstanding
options
shares
Exercised
Quantity
Unit price
(NT$)
0
35.0
31.9
Matthew
Miau
Billy Ho
Percentage of
Exercised options to
Total amount
outstanding
shares
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(Retired on
Feb 29, 2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin
(Retired on
Mar 9, 2009)
Jack Kuo
C.S. Chen
6,025,000
(Retired on
Feb 17,
2009 )
C.P. Lee
James Wu
King Chen
(Resigned on
Oct 1, 2008)
Alice Fang
Robert Yang
Johnson
Wang
0.39%
0
Crystal Yang
Vice GM
Quantity
(Note 1)
(Took
position on
Feb 17, 2009)
Tracy Ting
Head Accountant (Took
position on
Feb 17, 2009)
53
0.00%
75,000
31.9
2,393
0.00%
April 30, 2009
Units NT$ Thousand/Shares
Unexercised
Percentage of
Unit price
Total
(NT$)
amount
outstanding
shares
Titles
CEO
GM
Senior Vice
GM
Senior Vice
GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Shares of
obtained
obtained
stocks to
stock
outstanding
options
shares
Exercised
Quantity
Unit price
(NT$)
0
13.2
Matthew
Miau
Billy Ho
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(Retired on
Feb 29, 2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin
(Retired on
Mar 9, 2009)
Jack Kuo
C.S. Chen
7,285,000
(Retired on
Feb 17,
2009 )
C.P. Lee
James Wu
King Chen
(Resigned on
Oct 1, 2008)
Alice Fang
Robert Yang
Johnson
Wang
0.47%
Percentage of
Total amount
outstanding
shares
0
Crystal Yang
Vice GM
(Took
position on
Feb 17, 2009)
Tracy Ting
position on
Feb 17, 2009)
54
0.00%
Quantity
(Note 1)
7,285,000
13.2
96,162
0.47%
Titles
CEO
GM
Senior Vice
GM
Senior Vice
GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Vice GM
Names
Shares of
obtained
obtained
stocks to
stock
outstanding
options
shares
Quantity
Unit price
(NT$)
0
11.35
Matthew
Miau
Billy Ho
Samuel Wang
C.J. Lin
Percy Chen
Gino Chang
(Retired on
Feb 29, 2008)
James Yuan
Ted Chang
Stone Chen
Michael Lin
Stone Lin
(Retired on
Mar 9, 2009)
Jack Kuo
C.S. Chen
7,485,000
(Retired on
Feb 17,
2009 )
C.P. Lee
James Wu
King Chen
(Resigned on
Oct 1, 2008)
Alice Fang
Robert Yang
Johnson
Wang
0.49%
Percentage of
Total amount
outstanding
shares
0
Crystal Yang
Vice GM
(Took
position on
Feb 17, 2009)
Tracy Ting
position on
Feb 17, 2009)
55
0.00%
April 30, 2009 Units
Unexercised
Exercised
NT$ Thousand/ Shares
Quantity
(Note 1)
Unit price
(NT$)
Total
amount
Percentage of
outstanding
shares
7,485,000
11.35
84,955
0.49%
April 30, 2009 Units NT$ Thousand/ Shares
Unexercised
Percentage of
Unit price
Total
(NT$)
amount
outstanding
shares
Titles
CEO
GM
Names
Head
Accountant
3,665,000
0.24%
Exercised
Quantity
Unit price
(NT$)
0
14.30
Percentage of
Total amount
outstanding
shares
Quantity
(Note 1)
Matthew Miau
Billy Ho
Senior Vice
Samuel Wang
GM
Senior Vice
C.J. Lin
GM
Vice GM
Percy Chen
Gino Chang
Vice GM
(Retired on Feb
29, 2008)
Vice GM
James Yuan
Vice GM
Ted Chang
Vice GM
Stone Chen
Vice GM
Michael Lin
Stone Lin
Vice GM
(Retired on Mar
9, 2009)
Vice GM
Jack Kuo
C.S. Chen
Vice GM
(Retired on Feb
17, 2009 )
Vice GM
C.P. Lee
Vice GM
James Wu
King Chen
Vice GM
(Resigned on Oct
1, 2008)
Vice GM
Alice Fang
Vice GM
Robert Yang
Vice GM
Johnson Wang
Vice GM
Shares of
obtained
stock
options
obtained
stocks to
outstanding
shares
0
Crystal Yang
(Took position on
Feb 17, 2009)
Tracy Ting
(Took position on
Feb 17, 2009)
56
0.00%
3,665,000
14.30
52,410
0.24%
Note 2: 2nd time stock options 2nd Term (1st time after merging Tyan Computer Corp. shares), 3rd time stock options 1st and 2nd Terms (2nd time after merging Tyan Computer
Corp. shares), 4th time stock options 1st term and 2nd term (3rd time after merging Tyan Computer Corp. shares), 7th time stock options (4th time after merging Tyan
Computer Corp. shares): No managers obtained and exercised stocks.
Note 3: Except for managers obtained stock options, employees who obtained stock options in the top ten list and exercised amounting to NT$ 30million: None.
6. New bonus shares for merger or accepting new stock shares from other companies: None.
7. Status for funds operation: There is no any outstanding fund planning or any fruitless fund project prior to the quarter of the
publication of this report.
57
V. Operation Overview
1. Operation report
(1) Business scope
1) Four major businesses and main current products of MiTAC’s are: (1) client system
business products; (2) enterprise products, including workstations, servers, and storage
devices; (3) wireless communications products, including handheld computers (including
“PND – Portable Navigation Device,” GPS smart phones” and their related technical
support and positioning services, etc. and (4) enterprise and channel servers/ workstation,
including Intel and AMD’s high-end two-way, four-socket & eight-socket X86
processing servers and workstation platforms and specialized enterprise servers and
workstation platforms for clients in projects.
2) Business ration
Unit: NT$ Thousand
Products
Computer & communication
products
Years
2008
Ratio (%)
60,809,425
100.00
3). Current Main Products
A. Client system business products
High-end business computers
High-end network computers
Mini multimedia PCs
All-In-One LCD computers
High-end computer motherboards
Entry-level and mid-range workstations
High-end barebones computer systems
Thin client computers
High-performance PC gaming computers
Portable client PC and mobile Internet devices
B. Enterprise products
High-end workstations
General-purpose servers Rack-mounted servers
Communicational servers Blade Servers
Storage
C. Wireless communications products
Portable Navigation Device
GPS Smart Phone
D. Enterprise and channel server/ workstation products
High-end workstations General-purpose servers Rack-mounted servers
Communications servers Blade Servers
High-density servers
4). Products or technology slated for development
Personal computers with wire or wireless networking features
High-performance low-cost dual-core processor-based workstations
System protocol and integration of thin client computers & servers
R&D of all-In-One LCD computer technologies
58
High-performance workstations based on RISC/CISC processors
High-performance servers
Servers for communications applications
Technology for storage devices
Technology for integrating computers and communications
Integration of data access, voice, and wireless broadband communications
functionality
Technologies for developing web-centric personal computers, IA products,
communications devices, and storage solutions
Technology for multimedia applications
Wireless communications and networking technologies
Technology for wireless communications equipment
Development of new digitalized multimedia technologies to create new business
opportunities and the foundation for related products
Operating systems and application software
VOIP communications products
GPS and electronic navigation technologies and location based service.
D. Enterprise and channel servers/ workstation products
High-performance servers (four-socket or eight-socket HPC server platform)
R&D of high-density servers
High-density blade servers
Technologies for storage devices
ODM server/ workstation platform development and production
Cloud computing
E. Others
High-density, high frequency electronics architectures and automated production
testing technologies.
High-yield product design approach (DFM).
Product design and manufacturing that address environmental concerns and meet
ISO 14000 standards.
High-speed PC architecture and heat flow technologies.
(2) Overview of the industry:
The following summarizes the situation for MiTAC’s four main product lines.
1) Client system business products
A. According to the latest research from IDC, the global demand for PCs has been
dropping drastically due to the economical crisis. IDC predicted that the shipping
quantity of global PCs will be 314 million units, and their growth rate will hit 3.8 %
and sales will decrease by 5.3% in 2009.
59
Shipment and estimation of PC from years of 2007 to 2012
Shipment
Source: IDC
Growth of shipment
DIGITIMES 2008/12
Units: Million
Made by G.N. Ying & P.W. Kao
B. According to IDC, consumers’ highly acceptance of laptops, price dropping and
replacement of the old PCs are still the major reasons to purchase in the PC market.
Although inexpensive mini laptops increase the volume for production, overall, the
lowered profit margins have caused some pressure on profitability for vendors. Most
importantly, due to the impact of the recession, all consumers and enterprises will
think twice before they purchase; even though the low price strategy creates more
sales, the growth for shipping quantity of PCs’ have still fallen below past
performance.
C. In home product market, client system business has been repositioned, with their raw
processing horsepower deemphasized and the focus shifted to their use in multimedia
entertainment and digital home applications. As a result, personal computers are
integrating functionality related to graphics, video, audio, and data, and all of above
are to initiate a new phase of strong growth.
D. Under demands of building high security and a highly-efficient remote control, all
business computers of MiTAC’s urgently need our vendors to integrate our brand
with the system. Our goal is to precisely meet MiTAC’s powerful system’s
integration capability, to work with world-known manufacturers, and then to achieve
a steady growth in the future.
E. Due to the difficulty in increasing demands on client computers world-wide, MiTAC
will systemically integrate all our superiority in order to supply customers the
barebones systems, a full system and a total solution.
F. Since many worldly famous companies have started a price war, it will be a great
advantage for all Taiwanese companies to obtain orders from other vendors due to
our low price. While worldwide famous companies continue to outsource, we believe
that Taiwanese companies will benefit from this.
G. The application of Cloud Computing has made thin computers popular. From the
development of remote control, to local server, and from tiny monitors to VOIP and
video conference devices, the market is calling for the mainframe supported multiple
high-definition monitors without fans.
H. All-in-one computers have been rapidly growing in popularity. In fact, there are many
reasons to cause AIO DT to be popular again. Firstly, monitors are getting too big for
computer desks. 22 to 24 inches monitors are already oversized; hence monitors have
reached their limits. Secondly, the improvement of DT’s modules has made
computer upgrades less necessary. Therefore, there will be less of a reason to separate
monitors and DT, so all-in-one DT has been much more stylish and popular. In 2009,
DT has been developed in two totally different directions: one is slim, small,
60
lightweight, inexpensive, low power consumption and a friendly design and is for
word processing and web browsing purposes. NettopAIO DT are type one. The
other direction is high-end, high-efficiency, high-cost, energy intensive and with a
metallic look. They are mainly used for video games and high-definition conference.
“Enthusiastic PC system” is the type of this cutting edge model.
MiTAC has been working on not only the completion of production lines on
all-in-one products for their differentiation and design, but also R&D sub-generation
products with major PC OEM vendors. We hope to increase sales of components and
high- value-added products.
I. The concepts of creativity, low cost and simplicity have become popular in the
mainstream market.
2) Enterprise products
Servers are used mainly for building corporate information systems, making them an
essential infrastructure investment for businesses. Because information systems are a
critical tool for any modern corporation seeking to sustain its operations, companies place
great importance on Total Cost of Ownership (TCO) when it comes to purchasing servers.
TCO includes the business costs incurred when the system is not operational as well as
regular maintenance costs. Therefore, they demand Reliability, Availability,
Serviceability, Usability, and Manageability – characteristics that are collectively termed
RASUM – from servers, which consequently require longer time for product development
and testing. Once products are introduced on the market, they have correspondingly
higher margins and longer product life cycles. As a result, major multinational server
vendors are relatively cautious when it comes to outsourcing manufacturing or design of
their server products, and building a business partnership requires a longer time. Besides
hardware products, software products are another important factor in the quality of
services provided by servers.
In terms of product types, traditional pedestal servers are already seeing gradual
decreases in their share of shipments in the American market. Replacing them as the
mainstream choice are rack-mounted servers, and this shift should become evident in
Europe and Asia as well over the next one or two years. Following rack-mounted servers
are highly computing-density blade servers. Because of the more stringent heat
dissipation demands of rack-mounted and blade servers stemming from their high
computation densities, vendors in this segment will be spending more for R&D and allied
investment than was necessary in the past for pedestal servers.
As for the storage device market, in the past, under the circumstances of closed supply
structure and the production amount of uniform model of products were small, vendors
rarely outsourced from Asian regions since the manufacturing profits were sufficient.
However, in the past two years, terrible market competition has forced vendors to seek
outsourcing partners in Asia; this will result in storage vendors outsourcing a greater
proportion of their manufacturing, which will greatly benefit Taiwanese vendors.
3) Wireless communications products
A. Current state of the industry and prospects
a. Portable Navigation Device
GPS has made a big technological breakthrough in minimization and
61
energy-efficiency; additionally, the cost of parts has decreased and digital mapping
technique have reached maturity; therefore, GPS is getting popular. According to
the research data, there will be 3 billion GPS users by 2020. They predicted the
market will reach the value of NT$16 trillion. Also, the GPS navigation market will
be EUR$ 2.7 trillion worldwide.
On the other hand, according to Canalys’ latest market data, shipment for PND
in 2008 was 41 million units; compared to 35 million units in 2007, its growth rate
was 17%, which was able to grow under the economic recession. They predict it
will be 42.8 million units in 2009.
There are more and more companies and brands joining the PND market every
day. We believe that GPS will develop toward a combination of cell phone, camera
and other great services. Even though GPS producers will add more functions, their
prices will drop. Many GPS companies merged the suppliers who provide maps &
information of GPS, in order to control the cost of production. Overall, there are
more than 800 million cars in the world that have not yet been equipped with a GPS.
Furthermore, the cost to add built- in GPS for car manufactures is still high, so we
believe there will be a potential GPS market.
b. Smart Phones
The year of 2008 is an official take-off year for GPS. The main driving forces
of GPS cell phones are from the completion of law regulation, the progress of micro
process in wafer graphics and packing technologies, solution for single-chip
semiconductors, a better digital navigation map, state-of-art mapping software and
finally, mobile based services. These factors are stimulations for the market to
bloom. According to ABI Research, they estimate that GPS phone shipments will
increase from 240 million units in 2008 to 550 million units in 2012; they believe
that GPS smart phones will take 30% of the market share. The market of GPS cell
phones will be over US$100 billion.
On the other hand, smart phone manufacturers are trying to include navigation
services and location-based services into smart phones. More than 70% of cell
phones have built-in GPS and in the 4th quarter of 2008, a total of 4 million
navigation sets were sold, which is a 100% increase compared to 2007.
B. Connections among the industry’s upstream, midstream and downstream
Approximately 80% of personal GPS devices are made and installed by
Taiwanese vendors, which shows that the powerful integrating capability of
Taiwanese GPS vendors throughout the GPS industry’s supply chain. Handheld
devices industry belongs to “short, small, light and thin”, so they are both easy to
carry and stylish. Therefore, from innovative and fashionable design on the outside, to
testing and whole machine production, vendors are required to make GPS devices
all-in-one embedded hardware and software. Specifically, all upstream and
mid-stream vendors produce key hardware components including microprocessors,
displays, touch panels, memories, IC drivers, batteries, acoustic filter, quartz
oscillator, objective devices, antenna, GPS chipset, GPS module, receiver, connectors
and pushbuttons, etc. They also produce integration devices, GIS graphic data
62
terminals, and digital content and software applications. Downstream vendors are
mainly OEM/ODM clients and channel providers.
C. Product trends
Handheld devices are “portable information” devices. They also incorporate the
latest web applications and wireless technology to access personal information any
time anywhere. All handheld products aim at different audiences. Detailed
description is as below:
a. Portable Navigation Devices
In 2008, the trend of PND-embedded products combine with other electronic
products had been more significant. Many PND products are equipped with GPS,
digital TV, DAB and PMP, some even with MP3, Blue Tooth, iPod and USB for
audio identification and voice synchronizer.
Because it is a trend to equip real-time information, i.e. traffic report, POI
search and other life assistance, adding all kind of online services into PND will
make it become a Must-Have for everyone.
Besides, different countries require different functions for GPS products: the
Asia-Pacific consumers pay more attention on multimedia entertainment, i.e.
digital TV and DVD; whereas Japanese who have the No. 1 GPS penetration rate
in the world pay more attention on traffic information and 3D satellite navigation
capability. As for Europeans and Americans, consumers rather emphasize driving
safety and emergency communication, while North Americans prefer a simple
operating interface. As a result, we can predict that GPS will develop toward
inexpensive, small, and multi-functional, and will require different marketing
approaches.
b. Smart Phones
Research data estimates that the market for smart phones is 200 million units
and their annual growth rate will be 15% over the next 3 to 5 years. It will be a
huge market. They predict that there will be 540 million units GPS shipped in 2010
and Europe will become the next largest GPS market. The main function of GPS is
to transmit data; therefore, GPS with Microsoft operating system will become the
fastest growing platform in communication, multimedia, word processing and
E-mails.
D. Change of market share
a. Merging
Many PND and cell phone manufacturers merged graphics vendors or other
suppliers to lower costs on software and hardware in 2008, such as Navigator
TomTom who bought Dutch TeleAtlas (TA); Nokia merged graphics company
Navteq. As for MiTAC, we purchased Navman and will continue to cooperate with
good graphics companies and will divide markets by providing added-values.
b. Competition among vendors
Handheld products will be much more competitive and diverse after all 3C
manufacturers enter this market. MiTAC has aimed at consumers whose demands
are to have easy-to-use interfaces, and then we are to develop completion of
63
graphics and data and diverse products.
As for smart phones, shipments are growing so rapidly that they represent an
enormous business opportunity. MiTAC has already introduced several Microsoft
OS-based smart phones that have had great feedback. In 2008, we still applied
smart navigation phones with communications and digital life data to satisfy
business users’ needs for mobile information. We plan to launch 3G GPS smart
phones in 2009.
MiTAC’s advantages are our R&D, manufacturing quality, cost controls and
mobile localization. In particular, we use market trends, customer satisfaction and
actively meet clients’ needs to develop our competency. Through strategic
alliances with major international vendors in software, hardware, and mobile
communication services to get new orders, MiTAC has 7% of the market shares
and is the third place at the market. After merging with the 4th company, Magellan,
it will increase the market share in North America and tremendously increase
profits.
4) Enterprise and channel server products/ workstation
A. Product Status
Generally, we can divide servers and workstation into two categories. One is
non-X86, which is designed for special and professional users, including CISC, RISC
and EPIC. The other type is the mainstream X 86, which is designed for all kinds of
businesses and companies. MiTAC produces X 86 servers/ workstation for business
solutions and channel servers/ work platform for channel market.
B. Market Status
According to IDC report dated in March 2008, the server industry continued to
grow and X86 had gradually occupied market and became the mainstream in the
server industry (See Table 1). It is anticipated to grow from 32.4 billion in 2008 to
38.8 billion in 2012. Annual growth for chip and operational servers could reach
4.7% (See Table 2). Due to the globally economic recession in 2008, clients will
think twice before investing in IT, so the X86 will probably become the top choice
and take over the non-X86’s market.
Table 1Forecast for global and regional server in 2008 in chip technology.
Source “Worldwide and Regional Server 2008-2012 Forecast March 2008”, IDC.
64
Table 2: Worldwide servers customer revenue by chip and operating system: 2008-2012.
Source
“Worldwide and Regional Server 2008-2012 Forecast
March 2008”, IDC.
MiTAC has contributed to designing and producing X86 server platforms for a long
time. We launched Intel and AMD platforms for channel market and made the top IT
investment choice, ROI in 2009 and 2010. We estimate that MiTAC will take 10% of
the server and workstation market share in Intel and 40% share in the AMD, about 10%
of the X86 server markets. We also customize total solutions for professional clients to
get a bigger market share.
(3) Overview for R&D
A. Research & Development Expenses
Unit: NT$ Thousand
Year
Item
R&D expenses
2008
Mar 31, 2009(Note)
1,655,217
420,095
Note: Figures taken until the quarter before the publication date of the report.
B. Recent successful technologies and products before the publication date of the report:
The R &D directions of MiTAC are to control new technology and new products,
following the trends developing toward wireless, mobile communication and the Internet
niche market. Additionally, MiTAC’s human resources are from Taiwan, China and North
America, who can observe the mainstream market and then use the existing specs to
create our own similar products, in time to meet the market’s demands. Our advantages
are product diversity, serial completion, a whole supply chain and global locations.
(1) Our success:
a. Allied with leading brands and corporations, using high power processor
techniques to provide different servers and workstations and become a channel
leading brand.
b. Adopted Microsoft software technology such as its wireless PDA platform, and
developed wireless networking products in parallel. Also developed products
jointly with major world-class vendors in the PDA and Pocket PC segment.
65
c. Successfully integrated GPS chips in a series of handheld device products,
combining this embedded hardware with GPS digital map applications software to
provide market-leading solutions.
d. Based on MiTAC’s global vertical and horizontal teamwork and integration
system, from ID design to tooling molds and vertical integration of production, to
satisfy customers and market demand. Drawing from the comprehensive
distribution network, and coordination capability of MiTAC to develop high-tech
wireless Internet and PC technology with international brands. MiTAC aims to
become one of the major PC suppliers with the core products of PC and home
computers that combine imagery, sound effects, video, and wireless.
(2) Products
a. Client system business products
Business and home PCs: A series of computers with a basic architecture built
around processors with the newest technologies, and integrating both
PCI-Express graphics cards and high-definition audio, wireless networking,
with structural designs that stress efficient thermal performance.
Entry-level and midrange workstations: Based on single and dual Intel and
AMD X86 processors.
Small form factor multimedia PCs
Full-featured client system business product solutions for the digital home and
digital office.
The highly integrated all-in-one LCD PC series in 17”, 19’ or 22”.
Thin PCs: are highly integrated terminal computers without fans. Three types:
Desktops, portable and All-in-one PCs. As for their platforms, there are X86
and SOC servers.
Portable client PCs and mobile Internet devices: Rather than just traditional
EeePC, MiTAC added more creativity and various software for end-users to
manage their personal information and achieve real-time news.
b. Enterprise products
Workstations: Expand joint development, design, manufacture, and distribution
of high-performance single- and dual-processor workstations with world-class
vendors. Become one of the few vendors with UNIX and Windows operating
system workstations made available.
Servers: MiTAC has accumulated extensive R&D experience with
multiprocessor servers over the years. In response to market growth and
demand globally for server storage devices, MiTAC’s R&D team has developed
single-, dual-, and quad-processor servers, and drowns on high-density system
integration technologies to develop high-density servers.
Storage equipment: In response to expansion of the storage equipment market,
MiTAC has dedicated R&D resources to developing associated technologies
and products.
c. Wireless communications products
Portable Navigation Device: We invented the thinnest PND in the world. It has
66
a camera, Wi-Fi, Bluetooth and GPS functions and uses Microsoft operating
platforms so its interfaces are more user-friendly and practical.
GPS Smart Phones: We use computing and mobile communication modules to
design satellite navigation high-end cell phones with functions, such as cameras,
multimedia and wireless web browser.
d. Enterprise and channel server workstation products
High-end server/workstation platforms: we continued to produce high-end
serves and barebones systems with Intel and AMD’s dual- and quad- cores in
45 nano lines. We also adapted the latest technology from up and downstream
vendors to create high-speed and low-cost platforms.
High-density servers: We have always worked on innovation so we launched
many high-density servers in 2008. One of them is 5U 10 node server, which
contains move 10 dual servers a 5U box, which minimizes the space needed for
blade servers. Additionally, we launched low-cost and high-density and high
operating performance blade server para-system. Its advantages are small so
clients can save more space in control room and lower its operation cost;
therefore, the system has become the leading brand.
(4) Long- and short-term business plans
1) Client system business products
A. For short-term business plans: The US, Europe, and Japan are the major PC markets.
MiTAC’s has focused on these markets, and will continue to develop further ODM
business opportunities in these markets in the future. About product strategies,
compact systems are getting more attention in the market. So far, the digital appliance
is starting to get prosperous. For the short-term plan, we will focus on ODM in North
America and Europe and expand the source of customers from different fields.
B. For long-term business plans: The Asia-Pacific region had the highest shipping volume
in the world in 2008. Especially, the Asia-Pacific region has already outnumbered
Japan, with mainland Chinese being the No 1 supplier in the Asia-Pacific region.
Therefore, for long-term business development, we plan to explore potential markets,
like China and Asia-Pacific region. As for product strategy, diversified products in all
age groups remain the focus of our development. MiTAC had gained our R&D
capability from all of the ODM digital production and we will expand our market from
the existing American & European markets to the global ones and to develop more
leading- edge products. Besides, we are working on making alliances with digital
services providers in order to open a new audio-video market.
2) Enterprise products
A. For short-term business plans: Our strategy is to maintain and cooperate with existing
clients at workstations and various types of servers and storages devices in order to
expand our customer base and increase revenues.
B. For long-term business plans: In the next three years, we will continue the
development and sales for storage devices and servers. On the other hand, we seek
long-term and stable cooperation with clients in the whole food chain, from entry-level
to high-end solutions, single product line and multiple ones. We want to strengthen our
67
product development capability and speed, product quality and delivery control. Our
aim is to reinforce our role as a major server ODM supplier.
3) Wireless communication products
A. For short-term business plans: We closely observe market and user’s feedback in order
to design the most competitive mobile communications products. We use our product
planning, development, design and production capabilities to provide our customers
high-value services. We will also give clients cheap mapping and points of interest in
order to open different markets.
B. For long-term business plans: We will utilize global distribution, sales models and
service networks to work closely with partners and vendors. MiTAC SYNNEX Group
will be the global channel with highly integrated product planning and
high-value-added products, thus to expand the foundation of major international client
base and to develop a varsity of clients.
4) Enterprise, channel server/ workstation products:
A. For short-term business plans:
a. Marketing strategies:
1. Provide our best services for authorized dealers; 2. Increase contact opportunities
with clients by joining server channel fairs; 3. Increase brand exposure to make a
good impression and develop loyal clients; and 4.Increase website functions by
online services, check repair processes and online counsel so we can provide
feedback to our customers immediately.
b. Sales strategies
1. Enhance training in sales people 2. Adjust the ratio of sales and investment in
terms of the situation in developing countries: China, India and Russia etc.; 3.
Strengthen the relationships with big project clients; and 4. Provide prompt and
assured services with our holistic system.
c. R&D
1. Continue to research on multi-function and high-efficiency servers; 2. develop a
supply chain with famous software vendors in a server industry; and 3. meet
clients’ needs on combining software and hardware services through certified
channel servers of famous software vendors.
B. For long-term business plans:
a. Marketing strategies
Enhance partnership among all upstream and downstream industries in PR activities
and create a win-win situation.
b. Sales strategies
1. Actively join in developing countries: China, India and Russia to build channels
for servers; 2. Work with local suppliers and introduce integrated services; and 3.
choose key clients to build a good reputation and receive more orders.
c. R&D strategies: set headquarters in important cities in the U.S., China and Taiwan
to localize MiTAC and employ locals. Its advantages are to service customers
without borders and time differences. And we will research products for niche
market for meeting the needs of different project clients.
68
2. Market and sales overview
(1) Market analysis
A. Sales regions of main products
Unit: NT$ Thousand
2008
21,872,165
17,751,439
20,464,888
720,933
Regions
N. America
Europe
Asia & Australia
Taiwan
Total
60,809,425
B. Market share
(a) Client system business products
According to IDC, computer sales for client system business computers in 2008 were
approximately 156 million units. MiTAC sold roughly 6.6 million entry-level and
midrange workstations and client system business computers, for a market share of
roughly 4.23%.
The majority of MiTAC’s OEM customers are the top ten PC brand vendors.
(b) Enterprise products
Because MiTAC’s products are mainly produced for ODM customers, it is more
difficult to gauge their market share. Drawing on many years of experience, Taiwan’s
major IT vendors are already able to provide integrated global logistics management,
providing customers with the best possible competitive advantage by coordinating
design, testing, manufacturing, assembly, and distribution with the customer’s market
launch timetable. The evident trend towards international brand vendors continuing to
seek Taiwanese partners shows that more and more non-PC products will be seeking
their design and manufacture outsourced to Taiwanese companies. Most Taiwanese
companies, including MiTAC, can anticipate enhanced competitiveness through this
type of alliance, helping them expand market share.
(c) Wireless communications products
In 2007, GPS products were a popular product. The global PND shipments were 35
million units in 2007, and global GPS shipments of about 41 million units, an increase
of 17% in 2008. According to Canalys, the American market has become the biggest
PND market. America has 52% of market share and EMEA in Africa has 36% of
market share.
MiTAC has complete lines in midrange, high-end and entry-level. Although in 2008,
MiTAC only shipped 4.43 million units, looking at different regions in the world, we
can see:
1) European market
A marketing research institute estimated 21 million units in Western Europe and 2
million units in Eastern Europe will be sold in 2009. MiTAC has had a stable
growth in the pan Europe market. MiTAC has 8 % of market share in Western
Europe and 20% of the market share in Eastern Europe, thus we are a leading
69
brand.
2) North America market
In 2008, a total of GPS shipment to North America was 19 million units.
Although affected by the recession, all brands held clearance sales before the New
Year. However, in Q4, 2008, there was a growth of 20% in North America and a
growth of 44% compared to the whole year of 2008, which was a much better
performance than a decrease of 26% of EMEA. Canalys predicted that the total
shipment will reach 26 million units in 2009. MiTAC is the 4th GPS brand in
America for 450 thousand units sold in North America in 2008. We know our
market share will climb up more after merging with Magellan, which was the No.3
brand in North America.
3) Asia-Pacific market
The Asia-Pacific area is the second fastest growing area in the world. In 2008,
there were 4 million GPS units sold in this area and Canalys predicted it will be a
total of 6 million shipments in 2009. MiTAC merged with Navman in 2007 and
became the top GPS brand in the Asia-Pacific area.
According to IDC, there were 1.18 billion cell phones sold in the world in 2008,
which is an increase of 3.5 % from the year before. IDC also indicated that, on the
optimistic side, the sales of smart phones also had a growth of 22.5% in 2008 from
the year before.
In terms of the Japanese market, GPS smart phones have mature services. Under
the push of operators and cell phone manufacturers, we predicted that the GPS
phones penetration rate in 2010 will be 91.9%, No.1 in the world. However, Europe
will become our next GPS smart phone market.
(d) Enterprise and channel servers / workstation products
According to IDC report dated in March 2008, X86 servers will take over the
market and become the mainstream server in the industry. From 32.4 billion in 2008
to 38.8 billion in 2012, the average annual growth will be 4.7%. And the shipments
will increase to 10.11 million units from 9.75 million units in 2008. For X86 servers,
we estimated a 4.5 % drop in 2009 and a 3.2% drop if excluding North America.
Overall, the server channel market will be slightly affected. Compared to their high
cost in purchasing and operation, X86 servers have great advantages in cost and
efficiency. Hence they will become the top choice when changing IT devices.
MiTAC is estimated that we will take over 10% of the X86 server markets.
C. Supply and demand projections in the future
(a) Client system business products
PCs have undergone many changes in the last twenty years and have reached
maturity. As for the U.S., Europe and Japan markets, the market is quite saturated, so
there is little room to grow. As for rising markets like China, India and South America,
because PCs there are not as common as in developed countries, we believe that we
will be able to maintain a positive growth in the future.
Besides common PC products, MiTAC has been actively studying high-value
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added products, like all-in-one integration PCs and thin computers for cloud
calculating and other high-value products.
(b) Enterprise products
With economic recovery more clear, enterprises are more willing to invest in IT;
therefore, the server market has seen some growth, and international servers are also on
the rise. Global server shipments have grown by 10% since 2003.
In response to the increase in shipment but the decrease in prices, major
international vendors have been outsourcing in order to gain more advantages.
Taiwanese companies have competitive edges in low cost, quick R&D and flexibility
of delivery time. Therefore, the scale of the server industry has grown because of the
increase of orders. Even though most are entry-level and low-end products, the
increase in volume and more expensive rack-optimized and blade servers are
compensating for falling prices for some components, so that the overall shipment
value continues to show growth.
For the prospects of Taiwanese servers market in 2009: under the economic
recession, we estimate that it will be a flat line or slight decline. But for new products
like blade servers and iSCSI storage devices, we predict a relatively outstanding
growth.
(c) Wireless communications products
GPS shipments are still increasing despite the economic recession. All suppliers
are eager to design an innovative and creative product. When all the convenience,
precision, acceptable prices, common applications in recreation and car use start to
work, the combination of GPS will create a maximum market.
According to the investigation report of Goldman Sachs, in all global navigation
devices in 2008, PND weighs 70 % and GPS and PDA take 10% of each in the market,
and the rest 10% is installed in automobiles. In the report, they predict that GPS will
grow to 20 % and PND will lower to 61 % in 2010.
MiTAC has been developing our own brand and working deeply with windows
OS mobile of platform; hence, we believe the strategies of continuous product
development, technical advantage and strategic alliance with worldly famous vendors
will benefit us on getting new orders and exploring new market.
(d) Enterprise and channel / workstation products
International brands have shown more concerns regarding IT equipment
investments. They want high-efficiency, high ROI, and low cost on purchasing and
future operations. We predicted that the market of non-X86 big servers has reached its
maturity or even to drop with the economic factors. On the other hand, X86 servers
that use dual- and quad- cores and virtual techniques will show a steady growth.
General users, large calculating centers, government infrastructure and biddings will be
the audiences for the 2009 market of X 86.
D. Favorable and unfavorable factors affecting MiTAC’s competitive edges and their
fallback plans
To overcome the challenges presented by the global economic recession, MiTAC
will take advantage of the new Joint Development Manufacturing (JDM) approach,
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combining global R&D, engineering, manufacturing, designing, electronic
manufacturing, sales distribution, and technical/after-sales services to achieve a higher
customer satisfaction for a greater competitive advantage over rivals.
(a) Competitive edges
The core competitive strength in MiTAC’s wireless communications business and
products lines in: Sales development, R&D capabilities, effective cost control, stable
product quality and high-yield production process, fast mass production ramp-up,
inventory management and component procurement, thorough logistic support
capabilities, and market cooperation and sound financials.
MiTAC’s core competitive strengths are as follows:
1) The understanding of customer requirements and market directions: we work
hand-in-hand with all software and hardware clients to explore consumer’s needs;
in addition, MiTAC is trying to get joint ventures with several worldwide IT and
communications companies. Once we partner with them, we believe that MiTAC
will be able to know the next step ahead of time.
2) Collaborates with the best software and hardware vendors to ensure sufficient
material supply for key hardware components.
3) R&D innovation: Many of our products have won awards and become market
leaders.
4) Continues to improve product quality and production capacity: Our years of
experience in embedded systems are our unique advantage.
5) By taking advantages of existing channel markets and our group’s global logistics
and service network, MiTAC can provide more comprehensive customer service.
(b) Favorable factors for the prospects
1) The integration of all supply chains for the Internet infrastructure
MiTAC has developed an effective distribution approach to combining global
e-commerce mechanisms and by developing products with high unit prices with a
direct sales model, which greatly increased our efficiency, reduces costs and raises
customer satisfaction.
2) Global e-manufacturing model
After several years of refining our logistic model, MiTAC’s e-manufacturing
system has been completed. This system allows us to perform R&D and design in
Taiwan and in the US, to produce in China and Taiwan for modules and
semi-parts, and assemble in these BTO/CTO centers in the US, Australia, and the
UK. The whole system was designed by considering the factors of technicality,
cost for production, shipping and delivery, and tariffs. Taiwan is a major
manufacturer of motherboards, workstations servers and storage devices; whereas
less technical products with longer delivery times are made in Mainland China.
All high-price major parts can be acquired everywhere in the world. MiTAC’s
global organization has enabled us to become to an international e-manufacturer.
3) The expansion of high value-added products
In response to the connection of wireless network communications and
computers, MiTAC will continue to form strategic alliances with leading vendors
too. We have demonstrated our outstanding innovation in design, R&D,
production, and manufacturing capability for GPS and Smart Phones by launching
several GPS navigation products. MiTAC uses the concept of integration of
computing and GPS on making wireless communication smart phones with voice
and data processing capability of multimedia, games, personal data management,
and even data transmission, and most importantly, of a low price.
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MiTAC is devoted to developing PND, GPS smart phones. There are more and
more features added everyday so the products will be more dedicated and practical
and can create many highly-added values. PND’s navigation combined with
digital maps and well-designed navigation software will make the PND a
must-have gadget in the future.
4) The market keeps growing
In addition to working at key markets, such as North America and Europe,
MiTAC will emphasize on developing markets, including in Mainland China,
Japan and Eastern Europe.
5) E-supply chain
For the needs of MiTAC’s global production and to separate local markets,
MiTAC has not only modularized all designs for key components, but also
integrated the upstream vendors into B2B in order to use the Just-In-Time system
to lower our inventory and reduce our risk and to give our clients an
always-on-time delivery service.
(c) Unfavorable factors to the future
1) Intense competition: Will all major vendors entering the handheld device market,
Canalys has predicted that prices will become to drop. The average price in 2010
for a PND device will be US$ 100. Additionally, the functions of PND and
wireless communications products continue to integrate. GPS smart phones will
become a necessity, which will cause an even more competitive market.
Our fallback measures:
Closely observe R&D innovation, strengthen our R&D results, shorten product
development times, and keep developing new models; utilize differences in
products and mass produce to maintain our profitability.
Increase customers’ satisfaction from providing design, mass production and
backup support services and try to ally with major brands in the world.
Utilize our global sales and distribution logistic model and build a
comprehensive material system, a value chain and the backup support.
2) Key components remain under control of foreign vendors and software and
hardware integration:
Fallback plans:
Maintain a good relationship with providers; in the meantime, train people who
can operate platform and communication components.
Find more suppliers for key components: Seek alternative suppliers to ensure
ample sources and gain competitive prices. In addition, maintain good
relationship with domestic vendors for more options.
Use mass amounts to lower unit price: Our several products are top sellers, so
we won orders from large OEM/ODM companies; therefore, the procurement
cost has been greatly reduced.
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(2) Important applications and production process for main products
A. Important product applications:
Product Types
Workstations
Servers
Storage Equipment
Desktop PCs
Portable Navigation Devices
GPS Smart Phones – build-in
PDA, GPS, phone and
multimedia
Important Users and Features
Graphical computing tool for designers
Data computing tool for businesses
Data storage tool for businesses
For personal, families, schools, and companies’ use to
manufacture, educate, wireless transmission in home video
entertainment and share multi-media information.
Application: In-car navigation system, track cargo and
automobiles and instant messengers
Wireless data transmission, GPS, voice, data, video,
multimedia applications and location positioning service. For
businesses (PIM management, i.e., personal planner, business
cards management, meeting minutes, e-mailing, multimedia
entertainment tool…) are getting popular.
B. Production procedure
Electronic Components
SMT Automated Assembly
ICT Testing
Manual Assembly
Substrate Soldering
Substrate Touch-up
Substrate Burn
ATE Automated Testing
Functional Testing
System Assembly
Functional Testing
Packaging
Random Testing
Finished Product
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C. Supply of key components
Names
CPU
Hard Disk Drives
DRAM
Flash
Printed Circuit
Boards
LCD Panels
CHIPSET
CDROM
MODEM
Camera Module
Battery Pack
Origins
Original Manufacturer: US
Original Manufacturer: US, Japan, Korea
Original Manufacturer: US, Japan, Germany,
Korea
Original Manufacturer: US, Korea, Taiwan
Supply Status
Good
Good
Good
Fair
Original Manufacturer: Taiwan, US, China
Good
Original Manufacturer: Taiwan, Korea
Original Manufacturer: Taiwan, US
Original Manufacturer: Taiwan, Japan, Korea
Original Manufacturer: Taiwan
Original Manufacturer: Taiwan, Japan, Korea
Original Manufacturer: Taiwan, Japan, China
Good
Good
Good
Good
Good
Good
D. Major customers and suppliers in these two years
1) List of major customers
2007
Items
1
2
3
Customers
Amount
“E”
18,732,410
SSDL and its
subsidiaries
14,647,047
SYNNEX
and its
subsidiaries
10,023,276
Percentage to
annual Net Sales
(%)
22.82
17.85
12.21
4
Others
Net Sales
38,671,164
82,073,897
47.12
100.00
Customers
SSDL and its
subsidiaries
“E”
SYNNEX
and its
subsidiaries
“D”
Others
Net Sales
Unit: NT$ Thousand
2008
Percentage to
Amount
annual Net
Sales (%)
9,924,934
16.32
9,550,157
15.71
7,950,925
7,141,094
26,242,315
60,809,425
13.08
11.74
43.15
100.00
Increases and decreases are reflection of market trends, product demands, business
prospects, R&D technology, sales profits, and customer contracts.
2) List of major suppliers
Unit: NT$ Thousand
2007
Items
Supplier
names
1
MiTAC
Computer
(ShunDe) Ltd.
MiTAC
Computer
(Kunshan)
Co., Ltd.
Others
Net Purchases
2
Amount
19,307,445
13,390,415
33,925,220
66,623,080
2008
Percentage to
Percentage to
the annual’s
the annual’s
Supplier names Amount
Net Purchases
Net Purchases
(%)
(%)
MiTAC
28.98
Computer
9,371,450
17.74
(ShunDe)Ltd.
MiTAC
Computer
20.10
7,472,996
14.15
(Kunshan) Co.,
Ltd.
50.92
Others
35,984,135
68.11
Net Purchases 52,828,581
100.00
100.00
Increases and decreases are reflection of yearly marketing and sales strategy, material
requirements, vendor supply prices, delivery terms, and product quality.
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E. Production volume and value in recent two years
Volume/value
Year
Major products
Computers and
communication
Unit: NT$ Thousand/ Set
2007
Capacity
2008
Volume
Value
Capacity
Volume
Value
23,500,000 16,287,467 70,537,991 21,150,000 12,129,766 55,904,929
Note: These figures listed above include overseas processing work.
F. Sales volume and value in recent two years
Unit: NT$ Thousand/ Set
2007
Volume/value Year
Major products
Computers and
communication
Import
Volume Value
2008
Export
Volume
Value
Import
Volume Value
243,283 1,127,318 16,422,673 80,946,579 251,700
Export
Volume
Value
720,933 11,884,356 60,088,492
G. Key Performance Indicator
1) Human Resources cost to sales revenues in recent two years
Sales revenues
Labor cost
Labor cost / Sales revenues
2007
82,073,897
1,548,047
0.02
Unit: NT$ Thousand
2008
60,809,425
1,252,405
0.02
2) Average sales revenue generated by each employee in recent two years
Sales revenues
Number of employees
Sales revenues / Number of
employees
2007
82,073,897
1,468
55,909
Unit: NT$ Thousand
2008
60,809,425
1,512
40,218
3) Financial structure, solvency, and operational ability in recent two years
2007
Debt ratio (%)
Current ratio (%)
Quick ratio (%)
Accounts receivable turnover
(times)
Inventory turnover (times)
76
45.47
136.93
107.13
2008
37.90
130.44
91.95
4.86
4.17
7.79
7.14
3. Workforce
(1) Staff’s information in the most recent two years and up to the publication date of this annual
report
Year
Direct personnel
Number of
Indirect personnel
employees
Total
Average age
Average employment years
PhD
Masters’
Level of
College
education
High school
Below
2007
0
1,468
1,468
36.52
2008
0
1,512
1,512
39.20
Ended on April 30, 2009
0
1,491
1,491
35.52
5.27
6
417
1,021
19
5
4.64
7
474
997
30
4
4.94
8
476
973
30
4
(2) Qualification of personnel who are responsible for financial data transparency
Internal Auditors of the Republic of China: 3 persons
Accountant of the Republic of China: 1 person
4. Expenses incurred for environmental protection issues
Upon to the publication date of the report and in recent years, the company had not been
punished or been fined by any losses caused by environmental pollution. Hereby describing our
counter measures:
We are a professional computer assembly manufacturer; in our production process, there are
no controlled items of air, water and toxic pollutants involved. In addition, the company
received an award of top 500 businesses -- the first Environmental Protection Assessment from
the Environmental Protection Agency in 1992. It was certified by ISO 14001 in 1997, and since
then, we have kept our commitment to preventing pollution. In 1999, we won a two-year honor
when passing the Safety and Hygiene System Evaluation conducted by the Council of Labor
Affairs. The company will continue to promote environmental protection, worker safety,
zero-pollution and zero-injury as our permanent operation goals.
(1) Background
MiTAC International Corp. is a manufacturer of PC/server products, including
workstation, server, storage device, and mobile communications. We follow the
environmental plea of the European Union, including WEEE (Directive on the Waste
Electronics and Electrical Equipment) and we focus on design for environment and apply all
concepts of recycling, disassembly, and reusing imports design, i.e. applying ACPI operating
system for power-saving/low-power CPU / module design/ supporting IPMI software and
optimal resources management. As for ROHS (Restriction of Hazardous Sustenance
Directive), we aim at controlling hazardous substances, i.e. Pb, Cd, Hg, Cr6+, PBBs, and
PBDEs, and we started to use green products to introduce design, development review,
supplier management and material acceptance. We also constructed an internal Green
Product website and its SOP to initiate the periodical organizational strategy review in
compliance with the European Union directives. Moreover, we constructed an occupational
health and safety system to minimize work hazards and to protect employees’ health and
safety, and to save some relevant costs. As a result, the improvement of working conditions
has indeed improved employees’ work ethic and their productivity.
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(2) MiTAC’s environmental health and safety strategy
MiTAC International based on the concept of environmental protection to develop our
policy:
1. Policies regarding environment, safety and hygiene:
Obey regulations: we obey the environmental, health and safety laws and commit
ourselves to perform superior to the regulations.
Guard resources on earth: We increase energy efficiency and advocate energy saving.
Develop green production process: Develop and supply environmentally-friendly
products in order to prevent pollution, to produce cleanly and to care for environment
from products.
A safe and healthy environment: to protect employees’ safety and health, to prevent
work hazards and diseases from happening, in addition, we encourage employees to
participate in the improvement plan and our ultimate goal is to create a safe and
healthy work environment.
Continue to improve the performance of environment, safety and hygiene: audit and
assess investments in resources in order to implement the management system and
then continuous improvement.
2. Non-toxic substance policy:
1 Earth: We respect the only Earth, so we:
Concern ourselves with the climate change, join the act of lowering green house gas
and decrease the emission to the Earth.
2 Principles: obey environmental laws and satisfy clients’ needs
Always be on top of laws: Ensure to follow all environmental regulations, i.e.
EU’s RoHS, WEEE and REACH to meet the demands for green products.
Follow the green principles: to build a green products platform and to manage a
green supply chain in order to satisfy clients’ needs.
3 Promises: Ensure management system’s effect, devote to environmental information
communication and to fulfill our social responsibilities.
Employ IECQ QC 080000 management system to activate the monitoring of HSF
procedure.
Build communication mechanisms, and release all critical environmental protection
information to the public.
Promote corporate growth and nature care and perform the global citizens’
responsibility.
4 realizations: Provide green products that are low-pollution, energy-saving, minimal
packaging, recyclable and brining the least burden to the Earth.
Use environmentally-friendly materials, such as EU’s RoHS and non-adding
Brominated Flame Retardants shells.
Follow International alliances’ requirements, i.e. Energy Star for energy
consumption to our products.
Lightweight packing, optimal sizing and least materials.
Reach at least 75% of product reuse, recycling and recovery.
We believe that all successful businesses will have to face the challenge of “ongoing
growth”. MiTAC has supported the ITDP for the MOEA (R.O.C) (Ministry of Economic
Affairs, ROC) since 2003. There were four review stages. We developed the lead-free and
halogen-free system assembly procedures and technologies. And the development was
successfully completed in 2005. The internal quality system operation was divided into:
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(a) Quality control system:
Succeeded a 3-year renewal of ISO 9001:2000 version, which was the foundation of the
development of the TL9000 management system; also, we obtained the certification of
communications products in the end of 2005.
(b) Environmental control system:
Completed ISO 14001:2000 version and OHSAS 18001:1999 auditing according to
the schedule. The IECQ QC080000 activity has been initiated since August, 2008. The
purpose of this activity reviews all functions of each department/responsible
departments/main operational procedures according to the IECQ directives. Therefore,
after the preliminary audit started, we were authorized by the IECQ in the U.S. to
delegate SGS for all examinations. We had a great outcome in the first stage in
September and SGS had audited other three stages and announced that MiTAC is
officially an organization that follows QC080000 (IECQ HSPM) on Dec. 7, 2006. We
dedicate ourselves to environmental protection and hope to find a balance between
business development and the ecosystem. Moreover, we realized that employees’
safety and health is a very important part of our enterprises. We will take every possible
measure to maintain a proper work environment. MiTAC commits ourselves to balance
between environmental protection requirements and company growth in order to have a
high standard ecosystem. We are to fulfill the social responsibility as a premium
enterprise and global citizen.
(3) Countermeasures to RoHS
In response to the requirements of RoHS, MiTAC will educate our suppliers through
executing “Plan G” of the MOEA, R.O.C. We will require class 1 suppliers to be audited on
the premises to ensure that they follow the RoHS requirements. Some suppliers requested us
to provide information of MiTAC’s Class 2 suppliers regarding the follow-up of the RoHS
process. We believe that our management style of raw materials will reduce the risks of
violating the RoHS regulations from changing design and materials from the upstream
suppliers’ side.
MiTAC is taking advantage of the e- control of the supply chain to systemize the RoHS
reporting procedures and to solve the problems of multiple products, multiple production
sites, and multiple contact windows; moreover, the RoHS data exchange efficiency has
benefited from the new procedure.
Additionally, MiTAC has signed the XRF SEA1000A agreement with TechMaxAsia
Electron Technical Co., Ltd. in 2007 and purchased ICP facility and a fully-equipped
laboratory in order ensure all components from the suppliers are in compliance with RoHS.
(4) Countermeasures of the impact on business from the EU environmental protection directives
In early 2005, MiTAC had completed the industrial technology development plan of the
MOEA, ROC – the lead-free and halogen-free systematic assembly procedure; therefore,
MiTAC had become one of the early enterprises with the lead-free process techniques. Also,
our systemizing management parts suppliers provide us with parts that are in compliance
with the RoHS; thus, MiTAC has the ability to produce green products and export them to
Europe when necessary. As a result, there is no negative impact from EU’s environmental
directives at MiTAC.
(5) MiTAC’s responses to environmental protection directives from the EU
From our observation of the environmental law development in the EU, the green
production has been changed from self claimer to a must; for instance, all countries in the
EU will have to finish all required implementation of 2010. MiTAC has listed DfE (Design
for Environment) and Eco-design to be our product design requirements last year. Currently,
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our SOP in environmental design obliges our R&D departments to meet the EuP’s energy
consumption.
(6) Countermeasures to the Greenhouse Gas (GHG)
Due to the worsening issue of global warming, since Aug 2007, MiTAC has initiated the
GHG checking operation in order to respond to the trend of CO2 emission and to reduce
GHG in the future. The scope contains MiTAC’s production site in China. With the
assistance of SGS, Taiwan, the company performs the courses of checking CO2 gas
emission and training program for internal inspectors. According to ISO14064-1, we
started the systematic setup and listed all items to check for CO2 emission; we also built
interior documentation and examination procedures as a reference of measuring the effects
afterwards. In the meantime, we actively reduce GHG, introduce energy saving plans, i.e.
introducing regeneration energies—solar energy, recyclables, electricity saving—lighting
and air conditioning management in summers, in order to reduce CO2 emission to our
atmosphere.
As per the Greenhouse Gas Protocol, MiTAC performs CO2 emission investigation and
data collection. The company checks the CO2 emission amount annually for the previous
year.
Here are the data of CO2 emission amount in 2007:
Direct CO2 emission (scope 1): total annual CO2 emission amount is 5,703 tons, about
10% of our total CO2 emission.
Indirect CO2 emission (scope 2): total annual CO2 emission amount is 50,150 tons, about
90% of the total CO2 emission, which was mainly from externally bought electricity &
steam gas.
MiTAC is concerned about the global climate change; we are dedicated to protecting
the Earth’s resources and fulfilling our duty as an enterprise citizen. We will continuously
push for the reduction of CO2 emission to reduce operation costs and work toward the
directions of efficient energy, power saving and environment protection. We will work on
the goal of creating a low-CO2 economic society.
5. Labor/Management Relations
The company is an information technology company, and our staff is suitably composed. Our
philosophy is to create a humane management. The company actively created various
communication channels for our employees and we respect our employees’ opinions. Hence, all
employees are encouraged to actively participate in employer and employee relationship affairs..
(1) Communication and incentives
The company greatly values our employees’ opinions, hence we have staff designated in
employees’ relationships. We also have a mailbox to hear our employees’ voices. We survey
on peers’ satisfaction and on a-360-degree feedback on all supervisors every six months; at
the end of each year, we perform a survey on employees’ satisfaction in the hope that
employee needs are being met.
The company has spared no effort to establish internal communication channels. At
present, employees commonly use our e-mail system, which reduces paper and reports
consumption and we believe that these increases the communication efficiency. At the same
time, the company has set up an internal “speak-out mailbox” where employees can directly
express their opinions. In addition, the company invested over NT$4 million to set up a
videoconferencing system, also called Video Conference Room, VCR to link all offices in
Hsinchu, Linkou, and Taipei so we can save the travel time. After we started to use VCR,
employees in different offices can have video-conference meetings without commuting, so
that the company’s internal communications have become more efficient.
Another achievement is the setup of the electronic bulletin board to promote the
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company’s mission, to announce operational performance, and to publish outside
information. In order to provide an incentive to inspire employees and to enhance morale,
the company selects employees and honors senior employees who have worked for MiTAC
for five, ten, fifteen, and twenty years at the year-end party. At the year-end party, the
Chairman and the General Managers will give them gold medals and cash prizes.
Hwa-Ya Technology Park, Taoyuan, is one of our major offices. In order to better care for
our employees, we provide a shuttle bus from Hwa-Ya to Taipei daily. We also encourage
employees to car pool and we provide ample parking spaces. We want to give all employees
a more convenient and more comfortable working environment.
(2) Benefits and training
1) Benefits
Employees are very important assets to us. In addition to provide every employee with
labor and health insurance lawfully, the company also insures employees group and
overseas travel insurance policies, which include life and business trip insurance and are
paid by the company.
We also have a well-organized employee benefit committee whose members are elected
by different departments. The committee not only holds regular meetings to discuss
workers’ benefits and all kinds of activities, but also to organize different clubs for
entertainment and recreational activities with free-of-charge facilities in the company,
including the gym, the dance studio, the massage room and the indoor ping-pong court to
help build camaraderie among employees.
The company also has a library that is open to employees all day long. In the library,
there is a CD-ROM bank. Besides, the library is a member of the “Interlibrary
Cooperation Association (ILCA)” so that employees can easily access information
pertinent to their work, not limited to this library but from other libraries too.
The company budgets substantial funds every year according to our comprehensive
training programs. The goals are to substantiate employees’ education and training, to
stimulate employees’ potentials, to upgrade employees’ occupational competence, and to
allow them to continuously learn and grow with the company. Since 2000, the company
started the e-Learning system; right now, there are more than one thousand courses in the
system, including various management, professional, and general courses. This e-learning
program allows employees to learn whenever and wherever. And the results have shown
after all these years.
2) Details for employee education and training
A. Education and training efforts in 2008
The company spent a total of NT$8.9 million on employees’ training in 2008. There
were approximately 19,100 employees who joined the training (in-class training:
approx. 12,200 people and online courses: approx. 6,900 trainees).
B. Education system
In order to accommodate our business philosophy, long-term talent cultivation plans,
and the integration of all our company’s training resources, the company provides the
following guidelines: a list of required and elective courses, regulations for instructors,
encouragement for the development of teaching materials within the company,
off-premises training regulation, material management regulation, and on-the-job
training regulation.
(3) Retirement system
The company has established a comprehensive and legally sanctioned retirement system
in accordance with the Basic Labor Laws of the Republic of China and Pension Ordinance.
According to the laws, we prepared a trust fund accountable for employees’ pension and we
also established a control committee that is comprised of representatives from labor and
81
management. This committee monitors the operation of the funds and transfers pensions to
this account on a monthly basis, at a rate determined by an actuarially neutral third party.
The company also insures employees who are qualified for “Labor Pension Ordinance” and
disburse a lawful amount to employee’s designated account monthly. So far, the system
operates regularly.
(4) Labor/management agreements
The company has always had the belief of protecting and sharing gains with the
employees, by that, we hope to maintain an excellent labor and management relationship.
We expect ourselves to retain our humane management and multiple communication
channels; therefore, we hope to further advance our relationship in the future.
(5) Work environment and Worker Safety Measures
In order to increase the safety of the work environment and workers and to protect
workers from injuries, deaths, or protests, the company implemented practices that enable us
to obtain OHSAS-18001 certification on November 6, 2003, and we actively promote these
practices.
(6) Employees’ code of conduct
In order to ensure a consistent standard for employee behaviors, we listed 28 guidelines as
the code of conduct. These guidelines are from four key categories, which are workers’
principles, confidentiality and non-competing agreement, and the use of the Internet at the
workplace, information security, and interaction with suppliers. These guidelines are posted
on the e-bulletin for employees’ reference, also a friendly reminder. For the purpose of
principles, the “Employee Reward and Penalty Guidelines” are also drafted as a basis of
determining rewards and penalties.
(7) Losses from labor disputes, projected loss amount and countermeasures in the most recent
year and up to the publication date of this annual report; if unable to estimate, please
explain:
MiTAC did not have any losses from labor disputes happened during the last year and up
to the publication date of this annual report. MiTAC maintains a harmonious relationship
with employees; therefore, the possibility of potential losses from labor disputes is very low.
6. Major contracts
Type
Master
Purchase
Agreement
Distribution
Agreement
Party
Period of validity
Major terms
Customer “E” From August 1, 2002 Set the terms for the
to July 31, 2005. It
manufacturing,
can be automatically delivery, and warranty
extended for one more for computer
year if there is not a products.
written termination
notice.
Customer “M” After October 26,
Set the terms for sales
2006 for one year. It of computers and
can be automatically electronic-related
extended for one more products.
year if there is not a
written termination
notice.
82
Restrictions
None
None
VI. Financial Statement
1. Most recent five-year Balance Sheet and Income Statement
(1) Condensed Balance Sheet
Years
Items
Common stock
Capital reserve
Retained
earnings
2006
2007
2008
35,901,473
22,353,401
2,239,867
613,095
1,152,041
62,278,377
23,797,940
22,253,488
2,196,827
613,095
1,239,469
50,119,319
36,117,501
18,216,392
2,220,427
1,219,528
57,792,348
16,764,510
16,259,451
24,121,951
26,219,092
18,244,889
17,707,718
17,516,570
17,892,161
25,944,042
28,555,927
Not yet
distributed
Not yet
distributed
Before
distribution
2,500,000
880,308
5,002,374
1,109,112
5,021,478
933,224
1,510,983
586,213
240,500
507,968
240,500
509,182
20,144,818
22,370,937
30,076,653
28,316,288
18,993,357
18,457,400
After
distribution
20,896,878
24,003,647
31,898,744
30,653,123
Not yet
distributed
Not yet
distributed
10,814,761
3,072,497
11,561,044
3,064,411
12,797,594
3,118,583
14,565,380
4,202,512
15,354,393
4,169,505
15,360,210
4,114,813
4,658,273
8,346,259
11,012,564
13,628,008
10,968,317
10,756,810
3,407,506
5,629,076
7,979,746
10,509,028
Not yet
distributed
Not yet
distributed
(7,439)
(4,244)
628,977
744,699
(406,451)
(285,725)
232,288
591,457
722,552
1,193,436
1,649,701
2,213,613
17,928,628
22,831,666
27,715,695
33,962,089
31,125,962
31,550,218
17,176,568
21,198,956
25,893,604
31,625,254
Not yet
distributed
Not yet
distributed
Before
distribution
After
distribution
Unrealized financial
instruments gains (losses)
Cumulative translation
adjustment
Before
Stockholder equity
distribution
Total
After
amount
distribution
20,874,292
13,727,485
2,516,750
936,419
38,073,446
2005
2009/3/31
(Reviewed by
CPA)
(Note)
22,966,985
22,771,673
1,810,511
1,013,358
1,426,591
50,007,618
25,390,052
16,311,089
2,408,847
1,074,115
45,202,603
Long-term liabilities
Other liabilities
Total
liabilities
Most recent five-year financial data
2004
Current assets
Funds and investment
Fixed assets
Intangible assets
Other assets
Total assets
Before
distribution
Current
After
liabilities
distribution
Unit: NT$ Thousand
Note: Numbers taken until the end of the quarter prior to the publication date of this annual report.
83
(2) Condensed Income Statement
Unit: NT$ Thousand
Years
2009/3/31
(Reviewed by
CPA)
(Note)
Most recent five-year financial data
Items
2004
Operating revenues
Gross profits
2005
2006
50,503,234 74,305,798
4,106,483 7,271,109
2007
2008
82,882,363 82,073,897 60,809,425
9,079,602 10,130,910 4,718,214
12,979,999
726,039
Operating income (loss)
1,145,074
3,718,672
4,958,306
4,574,512
(588,485)
(270,109)
Non-operating incomes
Non-operating expenses
Income before income tax from
continuing operations
Income (loss) from continuing
operations
Income from discontinued
operations
Extraordinary losses
1,540,410
(409,298)
2,137,707
(322,425)
1,482,530
(310,042)
2,137,177
(219,517)
1,433,674
(209,745)
281,853
(223,252)
2,276,186
5,533,954
6,130,794
6,492,172
635,444
(211,508)
2,142,499
4,941,793
5,383,612
5,648,262
459,289
(211,508)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,142,499
2.11
4,941,793
4.53
5,383,488
4.39
5,648,262
4.07
1.59
3.59
3.80
3.86
459,289
0.31
Not yet
distributed
Cumulative effect of changes in
accounting principles
Net income
Pre-Earnings retrospection
Earnings
per share Post-retrospection
(124)
(211,508)
(0.14)
Not yet
distributed
Note: Numbers taken until the end of the quarter prior to the publication date of this annual report.
(3) CPAs and Auditor’s opinions for the most recent five years:
Years
2008
2007
2006
2005
2004
Names of CPAs
Auditor’s
opinions
Yu-Kuan Lin, Wei- Cheng Wang
Unqualified
Fang-Yu Wen, Yu-Kuan Lin
Unqualified
Ying-Fei Liu, Fang-Yu Wen
Amended unqualified
Ying-Fei Liu, Fang-Yu Wen
Unqualified
Ying-Fei Liu, Wei- Cheng Wang
Amended unqualified
Name of CPA Firm
PriceWaterhouse Coopers
Taiwan
Taiwan
Taiwan
Taiwan
Taiwan
84
2. Financial analysis in most recent five years
Years
Analysis
Financial
structure
(%)
Debt ratio
Share of long-term funds in
fixed assets
Current ratio
Solvency
Quick ratio
(%)
Times interest earned ratio
A/R turnover (times)
A/R turnover days
Inventory turnover (times)
Operational A/P turnover (times)
capabilities Inventory turnover days
(Note 2)
Fixed assets turnover
(times)
Total assets turnover
(times)
Return on assets (%)
Return on shareholders
equity (%)
Operating
To paid-in
income
capital (%)
Profitability
PBT
Net income ratio (%)
Most recent five years financial analysis
2004
2005
2006
52.91
49.49
811.71
124.51
91.60
10.76
4.86
75
9.80
7.94
37
1,155.39
156.13
118.15
20.45
5.87
62
11.52
8.51
32
19.48
30.17
35.81
1.44
6.75
1.78
12.48
12.28
10.59
21.05
4.24
PreSimple EPS retrospection
52.04
2007
45.47
1,474.36 1,583.71
149.73
136.93
105.93
107.13
31.18
33.11
5.49
4.86
67
75
8.89
7.79
6.64
5.48
41
47
2009/03/31
(Reviewed by
CPA)
2008
(Note 1)
36.91
37.90
1,427.81
130.44
91.95
5.88
4.17
87
7.14
5.21
51
1,755.90
129.70
93.00
4.23
86
6.51
5.17
56
36.80
27.41
25.91
1.61
10.80
1.37
9.70
1.08
0.98
1.04
(0.39)
24.25
21.30
18.32
1.41
(0.67)
32.17
47.87
6.65
38.74
47.91
6.50
31.41
44.57
6.88
(3.83)
4.14
0.76
(1.76)
(1.38)
(1.63)
2.11
4.53
4.39
4.07
0.31
(0.14)
PostNot yet
Not yet
retrospection
distributed
1.59
3.59
3.80
3.86 distributed
Cash flow ratio (%)
13.33
21.79
18.15
19.96
9.77
Cash flow Cash flow adequacy ratio (%)
81.89
151.46
79.63
122.78
130.94
126.67
Cash reinvestment ratio (%)
7.57
9.60
8.70
10.11
Operating leverage
3.25
1.56
1.39
1.29
Leverage
Financial leverage
1.26
1.08
1.04
1.05
0.82
Analysis of changes in financial ratio in 2007and 2008(changes less than 20% are exempted):
1. Due to the economic recession in 2008, all consumer electronics sales are affected , thus the decreased profits
affected Times interest earned ratio, fixed assets turnover (times), total asset turnover (times), and related ratio
of profitability.
2. Because the operating activity net cash flow was decreased in 2008, the cash flow ratio and cash reinvestment
ratio were decreased.
3. The decrease of operating income caused the operating leverage and financial leverage declined.
Note 1: To the end of quarter prior to the publication date of this annual report.
Note 2: For convenience of marking comparisons, the operational capability for the first quarter of 2009 has been
converted to a whole year figure.
(NT$)
85
1. Financial structure
(1) Debt ratio = Total liabilities / Total assets
(2) Ratio of long-term funds to fixed assets= (Net shareholders’ equity + Long-term debts) / Net
fixed assets
2. Solvency
(1) Current ratio = Current assets / Current liabilities
(2) Quick ratio = (Current assets – Inventory – Prepaid expenses) / Current liabilities
(3) Time-Interest-earned ratio = Income before income tax and interest expense / Interest
expense
3. Operational capability
(1) A/R turnover (times) = Net sales / Average receivables balance (including accounts
receivable and notes receivable from operations) in various terms
(2) A/R turnover days= 365 / A/R turnover (times)
(3) Inventory turnover (times) = Cost of goods sold / Average inventory
(4) AP turnover (times) = Cost of goods sold / Average accounts payable balance (including
accounts payable and notes payable from operations) in various terms
(5) Inventory turnover days = 365 / Inventory turnover (times)
(6) Fixed assets turnover (times) = Net sales / Net fixed assets
(7) Total asset turnover (times) = Net sales / Total assets
4. Profitability
(1) Return on assets =Profit after tax +Interest expenses x (1 – (tax rate) /Average of
total assets
(2) Return on shareholders’ equity = Profit after tax / Average net equity
(3) Net income ratio = Profit after tax / Net sales
(4) EPS = (Profit after tax – Dividend from preferred stock) / Weighted average of outstanding
shares
5. Cash Flow
(1) Cash flow ratio = Cash flow from operations / Current liabilities
(2) Cash flow adequacy ratio = Most recent five-year cash flow from operations /
Most recent five-year (sum of capital expenditures, increases in inventory, cash dividends)
(3) Cash reinvestment ratio = (Cash flow from operating activities – Cash dividend) / (Gross
fixed assets + Long-term investment + other assets + Working capital)
6. Leverage
(1) Operating leverage = (Net revenue – Variable cost of goods sold and operating expenses) /
Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expense)
86
3. Supervisors’ Report of the most recent year
MiTAC INTERNATIONAL CORP.
Supervisors’ Report
The Board of Directors of the Company has prepared the 2008 Business report, financial report,
and Earning Distribution Proposal. The undersigned supervisors have reviewed the financial report
and the aforesaid documents, and did not find any incompliance. In accordance with Article 219 of
the Company Law, it is hereby submitted for your review and perusal.
TO: The fiscal year 2009 Annual Shareholders’ Meeting of MiTAC International Corp.
Supervisor:
Arthur Chiao
Charles Jin
(Representative of Lien Hwa Industrial Corp.)
Apr. 28, 2009
87
4. MiTAC International Corp. Consolidated Financial Statement and Report of
Independent Accountants
Report of Independent Accountants
PWCR08000450
To the Board of Directors and stockholders of MiTAC International Corp.:
We have audited the accompanying consolidated balance sheets of MiTAC International Corp.
and its subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of
income, of changes in stockholder’s equity and of cash flows for the years then ended. These
financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Examination of Financial
Statements by Certified Public Accountants and generally accepted auditing standards in the
Republic of China. Those standards and rules require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for an opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of MiTAC International Corp. and its subsidiaries as of
December 31, 2008 and 2007, and the results of their operations and their cash flows for the years
then ended in conformity with the “Rules Governing the Preparation of Financial Statements by
Securities Issuers” and generally accepted accounting principles in the Republic of China.
April 6, 2009
----------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are intended only to present the financial
position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in the Republic of China and not those of any other jurisdictions. The
standards, procedures and practices to audit such consolidated financial statements are those
generally accepted and applied in Republic of China.
88
MITAC INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)
2008
$
11,977
520,783
1,045
15,402
416
8,100,636
3,071,199
224,827
33,539
8,072,833
947,233
908,573
28,942,369
Long-term Investments
Available-for-sale financial assets –- non-current
(Note 4 (3))
Financial assets carried at cost – non-current (Note 4 (4))
Long-term investments accounted for under the equity
method (Note 4 (7))
Other Financial Assets – non-current (Note 6)
Property, Plant and Equipment - net
(Notes 4 (8) and 6)
Intangible Assets
Goodwill (Note 4 (9))
Other intangible assets
Other Assets
Refundable deposits
Deferred charges
Deferred income tax assets – non-current (Note 4 (21))
Others (Notes 4 (10) and 6)
TOTAL ASSETS
7,033,906
$
14,411,289
9,301
910,249
95,661
11,442,869
3,155,139
607,819
570,668
9,760,547
717,342
890,581
42,571,465
762,323
1,435,961
1,140,106
1,709,031
10,142,139
12,340,423
64,189
10,196,690
13,045,827
38,494
8,366,672
8,731,095
1,289,824
269,314
1,559,138
1,281,236
254,635
1,535,871
51,715
362,422
134,317
926,548
1,475,002
108,005
349,542
138,710
901,148
1,497,405
52,747,793
2008
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities
Short-term loans (Notes 4 (11) and 6)
Commercial paper payable – net (Note 4 (12))
Financial liabilities at fair value through profit or loss (Note 4 (13))
Notes payable
Accounts payable
Accounts payable – related parties (Note 5)
Income tax payable (Note 4 (21))
Accrued expenses
Other payables
Receipts in advance
Current portion of long-term debts (Notes 4 (14) and 6)
Provision for product warranty
Other current liabilities
$
$
Long-term Liabilities
Derivative financial liabilities for hedging – non-current (Note 10 (1))
Bonds payable (Notes 4 (14) and 6)
Other Liabilities
Accrued pension payable (Note 4 (15))
Deposit in
Deferred income tax liability (Note 4 (21))
Others
Total Liabilities
Stockholder’s Equity
Common stock (Note 4 (16))
Capital reserve (Note 4 (17))
Retained earnings (Note 4 (18))
Legal reserve
Unappropriated earnings
Unrealized financial instruments gain (loss)
Cumulative translation adjustments
Treasury stock (Note 4 (20))
Total Stockholder’s Equity
Commitments and Contingent Liabilities (Note 7)
Significant subsequent events (Note 9)
67,420,157
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
89
$
2007
ASSETS
Current Assets
Cash and cash equivalents (Note 4 (1))
Financial assets at fair value through profit or loss
(Note 4 (2))
Available-for-sale financial assets – current (Note 4 (3))
Derivative financial assets for hedging-current (Note 10(1))
Notes receivable – net
Notes receivable – related party (Note 5)
Accounts receivable – net (Note 4 (5))
Accounts receivable – related parties (Notes 4 (5) and 5)
Other receivables
Other financial assets – current (Note 6)
Inventories - net (Note 4 (6))
Prepayments
Deferred income tax assets – current (Note 4 (21))
(
(
$
2007
2,153,444
88,995
24,730
9,155,307
452,834
1,065,914
4,389,020
352,679
296,094
1,500,000
856,872
452,181
20,788,070
$
4,343,830
44,000
21,811
31,937
12,528,936
714,261
1,330,339
6,063,645
333,283
657,312
3,500,000
1,180,073
474,851
31,224,278
240,500
240,500
10,983
1,500,000
1,510,983
86,353
11,039
421,435
74,434
593,261
21,621,831
87,808
180
553,621
81,198
722,807
33,458,068
15,354,393
4,169,505
14,565,380
4,202,512
2,725,906
8,242,411
406,451 )
1,649,701
609,503 )
31,125,962
2,161,080
11,466,928
744,699
1,193,436
371,946 )
33,962,089
52,747,793
(
$
67,420,157
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
EXCEPT EARNINGS PER SHARE)
Operating revenues-net (Note 5)
Operating costs (Note 5)
Gross profit
Operating expenses
Selling expenses
Administrative expenses
Research and development expenses
$
(
2008
64,735,047
57,026,587 )
7,708,460
(
(
(
(
(
Operating (loss) income
Non-operating income and gains
Interest income
Gain on valuation of financial assets
Gain on valuation of financial liabilities
Investment income accounted for under the equity
method (Note 4 (7))
Dividend income
Gain on disposal of property, plant and equipment
Gain on disposal of investment
Gain on physical count of inventories
Exchange gain, net
Other income
Non-operating expenses and losses
Interest expense
Loss on valuation of financial liabilities
Loss on disposal of property, plant and equipment
Other losses
4,332,872 )
1,648,786 )
2,534,270 )
8,515,928 )
807,468 )
(
(
(
(
(
Income before income tax
Income tax expense (Note 4 (21))
Consolidated net income
Attributable to:
Equity holders of the Company
Minority interest
$
$
(
(
(
(
4,824,134 )
2,103,622 )
2,551,401 )
9,479,157 )
4,905,114
255,152
3,071
1,754
1,059,436
174,566
1,835
122,826
204,320
87,848
1,911,620
1,006,576
80,180
401,063
1,968
239,100
407,184
2,396,048
(
326,803 )
47,482 )
36,258 )
410,543 )
6,890,619
1,042,595 )
5,848,024
(
(
(
(
$
459,289
459,289
$
Basic earnings per share (in NT dollars) (Note 4 (22))
Consolidated net income attribute to the Company
Diluted earnings per share (in NT dollars)
Consolidated net income attribute to the Company
(
248,812
11,977
-
144,368 )
67,185 )
46,992 )
48,868 )
307,413 )
796,739
337,450 )
459,289
(
2007
90,220,490
75,836,219 )
14,384,271
$
$
5,648,262
199,762
5,848,024
$
Before
income tax
After
income tax
Before
income tax
After
income tax
$
0.42
$
0.31
$
4.44
$
3.86
$
0.37
$
0.25
$
4.13
$
3.60
90
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007
Retained Earnings
2007
Balance at January 1, 2007
Common
Stock
$12,797,594
Capital
Reserve
Legal
Reserve
$ 3,118,583
$ 1,622,731
Unappropriated
Earnings
Unrealized
financial
instruments
gain – (loss)
Cumulative
Translation
Adjustments
$
$
$
9,389,833
628,977
722,552
Treasury
Stock
Minority
Interest
( $ 564,575 )
$ 2,250,246
$ 29,965,941
Total
Distribution of 2006 earnings:
-
-
538,349
(
538,349 )
-
-
-
-
-
193,805
-
-
(
193,805 )
-
-
-
-
-
-
-
-
(
290,708 )
-
-
-
-
Stock dividends
1,016,922
-
-
(
1,016,922 )
-
-
-
-
Cash dividends
-
-
-
(
1,525,383 )
-
-
-
-
(
-
-
(
6,000 )
(
Legal reserve
Employee bonuses – stock
Employee bonuses – cash
Directors’ and supervisors’ remuneration
-
Exercise of employee stock option
51,282
Consolidated net income for 2007
-
Capital reserve due to change in ownership of long-term
investments
-
22,597 )
-
(
12,581 )
290,708 )
1,525,383 )
-
-
-
-
-
-
-
-
-
-
28,685
-
5,648,262
-
-
-
199,762
5,848,024
-
-
-
-
-
-
(
6,000 )
12,581 )
505,777
1,126,365
-
-
-
-
-
-
1,632,142
Recognition of unrealized profit or loss on available-for-sale
financial assets
-
-
-
-
105,227
-
-
-
105,227
Recognition of unrealized gain or loss on derivative financial
instruments for hedging
-
-
-
-
10,495
-
-
-
10,495
Cash dividends received by subsidiaries from the Company
-
18,834
-
-
-
-
-
-
18,834
Decrease in minority interest
-
-
-
-
-
Translation adjustment for 2007
-
-
-
-
-
-
Balance at December 31, 2007
$14,565,380
(
26,092 )
$ 4,202,512
-
-
$ 2,161,080
$
(CONTINUED)
91
Treasury stock transaction-net
Issuance of common stock as a result of merger
(
(
11,466,928
470,884
$
744,699
$
1,193,436
(
2,450,008 )
-
-
192,629
( $ 371,946 )
$
(
2,450,008 )
470,884
-
166,537
-
$ 33,962,089
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2008 and 2007
Retained Earnings
2008
Balance at January 1, 2008
Common
Stock
$14,565,380
Capital
Reserve
Legal
Reserve
$ 4,202,512
$ 2,161,080
Unappropriated
Earnings
Unrealized
financial
instruments
gain – (loss)
Cumulative
Translation
Adjustments
$
$
$
11,466,928
744,699
Treasury
Stock
1,193,436
( $ 371,946 )
Minority
Interest
$
Total
-
$ 33,962,089
Distribution of 2007 earnings:
-
-
564,826
(
564,826 )
-
-
-
-
-
203,337
-
-
(
203,337 )
-
-
-
-
-
-
-
-
(
305,006 )
-
-
-
-
Stock dividends
578,808
-
-
(
578,808 )
-
-
-
-
Cash dividends
-
-
-
(
2,025,829 )
-
-
-
-
(
(
6,000 )
-
-
-
-
(
-
-
-
-
Legal reserve
Employee bonuses – stock
Employee bonuses – cash
305,006 )
2,025,829 )
-
-
-
6,868
1,170
-
-
Employee compensation plan - employee stock options
-
16,591
-
-
Consolidated net income for 2008
-
-
-
459,289
-
-
-
-
Capital reserve due to change in ownership of long-term investments
-
-
-
-
-
-
-
(
81,777 )
Recognition of unrealized profit or loss on available-for-sale financial
assets
-
-
-
-
-
-
-
(
1,163,178 )
Recognition of unrealized gain or loss on derivative financial instruments
for hedging
-
-
-
-
12,028
-
-
-
12,028
Cash dividends received by subsidiaries from the Company
-
31,009
-
-
-
-
-
-
31,009
Translation adjustment for 2008
-
-
-
-
-
456,265
-
-
Treasury stock transaction-net
-
-
-
-
-
-
Balance at December 31, 2008
$15,354,393
$ 4,169,505
$ 2,725,906
(
81,777 )
$
8,242,411
92
6,000 )
8,038
16,591
(
($
1,163,178 )
406,451 )
See report of independent accountants dated April 6, 2009.
Exercise of employee stock option
(
$
1,649,701
(
237,557 )
( $ 609,503 )
$
-
459,289
456,265
(
237,557 )
$ 31,125,962
CONSOLIDATED STATEMENTS OF CASH FLOWS
2008
Cash flows from operating activities:
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Bad debts expense
Loss on obsolescence and market value decline of inventories
Depreciation
Amortization
Loss (Gain) on valuation of financial liabilities
Gain on valuation of financial assets
Long-term investment income accounted for under the equity
method
Gain on disposal of investments
Cash dividends from long-term investments accounted for under
the equity method
$
(
(
(
473,756
1,663,375
643,392
1,754 )
3,071 )
(
1,059,436 )
(
1,006,576 )
(
122,826 )
(
401,063 )
298,876
71,667
46,992
47,482
1,835 )
16,591
-
(
(
(
(
(
152,636 )
2,418,217
325,513 )
528,258 )
(
7,207 )
(
59,333 )
(
(
(
3,399,952 )
264,425 )
1,674,625 )
19,329
361,218 )
6,256 )
1,455 )
(
2,410,724 )
504,778
472,430
164,576 )
171,655
170,796 )
7,466
(
(
(CONTINUED)
190,115
2,038,260
382,992
809,226
229,891 )
13,599 )
(
(
(
Provision for product warranty
Deferred income tax liabilities
Net cash provided by operating activities
5,848,024
36,213
79,843
3,261,264
Accounts payable
Income tax payable
Accrued expenses
Other payables
Receipts in advance
Accrued pension payable
93
$
872,558
1,234,006
498,867
67,185
11,977 )
(
Other receivables
Inventories
Prepayments
Deferred income tax assets
Increase (decrease) in:
Notes payable
459,289
86,144
Loss on disposal of property, plant and equipment, net
Gain on disposal of property, plant and equipment, net
Employee compensation plan - employee stock options
Changes in assets and liabilities:
(Increase) decrease in:
Notes receivable
Accounts receivable
2007
323,201 )
148,600 )
506,659
(
(
(
629,247
311,444 )
9,680,333
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
2007
2008
Cash flows from investing activities:
Decrease (increase) in financial assets at fair value through profit
or loss and available-for-sale financial assets
Inecrease in long-term investments
Proceeds from disposal of long-term investments
Increase in financial assets carried at cost – non-current
Decrease in financial assets carried at cost – non-current with net
of cash from return of capital
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in deferred charges
Decrease in refundable deposits, net
Decrease(increase) in other financial assets
Increase in other assets, net
Net cash paid for acquisition of Navman
Cash received due to merger with Tyan
Cash transferred out from MPT due to MPT being merged into
other company
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in short-term debts, net
Decrease in commercial paper payable, net
Repayment of long-term loans
Increase (decrease) in deposit-in
Exercise of employee stock options
Employee bonuses paid
Cash dividends paid
Repayment of bonds payable
Purchase of treasury stock
Sale of treasury stock
Net cash used in financing activities
Effects of changes in exchange rates
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income tax
(CONTINUED)
94
$
(
9,301
821,790
78,554 )
40,119
603,538 )
118,087
523,238 )
56,290
511,434
-
(
(
351,691
(
(
(
(
(
(
(
(
(
(
$
$
$
2,190,386 )
44,000 )
10,859
8,038
305,006 )
6,000 )
2,025,762 )
3,259,500 )
237,557 )
8,049,314 )
186,419 )
7,377,383 )
14,411,289
7,033,906
182,680
749,939
($
(
(
41,738 )
80,832 )
529,778
74,755 )
1,538,175 )
396,340
422,004 )
18,381
567,619 )
761 )
446,655 )
728,151
(
(
(
(
(
(
(
373,593 )
1,873,482 )
(
(
(
(
$
2,705,180 )
86,000 )
3,259 )
125 )
28,685
290,708 )
6,000 )
1,506,498 )
18,859 )
329,653
4,258,291 )
121,415 )
3,427,145
10,984,144
14,411,289
$
$
326,235
1,394,193
(
(
(
(
(
(
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
2008
2007
Net assets acquired due to merger with Tyan and acquisition
of Navman, excluding cash
Accounts receivable
$
-
$
1,456,611
Inventories
-
879,213
Other current assets
-
97,069
Property, plant and equipment
-
230,989
Goodwill
-
1,281,236
Other assets
-
9,923
Accounts payable
-
(
1,483,978 )
Accrued expenses
-
(
903,801 )
-
(
64,608 )
Other liabilities
-
(
56,403 )
$
-
$
1,446,251
$
-
$
446,655
Cash infusion due to business combination:
Issued new stocks for merger with Tyan
-
505,777
Premium on paid-in capital
-
1,126,365
Investment before merger with Tyan
-
95,605
Less: net assets acquired due to merger with Tyan and
acquisition of Navman, excluding cash
-
(
1,446,251 )
Net cash acquired for consolidation of Tyan
$
-
$
728,151
Cash paid for acquisition of Navman
$
-
$
519,088
Less: cash of Navman
-
(
72,433 )
$
-
$
446,655
$
-
$
1,150,159
The Company’s subsidiaries merged into another company
Net assets transferred out from MPT excluding cash
Investment before merger into another company
Cash transferred out from MPT due to merger of MPT into
another company
$
-
(
-
($
95
1,523,752 )
373,593 )
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
EXCEPT AS OTHERWISE INDICATED)
1. HISTORY AND ORGANIZATION
1)
The Company
MiTAC International Corp. (“the Company”) was incorporated as a company
limited by shares under the provisions of the Company Law of the Republic of
China (R.O.C) on December 8, 1982 and started its operations on December 15,
1982. The main activities of the Company include the design, manufacture, sales
and services of micro-computers, mobile communications and related products as
well as other related investments. As of December 31, 2008, the Company and its
subsidiaries had 9,968 employees.
2)
Subsidiaries included in the consolidated financial statements and their changes
Ownership (%)
Investor
MiTAC International
Corp.
Subsidiary
Main activities
Silver Star Developments Ltd.
December 31,
2008
2007
Investment holding
100%
100%
Investment holding
100%
100%
Investment holding
100%
100%
Manufacturing
100%
-
Description
(SSDL) and its subsidiaries
Tsu Fung Investment Corp.
(TFC) and its subsidiaries
Foreground Technology Ltd.
Note
and its subsidiaries
DLC Technology Corporation
Note The Company succeeded Foreground Technology Ltd. (Foreground) and its
subsidiaries since the Company merged with Tyan Computer Technology
Co., Ltd. on October 16, 2007.
3)
Majority-owned subsidiaries excluded in the consolidation: None.
4)
Adjustment for subsidiaries with different balance sheet dates
Some of SSDL’s subsidiaries adopted accounting periods that are different from the
Company’s accounting period. However, as the difference is not over 3 months, the
financial reports of these subsidiaries are consolidated without any adjustment.
Special operating risks in foreign subsidiaries: None.
Nature and extent of the restrictions on fund remittance from subsidiaries to the
parent company: None.
Contents of subsidiaries’ securities issued by the parent Company: Refer to Note 4
(20).
Information on convertible bonds and common stock issued by subsidiaries: DLC
Technology Corporation increased their capital amounting to $65,755 in 2008. Tsu
Fung Investment Corp. and SSDL and its subsidiaries increased their capital
amounting to $75,000 and $1,485,099, respectively in 2007.
5)
6)
7)
8)
96
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements of the Company and its subsidiaries
(collectively referred herein as the Group) are prepared in accordance with the “Rules
Governing the Preparation of Financial Statements by Securities Issuers” and accounting
principles generally accepted in the Republic of China. The Group’s significant
accounting policies are summarized below:
1)
Basis for preparation of consolidated financial statements
All majority-owned subsidiaries and controlled entities are included in the
consolidated financial statements. Effective January 1, 2008, the Company prepares
consolidated financial statements on a quarterly basis. Significant inter-company
transactions and assets and liabilities arising from inter-company transactions are
eliminated.
2)
Translation of financial statements of foreign subsidiaries
Assets and liabilities of foreign subsidiaries are translated into New Taiwan dollars
using the exchange rates at the balance sheet date. Equity accounts are translated at
historical rates except for beginning retained earnings, which are carried forward
from prior year’s balance. Dividends are translated at the rates prevailing at the date
of declaration. Profit and loss accounts are translated at weighted-average rates of
the year. The resulting translation differences are included in “cumulative
translation adjustments” under stockholders’ equity.
3)
Foreign currency transactions
A. The Company and its consolidated subsidiaries maintain their accounts in New
Taiwan dollars and their functional currencies, respectively. Transactions
denominated in foreign currencies are translated into New Taiwan dollars and
their functional currencies at the spot exchange rates prevailing at the
transaction dates. Exchange gains or losses due to the difference between the
exchange rate on the transaction date and the exchange rate on the date of actual
receipt and payment are recognized in current year’s profit or loss.
B. Receivables, other monetary assets and liabilities denominated in foreign
currencies are translated at the spot exchange rates prevailing at the balance
sheet date. Exchange gains or losses are recognized in profit or loss.
C. When a gain or loss on a non-monetary item is recognized directly in equity, any
exchange component of that gain or loss shall be recognized directly in equity.
Conversely, when a gain or loss on a non-monetary item is recognized in profit
or loss, any exchange component of that gain or loss shall be recognized in
profit or loss. However, non-monetary items that are measured on a historical
cost basis are translated using the exchange rate at the date of the transaction.
4) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets;
otherwise they are classified as non-current assets:
a) Assets arising from operating activities that are expected to be realized or
consumed, or are intended to be sold within the normal operating cycle;
b) Assets held mainly for trading purposes;
97
c) Assets that are expected to be realized within twelve months from the balance
sheet date;
d) Cash and cash equivalents, excluding restricted cash and cash equivalents and
those that are to be exchanged or used to pay off liabilities more than twelve
months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current
liabilities; otherwise they are classified as non-current liabilities:
a) Liabilities arising from operating activities that are expected to be paid off
within the normal operating cycle;
b) Liabilities arising mainly from trading activities;
c) Liabilities that are to be paid off within twelve months from the balance sheet
date;
d) Liabilities for which the repayment date cannot be extended unconditionally
to more than twelve months after the balance sheet date.
5)
Cash equivalents
Cash and cash equivalents include cash on hand and in banks and other short-term
highly liquid investments which are readily convertible to known amount of cash
and which are subject to insignificant risk of changes in value resulting from
fluctuations in interest rates.
6)
7)
Financial assets and financial liabilities at fair value through profit or loss
A.
Financial assets and financial liabilities at fair value through profit or loss are
recognized and derecognized using trade date accounting and are recognized
initially at fair value.
B.
These financial instruments are subsequently remeasured and stated at fair
value, and the gain or loss is recognized in profit or loss. The fair value of
listed stocks, OTC stocks and closed-end mutual funds is based on latest
quoted fair prices of the accounting period. The fair value of open-end and
balanced mutual funds is based on the net asset value at the balance sheet date.
C.
When a derivative is an ineffective hedging instrument, it is initially
recognized at fair value on the date a derivative contract is entered into and is
subsequently remeasured at its fair value. If a derivative is a non-option
derivative, the fair value initially recognized is zero.
Available-for-sale financial assets
A.
B.
Available-for-sale financial assets are recognized and derecognized using trade
date accounting and are initially stated at fair value plus transaction costs that
are directly attributable to the acquisition of the financial asset.
The financial assets are remeasured and stated at fair value, and the gain or
loss is recognized in equity, until the financial asset is derecognized, at
which time the cumulative gain or loss previously recognized in equity shall
be recognized in profit or loss. The fair values of listed stocks, OTC stocks
98
C.
8)
Financial assets carried at cost
A.
B.
9)
and closed-end mutual funds are based on latest quoted fair prices of the
accounting period. The fair values of open-end and balanced mutual funds
are based on the net asset value at the balance sheet date.
If there is any objective evidence that the financial asset is impaired, the
cumulative loss that had been recognized directly in equity shall be transferred
from equity to profit or loss.
When the fair value of an equity instrument
subsequently increases, impairment losses recognized previously in profit or
loss shall not be reversed. When the fair value of a debt instrument
subsequently increases and the increase can be objectively related to an event
occurring after the impairment loss was recognized in profit or loss, the
impairment loss shall be reversed to the extent of the loss recognized in profit
or loss.
Investment in unquoted equity instruments is recognized or derecognized using
trade date accounting and is stated initially at its fair value plus transaction
costs that are directly attributable to the acquisition of the financial asset.
If there is any objective evidence that the financial asset is impaired, the
impairment loss is recognized in profit or loss. Such impairment loss shall not
be reversed when the fair value of the asset subsequently increases.
Derivative financial instruments for hedging
When the transactions qualify for all the conditions of applying hedge accounting,
the resulting profit or loss is recognized by offsetting the changes in the fair values
of hedging instrument and hedged items. When the transactions qualify as cash flow
hedges, the effective portion of any gain or loss on remeasurement of the derivative
financial instrument to fair value is recognized directly in equity.
10) Accounts receivable
Accounts receivable are claims resulting from sale of goods or services. The fair
value of accounts receivable is calculated based on the imputed interest rate.
Accounts receivable which is collectible within one year, and where the difference
between the fair value and the value at maturity is insignificant is measured at
carrying value.
11) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on the collectibility of accounts,
notes and other receivables.
12) Inventories
A.
Inventories of the Company are stated at standard cost, which is adjusted to
actual cost at year-end.
B.
Inventories of the Company and its subsidiaries are valued at the lower of cost
or market value at balance sheet date. The market value is based on the
replacement cost for raw materials and supplies and net realizable value for
work in process, finished goods and merchandise. Allowance for slow moving
99
items and decline in the market value is provided when necessary.
13) Long-term equity investments accounted for under equity method
A.Long-term equity investments in which the Group holds more than 20% of the
investee company’s voting shares or has the ability to exercise significant
influence on the investee’s operational decisions are accounted for under the
equity method. All majority-owned subsidiaries and controlled entities are
accounted for under the equity method and are included in the consolidated
financial statements on a quarterly basis.
B. For investments accounted for under the equity method, the Company
recognizes investment gains or losses by quarter. The unrealized profits and
losses from intercompany transactions between the Company and investee
company during the current year shall be eliminated.
C. Exchange differences arising from translation of the financial statements of
overseas investee companies accounted for under the equity method are
recorded as “cumulative translation adjustments” under stockholder’s equity.
14) Property, plant and equipment
A. Property, plant and equipment are stated at cost. Interest incurred on loans
used to finance the construction of property and plant is capitalized and
depreciated accordingly.
B. Depreciation is calculated on a straight-line basis over the assets’ estimated
useful lives. Residual values of fixed assets still in use at the end of the
original service lives are depreciated based on the newly estimated remaining
service lives of the assets. The useful lives of the fixed assets are 3 – 10 years,
except for buildings, which are 3 - 55 years.
C. Maintenance and repairs are expensed as incurred. Significant renewals and
improvements are capitalized and depreciated accordingly.
D. Idle assets are valued at the lower of book value or net realizable value (based
on the appraised value by a real estate appraisal company) and classified as
other assets. Rental assets are valued at cost and classified as other assets;
current depreciation is recorded as non-operating expense.
15) Intangible assets
Land use rights are amortized on a straight-line method over 48~50 years.
16) Deferred charges
A. Telephone installation expenditure is amortized on a straight-line method over 5
years.
B. Mold expenses are amortized on a straight-line method over 2 years.
C. Issuance costs of bonds are deferred and amortized on a straight-line method
over the life of the bonds.
D. Software cost is amortized on a straight-line method over 5 years.
100
17) Impairment of non-financial assets
The Group recognizes impairment loss when there is indication that the recoverable
amount of an asset is less than its carrying amount. The recoverable amount is the
higher of the fair value less costs to sell and value in use. The fair value less costs to
sell is the amount obtainable from the sale of the asset in an arm’s length transaction
after deducting any direct incremental disposal costs. The value in use is the present
value of estimated future cash flows to be derived from continuing use of the asset
and from its disposal at the end of its useful life. When the impairment no longer
exists, the impairment loss recognized in prior years shall be recovered.
The recoverable amount of goodwill, intangible assets with indefinite useful lives
and intangible assets which have not yet been available for use shall be evaluated
periodically. Impairment loss will be recognized whenever there is indication that
the recoverable amount of these assets is less than their respective carrying amount.
Impairment loss of goodwill recognized in prior years is not recoverable in the
following years.
18) Convertible bonds
For convertible bonds issued prior to and including December 31, 2005, in
accordance with the EITF 95-78 issued by the Accounting Research and
Development Foundation of the R.O.C., the Company elected not to bifurcate the
embedded derivatives and accounted for those convertible bonds as follows:
A. When bonds are converted, the par value of the bonds is credited to common
stock and any excess is credited to capital reserve. No gain or loss is recognized
on bond conversion.
B. Expenditures incurred on issuance of convertible bonds are classified as deferred
assets and amortized over the life of the bonds. In cases where the bonds are
converted or redeemed before the maturity date, the issuance expenditures are
expensed in proportion to the amount of bonds converted or redeemed.
19) Pension plan
Under the defined benefit pension plan, net periodic pension costs are recognized in
accordance with the actuarial calculations. Net periodic pension costs include
service cost, interest cost, expected return on plan assets, and amortization of
unrecognized net transition obligation and gains or losses on plan assets.
Unrecognized net transition obligation is amortized on a straight-line basis over 15
years. Under the defined contribution pension plan, net periodic pension costs are
recognized as incurred.
20) Warranty
Warranty is estimated based on historical experience. Service warranty expense is
included in the current year'
s operating expense.
21) Income tax
A. Income taxes are allocated on the inter- and intra-period basis. Over or under
provision of prior years’ income tax liabilities is included in current year’s
income tax.
101
B. Investment tax credits arising from expenditures incurred on acquisitions of
equipment or technology, research and development, employees’ training, and
equity investments are recognized in the year the related expenditures are
incurred.
C. An additional 10% tax is levied on the unappropriated retained earnings and is
recorded as income tax expense in the year the stockholders resolve to retain the
earnings.
22) Share-based payment - employee compensation plan
A. The employee stock options granted from January 1, 2004 through December 31,
2007 are accounted for in accordance with EITF92-070, EITF92-071 and
EITF92-072 “Accounting for Employee Stock Options” as prescribed by the
Accounting Research and Development Foundation, R.O.C., dated March 17,
2003. Under the share-based employee compensation plan, compensation cost
is recognized using the intrinsic value method and pro forma disclosures of net
income and earnings per share are prepared in accordance with the R.O.C. SFAS
No. 39, “Accounting for Share-based Payment”.
B. For the grant date of the share-based payment agreements set on or after January
1, 2008, the Company shall measure the services received during the vesting
period by reference to the fair value of the equity instruments granted and
account for those amounts as payroll expenses during that period.
23) Employees’ bonuses and directors’ and supervisors’ remuneration
Effective January 1, 2008, pursuant to EITF96-052 of the Accounting Research and
Development Foundation, R.O.C., dated March 16, 2007, “Accounting for
Employees’ Bonuses and Directors’ and Supervisors’ Remuneration”, the costs of
employees’ bonuses and directors’ and supervisors’ remuneration are accounted for
as expenses and liabilities, provided that such a recognition is required under legal
or constructive obligation and those amounts can be estimated reasonably. However,
if the accrued amounts for employees’ bonuses and directors’ and supervisors’
remuneration are significantly different from the actual distributed amounts
resolved by the stockholders at their annual stockholders’ meeting subsequently, the
differences shall be recognized as gain or loss in the following year. In addition, in
accordance with EITF97-127 of the Accounting Research and Development
Foundation, R.O.C., dated March 31, 2008, “Criteria for Listed Companies in
Calculating the Number of Shares of Employees’ Stock Bonus”, the Company
calculates the number of shares of employees’ stock bonus based on the closing
price of the Company'
s common stock at the previous day of the stockholders’
meeting held in the year following the financial reporting year, and after taking into
account the effects of ex-rights and ex-dividends.
24) Revenues and expenses
Revenues are recognized when the earning process is substantially completed and
they are realized or realizable. Allowance for sales rebate and return are estimated
based on historical experience as revenues recognized. Costs and expenses are
recognized as incurred.
102
25) Treasury stock
A. Treasury stock is stated at cost using the weighted-average method and is
reported as a deduction under stockholder’s equity.
B. Upon subsequent disposal of the treasury stock, the excess of the proceeds from
disposal over the book value is credited to capital reserve. However, if the book
value of the treasury stock exceeds the proceeds from disposal, the excess is
first charged against capital reserve and the remainder, if any, is charged against
retained earnings.
C. The book value of treasury stock is determined by the weighted-average
method.
D. When treasury stock is retired, the treasury stock account is credited and all
capital account balance related to the treasury shares, including capital reserve
from paid-in capital in excess of par are debited on a proportionate basis. When
the book value of treasury stock is higher than capital account balance,
including additional paid-in capital in excess of par, the difference is debited to
offset against this capital reserve from treasury stock. However, when the
balance of this capital reserve account is insufficient to offset the difference,
then the remaining amount should be charged against retained earnings. When
the book value of treasury stock is less than the capital account balance,
including additional paid-in capital in excess of par, the difference is credited to
capital reserve from treasury stock.
26) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets and liabilities and the disclosures of contingent assets
and liabilities at the date of the financial statements and the amounts of revenues
and expenses during the reporting period. Actual results could differ from those
assumptions and estimates.
27) Business combination
The Company adopted the R.O.C. SFAS No. 25, “Accounting for Business
Combination - Purchase Method” to account for any business combination
transactions.
3. EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
1) Share-based payment employee compensation plan
Effective January 1, 2008, the Group adopted R.O.C. SFAS No. 39, “Accounting for
Share-based Payment”. As a result of the adoption of SFAS No. 39, net income
decreased by $12,443 and earnings per share decreased by $0.01 dollar for the year
ended December 31, 2008.
2) Employees’ bonuses and directors’ and supervisors’ remuneration
Effective January 1, 2008, the Group adopted EITF96-052 of the Accounting Research
and Development Foundation, R.O.C., dated March 16, 2007. As a result of the adoption
of EITF96-052, net income decreased by $17,080 and earnings per share decreased by
$0.01 dollar for the year ended December 31, 2008.
103
4. DETAILS OF SIGNIFICANT ACCOUNTS
1) Cash and cash equivalents
December 31,
2008
Cash:
Petty cash
Checking and savings accounts
Time deposits
$
Cash equivalents:
Repurchase bonds
$
2007
3,289
2,357,768
3,213,857
5,574,914
1,458,992
7,033,906
$
$
2,735
3,623,876
7,968,556
11,595,167
2,816,122
14,411,289
2) Financial assets at fair value through profit or loss
December 31,
2008
Current items:
Financial assets held for trading
Corporate bonds
Adjustment of financial assets held for trading
$
$
2007
11,977
11,977
$
$
7,500
1,801
9,301
A. The Group recognized net gain of $11,977 and $3,071 for the years ended
December 31, 2008 and 2007, respectively.
B. The nature and contractual terms of derivatives are described in Note 11.
3) Available-for-sale financial assets
December 31,
2007
2008
Current items:
Listed (TSE and OTC) stocks
Adjustments of available-for-sale financial assets
$
(
$
Non-current items:
Listed (TSE and OTC) stocks
Adjustments of available-for-sale financial assets
$
$
778,980
258,197 )
520,783
$
630,882
131,441
762,323
$
$
$
768,319
141,930
910,249
629,451
510,655
1,140,106
4) Financial assets carried at cost
December 31,
2008
Non-current items:
Emerging stocks
Unlisted stocks
$
$
104
645,051
790,910
1,435,961
2007
$
$
645,051
1,063,980
1,709,031
The above investments were measured at cost since its fair value cannot be measured
reliably.
5) Accounts receivable - net
December 31,
Third parties
Less: Allowance for doubtful accounts
Allowance for sales rebate
$
(
(
Related parties
$
2008
9,440,135
73,207 )
1,266,292 )
8,100,636
3,071,199
11,171,835
2007
$ 12,894,380
(
124,702 )
(
1,326,809 )
11,442,869
3,155,139
$ 14,598,008
6) Inventories - net
December 31,
Raw materials
Finished goods
2008
3,921,315
5,674,953
9,596,268
$
Less: Allowance for obsolescence and market value
decline
(
2007
$ 4,372,334
6,290,875
10,663,209
1,523,435 )
8,072,833
$
(
$
902,662 )
9,760,547
7) Long-term investments accounted for under the equity method
A. Details of long-term equity investments are set forth below:
December 31,
2008
Amount
2007
Percentage
Percentage
of direct
of direct
ownership
Amount
ownership
Equity method:
MiTAC Technology Corp.
3,715,813
35.45%
Tung Da Investment Co., Ltd.
480,360
49.99%
668,761
49.99%
3 Probe Technology Co., Ltd.
10,353
23.13%
10,421
23.25%
Lian Jie Investment Co., Ltd.
75,633
49.98%
79,749
49.98%
Shen-Tong Construction &
Development Co., Ltd.
83,922
47.55%
84,297
47.55%
5,288,352
23.96%
5,322,520
27.34%
50,107
49.96%
46,921
49.96%
Mainpower International Ltd.
180,730
50.00%
13,509
50.00%
Suzhou MiTAC Precision Technology
Co., Ltd.
256,869
29.63%
264,355
35.78%
Synnex Corp.
$
Harbinger II (BVI) Venture Capital
Corp.
$ 10,142,139
105
$
3,706,157
$ 10,196,690
35.70%
B. Investment income (loss) accounted for under the equity method for the years
ended December 31, 2008 and 2007 is set forth below:
For the years ended December 31,
Investee company
2008
2007
Equity method:
$
393,721
Tyan Computer Technology Corp.
-
Tung Da Investment Co., Ltd.
Synnex Corp.
3 Probe Technology Co., Ltd.
$
(
407,357
13,439 )
32,299
44,244
650,202
620,722
(
38 )
(
30,229 )
(
3,664 )
(
2,478 )
Shen-Tong Constuction & Development Co., Ltd.
(
375 )
(
359 )
Brilliant Star Holding Ltd.
-
Harbinger II (BVI) Venture Capital Corp.
429
2,479
973
Mainpower International Ltd.
(
5,663 )
(
9,604 )
Suzhou MiTAC Preclsion Technology Co., Ltd.
(
9,525 )
(
11,040 )
$
1,059,436
$
1,006,576
8) Property, plant and equipment - net
December 31,
2007
2008
Cost
Land
$
1,236,574
$
1,130,861
Buildings
5,233,813
4,718,339
Machinery
5,356,995
5,150,892
Computer and communication equipment
862,268
1,019,006
Transportation equipment
124,599
121,465
Furniture and fixtures
780,510
784,925
68,140
73,401
982,364
973,498
14,645,263
13,972,387
Leasehold improvements
Other equipment
Accumulated depreciation
(
6,305,882 )
(
5,388,628 )
Accumulated impairment
(
12,149 )
(
12,149 )
Construction in progress and prepayments for equipment
Net book value
39,440
$
8,366,672
159,485
$
8,731,095
9) Goodwill
December 31,
2008
$ 1,289,824
Goodwill
December 31,
2007
$ 1,281,236
A. The goodwill resulting from the merger with Tyan Computer Technology Co.,
Ltd. and acquisition of Navman Corp., represents the excess of acquisition cost
over fair value of acquired net assets of Tyan Computer Technology Co., Ltd. and
Navman Corp.
106
B. Goodwill impairment test was conducted in accordance with the R.O.C. SFAS
No. 35 “Impairment of Assets”. On December 31, 2008, the Company evaluated
the recoverable amount of assets used for operations and goodwill based on their
value in use. The value in use is the present value of estimated future cash flows
to be derived from continuing use of the asset and goodwill and from their
disposal at the end of their useful life, which is based on the five-year financial
forecast with the discount rate of 6.96% and 6.84%, respectively. The following
sets forth the methods and assumptions used to estimate the recoverable amount
of assets and goodwill:
a) Estimated operating revenue: it is calculated based on industrial and market
information and the Company’s future operations and sales planning.
b) Estimated operating cost: it is calculated based on the estimated gross profit
margin, which is derived from prior years’ operating costs and the Company’s
future operations and sales planning.
c) Estimated operating expense: it is calculated based on prior years’ operating
expenses and the Company’s future operations and sales planning.
C. The recoverable amount calculated based on the foregoing assumptions is higher
than the sum of carrying value of identifiable assets and goodwill on December
31, 2008. Therefore, no impairment loss was recognized.
10) Other assets
December 31,
Land
Building
Rental buildings and machinery, net
Others
2008
790,098
$
118,096
109,117
1,017,311
90,763) (
926,548
$
Less: Accumulated impairment
$
(
$
2007
734,207
121,172
135,724
808
991,911
90,763)
901,148
The Company owns a piece of agricultural land, located at Treasure Mountain, Hsin
Chu Hsien, with a total area of 140,247.70 square meters, for the employees’ housing
project.
11) Short-term loans
December 31,
2008
2,153,444
$
2,153,444
1.1628%~2.77%
Unsecured bank loans
Secured bank loans
$
Interest rates
107
2007
3,659,376
684,454
$
4,343,830
1.62%~6.12%
$
12) Commercial paper payable - net
December 31,
2007
2008
Commercial paper
Interest rates
$
-
$
44,000
2.12%
13) Financial liabilities at fair value through profit or loss - current
December 31,
2008
Current items:
Adjustment of financial liabilities held for
trading
-Derivative financial instruments
$
2007
88,995
$
21,811
A. The Group recognized a net loss of $67,185 and a net gain of $1,754 for the years
ended December 31, 2008 and 2007, respectively.
B. The nature and contractual terms of derivatives are described in Note 11.
14) Bonds payable
December 31,
Secured bonds payable
Less: Current portion
$
(
Unsecured bonds payable
Less: Current portion
$
2008
1,500,000
1,500,000)
240,500
240,500
240,500
$
(
(
$
2007
2,000,000
500,000)
1,500,000
3,000,000
3,000,000)
1,500,000
A. On May 25, 2004, the Company issued secured bonds. The main terms of the
issue are as follows:
(a) Total amount: $2,000,000
(b) Interest rate: 1.60% per annum for par value of $1,500,000. Floating rate
with approximately 1.60% after hedging for par value of $500,000.
(c) Maturity date: May 25, 2008 for par value of $500,000, and May 25, 2009
for par value of $1,500,000.
(d) Collateral: Equity securities. (Refer to Note 6)
108
B. On August 12, 2006, the Company issued unsecured convertible bonds. The
main terms of the issue are as follows:
(a)
(b)
(c)
(d)
Total amount: $3,000,000
Interest rate: Zero
Maturity date: August 12, 2010
Convertible price: NT$48 per share of common stock. The price shall be
reset when issuance of common shares or distribution of cash dividends
exceeds 15% of total paid-in capital. The reset of convertible price is
based on the formula and terms defined in the bond’s prospectus. The
reset price shall be lower but no less than 80% of the original convertible
price. As of December 31, 2008, the convertible price is NT$29.9.
(e) Put and call: After three years from the issuance of bonds, the investors
can have the Company redeem all the bonds. On August 12, 2008, the
investors had the Company redeem bonds amounting to $2,759,500. From
one month after the bonds were issued to ten days before the maturity date,
if the Company’s closing price in Taiwan Stock Exchange is 50% higher
than the convertible price then for continuous 30 working days, or the
unconverted bonds exceed 10% of total amount of bonds issued, the
Company can call all the bonds at par value.
15) Pension plan
A. The Company has a non-contributory and funded defined benefit pension plan in
accordance with the Labor Standards Law, covering all regular employees. Under
the defined benefit plan, two units are accrued for each year of service for the
first 15 years and one unit for each additional year thereafter, subject to a
maximum of 45 units. Pension benefits are based on the number of units accrued
and the average monthly salaries and wages of the last 6 months prior to
retirement. The Company contributes monthly an amount equal to 2% of the
employees’ monthly salaries and wages to the retirement fund deposited with
Bank of Taiwan, the trustee, under the name of the independent retirement fund
committee.
B. Based on actuarial assumptions for 2008 and 2007, the discount rate is 2.5% and
3.5%, respectively, expected rate of return on plan assets is 2.5% and 3.5%,
respectively, and the rate of compensation increase is 2% and 3%, respectively.
109
C. The following sets forth the pension information based on the actuarial report:
a. Funded status of the pension plan:
December
31, 2007
December
31, 2008
Vested benefit obligation
($
71,492 )
($
64,424 )
Non-vested benefit obligation
(
235,344 )
(
240,624 )
Accumulated benefit obligation
(
306,836 )
(
305,048 )
Effect of projected salary increase
(
101,665 )
(
130,174 )
Projected benefit obligation
(
408,501 )
(
435,222 )
Fair value of plan assets
263,036
249,560
Funded status
(
145,465 )
(
185,662 )
Unrecognized transition (asset) obligation
(
2,098 )
(
3,148 )
Unrecognized loss
71,353
Prepaid pension cost
($
Vested benefit
76,210 )
$
114,831
($
95,095
73,979 )
$
75,136
b. Net pension cost comprises the following:
2008
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized loss on plan
assets
Amortization of unrecognized transition
asset
Net periodic pension cost
$
(
2007
11,237
15,233
8,957 )
$
(
3,962
(
$
1,050 )
20,425
20,003
11,615
8,255 )
254
(
$
1,050 )
22,567
D. Effective July 1, 2005, the Company and its subsidiary, MiTAC Precision
Technology Co. Ltd., established a defined contribution pension plan (the “New
Plan”) under the Labor Pension Act. Employees have the option to be covered
under the New Plan. Under the New Plan, the Company and its subsidiary
contributes monthly an amount based on 6% of the employees’ monthly salaries
and wages to the employees’ individual pension accounts at the Bureau of Labor
Insurance. The benefits accrued are portable upon termination of employment.
Pensions are paid by monthly installments or in lump sum based on the
accumulated balances of the employees’ individual pension accounts. The
pension costs were $62,185 and $54,594 in 2008 and 2007, respectively.
The Company’s mainland subsidiaries have a defined contribution plan. Monthly
contributions are based on a certain percentage of employees'monthly salaries
and wages to an independent fund administered by the government in accordance
with the pension regulations in the People’s Republic of China.
16) Capital
As of December 31, 2008, the Company′s authorized capital was $22,000,000,
consisting of 2,200,000 thousand shares of common stock (including 250,000
thousand shares reserved for employee stock options), and the paid-in capital was
$15,354,393 with a par value of $10 (in dollars) per share.
110
17) Capital reserve
The R.O.C. Company Law requires that capital reserve shall be exclusively used to
cover accumulated deficits or to increase capital and shall not be used for any other
purpose. However, capital reserve arising from paid-in capital in excess of par value
on issuance of common stock and donations can be capitalized once a year, provided
that the Company has no accumulated deficits and the amount to be capitalized does
not exceed 10% of the paid-in capital.
18) Retained earnings
A. Legal reserve
Except for covering accumulated deficits or increasing capital, the legal reserve
shall not be used for any other purpose. Capitalization of the legal reserve is
permitted, provided that the balance of the reserve exceeds 50% of the
Company’s paid-in capital and the amount capitalized does not exceed 50% of
the balance of the reserve.
B. Undistributed earnings: According to the Company'
s Articles of Incorporation,
current year'
s earnings, if any, shall be distributed in the following order:
(a) Covering prior years'operating losses, if any;
(b) Paying all taxes and dues;
(c) Setting aside 10% of the remaining amount, after deducting (a) and (b), as
legal reserve;
(d) Setting aside special retained earnings reserve of the remaining amount,
after deducting (a), (b) and (c), by the resolution at the stockholder’s
meeting.
(e) Allocating dividends and bonuses.
(f) Allocating at least 5% of the remaining amount, after deducting (a), (b),
(c), (d) and (e) as employees’ bonus.
The distribution of the Company’s undistributed earnings shall be proposed
by the Board of Directors and resolved in the annual Stockholder’s meeting.
C. The appropriation of 2007 and 2006 earnings had been resolved at the
shareholders meeting on June 25, 2008 and June 12, 2007 Details are
summarized below:
2007
Legal reserve
Stock dividends
Cash dividends
Directors’ and
supervisors’
remuneration
Employees’ stock
bonus
Employees’cash bonus
Total
$
Amount
564,826
578,808
2,025,829
Dividends per
share (in dollars)
$
0.3999
1.3998
6,000
$
$
203,337
305,006
3,683,806
-
$
111
1.7997
2006
Dividends per
Amount
share (in dollars)
538,349
$
1,016,922
0.7923
1,525,383
1.1883
6,000
$
193,805
290,708
3.571,167
-
$
1.9806
The appropriation of 2007 earnings had been resolved at the shareholders’
meeting and coincided with the proposal by the Board of Directors. As of April 6,
2009, the Company had not yet held the meeting of Board of Directors to discuss
the earnings distribution proposal for 2008. Information on the appropriation as
resolved by the Board of Directors and approved by the stockholders will be
posted in the “Market Observation Post System” at the website of the Taiwan
Stock Exchange.
Based on the resolution for the appropriation of 2007 earnings, employees’ stock
bonus amounted to 20,344 thousand shares. The estimated earnings per share
after accounting for the distribution of employees’ bonus and directors’ and
supervisors’ remuneration as expense in 2007 is $3.7 per share (in dollars).
The estimated amounts of employees’ bonus and directors’ and supervisors’
remuneration of 2008 are $20,733 and $2,000, respectively, and are recognized
as operating costs or operating expeneses for 2008.
The basis of estimates for employees’ bonus is based on a 5% percentage (as
prescribed by the Company’s Articles of Incorporation) of net income in 2008
after taking into account the legal reserve and other factors.
Information on the appropriation of the Company’s employees’ bonus and
directors’ and supervisors’ remuneration as resolved by the Board of Directors
and approved by the stockholders will be posted in the “Market Observation Post
System” at the website of the Taiwan Stock Exchange.
19) Share-based payment employee compensation plan
A.As of December 31, 2008, the Company’s share-based payment transactions are set
forth below:
Type of
arrangement
Grant date
Second stock
option
incentive plan
2006.12.07
and
2007.01.11
Third stock
2007.7.30
option
and
incentive plan 2007.08.17
Fourth stock
option
incentive plan
Assumed first
stock option
incentive plan
of Tyan
Computer
Technology
Co., Ltd.
Assumed
2008.10.13
and
2008.10.27
2003.03.31
and
2003.12.31
2005.08.31
Quantity granted
(in thousands of
shares)
Contract
period
64,000
6 years
50% can be exercised
after 2 years of grant
5.78%
0%
64,000
6 years
5.78%
0%
85,000
6 years
0%
15%
2,999
(Note)
6 years
after 2007.02.01
after 2008.02.01
after 2009.02.01
1.93%
0%
3,279
6 years
18.50%
0%
112
Vesting conditions
Actual resignation
Estimated future rate in the current
resignation rate
period
Type of
arrangement
Grant date
second
and
stock option 2006.03.10
incentive plan
of Tyan
Computer
Technology
Co., Ltd.
Quantity granted
(in thousands of
shares)
(Note)
Contract
period
Vesting conditions
Actual resignation
Estimated future rate in the current
resignation rate
period
Assumed third 2006.06.30
stock option and
incentive plan 2007.03.19
of Tyan
Computer
Technology
Co., Ltd.
1,117
(Note)
6 years
11.73%
0%
Assumed
2007.09.26
fourth stock
option
incentive plan
of Tyan
Computer
Technology
Co., Ltd.
1,245
(Note)
6 years
0%
0%
NoteAccording to the business merger agreement, 1.26 units of employee stock
options of Tyan Computer Technology Co., Ltd. could be exchanged for
one unit of the Company’s employee stock options.
B A summary of the activity under the Company’s first stock option incentive
plan is set forth below:
For the year ended December 31, 2008
Weighted average
In thousands of
exercise price
shares
(in NT dollars)
Options outstanding
at the beginning of
the year
Options granted
Stock dividends or
adjustment of
number of options
Options exercised
Options revoked
Options outstanding
at the end of the
year
Options exercisable
at the end of the
year
Options approved and
not yet issued at the
end of the year
-
$
Weighted average
In thousands of
exercise price
shares
(in NT dollars)
-
8,620
-
(
(
5,128 )
3,492 )
-
-
-
-
-
-
113
6.0
-
-
$
4.4
C. (a) A summary of the activity under under the Company’s second stock option is set
forth below:
2008
Options outstanding
at the beginning
of the year
Options granted
Stock dividends or
adjustment of
number of options
Options exercised
Options revoked
(
Options outstanding
at the end of the
year
Options exercisable
at the end of the
year
Options approved
and not yet issued
at the end of the
year
2007
Weighted average
exercisable price
(in NT dollars)
$
33.15
In thousands
of shares
64,000
-
Weighted average
exercisable price
(in NT dollars)
$
37.7
In thousands
of shares
32,000
32,000
-
16,040 )
37.2
-
47,960
30.15
64,000
-
-
-
-
33.15
(b) As of December 31, 2008, the summary of the outstanding second stock option
plan was as follows:
Number of options outstanding at the end of the year
Range of
exercise
price
(in NT dollars)
$29.9 and 30.4
In thousands
of shares
47,960
Expected
weighted
average
residual years
3.99
Weighted
average
exercise price
(in NT dollars)
$
30.15
Exercisable options at the end of the year
In thousands
of shares
11,990
Weighted average
exercise price
(in NT dollars)
$
30.4
D. (a) A summary of the activity under the Company’s third stock option plan is set
forth below:
2008
Options outstanding
at the beginning
of the year
Options granted
Stock dividends or
adjustment of
number of options
Options exercised
Options revoked
(
Options outstanding
at the end of the
year
Options exercisable
at the end of the
year
Options approved
and not yet issued
at the end of the
year
2007
Weighted average
exercisable price
(in NT dollars)
$
36.75
In thousands
of shares
64,000
-
In thousands
of shares
64,000
-
16,650 )
39.175
-
47,350
33.12
64,000
-
-
-
-
Weighted average
exercisable price
(in NT dollars)
$
-
114
36.75
(b) As of December 31, 2008, the summary of the outstanding third stock option
Range of
exercisable
price
(in NT dollars)
In thousands
of shares
Expected
weighted
average
residual years
$31.9 and 35.2
47,350
4.60
Weighted
average
exercise price
(in NT dollars)
$
In thousands
of shares
33.55
-
Weighted average
exercise price
(in NT dollars)
$
-
E. (a) A summary of the activity under the Company’s fourth stock option plan is set
forth below:
Weighted average
exercise price
(in NT dollars)
In thousands of
shares
Options outstanding at the beginning of the
year
-
Options granted
$
-
85,000
12.28
Stock dividends or adjustment of number of
options
-
-
Options exercised
-
-
Options revoked
-
-
Options outstanding at the end of the year
85,000
12.28
Options exercisable at the end of the year
-
-
Options approved and not yet issued at the end
of the year
-
(b) As of December 31, 2008, the summary of the outstanding fourth stock option
Range of
exercisable
price
(in NT dollars)
$11.35 and 13.2
In thousands
of shares
Expected
weighted
average
residual years
85,000
5.80
115
Weighted
average
exercise price
(in NT dollars)
$
12.28
In thousands
of shares
-
Weighted average
exercise price
(in NT dollars)
$
-
F. (a) A summary of the activity under the Company’s assumed stock option plan of
Tyan Computer Technology Co., Ltd. as of October 16, 2007 is set forth below:
2008
In thousands
of shares
Options outstanding
at the beginning
of the year
2007
Weighted average
exercisable price
(in NT dollars)
5,404
$
17.45
-
Options granted
-
5,404
Stock dividends or
adjustment of
number of options
-
-
Options exercised
(
687 )
Options revoked
(
795 )
Options outstanding
at the end of the
year
Weighted average
exercisable price
(in NT dollars)
In thousands
of shares
11.70
$
-
17.45
-
3,922
16.21
5,404
Options exercisable
at the end of the
year
584
135
Options approved
and not yet issued
at the end of the
year
-
-
17.45
(b) As of December 31, 2008, the summary of the outstanding stock option plan
was as follows:
Number of options outstanding at the end of the year Exercisable options at the end of the year
Range of
exercise
price
(in NT dollars)
$
In thousands
of shares
Expected
weighted
average
residual years
7.3
635
0.25
8.0
92
13.3
Weighted
average
exercise price
(in NT dollars)
Weighted average
exercise price
(in NT dollars)
7.3
125
1.00
8.0
25
8.0
804
2.67
13.3
225
13.3
16.9
160
3.19
16.9
72
16.9
20.6
274
3.50
20.6
137
20.6
20.2
712
4.22
20.2
-
19.9
1,245
4.75
19.9
-
16.21
584
3,922
$
In thousands
of shares
$
116
$
7.3
G. The following sets forth the pro forma net (loss) income and earnings per share
based on the assumption that the compensation cost is accounted for using the fair
value method (the intrinsic value method) for the stock options granted before the
effectivity of R.O.C. SFAS No. 39, Accounting for Share-based Payment:
Net income (loss)
Basic EPS (in
dollars)
Diluted EPS (in
dollars)
Net income (loss)
stated
in
the
statement of income
Pro forma net income
EPS stated in the
statement of income
Pro forma EPS
EPS stated in the
statement of income
Pro forma EPS
For the year ended
December 31, 2008
For the year ended
December 31, 2007
$
$
(
459,289
131,376 )
(
(
5,648,262
5,310,950
0.31
3.86
0.09 )
3.63
0.25
3.60
0.12 )
3.38
(a) The Company estimated the fair value of second stock option as of grant date
under Black-Scholes option model. The factor’s weighted average information
and fair value are listed as follows:
Dividend yield rate
Expected price volatility
Risk-free interest rate
Expected vesting period
Options granted (in shares)
Weighted-average fair value per
share (in dollars)
Grant date
December 7,
2006
0%
29.09%
1.83%
3.75 years
32,000,000
9.39
Grant date
January 11,
2007
0%
28.59%
1.87%
3.75 years
32,000,000
9.16
(b) The Company estimated the fair value of third stock option as of grant date
under Black-Scholes option model. The factor’s weighted average information
and fair value are listed as follows:
Grant date
July 30,
2007
Dividend yield rate
share (in dollars)
0%
29.92%
2.44%
3.75 years
32,000,000
11.46
Grant date
August 17,
2007
0%
29.92%
2.44%
3.75 years
32,000,000
9.25
(c) The Company assumed the employee stock options issued by Tyan as a result of
117
the merger. The Company estimated the fair value of stock options as of grant
date under Black-Scholes option model except the grant date of September 26,
2007 was under Binomial option model. The factor’s weighted average
information and fair value are listed as follows:
Grant date
August 31,
2005
Dividend yield rate
share (in dollars)
0%
50.00%
2%
6 years
3,422,000
12.44
Dividend yield rate
share (in dollars)
Grant date
June 30, 2006
0%
50.00%
2.00%
6 years
510,000
12.78
Grant date
march 10,
2006
0%
50.00%
2.00%
6 years
667,000
12.46
Grant date
March 19,
2007
0%
75.00%
2.00%
6 years
897,000
10.78
Dividend yield rate
share (in dollars)
Grant date
September 26,
2007
0%
27.78%
2.52%
4.375 years
1,569,000
4.68
H.For the stock options granted after January 1, 2008 with the compensation cost
accounted for using the fair value method, their fair value on the grant date is
estimated using Black-Scholes option-pricing model. The weighted-average
parameters used in the estimation of the fair value are as follows:
118
Grant date
Stock
price (in
dollars)
Exercise
price (in
dollars)
Expected
price
volatility
Expected
vesting
period
Fourth stock
option
incentive plan
2008.10.13
$ 13.2
$ 13.2
28.37%
(Note)
3.47 years
0.00%
1.96%
$ 3.12
Fourth stock
option
incentive plan
2008.10.27
$ 11.35
$ 11.35
28.42%
(Note)
3.47 years
0.00%
1.89%
$ 2.67
Type of
arrangement
Expected
Fair value
Risk-free per unit (in
dividend
yield rate interest rate dollars)
Note：In accordance with EITF92-205, if the enterprise’s historical stock prices were
significantly abnormal, those prices shall be excluded from the reference
values in calculating expected price volatility rate. Expected price volatility
rate is determined based on the stock prices for the recent period that is as
long as the expected vesting period of stock options, and taking into account
the effect of earnings appropriation every year on stock price.
20) Treasury stock
Reason for reacquisition
To be reissued to employees
Company’s common shares held by
its subsidiaries, TFC Investment
Co., Ltd.
its subsidiaries, SSDL
Reason for reacquisition
To be reissued to employees
its subsidiaries, TFC Investment
Co., Ltd.
its subsidiaries, SSDL
2008
(in thousands of shares)
Beginning shares
Addition
Reduction
650
9,350
19,583
783
2,658
106
-
2007
(in thousands of shares)
Beginning shares
Addition
Reduction
24,139
650
24,139
Ending shares
10,000
20,366
2,764
Ending shares
650
15,849
3,734
-
19,583
-
2,658
-
2,658
A. Pursuant to the R.O.C. Securities and Exchange Law, the number of shares
bought back as treasury stock should not exceed 10% of the number of the
Company’s issued and outstanding shares and the amount bought back should not
exceed the sum of retained earnings, paid-in capital in excess of par value and
realized capital reserve. As of December 31, 2008, the shares bought back as
treasury stock amounted to $256,417.
B. Pursuant to the R.O.C. Securities and Exchange Law, treasury stock should not
be pledged as collateral and is not entitled to dividends before it is reissued to the
employees.
C. Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should be
reissued to the employees within three years and shares not reissued within the
three-year period are to be retired. Treasury shares to enhance the Company’s
credit rating and the stockholder’s equity should be retired within six months of
acquisition.
119
D. As of December 31, 2008, the total number of the Company’s shares held by its
subsidiaries, Silver Star Developments Ltd., was 2, 764 (in thousand shares) with
an average book value of $77,002 and $27.86 (in dollars) per share and market
vaule of $11.75 (in dollars) per share.
E. As of December 31, 2008, the total number of the Company’s shares held by its
subsidiaries, Tsu Fung Investment Corp., was 20,366 (in thousand shares) with an
average book value of $276,084 and $13.56 (in dollars) per share and market
value of $11.75 (in dollars) per share.
F. In accordance with EITF-91-341, when the subsidiaries obtain cash dividends
from the Company, it should write off investment income and adjust capital
reserve-treasury stock transaction. As of December 31, 2008 and 2007, the
adjustment amount was $31,009 and $18,834, respectively.
21) Income tax
A. Income tax expense and payable are reconciled as follows:
Income tax at statutory tax rate
Tax effect of permanent differences
10% tax on unappropriated earnings
Tax effect of investment tax credits
Overdue tax assessed and approved by the Tax
Authority
Adjustment of prior year’s income tax expense
Withholding tax
Income tax expense
Net effect of deferred income tax liabilities
Adjustment of prior year’s income tax expense
Overdue tax assessed and approved by the Tax
Authority
Prepaid income tax
Income tax paid by subsidiary
Tax which is subjected to separate withholding
income tax
Adjustment of Tyan prior year’s income tax payable
Adjustment of MPT and its subsidiaries’ prior year’s
income tax payable
Translation adjustment
Income tax payable
$
(
(
2008
242,735
212,258 )
196,446
175,630 )
560,947
275,277 )
487
337,450
162,199
275,277
479,292
(
$
(
(
2007
1,813,775
914,601 )
195,505
254,926 )
479,292
285,614 )
9,164
1,042,595
839,702
285,614
-
(
(
(
98,307 )
97,454 )
(
(
686,228 )
125,169 )
(
487 )
-
(
9,164 )
9.493
(
29,848 )
3,344
1,330,339
$
7,944
1,065,914
$
B. Deferred income tax assets and liabilities:
December
December
Deferred income tax assets – current
$
31, 2008
918,791
Deferred income tax assets – non-current
$
647,132
$
335,407
Deferred income tax liabilities – current
$
10,218
$
10,218
Deferred income tax liabilities – non-current
Valuation allowance current
$
$
406,536
-
$
$
196,697
16,414
Valuation allowance non-current
$
527,714
$
553,621
120
$
31, 2007
900,799
C. Components of deferred income tax assets and liabilities:
December 31, 2008
Amount
Tax Effect
Current (shown in other current assets):
Temporary differences
Provision for loss on obsolete
inventories
Allowance for sales rebate
Unrealized warranty
Others
Loss carryforward
Valuation allowance
Non-current:
Temporary differences
Unrealized investment gain
Others
Investment tax credits
Valuation allowance
$ 1,123,376
826,152
763,168
787,335
175,135
( $ 2,110,854 )
1,713,514
$ 280,844
206,538
190,791
196,834
43,784
(
10,218 )
$ 908,573
December 31, 2007
Amount
Tax Effect
$ 495,158
883,210
2,154,530
4,641
( $ 527,714 ) ( $ 2,110,854 )
428,379
989,376
218,753
(
406,536 )
( $ 287,118 )
$ 123,790
220,802
538,633
1,160
(
10,218 )
$ 874,167
( $ 527,715 )
247,344
62,157
(
196,697 )
( $ 414,911 )
D. The Company is eligible for investment tax credits under the statute for
Upgrading Industry and losses available to be carry forward as of December 31,
2008 are as follows:
Item
Research and Development
Total tax credits
$
-
Loss carryforward
-
Unused tax credits
$
Final year tax
credits are due
152,841
2012
43,784
2018
The Company assumed investment tax credits of Tyan Computer Technology Co.,
Ltd.investment tax credits
Item
Research and Development
Total tax credits
$
-
Unused tax credits
$
65,912
Final year tax
credits are due
2012
E. As of December 31, 2008, the Company'
s income tax returns through 2006 have
been assessed and approved by the Tax Authority. The Company has applied for
tax litigation for years 2000, 2001 and 2003, because taxable income were
adjusted and part of the research and development for tax credits were assessed
as not qualified for tax credits, which resulted in no income tax refundable for
year 2000 and an additional tax payable for year 2001. The Company has paid
half of the additional tax payable for year 2001. The administrative lawsuits
regarding income tax returns of years 2000, 2001 and 2003 have been dismissed
by the Taiwan High Court, so the Company has filed a tax appeal with the
Supreme Court of R.O.C. In addition, the Company has applied for tax
re-investigation for years 2004, 2005 and 2006, because all the research and
development and part of employees’ training for tax credits were assessed as not
qualified for tax credits and other income was added, which resulted in additional
tax payable for years 2005 and 2006. However, since there were unused tax
credits before 2004, the Company was not assessed at additional tax for year
2004. The tax re-investigation for 2004 income tax return has been dismissed
by the Tax Authority, so the Company has filed a tax appeal for that year. The
Company has assessed the income tax effect for all the cases above and accrued
the corresponding tax liability in the financial statements.
121
F. Under the PRC tax regulations, the corporate income tax for Mainland China
subsidiary shall be levied at the rate of 25 %. However, as MiTAC Computer
(Kunshan) Co. Ltd. is a foreign-invested manufacturing enterprise established in
the PRC, according to the Corporate Income Tax Law of the PRC, it is exempt
from corporate income tax for the first and second profit-making years and are
subject to a 50% reduction of corporate income tax from the third through fifth
profit-making years. Pursuant to Article 57 of the Corporate Income Tax Law
of the PRC (“new tax law”) passed at the National People’s Congress held on
March 16, 2007, those enterprises which were established before the effective
date of new tax law and have enjoyed tax relief shall be assessed at the tax rate
regulated by new tax law after five-year enforcement of the law, and those
enterprises which enjoy tax relief for a specific period can continue enjoying tax
relief until due date, while for those enterprises which have not reported any
profit and not enjoyed tax relief, the tax grace period starts from January 1, 2008.
Accordingly, the regulatory corporate income tax rate was 18% for 2008.
However, MiTAC Computer (Kunshan) Co. Ltd. was assessed at the tax rate of
9% for that year because of the 50% tax reduction.
G. Unappropriated earnings
Earnings earned before 1998
Earnings earned in and after
1998
December 31, 2008
$
305,502
December 31, 2007
$
305,502
7,936,909
8,242,411
11,161,426
11,466,928
$
$
H.
December 31, 2008
Balance of stockholder’s
tax credit account
$
1,439,740
December 31, 2007
$
2008 (estimated)
Ratio of deductible tax
credit
$
122
18.14%
1,309,935
2007
$
17.06%
22) Earnings per share
Amount
Earnings per share (in dollars)
Weighted
Average
Outstanding
Common
Shares
Income before
Income before
(in thousands
income tax
Net income
income tax
Net income
of shares)
Basic earnings
per share:
Consolidated net
$
income
Net income
attributable to
Majority
stockholders
$
Less: effect of
dilutive
potential
common stocks
issued by
investee
companies
(
Effect of dilutive
potential
common stocks:
Convertible bonds
Employee stock
options
Employees’ bonus
Diluted earnings
per share
$
796,739
$
459,289
635,444
$
459,289
58,634 )
(
1,502,941
$ 0.31
58,634 )
-
-
64,956
-
-
1,938
400,655
1,571,513
576,810
$ 0.42
$
1,678
$
0.37
$
0.25
Effective January 1, 2008, as employees’ bonus could be distributed in the form of
stock, the diluted EPS computation shall include those estimated shares that would
be increased from employees’ stock bonus issuance in the weighted-average number
of common shares outstanding during the reporting year, which taking into account
the dilutive effects of stock bonus on potential common shares; whereas, basic EPS
shall be calculated based on the weighted-average number of common shares
outstanding during the reporting year that include the shares of employees’ stock
bonus for the appropriation of prior year earnings, which have already been resolved
at the stockholders’ meeting held in the reporting year. Since capitalization of
employees’ bonus no longer belongs to distribution of stock dividends (or retained
earnings and capital reserve capitalized), the calculation of basic EPS and diluted
EPS for all periods presented shall not be adjusted retroactively. However, the
accounting treatment for the appropriation of employees’ bonus for 2007 earnings
resolved at the stockholders’ meeting held in 2008 is still in accordance with the
regulations on capitalization of employees’ bonus under paragraphs 19 and 39 of
R.O.C. SFAS No. 24, “Earnings per Share”.
123
Earnings per share (in dollars)
Weighted
Average
Outstanding
Common
Shares
Income before
(in thousands
Net income
income tax
Net income
of shares)
Amount
Income before
income tax
Basic earnings
per share:
Net income
$
Consolidated net
income
attributable to
Majority
$
stockholders
Less: effect of
dilutive
potential
common stocks
issued by
investee
companies
(
Effect of dilutive
potential
common stocks:
Convertible bonds
Employee stock
options
Diluted earnings
per share
$
6,655,257
$
5,648,262
6,492,172
$
5,648,262
64,136 )
(
1,463,033
52,834 )
-
80,257
-
-
13,062
5,595,428
1,556,352
$
$ 3.86
-
-
6,428,036
$ 4.44
$
4.13
$
3.60
a. The weighted-average outstanding common stock for 2008 and 2007 excluded
treasury stock.
b. The weighted-average outstanding common stock for 2008 has been adjusted
retroactively because of the capitalization of unappropriated earnings in 2007.
c. For 2008, the potential common shares issuable upon the conversion of second,
third and fourth employee stock options were not included in the calculation of
diluted EPS as the inclusion of such shares would have been anti-dilutive.
23) Personnel, depreciation and amortization expenses
The personnel, depreciation and amortization expenses for 2008 and 2007 were as
follows:
Cost of sales
Personnel expenses
Salaries
$
918,285
Operating
expenses
Non-operating
expenses
$
$
3,527,660
Total
-
$
4,445,945
759,706
2,990,677
-
3,750,383
31,339
204,996
-
236,335
6,900
153,401
-
160,301
120,340
178,586
-
298,926
Depreciation
830,440
391,909
11,657
1,234,006
Amortization
375,453
123,414
-
498,867
Labor and health insurance
Pension
Others
124
Cost of sales
Personnel expenses
$
Salaries
1,752,757
Operating
expenses
Non-operating
expenses
$
$
3,679,175
Total
-
$
5,431,932
1,440,928
3,150,829
-
4,591,757
Labor and health insurance
62,523
193,837
-
256,360
Pension
17,480
109,149
-
126,629
Others
231,826
225,360
-
457,186
Depreciation
1,060,293
557,137
15,945
1,633,375
Amortization
480,013
163,379
-
643,392
5. RELATED PARTY TRANSACTIONS
1) Names of the Related Parties and their relationship with the Company
The relationship with the Company
Names of the related parties
MiTAC Inc.
Investor Company accounted for under the equity method.
MiTAC Technology Corp. (MTC) and its
subsidiaries
Investee Company accounted for under the equity method
(Note 1)
Tyan Computer Technology Corp. (TYAN)
Investee Company accounted for under the equity method.
(Note 2)
3Probe Technologies Corp.
Shen-Tong Construction & Development Co.,
Ltd.
Wisdom Investment Co., Ltd.
Indirect Investee Company accounted for under the equity
method.
Tyan Computer Corp. (TYAN US)
method.
Synnex Corp. (SYNNEX) and its subsidiaries
method.
Synnex Technology International Corp. (SIC)
Common board chairman.
Harbinger Venture Management Co., Ltd.
Harbinger II (BVI) Venture Capital Corp.
UPC Technology Corporation
BOC Lien Hwa Industrial Gas Corp.
The Company’s chairman is BOC’s director
United Industrial Gas Corporation
The Company’s chairman is United’s director
MiTAC Communication Co., Ltd.
The Company’s chairman is MiTAC Communication Co., Ltd.’s
director.
Gemtek Technology Co., Ltd. (Gemtek)
The Company is Gemtek’s director
Harbinger VI
Note1: MTC merged with Mitac Precision Technology Co., Ltd. and assumed its
subsidiary company of Hot Link Technology Ltd. and its subsidiaries on August
31, 2007. The transaction amounts after August 31, 2007 are disclosed in related
party transactions
125
Note 2: The Company merged with Tyan Computer Technology Co., Ltd. and assumed the
subsidiary, Foreground Technology Ltd. The transaction amounts before August
31, 2007 are disclosed in related party transactions.
2) Significant related party transactions and balances
A. Purchases (including process expenditures)
For the years ended December 31, 2008 and 2007, the Company had purchases from
related parties amounting to $4,101,975 and $2,495,551, respectively.
The purchase price to related parties is based on market value. The payment period is
150 days and 90 days after offsetting certain receivables and payables according to
payment terms to overseas and domestic related parties, respectively. The payment
period to regular suppliers is approximately 90 days after purchase date.
B. Sales
SYNNEX and its subsidiaries
Others
$
$
2008
8,423,052
1,235,341
9,658,393
$
$
2007
10,412,897
3,226,097
13,638,994
The selling price to related parties is based on market value. The collection period is
150 days and 90 days after offsetting certain receivables and payables according to
collection terms to overseas and domestic related parties, respectively. The collection
period for regular customers is approximately 90 days after shipping date.
C. Accounts receivable and notes receivable
Others
$
$
December 31,
2008
2,879,557
$
191,642
3,071,199
$
2007
2,649,878
505,261
3,155,139
D. Other receivables
December 31,
2008
MTC and its subsidiaries
$
Others
2007
66,314
35,061
$
2,172
$
126
103,547
190,951
24,771
$
215,722
E. Accounts payable
December 31,
2008
$
Others
2007
360,386
$
678,408
92,448
$
452,834
35,853
$
714,261
F. Other payables
December 31,
2008
$
Others
2007
6,798
$
73,363
6,470
29,489
$
42,757
9,661
1,487
$
84,511
G. During 2008 and 2007, the Company paid to related parties expenses amounting to
$55,247 and $23,907, respectively.
H. (a) During 2008 and 2007, the Company sold machinery and mold equipment to
related parties at the sales price of $2,999 and $3,596 and recognized a gain of
$1,210 and $258, respectively.
(b) During 2008 and 2007, the Company purchased machinery and mold equipment
from related parties at the purchase price of $255,805 and $146,768, respectively.
I. As of December 31, 2007, the Company provided a guarantee for Suzhou MiTAC
Precision Technology Co., Ltd. via Silver Star Development Ltd. amounting to
$83,225.
J. As of December 31, 2008 and 2007, MiTAC Technology Corp. provided guarantees
for rent to the Company amounting to $3,600.
K. In 2008 and 2007, the Company earned rent revenue from related parties amounting
to $33,020 and $24,778, respectively.
L. Directors’, supervisors’ and key managers’ salary, bonus, and remuneration
2007
2008
Salaries, bonus, and service execution fees
$
Remuneration
129,439
$
4,008
$
133,447
119,072
130,932
$
250,004
(a)Salaries included wages, bonuses, meal expense, retirement pension, employees’
bonuses and travel allowance.
(b)Remuneration included appropriation of directors’ and supervisors’ remuneration and
employees’ bonuses.
(b)The relevant information above was disclosed in the Company’s annual report.
127
6. ASSETS PLEDGED AS COLLATERAL
ASSETS
Building
$
December 31,
2008
$
Building
Long-term investments accounted
for under the equity method:
Marketable securities
Treasury stocks:
Marketable securities
Time deposits
2007
560,922
Subject of collateral
Short-term debts and provisional
seizure
Short-term debts
507,316
-
927,106
925,792
Bonds payable
24,039
66,344
565,168
Commercial paper payable
Development of Treasure
Mountain, Letter for guarantee
of customs duties, and royalty
contract
9,500
5,500
24,150
-
$ 1,492,111
$ 2,123,726
Other financial assets:
Time deposits
Saving account
Guarantee for application for
letters of credit
Letter for guarantee of sponoring
Expo 2010
7. COMMITMENTS AND CONTINGENT LIABILITIES
1) The Group had outstanding letters of credit for inventory purchases of approximately
$0 and $68,451 at December 31, 2008 and 2007, respectively.
2) The Company has credit lines for guarantee of customs duties in 2008 and 2007. As
of December 31, 2008 and 2007, the amount of customs duties guaranteed by the
bank was $3,400 and $4,000, respectively.
3) The Company leased certain land (from 2008 to 2026), factories and offices (up to
December 2026 and December 2009) under operating leases. Annual rental
payments are approximately $45,879.
4) Mio International Limited, the Company’s subsidiary, entered into a software
technology transfer agreement with Nav N Go Kft. Because the two parties were
involved in a dispute about contract termination, Nav N Go Kft filed a separate
lawsuit against the Company’s three subsidiaries, Mio International Limited, Mio
Technology Benelux NV and Mio Technology USA Limited, alleging their violation
of contract and infringement of its copyright. The three lawsuits are under the
jurisdiction of the courts in the United States of America, Belgium and Hungary,
respectively.
8. SIGNIFICANT DISASTER LOSS
None.
9.SIGNIFICANT SUBSEQUENT EVENTS
1) On January 12, 2009, the Company and its overseas subsidiary-Silver Star Developments
Ltd. (SSDL) and SSDL’s subsidiary signed an agreement to jointly purchase the assets of
the Consumer Global Navigation Satellite Systems Division owned by Magellan
Navigation, Inc. and its subsidiary, including navigation software, patent, trademark,
technology transfer, intellectual property rights, management team, clients, sales channels,
etc.. According to the purchase agreement, the total purchase price is up to US$96,000 and
128
the price is subject to adjustment based on the net asset value of that division on the
acquisition date. As of April 6, 2009, the Company, SSDL and SSDL’s subsidiary had
paid US$35,352 in advance for this purchase. Regarding the net asset value, discussions
are still ongoing.
2) The Company decided to participate in the private placement of Loyalty Founder
Enterprise Co., Ltd. and subscribe for 60,000,000 shares issued through the private
placement in the amount of $150,000, with a subscription price of NT$2.5 (in dollars) per
share. Therefore, the Company will hold 25.24% equity interest in Loyalty Founder
Enterprise Co., Ltd. after this subscription. As of April 6, 2009, the Company had paid
$80,000 for the share subscription.
10. OTHER INFORMATION
1) The fair values of the financial instruments.
December 31, 2008
December 31, 2007
Fair value
Financial Assets
Financial assets with
fair value equal to
book value
Book value
Quotations
in an active
market
$ 18,595,829
$
Evaluation
model
Book value
-
$ 18,595,829
$ 30,429,944
$
-
-
-
1,283,106
1,283,106
-
Financial assets at fair
value through profit
or loss
Available-for-sale
financial assets
Financial assets carried
at cost
Fair value
Quotations
in an active
market
Evaluation
model
-
$ 30,429,944
6,618
6,618
-
2,050,355
2,050,355
-
1,435,961
-
1,435,961
1,709,031
-
1,709,031
$ 21,314,896
$ 1,283,106
$ 20,031,790
$ 34,195,948
$ 2,056,973
$ 32,138,975
Forward foreign
exchange
$
11,977
$
-
$
11,977
$
$
$
Interest rate Swap
$
1,045
$
-
$
1,045
2,683
December 31, 2008
Book value
$ 18,914,020
$
2,683
December 31, 2007
Fair value
Quotations
in an active
market
-
Fair value
Evaluation
model
Book value
Quotations
in an active
market
$ 18,914,020
$ 27,045,335
$
Evaluation
model
Financial Liabilities
Financial liabilities with
fair value equal to
book value
Bonds payable
Purchase of forward
foreign exchange
-
-
$ 27,045,335
1,740,500
1,712,369
-
5,000,000
5,056,816
-
$ 20,654,520
$ 1,712,369
$ 18,914,020
$ 32,045,335
$ 5,056,816
$ 27,045,335
$
$
$
$
19,601
$
-
$
Currency Swap
88,995
-
88,995
$
2,210
$
-
$
19,601
2,210
Interest rate Swap
$
10,983
$
-
$
10,983
The methods and assumptions used to measure the fair value of financial instruments are as
follows:
A. For short-term instruments, the fair values were determined based on their carrying
values because of the short maturities of the instruments. This method was applied to
Cash and cash equivalents, Notes receivable, Accounts receivable. Other receivables,
Other financial assets, Refundable deposits, Short-term loans, Commercial paper payable,
Notes payable, Accounts payable, Income tax payable, Accrued expenses, Other
129
payables, Provision for product warranty, Other current liabilities and Deposit in.
B. Available-for-sale financial instruments are based on the market value of securities.
C. Fair value of bonds payable is estimated using the market value. The book value of
long-term loans is used as fair value as the loans bear floating interest rates.
D. Derivative financial instruments: The estimated fair values are the expected cash flow
(using rates quoted by financial institutions) if the contracts are terminated at the balance
sheet date, including unrealized gains or losses. The quotes from financial institutions are
available for most of the Company’s derivate financial instruments.
2) As of December 31, 2008 and 2007, the financial assets and the financial liabilities with
fair value risk due to the change of interest amounted to $1,458,992 and $2,816,122;
$1,240,500 and $4,544,000, respectively, and the financial assets and the financial
liabilities with cash flow risk due to the change of interest amounted to $5,015,906 and
$11,126,454; $2,653,444 and $4,854,813, respectively.
3) For the years ended December 31, 2008 and 2007, total interest income and total
interest expense for financial assets and financial liabilities that are not at fair value
through profit or loss amounted to $248,416 and $255,152; $141,168 and $318,803,
respectively.
4) Financial risk management
In order to identify, evaluate and manage market risk, credit risk, liquidity risk and cash
flow risk, the Group has established a risk management program and carries out
procedures to monitor the fluctuations in exchange rate and interest rate, as well as
implement credit controls over its transaction counterparties.
By considering factors such as changes in industrial environment, competitive position,
and market risks, the Group adjusts related positions of financial assets and liabilities in
order to optimize its risk exposure, maintain liquidity and centrally manage all market
risks. The Group mainly use derivative financial instruments to hedge the operating risk.
In order to manage its risk exposure, the Group established a risk management program
as follows:
A. Interest rate risk
The Group undertakes derivative financial instruments such as interest rate swaps, to
hedge cash flow risk and fair value risk arising from fluctuations in interest rates.
B. Foreign exchange risk
To hedge cash flow fair value risk arising from fluctuations in exchange rates, the
Group undertakes derivative financial instruments such as forward exchange
contracts to hedge recognized assets and liabilities denominated in foreign
currencies and highly probable forecast transactions.
5) Information of financial risk
A. Market risk
(a) Equity financial instruments: The investment in these financial instruments is
influenced by market price. The Group evaluates the investment performance
periodically. Thus, the price risk is low.
(b) The Group issues secured and unsecured bonds payable. Although the fair value
of bonds payable would be changed due to changes in market interest rate and
market price, the Group evaluates the market risk periodically. Thus, the Group
130
expects to have no significant market risk.
(c) Short-term financial instruments: Maturities of these financial instruments are
within one year. Therefore, the Group expects to have no significant market risk.
(d) Derivative financial instruments: The forward contract was entered into for
hedging the fluctuation of exchange rate. Gains or losses on this contract is likely
to be offset from the hedged items. Therefore, the market risk is low.
B. Credit risk
(a) Equity financial instruments: The Group trades with reputable counter-parties.
Thus, there is no significant credit risk.
(b) There are no credit risk in the Group’s bonds payable.
(c) Short-term financial instruments: The Group has established control procedures
over the credit management on counter-parties, and the counter-parties are
reputable companies and financial institutions with high credit ratings. The Group
believes its exposure to potential default risk is low.
(d) Derivative financial instruments: The Group believes its exposure to potential
default risk is low due to the counter-parties being reputable institutions, and the
Group diversifies the credit risks by entering into transactions with multiple
counter-parties.
C. Liquidity risk
(a) Equity financial instruments:
The Group invests in available-for-sale financial assets, which are traded in
active markets and can be readily converted into certain amount of cash
approximate to their fair vaules. The liquidity risk exposure is low.
The Group is exposed to a higher liquidity risk since its investments in financial
assets carried at cost have no active market. However, the Group has no intention
to hold these financial assets for trading and does not expect to sell those
financial assets frequently. Therefore, the exposure to liquidity risk would be
effectively reduced.
(b) Bonds payable:
The Group manages its financing and investing activities based on its operating
capital requirements and capital expenditure budgets, thus, the liquidity risk is
expected to be low.
within one year. And the Group has set operating plans to deal with future cash
needs. Thus, liquidity risk is believe to be minimal.
(d) Derivative financial instruments: The forward for trading was entered for hedging
the foreign exchange risk. It results cash in and cash out, respectively, at maturity.
Because the Group will receive and pay the cash on settlement dates and the
future working capital is sufficient, therefore, the liquidity risk and cash flow risk
is low.
131
D. Cash flow risk
(a) The Group issues parts of secured bonds payable with fixed interest rate and parts
of secured bonds payable with floating interest rate. The Group undertakes
interest rate swaps to hedge cash flow risk arising from fluctuations in interest
rates.
The Group issues unsecured bonds payable with zero interest and there is no cash
flow risk arising from fluctuations in interest rates.
(b) Derivative financial instruments: These financial instruments are non-interest
bearing financial instruments. Thus, there is no cash flow risk.
within one year, there is no material cash flow risk.
6) The Group’s interest rate risk arises from floating rate bonds payables. Bonds payables
issued at variable rates expose the Group to cash flow interest rate risk, therefore the
Group undertakes interest rate swaps to hedge cash flow risk.
Designated for hedging
Hedge item
Interest expense of
bonds payable with
floating
interest
rate
Financial
instrument was
designated for
hedging
instrument
Interest rate
SWAP
December 31,
2008
December 31,
2007
$
($
1,045
Items
Amount of gain or loss recognized directly
in equity
Amount removed from equity and
recognized in profit or loss
Amount removed from equity and adjusted
in non-financial assets / liabilities
Period of
anticipated cash
flow
10,983)
2004.05.25~
2009.05.25
Period of gain
(loss) recognized
in income
statements
N/A
For the year ended
December 31, 2008
For the year ended
December 31, 2007
$
$
132
12,028
10,495
-
-
-
-
11. SUPPLEMENTARY DISCLOSURES
A. Information of Significant Transactions:
(1) Loans granted during the year ended December 31, 2008: None.
(2) Endorsements and guarantees provided during the year ended December 31, 2008:
Ratio of
International Corp.
endorsements /
outstanding
the Outstanding
accumulated
Ceiling on total
the Amount of
endorsements /
amount of
Party being
Relationship with
guarantees
endorsements /
endorsements /
endorsements /
guarantees amount
endorsements /
endorsed /
the endorser /
provided for a
guarantees amount
guarantees amount
guarantees with
to net asset value
guarantees
guaranteed
guarantor
single party
during 2008
at Dec. 31, 2008
collateral placed
of the Company
provided
Subsidiary
$16,181,977
$310,000
$160,000
-
0.49%
116,000
116,000
-
0.36%
MiTAC U.K. Ltd.
18,077
16,787
-
0.05%
Mio Technology
196,830
196,830
-
0.61%
16,402
16,402
-
0.05%
597,545
388,800
-
1.20%
82,500
80,073
-
0.25%
Tsu Fung
Investment Corp.
MiTAC Japan
Corp.
UK Ltd.
MiTAC Australia
Pty Ltd.
Silver Star
Developments Ltd.
Tyan Computer
Corp. -USA
133
MiTAC
Maximum
Endorser / guarantor
Limit on
$32,363,953
(3) Marketable securities held as of December 31, 2008:
December 31, 2008
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
Investee company
accounted for under the
equity method
None
!
Board member of
Asia-Paicfic
!
!
Common board
chairman
Available-for-sale
financial assets
!
UPC Technology
Corporation
Lien Hwa Industrial
Corp.
Gemtek Technology Co.,
Ltd.
Financial assets
carried at cost
!
Overseas Investment &
Development Corp.
Asia-Pacific Technology
& Intellectual Property
Service Inc.
Harbinger Venture
Management Co., Ltd.
Harbinger VI
None
!
Tung Da Investment Co.,
Ltd.
Tsu Fong Investment
Corp.
3 Prode Technologies
Co., Ltd.
DLC Technology
Corporation
Lian Jie Investment Co.,
Ltd.
Silver Star Developments
Ltd.
Foreground Technology
Ltd.
Shen-Tong Construction
& Development Co., Ltd.
Channel Overseas
Corporation
MiTAC Inc.
General ledger
account
Long-term
investment
accounted for
under the equity
method
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
Stocks
Relationship with the
issuer
Investee company
equity method
Board member of
Gemtek
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
MiTAC
International
Corp.
Type
!
Securities held by
Name of marketable
securities
MiTAC Technology
Corp.
Number of shares
Book value
Percentage
Market value (Note 1)
190,396,939
$3,716,172
35.45%
$2,713,156
(Note 2)
53,145,723
480,360
49.99%
480,360
98,455,566
763,853
100.00%
1,080,000
10,353
23.13%
1,039,937
(Note 3)
10,353
6,600,000
49,435
100.00%
49,435
12,995,000
75,633
49.98%
75,633
215,495,404
15,338,386
100.00%
9,045,492
546,777
100.00%
15,415,388
(Note 3)
546,777
8,559,400
83,922
47.55%
83,922
1,125,945
-
5.00%
-
28,549,614
645,051
8.69%
645,051
1,000,000
10,000
1.11%
10,000
140,000
-
0.85%
-
23,181,675
189,128
14.05%
189,128
2,700,000
27,000
13.28%
27,000
12,994,032
128,511
1.55%
128,511
22,805,756
264,546
2.90%
264,546
5,522,995
254,058
2.14%
254,058
134
Note 1: The market value of investments accounted for under the equity method was based on the net asset value of the investee company, while the market value of
investments accounted for under the cost method was based on acquisition cost if not listed or the closing price during the last month of the year if listed.
Note 2: The investor provided 47,500 thousand shares as collateral.
Note 3: The book value decreased by $353,086 as the Company accounted for shares held by Tsu Fung Investment Corp. and Silver Star Developments Ltd. and its
subsidiaries in accordance with the Statement of Financial Accounting Standards for treasury stocks.
(4) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2008: None.
(5) Real estate acquired amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2008: None.
(6) Real estate disposed amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2008: None.
(7) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2008:
Board member of
Gemtek
7,950,925
13%
Note 1
Sales
1,250,913
2%
Note 1
Purchases
Sales
400,910
159,902
1%
-
Note 3
Note 1
Purchases
173,839
-
Note 3
1,028,980
2%
Note 1
Sales
!
Sales
!
Note 3
Note 3
!
32%
4%
Unit price
Note 2
!
Credit Term
Note 1
!
Amount
$9,924,934
17,037,953
1,993,584
!
!
!
Common board
chairman.
Purchases
Percentage of
purchase /
sales
16%
!
Mio Technology
Corp.
Synnex
Technology
International
Corp.
Gemtek
Technology Co.,
Ltd.
Purchases /
Sales
Sales
!
!
Tyan Computer
Technology
Corp.-USA
Indirect investee
company
accounted for
under the equity
method.
Indirect investee
company
accounted for
under the equity
method.
!
MiTAC
Technology
Corp. and its
subsidiaries
Synnex Corp.
Relationship with
the counterparty
Investee company
accounted for
under the equity
method
!
!
Name of related
parties
Silver Star
Developments
Ltd. and its
subsidiaries
Credit Term
Note 1
Balance
$4,601,723
Accounts and notes receivable
(payable)
Percentage of
account
39%
Note 3
Note 3
( 2,000,440)
( 228,572)
21%
2%
Note 1
2,760,403
23%
Note 1
65,122
Note 3
Note 1
Note 3
Note 1
(
58,339)
161,431
Footnote
-
-
1%
The collection period is 150 days and 90 days after offsetting certain receivables and payables according to collection terms to overseas and domestic related parties,
respectively. The collection period for regular customers is approximately 90 days after shipping date.
The selling price to related parties is based on market value.
135
The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,
respectively. The payment period for regular supplies is approximately 90 days after purchase date.
Note 3
"
Note 2
"
Note 1
"
!
!
!
!
!
!
!
!
The company
buying /selling
products
MiTAC
International Corp.
Reason and situation of having different
transaction terms between related parties
!
Transactions
(8) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2008:
Balance of receivable from related party
Name of the
counterparty
Company Name
!
!
MiTAC
International Corp.
counterparty
Synnex Corp. and its
subsidiaries
Investee company
Gemtek Technology
CO., Ltd.
Notes/Accounts
receivable
Other
receivables
Total
Overdue receivables
Turnover rate
(times)
Collection
method
Subsequent
received amount
-
N/A
$ 1,205,092
Amount
$
Bad debts allowance
provided
$2,760,403
$ 2,288
$2,762,691
3.02
Board member of
Gemtek
161,431
-
161,431
5.80
-
N/A
153,165
-
Silver Star
Investee company
4,601,723
170,168
4,771,891
1.78
-
N/A
4,320,671
-
Developments Ltd. and
its subsidiaries
accounted for under
the equity method
(9) Information on derivative transactions.
To hedge existing assets denominated in foreign currencies:
December 31, 2008:
Item
Notional Amount (in thousands)
Contract Period
Contract Terms
US$
31,000
2008.10.13~2009.01.23
Note 1
EUR
20,400
2008.10.30~2009.03.16
Note 1
JPY
50,000
2008.12.23~2009.02.26
Note 1
AUD
13,000
2008.10.16~2009.03.16
Note 1
NZD
1,300
2008.11.14~2009.01.23
Note 1
Buy of forward foreign exchange
US$
16,000
2008.10.13~2009.01.21
Note 1
Interest rate SWAP
NT$
500,000
2004.05.25~2009.05.25
Note 2
Contract Period
Contract Terms
2007.12.4~2008.01.28
Note 1
!
!
!
!
Sales of forward foreign exchange
December 31, 2007:
Item
US$
20,000
Note 1
2007.12.28~2008.01.28
Note 1
AUD
24,300
2007.11.26~2008.03.14
Note 1
NZD
2,600
2007.12.18~2008.02.15
Note 1
Buy of currency SWAP
US$
148,150
2007.12.10~2008.01.28
Note 1
Interest rate SWAP
NT$
500,000
2004.05.25~2009.05.25
Note 2
136
2007.11.13~2008.03.14
100,000
30,500
JPY
!
!
!
EUR
!
$
-
accounted for under
the equity method
Note 1: Future cash flow: the Company will receive (pay) cash or sale (purchase) contracts on settlement dates.
Note 2: On exercise of SWAP, the amount of cash outflow is calculated at a fixed rate of 1.6%, and the amount of cash inflow is calculated using a floating rate (6-month
USD-LIBOR-BBA), observed as follows:
2.0%, the floating rate is 3%, and
137
2.0%, the floating rate is 4.5% less 6M LIBOR, which is above or equal to 0%.
if 6M LIBOR
%
$
if 1.1% 6M LIBOR
$
#
If 6M LIBOR 1.1%, the floating rate is 6M LIBOR;
B. Information of Subsidiaries:
(1) Related information of Subsidiaries as of December 31, 2008:
Mainpower
International Ltd.
49.99%
480,360
64,767
32,299
7,081,179
(US$215,495)
7,081,179
(US$215,495)
215,495,404
100.00%
15,338,386
375,898
453,600
625,000
550,000
98,455,566
100.00%
763,853
89,654
67,657
16,800
16,800
1,080,000
23.13%
10,353
482
(38)
129,950
129,950
12,995,000
49.98%
75,633
(7,330)
(3,664)
85,594
85,594
8,559,400
47.55%
83,922
(709)
(375)
297,235
(US$9,045)
297,235
(US$9,045)
9,045,492
100.00%
546,777
10,347
(24,409)
-
6,600,000
100.00%
49,435
(64)
(16,320)
47,905
(US$1,458)
47,905
(US$1,458)
1,457,850
49.96%
50,107
4,963
180,730
(US$5,500)
16,430
(US$500)
5,500,001
50.00%
180,730
(7,578)
!
Taiwan
British Virgin
Islands
Taiwan
British Virgin
Islands
!
British Virgin
Islands
Information
process service,
sales of software
and international
trading.
Investment
Building and
factory
construction,
leasing and sales
Investment
Manufacturing of
data storage
media , computer
and
communication
equipment
65,755
138
Investee
accounted for
under equity
method
!
53,145,723
Note
Subsidiary
!
299,985
Income (loss) of the
investee Company
Investee
accounted for
under equity
method
!
299,985
Book value
!
$1,205,926
Percentage
owned
Subsidiary
!
$3,716,172
!
35.45%
!
190,396,939
Number of shares
Harbinger II
(BVI) Venture
Capital Corp.
$1,391,549
!
DLC Technology
Corporation
$1,391,549
!
Lian Jie
Investment Co.,
Ltd.
Shen-Tong
Construction &
Development
Co., Ltd.
Foreground
Technology Ltd.
Manufacturing and
sale of notebook
computer, military
and industrial
computer systems,
etc.
Investment
!
Tung Da
Investment Co.,
Ltd.
Silver Star
Developments
Ltd.
Tsu Fung
Investment Corp.
3Probe
Technologies
Taiwan
Gain/Loss
recognized by
the Company
$393,721
Beginning
balance
!
Silver Star
Developments
Ltd. (SSDL)
MiTAC
Technology
Corp.
Ending
balance
!
!
!
!
!
!
!
!
!
MiTAC
International
Corp.
the Main business
operations
!
Investor
Shares held by the Company
Location
(Country)
Investee
accounted for
under equity
method by
SSDL
!
Original amount
Investee
Company
the Main business
operations
Ending
balance
Beginning
balance
Synnex Corp.
USA
$747,333
(US$22,743)
$834,085
(US$25,383)
Suzhou MiTAC
Precision
Technology Co.,
Ltd.
Mio Technology
Corp.
China
Information
process services,
sales of computer
peripheral, system
and network
products
Manufacturing of
mainboard,
desktop computers,
interfere cards, etc.
Information
process service and
sales of software.
$443,610
(US$13,500)
$443,610
(US$13,500)
5,000
5,000
Taiwan
139
Number of shares
7,752,824
Percentage
owned
Book value
Income (loss) of the
investee Company
23.96%
5,353,238
2,642,536
-
29.63%
256,869
(24,857)
500,000
100.00%
22,766
5,017
Gain/Loss
recognized by
the Company
Note
!
Location
(Country)
Tsu Fung
Investment
Corp.
Investee
Company
!
!
Investor
Shares held by the Company
!
Original amount
Subsidiary of
Tsu Fung
Investment
Corp.
(2) Loans granted during the year ended December 31, 2008:
Collateral
140
Note 1: The borrowers required short-term capital.
Note 2: Equal to the net worth based on the financial statements audited by independent accountants.
-
-
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
-
!
-
-
!
236,592
-
!
525,408
-
!
-
-
!
923
-
!
936
-
!
-
-
!
-
-
-
!
170,225
-
-
!
-
-
!
-
-
-
!
25,954
-
-
$6,019,621
(Note 2)
!
-
-
$6,019,621
(Note 2)
!
-
-
-
Ceiling on total
loans granted
!
259,544
-
-
Limit on loans granted
to a singly party
!
-
!
-
-
!
3,605
-
!
-
!
-
-
!
139,508
-
-
!
-
-
$
!
-
-
None
!
17,844
-
-
Value
!
-
$
Item
!
-
Allowance
for
doubtful
accounts
!
778,632
-
!
-
!
-
!
611,800
-
!
-
!
-
!
49,943
Operations
!
-
!
Note 1
!
-
$
!
-
$2,242,810
Reason of
short-term
financing
!
Nature of
loan
the Ending
balance
!
!
!
!
!
!
!
!
!
!
MiTAC (U.K.)
Ltd.
Start Well
Technology
Ltd.
MiTAC Star
Service Ltd.
Dynamic Star
Investment
Ltd.
Software
Insights Ltd.
Magicmate
Group Ltd.
Huge Extent
Ltd.
Booming
Enterprises
Ltd.
Mass Bridge
Ltd.
MiTAC
Cooperatie
U.A.
Mio
Technology
UK Ltd.
Affiliated
loans
receivable
!
Pacific China
Corp.
Interest
rate
Maximum
outstanding
!
!
!
!
!
!
!
!
!
!
!
!
Silver Star
Developments
Limited
Borrower
!
Creditor
General
ledger
account
Amount of
transaction
with
borrower
(3) Endorsements and guarantees provided during the year ended December 31, 2008:
Suzhou MiTAC
Precision
Technology Co., Ltd.
Joint venture investee
Company
141
$
-
Ratio of accumulated
endorsements /
guarantees amount to
net asset value of the
Company
$580,156
$388,800
2.58%
361,460
-
-
-
134,533
-
-
-
83,225
-
-
-
Ceiling on total
amount of
endorsements /
guarantees provided
$15,049,052
(Note)
!
the Amount of
endorsements /
guarantees with
collateral placed
!
!
Note: Equal to the net worth based on the financial statements audited by independent accountants.
the Outstanding
endorsements /
guarantees amount at
Dec.31, 2007
!
MiTAC Research
(Shanghai) Ltd.
$15,049,052
!
MiTAC Computer
(Kunshan) CO., Ltd.
Subsidiaries
!
MiTAC Computer
(Shunde) Corp.
endorser / guarantor
!
!
!
!
Party being endorsed
/ guaranteed
!
Endorser / guarantor
Maximum
outstanding
endorsements
guarantee amount
during 2007
Limit on
endorsements /
guarantees provided
for a single party
(4) Marketable securities as held of December 31, 2008:
December 31, 2008
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
!
Financial assets carried at
cost
Long-term investment
equity method.
!
!
!
!
Tsu Fung’s investee company
accounted for under the equity
methods.
SSDL’s investee company
method
!
Financial assets carried at
cost
!
142
!
!
!
None
Synnex Corp.
Suzhou MITAC Precision
Technology Co., Ltd.
Mainpower International
Ltd.
Brilliant Star Holdings
Ltd.
Budworth Investments
Ltd.
Gapura Inc.
Global Strategic
Investment Inc.
Panasas Inc.
MiTAC’s investee company
method
None
!
Harbinger II (BVI)
Venture Capital Corp.
Available-for-sale financial
assets
!
Harbinger Venture
Management Co., Ltd.
3Probe Technologies
Corp.
Cirocomm Technology
Corp.
Lien Yung Investment
Corp.
G. Marso Electronics, Inc.
Mio Technology Corp.
None
!
Linpus Technology Corp.
General ledger account
!
!
!
!
!
!
!
!
!
Synnex Technology
International Corp.
UPC Technology
Corporation
Lien Hwa Industrial
Corp.
MiTAC International
Corp.
Relationship with the issuer
!
!
!
!
!
!
!
!
!
!
!
!
!
Stocks
!
Silver Star
Developments
Ltd.
Name of marketable
securities
!
!
!
!
!
!
!
!
Stocks
!
!
!
!
!
!
!
!
!
Tsu Fung
Investment Corp.
Type
!
Security held by
Market value
(Note 1)
Number of
shares
Book value
Percentage
3,293,710
$111,986
0.27%
$111,986
6,402,969
63,325
0.76%
63,325
1,152,545
13,370
0.15%
13,370
20,366,568
239,307
1.33%
239,307
21,395,741
2,125,607
310,211
3,485
3.98%
18.68%
310,211
3,485
498,143
479
19.99%
479
6,000
30
0.13%
30
2,667,500
37,500
6.31%
37,500
9,015,254
87,969
19.99%
87,969
1,667,000
500,000
17,604
22,766
6.45%
100.00%
17,604
22,766
1,457,850
50,107
49.96%
50,107
7,752,824
(Note 2)
5,353,238
256,869
23.96%
29.63%
2,886,406
256,869
5,500,001
180,730
50.00%
180,730
7,115,000
232,553
15.29%
232,553
4,744,000
91,781
14.83%
91,781
295,831
1,000,000
23,089
5.55%
1.26%
23,089
1,391,354
-
0.99%
-
December 31, 2008
Stocks
Silicon Storage
Technology Inc.
!
!
!
!
!
Available-for-sale financial
assets
MiTAC’s investee company
method
None
!
Synnex International
Corp.
MiTAC International
Corp.
!
Cirocomm Technology
Harbinger Ruyi Venture
Limited
Ono Sanyo
General ledger account
!
!
GDR
Relationship with the issuer
!
!
!
!
!
!
!
!
!
Type
!
Security held by
Name of marketable
securities
Market value
(Note 1)
Number of
shares
Book value
Percentage
2,667,500
1,000,000
37,432
32,860
6.31%
18.18%
37,432
32,860
219,000
32,091
4.75%
32,091
2,444,619
83,117
0.20%
83,117
2,763,889
32,476
0.18%
32,476
290,909
21,891
0.28%
21,891
Note 1: The market value of investments accounted for under the equity method was based on the net asset value of the investee company, while the market value of investment
accounted for under cost method was based on acquisition cost if not listed or the average closing price during the last day of the year if listed.
Note 2: It’s a limited company.
(5) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2008:
Balance as at January 1,
2008
Amount
Third party
None
8,652,824
$5,363,029
-
Subsidiary
of SSDL
1
85,268
1
Number of
shares (in
thousands)
Number of
shares (in
thousands)
Amount
Selling
price
Book
value
$667,586
$533,158
120,923,879
3,973,559
-
--
5
10,131,235
332,912
-
1
-
5,500,000
180,730
9,900,001
580,711
20,000,000
50,500,00
1,656,236
900,000
2,798
Number of
shares (in
thousands)
Gain (loss)
on disposal
Amount
$134,428
7,752,824
$5,353,238
--
-
120,923,880
4,083,520
--
--
-
10,131,236
332,915
-
--
--
-
5,500,001
181,784
657,200
-
--
--
-
29,900,001
1,245,412
24,000,000
788,640
-
--
--
-
74,500,000
2,466,168
4,300,100
141,301
-
--
--
-
5,200,100
144,136
900,000
143
$
Balance as at December 31,
2008
Disposal
-
!
!
!
!
!
!
!
Note 2
!
Number
of shares
(in
thousands)
!
!
!
!
Counterparty
Relationship
with the
Company
!
Software
Insights Ltd.
!
Pacific China
Corp.
Best Profit
Ltd.
Mass Bridge
Ltd.
Start Well
Technology
Ltd.
MiTAC Star
Service Ltd.
Long-term
investments
accounted
for under the
equity
method
!
!
!
!
!
!
Pacific China
Corp.
Synnex Corp.
!
Investor
Silver Star
Development
Ltd.
Marketable
securities
General
ledger
account
Addition
Balance as at January 1,
2008
Pacific China
Corp.
convertible
preferred
stock
Note 1
Financial
assets
carried at
cost
!
!
!
!
Counterparty
Relationship
with the
Company
!
Best Profit Ltd.
Huge Extent
Ltd.
Mio
Technology
UK Ltd.
Pacific Metal
Developments
Ltd.-
!
!
Investor
Marketable
securities
General
ledger
account
Affiliated
company
Number
of shares
(in
thousands)
Addition
Number of
shares (in
thousands)
Amount
Balance as at December 31,
2008
Disposal
Number of
shares (in
thousands)
Amount
Selling
price
Book
value
Number of
shares (in
thousands)
Gain (loss)
on disposal
Amount
1
-
8,000,000
262,880
-
--
--
-
8,000,001
262,880
10,000
22,759
5,497,684
306,624
-
--
--
-
5,507,684
(181,509)
5,100,000
154,204
-
-
5,100,000
-
-
-
154,204
154,204
Note 1: Pacific Metal Developments Ltd. retired preferred stcok.
Note 2: Increase investment by a debt-for-equity swap.
(6) Real estate acquired exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2008: None.
(7) Real estate disposed exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2008: None.
(8) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2008:
1,850,883
7.40%
Note 2
Sales
Purchases
157,728
1,250,913
0.54%
68.10%
Note 1
Note 5
26.30%
Note 4
Sales
400,910
144
!
Purchases
!
Note 2
!
39.66%
!
9,924,934
Unit price
Note 3
!
!
!
MIC’s Investee
company accounted
for under the equity
method
Credit Term
Note 1
Purchases
MiTAC
International
Corp.
Purchase / Sales
Sales
Transactions
Percentage of
purchase /
sales
Amount
$17,037,953
58.65%
!
MiTAC
Technology
Corp. and its
subsidiaries
!
MiTAC
International
Corp.
Relationship with
counterparty
SSDL’s parent
company
!
!
Tyan Computer
Name of
related parties
MiTAC
International
Corp.
!
!
!
!
The company
buying/selling
products
Silver Star
Developments
Ltd. (SSDL) and
its subsidiaries
Reason and situation of having
different transaction term
between related parties and
others
Accounts and notes receivable (payable)
Credit Term
Note 1
Balance
$2,000,440
Percentage of
account
35.43%
Note 2
(4,601,723)
67.98%
Note 2
(131,814)
1.95%
Note 2
Note 5
29,508
(65,122)
0.52%
56.21%
Note 4
-
-
Note
"
"
"
The collection period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,
respectively. The collection period for regular customers is approximately 90 days after shipping date.
Note 2 The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties,
respectively. The payment period to regular supplies is approximately 90 days after purchase date.
Note 3 The selling price to overseas related parties is based on market value. The selling price to domestic related parties is based on common domestic price.
Note 1
Note 4
"
"
The collection period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The collection period for regular
customers is approximately 90 days after shipping date.
Note 5 The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The payment period to regular
supplies is approximately 90 days after purchase date.
(9) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2008:
Balance of receivables from related party
Name of the
counterparty
Company Name
Silver Star
Developments Ltd.
and its subsidiaries
MiTAC
International
Corp.
Overdue receivable
Relationship with
the counterparty
Notes / Accounts
receivable
Other receivables
Total
Turnover rate
(times)
SSDL’s parent
company
$2,000,440
$526,813
$2,527,253
3.44
(10) Information on derivative transactions:
December 31, 2007:
Item
Contract Period
Contract term
2007.07.19~2008.05.08
Note
SSDL and its subsidiaries
US$
4,200
145
Note : Future cash flow: the company will receive (pay) cash or sale (purchase) contracts at settlement dates.
Amount
$
-
Collection method
Subsequent
amount received
N/A
$824,128
Bad debt
allowance
provided
$
-
C. Relevant Information Regarding Investments In Mainland China:
a) Basic information, change in investment balance and profits/losses recognized from the direct investment:
Amount of remittance
out in 2008
Naviart
Information
Technolgoy
(Shanghai) Co.,
Ltd.
Mio Technology
Ltd.
Shenyang Heda
Computer Co.,
LTd.
MITAC
LOGISTIC
SERVICE
(KUNSHAN)
LTD.
839,341
(RMB174,576)
50,244
(RMB10,450)
13,319
(RMB2,770)
9,423
(RMB1,960)
15,117
(RMB3,144)
13,462
(RMB2,800)
$
Remittance
in
-
$
-
943,082
(uS$ 28,700)
-
-
32,860
(US$1,000)
-
32,860
(US$1,000)
Shares held by
the Company
(Direct/indirect)
Profit/loss
recognized in
2008 (Note 1)
Ending balance of book value
on December 31, 2008
Ending balance of
profit remittance
into Taiwan
100.00%
$61,200
$3,522,936
943,082
(US$28,700)
100.00%
106,025
1,976,519
-
-
32,860
(US$1,000)
100.00%
4,331
54,876
-
-
-
32,860
(US$1,000)
100.00%
7,864
63,598
-
233,306
(US$7,100)
-
-
233,306
(US$7,100)
15.29%
-
-
-
170,872
(US$5,200)
-
-
170,872
(US$5,200)
100%
20,206
272,831
-
443,610
(US$13,500)
-
-
443,610
(US$13,500)
50.00%
(9,525)
256,869
-
7,394
(US$225)
41,897
(US$1,275)
-
49,291
(US$1,500)
100.00%
(727)
49,862
-
3,286
(US$100)
-
-
3,286
(US$100)
100.00%
1,861
(8,958)
-
8,215
(US$250)
-
-
8,215
(US$250)
100.00%
7,948
10,562
-
4,271
(US$130)
-
-
4,271
(US$130)
34.21%
-
-
-
-
13,144
(US$400)
-
13,144
(US$400)
100.00%
(977)
12,428
-
146
Suzhou MITAC
Precision
Technology Co.,
Ltd.
Mio Technology
(Chengdu) Ltd.
1,528,575
(RMB317,931)
Remittance
out
Catac Electronic
(Zhong-Shan) Co.,
Ltd.
MiTAC Research
(ShangHai)
Ltd.-MRC
39,796
(RMB8,277)
!
206,932
(RMB43,040)
MiTAC
Technology
(Kunshan) Co.,
Ltd.
39,796
(RMB8,277)
!
Design and
manufacturing of
computers and related
accessories
Manutacturing of
mainboard, desktop
computers, interf are
cards, etc.
Manufacturing
assembling computers
and provide test, main
tenance and service for
related products
Manufacturing
and provide test,
maintenance and
service for related
products
Sales computer
accessories and related
service.
Design and
manufacture of
computer accessories
Service of good import
and export in domestic
of Manland china ,
international
distribution and simple
processing
MiTAC Service
(Shanghai) Co.,
Ltd.
!
1,463,139
(RMB304,321)
!
Sales and
manufacturing of
computer accessories,
hardware, software and
related services.
Manufacturing,
and provide test,
maintenance and
service for related
product.
Sales and
manufacturing of
computer accessories,
hardware, software and
related service.
Sales and
manufacturing of PCB.
$2,293,628
(US$ 69,800)
!
MiTAC Computer
(Kunshan) Co.,
Ltd.
Invest in
Mainland
China through
investing
company in
third area
!
$2,965,682
(RMB616,837)
!
Manufacturing of
computer cases and
monitors, etc.
!
MiTAC Computer
(Shunde) Corp.
Beginning balance of
remittance in 2008
!
Capital
Method of
investment
!
Main activities of
investee
!
Name of investee
in Mainland China
Ending balance of
remittance from
Taiwan on
December 31,
2008
$2,293,628
(US$ 69,800)
$
-
Ending balance of investment from Taiwan on
Approved investment amount by Ministry of
The ceiling amount of the Company for investment in
December 31, 2008
Economic Affairs R.O.C.
Mainland China
$4,484,541
$4,792,570
Note 3
(US$136,474)
(US$145,848)
147
Note 1: Profit/Loss recognized based on the unaudited financial statements, except for MiTAC Computer (Shunde) Corp., MiTAC Computer (Kunshan) CO., Ltd., MiTAC Service
(Shanghai) Co., Ltd.,MiTAC Technology (Kunshan) Co., Ltd.,MiTAC Research (ShangHai) Ltd.-MRC, Mio Technology Ltd. and Suzhou MITAC Precision Technology Co.,
Ltd.
Note 2: Investing in non-cumulative, convertible preferred stock without right of voting.
Note 3:The Company had obtained a certificate of conforming to the business scope of headquarters (Certificate No.: Gong-Zhi-Zi Letter No. 09601048060) on December 25, 2007,
issued by the Industrial Development Bureau, MOEA, in accordance with “Criteria for Identifying Business Headquarters”, promulgated on September 26, 2008. Accordingly,
the amount of the Company’s investments in Mainland China has no limitation.
b) Major transactions with the subsidiaries in third region and Mainland China:
1) Purchases
The Company’s purchases from Mainland China subsidiaries:
MiTAC Computer (Shunde) Corp.
MiTAC Computer (Kunshan) Co., Ltd.
$
$
2008
16,966,988
15,158,299
32,125,287
$
$
2007
35,342,412
27,386,002
62,728,414
Note: The above purchase amounts included raw materials and supplies and
processing over head charged to the Company since the Company
commissioned its Mainland China subsidiaries to process products for it. In
addition, some of the Company’s transactions with MiTAC Computer (Kunshan)
Co., Ltd. were conducted indirectly through Mio International Ltd. located at the
third territory which amounted to $14,153,452 and $23,994,521 for the years
ended December 31, 2008 and 2007, respectively.
The purchase prices from Mainland China subsidiaries are negotiated based on the
material and manufacturing cost. The payment period is 150 days after offsetting
certain receivables and payables according to the payment terms.
The purchase prices that the Company purchase from regular suppliers are negotiated
based on local market value. The payment period is approximately 90 days from
shipping date.
As of December 31, 2008, the unrealized intercompany gain due to up
stream sales is $0.
2) Sales
The Company sales to Mainland China subsidiaries:
Others
$
$
2008
7,595,538
7,685,303
164,314
15,445,155
$
$
2007
16,034,967
13,995,587
61
30,030,615
The sales prices to Mainland China subsidiaries are negotiated based on the product
cost. The collection period is 150 days after offsetting certain receivables and
payables according to the collection terms.
The sales prices to regular customers are negotiated based on local market value. The
collection period is approximately 90 days from shipping date.
As of December 31, 2008 and 2007, the unrealized intercompany gain due to down
stream sales is $0.
&
148
&
3) Property transactions:
In 2008 and 2007, the Company sold equipment and molds to third region and
Mainland China subsidiaries amounting to $267 and $3,306, respectively. The total
disposal gain was $109 and $258, respectively.
In 2008 and 2007, the Company purchased equipments and molds from third region
and Mainland China subsidiaries amounting to $0 and $182,364, respectively.
4) Accounts payable:
The Company to Mainland China subsidiaries:
December 31,
$
$
2008
415,004
1,584,515
1,999,519
$
$
2007
4,733,336
3,181,373
7,914,709
5) Loans to third region and Mainland China subsidiaries: None.
6) The endorsements and guarantees provided by the Company to Mainland China
subsidiaries:
i) As of December 31, 2008 and 2007, the Company guaranteed and endorsed the
bank loans of MiTAC Computer (Shunde) Corp. through Silver Star
Developments Ltd. amounting to $388,800 and $580,156, respectively.
ii)
As of December 31, 2007 , the Company guaranteed and endorsed the bank loans
of MITAC Computer (Kunshan) Co., Ltd. through Silver Star Developments Ltd.
amounting to $361,460.
iii) As of December 31, 2007, the Company guaranteed and endorsed the bank loans
of Suzhou MiTAC Precision Technology Co., Ltd. through Silver Star
Developments Ltd. amounting to $83,225.
iv) As of December 31, 2007, Silver Star Developments Ltd. has provided time
deposits of $134,533 as guarantee for the bank loans of MiTAC Research
(ShangHai) Ltd.
7) Other significant transactions which affect current income or financial conditions:
i) In 2008 and 2007, the Company paid warranty expense to the subsidiaries in
Mainland China amounting to $343,516 and $254,024, respectively.
&
149
&
D) The relation of business and important transactions between the Company and its subsidiaries
2008
Transaction
counterparty (Note 1)
General Ledger Account
Transaction terms
Percentage of consolidated total operating
revenue or total assets (Note 2)
(1)
Sales
$ 9,924,934
Note 3
15.33%
"
"
(1)
"
"
(1)
Purchases
17,359,253
Note 4
26.82%
Accounts receivable
4,601,723
Note 3
8.72%
"
"
(1)
"
"
(1)
Accounts payable
2,000,440
Note 4
3.79%
Warranty expense
1,260,237
Note 4
1.94%
"
"
(1)
"
"
(1)
Accrued expenses / Other payables
526,813
Note 4
1.00%
Endorsements and guarantees
734,819
"
"
"
(1)
Other receivables
170,168
Note 3
0.32%
(1)
Other receivables
818
Note 3
0.00%
"
Tsu Fung Investment Corp. and
its subsidiaries
(1)
Sales
159,902
Note 3
0.25%
"
"
(1)
Other receivables
1,242
Note 3
0.00%
"
(1)
Accrued expenses
1,292
Note 4
0.00%
"
"
(1)
Endorsement and guarantees
"
Foreground Technology Ltd. and
its subsidiaries
(1)
Sales
"
"
(1)
"
"
(1)
"
"
(1)
"
"
"
"
Company Name
Name of the counterparty
"
Amount
1.39%
160,000
0.30%
1,250,246
Note 3
1.93%
Purchases
401,240
Note 4
0.62%
Accounts receivable
65,122
Note 3
0.12%
5,811
Note 4
0.01%
(1)
Other receivables
24,917
Note 3
0.05%
(1)
80,073
(2)
Sales
17,359,253
Note 3
"
"
(2)
Accounts receivable
2,000,440
Note 3
3.79%
"
"
(2)
Purchases
9,924,934
Note 4
15.33%
"
"
(2)
Accounts payable
4,601,723
Note 4
8.72%
"
"
(2)
Other Sales
526,813
Note 3
1.00%
"
"
(2)
Accounts receivable
"
"
(2)
Other revenues
its subsidiaries
(3)
150
'
Sales
'
0.15%
26.82%
170,168
Note 4
0.32%
1,260,237
Note 3
1.95%
810
Note 3
0.00%
Transaction
Company Name
"
"
(3)
Other payables
"
"
(3)
Accounts receivable
its subsidiaries
(2)
Purchases
"
"
(2)
"
"
(2)
"
"
"
"
Transaction terms
1,170
Note 4
0.00%
Amount
447
Note 3
0.00%
1,250,246
Note 4
1.93%
Accounts Payable
65,122
Note 4
0.12%
Other payables
24,917
Note 4
0.05%
(2)
Sales
401,240
Note 3
0.62%
(2)
Other receivables
5,811
Note 3
0.01%
"
(3)
Purchases
810
Note 4
0.00%
"
"
(3)
Accounts Payable
447
Note 4
0.00%
1,170
Note 3
0.00%
818
Note 4
0.00%
159,902
Note 4
0.25%
"
(3)
Other receivables
(2)
Other payables
Tsu Fung Investment Corp. and its
subsidiaries
(2)
Purchases
"
"
(2)
Other payable
1,242
Note 4
0.00%
"
"
(2)
Accounts receivable
1,292
Note 3
0.00%
151
'
(
The relationship with the transaction parties are as follows:
(1)The Company to the consolidated subsidiary.
(2)The consolidated subsidiary to the Company.
(3)The consolidated subsidiary to the consolidated subsidiary.
Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenue.
The collection period is 150 days after offsetting certain receivables and payables according to collection terms to overseas related parties. The sales price to related parties is
based on market value.
The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The purchase price from related parties
is based on market value.
'
Note 4
(
Note 2
Note 3
(
Note 1
(
"
2007
Transaction
Transaction terms
MiTAC Precision Technology
Co.,Ltd. and its subsidiaries
(1)
Purchases
$ 1,335,658
Note 4
1.48%
"
(1)
Sales
14,647,247
Note 3
16.64%
"
"
(1)
Purchases
33,063,724
Note 4
36.65%
"
"
"
(1)
Accounts receivable
6,526,617
Note 3
9.68%
"
(1)
Accounts payable
7,914,709
Note 4
11.74%
"
"
(1)
Warranty expense
834,917
Note 4
0.93%
"
"
(1)
629,660
Note 4
0.93%
"
"
(1)
Company Name
Amount
1,027,355
1.52%
(1)
Other receivables
74,032
Note 3
0.11%
(1)
Sales
284,496
Note 3
0.32%
"
"
(1)
Accounts receivable
39,395
Note 3
0.06%
"
"
(1)
Other receivables
11,624
Note 3
0.02%
"
(1)
Accrued expenses
1,981
Note 4
0.00%
"
"
(1)
Endorsement and guarantees
310,000
"
its subsidiaries
(1)
Sales
179,030
Note 3
0.31%
"
"
(1)
Accounts receivable
122,593
Note 3
0.18%
"
"
(1)
Other receivables
699
Note 3
0.00%
"
"
(1)
Purchases
78,232
Note 4
0.09%
(2)
Sales
33,063,724
Note 3
36.65%
"
"
(2)
Accounts receivable
7,914,709
Note 3
11.74%
"
"
(2)
Purchases
14,647,247
Note 4
16.64%
"
"
(2)
Unrealized gain or loss
-
0.14%
"
"
(2)
Accounts payable
6,526,617
Note 4
9.68%
"
"
(2)
Accounts receivable
629,660
Note 3
0.93%
"
"
(2)
Other payables
74,032
Note 4
0.11%
"
"
(2)
Other Sales
843,917
Note 3
0.32%
"
MiTAC Precision Technology
Co., Ltd. and its subsidiaries
(3)
Purchases
2,262,996
Note 4
2.51%
"
152
'
"
Tsu Fung Investment Corp. and
its subsidiaries
'
"
"
126,750
0.46%
Transaction
Transaction terms
Sales
82,133
Note 3
0.09%
Sales
29,978
Note 3
0.03%
(3)
Accounts payable
10,182
Note 4
0.02%
(3)
Other payables
4,160
Note 4
0.03%
"
(3)
Accounts receivable
29,948
Note 3
0.04%
MiTAC Precision Technology Co.,
Ltd and its subsidiaries
(2)
Sales
1,335,658
Note 3
1.48%
"
(3)
Sales
2,262,996
Note 3
2.51%
Company Name
MiTACPrecision Technology Co.,
Ltd. and its subsidairies
(3)
"
its subsidiaries
(3)
"
"
"
"
"
Amount
$
"
Purchases
82,133
Note 4
0.09%
(2)
Purchases
179,030
Note 4
0.31%
"
"
(2)
Accounts Payable
122,593
Note 4
0.18%
"
"
(2)
Other payables
699
Note 3
0.00%
"
"
(2)
Sales
78,232
Note 3
0.09%
"
(3)
Purchases
29,978
Note 4
0.03%
"
"
(3)
Accounts Receivable
10,182
Note 3
0.02%
"
"
(3)
Accounts Payable
29,948
Note 4
0.04%
"
"
(3)
Other receivables
4,160
Note 3
0.03%
Tsu Fung Investment Corp. and its
subsidiaries
(2)
Purchases
284,496
Note 4
0.32%
"
"
(2)
Accounts payable
39,395
Note 4
0.06%
"
"
(2)
Other payables
11,624
Note 4
0.02%
"
"
(2)
Accounts receivable
1,981
Note 3
0.00%
153
'
(
The relationship with the transaction parties are as follows:
(1)The Company to the consolidated subsidiary.
(2)The consolidated subsidiary to the Company.
(3)The consolidated subsidiary to the consolidated subsidiary.
Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenue.
The collection period is 150 days after offsetting certain receivables and payables according to collection terms to overseas related parties. The sales price to related parties is
based on market value.
The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The purchase price from related parties
is based on market value.
'
Note 4
(
Note 2
Note 3
(
Note 1
(
"
its subsidiaries
12. SEGMENT INFORMATION
1) Operations in different industries:
The Company operates principally in one industry. The Company’s major operation is the
design, manufacture, sales and services of micro-computers and related products.
2) Operations in different geographic areas:
2008
Revenue from third parties
Revenue from parent and
consolidated subsidiaries
Total
Income per area
Interest expense
Investment income
Identifiable assets
Long-term investments
Total assets
Adjustments and
Eliminations
Asia
$ 1,581,000
Others
$ 13,329,422
Taiwan
$ 50,676,809
47,314,191
$ 48,895,191
$
531,494
1,724,579
$ 15,054,001
($
285,886 )
10,998,896
$ 61,675,705
($
40,177 )
($
($
($
60,037,666 )
60,037,666 )
327,760 )
$ 15,510,468
$ 6,609,150
$ 30,431,375
( $
9,945,339 )
Consolidation
$ 65,587,231
$ 65,587,231
( $
118,329 )
(
144,368 )
1,059,436
$
796,739
$ 42,605,654
10,142,139
$ 52,747,793
In order to reconcile the amounts of segment information and the amounts shown on the
consolidated financial statements, the following adjustments and eliminations have been
made:
A. Revenue from parent and consolidated subsidiaries: $60,037,666.
B. Income from parent and consolidated subsidiaries: ($323,760), which is equal to the
revenues from the parent and consolidated subsidiaries of $60,037,666 less the related
costs and expenses of $59,713,906.
2007
Revenue from third parties
Revenue from parent and
consolidated subsidiaries
Total
Income per area
Interest expense
Investment income
Identifiable assets
Long-term investments
Total assets
Asia
$ 6,282,719
Others
$ 15,595,022
Taiwan
$ 69,732,221
Adjustments and
Eliminations
$
-
97,386,829
$103,669,548
$ 1,130,661
769,115
$ 16,364,137
($
20,193 )
15,659,494
$ 85,391,715
$ 5,407,198
( 113,815,438 )
( $ 113,815,438 )
($
306,820 )
$ 26,858,947
$ 8,134,100
$ 43,555,119
($
21,324,699 )
Consolidation
$ 91,609,962
$ 91,609,962
$ 6,210,846
(
326,803 )
1,006,576
$ 6,890,619
$ 57,223,467
10,196,690
$ 67,420,157
In order to reconcile the amounts of segment information and the amounts shown on the
consolidated financial statements, the following adjustments and eliminations have been
made:
A. Revenue from parent and consolidated subsidiaries: $113,815,438.
B. Income from parent and consolidated subsidiaries: $306,820, which is equal to the
revenues from the parent and consolidated subsidiaries of $113,815,438 less the related
costs and expenses of $113,508,618.
)
154
)
3) Export sales
North America
Europe
Asia and Australia
$
$
2008
17,172,002
14,404,590
18,247,966
49,824,558
2007
27,108,878
22,061,769
18,475,813
67,646,460
$
$
4) Major customers
List of customers which accounted for more than 10% of total sales:
E customer
Percentage of
total sales
Sales amount
Customer name
$
Sales department
12,489,541
19%
Total company
Synnex Corp.
(SYNNEX) and its
subsidiaries
8,423,052
13%
Total company
B customer
7,141,094
11%
Total company
Customer name
E customer
Synnex Corp.
(SYNNEX) and its
subsidiaries
Percentage of
total sales
Sales amount
$
Sales department
18,732,410
21%
Total company
10,412,897
12%
Total company
5. MiTAC and related enterprises had difficulties in cash flow and affected MiTAC Corp. up to
the publication date of this annual report: None.
)
155
)
VII. Assessment of financial conditions, operational
result, and potential risks
1. Financial status, discussion, and analysis
Years
Items
Current assets
Fixed assets
Intangible assets
Other assets
Total assets
Current liabilities
Long-term debt
Total liabilities
Capital
Capital reserves
Retained earnings
Total shareholder equity
2007
35,901,473
2,239,867
613,095
1,152,041
62,278,377
26,219,092
1,510,983
28,316,288
14,565,380
4,202,512
13,628,008
33,962,089
2008
23,797,940
2,196,827
613,095
1,239,469
50,119,319
18,244,889
240,500
18,993,357
15,354,393
4,169,505
10,968,317
31,125,962
Unit: NT$ Thousand
Differential
Amount
%
(12,103,533)
(33.71)
(43,040)
(1.92)
87,428
7.59
(12,159,058)
(19.52)
(7,974,203)
(30.41)
(1,270,483)
(84.08)
(9,322,931)
(32.92)
789,013
5.42
(33,007)
(0.79)
(2,659,691)
(19.52)
(2,836,127)
(8.35)
(1) Analysis of changes in assets, liabilities, and shareholders’ equity in the most recent two
years (changes over 20% and NT$10 million):
1) Current assets: Primarily due to the economic recession, there was a decrease of
shipments, then profits. Also, Repaying loans to the bank and redeeming corporate
debenture bonds caused less cash, cash equivalents and receivables.
2) Current liabilities: Primarily due to the economic recession, there was a decrease of
shipments and related cost and fees, and then a decrease of accrued payables.
Additionally, the paid-back of the bank loans and the due date of the corporate
debenture bonds caused less short-term loans and long-term debts within a year.
3) Long-term debt: Primarily due to the re-categorized corporate debenture bonds which
would mature within a year were current portion of long–term debts.
4) Total liabilities: Statement 2 and 3 above were caused due to a decrease in liabilities.
(2) The aforementioned changes did not have a significant impact on the company’s
operation.
)
156
)
2. Analysis of business results
Years
2007
Items
85,567,363
Gross operating revenue
(3,493,466)
Minus: Sales return and allowance
82,073,897
Net operating revenue
(71,942,987)
Operating costs
10,130,910
Gross profit
(5,556,398)
Operating expenses
4,574,512
Operating income (losses)
2,137,177
Non-operating income and gains
Non-operating expenses and
(219,517)
Losses
Income before income tax from
6,492,172
continuing operations
(843,910)
Income tax expense
Cumulative effect of changes in
accounting principles
Net income from continuing
5,648,262
operations
2008
65,271,859
(4,462,434)
60,809,425
(56,091,211)
4,718,214
(5,306,699)
(588,485)
1,433,674
Unit: NT$ Thousand
Amount
Change in
changed
percentage %
(20,295,504)
(23.72)
968,968
27.74
(21,264,472)
(25.91)
(15,851,776)
(22.03)
(5,412,696)
(53.43)
(249,699)
(4.49)
(5,162,997)
(112.86)
(703,503)
(32.92)
(209,745)
(9,772)
(4.45)
635,444
(176,155)
(5,856,728)
(667,755)
(90.21)
(79.13)
459,289
-
-
(5,188,973)
(91.87)
1) Analysis of changes in percentage increases/decreases (changes less than 20% are
exempted):
a. Gross operating revenue: Due to the economic recession and price competition in 2008,
all consumer electronics were affected, hence the total of operating revenue was less
than in 2007.
b. Sales return and allowance: Primarily due to the recession and the clearance sale
because of the stock clearance, the amount of the sales returns and allowances
increased.
c. Operating costs: Mainly because the decline of the operating revenue, the costs
declined as well.
d. Gross profit and operating income: Also affected by the factors above.
e. Non-operating income and gains: Mainly because the investment incomes decrease
from the equity assessment caused the decrease of non-operating income and gains in
2008.
f. Income before income tax and net income from continuing operations: Also affected by
the factors above.
2) Reasons for changing the company’s major businesses: The company did not change its
major businesses.
3) The forecasts for sales volumes and their evidence and the possible impacts and their
countermeasures:
MiTAC predicts that due to our current management plan and our assessment of the
future environment, we continue to be among the top three in the world in the wireless
communication market; we will also actively explore GPS communicative networking
handheld devices, GPS smart phones, and their added-value services of the complete
online navigation system, in order to design the smoothest operation interfaces and
functions mainly for consumers. Meanwhile, we intend to maintain the biggest market
share from targeting different regional market for three different brands: Mio, Navman
and Magellan. We predicted that PND’s shipment will increase in 2009. As for terminal
)
157
)
computers, we will focus on thin computers and customized products, as well as a series
of X86 workstation products and mobile online niche markets to maintain the standard
quantity of shipments and to target different groups of users. About enterprise product
development, we will not only work on the server industry to keep our edge, but also
develop new clients and new products in storage devices; additionally, we will reinforce
Tyan’s market share and channel coverage rate. Lastly, for high-end servers, we will aim
at high-speed computing clusters and their applications and we will research and develop
more high-density and energy efficient Rack-mounted Server Quasi-system.
3. Cash flow analysis
Initial cash
balance
Net cash flow from
operating activities
Cash outflows
for the full
year
Cash surplus
(shortfall)
9,972,213
1,782,996
(8,080,158)
3,675,051
Unit: NT$ Thousand
Measures for rectifying
cash shortfall
Investment
Financing
plans
plans
-
(1) Analysis of cash flow for the current year
A. Operating activities: Due to the proper capital management, operations in 2008
resulted in a net cash inflow.
B. Cash outflow for the full year: Primarily caused by paying back partial bank loans,
buying treasury stocks and distributing cash dividends and employees’ bonuses, fixed
assets and deferred expenses.
(2) Remedy for cash shortfalls: The situation did not occur.
(3) Cash flow analysis for the next year
Initial cash
balance
3,727,780
Net cash flow Cash outflows Cash surplus
from operations for the full year (shortfall)
291,815
(2,785,602)
1,233,993
Unit: NT$ Thousand
Measures for rectifying
cash shortfall
Investment
Financing plans
plans
-
1) Analysis of cash flow changes for the next year:
A. Operating activities: We forecasted that operating activities for 2009 will have a net
cash inflow.
B. Cash outflow for the full year: We plan to increase long-term investments, purchase
patent rights and techniques, buy fixed assets, redeem corporate bonds, and
distribute cash dividends and employees’ bonuses.
2) Remedies for cash shortfalls: N/A
4.
Influence from major capital expenditures in the most recent year on financial condition:
None.
5.
Reinvestment policy in the most recent year, causes for reinvestment income and loss,
remedial measures and the investment plan in current year:
)
158
)
(1) Major reasons for profits or losses caused by the reinvestment policy in the most recent year:
Item
Investment amount
MiTAC and
Not over the US$
SSDL and
96,000 thousand
its
budget, but the amount
subsidiaries
will be adjusted
according to the net
asset value on the
purchasing date
Reinvestment policy
In order to expand portable
navigation product market,
MiTAC determined by the Board
meeting on Dec 14, 2008 that to
acquire Magellan Navigation, Inc.
and its subsidiaries’ consumer
product division, including
navigation software, patents,
trademark, authorization,
intellectual property, management
team, clients and sales channels,
are owned by MiTAC and our
overseas subsidiaries.
Major reasons for causing Improvement
profits or losses
plan
This project took place in
N/A
early 2009 and it’s still
ongoing, so there are no
related profits and losses.
(2) Investment plan within the year: We will follow the company’s operating strategies and perform
global investment plan.
6. Risk management
(1) Organization structure
Responsible units
Tasks and missions
Finance Center
Is responsible for business decision planning, mid-term and long-term investment
assessment, financial coordination and operation, risk avoidance mechanism,
making reliable financial statements, business performance, efficiency, and
obedience of law in order to minimize financial, taxable, and strategic risks.
MIS Center
Is responsible for planning, constructing, and maintaining the Internet safety and
information software and hardware equipment or systems; in the meantime,
measure the Internet and system quality to minimize risks.
Legal Affairs Center
Is responsible for regulatory risk control, obeying governmental supervision
policies and handling contracts and litigation disputes to minimize legal risks.
Resources
Development Center
Is responsible for personnel and real estate risk management; also, it is to obey
governmental regulations in order to secure ongoing concerns and property safety.
)
159
)
(2) Influences of the interest rates, the exchange rate fluctuations and the inflation on the
company’s profits or losses in 2008 & 2009, and countermeasures for the future:
1) Influences from factors above during Jan 1, 2008 and Mar 31, 2009
2008
Unit: NT$ Thousand
2009/3/31
(Reviewed by CPA) (Note 1)
Percentage to
Amount
the sales
(NT$ Thousand)
revenue (%)
14,223
0.11
(NT$ Thousand)
130,120
Percentage
to the sales
revenue (%)
0.21
Exchange gain/loss
238,621
0.39
(43,082)
(0.33)
Losses (Gains) on
evaluation of
financial assets
(55,208)
(0.09)
70,369
0.54
Amount
Items
Interest expense
Note 1: To the end of the quarter prior to the publication date of this annual report.
Note 2: Inflation was negligible.
2) MiTAC’s substantial measures to respond to the variation of the interest, exchange
rate and inflation are:
A. All accounts receivable and payable are received and paid in USD so minimize
the effects on overall profits from variable currency exchange.
B. At present, the trading of derivative products is to avoid risks of the actual
foreign currency assets and the liabilities; also, to periodically evaluate gains and
losses per the “Procedure for Derivative Trading”.
C. We collect currency exchange rates, announced interest rate and market
information everyday and report to the top management immediately when an
emergency occurs so we can respond accordingly.
D. We evaluate announced interest rates and work closely with banks in order to
obtain preferred interest on loans, so that we can minimize the impact of rate
fluctuations on the company.
E. Due to the advance of crude oil and raw materials, fighting against inflation has
become a crucial issue. Our countermeasures are to seek different suppliers,
alternative materials and implement conservative purchasing. Also, we sign
contracts with suppliers to lock the intended material prices and strictly follow
the latest production plans. All these measures are to control the inventory and
cost of production materials and to decrease the possible impact from pricing
variations.
(3) Policies regarding participation in high-risk, highly leveraged investments, loans to other
parties, endorsements, guarantees, and derivatives; major reasons for gains or losses in
the recent year, and countermeasures for the future
1) MiTAC did not pursue high-risk, highly leveraged investments.
2) All loans to others follow the “Procedures Governing Lending Capital to others”.
There were no loans to others until the end of 2008. Up to April 30th, 2009, the
maximum amount of loans to other parties were NT$ 6,310,044 thousand and the
balance amount was NT $1,329,320 thousand.
3) All endorsements to other parties follow the “Procedures Governing Endorsement and
Guarantee”. The maximum amount that the company endorsed to other parties by the
end of 2008 and by the end of April, 2009 was NT$ 32,363,953 thousand and
31,550,218 thousand respectively. And the balance amount until the same dates above
)
160
)
was NT$ 974,892 thousand and 597,070 thousand respectively.
4) The company has derivative transactions conducted according to the “Procedure for
Derivative Trading”.
(4) Future R&D and budgeted R&D expenditures:
1) In 2009, R&D expenditures are budgeted to be NT$ 1,698,186 thousand.
2) Future R&D projects
Personal computers with wire or wireless networking features
High-performance low-cost dual-core processor-based workstations
System protocol and integration of thin client computers & servers
R&D of all-In-One LCD computer technologies
High-performance workstations based on RISC/CISC processors
High-performance servers
Servers for communications applications
Technology for storage devices
Technology for integrating computers and communications
Integration of data access, voice, and wireless broadband communications
functionality
Technologies for developing web-centric personal computers, IA products,
communications devices, and storage solutions
Technology for multimedia applications
Wireless communications and networking technologies
Technology for wireless communications equipment
Development of new digitalized multimedia technologies to create new business
opportunities and the foundation for related products
Operating systems and application software
VOIP communications products
GPS and electronic navigation technologies and location based service.
D. Enterprise and channel servers/ workstation products
High-performance servers (four-socket or eight-socket HPC server platform)
R&D of high-density servers
High-density blade servers
Technologies for storage devices
ODM server/ workstation platform development and production
Cloud computing
E. Others
High-density, high frequency electronics architectures and automated production
testing technologies.
High-yield product design approach (DFM).
Product design and manufacturing that address environmental concerns and meet
ISO 14000 standards.
High-speed PC architecture and heat flow technologies.
)
161
)
(5) The impact of major changes in domestic or foreign government policies and laws in
recent years on the company’s financial condition and business, and our countermeasures:
None.
(6) Technology changes and industry changes in the most recent year and the impact on the
company’s finances and sales, and our countermeasures
1. Client system business products:
Due to the intense competition and the rapid price decline in computer hardware, our
countermeasures are to develop lower-cost products and to speed up the development
for new products, and to increase the differentiation in products and shorten the time
needed for mass production.
Also, to deal with the economic recession, we will continue to lower production costs
and differentiate our products, increase added-values for understanding users’ needs
and shorten the time needed for mass production.
2. Enterprise products:
Due to the recession, enterprises generally invest less in technologies. As a result,
each single product contributes less to our revenue. In addition, vendors are cutting
prices in order to obtain more orders, thus putting pressure on profit margins. Therefore,
we need to use more R&D workers to devote to new product projects in order to
achieve the same level of revenues and profits as in the past. The invention of
high-density server products should increase average per-unit prices and production
value.
3. Wireless communications products:
Wireless communication product development is leaning toward lower power
consumption, high-integration in functionality, and a faster speed for data transmission.
Product development is for lightweight, thin, compact, fashionable design,
highly-integrated quality, and easy-to-use interface; also, we combine advanced
technology to design toward a complete wireless link, hand-free, and voice
identification. MiTAC plans to integrate wireless broadband technology into the future
hands-free device and studies on built-in and dual-communications for the linking
digital service with a great potential. Furthermore, the mass production of the satellite
navigation phones and the smart phones with a built-in camera will contribute greatly
for our business and profits.
4. Enterprise and channel server/ workstation products:
Since the hardware techniques of the server industry have had many breakthroughs,
duad-core CPUs have gradually replaced dual-core processors; as for processors, the
manufacturing process has improved from 65 nanometers to 45 nanometers and
working toward 32 nanometers. Furthermore, memories have gradually developed from
1 GB to 4GB. With all the fast software development and popular virtual concept, the
server industry has been blooming and of course, very competitive. Therefore, how to
have a stable cooperation with up and down streams has become the key to success for
server channel manufacturers.
Based on this concept, MiTAC not only work closely with software companies like
Intel and AMD, but also cooperate with famous companies for virtualization techniques.
We ensure our market share by certifying products, integrating total solutions for
high-function and low-cost to keep our competitive edge.
(7) The impact of the company’s image change, of our crisis management capabilities, and
countermeasures in the most recent year: None.
(8) Expected values, possible risks and countermeasures for recent merger: None.
)
162
)
(9) Expected values, possible risks and countermeasures for recent factory expansion: None.
(10) Risks faced in centralized stocking and selling and their countermeasures:
About stocking:
The subsidiaries in China are our OEM factories, so we have to buy finished goods
back and pay for processing charges. But MiTAC owns 100% of the subsidiaries so there
is no risk for stock control. Also, our procurement policy for main materials is to have at
least two suppliers and spread out the sources for material supply; furthermore, MiTAC
has maintained a long-term relationship with all suppliers to ensure a stable source of
material supply.
About sales:
The company does not get most of its revenue from any single client, so there is no
obvious risk in this area. The sales ratio to each client has been kept under 30% in the
last two years. Based on our strong R&D and production capabilities, on one hand,
MiTAC has maintained a long-term relationship with the existing customers; on the
other hand, we have striven to develop new customers in order to expand the source of
business. Therefore, MiTAC expects no risk from a centralized practice.
(11) Impact and risks associated with large transfers or conversions of equity by directors,
supervisors or major shareholders holding stake over 10%:
MiTAC is aware of the major shareholders and the final controller of the major
shareholders, so the holdings of the Directors, Supervisors, and the top ten shareholders
are reported according to the Stock Exchange Law.
(12) Impact and risks associated with changes of the company’s ownership: None.
(13) Litigation and non-litigious disputes:
1. MiTAC’s directors, supervisors, general managers, actual person in charge or major
shareholders holding stakes over 10%:
In the most recent year and to the publication date of this annual report, there was
no involvement of any litigation or non-litigious disputes that might have a significant
impact on shareholders’ rights or stock prices, as defined in Article 20, item 6, Part 12
in “Criteria Governing Information to be Published in Annual reports of Public
Companies.”
2. MiTAC’s subsidiaries:
Mio International Limited, the Company’s subsidiary, entered into a software
technology transfer agreement with Nav N Go Kft. Because the two parties were
involved in a dispute about contract termination, Nav N Go Kft filed a separate
lawsuit against the Company’s three subsidiaries, Mio International Limited, Mio
Technology Benelux NV and Mio Technology USA Limited, alleging their violation
of contract and infringement of its copyright. The three lawsuits are under the
jurisdiction of the courts in the United States of America, Belgium and Hungary,
respectively. MiTAC has assigned lawyers in the local and evaluated there’s no
important or negative influence in finance and operation.
(14) Other important risks and their countermeasures: None.
7. Other important events: None.
)
163
)
IX. Special events of record
164
*
*
1. Information on affiliates
(1) Consolidated operational statement for affiliates
1) Organization chart to affiliates
*
*
165
2) Affiliated companies – basic data:
Company Name
Tsu Fong Investment Corp.
Date established
Address
Feb. 16, 1998 10/F, 77, Minsheng East Road, Section 3, Taipei
Jun. 05, 1990 P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands
47988 Fremont Blvd, Fremont, CA 94538 U.S.A.
MiTAC Japan Corp.
Apr. 30, 1983
1-2-8 Showajima, Ohta-Ku, Tokyo, Japan 143-0004
Mio Technology Benelux N.V.
Sept. 13, 1993
Z5 Mollem 318 - 1730 Asse (Mollem), Belgium
MiTAC (U.K.) Ltd.
Nov. 21, 2000
Synnex House, Nedge Hill, Telford, Shropshire TF3 3AH, U.K.
Mio Limited
Jul. 10, 2000
Synnex House, Nedge Hill, Telford, Shropshire TF3 3AH, U.K.
MiTAC Pacific (H.K.) Ltd.
Jun. 13, 1991
Room 1221, 12/F, Leighton Centre, 97 Leighton Rd. Causeway Bay, HK
System Glory International Ltd.
Pacific China Corp.
MiTAC Star Service Ltd.
Software Insights Ltd.
Oct. 25, 1995
Dec. 27, 1996
Jan. 12, 2001
Jul. 18, 2000
P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
MiTAC Computer (KunShan) Co., Ltd.
Nov. 01, 2000
Kunshan Export Processing Zone, Jiangsu Province, China
MiTAC Service (Shanghai) Co. Ltd.
Oct. 11, 2001
2 Fl. No. 129, Fute Rd., (N.), Waigaoqiao Free Trade Zone, Shanghai, China
MiTAC Computer (ShunDe) Ltd.
Jan. 18, 1993
No. 1, ShunDa Rd., Lunjiao Town, ShunDe City, Guangdong Province,
China
MiTAC Research (Shanghai) Ltd.
Nov. 23, 2004
213, Jiang Chang 3rd Road, Zha-Bei District, Shanghai
Jan. 17, 2000
2/F, 77, Minsheng East Road, Section 3, Taipei
Start Well Technology Ltd.
Dynamic Star Investments Ltd.
Apr. 20, 2000
Nov. 28, 2001
166
*
Mar. 15, 1993
*
MiTAC U.S.A. Inc.
Unit: Thousand Dollars
Paid-in capital
Main business or production items
NT$984,556 General investment
US$215,495 General investment
Sales of wireless Communication products,
US$2,750 computer peripherals, software and hardware,
and associated products
YEN 50,000 computer peripherals, software and hardware,
EUR 1,618 computer peripherals, software and hardware,
US$852 computer peripherals, software and hardware,
GBP 0 computer peripherals, software and hardware,
US$0 General investment
Produces
computers
and
peripheral
RMB 304,321 equipment, hardware and software and related
products; sales of own manufactured product
Testing, repairs, displays of calculator
components and related products; technical
RMB 8,277
support and after-sales service for related
products.
Manufactures
computer,
mainboards,
interface cards, monitors, power supplies,
RMB 616,837
keyboards, related pressed metal parts, plastic
components; mainboard repair services
R&D and manufacture of computer software;
RMB 43,040 sales of own manufactured product and
provision of related technical support service
Data processing services, software,
NT$5,000 wholesales and retail sales of electronic
communications software
Company Name
Date established
Address
MiTAC Technology (Kunshan) Co.,
Ltd.
Jan. 28,2002
Kunshan Export Processing Zone, Jiangsu Province, China
Mio International Ltd.
Feb. 06, 2004
Magicmate Group Ltd.
Jul. 27, 2006
Mio Technology Korea
Jul. 27, 2006
53-5, 7F, ChungJin BD., Wonhuyro3 ga, Youngsan Gu, Seoul, Korea
Huge Extent Limited
Jun. 22, 2006
Mio Technology (Cheng Du) Ltd.
Oct. 24, 2006
2f, Building A7, Tian-Fu Software Park, Gao-Xin District, Cheng Do China
Booming Enterprises Inc.
May. 18, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
Mio Technology USA Ltd.
Jul. 17, 2006
47988 Fremont Blvd, Fremont, CA 94538 U.S.A.
MiTAC Australia Pty Ltd.
Mar. 06, 2007 Suite 2, 408 Victoria Rd, Gladesville NSW 2111 Australia
Navman Technology NZ Ltd.
Mar. 06, 2007 7-11 Kawana Street, Northcote, PO Box. 36 173, Northcote Auckland, New Zealand
Naviart IT (Shanghai) Co., Ltd.
Mar. 15, 2006
Naviart Limited
Mar. 03, 2005 15F, Hutchison House, 10 Harcourt Rd., Central, H.K.
Mio Technology UK Ltd.
May. 10, 2001
Spectrum House, Beehive Ring Road, London Gatwick Airport, RH6 0LG, UNITED
KINGDOM
DLC Technology Corp.
Jun. 20, 2007
2F, No.26, Lane 513, Rui Guang Rd., Neihu District, Taipei City
Mio Technology (Shuzhou) Ltd.
Dec. 04, 2003
Foreground Technology Limited
Jun. 05, 2002
International Business Building, No.8, Zhao Feng Rd., International Business Zone, Economic
& Technologies Development District, KunShan City, China
Tyan Computer Corporation - USA
Jul. 17, 1989
3288 Laurelview Ct., Fremont, CA 94538
Tyan Computer Corporation - GMBH
Dec. 03, 1998 Einsteinstr. 14
Room 22301-1041, Building 14, Pu Dong Software Park, No. 498, Guo-Shou-Jing Rd.,
Zhang-Jiang High-Tech Park, Shanghai, China
*
*
85716 Unterschleißheim Germany
167
Testing, repairs, displays of calculator
components and related products; technical
RMB 8,277
support and after-sales service for related
products.
KRW 100,000 computer peripherals, software and hardware,
R&D and manufacture of computer software;
RMB 10,450 sales of own manufactured product and
provision of related technical support service
A$127 computer peripherals, software and hardware,
NZ$140 computer peripherals, software and hardware,
RMB 2,770 computer peripherals, software and hardware,
EUR 6,665 computer peripherals, software and hardware,
NT$66,000 computer peripherals, software and hardware,
Run and agent for import & export of
RMB 1,960
commodities and technologies.
EUR 26 computer peripherals, software and hardware,
Paid-in capital
Company Name
Top Sheen Enterprises Ltd.
Best Profit Ltd.
Bright Crown Management Ltd.
Sky Universe enterprises Ltd.
Date established
Address
Jan. 23, 2003 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
Scotia Centre, 4th Fl., P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman
Jan. 03, 2007
Islands
Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
Apr. 17, 2007 47988 Fremont Blvd, Fremont, CA 94538 U.S.A.
Mass Bridge Ltd.
Aug. 16, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands
MiTAC Computer (Vietnam) Co., Ltd
Mar. 25, 2008 Lot No.1-2-3-5-6-7, Que Vo industrial Park, Que Vo Distric BacNinh Province.
Produces Wireless communication products
US$5,500 Computer peripherals, software and hardware,
+
MiTAC Logistics Corporation
Paid-in capital
MiTAC Cooperatie U.A.
Scotia Centre, 4th Floor, P.O.Box 2804, George Town, Grand Cayman KY1-1112, Cayman
Islands
Nov. 08, 2007 Fortunaweg 11, Schiedam 3113AN, The Netherlands
MiTAC Netherlands B.V.
Mar. 17, 2008 Fortunaweg 11, Schiedam 3113AN, The Netherlands
MiTAC Logistic Service (KunShan)
Ltd.
Mar. 17, 2008 No. 269, 2nd Blvd. , Kunshan Export Processing Zone, Jiangsu Province, China
Great Rich Ltd.
Jan. 08, 2007
168
*
*
3) Shareholders of the affiliates or subsidiaries: None
Run and agent for import & export of
RMB 2,800
commodities, and warehousing service
4) Business operation of and relation with the affiliates:
Type of business
Manufacture
and sales of
communication
& computer
products
Name of affiliated company
MiTAC Computer (Shunde) Ltd.
MiTAC Computer (Vietnam) Co.,
Ltd
System Glory Int’l Ltd.
Pacific China Corp.
Dynamic Star Investments Ltd.
Huge Extent Limited
Investment
holding company Booming Enterprises Inc.
Best Profit Ltd.
Sky Universe Enterprises Ltd.
Mass Bridge Ltd.
Great Rich Ltd.
Technical
services
Trading
Relations with business of affiliated company
Production and sales of MiTAC International products, provision of
after-sales service
after-sales service
after-sales service
Investment in overseas subsidiaries for production and sales of MiTAC
International Products, provision of after-sales service
Investment in overseas subsidiaries for sales of MiTAC International
Products, provision of after-sales service.
International Products, provision of after-sales service.
Investment in overseas subsidiaries, for sales of MiTAC International
General investment
Computer software R&D and sales of its own products, provision of
associated technology query services
MiTAC Technology (Kunshan) Co., Ltd. Provision of after-sales service to MiTAC International products
MiTAC Service (Shanghai) Co., Ltd.
Provision of after-sales service to MiTAC International products
Sales of MiTAC’s products
Mio Limited
Sales of MiTAC’s products
Sales of MiTAC’s products, provision of after-sales service.
MiTAC U.S.A. Inc.
MiTAC Japan Corp.
MiTAC (U.K.) Ltd.
,
169
,
Type of business
Name of affiliated company
Trading
Mio Technology (Shuzhou) Ltd.
Naviart Ltd.
Agent for import &
MiTAC Logistic Service (KunShan)
export trading and
related services Ltd.
Relations with business of affiliated company
Run and agent for import & export of commodities, and warehousing
service
5) Directors, supervisors, General Managers of affiliated companies
Company name
Title
Chairman
Director
Director
Supervisor
Director
Silver Star Developments Ltd. Director
Director
Director
MiTAC U.S.A. Inc.
Director
Director
Director
MiTAC Japan Corp.
Director
Supervisor
Director
Director
Director
MiTAC (U.K.) Ltd.
Director
Director
Mio Limited
Director
Director
Director
Director
System Glory International
Director
Ltd.
Director
Director
Pacific China Corp.
Director
Director
Director
Director
Director
Director
Director
Director
Chairman
MiTAC Computer (KunShan) Director
co., Ltd.
Director/General
Manager
Supervisor
Name or Rep.
Holdings
Shares
Stake
98,455,566
98,455,566
98,455,566
98,455,566
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
N/A
N/A
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
Start Well Technology Ltd. Rep. C.P. Lee
N/A
100%
C.S. Chen
N/A
0%
MiTAC International Corp. Rep. Billy Ho
MiTAC International Corp. Rep. Crystal Yang
MiTAC International Corp. Rep. Jessica Chiu
MiTAC International Corp. Rep. C.S. Chen
Billy Ho
Crystal Yang
James Yuan
Crystal Yang
Billy Ho
Billy Ho
Crystal Yang
Iida
Vicky Hsieh
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Start Well Technology Ltd. Rep. Samuel Wang
Start Well Technology Ltd. Rep. Billy Ho
,
170
,
Company name
Title
Chairman
MiTAC Service (Shanghai) co., Vice Chairman/
Ltd.
General Manager
Director
Chairman
Director
Mitac Computer (Shunde) Ltd. Director
Director
General Manager
Chairman
Mitac Research (Shanghai) Ltd. Director
Director
Chairman
Director
Director
Supervisor
General Manager
Director
Director
Director
Director
Dynamic Star Investments Ltd. Director
Director
Chairman
MiTAC Technology (KunShan) Director
Co., Ltd.
Director/General
Manager
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Huge Extent Limited
Director
Director
Director
Director/General
Mio Technology (Cheng Du)
Manager
Ltd.
Director
Supervisor
Director
Director
Director
Director
Director
Director
Director
Director
Director
Name or Rep.
Holdings
Shares
Stake
Pacific China Corp. Rep. Billy Ho
N/A
100%
Pacific China Corp. Rep. Percy Chen
N/A
100%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
500,000
500,000
500,000
500,000
0
0
0
0
0
0
0
N/A
N/A
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
0%
0%
0%
0%
100%
100%
N/A
100%
0
0
0
0
0
0
0
0
0
0
0
0
N/A
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
Mio International Ltd. Rep. N.Y. Yeh
N/A
100%
Mio International Ltd. Rep. Billy Ho
C.S. Chen
Crystal Yang
Billy Ho
James Yuan
Crystal Yang
Billy Ho
Samuel Wang
Billy Ho
Samuel Wang
Liu Fung Kiu
N/A
N/A
0
0
0
0
0
0
0
0
0
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Pacific China Corp. Rep. C.P. Lee
MiTAC Star Service Ltd.Rep. Billy Ho
MiTAC Star Service Ltd. Rep. C.S. Chen
MiTAC Star Service Ltd. Rep. Matthew Miau
MiTAC Star Service Ltd. Rep. Francis.tsai
Stone Lin
Software Insights Ltd. Rep. Samuel Wang
Software Insights Ltd. Rep. N. Y. Yeh
Software Insights Ltd. Rep. Billy Ho
Tsu Fung Investment Corp. Rep. Billy Ho
Tsu Fung Investment Corp. Rep. James Yuan
Tsu Fung Investment Corp. Rep. Percy Chen
Tsu Fung Investment Corp. Rep. C.S. Chen
Samuel Wang
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Dynamic Star Investments Ltd. Rep. Billy Ho
Dynamic Star Investments Ltd. Rep. C.P. Lee
Dynamic Star Investments Ltd. Rep. Percy
Chen
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
Samuel Wang
Crystal Yang
Billy Ho
James Yuan
Mio International Ltd. Rep. Samuel Wang
,
171
,
Company name
Title
Director
Director
Director
Director
Naviart IT (Shanghai) Co., Ltd. Director
Director
Director
Naviart Ltd.
Director
Director
Director
Director
Director
Chairman
Director
Director
Supervisor
Mio Technology Ltd.
Chairman/General
(Shuzhou)
Manager
Director
Director
Supervisor
Director
Foreground Technology Ltd.
Director
Director
Tyan Computer Corporation - Director
USA
Director
Tyan Computer Corporation - Director
GMBH
Director
Director
Director
Director
Director
Best Profit Ltd.
Director
Director
Director
Bright Crown Management Ltd. Director
Director
Director
Sky Universe Enterprises Ltd. Director
Director
Director
Director
Director
Mass Bridge Ltd.
Director
Director
Director
MiTAC Computer (Vietnam)
Director
Co., Ltd.
Director
Director
Great Rich Ltd.
Director
Director
Director
Director
Director
Director
Chairman
Director
MiTAC Logistic Service
Director/General
(KunShan) Ltd.
Manager
Supervisor
Name or Rep.
Crystal Yang
Billy Ho
Samuel Wang
Naviart Ltd. Rep. Billy Ho
Naviart Ltd. Rep. N. Y. Yeh
Naviart Ltd. Rep. Samuel Wang
Crystal Yang
Billy Ho
Samuel Wang
Crystal Yang
Billy Ho
Samuel Wang
MiTAC Internal Corp. Rep. Billy Ho
MiTAC Internal Corp. Rep. Samuel Wang
MiTAC Internal Corp. Rep. King Chen
MiTAC Internal Corp. Rep. Crystal Yang
Holdings
Shares
Stake
0
0
0
N/A
N/A
N/A
0
0
0
0
0
0
6,600,000
6,600,000
6,600,000
6,600,000
0%
0%
0%
100%
100%
100%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
Mio International Ltd. Rep. Samuel Wang
N/A
100%
Mio International Ltd. Rep Billy Ho
Mio International Ltd. Rep C.P. Lee
C.S. Chen
Crystal Yang
Billy Ho
James Yuan
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
James Yuan
Crystal Yang
Billy Ho
James Yuan
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
Billy Ho
James Yuan
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
James Yuan
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Billy Ho
Crystal Yang
Bright Crown Management Ltd. Rep. Billy Ho
Bright Crown Management Ltd. Rep. Percy Chen
N/A
N/A
N/A
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
N/A
N/A
100%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
Bright Crown Management Ltd. Rep. C.P. Lee
N/A
100%
Doris Huang
N/A
0%
,
172
,
6) Operations overview of affiliated companies: (Unit: NT$ Thousand)
Company name
Tsu Fung Investment Corp.
Silver Star Developments Ltd. - Consolidated
MiTAC U.S.A. Inc.
MiTAC Japan Corp.
MiTAC UK Ltd.
Mio Limited
System Glory International Ltd.
Pacific China Corp.
MiTAC Computer (KunShan) co., Ltd.
MiTAC Service (Shanghai) co., Ltd.
MiTAC Computer (Shunde) Ltd.
Dynamic Star Investment Ltd.
MiTAC Technology (KunShan) co., Ltd.
Mio International Ltd
Huge Extent Limited
Naviart Limited (HK)
Mio Technology Ltd. (Shuzhou)
Best Profit Ltd.
Sky Universe Enterprises Ltd.
Mass Bridge Ltd.
MiTAC Computer (Vietnam) Co., Ltd
Great Rich Limited
MiTAC Logistic Service (KunShan) LTD.
-
.
Capital
15,354,393
984,556
7,081,179
90,366
18,180
74,826
28,003
5
329
0
3,973,559
2,448,070
170,875
1,463,139
39,796
2,965,682
206,932
5,000
982,514
18,073
39,796
41,897
3,651
2,911
262,880
50,244
26,288
26,288
2,887
2,664
13,319
185,549
308,190
66,000
9,423
297,235
551
1,182
14,445
332,912
13,144
3,286
3,286
180,730
180,730
0
0
923
13,462
Total
liabilities
Total assets
50,119,319
988,405
25,136,127
144,057
176,889
900,284
91,871
5
45,692
138,873
4,086,330
2,466,168
144,136
3,752,221
70,753
4,192,635
446,458
32,162
1,257,457
32,868
91,674
2,246,251
3,658
41,339
262,880
58,538
26,288
976,554
879,832
109,064
17,015
64,610
644,144
49,448
231,789
689,329
659,651
26,675
10,975
332,915
13,144
3,286
2,163,748
181,784
181,221
0
923
923
12,903
,
18,993,357
706
9,736,281
45,874
179,079
586,196
85,914
0
42,264
73,287
2,810
0
0
1,775,702
15,877
669,699
173,627
9,396
12,045
0
28,076
2,196,778
0
45,810
0
8,676
0
1,131,093
919,917
75,374
25,973
4,312
825,653
13
221,227
142,552
140,629
1,390
0
0
0
0
2,169,371
0
0
0
923
0
475
173
,
Stockholder’s
Equity
31,125,962
987,699
15,399,846
98,183
(2,190)
314,088
5,957
5
3,428
65,586
4,083,520
2,466,168
144,136
1,976,519
54,876
3,522,936
272,831
22,766
1,245,412
32,868
63,598
49,473
3,658
(4,471)
262,880
49,862
26,288
(154,539)
(40,085)
33,690
(8,958)
60,298
(181,509)
49,435
10,562
546,777
519,022
25,285
10,975
332,915
13,144
3,286
(5,623)
181,784
181,221
0
0
923
12,428
Operating
Revenues
60,809,425
104,308
32,628,114
209,557
582,117
3,725,983
130,525
0
0
0
0
0
0
14,138,713
98,132
16,905,477
457,036
199,955
0
0
109,989
14,978,691
0
83,375
0
57,878
0
1,369,557
2,118,902
461,653
3,756
12,389
2,459,083
30,605
920,854
1,532,911
1,524,192
(584)
0
0
0
0
2,978,665
0
0
0
0
0
829
Operating
Income
(588,485)
89,914
(222,817)
10,754
(5,756)
(59,012)
7,129
0
(186)
0
(0)
0
0
76,461
8,070
205,471
6,503
6,926
0
0
13,632
0
0
1,211
0
1,035
0
(109,501)
9,411
24,626
1,825
7,035
(421,199)
(225)
20,030
7,767
23,081
(16,206)
0
(2)
(0)
0
18,422
(0)
(8)
(0)
0
0
(1,055)
Net Income
after tax
-
.
459,289
89,654
375,898
8,313
(22,976)
(74,310)
3,478
0
1,188
1,413
22,189
4
0
106,025
4,331
61,200
20,206
5,017
(0)
0
7,864
0
2
(7,708)
0
(727)
0
(136,706)
2,699
12,044
1,861
7,036
(479,220)
(64)
7,948
10,347
22,897
(2,159)
0
(2)
(0)
0
17,652
1,011
471
(0)
0
0
(977)
EPS(NT$)
(after tax
0.31
0.91
1.74
6.24
(22,976)
(1,138.85)
6.96
0.00
118.84
1,413,499.02
0.18
0.00
0.00
N/A
N/A
N/A
N/A
10.03
(0.00)
0.00
N/A
0.00
0.02
(385.38)
0.00
N/A
0.00
(17,088.27)
21.25
86.03
N/A
0.17
(87.01)
(0.01)
N/A
1.14
22,896.82
N/A
0.00
(0.00)
(0.00)
0.00
176.52
0.18
N/A
(31.53)
N/A
0.00
N/A
.
2. Subscription of marketable security in the most recent year and up to the publication of
this annual report: None
3. MiTAC’s stocks held or disposed by its subsidiaries in the most recent year and up to the
publication of this annual report:
April 30, 2009
Unit: NT$ Thousand; shares; %
Subsidiary
Capital
collected
Source
Of
fund
Shares and
Stock
Return value holdings
Endorsement
Holdings
Stock shares
Acquisition or
shares and on
amount for
up to the
of
and value
Mortgage
value
invest publication of
MiTAC’s
disposition date
MiTAC
acquired
disposed ment
subsidiary
the annual
report
106,292
shares
(earnings)
Aug 23, 2008
Silver Star
Developments
Ltd.
Selfsufficient
US$215,495 fund and
100%
loans
2009 up to the
publication of
the annual
Report.
Aug 23, 2008
Tsu Fong
Investment
Corp.
984,556
Selfsufficient
fund and
loans
100%
-
-
-
-
-
783,246
shares
(earnings)
-
-
2009 up to the
publication of
the annual
Report.
-
-
-
2,763,889
shares
$77,002
-
-
1,329,320
20,366,568
shares
$276,084
-
160,000
-
4. Supplementary disclosure: None
5. In most recent year and the present year to the publication date of this annual report,
occurrence of events that might have a significant impact on shareholder rights or stock
prices, as defined in Article 36, item 2, Part 2 in the “Securities and Exchange Law”:
On January 12, 2009, the Company and its overseas subsidiary-Silver Star Developments
Ltd. (SSDL) and SSDL’s subsidiary signed an agreement to jointly purchase the assets of the
Consumer Global Navigation Satellite Systems Division owned by Magellan Navigation, Inc.
and its subsidiary, including navigation software, patent, trademark, technology transfer,
intellectual property rights, management team, clients, sales channels, etc.. According to the
purchase agreement, the total purchase price is up to US$96,000 thousand and the price is
subject to adjustment based on the net asset value of that division on the acquisition date.
Regarding the net asset value, discussions are still ongoing.
,
174
,
Loans to
subsidiary

2008 Annual Report

Transcription

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