o
|
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT
OF 1934
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the fiscal year ended December 31,
2006
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the transition period from ________________ to
________________
|
AU
OPTRONICS CORP.
(Translation
of Registrant’s name into English)
|
TAIWAN,
REPUBLIC OF CHINA
(Jurisdiction
of incorporation or organization)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Shares of par value NT$10.00 each
|
The
New York Stock Exchange, Inc.*
|
|
*
|
Not
for trading, but only in connection with the listing on the New York
Stock
Exchange, Inc. of American Depositary Shares representing such Common
Shares
|
Large accelerated filer x |
Accelerated
filer o
|
Non-accelerated
filer o
|
1
|
|
1
|
|
2
|
|
2
|
|
2
|
|
2
|
|
2
|
|
5
|
|
5
|
|
5
|
|
25
|
|
25
|
|
26
|
|
35
|
|
38
|
|
40
|
|
40
|
|
40
|
|
54
|
|
59
|
|
59
|
|
60
|
|
60
|
|
65
|
|
65
|
|
68
|
|
69
|
|
69
|
|
70
|
|
71
|
|
71
|
|
72
|
|
76
|
|
76
|
|
76
|
|
76
|
|
77
|
|
78
|
|
78
|
|
78
|
|
79
|
|
79
|
|
79
|
|
79
|
|
79
|
|
79
|
|
79
|
|
79
|
|
85
|
|
85
|
|
86
|
90
|
|
90
|
|
90
|
|
90
|
|
90
|
|
92
|
|
92
|
|
92
|
|
92
|
|
92
|
|
94
|
|
94
|
|
95
|
|
96
|
|
96
|
|
96
|
|
96
|
|
96
|
|
96
|
Year
Ended and As of December 31,
|
||||||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||
(in
millions, except percentages and per common share and per ADS
data)
|
||||||||||||||||||||||||
Statement
of Income Data:
|
||||||||||||||||||||||||
ROC
GAAP
|
||||||||||||||||||||||||
Net
sales
|
75,689.2
|
104,860.6
|
168,111.6
|
217,388.4
|
293,106.8
|
8,993.8
|
||||||||||||||||||
Gross
profit
|
12,083.0
|
23,461.8
|
39,643.3
|
29,848.0
|
29,850.3
|
915.9
|
||||||||||||||||||
Operating
expenses
|
4,369.1
|
7,217.0
|
11,036.0
|
12,859.3
|
15,634.0
|
479.7
|
||||||||||||||||||
Operating
income
|
7,713.9
|
16,244.8
|
28,607.3
|
16,988.7
|
14,216.3
|
436.2
|
||||||||||||||||||
Income
before income tax
|
6,022.8
|
15,573.2
|
28,024.2
|
16,094.6
|
10,200.3
|
313.0
|
||||||||||||||||||
Income
tax benefit (expense)
|
(0.1 | ) |
86.7
|
(61.3 | ) | (473.4 | ) | (1,068.3 | ) | (32.8 | ) | |||||||||||||
Cumulative
effect of changes in accounting principles(1)
|
—
|
—
|
—
|
—
|
(38.6 | ) | (1.2 | ) |
Year
Ended and As of December 31,
|
||||||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||
(in
millions, except percentages and per common share and per ADS
data)
|
||||||||||||||||||||||||
Statement
of Income Data:
|
||||||||||||||||||||||||
Net
income
|
6,022.7
|
15,659.9
|
27,962.9
|
15,621.2
|
9,093.4
|
279.0
|
||||||||||||||||||
Weighted
average shares outstanding—Basic
|
4,790.8
|
5,322.3
|
5,569.3
|
5,893.6
|
6,466.9
|
6,466.9
|
||||||||||||||||||
Weighted
average shares outstanding—Diluted
|
5,126.4
|
5,385.5
|
5,569.3
|
5,893.6
|
6,566.0
|
6,566.0
|
||||||||||||||||||
Earnings
per share—Basic
|
1.28
|
2.95
|
5.02
|
2.65
|
1.41
|
0.04
|
||||||||||||||||||
Earnings
per share—Diluted
|
1.20
|
2.91
|
5.02
|
2.65
|
1.31
|
0.04
|
||||||||||||||||||
Earnings
per ADS equivalent—Basic
|
12.84
|
29.47
|
50.21
|
26.52
|
14.08
|
0.43
|
||||||||||||||||||
Earnings
per ADS equivalent—Diluted
|
12.00
|
29.13
|
50.21
|
26.52
|
13.06
|
0.40
|
||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||
ROC
GAAP
|
||||||||||||||||||||||||
Current
assets
|
49,830.0
|
50,682.3
|
59,747.3
|
95,841.0
|
152,742.6
|
4,686.8
|
||||||||||||||||||
Equity
method investments
|
37.7
|
701.5
|
5,577.4
|
5,244.3
|
11,682.0
|
358.5
|
||||||||||||||||||
Property,
plant and equipment
|
71,045.3
|
100,552.5
|
159,743.1
|
221,126.8
|
381,550.7
|
11,707.6
|
||||||||||||||||||
Goodwill
and intangible assets
|
2,984.5
|
2,237.9
|
1,062.7
|
2,483.3
|
20,142.8
|
618.1
|
||||||||||||||||||
Total
assets
|
129,171.4
|
158,070.8
|
230,694.4
|
329,796.3
|
578,126.0
|
17,739.4
|
||||||||||||||||||
Current
liabilities
|
25,204.3
|
39,789.6
|
53,600.8
|
89,858.1
|
167,316.9
|
5,134.0
|
||||||||||||||||||
Long-term
liabilities
|
26,027.6
|
25,306.4
|
46,334.0
|
83,940.3
|
179,712.8
|
5,514.4
|
||||||||||||||||||
Total
liabilities
|
51,343.4
|
65,416.3
|
100,128.8
|
173,976.8
|
347,049.7
|
10,649.0
|
||||||||||||||||||
Capital
stock
|
40,243.0
|
43,522.4
|
49,580.4
|
58,305.5
|
75,734.0
|
2,323.8
|
||||||||||||||||||
Total
stockholders’ equity
|
77,828.0
|
92,654.5
|
130,565.6
|
155,819.5
|
231,076.3
|
7,090.4
|
||||||||||||||||||
Other
Financial Data:
|
||||||||||||||||||||||||
ROC
GAAP
|
||||||||||||||||||||||||
Gross
margin(3)
|
16.0 | % | 22.4 | % | 23.6 | % | 13.7 | % | 10.2 | % | 10.2 | % | ||||||||||||
Operating
margin(4)
|
10.2 | % | 15.5 | % | 17.0 | % | 7.8 | % | 4.9 | % | 4.9 | % | ||||||||||||
Net
margin(5)
|
8.0 | % | 14.9 | % | 16.6 | % | 7.2 | % | 3.1 | % | 3.1 | % | ||||||||||||
Capital
expenditures
|
18,035.3
|
39,300.6
|
81,868.7
|
80,652.3
|
87,246.7
|
2,677.1
|
||||||||||||||||||
Depreciation
and amortization
|
12,989.9
|
16,294.6
|
25,309.3
|
34,493.2
|
52,760.2
|
1,618.9
|
||||||||||||||||||
Cash
dividend paid
|
—
|
2,006.9
|
5,208.3
|
5,935.2
|
1,749.2
|
53.7
|
||||||||||||||||||
Cash
flows from operating activities
|
20,821.7
|
37,041.5
|
49,393.6
|
48,006.0
|
68,526.7
|
2,102.7
|
||||||||||||||||||
Cash
flows from investing activities
|
(18,125.0 | ) | (40,339.4 | ) | (87,010.2 | ) | (82,456.2 | ) | (83,300.6 | ) | (2,556.0 | ) | ||||||||||||
Cash
flows from financing activities
|
16,754.3
|
(4,672.6 | ) |
37,615.2
|
43,097.3
|
32,550.8
|
998.8
|
Year
Ended and As of December 31,
|
||||||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||
(in
millions, except percentages and per common share and per ADS
data)
|
||||||||||||||||||||||||
Statement
of Income Data:
|
||||||||||||||||||||||||
U.S.
GAAP
|
||||||||||||||||||||||||
Net
sales
|
75,689.2
|
104,860.6
|
168,111.6
|
217,388.4
|
293,106.8
|
8,993.8
|
||||||||||||||||||
Gross
profit
|
9,492.1
|
19,919.7
|
32,855.6
|
22,126.5
|
23,372.0
|
717.2
|
||||||||||||||||||
Operating
expenses
|
3,678.7
|
6,581.8
|
12,686.8
|
12,642.7
|
15,819.3
|
485.4
|
||||||||||||||||||
Operating
income
|
5,813.4
|
13,337.9
|
20,168.8
|
9,483.8
|
7,552.6
|
231.7
|
||||||||||||||||||
Income
before income tax, extraordinary item and minority
interest
|
5,150.9
|
12,485.3
|
18,575.9
|
8,837.1
|
2,222.4
|
68.2
|
||||||||||||||||||
Income
tax expenses
|
(212.0 | ) |
3,230.1
|
(463.4 | ) | (473.4 | ) | (1,059.2 | ) | (32.5 | ) | |||||||||||||
Minority
interest in loss
|
–
|
–
|
–
|
(5.8 | ) | (10.0 | ) | (0.3 | ) | |||||||||||||||
Extraordinary
item(2)
|
–
|
–
|
–
|
308.7
|
–
|
–
|
||||||||||||||||||
Net
income
|
4,938.9
|
15,715.4
|
18,112.5
|
8,678.2
|
1,173.2
|
36.0
|
||||||||||||||||||
Weighted
average shares outstanding—Basic
|
4,505.3
|
5,031.0
|
5,350.2
|
5,762.9
|
6,426.9
|
6,426.9
|
||||||||||||||||||
Weighted
average shares outstanding—Diluted
|
4,820.9
|
5,091.0
|
5,350.2
|
5,762.9
|
6,426.9
|
6,426.9
|
Year
Ended and As of December 31,
|
||||||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||
(in
millions, except percentages and per common share and per ADS
data)
|
||||||||||||||||||||||||
Statement
of Income Data:
|
||||||||||||||||||||||||
U.S.
GAAP
|
||||||||||||||||||||||||
Earnings
per share—Basic:
|
||||||||||||||||||||||||
Income
before extraordinary item
|
1.10
|
3.12
|
3.39
|
1.46
|
0.18
|
0.01
|
||||||||||||||||||
Extraordinary
item
|
|
|
|
0.05
|
–
|
–
|
||||||||||||||||||
Net
income
|
1.10
|
3.12
|
3.39
|
1.51
|
0.18
|
0.01
|
||||||||||||||||||
Earnings
per share—Diluted:
|
||||||||||||||||||||||||
Income
before extraordinary item
|
1.05
|
3.09
|
3.39
|
1.46
|
0.18
|
0.01
|
||||||||||||||||||
Extraordinary
item
|
|
|
|
0.05
|
–
|
–
|
||||||||||||||||||
Net
income
|
1.05
|
3.09
|
3.39
|
1.51
|
0.18
|
0.01
|
||||||||||||||||||
Earnings
per ADS equivalent—Basic:
|
||||||||||||||||||||||||
Income
before extraordinary item
|
10.96
|
31.24
|
33.85
|
14.52
|
1.83
|
0.06
|
||||||||||||||||||
Extraordinary
item
|
|
|
|
0.54
|
–
|
–
|
||||||||||||||||||
Net
income
|
10.96
|
31.24
|
33.85
|
15.06
|
1.83
|
0.06
|
||||||||||||||||||
Earnings
per ADS equivalent—Diluted:
|
||||||||||||||||||||||||
Income
before extraordinary item
|
10.54
|
30.92
|
33.85
|
14.52
|
1.83
|
0.06
|
||||||||||||||||||
Extraordinary
item
|
|
|
|
0.54
|
–
|
–
|
||||||||||||||||||
Net
income
|
10.54
|
30.92
|
33.85
|
15.06
|
1.83
|
0.06
|
||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||||||
U.S.
GAAP
|
||||||||||||||||||||||||
Current
assets
|
48,967.9
|
51,111.2
|
58,254.5
|
93,469.8
|
150,826.8
|
4,628.0
|
||||||||||||||||||
Property,
plant and equipment
|
72,195.3
|
100,283.5
|
159,185.3
|
220,974.0
|
380,859.8
|
11,686.4
|
||||||||||||||||||
Goodwill
and intangible assets
|
20,881.1
|
18,432.1
|
16,207.4
|
16,578.5
|
33,188.5
|
1,018.4
|
||||||||||||||||||
Total
assets
|
143,531.4
|
173,905.7
|
245,114.0
|
342,809.3
|
588,399.6
|
18,054.6
|
||||||||||||||||||
Current
liabilities
|
25,789.5
|
41,275.4
|
55,444.9
|
91,288.0
|
169,515.0
|
5,201.4
|
||||||||||||||||||
Long-term
liabilities
|
27,149.7
|
25,651.4
|
46,983.5
|
84,485.1
|
179,924.4
|
5,520.9
|
||||||||||||||||||
Total
liabilities
|
52,939.2
|
66,926.8
|
102,428.4
|
175,773.1
|
349,439.4
|
10,722.3
|
||||||||||||||||||
Total
stockholders’ equity
|
90,592.2
|
106,978.9
|
142,685.6
|
166,918.9
|
238,618.1
|
7,321.8
|
||||||||||||||||||
Other
Financial Data:
|
||||||||||||||||||||||||
U.S.
GAAP
|
||||||||||||||||||||||||
Gross
margin(3)
|
12.5 | % | 19.0 | % | 19.5 | % | 10.2 | % | 8.0 | % | 8.0 | % | ||||||||||||
Operating
margin(4)
|
7.7 | % | 12.7 | % | 12.0 | % | 4.4 | % | 2.6 | % | 2.6 | % | ||||||||||||
Net
margin(5)
|
6.5 | % | 15.0 | % | 10.8 | % | 4.0 | % | 0.4 | % | 0.4 | % | ||||||||||||
Capital
expenditures
|
18,035.3
|
39,300.6
|
82,011.1
|
80,801.0
|
87,408.9
|
2,682.1
|
||||||||||||||||||
Depreciation
and amortization
|
14,614.0
|
17,369.8
|
26,358.0
|
36,067.1
|
54,940.0
|
1,685.8
|
||||||||||||||||||
Cash
flows from operating activities
|
21,227.5
|
36,987.3
|
48,943.8
|
46,951.9
|
67,955.3
|
2,085.2
|
||||||||||||||||||
Cash
flows from investing activities
|
(18,549.9 | ) | (40,339.4 | ) | (88,001.0 | ) | (81,428.1 | ) | (83,130.7 | ) | (2,550.8 | ) | ||||||||||||
Cash
flows from financing activities
|
16,773.4
|
(4,618.4 | ) |
38,066.2
|
43,783.9
|
32,951.7
|
1,011.1
|
(1)
|
Represents
the cumulative effect of our adoption of Republic of China Statement
of
Financial Accounting Standards (“ROC SFAS”) No. 34 “Financial Instruments:
Recognition and Measurement” on January 1,
2006.
|
(2)
|
Represents
the proportionate share of extraordinary gain reported by equity
method
investee in 2005. Please see note 25(c) to our consolidated
financial statements for further
information.
|
(3)
|
Gross
margin is calculated by dividing gross profit by net
sales.
|
(4)
|
Operating
margin is calculated by dividing operating income by net
sales.
|
(5)
|
Net
margin is calculated by dividing net income by net
sales.
|
NT
dollars per U.S. dollar Noon Buying Rate
|
||||||||||||||||
Average
|
High
|
Low
|
Period-End
|
|||||||||||||
(of
month end rates for years)
|
||||||||||||||||
2002
|
NT$34.54
|
NT$35.16
|
NT$32.85
|
NT$34.70
|
||||||||||||
2003
|
34.40
|
34.98
|
33.72
|
33.99
|
||||||||||||
2004
|
33.27
|
34.16
|
31.74
|
31.74
|
||||||||||||
2005
|
32.13
|
33.77
|
30.65
|
32.80
|
||||||||||||
2006
|
32.51
|
33.31
|
31.28
|
32.59
|
||||||||||||
December
|
32.51
|
32.74
|
32.27
|
32.59
|
||||||||||||
2007:
(through June 26)
|
33.00
|
33.41
|
32.38
|
32.77
|
||||||||||||
January
|
32.77
|
32.99
|
32.38
|
32.95
|
||||||||||||
February
|
32.97
|
33.08
|
32.86
|
32.98
|
||||||||||||
March
|
33.01
|
33.13
|
32.84
|
33.01
|
||||||||||||
April
|
33.15
|
33.33
|
33.05
|
33.33
|
||||||||||||
May
|
33.28
|
33.41
|
32.97
|
33.09
|
||||||||||||
June
(through June 26)
|
33.00
|
33.18
|
32.74
|
32.77
|
·
|
Our
ability to develop and introduce new products to meet customers’ needs in
a timely manner. The inability to develop or introduce new products
in a timely manner may hurt our competitive position because customers
may
choose to source more advanced products from
competitors.
|
·
|
Our
ability to develop or acquire and implement new manufacturing processes
and product technologies. If we are unable to successfully implement
new manufacturing processes and product technologies in a timely
manner,
our competitors may seize new opportunities in new
markets.
|
·
|
Our
ability to control our fixed and variable costs and operating
expenses. Increased fixed and variable costs and operating expenses
may reduce our profitability and adversely affect our results of
operations.
|
·
|
Changes
in our product mix or those of our customers. When our customers or
we discontinue a product or experience production problems with new
products, our results of operations may
fluctuate.
|
·
|
Our
ability to obtain raw materials and components at acceptable prices
and in
a timely manner. A shortage in raw materials and components could
result in increased raw materials and components costs and put downward
pressure on gross margins as well as cause delays to our production
and
delivery schedules, which may result in the loss of customers and
revenues.
|
·
|
Lower
than expected growth in demand for TFT-LCD panels resulting in oversupply
in the market. When oversupply conditions occur, we may reduce the
price of our panels to maintain high capacity utilization rates or
reduce
the volume of our production.
|
·
|
Our
ability to obtain adequate external financing on satisfactory
terms. Our business is capital-intensive and if we are
unable to maintain our sources of external funding, it will have
a
material adverse effect on our business, results of operations and
future
prospects.
|
·
|
Fines
and penalties payable. We are currently the subject of an
investigation into possible anticompetitive behavior by the United
States
Department of Justice, the Commission of the European Communities
Directorate-General for Competition, the Canadian Competition Bureau
and
the Japan Fair Trade Commission. In addition, the Korea Fair
Trade Commission made a visit to our Korean affiliate as part of
its
investigation in the TFT-LCD industry. There are also over 100 civil
lawsuits filed against us in the U.S. and Canada alleging, among
other
things, antitrust violations. Any penalties, fines or settlements
made in
connection with this investigation and/or these lawsuits may have
a
material adverse effect on our business, results of operations and
future
prospects.
|
·
|
the
cyclical nature of both the TFT-LCD industry, including fluctuations
in
average selling prices, and the markets served by our
customers;
|
·
|
the
speed at which we and our competitors expand production
capacity;
|
·
|
access
to raw materials and components, equipment, electricity, water and
other
required utilities on a timely and economical
basis;
|
·
|
technological
changes;
|
·
|
the
loss of a key customer or the postponement of orders from a key
customer;
|
·
|
the
outcome of on-going and future litigation and government
investigations;
|
·
|
changes
in end users’ spending patterns;
|
·
|
changes
to our management team;
|
·
|
the
rescheduling and cancellation of large
orders;
|
·
|
access
to funding on satisfactory terms;
|
·
|
our
customers’ adjustments in their inventory;
and
|
·
|
natural
disasters, such as typhoons and earthquakes, and industrial accidents,
such as fires and power failures, as well as geo-political instability
as
a result of terrorism or political or military
conflicts.
|
·
|
our
growth plan;
|
·
|
manufacturing
process and product technologies;
|
·
|
market
conditions;
|
·
|
prices
of equipment; and
|
·
|
interest
rates and foreign exchange rates.
|
·
|
complexity
of managing a larger business, including supply chain management,
manufacturing capacity management, research and development, human
resources and financial and audit
management;
|
·
|
regulatory
and commercial limitations on funding as a result of increased debt
from
the assumption of QDI debt;
|
·
|
difficulties
in integrating the operations and financial condition, products,
personnel
and cultures;
|
·
|
unforeseen
contingent risks or latent liabilities relating to the merger that
may
become apparent in the future;
|
·
|
diversion
of management’s time and attention from our core
business;
|
·
|
dilution
of the stock ownership of existing shareholders or earnings per
share;
|
·
|
increased
costs and efforts in connection with our compliance of Section 404
of the
Sarbanes-Oxley Act of 2002; and
|
·
|
effects
on our capacity utilization as a result of post-merger excess capacity
and
market conditions.
|
·
|
price;
|
·
|
product
performance features and quality;
|
·
|
customer
service, including product design
support;
|
·
|
ability
to reduce production cost;
|
·
|
ability
to provide sufficient quantity of products to fulfill customers’
needs;
|
·
|
research
and development;
|
·
|
time-to-market;
and
|
·
|
access
to capital.
|
·
|
the
level of contaminants in the manufacturing
environment;
|
·
|
human
error;
|
·
|
equipment
malfunction;
|
·
|
use
of substandard raw materials and components;
and
|
·
|
inadequate
sample testing.
|
·
|
discontinue
using disputed manufacturing process
technologies;
|
·
|
pay
substantial monetary damages;
|
·
|
seek
to develop non-infringing technologies, which may not be feasible;
or
|
·
|
seek
to acquire licenses to the infringed technology, which may not be
available on commercially reasonable terms, if at
all.
|
|
·
|
Computer
products, which typically utilize display panels ranging from 8.4
inches
to larger than 20 inches, primarily for use in notebook computers
and
desktop monitors.
|
|
·
|
Consumer
electronics products, which typically utilize display panels ranging
from
1.5 inches to 10.2 inches or above for use in products such as digital
cameras, digital camcorders, mobile phones, car television monitors,
car
navigation systems, portable television, multiple function machines,
printer displays, portable game consoles and portable DVD
players.
|
|
·
|
LCD
television, which typically utilizes display panels with panel size
of 14
inches to 46 inches. We commenced the production of display panels
for LCD
television in the fourth quarter of
2002.
|
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(panels
in thousands)
|
||||||||||||
Panels
for Computer Products
|
||||||||||||
Panels
for notebook computers
|
4,923.0
|
7,365.5
|
14,902.3
|
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
(panels
in thousands)
|
||||||||||||
Panels
for desktop monitors
|
12,150.8
|
18,652.2
|
24,169.6
|
|||||||||
Total
panels for computer products
|
17,073.8
|
26,017.7
|
39,071.9
|
|||||||||
Panels
for Consumer Electronics Products
|
33,697.7
|
54,598.1
|
79,483.0
|
|||||||||
Panels
for LCD Television
|
1,369.4
|
4,033.6
|
9,380.7
|
|||||||||
Total
|
52,140.9
|
84,649.4
|
127,935.6
|
Year
Ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Panels
for Computer Products
|
||||||||||||||||
Panels
for notebook computers
|
32,268.5
|
33,265.0
|
50,306.3
|
1,543.6
|
||||||||||||
Panels
for desktop monitors
|
98,999.8
|
108,623.6
|
104,832.9
|
3,216.7
|
||||||||||||
Total
panels for computer
products
|
131,268.3
|
141,888.6
|
155,139.2
|
4,760.3
|
||||||||||||
Panels
for Consumer Electronics Products
|
21,043.8
|
28,636.7
|
31,331.1
|
961.4
|
||||||||||||
Panels
for LCD Television
|
14,585.7
|
46,147.9
|
104,948.9
|
3,220.3
|
||||||||||||
Other(1)
|
1,213.8
|
715.2
|
1,687.6
|
51.8
|
||||||||||||
Total
|
168,111.6
|
217,388.4
|
293,106.8
|
8,993.8
|
(1)
|
Includes
revenues generated from sales of raw materials and components and
other
TFT-LCD panel products, and from service
charges.
|
Year
Ended December 31,
|
||||||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||||||
Region
|
Net
Sales
|
%
|
Net
Sales
|
%
|
Net
Sales
|
%
|
||||||||||||||||||
(in
NT$ millions, except percentages)
|
||||||||||||||||||||||||
Taiwan
|
68,275
|
40.6 | % |
82,473
|
37.9 | % |
89,841
|
30.7 | % | |||||||||||||||
Japan
|
7,365
|
4.4 | % |
4,345
|
2.0 | % |
18,170
|
6.2 | % | |||||||||||||||
Asia(1)
|
84,214
|
50.1 | % |
116,305
|
53.5 | % |
136,293
|
46.5 | % | |||||||||||||||
Europe
|
4,710
|
2.8 | % |
9,361
|
4.3 | % |
30,106
|
10.3 | % | |||||||||||||||
United
States
|
1,702
|
1.0 | % |
2,761
|
1.3 | % |
13,853
|
4.7 | % |
Year
Ended December 31,
|
||||||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||||||
Region
|
Net
Sales
|
%
|
Net
Sales
|
%
|
Net
Sales
|
%
|
||||||||||||||||||
(in
NT$ millions, except percentages)
|
||||||||||||||||||||||||
Others
|
1,846
|
1.1 | % |
2,143
|
1.0 | % |
4,844
|
1.6 | % | |||||||||||||||
Total
|
168,112
|
100.0 | % |
217,388
|
100.0 | % |
293,107
|
100.0 | % |
(1)
|
Excludes
Japan and Taiwan.
|
Glass
Substrates
|
Liquid
Crystals
|
Color
Filters
|
Polarizer
|
Backlight
Units
|
Driver
Integrated Circuits
|
|||||
Asahi
Glass
|
Merck
|
Cando
Corporation(1)
|
Nitto
Denko
|
Coretronic
|
Nippon
Electric Company
|
|||||
Corning
Taiwan
|
Sojitz
Taiwan
|
Dai
Nippon Printing
|
Optimax
|
Forhouse
|
Novatek
|
|||||
Nippon
Electric Glass
|
Toppan
CFI(2)
|
Daxon
Technology(3)
|
Radiant
Opto-Electronics
|
Raydium
Semiconductor(4)
|
(1)
|
Cando
Corporation has been our equity method investee since November 2003.
See
“Item 7.B. Related Party
Transactions.”
|
(2)
|
Toppan
CFI has been our equity method investee since August 2006. See “Item 7.B.
Related Party Transactions.”
|
(3)
|
Daxon
Technology is a subsidiary of one of our major shareholders, BenQ.
See
“Item 7.B. Related Party
Transactions.”
|
(4)
|
We
reduced our indirect ownership in Raydium Semiconductor Corporation
to
less than 50% in January 2006. As a result, Raydium Semiconductor
is no
longer a consolidated subsidiary.
|
|
·
|
LG.
Philips LCD and Samsung, in Korea;
|
|
·
|
Chi
Mei Optoelectronics, Chunghwa Picture Tubes, Hannstar Display, Innolux
Display and Toppoly Optoelectronics, in
Taiwan;
|
|
·
|
Sharp,
Toshiba Matsushita Display Technology, Hitachi and Tottori Sanyo,
in
Japan; and
|
|
·
|
SVA-NEC,
BOE-OT and Long-Teng Corporation, in the
PRC.
|
|
·
|
price,
based in large part on the ability to ramp-up lower cost, “next
generation” production facilities before
competitors;
|
|
·
|
product
features and quality;
|
|
·
|
customer
service, including product design
support;
|
|
·
|
ability
to keep production costs low by maintaining high yield and operating
at
full capacity;
|
|
·
|
ability
to provide sufficient quantity of products to meet customer
demand;
|
|
·
|
quality
of the research and development
team;
|
|
·
|
time-to-market;
|
|
·
|
superior
logistics; and
|
|
·
|
access
to capital.
|
Subsidiary
|
Main Activities
|
Jurisdiction of
Incorporation
|
Total Paid-in
Capital
|
Percentage of
Our Ownership
Interest
|
||||
NT$
(in
millions)
|
||||||||
AU
Optronics (L) Corp.
|
Holding
company
|
Malaysia
|
8,769.5
|
100%
|
||||
AU
Optronics Corporation America
|
Sales
services in the United States
|
United States
|
32.6
|
100%(1)
|
||||
AU
Optronics Corporation Japan
|
Sales
services in Japan
|
Japan
|
26.1
|
100%(1)
|
||||
AU
Optronics Europe B.V.
|
Sales
services in Europe
|
Netherlands
|
1.9
|
100%(1)
|
||||
AU
Optronics Korea Ltd.
|
Sales
services in South Korea
|
South
Korea
|
5.1
|
100%(1)
|
||||
AU
Optronics Singapore Pte. Ltd.
|
Sales
services in South Asia
|
Singapore
|
2.1
|
100%(1)
|
||||
AU
Optronics (Shanghai ) Corp.
|
Sales
services in the PRC
|
PRC
|
32.6
|
100%(1)
|
||||
AU
Optronics (Xiamen) Corp.
|
Assembly
of TFT-LCD modules in the PRC
|
PRC
|
1,629.8
|
100%(1)
|
Subsidiary
|
Main Activities
|
Jurisdiction of
Incorporation
|
Total Paid-in
Capital
|
Percentage of
Our Ownership
Interest
|
||||
NT$
(in
millions)
|
||||||||
AU
Optronics (Suzhou) Corp.
|
Assembly
of TFT-LCD modules in the PRC
|
PRC
|
6,519.2
|
100%(1)
|
||||
Konly
Venture Corp.
|
Venture
capital investment
|
ROC
|
2,200.0
|
100%
|
||||
Darwin
Precisions (L) Corp.
|
Holding
company
|
Malaysia
|
684.6
|
50%(1)
|
||||
Darwin
Precisions (Suzhou) Corp.
|
Manufacturing
and assembly of backlight modules and related components in the
PRC
|
PRC
|
977.9
|
50%(2)
|
||||
Darwin
Precisions (Xiamen) Corp.
|
Manufacturing
and assembly of backlight modules and related components in the
PRC
|
PRC
|
391.2
|
50%(2)
|
||||
QDI
Development Limited
|
Holding
company
|
British
Virgin Islands
|
28.2
|
100%
|
||||
Quanta
Display Japan Inc.
|
Display
design
|
Japan
|
27.4
|
100%(3)(4)
|
||||
QDI
International Limited
|
Holding
Company
|
British
Virgin Islands
|
236.2
|
100%
|
||||
Tech-Well
(Shanghai) Display Corp.
|
Assembly
of TFT-LCD modules in the PRC
|
PRC
|
2,607.7
|
100%(5)
|
||||
Quanta
Display Technology Investment Ltd.
|
Venture
capital investment
|
ROC
|
594.8
|
100%
|
(1)
|
Indirectly,
through our 100% ownership of AU Optronics (L)
Corp.
|
(2)
|
Indirectly,
through our 50% ownership of Darwin Precisions (L)
Corp.
|
(3)
|
Indirectly,
through our 100% ownership of QDI Development
Limited.
|
(4)
|
In
August 2006, operations at Quanta Display Japan Inc. were discontinued
and
we are currently liquidating its
assets.
|
(5)
|
Indirectly,
through our 100% ownership of QDI International
Limited.
|
Location
|
Building
Size
|
Input
Substrate Size /
Installed
Capacity
|
Commencement
of
Commercial
Production
|
Primary
Use
|
Owned
or Leased
|
|||||
(in
square
meters)
|
(in
millimeters)/ (substrates
processed
per month)
|
|||||||||
No.
5, Li-Hsin Rd.
6,
Hsinchu
Science
Park,
Hsinchu,
Taiwan,
ROC
|
69,647
|
610x720/45,000(1)
|
December
1999
|
Manufacturing
of TFT-LCD panels
|
·
Building is
owned
· Land
is leased
(expires in
December 2020)
|
|||||
No.
1, Li-Hsin Rd.
2,
Hsinchu
Science
Park,
Hsinchu,
Taiwan,
ROC
|
163,564
|
610x720/LTPS
20,000(1)
|
November
2000
|
Manufacturing
of TFT-LCD panels; business operations; research and development;
sales
and marketing
|
·
Building is
owned
·
Land is leased
(expires in
December 2020)
|
|||||
No.
23, Li-Hsin Rd.
Hsinchu
Science
Park,
Hsinchu,
Taiwan,
ROC
|
105,127
|
600x720/60,000(1)
|
July
1999
|
Manufacturing
of TFT-LCD panels
|
·
Building is
owned
·
Land is leased
(expires in
January 2017)
|
|||||
189,
Hwaya Rd. 2,
Kueishan
Hwaya Science Park,
Taoyuan,
ROC*
|
865,426
|
620x750/a-Si
35,000(1)
1,100x1,300/70,000(2)
|
December
2001
October
2003
|
Manufacturing
of
TFT-LCD
panels
|
·
Building is
owned
·
Land is
owned
|
|||||
No.
1, Xinhe Rd.
Aspire
Park 325
Lungtan,
Taoyuan
Taiwan,
ROC
|
248,231
|
680x880/60,000(3)
1,100x1,250/50,000(2)
1,100x1,300/70,000(2)
|
February
2001 March 2003 February 2004
|
Manufacturing
of TFT-LCD panels; module and component assembly; manufacturing of
color
filters
|
·
Building is
owned
·
Land is
owned
|
|||||
228,
Lungke St., Lungke Science Park,
Lungtan,
Taoyuan,
Taiwan,
ROC*
|
161,425
|
1,500x1,850/60,000(4)
|
August
2005
|
Manufacturing
of TFT-LCD panels; manufacturing of color filers
|
·
Building is
owned
·
Land is leased
(expires in
February 2008)
|
Location
|
Building
Size
|
Input
Substrate Size /
Installed
Capacity
|
Commencement
of
Commercial
Production
|
Primary
Use
|
Owned
or Leased
|
|||||
(in
square
meters)
|
(in
millimeters)/ (substrates
processed
per month)
|
|||||||||
No.
1 JhongKe Rd.
Central
Taiwan
Science
Park
Taichung
407,
Taiwan,
ROC
|
536,488
|
1,500x1,850/120,000(4)
1,100x1,300/60,000(2)
1,950x2,250/20,000(5)
|
March
2005
August
2005
September
2006
|
Manufacturing
of TFT-LCD panels; module and component assembly; manufacturing of
color
filters
|
·
Building is
owned
·
Land is leased
(expires in
December 2022)
|
|||||
No.
398, Suhong
Zhong
Road
Suzhou
Industrial
Park,
Suzhou,
PRC
|
226,549
|
N/A
|
July
2002
|
Module
and component assembly
|
·
Building is
owned
·
Land is leased
(expires in
2051)
|
|||||
No.
3, Lane 58,
San-Zhuang
Rd.,
Songjiang
Export Processing Zone,
Shanghai,
China*
|
210,530
|
N/A
|
October
2004
|
Module
and component assembly
|
·
Building is
owned
·
Land is leased
(expires in
2052)
|
|||||
No.
1689, North of XiangAn Rd.,
XiangAn
Branch,
Torch
Hi-tech Industrial
Development
Zone,
Xiamen,
China
|
256,409
|
N/A
|
Second
Quarter of 2007
|
Module
and component assembly
|
·
Building is
owned
·
Land is leased
(expires in
2056)
|
*
|
Facilities
acquired through our merger with
QDI.
|
(1)
|
3.5-generation
fab.
|
(2)
|
Fifth-generation
fab.
|
(3)
|
Fourth-generation
fab.
|
(4)
|
Sixth-generation
fab.
|
(5)
|
7.5
generation fab.
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Balance
at beginning of year
|
45,756
|
698,506
|
414,086
|
12,705.9
|
||||||||||||
Provision
charged to revenue
|
696,328
|
337,828
|
2,322,856
|
71,275.1
|
||||||||||||
Allowance
assumed from the merger with QDI
|
—
|
—
|
98,190
|
3,012.9
|
||||||||||||
Write-off
|
(43,578 | ) | (622,248 | ) | (2,001,608 | ) | (61,417.9 | ) | ||||||||
Balance
at end of year
|
698,506
|
414,086
|
833,524
|
25,576.0
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Balance
at beginning of year
|
81,085
|
90,306
|
91,422
|
2,805.2
|
||||||||||||
Provision
charged to expense
|
9,221
|
1,116
|
278,216
|
8,536.9
|
||||||||||||
Allowance
assumed from the merger with QDI
|
—
|
—
|
149,866
|
4,598.5
|
||||||||||||
Write-off
|
—
|
—
|
(45,479 | ) | (1,395.5 | ) | ||||||||||
Balance
at end of year
|
90,306
|
91,422
|
474,025
|
14,545.1
|
Year
Ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
%
|
%
|
%
|
||||||||||
Net
sales
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of goods sold
|
76.4
|
86.3
|
89.8
|
|||||||||
Gross
profit
|
23.6
|
13.7
|
10.2
|
|||||||||
Operating
expenses
|
6.6
|
5.9
|
5.3
|
|||||||||
Selling
|
1.5
|
1.9
|
2.3
|
|||||||||
General
and administrative
|
2.1
|
1.8
|
1.4
|
|||||||||
Research
and development
|
3.0
|
2.2
|
1.6
|
|||||||||
Operating
income
|
17.0
|
7.8
|
4.9
|
|||||||||
Net
non-operating loss
|
(0.4 | ) | (0.4 | ) | (1.4 | ) | ||||||
Income
before income tax
|
16.6
|
7.4
|
3.5
|
|||||||||
Income
tax expenses
|
0.0
|
0.2
|
0.4
|
|||||||||
Net
income
|
16.6
|
7.2
|
3.1
|
|
·
|
Share
offerings in 1999 by Unipac for the purchase of equipment used at
two of
our 3.5-generation fabs, and share offering in 1999 by Acer Display
for
the purchase of equipment used at our fourth-generation
fab.
|
|
·
|
The
tax exemption period relating to the equipment purchased for our
second
3.5-generation fab is four years and will expire in
2008.
|
|
·
|
The
tax exemption period relating to our fourth-generation fab commenced
in
2005 and will expire in 2009.
|
|
·
|
Share
offering in 1996 by Acer Display for the purchase of equipment used
at our
3.5-generation fab.
|
|
·
|
The
tax exemption period commenced in 2003 and will expire in
2007.
|
|
·
|
Share
offerings in 2001 for the purchase of equipment used at our
fourth-generation fab.
|
|
·
|
The
tax exemption period commenced in 2005 and will expire in
2009.
|
|
·
|
Capitalization
of retained earnings in 2001 for the purchase of equipment used at
our
3.5-generation fab and fifth-generation
fab.
|
|
·
|
The
tax exemption period is five years for our 3.5-generation fab and
fifth-generation fab.
|
|
·
|
We
have not yet designated the year from which we will use this tax
exemption.
|
|
·
|
Capitalization
of retained earnings in 2003 for the purchase of equipment used at
our
fifth-generation fab.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not yet received all required government approvals and have
not
designated the year from which we will use this tax
exemption.
|
|
·
|
Issuance
of ADS in 2002 for the purchase of equipment used at our fifth-generation
fab.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not received all required government approvals and have not
yet
designated the year from which we will use this tax
exemption.
|
|
·
|
Capitalization
of retained earnings in 2004 for the purchase of equipment used at
our
sixth-generation fab.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not received all required government approvals and have not
yet
designated the year from which we will use this tax
exemption.
|
|
·
|
Issuance
of ADS in 2004 for the purchase of equipment used at our fifth-generation
fab.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not received all required government approvals and have not
yet
designated the year from which we will use this tax
exemption.
|
|
·
|
Capitalization
of retained earnings in 2005 for the purchase of equipment used at
our
7.5-generation fab.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not received all required government approvals and have not
yet
designated the year from which we will use this tax
exemption.
|
|
·
|
Issuance
of ADS in 2005 for the purchase of equipment used at our sixth-generation
and 7.5-generation fabs.
|
|
·
|
The
tax exemption period is five years.
|
|
·
|
We
have not received all required government approvals and have not
yet
designated the year from which we will use this tax
exemption.
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Equipment
purchases
|
80,814.5
|
72,536.5
|
64,411.7
|
1,976.4
|
||||||||||||
Land
and building purchases
|
2,233.3
|
21,317.5
|
24,834.6
|
762.0
|
Payments
due by Period
|
||||||||||||||||||||
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
||||||||||||||||
(in
millions)
|
||||||||||||||||||||
Contractual
Obligations
|
||||||||||||||||||||
Long-term
debt obligations(1)
|
221,278.4
|
41,889.8
|
98,129.7
|
69,183.2
|
12,075.7
|
|||||||||||||||
Operating
lease obligations(2)
|
2,996.3
|
209.8
|
387.9
|
387.9
|
2,010.7
|
|||||||||||||||
Purchase
obligations(3)
|
37,586.9
|
37,586.9
|
-
|
-
|
-
|
|||||||||||||||
Total
|
261,861.6
|
79,686.5
|
98,517.6
|
69,571.1
|
14,086.4
|
(1)
|
Includes
principal payment obligations
only.
|
(2)
|
Represents
our obligations to make lease payments to use the land on which our
fabs
and module-assembly facilities are
located.
|
(3)
|
Includes
purchase orders for the machinery and equipment at our fabs. We have
placed orders related to the installation of machinery and equipment
at
our second sixth-generation and our first 7.5-generation fabs. As
of
December 31, 2006, we had made commitments of approximately NT$15.3
billion (US$0.5 billion), primarily relating to the sixth-generation
fab
and approximately NT$16.9 billion (US$0.5 billion), relating to the
7.5-generation fab, which commitments may be cancelled subject to
the
payment of certain penalties.
|
For
the Year Ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Net
income in accordance with
|
||||||||||||||||
ROC
GAAP
|
27,962.9
|
15,621.2
|
9,093.4
|
279.0
|
||||||||||||
U.S.
GAAP
|
18,112.5
|
8,678.2
|
1,173.2
|
36.0
|
||||||||||||
Shareholders’
equity in accordance with
|
||||||||||||||||
ROC
GAAP
|
130,565.6
|
155,819.5
|
231,076.3
|
7,090.4
|
||||||||||||
U.S.
GAAP
|
142,685.6
|
166,918.9
|
238,618.1
|
7,321.8
|
||||||||||||
Cash
flows from operating activities in accordance with
|
||||||||||||||||
ROC
GAAP
|
49,393.6
|
48,006.0
|
68,526.7
|
2,102.7
|
||||||||||||
U.S.
GAAP
|
48,943.8
|
46,951.9
|
67,955.3
|
2,085.2
|
||||||||||||
Cash
flows from investing activities in accordance with
|
||||||||||||||||
ROC
GAAP
|
(87,010.2 | ) | (82,456.2 | ) | (83,300.6 | ) | (2,556.0 | ) | ||||||||
U.S.
GAAP
|
(88,001.0 | ) | (81,428.1 | ) | (83,130.7 | ) | (2,550.8 | ) | ||||||||
Cash
flows from financing activities in accordance with
|
||||||||||||||||
ROC
GAAP
|
37,615.2
|
43,097.3
|
32,550.8
|
998.8
|
||||||||||||
U.S.
GAAP
|
38,066.2
|
43,783.9
|
32,951.7
|
1,011.1
|
Name
|
Age
|
Position
|
Term
Expires
|
Years
with
Us
|
Principal
Business Activities
Performed
Outside Our Company
|
|||||
Kuen-Yao
(K.Y.) Lee
|
55
|
Chairman
|
2007
|
11
|
Chairman
and Chief Executive Officer of BenQ; Director of Darfon Electronics
Corp.;
Director of Daxon Technology Inc.
|
|||||
Chee-Chun
Leung(1)
|
57
|
Vice-Chairman
|
2007
|
1
|
Vice-Chairman
of Quanta Computer Inc.; Chairman of Xin Min Investment Co.; Chairman
of
Min Da Investment Co.; Supevisor of Yi Jia Ying Investment Co.; Supervisor
of Min Hwa Investment Co.
|
|||||
Hsuan
Bin (H.B.) Chen(1)
|
56
|
Director
|
2007
|
10
|
Chairman
of Wellypower Optronics Corporation; Director of BenQ
|
|||||
Hsi-Hua
Sheaffer Lee(1)
|
52
|
Director
|
2007
|
11
|
President
and Chief Operating Officer of BenQ; Chairman of Darfon Electronics
Corp.
|
|||||
Hui
Hsiung(1)
|
54
|
Director
|
2007
|
11
|
||||||
Michael
Wang(2)
|
53
|
Director
|
2007
|
1
|
President
of Quanta Computer Inc.
|
|||||
Cheng-Chu
Fan
|
55
|
Director
|
2007
|
3
|
Senior
Advisor, WK Technology Fund; Director of Advantech Co., Ltd.; Director
of
Transcend Information, Inc.
|
|||||
Vivien
Huey-Juan Hsieh
|
54
|
Director
|
2007
|
3
|
Professor
at National Taipei University of Technology
|
|||||
T.J.
Huang
|
61
|
Director
|
2007
|
3
|
Chairman,
Systex Corporation; Chairman, Sysware Corporation; President, Asia
Vest
Partners TCW/YFT (Taiwan) Ltd.
|
Name
|
Age
|
Position
|
Term
Expires
|
Years
with
Us
|
Principal
Business Activities
Performed
Outside Our Company
|
|||||
Chieh-Chien
Chao
|
63
|
Supervisor
|
2007
|
3
|
Professor
at National Chiao Tung University
|
|||||
Ko-Yung
(Eric) Yu(1)
|
51
|
Supervisor
|
2007
|
11
|
Chief
Financial Officer of BenQ; Chairman of Daxon Technology
Inc.
|
|||||
Shin
Chen(3)
|
59
|
Supervisor
|
2007
|
2
|
Senior
Executive Vice President, CDIB
|
(1)
|
Representing
BenQ.
|
(2)
|
Representing
Darly 2 Venture Ltd.
|
(3)
|
Representing
CDIB.
|
Name
|
Age
|
Position
|
Years
with Us
|
|||
Kuen-Yao
(K.Y.) Lee
|
55
|
Chairman
and Chief Executive Officer
|
11
|
|||
Hsuan
Bin (H.B.) Chen
|
56
|
President
and Chief Operating Officer
|
10
|
|||
Hui
Hsiung
|
54
|
Executive
Vice President
|
11
|
|||
Max
Cheng
|
45
|
Chief
Financial Officer; Chief Accounting Officer; and
Controller
|
9
|
As
of December 31,
|
||||||||||||
Function
|
2004
|
2005
|
2006
|
|||||||||
Production
|
14,142
|
18,094
|
31,192
|
|||||||||
Technical(1)
|
3,278
|
4,404
|
7,685
|
|||||||||
Sales
and marketing
|
375
|
378
|
566
|
|||||||||
Management
and administration
|
2,112
|
1,451
|
1,567
|
|||||||||
Total
|
19,907
|
24,327
|
41,010 | (2) |
(1)
|
Includes
research and development personnel.
|
(2)
|
We
added 5,855 employees as a result of the merger with
QDI.
|
As
of December 31,
|
||||||||||||
Location
|
2004
|
2005
|
2006
|
|||||||||
Taiwan(1)
|
10,544
|
13,514
|
20,965
|
|||||||||
PRC(2)
|
9,329
|
10,741
|
19,973
|
|||||||||
Others
|
34
|
72
|
72
|
|||||||||
Total
|
19,907
|
24,327
|
41,010 | (3) |
(1)
|
Employed
by AU Optronics Corp.
|
(2)
|
Employed
by AU Optronics (Suzhou) Corp., AU Optronics (Xiamen) Corp. and Tech-Well
(Shanghai) Display Corp.
|
(3)
|
We
added 5,855 employees as a result of the merger with
QDI.
|
Name
|
Number
of Shares Owned
|
Percentage
of Shares Owned
|
||||||
Kuen-Yao
(K.Y.) Lee, Chairman and Chief Executive Officer
|
9,677,454
|
*
|
||||||
Chee-Chun
Leung, Vice Chairman
|
638,029,792 | (1) | 8.42 | % | ||||
Hsuan
Bin (H.B.) Chen, Director, President and Chief Operating
Officer
|
5,421,956
|
*
|
||||||
Hsi-Hua
Sheaffer Lee, Director
|
638,029,792 | (1) | 8.42 | % | ||||
Hui
Hsiung, Director and Executive Vice President
|
638,029,792 | (1) | 8.42 | % | ||||
Michael
Wang, Director
|
1,560,697 | (2) |
*
|
|||||
Cheng-Chu
Fan, Director
|
—
|
—
|
||||||
Vivien
Huey-Juan Hsieh, Director
|
—
|
—
|
||||||
T.J.
Huang, Director
|
—
|
—
|
||||||
Chieh-Chien
Chao, Supervisor
|
—
|
—
|
||||||
Ko-Yung
(Eric) Yu, Supervisor
|
638,029,792 | (1) | 8.42 | % | ||||
Shin
Chen, Supervisor
|
40,732,629 | (3) |
*
|
|||||
Max
Cheng, Chief Financial Officer, Chief Accounting Officer and
Controller
|
1,059,780
|
*
|
*
|
The
number of common shares held is less than 1% of our total outstanding
common shares.
|
(1)
|
Represents
shares held by BenQ.
|
(2)
|
Represents
shares held by Darly 2 Venture Ltd.
|
(3)
|
Represents
shares held by CDIB.
|
Name
of Beneficial Owner
|
Number
of Shares
Beneficially
Owned
|
Percentage
of Shares
Beneficially
Owned
|
Percentage
of Shares
Beneficially
Owned
(Fully
Diluted)
|
|||
BenQ
157,
Shan-Ying Road,
Gueishan,
Taoyuan 333,
Taiwan,
ROC
|
641,466,625
|
8.47%
|
8.47%
|
|||
Quanta
Computer Inc.
(1)
211,
Wen Hwa 2nd
Road,
Gueishan
Hsiang, Taoyuan,
Taiwan,
ROC
|
402,464,697
|
5.31%
|
5.31%
|
|||
All
directors and supervisors as a group(2)
|
695,422,528
|
9.18%
|
9.18%
|
(1)
|
As
of December 31, 2006.
|
(2)
|
Calculated
as the sum of: (a) with respect to directors and supervisors who
are
serving in their personal capacity, the number of shares held by
such
director or supervisor and (b) with respect to directors and supervisors
who are serving in the capacity as legal representatives, the number
of
shares owned by such institutional or corporate shareholder for which
such
director or supervisor is a legal
representative.
|
|
·
|
pre-approval
by a majority vote of disinterested directors of each sale to, or
purchase
of raw materials and components from, a related party that is in
the
ordinary course of our business, which transaction involves a transaction
amount in excess of 5% of our net sales or raw materials and component
purchases, as the case may be, for the previous three months on an
unconsolidated basis, provided that any series of similar transactions
with the same related party that collectively exceeds 40% of our
net sales
or raw materials and component purchases, as the case may be, for
the
previous three months on an unconsolidated basis shall also require
pre-approval;
|
|
·
|
periodic
review by our board of directors of other related party transactions
in
the ordinary course of business;
|
|
·
|
pre-approval
by a majority vote of disinterested directors of related party
transactions not in the ordinary course of business and not otherwise
specified in our related party transaction policy;
and
|
|
·
|
recusal
of any interested director from consideration of matters involving
the
company he or she represents or with respect to which the director
might
have a conflict of interest.
|
|
·
|
payment
of all income taxes; and
|
|
·
|
deduction
of any past losses.
|
|
·
|
5%
to 10% of the earnings to be distributed is distributable as a bonus
for
employees;
|
|
·
|
no
more than 1% of the earnings to be distributed is distributable as
remuneration to directors and supervisors;
and
|
|
·
|
all
or a portion of the balance is distributable as dividend and bonus
to our
shareholders.
|
Taiwan
Stock Exchange
|
New
York Stock Exchange(1)
|
|||||||||||||||||||||||
Closing
Price Per
Share |
Closing
Price per
ADS
|
|||||||||||||||||||||||
High
|
Low
|
Average
Daily
Trading
Volume |
High
|
Low
|
Average
Daily
Trading
Volume
|
|||||||||||||||||||
(NT$)
|
(NT$)
|
(in
thousands of shares)
|
(US$)
|
(US$)
|
(in
thousand of ADSs)
|
|||||||||||||||||||
2002:
|
58.57
|
15.24
|
93,256.21
|
12.33
|
4.30
|
733.59
|
||||||||||||||||||
2003:
|
49.90
|
16.86
|
95,656.02
|
14.80
|
4.81
|
438.40
|
||||||||||||||||||
2004:
|
78.50
|
41.40
|
97,560.92
|
27.93
|
12.47
|
3,274.97
|
||||||||||||||||||
2005:
|
55.70
|
41.50
|
58,771.47
|
18.14
|
12.73
|
1,848.57
|
||||||||||||||||||
First
Quarter
|
49.90
|
41.50
|
58,172.41
|
16.48
|
12.73
|
2,056.82
|
||||||||||||||||||
Second
Quarter
|
55.70
|
45.45
|
59,284.95
|
18.14
|
14.57
|
1,650.07
|
||||||||||||||||||
Third
Quarter
|
54.50
|
40.50
|
51,883.38
|
17.42
|
12.25
|
2,010.34
|
||||||||||||||||||
Fourth
Quarter
|
49.00
|
36.05
|
55,640.56
|
15.01
|
10.93
|
2,459.76
|
||||||||||||||||||
2006:
|
55.20
|
40.00
|
47,043.79
|
17.56
|
12.16
|
2,162.58
|
||||||||||||||||||
First
Quarter
|
55.20
|
45.55
|
61,146.76
|
17.30
|
14.15
|
2,531.71
|
||||||||||||||||||
Second
Quarter
|
55.10
|
40.00
|
56,726.53
|
17.56
|
12.16
|
2,049.58
|
||||||||||||||||||
Third
Quarter
|
50.60
|
44.15
|
37,891.75
|
15.83
|
13.46
|
2,054.66
|
||||||||||||||||||
Fourth
Quarter
|
47.60
|
42.10
|
33,973.65
|
14.46
|
12.76
|
2,021.21
|
||||||||||||||||||
November
|
45.00
|
42.80
|
33,222.27
|
13.59
|
12.97
|
1,870.30
|
||||||||||||||||||
December
|
45.30
|
42.10
|
33,842.67
|
13.83
|
12.76
|
1,708.51
|
||||||||||||||||||
2007
(through June 26):
|
59.10
|
43.30
|
36,164.12
|
17.99
|
13.06
|
1,463.09
|
Taiwan
Stock Exchange
|
New
York Stock Exchange(1)
|
|||||||||||||||||||||||
Closing
Price per
Share
|
Closing
Price per
ADS
|
|||||||||||||||||||||||
High
|
Low
|
Average
Daily
Trading
Volume
|
High
|
Low
|
Average
Daily
Trading
Volume
|
|||||||||||||||||||
(NT$)
|
(NT$)
|
(in
thousands of shares)
|
(US$)
|
(US$)
|
(in
thousand of ADSs)
|
|||||||||||||||||||
First
Quarter
|
48.60
|
43.30
|
34,827.81
|
15.06
|
13.06
|
1,484.99
|
||||||||||||||||||
January
|
45.70
|
43.30
|
24,662.82
|
14.10
|
13.06
|
1,373.75
|
||||||||||||||||||
February
|
48.60
|
44.90
|
50,420.67
|
15.06
|
13.77
|
1,688.52
|
||||||||||||||||||
March
|
48.40
|
44.90
|
36,415.43
|
14.79
|
13.74
|
1,410.34
|
||||||||||||||||||
Second
Quarter (through June 26)
|
59.10
|
47.85
|
37,455.14
|
17.99
|
14.69
|
1,440.83
|
||||||||||||||||||
April
|
54.00
|
47.85
|
48,311.05
|
16.71
|
14.69
|
1,756.30
|
||||||||||||||||||
May
|
54.90
|
50.80
|
27,181.41
|
16.51
|
15.30
|
1,221.58
|
||||||||||||||||||
June
(through June 26)
|
59.10
|
52.80
|
37,978.88
|
17.99
|
16.15
|
1,358.294
|
(1)
|
Each
ADS represents the right to receive 10 common
shares.
|
|
·
|
any
amendment to our articles of
incorporation;
|
|
·
|
our
dissolution or amalgamation;
|
|
·
|
a
merger or spin-off;
|
|
·
|
transfers
of the whole or a substantial part of our business or
properties;
|
|
·
|
the
acquisition of the entire business of another company which would
have a
significant impact on our
operations;
|
|
·
|
the
distribution of any stock dividend;
or
|
|
·
|
the
removal of directors or
supervisors.
|
|
·
|
payment
of all income taxes; and
|
|
·
|
deduction
of any past losses.
|
|
·
|
5%
to 10% of the earnings to be distributed is distributable as a bonus
for
employees;
|
|
·
|
no
more than 1% of the earnings to be distributed is distributable as
remuneration to directors and supervisors;
and
|
|
·
|
all
or a portion of the balance is distributable as a dividend and bonus
to
our shareholders.
|
|
·
|
to
transfer shares to our employees;
|
|
·
|
to
facilitate conversion arising from bonds with warrants, preferred
shares
with warrants, convertible bonds, convertible preferred shares or
certificates of warrants issued by our company into shares;
and
|
|
·
|
if
necessary, to maintain our credit and our shareholders’ equity; provided
that the shares so purchased shall be cancelled
thereafter.
|
|
·
|
Within
30 days from the date on which a shareholders’ resolution is adopted, a
shareholder may file a lawsuit to annul a shareholders’ resolution if the
procedure for convening a shareholders’ meeting or the method of
resolution violates any law or regulation or our articles of
incorporation.
|
|
·
|
If
the substance of a resolution adopted at a shareholders’ meeting
contradicts any applicable law or regulation or our articles of
incorporation, a shareholder may bring a suit to determine the validity
of
such resolution.
|
|
·
|
Shareholders
who have continuously held 3% or more of the total number of issued
and
outstanding shares for a period of one year or longer may request
in
writing that a supervisor institute an action against a director
on our
behalf. In case the supervisor fails to institute an action within
30 days
after receiving such request, the shareholders may institute an action
on
our behalf. In the event that shareholders institute an action, a
court
may, upon motion of the defendant, order such shareholders to furnish
appropriate security.
|
|
·
|
In
the event that any director, supervisor, officer or shareholder who
holds
more than 10% of our issued and outstanding shares and their respective
spouse and minor children and/or nominees sells shares within six
months
after the acquisition of such shares, or repurchases the shares within
six
months after the sale, we may make a claim for recovery of any profits
realized from the sale and purchase. If our board of directors or
our
supervisors fail to make a claim for recovery, any shareholder may
request
that our board of directors or our supervisors exercise the right
of claim
within 30 days. In the event our directors or our supervisors fail
to
exercise such right during such 30-day period, such requesting shareholder
will have the right to make a claim for such recovery on our behalf.
Our
directors and supervisors will be jointly and severally liable for
damages
suffered by us as a result of their failure to exercise the right
of
claim.
|
|
·
|
you
are an individual and you are not physically present in Taiwan for
183
days or more during any calendar year;
or
|
|
·
|
you
are an entity and you are organized under the laws of a jurisdiction
other
than Taiwan and have no fixed place of business or other permanent
establishment or business agent in
Taiwan.
|
|
·
|
25%
of the gains realized by non-Taiwan entities;
and
|
|
·
|
35%
of the gains realized by non-Taiwan
individuals.
|
|
·
|
a
citizen or resident of the United
States;
|
|
·
|
a
corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States or any political
subdivision thereof; or
|
|
·
|
an
estate or trust the income of which is subject to U.S. federal income
taxation regardless of its source.
|
|
·
|
dealers
and traders in securities or foreign
currencies;
|
|
·
|
certain
financial institutions;
|
|
·
|
insurance
companies;
|
|
·
|
tax-exempt
organizations;
|
|
·
|
partnerships
or other entities classified as partnerships for U.S. federal income
tax
purposes;
|
|
·
|
persons
liable for alternative minimum tax;
|
|
·
|
persons
holding ADSs or shares as part of a hedge, straddle, conversion
transaction, or integrated
transaction;
|
|
·
|
persons
owning, or treated as owning, 10% or more of our voting
stock;
|
|
·
|
persons
whose functional currency for U.S. federal income tax purposes is
not the
U.S. dollar; or
|
|
·
|
persons
who acquired ADSs or shares pursuant to the exercise of any employee
stock
option or otherwise as
compensation.
|
Expected
Maturity Date
|
||||||||||||||||||||||||||||||||
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
Total
|
Fair
Value at December 31, 2006
|
|||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||
Certificates
of Deposit:
|
||||||||||||||||||||||||||||||||
Fixed
rate (US$)
|
247,921
|
—
|
—
|
—
|
—
|
—
|
247,921
|
247,921
|
||||||||||||||||||||||||
Average
interest rate
|
5.170 | % |
—
|
—
|
—
|
—
|
—
|
5.170 | % | 5.170 | % | |||||||||||||||||||||
Fixed
rate (NT$)
|
5,503,644
|
—
|
—
|
—
|
—
|
—
|
5,503,644
|
5,503,644
|
||||||||||||||||||||||||
Average
interest rate
|
1.355 | % |
—
|
—
|
—
|
—
|
—
|
1.355 | % | 1.355 | % | |||||||||||||||||||||
Fixed
rate (JP¥)
|
27,624,699
|
—
|
—
|
—
|
—
|
—
|
27,624,699
|
27,624,699
|
||||||||||||||||||||||||
Average
interest rate
|
0.246 | % |
—
|
—
|
—
|
—
|
—
|
0.246 | % | 0.246 | % | |||||||||||||||||||||
Fixed
rate (CNY)
|
101,000
|
—
|
—
|
—
|
—
|
—
|
101,000
|
101,000
|
||||||||||||||||||||||||
Average
interest rate
|
1.620 | % |
—
|
—
|
—
|
—
|
—
|
1.620 | % | 1.620 | % | |||||||||||||||||||||
Liabilities
Bonds:
|
||||||||||||||||||||||||||||||||
Secured
(NT$)(1)
|
1,000,000
|
2,500,000
|
5,500,000
|
5,500,000
|
2,500,000
|
0
|
17,000,000
|
16,887,600
|
||||||||||||||||||||||||
Fixed
rate
|
1.430 | % | 1.430 | % | 1.741 | % | 1.976 | % | 1.948 | % |
––
|
1.784 | % | |||||||||||||||||||
Secured
Long-term Loans:
|
||||||||||||||||||||||||||||||||
Fixed
rate (NT$)
|
150,000
|
325,000
|
550,000
|
475,000
|
0
|
0
|
1,500,000
|
1,532,197
|
||||||||||||||||||||||||
Average
interest rate
|
2.862 | % | 2.710 | % | 2.715 | % | 2.734 | % |
––
|
––
|
2.717 | % | ||||||||||||||||||||
Variable
rate (NT$)
|
30,921,556
|
36,622,512
|
41,072,279
|
33,029,544
|
27,678,665
|
12,075,720
|
181,400,276
|
181,400,276
|
||||||||||||||||||||||||
Average
interest rate
|
2.203 | % | 2.302 | % | 2.368 | % | 2.334 | % | 2.435 | % | 2.397 | % | 2.372 | % | ||||||||||||||||||
Interest
Rate Swaps(2):
|
||||||||||||||||||||||||||||||||
Variable
to fixed (NT$)
|
—
|
14,500,000
|
10,000,000
|
1,000,000
|
31,000,000
|
—
|
56,500,000
|
(324,153 | ) | |||||||||||||||||||||||
Pay
rate
|
—
|
2.231 | % | 1.928 | % | 2.040 | % | 2.059 | % |
—
|
2.080 | % |
(1)
|
NT$5,500
million are variable rate and NT$11,500 million are fixed
rate.
|
(2)
|
90-day
Taipei Money Market
Secondary middle rate settled quarterly (1.748% as of December 31,
2006).
|
(in
thousands)
|
|
Contracts
to sell US$/Buy NT$:
|
|
Aggregate
contract amount
|
US$674,000
|
Average
contractual exchange rate
|
NT$32.4559
per US$
|
Contracts
to sell NT$/Buy Japanese yen:
|
|
Aggregate
contract amount
|
NT$23,396,738
|
Average
contractual exchange rate
|
JPY3.5689
per NT$
|
Contracts
to sell NT$/Buy US$:
|
|
Aggregate
contract amount
|
US$294,500
|
Average
contractual exchange rate
|
NT$32.5805
per US$
|
Fair
value of all forward contracts
|
NT$(506,632)
|
|
·
|
pertain
to the maintenance of records that, in reasonable detail, accurately
and
fairly reflect our transactions and dispositions of our
assets;
|
|
·
|
provide
reasonable assurance that our transactions are recorded as necessary
to
permit preparation of our financial statements in accordance with
ROC GAAP
and US GAAP, and that our receipts and expenditures are being made
only in
accordance with authorizations of our management and our directors;
and
|
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could
have
a material effect on the financial
statements.
|
Year
ended December 31,
|
||||||||
Services
|
2005
|
2006
|
||||||
NT$
|
NT$
|
|||||||
(in
thousands)
|
||||||||
Audit
Fees(1)
|
26,611
|
37,930
|
||||||
Tax
Fees(2)
|
400
|
—
|
||||||
Total
|
27,011
|
37,930
|
(1)
|
Audit
Fees. This category includes the audit of our financial
statements, review of quarterly financial statements and services
that are
normally provided by the independent auditors in connection with
statutory
and regulatory filings or engagements for those fiscal years, and
service
related to testing the effectiveness of our internal control over
financial reporting required by Section 404 of the Sarbanes-Oxley
Act of
2002. This category also includes advice on audit and
accounting matters that arose during, or as a result of, the audit
or the
review of quarterly financial statements and statutory audits required
by
non-U.S. jurisdictions, including statutory audits required by the
Tax
Bureau of the ROC, Customs Bureau of the ROC and Financial Supervisory
Commission of the ROC. This category also includes comfort letters,
consents and assistance with and review of documents filed with the
SEC.
|
(2)
|
Tax
Fees. This category
consists of professional services rendered by KPMG for tax
compliance.
|
1.1
|
Articles
of Incorporation (English translation).
|
2.1
|
Deposit
Agreement, dated May 29, 2002, among AU Optronics Corp., Citibank,
N.A. as
depositary, and Holders and Beneficial Owners of American depositary
shares evidenced by American depositary receipts issued thereunder,
including the form of American depositary receipt (incorporated herein
by
reference to Exhibit 2(A) to our annual report on Form 20-F as filed
with
the Commission on June 30, 2003).
|
2.2
|
Amendment
No. 1 to the Deposit Agreement, dated February 15, 2006, among AU
Optronics Corp., Citibank, N.A. as depositary, and Holders and Beneficial
Owners of American depositary shares evidenced by American depositary
receipts issued thereunder, including the amended form of American
depositary receipt.
|
4.1
|
Patent
and Technology License Agreement by and between FDTC and AU Optronics
Corp., for TFT-LCD technologies, dated March 31, 2003 (incorporated
herein
by reference to Exhibit 4(g) to our annual report on Form 20-F as
filed
with the Commission on June 30,
2003).
|
4.2
|
Stock
Purchase Agreement by and among FDTC, Fujitsu and AU Optronics Corp.,
for
purchase certain amount of stocks of FDTC, dated March 25, 2003
(incorporated herein by reference to Exhibit 4(i) to our annual report
on
Form 20-F as filed with the Commission on June 30,
2003).
|
4.3
|
Patent
License Agreement by and between SEL and AU Optronics Corp., for
amorphous
silicon TFT technologies, effective on September 1, 2003. (Confidential
treatment requested for certain portions of the
agreement).
|
4.4
|
Lease
Agreement with Hsinchu Science Park Administration in relation to
government-owned land located at Hsinchu Science Park, No. 76-6 Small
Section, Hsinchu, Taiwan, Republic of China, with respect to part
of the
site of our previous L1 fab (incorporated herein by reference to
Exhibit
4(j) to our annual report on Form 20-F as filed with the Commission
on
June 30, 2003).
|
4.5
|
Lease
Agreement with Hsinchu Science Park Administration in relation to
government-owned land located at Hsinchu Science Park, No. 77 Small
Section, Hsinchu, Taiwan, Republic of China, with respect to part
of the
site of L1 fab (incorporated herein by reference to Exhibit 4(k)
to our
annual report on Form 20-F as filed with the Commission on June 30,
2003).
|
4.6
|
Lease
Agreement with Hsinchu Science Park Administration in relation to
government-owned land located at Hsinchu Science Park, Nos. 255-46
Gin-Shan Section, Hsinchu, Taiwan, Republic of China, the site of
one of
our 3.5-generation fabs (incorporated herein by reference to Exhibit
4(l)
to ours annual report on Form 20-F as filed with the Commission on
June
30, 2003).
|
4.7
|
Lease
Agreement with Hsinchu Science Park Administration in relation to
government-owned land located at Hsinchu Science Park, Nos. 114-4
Gin-Shan
Section, Hsin-Chu, Taiwan, Republic of China, the site of one of
our
3.5-generation fabs (incorporated herein by reference to Exhibit
4(m) to
our annual report on Form 20-F as filed with the Commission on June
30,
2003).
|
4.8
|
Lease
Agreement with Hsinchu Science Park Administration in relation to
government-owned land located at Hsinchu Science Park, Nos. 472 etc,
Gin-Shan Section, Hsinchu, Taiwan, Republic of China, the site of
one of
our 3.5-generation fabs (incorporated herein by reference to Exhibit
4(n)
to our annual report on Form 20-F as filed with the Commission on
June 30,
2003).
|
4.9
|
Lease
Agreement by and between Acer Display Technology, Inc. and Min-Tour
Inc.
for No. 1 Xinhe Road Aspire Park, 325 Lungtan, Taoyuan, Taiwan, Republic
of China, the site of our fourth-generation fab and module-assembly
plant
(in Chinese, with English summary translation) (incorporated herein
by
reference to Exhibit 10.12 to our Registration Statement on Form
F-1
(Registration No. 333-87418) as filed with Commission on May 1,
2002).
|
4.10
|
Lease
Agreement by and between AU Optronics Corp. and UMC for No. 1, Gin-Shan
Section 7 of Hsinchu Science Park, Hsinchu, Taiwan, Republic of China,
the
site of one of our fourth-generation fab module-assembly plant (in
Chinese, with English summary translation) (incorporated herein by
reference to Exhibit 10.13 to our Registration Statement on Form
F-1
(Registration No. 333-87418) as filed with the Commission on May
1,
2002).
|
4.11
|
Lease
Agreement by and between AU Optronics (Suzhou) Corp. and Chinese-Singapore
Suzhou Industrial Park Development Co., Ltd. for No. 398, Suhong
Zhong
Road, Suzhou Industrial Park, Suzhou, The People’s Republic of China, the
site of two of our module-assembly plants (incorporated herein by
reference to Exhibit 4(q) to our annual report on Form 20-F as filed
with
the Commission on June 30, 2003).
|
4.12
|
Merger
Agreement, dated April 7, 2006, between AU Optronics Corp. and Quanta
Display Inc. (incorporated herein by reference to Item 1 of our Form
6-K
as filed with the Commission on May 12,
2006).
|
4.13
|
Quanta
Display Inc. 2002 Employee Stock Option Plan (English
translation).
|
4.14
|
Quanta
Display Inc. 2003 Employee Stock Option Plan (English
translation).
|
8.1
|
List
of Subsidiaries.
|
12.1
|
Certification
of Kuen-Yao (K.Y.) Lee, Chairman and Chief Executive Officer of AU
Optronics Corp., pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
(included on the signature page hereto).
|
12.2
|
Certification
of Max Cheng, Chief Financial Officer of AU Optronics Corp., pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002 (included on the signature
page hereto).
|
13.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
|
AU
OPTRONICS CORP.
|
||||
By:
|
/s/
KUEN-YAO (K.Y.) LEE
|
|||
Name:
|
Kuen-Yao
(K.Y.) Lee
|
|||
Title:
|
Chief
Executive Officer
|
Page
|
|
Consolidated
Financial Statements of Advanced Semiconductor Engineering,
Inc.
and
Subsidiaries
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheets
|
F-2
|
Consolidated
Statements of Income
|
F-4
|
Consolidated
Statements of Stockholders’ Equity
|
F-6
|
Consolidated
Statements of Cash Flows
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
|
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
Assets
|
||||||||||||
Current
assets:
|
||||||||||||
Cash
and cash equivalents (note 3)
|
26,263,265
|
43,925,540
|
1,347,823
|
|||||||||
Notes
and accounts receivable, net (note 6)
|
34,848,588
|
47,309,900
|
1,451,669
|
|||||||||
Receivables
from related parties (note 19)
|
7,766,800
|
10,521,081
|
322,832
|
|||||||||
Other
current financial assets (notes 5 and 6)
|
1,114,300
|
1,112,729
|
34,143
|
|||||||||
Inventories,
net (note 7)
|
19,167,488
|
42,315,892
|
1,298,432
|
|||||||||
Prepayments
and other current assets (note 21)
|
1,384,076
|
3,038,927
|
93,247
|
|||||||||
Deferred
tax assets (note 16)
|
3,709,886
|
2,669,816
|
81,921
|
|||||||||
Available-for-sale
financial
assets—current
(notes 2(z)
and
4)
|
1,586,504
|
1,848,758
|
56,728
|
|||||||||
Total
current assets
|
95,840,907
|
152,742,643
|
4,686,795
|
|||||||||
Long-term
investments:
|
||||||||||||
Equity
method investments (note 8)
|
5,244,334
|
11,682,012
|
358,454
|
|||||||||
Available-for-sale
financial assets—noncurrent
(notes 2(z) and 4)
|
10,000
|
177,175
|
5,437
|
|||||||||
Financial
assets carried at cost
|
63,538
|
536,961
|
16,476
|
|||||||||
Total
long-term investments
|
5,317,872
|
12,396,148
|
380,367
|
|||||||||
Property,
plant and equipment (notes 9, 19 and
20):
|
||||||||||||
Land
|
3,590,536
|
6,273,615
|
192,501
|
|||||||||
Buildings
|
38,056,666
|
59,044,906
|
1,811,749
|
|||||||||
Machinery
and equipment
|
244,584,417
|
415,490,722
|
12,749,025
|
|||||||||
Other
equipment
|
10,563,592
|
16,390,328
|
502,925
|
|||||||||
296,795,211
|
497,199,571
|
15,256,200
|
||||||||||
Less: accumulated depreciation
|
(92,929,473 | ) | (141,700,949 | ) | (4,347,988 | ) | ||||||
Construction
in progress
|
1,704,372
|
6,254,058
|
191,901
|
|||||||||
Prepayments
for purchases of land and equipment
|
15,556,729
|
19,797,975
|
607,486
|
|||||||||
Net
property, plant and equipment
|
221,126,839
|
381,550,655
|
11,707,599
|
|||||||||
Intangible
assets:
|
||||||||||||
Technology
related fees (note 21)
|
2,483,329
|
2,485,374
|
76,262
|
|||||||||
Goodwill
(note 24)
|
-
|
14,288,008
|
438,417
|
|||||||||
Core
technologies (note 24)
|
-
|
3,369,392
|
103,387
|
|||||||||
Total
intangible assets
|
2,483,329
|
20,142,774
|
618,066
|
|||||||||
Other
assets:
|
||||||||||||
Idle
assets, net (note 9)
|
1,165,781
|
1,776,756
|
54,519
|
|||||||||
Refundable
deposits (note 19)
|
246,373
|
274,248
|
8,415
|
|||||||||
Deferred
charges and others
|
1,441,982
|
3,632,452
|
111,459
|
|||||||||
Deferred
tax assets (note 16)
|
222,157
|
2,433,212
|
74,661
|
|||||||||
Restricted
cash in bank (note 20)
|
32,200
|
43,200
|
1,326
|
|||||||||
Long-term
prepayments for materials (note 21)
|
1,918,888
|
3,063,271
|
93,994
|
|||||||||
Prepaid
pension cost (note 14)
|
-
|
70,602
|
2,166
|
|||||||||
Total
other assets
|
5,027,381
|
11,293,741
|
346,540
|
|||||||||
Total
Assets
|
329,796,328
|
578,125,961
|
17,739,367
|
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
Liabilities
and Stockholders’ Equity
|
||||||||||||
Current
liabilities:
|
||||||||||||
Short-term
borrowings (note 10)
|
-
|
3,729,465
|
114,436
|
|||||||||
Accounts
payable
|
48,642,321
|
69,495,532
|
2,132,419
|
|||||||||
Payables
to related parties (note 19)
|
2,197,285
|
6,738,803
|
206,775
|
|||||||||
Accrued
expenses and other current liabilities (note 16)
|
9,491,564
|
14,237,442
|
436,865
|
|||||||||
Financial
liabilities measured at fair value—current (notes
2(z) and 5)
|
-
|
506,632
|
15,546
|
|||||||||
Equipment
and construction in progress payable
|
19,694,213
|
30,719,178
|
942,595
|
|||||||||
Current
installments of long-term borrowings (notes 13 and
20)
|
9,832,723
|
31,071,555
|
953,408
|
|||||||||
Current
installments of bonds payable (notes 11, 12 and 20)
|
-
|
10,818,265
|
331,950
|
|||||||||
Total
current liabilities
|
89,858,106
|
167,316,872
|
5,133,994
|
|||||||||
Long-term
liabilities:
|
||||||||||||
Financial
liabilities measured at fair value—noncurrent
(notes 2(z) and 5)
|
-
|
1,534
|
47
|
|||||||||
Bonds
payable, excluding current installments (notes 11 and 20)
|
12,000,000
|
16,000,000
|
490,948
|
|||||||||
Convertible
bonds payable (note 12)
|
-
|
11,559,907
|
354,707
|
|||||||||
Long-term
borrowings, excluding current installments (notes
13 and 20)
|
71,940,306
|
151,828,721
|
4,658,752
|
|||||||||
Hedging
derivative financial liabilities—noncurrent (notes
2(z) and 5)
|
-
|
322,619
|
9,900
|
|||||||||
Total
long-term liabilities
|
83,940,306
|
179,712,781
|
5,514,354
|
|||||||||
Other
liabilities (note 14)
|
178,424
|
19,990
|
613
|
|||||||||
Total
liabilities
|
173,976,836
|
347,049,643
|
10,648,961
|
|||||||||
Stockholders’
equity (notes 2(z), 5 and 15):
|
||||||||||||
Capital
stock:
|
||||||||||||
Common
stock, NT$10 par value
|
58,305,471
|
75,734,028
|
2,323,842
|
|||||||||
Capital
surplus
|
57,664,144
|
110,675,618
|
3,396,000
|
|||||||||
Retained
earnings:
|
||||||||||||
Legal
reserve
|
4,964,545
|
6,527,244
|
200,284
|
|||||||||
Special
reserve
|
201,809
|
201,809
|
6,193
|
|||||||||
Unappropriated
retained earnings
|
34,507,005
|
37,262,566
|
1,143,374
|
|||||||||
39,673,359
|
43,991,619
|
1,349,851
|
||||||||||
Cumulative
foreign currency translation adjustment
|
59,213
|
305,857
|
9,385
|
|||||||||
Unrealized
gain or loss on financial instruments
|
-
|
27,182
|
834
|
|||||||||
155,702,187
|
230,734,304
|
7,079,912
|
||||||||||
Minority
interest
|
117,305
|
342,014
|
10,494
|
|||||||||
Total
stockholders’ equity
|
155,819,492
|
231,076,318
|
7,090,406
|
|||||||||
Commitments
and contingent liabilities (notes 11, 13, 19 and
21)
|
||||||||||||
Total
Liabilities and Stockholders’ Equity
|
329,796,328
|
578,125,961
|
17,739,367
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Net
sales (note 19)
|
168,111,569
|
217,388,388
|
293,106,770
|
8,993,764
|
||||||||||||
Cost
of goods sold (note 19)
|
128,468,264
|
187,540,389
|
263,256,485
|
8,077,830
|
||||||||||||
Gross
profit
|
39,643,305
|
29,847,999
|
29,850,285
|
915,934
|
||||||||||||
Operating
expenses (note 19):
|
||||||||||||||||
Selling
|
2,447,102
|
4,016,672
|
6,776,339
|
207,927
|
||||||||||||
General
and administrative
|
3,577,327
|
3,960,354
|
4,094,917
|
125,649
|
||||||||||||
Research
and development
|
5,011,547
|
4,882,285
|
4,762,767
|
146,142
|
||||||||||||
11,035,976
|
12,859,311
|
15,634,023
|
479,718
|
|||||||||||||
Operating
income
|
28,607,329
|
16,988,688
|
14,216,262
|
436,216
|
||||||||||||
Non-operating
income and gains:
|
||||||||||||||||
Interest
income
|
174,898
|
225,062
|
1,136,209
|
34,864
|
||||||||||||
Investment
gain recognized by equity method, net (note 8)
|
34,268
|
-
|
-
|
-
|
||||||||||||
Gain
on sale of investments, net (notes 4 and
8)
|
39,778
|
121,679
|
29,562
|
907
|
||||||||||||
Foreign
currency exchange gain, net
|
85,132
|
645,572
|
598,282
|
18,358
|
||||||||||||
Other
income
|
166,899
|
228,886
|
458,694
|
14,075
|
||||||||||||
500,975
|
1,221,199
|
2,222,747
|
68,204
|
|||||||||||||
Non-operating
expenses and losses:
|
||||||||||||||||
Interest
expense (note 9)
|
796,279
|
1,311,683
|
3,401,740
|
104,380
|
||||||||||||
Investment
loss recognized by equity method, net (note 8)
|
-
|
588,597
|
1,701,545
|
52,211
|
||||||||||||
Assets
impairment loss (notes 4, 8 and 9)
|
-
|
22,321
|
287,052
|
8,808
|
||||||||||||
Loss
on valuation of financial instruments (notes 2(z) and 5)
|
-
|
-
|
608,572
|
18,674
|
||||||||||||
Other
losses
|
287,827
|
192,718
|
239,796
|
7,358
|
||||||||||||
1,084,106
|
2,115,319
|
6,238,705
|
191,431
|
|||||||||||||
Income
before income tax and cumulative effect of changes in accounting
principles
|
28,024,198
|
16,094,568
|
10,200,304
|
312,989
|
||||||||||||
Income
tax expense (note 16)
|
61,346
|
473,429
|
1,068,324
|
32,781
|
||||||||||||
Income
before cumulative effect of changes in accounting
principles
|
27,962,852
|
15,621,139
|
9,131,980
|
280,208
|
||||||||||||
Cumulative
effect of changes in accounting principles (note
2(z))
|
-
|
-
|
(38,585 | ) | (1,184 | ) | ||||||||||
Net
income
|
27,962,852
|
15,621,139
|
9,093,395
|
279,024
|
||||||||||||
Attributable
to:
|
||||||||||||||||
Equity
holders of the parent company
|
27,962,852
|
15,626,991
|
9,103,472
|
279,333
|
||||||||||||
Minority
interest
|
-
|
(5,852 | ) | (10,077 | ) | (309 | ) | |||||||||
Net
income
|
27,962,852
|
15,621,139
|
9,093,395
|
279,024
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Earnings
per share—Basic (note 17):
|
||||||||||||||||
Income
before cumulative effect of changes in accounting
principles
|
5.82
|
2.77
|
1.42
|
0.04
|
||||||||||||
Cumulative
effect of changes in accounting principles
|
-
|
-
|
(0.01 | ) |
-
|
|||||||||||
Basic
EPS—net income
|
5.82
|
2.77
|
1.41
|
0.04
|
||||||||||||
Basic
EPS—retroactively adjusted
|
5.02
|
2.65
|
||||||||||||||
Earnings
per share—Diluted (note 17):
|
||||||||||||||||
Income
before cumulative effect of changes in accounting
principles
|
5.82
|
2.77
|
1.32
|
0.04
|
||||||||||||
Cumulative
effect of changes in accounting principles
|
-
|
-
|
(0.01 | ) |
-
|
|||||||||||
Diluted
EPS—net income
|
5.82
|
2.77
|
1.31
|
0.04
|
||||||||||||
Diluted
EPS—retroactively adjusted
|
5.02
|
2.65
|
Capital
Stock
|
Retained
Earnings
|
|||||||||||||||||||||||||||||||||||||||||||
Common
shares
|
Common
stock
|
Capital
surplus
|
Legal
reserve
|
Special
reserve
|
Unappropriated
retained earnings
|
Cumulative
foreign currency translation adjustment
|
Unrealized
gain
or loss
on
financial instruments
|
Treasury
stock
|
Minority
interest
|
Total
|
||||||||||||||||||||||||||||||||||
Balance
at December 31, 2003
|
4,352,237
|
43,522,372
|
32,197,790
|
602,267
|
-
|
16,578,660
|
4,419
|
-
|
(250,981 | ) |
-
|
92,654,527
|
||||||||||||||||||||||||||||||||
Appropriation
for legal reserve
|
-
|
-
|
-
|
1,565,993
|
-
|
(1,565,993 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
dividends
|
-
|
-
|
-
|
-
|
-
|
(5,208,285 | ) |
-
|
-
|
-
|
-
|
(5,208,285 | ) | |||||||||||||||||||||||||||||||
Issuance
of shareholders stock dividends
|
217,012
|
2,170,119
|
-
|
-
|
-
|
(2,170,119 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Issuance
of employee stock bonus
|
88,792
|
887,918
|
-
|
-
|
-
|
(887,918 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
employees’ profit sharing
|
-
|
-
|
-
|
-
|
-
|
(380,535 | ) |
-
|
-
|
-
|
-
|
(380,535 | ) | |||||||||||||||||||||||||||||||
Remuneration
to directors and supervisors
|
-
|
-
|
-
|
-
|
-
|
(70,470 | ) |
-
|
-
|
-
|
-
|
(70,470 | ) | |||||||||||||||||||||||||||||||
Issuance
of common stock for cash
|
300,000
|
3,000,000
|
12,967,194
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,967,194
|
|||||||||||||||||||||||||||||||||
Effect
of disproportionate participation in investee’s capital
increase
|
-
|
-
|
109
|
-
|
-
|
(153,569 | ) |
-
|
-
|
-
|
-
|
(153,460 | ) | |||||||||||||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
27,962,852
|
-
|
-
|
-
|
-
|
27,962,852
|
|||||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(206,228 | ) |
-
|
-
|
-
|
(206,228 | ) | |||||||||||||||||||||||||||||||
Balance
at December 31, 2004
|
4,958,041
|
49,580,409
|
45,165,093
|
2,168,260
|
-
|
34,104,623
|
(201,809 | ) |
-
|
(250,981 | ) |
-
|
130,565,595
|
|||||||||||||||||||||||||||||||
Appropriation
for legal reserve
|
-
|
-
|
-
|
2,796,285
|
-
|
(2,796,285 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Appropriation
for special reserve
|
-
|
-
|
-
|
-
|
201,809
|
(201,809 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
dividends
|
-
|
-
|
-
|
-
|
-
|
(5,935,249 | ) |
-
|
-
|
-
|
-
|
(5,935,249 | ) | |||||||||||||||||||||||||||||||
Issuance
of shareholders stock dividends
|
445,144
|
4,451,437
|
-
|
-
|
-
|
(4,451,437 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Issuance
of employee stock bonus
|
97,363
|
973,625
|
-
|
-
|
-
|
(973,625 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
employees’ profit sharing
|
-
|
-
|
-
|
-
|
-
|
(649,084 | ) |
-
|
-
|
-
|
-
|
(649,084 | ) | |||||||||||||||||||||||||||||||
Remuneration
to directors and supervisors
|
-
|
-
|
-
|
-
|
-
|
(37,447 | ) |
-
|
-
|
-
|
-
|
(37,447 | ) | |||||||||||||||||||||||||||||||
Issuance
of common stock for cash
|
330,000
|
3,300,000
|
12,294,150
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15,594,150
|
|||||||||||||||||||||||||||||||||
Issuance
of treasury stock to employees
|
-
|
-
|
-
|
-
|
-
|
(73,076 | ) |
-
|
-
|
250,981
|
-
|
177,905
|
||||||||||||||||||||||||||||||||
Effect
of disproportionate participation in investee’s capital
increase
|
-
|
-
|
204,901
|
-
|
-
|
(106,597 | ) |
-
|
-
|
-
|
-
|
98,304
|
||||||||||||||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
15,626,991
|
-
|
-
|
-
|
-
|
15,626,991
|
|||||||||||||||||||||||||||||||||
Minority
interest in net income of subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(5,852 | ) | (5,852 | ) | |||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
261,022
|
-
|
-
|
-
|
261,022
|
|||||||||||||||||||||||||||||||||
Adjustments
for changes in minority interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
123,157
|
123,157
|
|||||||||||||||||||||||||||||||||
Balance
at December 31, 2005
|
5,830,548
|
58,305,471
|
57,664,144
|
4,964,545
|
201,809
|
34,507,005
|
59,213
|
-
|
-
|
117,305
|
155,819,492
|
|||||||||||||||||||||||||||||||||
Appropriation
for legal reserve
|
-
|
-
|
-
|
1,562,699
|
-
|
(1,562,699 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
dividends
|
-
|
-
|
-
|
-
|
-
|
(1,749,164 | ) |
-
|
-
|
-
|
-
|
(1,749,164 | ) | |||||||||||||||||||||||||||||||
Issuance
of shareholders stock dividends
|
174,916
|
1,749,164
|
-
|
-
|
-
|
(1,749,164 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Issuance
of employee stock bonus
|
88,605
|
886,051
|
-
|
-
|
-
|
(886,051 | ) |
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||
Cash
employees’ profit sharing
|
-
|
-
|
-
|
-
|
-
|
(379,736 | ) |
-
|
-
|
-
|
-
|
(379,736 | ) | |||||||||||||||||||||||||||||||
Remuneration
to directors and supervisors
|
-
|
-
|
-
|
-
|
-
|
(21,097 | ) |
-
|
-
|
-
|
-
|
(21,097 | ) | |||||||||||||||||||||||||||||||
Issuance
of new shares for merger
|
1,479,110
|
14,791,100
|
52,957,471
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
67,748,571
|
|||||||||||||||||||||||||||||||||
Employee
stock options assumed from merger with QDI
|
-
|
-
|
76,062
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
76,062
|
|||||||||||||||||||||||||||||||||
Issuance
of stock for employee stock options exercised
|
224
|
2,242
|
6,390
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
8,632
|
|||||||||||||||||||||||||||||||||
Effect
of disproportionate participation in investee’s capital increase and
unrealized gain or loss on financial instruments
|
-
|
-
|
(28,449 | ) |
-
|
-
|
-
|
-
|
11,912
|
-
|
-
|
(16,537 | ) | |||||||||||||||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
9,103,472
|
-
|
-
|
-
|
-
|
9,103,472
|
|||||||||||||||||||||||||||||||||
Minority
interest in net income of subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(10,077 | ) | (10,077 | ) | |||||||||||||||||||||||||||||||
Unrealized
gain on available-for-sale financial assets
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
255,159
|
-
|
-
|
255,159
|
|||||||||||||||||||||||||||||||||
Unrealized
loss on cash flow hedges
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(239,889 | ) |
-
|
-
|
(239,889 | ) | |||||||||||||||||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
246,644
|
-
|
-
|
-
|
246,644
|
|||||||||||||||||||||||||||||||||
Adjustments
for changes in minority interests
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
234,786
|
234,786
|
|||||||||||||||||||||||||||||||||
Balance
at December 31, 2006
|
7,573,403
|
75,734,028
|
110,675,618
|
6,527,244
|
201,809
|
37,262,566
|
305,857
|
27,182
|
-
|
342,014
|
231,076,318
|
|||||||||||||||||||||||||||||||||
Balance
at December 31, 2006 (in US$)
|
2,323,842
|
3,396,000
|
200,284
|
6,193
|
1,143,374
|
9,385
|
834
|
-
|
10,494
|
7,090,406
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
27,962,852
|
15,621,139
|
9,093,395
|
279,024
|
||||||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||||||
Depreciation
|
23,653,128
|
33,271,070
|
50,632,568
|
1,553,623
|
||||||||||||
Amortization
of intangible assets and deferred charges
|
1,656,148
|
1,222,130
|
2,127,650
|
65,285
|
||||||||||||
Provision
for inventory devaluation
|
588,428
|
613,105
|
3,309,176
|
101,540
|
||||||||||||
Investment
loss (gain) recognized by equity method, net
|
(75,230 | ) |
467,731
|
1,676,373
|
51,438
|
|||||||||||
Proceeds
from cash dividends
|
-
|
206,920
|
26,903
|
825
|
||||||||||||
Unrealized
foreign currency exchange loss (gain), net
|
4,046
|
(391,789 | ) | (393,310 | ) | (12,068 | ) | |||||||||
Provision
for idle assets revaluation and others
|
136,574
|
22,321
|
287,052
|
8,808
|
||||||||||||
Loss
(gain) from disposal and write-off of property, plant and equipment,
and
others
|
22,539
|
35,469
|
(2,224 | ) | (68 | ) | ||||||||||
Amortization
of premium for convertible bonds and commercial paper
|
-
|
-
|
(549,683 | ) | (16,866 | ) | ||||||||||
Loss
on valuation of financial instruments and cumulative effect of change
in
accounting principles
|
-
|
-
|
713,966
|
21,908
|
||||||||||||
Changes
in operating assets and liabilities, net of effects from merger with
QDI:
|
||||||||||||||||
Decrease
(increase) in notes and accounts receivable (including related
parties)
|
(4,541,413 | ) | (22,100,074 | ) |
598,788
|
18,373
|
||||||||||
Increase
in inventories, net
|
(6,517,288 | ) | (3,895,603 | ) | (13,975,020 | ) | (428,813 | ) | ||||||||
Increase
in deferred tax assets, net
|
(294,415 | ) | (1,048,303 | ) | (159,586 | ) | (4,897 | ) | ||||||||
Decrease
(increase) in prepayments (including long-term prepayments for materials)
and other current assets
|
(299,920 | ) | (3,489,294 | ) |
1,191,679
|
36,566
|
||||||||||
Increase
in notes and accounts payable (including related parties)
|
5,026,628
|
23,285,954
|
14,569,014
|
447,039
|
||||||||||||
Increase
(decrease) in accrued expenses and other current
liabilities
|
2,012,180
|
4,204,553
|
(532,219 | ) | (16,331 | ) | ||||||||||
Increase
(decrease) in accrued pension liabilities
|
59,323
|
(19,299 | ) | (87,790 | ) | (2,694 | ) | |||||||||
Net
cash provided by operating activities
|
49,393,580
|
48,006,030
|
68,526,732
|
2,102,692
|
||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||
Purchase
of available-for-sale financial assets
|
-
|
-
|
(13,189 | ) | (404 | ) | ||||||||||
Proceeds
from disposal of available-for-sale financial assets
|
708,756
|
-
|
12,771
|
392
|
||||||||||||
Acquisition
of property, plant and equipment
|
(81,868,673 | ) | (80,652,331 | ) | (87,246,727 | ) | (2,677,101 | ) | ||||||||
Proceeds
from disposal of property, plant and equipment
|
-
|
20,530
|
279,615
|
8,580
|
||||||||||||
Purchase
of long-term investments
|
(5,385,466 | ) | (266,072 | ) | (8,383,329 | ) | (257,236 | ) | ||||||||
Proceeds
from disposal of long-term investments
|
230,736
|
319,612
|
60,373
|
1,852
|
||||||||||||
Proceeds
from long-term investments returned
|
-
|
21,284
|
-
|
-
|
||||||||||||
Increase
in intangible assets and deferred charges
|
(721,488 | ) | (2,778,815 | ) | (2,488,687 | ) | (76,364 | ) | ||||||||
Decrease
in refundable deposits
|
25,961
|
882,591
|
49,054
|
1,505
|
||||||||||||
Increase
in restricted cash in bank
|
-
|
(3,000 | ) | (11,000 | ) | (338 | ) | |||||||||
Cash
decrease resulting from change in consolidated entity
|
-
|
-
|
(32,528 | ) | (998 | ) | ||||||||||
Cash
assumed from merger with QDI
|
-
|
-
|
14,473,057
|
444,095
|
||||||||||||
Net
cash used in investing activities
|
(87,010,174 | ) | (82,456,201 | ) | (83,300,590 | ) | (2,556,017 | ) | ||||||||
Cash
flows from financing activities:
|
||||||||||||||||
Increase
(decrease) in short-term borrowings
|
5,882,209
|
(6,183,004 | ) | (1,618,585 | ) | (49,665 | ) | |||||||||
Increase
in guarantee deposits
|
1,455
|
3,729
|
3,275
|
100
|
||||||||||||
Repayment
of long-term borrowings and bonds payable
|
(6,892,110 | ) | (7,472,752 | ) | (19,753,513 | ) | (606,122 | ) | ||||||||
Proceeds
from long-term borrowings and bonds payable
|
28,315,772
|
47,468,013
|
55,791,101
|
1,711,909
|
||||||||||||
Issuance
of common stock for cash
|
15,967,194
|
15,594,150
|
-
|
-
|
||||||||||||
Cash
dividends
|
(5,208,285 | ) | (5,935,249 | ) | (1,749,164 | ) | (53,672 | ) | ||||||||
Proceeds
from issuance of stock for employee stock options
exercised
|
-
|
-
|
8,632
|
265
|
||||||||||||
Directors’
and supervisors’ remuneration and employees’ profit
sharing
|
(451,005 | ) | (686,531 | ) | (400,833 | ) | (12,299 | ) | ||||||||
Proceeds
from issuance of treasury stock
|
-
|
177,905
|
-
|
-
|
||||||||||||
Proceeds
from issuance of subsidiary shares to minority interests
|
-
|
131,087
|
269,907
|
8,282
|
||||||||||||
Net
cash provided by financing activities
|
37,615,230
|
43,097,348
|
32,550,820
|
998,798
|
||||||||||||
Effect
of exchange rate change on cash
|
(163,055 | ) | (181,575 | ) | (114,687 | ) | (3,519 | ) | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
(164,419 | ) |
8,465,602
|
17,662,275
|
541,954
|
|||||||||||
Cash
and cash equivalents at beginning of year
|
17,962,082
|
17,797,663
|
26,263,265
|
805,869
|
||||||||||||
Cash
and cash equivalents at end of year
|
17,797,663
|
26,263,265
|
43,925,540
|
1,347,823
|
||||||||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||||||
Cash
paid for interest expense (excluding interest capitalized)
|
771,423
|
1,190,438
|
2,883,499
|
88,478
|
||||||||||||
Cash
paid for income taxes
|
14,189
|
607,511
|
1,232,844
|
37,829
|
||||||||||||
Additions
to property, plant and equipment:
|
||||||||||||||||
Increase
in property, plant and equipment
|
83,047,775
|
93,854,019
|
89,246,312
|
2,738,457
|
||||||||||||
Increase
in construction in-progress and prepayments
|
(1,179,102 | ) | (13,201,688 | ) | (1,999,585 | ) | (61,356 | ) | ||||||||
Cash
paid
|
81,868,673
|
80,652,331
|
87,246,727
|
2,677,101
|
||||||||||||
Supplementary
disclosure of non-cash investing and financing
activities
|
||||||||||||||||
Current
installments of long-term liabilities
|
7,084,416
|
9,832,723
|
41,889,820
|
1,285,358
|
||||||||||||
Cash
assumed from merger with QDI:
|
||||||||||||||||
Common
stock issued for consideration of merger
|
67,764,472
|
2,079,303
|
||||||||||||||
Employee
stock options assumed
|
73,383
|
2,252
|
||||||||||||||
Liabilities
assumed
|
122,887,762
|
3,770,720
|
||||||||||||||
Less:
Non-cash assets acquired
|
(161,964,552 | ) | (4,969,763 | ) | ||||||||||||
Less:
Goodwill
|
(14,288,008 | ) | (438,417 | ) | ||||||||||||
Cash
assumed from merger with QDI
|
14,473,057
|
444,095
|
||||||||||||||
Impact
of change in consolidated entity:
|
||||||||||||||||
Cash
|
32,528
|
998
|
||||||||||||||
Non-cash
assets
|
68,195
|
2,093
|
||||||||||||||
Liabilities
|
(37,811 | ) | (1,160 | ) | ||||||||||||
Minority
interests
|
(35,121 | ) | (1,078 | ) | ||||||||||||
27,791
|
853
|
1.
|
Organization
|
2.
|
Summary
of Significant Accounting
Policies
|
(a)
|
Accounting
principles and consolidation policy
|
(b)
|
Revenue
recognition
|
(c)
|
Use
of estimates
|
(d)
|
Foreign
currency transactions and
translation
|
(e)
|
Cash
equivalents and restricted cash in
bank
|
(f)
|
Financial
instruments and hedging activities
|
|
(1)
|
Financial
assets and liabilities
measured at fair
value through profit or
loss: Financial
instruments are
classified into this category if the purpose of acquisition is principally
for selling or repurchasing in the near term. Except for
effective hedging
derivative
financial
instruments, all
other financial derivatives are included in this
category.
|
|
(2)
|
Available-for-sale
financial assets:
These
are evaluated at fair value,
and any changes are recorded as a separate component of
stockholders’
equity. If there is
objective evidence of impairment, an impairment
loss is
recognized in profit or loss. If, in a subsequent period,
events or changes in circumstances indicate that the amount of impairment
loss decreases, reversal of a previously recognized impairment loss
for
equity securities is not
allowed; while for debt
securities, the reversal is allowed through profit or loss provided
that
the decrease is clearly attributable to an event which occurred after
the
impairment loss is
recognized.
|
|
(3)
|
Financial
liabilities
measured at amortized
cost:
Financial
liabilities not measured
at fair value through profit or loss and not designated as hedges
are reported
at
amortized cost.
|
|
(4)
|
Financial
assets carried at cost:
Equity
investments which cannot be
evaluated at fair value are recorded based on original
cost. If
there is objective evidence that an impairment loss has been incurred
on
unquoted equity instruments that is carried at cost, the amount of
the
impairment loss is measured as the difference between the carrying
amount
of the financial
asset and the present value of
estimated future cash flows discounted at the current market rate
of
return for a similar financial
asset.
|
|
(5)
|
Hedging
purpose derivative
financial instrument: Such
derivative instruments are
entered into for hedging purpose. The purpose
of
cross currency swaps for hedging purpose is to hedge exchange rate
resulting from assets, liabilities or commitments denominated in
foreign
currency. Changes in
the fair value of the hedging instrument designated as a cash flow
hedge
are recognized directly in
equity. If
a hedge of a forecasted
transaction subsequently results in the recognition of an
asset or a liability, then the
amount
recognized
in equity is
reclassified into profit or loss
in the same period or periods during which the asset
acquired or
liability assumed affects profit or loss. For
hedges other than those
covered by the
preceding statements, the associated cumulative gain or loss is removed
from equity and recognized
in profit or loss in the same
period or periods
during which the hedged forecast transaction affects profit or
loss.
|
|
(1)
|
Equity
investments
of the Company
were classified
as
short-term investments and
long-term
investments based
on
the intention and term of holding. Short-term investments
were
recorded at cost
when
acquired and were
stated at the lower of
aggregate cost or fair value at the balance sheet date. The market
value
for open-end
mutual funds
was
determined based on
their
net asset value at the balance
sheet date. The fair value of publicly
traded equity securities
was determined based
on quoted
market price on the
balance sheet
date. Impairment
loss on short-term
investment was charged to
current
operations. Long-term
investments in
non-listed securities were accounted for at
cost. If there
is objective evidence
that a decline in value of a long-term investment carried at
cost
was
other than temporary,
an impairment
loss
was recognized
and charged to current
operations.
|
|
(2)
|
Forward
currency
exchange
contract receivables and
payables were
recorded at the spot rate at the
date of inception. The
discount or premium
was
amortized on a straight-line
basis over the life of the contract. Realized
and
unrealized gains or losses on these contracts resulting from
actual
settlement or balance sheet date translation were
charged or credited to current
operations.
|
|
(3)
|
Interest
rate swap contracts
were
used
to
hedge changes in
cash flows associated
with variable rate of long-term debt. The
net amounts received or paid
under the contracts were
reported
as adjustments to
interest expense on long-term
debt.
|
(g)
|
Derivative
financial instruments and hedging
activities
|
(h)
|
Allowance
for doubtful accounts
|
(i)
|
Inventories
|
(j)
|
Equity
method investments
|
(k)
|
Property,
plant and equipment
|
(l)
|
Impairment
of long-lived assets and long-lived assets to be disposed
of
|
(m)
|
Goodwill
and other intangible
assets
|
(n)
|
Deferred
charges
|
(o)
|
Convertible
bonds assumed in a business
combination
|
(p)
|
Employee
retirement plan
|
(q)
|
Treasury
stock
|
(r)
|
Employee
stock options assumed in a business
combination
|
(s)
|
Government
grants
|
(t)
|
Income
tax
|
(u)
|
Investment
tax credits
|
(v)
|
Earnings
per common share
|
(w)
|
Convenience
translation into U.S.
dollars
|
(x)
|
Business
combinations
|
(y)
|
Reclassification
|
(z)
|
Accounting
changes
|
Nature
of accounting
changes
|
Increase
(decrease)
in
net
income
|
Increase
(decrease) in basic
EPS
|
||||||
NT$
|
NT$
|
|||||||
(in
thousands, except for
per share
data)
|
||||||||
Accounting
for financial
instruments
|
(183,363 | ) | (0.024 | ) | ||||
Accounting
for investor-level
goodwill
|
112,969
|
0.015
|
||||||
(70,394 | ) | (0.009 | ) |
|
(1)
|
Financial
instruments are
accounted for in accordance with ROC SFAS No. 34 and ROC
SFAS No.
36. Refer to notes 4, 5, and 18 for further
details.
|
|
(2)
|
Effective
January 1, 2006 and in
accordance with ROC SFAS No. 5, the unallocated difference
between the
acquisition cost and carrying amount of net equity of
equity-method method
investees (i.e. investor-level goodwill) is no longer
amortized.
|
3.
|
Cash
and Cash Equivalents
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Cash
and bank deposits
|
17,340,808
|
31,123,600
|
955,005
|
|||||||||
Government
bonds
|
8,922,457
|
12,801,940
|
392,818
|
|||||||||
26,263,265
|
43,925,540
|
1,347,823
|
4.
|
Financial
Assets
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Available-for-sale
financial assets—current:
|
||||||||||||
Publicly
listed stocks
|
1,586,504
|
1,848,758
|
56,728
|
|||||||||
Fair
value
|
1,697,414
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Available-for-sale
financial assets—noncurrent:
|
||||||||||||
Promate
Electronic Co., Ltd. (Promate)
|
10,000
|
16,847
|
517
|
|||||||||
Nano
Electro-Optical Technology Co., Ltd. (Nano-Op)
|
-
|
160,328
|
4,920
|
|||||||||
10,000
|
177,175
|
5,437
|
||||||||||
Financial
assets carried at cost—noncurrent:
|
||||||||||||
Darly3
Venture Inc. (Darly3)
|
38,633
|
38,633
|
1,185
|
|||||||||
StarBex
International Inc. (StarBex)
|
7,905
|
7,905
|
243
|
|||||||||
Daxon
Technology Inc. (Daxon)
|
17,000
|
7,207
|
221
|
|||||||||
Entire
Technology Co., Ltd. (Entire)
|
-
|
210,800
|
6,468
|
|||||||||
Skypola
Optronics Co., Ltd. (Skypola)
|
-
|
234,800
|
7,205
|
|||||||||
Exploit
Technology Co., Ltd. (Exploit)
|
-
|
37,616
|
1,154
|
|||||||||
63,538
|
536,961
|
16,476
|
5.
|
Derivative
Financial Instruments and Hedging
Policy
|
(a)
|
Derivative
financial instruments
|
December
31,
|
|||||||||||||||||
2005
|
2006
|
||||||||||||||||
Notional
amount
|
Carrying
amount
|
Notional
amount
|
Carrying
amount
|
||||||||||||||
NT$
|
NT$
|
US$
|
|||||||||||||||
(in
thousands)
|
|||||||||||||||||
Derivative
financial liabilities (assets):
|
|||||||||||||||||
Sale
of foreign currency forward contracts
|
USD838,000
|
(450,980 | ) |
USD674,000
|
35,798
|
1,098
|
|||||||||||
Purchase
of foreign currency forward contracts
|
YEN61,900,000
|
248,919
|
YEN83,500,000
|
468,552
|
14,377
|
||||||||||||
Purchase
of foreign currency forward contracts
|
-
|
-
|
USD294,500
|
2,282
|
70
|
||||||||||||
Purchase
of foreign currency forward contracts
|
USD8,000
|
972
|
-
|
-
|
-
|
||||||||||||
Interest
rate swaps
|
NTD25,500,000
|
-
|
NTD56,500,000
|
324,153
|
9,946
|
(b)
|
Hedge
accounting
|
Hedged
item
|
Hedging
instrument
|
Notional
amount
|
Fair
value of hedging instrument
|
Expected
period of
cash
flows
|
Expected
period of recognition
in
earnings
|
|||||
NT$
|
||||||||||
(in
thousands)
|
||||||||||
Bonds
payable with variable interest rate
|
Interest
rate swaps contracts
|
5,500,000
|
(21,508)
|
Apr.
2007–
Apr.
2009
|
Jan.
2007–
Apr.
2009
|
|||||
Long-term
borrowings with variable interest rate
|
Interest
rate swaps contracts
|
45,500,000
|
(301,111)
|
Jan.
2007–
Dec.
2011
|
Jan.
2007–
Dec.
2011
|
December
31, 2006
|
||||||||
NT$
|
US$
|
|||||||
(in
thousands)
|
||||||||
Amount
recognized
in
equity upon initial
adoption
|
314,521
|
9,650
|
||||||
Amount
recognized in equity for
current
period change
|
5,331
|
164
|
||||||
319,852
|
9,814
|
(c)
|
Information
of derivative financial instruments in year
2005
|
(1)
|
Interest
rate
swaps
|
December
31, 2005
|
||||||||||
Inception
|
Maturity
|
Notional
amount
|
Fixed
interest
rate paid
|
Variable
interest rate received
|
Fair
value
|
|||||
NT$
|
NT$
|
|||||||||
(in
thousands)
|
||||||||||
2003
|
Jan.
8, 2008–
Dec.
11, 2008
|
14,500,000
|
1.65%–2.54%
|
1.426%–1.458%
|
(168,533)
|
|||||
2004
|
Jan.
16, 2009–
Jul.
13, 2009
|
4,500,000
|
|
2.18%–2.78%
|
1.42%–1.503%
|
(98,890)
|
||||
2004
|
Apr.
23, 2009
|
5,500,000
|
1.43%
|
0%–3.0001%
|
(46,282)
|
|||||
2005
|
Sep.
14, 2010–
Sep.
21, 2010
|
1,000,000
|
2.03%–2.05%
|
1.454%–1.473%
|
(586)
|
|||||
(314,291)
|
(2)
|
Foreign
currency forward contracts
|
December
31, 2005
|
||||||||||
Buy
|
Sell
|
Contract
amount
|
Fair
value
|
Settlement
date
|
Maturity
amount
|
|||||
NT$
|
||||||||||
(in
thousands)
|
||||||||||
NTD
|
USD
|
USD838,000
|
449,283
|
Jan.
10, 2006–Feb.
27, 2006
|
NTD27,903,200
|
|||||
|
||||||||||
YEN
|
NTD
|
NTD17,595,929
|
(286,768
|
) |
Jan.
10, 2006–Mar.
10, 2006
|
YEN61,900,000
|
||||
YEN
|
USD
|
USD8,000
|
1,274
|
Jan.
6, 2006–Feb.
10, 2006
|
YEN945,021
|
|||||
163,789
|
NT$
|
||||
(in
thousands)
|
||||
Foreign
currency forward contracts receivable
|
45,492,249
|
|||
Foreign
currency forward contracts payable
|
(45,374,351 | ) | ||
Unamortized
premium
|
85,135
|
|||
Foreign
currency forward contracts receivable, net
|
203,033
|
|||
Fair
value
|
163,789
|
6.
|
Notes
and Accounts
Receivable
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Notes
receivable
|
22,460
|
72,656
|
2,229
|
|||||||||
Accounts
receivable
|
35,232,155
|
48,466,302
|
1,487,153
|
|||||||||
Less:
allowance for doubtful accounts
|
(87,300 | ) | (422,123 | ) | (12,953 | ) | ||||||
allowance
for sales returns and discounts
|
(318,727 | ) | (806,935 | ) | (24,760 | ) | ||||||
34,848,588
|
47,309,900
|
1,451,669
|
Underwriting
bank
|
Purchased
amount
|
Amount
sold
|
Amount
excluded
|
Principle
terms
|
Promissory
note as
collateral
|
|||||
(in
thousands)
|
||||||||||
Ta
Chong
Bank
|
USD20,000
|
USD63,287
|
USD63,287
|
See
Notes
|
None
|
|||||
Chinatrust
Commercial
Bank
|
USD15,000
|
USD49,953
|
USD49,953
|
See
Notes
|
None
|
|||||
Mizuho
Corporate
Bank
|
USD75,000
|
-
|
-
|
See
Notes
|
None
|
Note
1:
|
Under
this facility, the Company, irrevocably and without recourse, transferred
accounts receivables to the underwriting
bank.
|
Note
2:
|
Within
the amount sold to the underwriting bank, the risk of non-collection
or
default by customers in the event of financial difficulties is borne
by
the bank. The Company is not responsible for the collection of
the receivables subject to the facility, and any legal proceedings
and
costs thereof in recovering the
receivables.
|
Note
3:
|
The
Company had informed its customers subject to the facility to make
repayment directly to the underwriting
bank.
|
Note
4:
|
As
of December 31, 2006, total outstanding balances of accounts receivables
sold to the underwriting banks, net of fees charged by the banks,
of
NT$460,873 thousand were classified under other current financial
assets.
|
7.
|
Inventories
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Finished
goods
|
6,849,281
|
21,764,004
|
667,812
|
|||||||||
Work
in process
|
10,290,872
|
21,247,361
|
651,960
|
|||||||||
Raw
materials and spare parts
|
3,371,630
|
3,567,828
|
109,476
|
|||||||||
20,511,783
|
46,579,193
|
1,429,248
|
||||||||||
Less:provision
for inventory obsolescence and devaluation
|
(1,344,295 | ) | (4,263,301 | ) | (130,816 | ) | ||||||
19,167,488
|
42,315,892
|
1,298,432
|
8.
|
Equity
Method Investments
|
December
31,
|
||||||||||||||||||||
2005
|
2006
|
|||||||||||||||||||
%
|
Amount
|
%
|
Amount
|
|||||||||||||||||
NT$
|
NT$
|
US$
|
||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
BenQ
Corporation (BenQ)
|
5 | % |
3,436,212
|
5 | % |
1,646,765
|
50,530
|
|||||||||||||
Cando
Corporation (Cando)
|
21 | % |
1,381,336
|
21 | % |
1,168,510
|
35,855
|
|||||||||||||
Wellypower
Optronics Corporation Ltd. (Wellypower)
|
9 | % |
359,221
|
9 | % |
461,439
|
14,159
|
|||||||||||||
Apower
Optronics Corporation (Apower)
|
7 | % |
40,978
|
6 | % |
59,595
|
1,828
|
|||||||||||||
Sita
Technology Corp. (Sita)
|
45 | % |
26,587
|
45 | % |
25,277
|
775
|
|||||||||||||
Patentop
Ltd. (Patentop)
|
41 | % |
-
|
41 | % |
-
|
-
|
|||||||||||||
Toppan
CFI (Taiwan) Co., Ltd. (Toppan
CFI)
|
-
|
-
|
49 | % |
7,375,926
|
226,325
|
||||||||||||||
Orise
Technology Co., Ltd. (Orise)
|
-
|
-
|
20 | % |
290,786
|
8,923
|
||||||||||||||
Asia
Pacific Genesis Venture Capital Fund L.P. (Asia Pacific
VC)
|
-
|
-
|
11 | % |
286,457
|
8,790
|
||||||||||||||
Daxin
Material Corp. (Daxin)
|
-
|
-
|
43 | % |
153,976
|
4,725
|
||||||||||||||
Light
House Technology Co., Ltd. (LHTC)
|
-
|
-
|
21 | % |
124,101
|
3,808
|
||||||||||||||
Raydium
Semiconductor Corp. (Raydium)
|
-
|
-
|
18 | % |
89,180
|
2,736
|
||||||||||||||
5,244,334
|
11,682,012
|
358,454
|
2006
|
||||||||||||||||
Beginning
balance
|
Current
period
net
increase
|
Amortization
|
Ending
balance
|
|||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Amortizable
assets
|
(56,171 | ) | (523,377 | ) |
19,655
|
(559,893 | ) | |||||||||
Goodwill
|
849,552
|
6,481
|
-
|
856,033
|
||||||||||||
Non-amortizable
assets
|
316,244
|
(28,207 | ) |
-
|
288,037
|
|||||||||||
1,109,625
|
(545,103 | ) |
19,655
|
584,177
|
9.
|
Property,
Plant and Equipment, and Idle
Assets
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Cost:
|
||||||||||||
Land
|
478,214
|
478,214
|
14,673
|
|||||||||
Buildings
|
544,421
|
664,536
|
20,391
|
|||||||||
Machinery
and other equipment
|
1,158,881
|
3,427,361
|
105,166
|
|||||||||
2,181,516
|
4,570,111
|
140,230
|
||||||||||
Less:
accumulated depreciation
|
(795,138 | ) | (2,566,607 | ) | (78,754 | ) | ||||||
1,386,378
|
2,003,504
|
61,476
|
||||||||||
Less:
allowance for devaluation on idle assets
|
(220,597 | ) | (226,748 | ) | (6,957 | ) | ||||||
1,165,781
|
1,776,756
|
54,519
|
10.
|
Short-term
Borrowings
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Short-term
borrowings
|
-
|
3,729,465
|
114,436
|
|||||||||
Unused
available balance
|
25,141,089
|
25,688,935
|
11.
|
Bonds
Payable
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Secured
bonds payable
|
12,000,000
|
17,000,000
|
521,632
|
|||||||||
Less:
current portion
|
-
|
(1,000,000 | ) | (30,684 | ) | |||||||
12,000,000
|
16,000,000
|
490,948
|
||||||||||
Interest
payable
|
84,603
|
160,655
|
4,930
|
|||||||||
Unused
available balance
|
5,000,000
|
7,000,000
|
214,790
|
Secured
Bond 1
|
Secured
Bond 2
|
Secured
Bond 3
|
||||
Par
value
|
NT$6,000,000
thousand
|
NT$6,000,000
thousand
|
NT$5,000,000
thousand
|
|||
Issue
date
|
Apr.
23, 2004 – Apr.
24, 2004
|
Jun.
6, 2005 – Jun.
13, 2005
|
Mar.
21, 2006
|
|||
Issue
price
|
At
par value
|
At
par value
|
At
par value
|
|||
Coupon
rate
|
As
stated below
|
Bond
I: 2.0000%
Bond
II: 1.9901%
|
Fixed
rate 1.948%
|
|||
Duration
|
As
stated below
|
Jun.
6, 2005 – Jun.
13, 2010
|
Mar.
21, 2006 – Mar.
21, 2011
|
|||
Bank
that provided guarantee
|
International
Commercial Bank of China and eleven other banks
|
Bank
of Taiwan and eight other banks
|
Mizuho
Corporate Bank and six other banks
|
|||
Redemption
|
As
stated
below
|
As
stated below
|
As
stated
below
|
12.
|
Convertible
Bonds Payable
|
December
31,
2006
|
||||||||||||||||||||||||
TCB
1
|
TCB
2
|
ECB
2
|
ECB
3
|
Total
|
||||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Convertible
bonds payable
|
5,197,500
|
5,987,100
|
63,595
|
9,599,522
|
20,847,717
|
639,697
|
||||||||||||||||||
Unamortized
premium (discount)
|
(198,256 | ) |
573,563
|
929
|
154,219
|
530,455
|
16,276
|
|||||||||||||||||
4,999,244
|
6,560,663
|
64,524
|
9,753,741
|
21,378,172
|
655,973
|
|||||||||||||||||||
Less:
current portion
|
-
|
-
|
(64,524 | ) | (9,753,741 | ) | (9,818,265 | ) | (301,266 | ) | ||||||||||||||
4,999,244
|
6,560,663
|
-
|
-
|
11,559,907
|
354,707
|
(a)
|
Domestic
convertible bond 1 (“TCB 1”)
|
Par
value
|
NT$10,500,000
thousand
|
|
Original
issue date
|
April
22, 2004
|
|
Original
issue price
|
102.5%
of par value
|
|
Coupon
rate
|
0%
|
|
Maturity
date
|
April
21, 2009
|
|
Collateral
|
None
|
|
Conversion
method
|
Bondholders
may convert bonds into common shares at any time between May 22,
2004 and
April 11, 2009.
|
|
Conversion
price
|
NT$70.49
(as adjusted effective October 1, 2006 as a result of merger with
QDI)
|
|
Put
right
|
No
|
|
Redemption
terms
|
(1) Unless
previously redeemed, purchased and cancelled, or converted, bonds
will be
redeemed on maturity at par.
(2) Effective
from the first anniversary of issuance to the 40 days before maturity,
the
Company may redeem the outstanding bonds at par if the closing price
of
its common share on the Taiwan Stock Exchange is at least 150% of
the
conversion price for 30 consecutive trading days.
(3) Effective
from the first anniversary of issuance to the 40 days before maturity,
the
Company may redeem the outstanding bonds at par if the total amount
of
outstanding bonds is less than NT$1,050,000
thousand.
|
(b)
|
Domestic
convertible bond 2 (“TCB 2”)
|
Par
value
|
NT$6,000,000
thousand
|
|
Original
issue date
|
July
18, 2005
|
|
Original
issue price
|
At
par value
|
|
Coupon
rate
|
0%
|
|
Maturity
date
|
July
17, 2010
|
|
Collateral
|
None
|
|
Conversion
method
|
Bondholders
may convert bonds into common shares at any time between August 18,
2005
and July 7, 2010.
|
|
Conversion
price
|
NT$44.10
(as adjusted effective October 1, 2006 as a result of merger with
QDI)
|
|
Put
right
|
Bondholders
have the right to request the Company to repurchase bonds on July
18, 2008
at 100% of the unpaid principle balance.
|
|
Redemption
terms
|
(1)
Unless previously redeemed, purchased and cancelled, or converted,
bonds
will be redeemed on maturity at par.
(2)
Effective from the first anniversary of issuance to the 40 days before
maturity, the Company may redeem the outstanding bonds at par if
the
closing price of its common share on the Taiwan Stock Exchange is
at least
150% of the conversion price for 30 consecutive trading days.
(3)
Effective from the first anniversary of issuance to the 40 days before
maturity, the Company may redeem the outstanding bonds at par if
the total
amount of outstanding bonds is less than NT$600,000
thousand.
|
(c)
|
Overseas
convertible bond 2 (“ECB 2”)
|
Par
value
|
US$270,000
thousand
|
|
Original
issue date
|
February
5, 2004
|
|
Original
issue price
|
At
par value
|
|
Coupon
rate
|
0%
|
|
Maturity
date
|
February
5, 2009
|
|
Collateral
|
None
|
|
Conversion
method
|
Bondholders
may, between March 16, 2004 and January 26, 2009, convert bonds into
common shares or certificates exchangeable for common
stock.
|
|
Conversion
price
|
NT$72.94
(as adjusted effective October 1, 2006 as a result of merger with
QDI). For purposes of determining the number converted shares,
a fixed exchange rate of US$1=NT$33.33 is used.
|
|
Put
right
|
Bondholders
have the right to request the Company to repurchase bonds on August
5,
2006 at 99.875% (see Note below) and August 5, 2007 at 99.825%, of
the
unpaid principle balance.
|
|
Redemption
terms
|
(1)
Unless previously redeemed, put option exercised, purchased and cancelled,
or converted, bonds will be redeemed on maturity at 99.75% of
par.
(2)
The Company may redeem the bonds at par, in whole or in part, if
the
closing price of its common shares on the Taiwan Stock Exchange translated
into U.S. dollars at rate of NT$33.33 = US$1 is at least 125% of
the
conversion price for a period of 30 consecutive trading
days.
|
(d)
|
Overseas
convertible bond 3 (“ECB 3”)
|
Par
value
|
US$294,500
thousand
|
|
Original
issue date
|
November
26, 2004
|
|
Original
issue price
|
At
par value
|
|
Coupon
rate
|
0%
|
|
Maturity
date
|
November
26, 2009
|
|
Collateral
|
None
|
|
Conversion
method
|
Bondholders
may, at any time between the 41 days after issuance to the 10 days
before
maturity, convert bonds into common shares or certificates exchangeable
for common stock.
|
|
Conversion
price
|
NT$52.54
(as adjusted effective October 1, 2006 as a result of merger with
QDI). For purposes of determining the number converted shares,
a fixed exchange rate of US$1=NT$32.57 is used.
|
|
Put
right
|
Bondholders
have the right to request the Company to repurchase bonds on January
26,
2007 at 100% of the unpaid principle balance. See further at
note 22.
|
|
Redemption
terms
|
(1) Unless
previously redeemed, purchased and cancelled, or converted, bonds
will be
redeemed on maturity at par.
(2) Effective
from the 26th month of issuance, the Company may, at any time after
January 26, 2007, redeem the bonds at par, in whole or in part, if
the
closing price of its common share on the Taiwan Stock Exchange translated
into U.S. dollars at the rate of NT$32.57 = US$1 is at least 125%
of the
conversion price for 30 consecutive trading days.
(3) The
Company may redeem total amount of outstanding bonds in whole at
par in
the event that 95% of the bonds have been previously redeemed, converted,
or purchased and cancelled.
|
13.
|
Long-term
Borrowings
|
Bank/
|
December
31,
|
|||||||||||||||
Agent
Bank
|
Purpose
|
Term
|
2005
|
2006
|
||||||||||||
NT$
|
NT$
|
US$
|
||||||||||||||
(in
thousands)
|
||||||||||||||||
Mega
International Commercial Bank
|
See
Note 2
|
From
Dec. 21, 2000 through Dec. 21, 2007. Repayable in 10 semi-annual
installments starting from June 2003.
|
4,400,000
|
2,200,000
|
67,505
|
|||||||||||
Chinatrust
Commercial Bank
|
See
Note 2
|
From
Sep. 21, 2000 through Sep. 21, 2007. Repayable in 10 semi-annual
installments starting from Mar. 2003.
|
5,400,000
|
2,700,000
|
82,847
|
|||||||||||
Chinatrust
Commercial Bank
|
See
Note 2
|
From
April 25, 2003 through April 25, 2010. Repayable in 9 semi-annual
installments starting from April 2006. Denominated in NT$115,000
million
and US$100 million.
|
14,783,500
|
11,479,431
|
352,238
|
|||||||||||
Mega
International Commercial Bank
|
See
Note 2
|
From
May 11, 2004 through May 11, 2011. Repayable in 9 semi-annual
installments starting from May 2007.
|
29,000,000
|
29,000,000
|
889,844
|
|||||||||||
Bank
of Taiwan
|
See
Note 2
|
From
Dec. 18, 2004 through Dec. 18, 2011. Repayable in 9 semi-annual
installments starting from Dec. 2007. Denominated in NT$49,000 million
and
US$150 million.
|
18,925,250
|
53,889,400
|
1,653,556
|
|||||||||||
Bank
of Taiwan
|
See
Note 2
|
From
Dec. 29, 2005 through Dec. 29, 2012. Repayable in 9 semi-annual
installments starting from Dec. 2008.
|
3,000,000
|
13,000,000
|
398,895
|
|||||||||||
Mega
International Commercial Bank (Note 1)
|
See
Note 2
|
From
Oct. 06, 2000 through Oct. 06, 2007. Repayable in 10
semi-annual installments starting from April 2003.
|
-
|
2,880,000
|
88,371
|
|||||||||||
Mega
International Commercial Bank (Note 1)
|
See
Note 2
|
From
Sep. 30, 2002 through Sep. 30, 2009. Repayable in 9 semi-annual
installments starting from Sep. 2005. Denominated in NT$13,000 million
and
US$58.4 million.
|
-
|
9,926,897
|
304,599
|
|||||||||||
Mega
International Commercial Bank (Note 1)
|
See
Note 2
|
From
Jan. 12, 2005 through Jan. 12, 2012. Repayable in 9 semi-annual
installments starting from Jan. 2008. Denominated in NT$23,300 million
and
US$200 million.
|
-
|
29,819,200
|
914,980
|
|||||||||||
Industrial
Bank of Taiwan
(Notes
1 and 2)
|
See
Note 2
|
From
Nov. 17, 2005 through Nov. 17, 2009. Repayable in 6 semi-annual
installments starting from May 2007.
|
-
|
500,000
|
15,342
|
Bank/
|
December
31,
|
|||||||||||||||
Agent
Bank
|
Purpose
|
Term
|
2005
|
2006
|
||||||||||||
NT$
|
NT$
|
US$
|
||||||||||||||
(in
thousands)
|
||||||||||||||||
Mega
International Commercial Bank (Note 1)
|
See
Note 2
|
From
July 14, 2006 through July 14, 2013. Repayable in 10
semi-annual installments starting from Jan. 2009.
|
-
|
14,000,000
|
429,580
|
|||||||||||
Industrial
Bank of Taiwan (Notes 1
and
3)
|
See
Note 3
|
From
Aug. 29, 2006 through Aug. 29, 2010. Repayable in 5 semi-annual
installments starting from Aug. 2008.
|
-
|
1,000,000
|
30,684
|
|||||||||||
Citi
Bank
(Syndicated
loan I)
|
See
Note 2
|
From
Apr. 10, 2003 through Nov. 14, 2007. Repayable in 6 semi-annual
installments starting from May 2005. Denominated in RMB800
million.
|
2,170,277
|
1,113,809
|
34,176
|
|||||||||||
Citi
Bank
(Syndicated
loan I)
|
See
Note 2
|
From
Oct. 12, 2004 through Nov. 14, 2007. Repayable in 6 semi-annual
installments starting from May 2005. Denominated in US$20
million.
|
437,929
|
217,448
|
6,672
|
|||||||||||
Citi
Bank
(Syndicated
loan II)
|
See
Note 2
|
From
Aug. 10, 2005 through Dec. 2, 2009. Repayable in 6 semi-annual
installments starting from June 2007. Denominated in US$54
million
|
919,466
|
1,760,977
|
54,034
|
|||||||||||
Citi
Bank
(Syndicated
loan II)
|
See
Note 2
|
From
April 28, 2006 through Nov. 30, 2009. Repayable in 4
semi-annual installments starting from May 2008. Denominated in
RMB830 million.
|
-
|
2,311,466
|
70,926
|
|||||||||||
Industrial
and Commercial Bank of China
|
See
Note 2
|
From
June 11, 2002 through June 10, 2007. Repayable in 2 semi-annual
installments starting from Dec. 2006. Denominated in RMB57
million.
|
231,916
|
162,872
|
4,998
|
|||||||||||
Industrial
and Commercial Bank of China
|
See
Note 2
|
From
April 11, 2002 through April 10, 2007. Repayable on April 10, 2007.
Denominated in RMB60 million
|
244,122
|
250,572
|
7,689
|
|||||||||||
Industrial
and Commercial Bank of China
|
See
Note 2
|
From
Aug. 31, 2004 through Mar. 1, 2009. Repayable on Mar. 1, 2009.
Denominated in RMB40 million.
|
162,748
|
167,048
|
5,126
|
|||||||||||
Bank
of China
|
See
Note 2
|
From
June 10, 2002 through Mar. 19, 2007. Repayable in 5 semi-annual
installments starting from Mar. 2005. Denominated in RMB166
million.
|
405,242
|
-
|
-
|
|||||||||||
Standard
Chartered Bank
|
See
Note 2
|
From
Dec. 31, 2004 through Nov. 11, 2009. Repayable in 6 semi-annual
installments starting from May 2007. Denominated in RMB320
million.
|
878,839
|
1,336,384
|
41,006
|
Bank/
|
December
31,
|
|||||||||||||||
Agent
Bank
|
Purpose
|
Term
|
2005
|
2006
|
||||||||||||
NT$
|
NT$
|
US$
|
||||||||||||||
(in
thousands)
|
||||||||||||||||
Bank
of America
|
See
Note 2
|
From
Jan. 24, 2005 through Dec. 30, 2009. Repayable in 6 semi-annual
installments starting from June 2007. Denominated in RMB200
million.
|
813,740
|
835,240
|
25,629
|
|||||||||||
ABN-AMRO
Bank
|
See
Note 2
|
From
Dec. 7, 2006 through Aug. 1, 2013. Repayable in 9 semi-annual
installments starting from Aug. 2009. Denominated in RMB800
million.
|
-
|
334,096
|
10,251
|
|||||||||||
ABN-AMRO
Bank
|
See
Note 2
|
From
Aug. 2, 2006 through Aug. 2, 2013. Repayable in 9 semi-annual
installments starting from Sep. 2009. Denominated in RMB2,000
million.
Repayment
for
the first 8 installments is
RMB6
million per installment,
with remaining
balance payable
at
the last installment.
|
-
|
250,572
|
7,689
|
|||||||||||
China
Construction Bank
|
See
Note 2
|
From
Aug. 10, 2006 through Aug. 10, 2011, 25% of which payable in Aug.
2009,
25% in Aug. 2010 and the remaining 50% in Aug. 2011. Denominated
in US$1
million and RMB20 million.
|
-
|
116,135
|
3,564
|
|||||||||||
Citi
Bank
|
See
Note 2
|
From
Feb. 27, 2006 through Mar. 30, 2010. Repayable in 7 semi-annual
installments starting from Mar. 2007. Denominated in RMB249
million.
|
-
|
1,039,874
|
31,908
|
|||||||||||
Citi
Bank
|
See
Note 2
|
From
Nov. 27, 2006 through Feb. 27, 2007. Repayable on Feb. 27,
2007. Denominated in US$80 million.
|
-
|
2,608,855
|
80,051
|
|||||||||||
81,773,029
|
182,900,276
|
5,612,160
|
||||||||||||||
Less:
current portion
|
(9,832,723 | ) | (31,071,555 | ) | (953,408 | ) | ||||||||||
71,940,306
|
151,828,721
|
4,658,752
|
||||||||||||||
Unused
available balance
|
73,653,956
|
107,029,987
|
3,284,136
|
Note 1: | Long-term borrowings assumed from QDI in connection with the merger on October 1, 2006 were recorded at fair value as of the acquisition date. |
Note
2:
|
The
purpose of the loan is for the purchase of machinery, equipment and
building.
|
Note
3:
|
The
purpose of the loan is for operational
use.
|
NT$
|
US$
|
|||||||
(in
thousands)
|
||||||||
2007
|
41,889,820
|
1,285,358
|
||||||
2008
|
46,008,174
|
1,411,727
|
||||||
2009
|
52,121,525
|
1,599,310
|
||||||
2010
|
39,004,544
|
1,196,825
|
||||||
2011
|
30,178,665
|
926,010
|
||||||
Thereafter
|
12,075,720
|
370,535
|
||||||
Total
|
221,278,448
|
6,789,765
|
14.
|
Retirement
Plan
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Benefit
obligation:
|
||||||||||||
Vested
benefit obligation
|
(3,990 | ) | (4,515 | ) | (139 | ) | ||||||
Non-vested
benefit obligation
|
(261,636 | ) | (433,354 | ) | (13,297 | ) | ||||||
Accumulated
benefit obligation
|
(265,626 | ) | (437,869 | ) | (13,436 | ) | ||||||
Additions
based on future salary increase
|
(299,866 | ) | (523,777 | ) | (16,072 | ) | ||||||
Projected
benefit obligation
|
(565,492 | ) | (961,646 | ) | (29,508 | ) | ||||||
Fair
value of plan assets
|
398,478
|
791,306
|
24,281
|
|||||||||
Funded
status
|
(167,014 | ) | (170,340 | ) | (5,227 | ) | ||||||
Unrecognized
pension loss
|
(16,762 | ) |
229,265
|
7,035
|
||||||||
Unrecognized
net transition obligation
|
12,761
|
11,677
|
358
|
|||||||||
Prepaid
pension assets (accrued pension liabilities)
|
(171,015 | ) |
70,602
|
2,166
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Defined
benefit pension plan:
|
||||||||||||||||
Service
cost
|
127,467
|
69,596
|
8,100
|
249
|
||||||||||||
Interest
cost
|
15,213
|
17,835
|
20,508
|
629
|
||||||||||||
Expected
return on plan assets
|
(7,571 | ) | (11,322 | ) | (15,208 | ) | (467 | ) | ||||||||
Amortization
|
4,303
|
1,084
|
3,092
|
95
|
||||||||||||
Net periodic
pension cost
|
139,412
|
77,193
|
16,492
|
506
|
||||||||||||
Defined
contribution pension cost
|
-
|
170,573
|
442,814
|
13,587
|
December
31,
|
||||||
2004
|
2005
|
2006
|
||||
Discount
rate
|
3.50%
|
3.50%
|
2.75%–3.50%
|
|||
Rate
of increase in future compensation levels
|
3.50%
|
3.50%
|
3.50%
|
|||
Expected
long-term rate of return on plan assets
|
3.50%
|
3.50%
|
2.75%–3.50%
|
15.
|
Stockholders’
Equity
|
(a)
|
Common
stock
|
(b)
|
Capital
surplus
|
(c)
|
Legal
reserve
|
(d)
|
Distribution
of earnings and dividend policy
|
(1)
|
5
to
10 percent as employee bonuses
|
(2)
|
At
most 1 percent as remuneration to directors and
supervisors
|
(3)
|
The
remainder, after retaining a certain portion for business consideration,
as common stockholders’ dividends.
|
Shares
|
NT$
|
|||||||
(in
thousands)
|
||||||||
Employee
bonuses – stock (at par value)
|
88,605
|
886,051
|
||||||
Employee
bonuses – cash
|
379,736
|
|||||||
Directors’
and supervisors’ remuneration
|
21,097
|
|||||||
1,286,884
|
(e)
|
Treasury
stock
|
(f)
|
Employee stock
options plans
|
ESO
Plans
|
Issuing
date
|
Units
issued
|
Term
of grant
|
Option
exercising term
|
Exercise
price*
|
|||||
2002
ESO Plan
|
Aug.
8, 2002
|
1,861
|
Aug.
8, 2002 – Aug.
7, 2008
|
Aug.
8, 2004 – Aug.
7, 2008
|
NT$38.50
|
|||||
2003
ESO Plan
|
Dec.
31, 2003
|
5,614
|
Dec.
31, 2003 – Dec.
30, 2009
|
Dec.
31, 2005 – Dec.
30, 2009
|
NT$51.10
|
Unit
|
Weighted
average
price
|
|||||||
(in
thousands)
|
NT$
|
|||||||
Outstanding
units at date of acquisition
|
7,475
|
48.0
|
||||||
Units
exercised
|
(224 | ) |
38.5
|
|||||
Units
cancelled
|
(26 | ) |
38.5
|
|||||
Outstanding
units at end of year
|
7,225
|
48.3
|
Outstanding
stock options
|
Vested
options
|
|||||||||||||||||||||
Exercise
price
|
Unit
|
Remaining
vesting period (year)
|
Exercise
price
|
Unit
|
Exercise
price
|
|||||||||||||||||
NT$
|
(in
thousands)
|
NT$
|
(in
thousands)
|
NT$
|
||||||||||||||||||
38.50
|
1,611
|
1.58
|
38.50
|
1,611
|
38.50
|
|||||||||||||||||
51.10
|
5,614
|
3.00
|
51.10
|
3,743
|
51.10
|
|||||||||||||||||
7,225
|
5,354
|
2002
stock
option
plan
|
2003
stock
option
plan
|
|||||||
Dividend
yield
|
2.4 | % | 2.4 | % | ||||
Expected
volatility
|
40.6 | % | 43.7 | % | ||||
Risk-free
interest rate
|
1.7 | % | 1.7 | % | ||||
Expected
continuing period
|
0.9
|
year |
1.9
|
years |
16.
|
Income
Taxes
|
(a)
|
The
Company is authorized to be a “Science-based industry” as defined under
the ROC Statute for the Establishment and Administration of Science-based
Industrial Park and an “Important technology-based industry company” as
defined under the Statute for Upgrading
Industries.
|
Year
of investment
|
Tax
incentive chosen
|
Tax
exemption period
|
||
1996
|
Tax
exemption of the Company’s L5 facility corporate income taxes for five
years
|
2003–2007
|
||
1999
|
Tax
exemption of the Company’s L3B facility corporate income taxes for four
years
|
2005–2008
|
||
1999,
2000, 2001
|
Tax
exemption of the Company’s L6 facility corporate
income taxes for five years
|
2005–2009
|
||
2001,
2002, 2003
|
Tax
exemption of the Company’s L6 facility corporate
income taxes for five years
|
2006–2010
|
||
2002
|
Tax
exemption of the Company’s L6 facility corporate
income taxes for five years
|
2007–2011
|
||
2003
|
Tax
exemption of the Company’s L6 facility corporate
income taxes for five years
|
2008–2012
|
(b)
|
The
components of income tax expense (benefit) are summarized as
follows:
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Current
income tax expense
|
355,761
|
1,521,732
|
1,227,910
|
37,678
|
||||||||||||
Deferred
income tax benefit
|
(294,415 | ) | (1,048,303 | ) | (159,586 | ) | (4,897 | ) | ||||||||
61,346
|
473,429
|
1,068,324
|
32,781
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Expected
income tax expense
|
7,006,049
|
4,023,642
|
2,550,076
|
78,247
|
||||||||||||
Tax
exemption
|
(1,424,088 | ) | (479,973 | ) | (917,564 | ) | (28,155 | ) | ||||||||
Increase
of investment tax credits, net of expired portion
|
(7,144,655 | ) | (4,813,223 | ) | (4,327,895 | ) | (132,798 | ) | ||||||||
Tax
on undistributed retained earnings
|
419,039
|
1,491,149
|
927,908
|
28,472
|
||||||||||||
Increase
in valuation allowance
|
1,031,632
|
127,211
|
2,710,172
|
83,160
|
||||||||||||
Non-deductible
expenses and others
|
173,369
|
124,623
|
125,627
|
3,855
|
||||||||||||
Income
tax expense
|
61,346
|
473,429
|
1,068,324
|
32,781
|
(c)
|
The
components of deferred income tax assets (liabilities) are summarized
as
follows:
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Current:
|
||||||||||||
Investment
tax credits
|
2,313,606
|
1,093,319
|
33,548
|
|||||||||
Unrealized
loss and expenses
|
443,809
|
407,963
|
12,518
|
|||||||||
Unrealized
sales profit
|
715,238
|
183,901
|
5,643
|
|||||||||
Unrealized
exchange gain
|
(57,755 | ) | (122,377 | ) | (3,755 | ) | ||||||
Loss
on valuation of financial assets
|
-
|
168,501
|
5,170
|
|||||||||
Inventories
|
295,999
|
937,925
|
28,779
|
|||||||||
Other
|
-
|
584
|
18
|
|||||||||
3,710,897
|
2,669,816
|
81,921
|
||||||||||
Valuation
allowance
|
(1,011 | ) |
-
|
-
|
||||||||
Net
deferred tax assets—current
|
3,709,886
|
2,669,816
|
81,921
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Non-current:
|
||||||||||||
Investment
tax credits
|
9,929,707
|
24,077,161
|
738,790
|
|||||||||
Net
operating loss carryforwards
|
11,594
|
-
|
-
|
|||||||||
Deferred
tax liabilities—property,
plant and
equipment
|
(776,554 | ) | (318,188 | ) | (9,763 | ) | ||||||
Investment
loss (gain) under the equity method
|
(89,961 | ) | (265,088 | ) | (8,134 | ) | ||||||
Impairment
loss on long-term investment under the equity method
|
-
|
65,708
|
2,016
|
|||||||||
Goodwill
|
-
|
(89,300 | ) | (2,740 | ) | |||||||
Other
|
78,550
|
16,057
|
492
|
|||||||||
9,153,336
|
23,486,350
|
720,661
|
||||||||||
Valuation
allowance
|
(8,931,179 | ) | (21,053,138 | ) | (646,000 | ) | ||||||
Net
deferred tax assets—non-current
|
222,157
|
2,433,212
|
74,661
|
|||||||||
Total
gross deferred tax assets
|
13,807,856
|
27,076,862
|
830,833
|
|||||||||
Total
gross deferred tax liabilities
|
(943,623 | ) | (920,696 | ) | (28,251 | ) | ||||||
Total
valuation allowance
|
(8,932,190 | ) | (21,053,138 | ) | (646,000 | ) | ||||||
3,932,043
|
5,103,028
|
156,582
|
(d)
|
Investment
tax credits
|
Year
of assessment
|
Unused
tax credits
|
Expiration
year
|
|||||||
NT$
|
US$
|
||||||||
(in
thousands)
|
|||||||||
2003
|
4,468,067
|
137,099
|
2007
|
||||||
2004
|
3,718,121
|
114,088
|
2008
|
||||||
2005
|
10,359,994
|
317,889
|
2009
|
||||||
2006
(estimated)
|
6,624,298
|
203,262
|
2010
|
||||||
25,170,480
|
772,338
|
(e)
|
The
2001 income tax return has been assessed by the tax authorities for
additional tax payable due to dispute in Unipac’s loss carryforwards of
NT$3,546,535 thousand prior to combination with the Company was regarded
as not eligible for use by the Company after the merger. The
Company disagreed with the assessment and subsequently filed a tax
appeal. The appeal is still under review. The
Company has evaluated the impact on the financial statements and
accrued
additional income tax in 2004. As of December 31, 2006, the tax
authorities had assessed the income tax returns of the Company through
2003 (except for 2002 which is still under review) and of QDI through
2004.
|
(f)
|
Information
about the integrated income tax
system
|
December
31,
|
|||||||||||||
2005
|
2006
|
||||||||||||
NT$
|
NT$
|
US$
|
|||||||||||
(in
thousands)
|
|||||||||||||
Unappropriated
earnings:
|
|||||||||||||
Earned
after January 1, 1998
|
34,507,005
|
37,262,566
|
1,143,374
|
||||||||||
ICA
balance
|
376,987
|
1,279,762
|
39,269
|
For
the year ended December
31,
|
||||||||
2005
|
2006
|
|||||||
(estimated)
|
||||||||
Creditable
ratio for earnings distribution to the Republic of China resident
stockholders
|
4.54 | % | 3.43 | % |
17.
|
Earnings
Per Share
|
For
the year ended December 31,
|
||||||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||||||
Pre-tax
|
After
tax
|
Pre-tax
|
After
tax
|
Pre-tax
|
After
tax
|
|||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
|||||||||||||||||||
(in
thousands, except for per share data)
|
||||||||||||||||||||||||
Basic
earnings per share:
|
||||||||||||||||||||||||
Net
income before cumulative effect of changes in accounting
principles
|
28,024,198
|
27,962,852
|
16,100,420
|
15,626,991
|
10,119,034
|
9,142,458
|
||||||||||||||||||
Cumulative
effect of changes in accounting principles
|
-
|
-
|
-
|
-
|
(38,986 | ) | (38,986 | ) | ||||||||||||||||
Net
income
|
28,024,198
|
27,962,852
|
16,100,420
|
15,626,991
|
10,080,048
|
9,103,472
|
||||||||||||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||||||||||
Shares
of common stock at beginning of the year
|
4,340,237
|
4,340,237
|
4,946,041
|
4,946,041
|
5,830,547
|
5,830,547
|
||||||||||||||||||
Issuance
of common stock for cash
|
156,667
|
156,667
|
146,465
|
146,465
|
-
|
-
|
||||||||||||||||||
Common
stock issued in connection with the acquisition of QDI
|
-
|
-
|
-
|
-
|
372,817
|
372,817
|
||||||||||||||||||
Stock
options
|
-
|
-
|
-
|
-
|
41
|
41
|
||||||||||||||||||
Issuance
of shareholders stock dividends and employee stock bonus
|
305,804
|
305,804
|
542,506
|
542,506
|
263,522
|
263,522
|
||||||||||||||||||
Treasury
stock transferred to employees
|
-
|
-
|
3,748
|
3,748
|
-
|
-
|
||||||||||||||||||
Weighted
average number of shares outstanding during the year
|
4,802,708
|
4,802,708
|
5,638,760
|
5,638,760
|
6,466,927
|
6,466,927
|
||||||||||||||||||
Retroactive
adjustment of capitalization of retained earnings
|
766,612
|
766,612
|
254,853
|
254,853
|
||||||||||||||||||||
Retroactively
adjusted weighted average outstanding shares
|
5,569,320
|
5,569,320
|
5,893,613
|
5,893,613
|
||||||||||||||||||||
Basic
earnings per share (NT$):
|
||||||||||||||||||||||||
Basic
earnings per share—net income before cumulative effect of changes in
accounting principles
|
5.84
|
5.82
|
2.86
|
2.77
|
1.57
|
1.42
|
||||||||||||||||||
Basic
earnings per share—cumulative effect of changes in accounting
principles
|
-
|
-
|
-
|
-
|
(0.01 | ) | (0.01 | ) | ||||||||||||||||
Basic
earnings per share—net income
|
5.84
|
5.82
|
2.86
|
2.77
|
1.56
|
1.41
|
||||||||||||||||||
Basic
earnings per share – retroactively adjusted
|
5.03
|
5.02
|
2.73
|
2.65
|
For
the year ended December 31,
|
||||||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||||||
Pre-tax
|
After
tax
|
Pre-tax
|
After
tax
|
Pre-tax
|
After
tax
|
|||||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
|||||||||||||||||||
(in
thousands, except for per share data)
|
||||||||||||||||||||||||
Diluted
earnings per share:
|
||||||||||||||||||||||||
Net
income
|
28,024,198
|
27,962,852
|
16,100,420
|
15,626,991
|
10,080,048
|
9,103,472
|
||||||||||||||||||
Effects
of potential common shares:
|
||||||||||||||||||||||||
Adjustment
for interest of convertible bonds payable
|
-
|
-
|
-
|
-
|
(706,883 | ) | (530,162 | ) | ||||||||||||||||
28,024,198
|
27,962,852
|
16,100,420
|
15,626,991
|
9,373,165
|
8,573,310
|
|||||||||||||||||||
Shares
of common stock at beginning of the year
|
4,802,708
|
4,802,708
|
5,638,760
|
5,638,760
|
6,466,927
|
6,466,927
|
||||||||||||||||||
Potential
number of common shares assumed upon conversion of convertible
bonds
|
-
|
-
|
-
|
-
|
99,045
|
99,045
|
||||||||||||||||||
Stock
options
|
-
|
-
|
-
|
-
|
56
|
56
|
||||||||||||||||||
Weighted
average number of shares outstanding during the year
|
4,802,708
|
4,802,708
|
5,638,760
|
5,638,760
|
6,566,028
|
6,566,028
|
||||||||||||||||||
Weighted
average number of shares outstanding—retroactively
adjusted
|
5,569,320
|
5,569,320
|
5,893,613
|
5,893,613
|
||||||||||||||||||||
Diluted
earnings per share (NT$):
|
||||||||||||||||||||||||
Diluted
earnings per share—net income before cumulative effect of changes in
accounting principles
|
5.84
|
5.82
|
2.86
|
2.77
|
1.44
|
1.32
|
||||||||||||||||||
Diluted
earnings per share—cumulative effect of changes in accounting
principles
|
-
|
-
|
-
|
-
|
(0.01 | ) | (0.01 | ) | ||||||||||||||||
Diluted
earnings per share—net income
|
5.84
|
5.82
|
2.86
|
2.77
|
1.43
|
1.31
|
||||||||||||||||||
Diluted
earnings per share—retroactively adjusted
|
5.03
|
5.02
|
2.73
|
2.65
|
18.
|
Additional
Disclosure on Financial
Instruments
|
(a)
|
Fair
value information
|
December
31, 2005
|
December
31, 2006
|
|||||||||||||||||||||||
Fair
value
|
Carrying
amount
|
Fair
value
|
Carrying
amount
|
|||||||||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
NT$
|
US$
|
|||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||
Financial
assets:
|
||||||||||||||||||||||||
Cash
and cash equivalents
|
26,263,265
|
26,263,265
|
43,925,540
|
1,347,823
|
43,925,540
|
1,347,823
|
||||||||||||||||||
Notes
and accounts receivable
|
42,615,388
|
42,615,388
|
57,830,981
|
1,774,501
|
57,830,981
|
1,774,501
|
||||||||||||||||||
Available-for-sale
financial assets—current
|
1,697,414
|
1,586,504
|
1,848,758
|
56,728
|
1,848,758
|
56,728
|
||||||||||||||||||
Other
current financial assets
|
1,114,300
|
1,114,300
|
1,112,729
|
34,143
|
1,112,729
|
34,143
|
||||||||||||||||||
Deposit-out
|
246,373
|
246,373
|
274,248
|
8,415
|
274,248
|
8,415
|
||||||||||||||||||
Financial
liabilities:
|
||||||||||||||||||||||||
Notes
and accounts payable
|
50,839,606
|
50,839,606
|
76,234,335
|
2,339,194
|
76,234,335
|
2,339,194
|
||||||||||||||||||
Equipment
and construction in progress payables
|
19,694,213
|
19,694,213
|
30,719,178
|
942,595
|
30,719,178
|
942,595
|
||||||||||||||||||
Short-term
borrowings
|
-
|
-
|
3,729,465
|
114,436
|
3,729,465
|
114,436
|
||||||||||||||||||
Long-term
borrowings (including current portion)
|
81,773,029
|
81,773,029
|
182,900,276
|
5,612,159
|
182,900,276
|
5,612,159
|
||||||||||||||||||
Convertible
bonds payable (including current portion)
|
-
|
-
|
21,464,841
|
658,633
|
21,378,172
|
655,973
|
||||||||||||||||||
Bonds
payable (including current portion)
|
11,951,724
|
12,000,000
|
17,077,390
|
524,007
|
17,000,000
|
521,632
|
||||||||||||||||||
Foreign
currency forward contracts
|
163,789
|
203,033
|
506,632
|
15,546
|
506,632
|
15,546
|
||||||||||||||||||
Interest
rate swaps contracts
|
-
|
-
|
324,153
|
9,946
|
324,153
|
9,946
|
(b)
|
The
following methods and
assumptions are used to
estimate the
fair value
of
the Company’s
financial
assets and
liabilities:
|
(1)
|
The
carrying amounts of cash and cash equivalents, notes and accounts
receivable, restricted cash in banks, refundable deposits, other
current
financial assets, accounts payable, payables to related parties,
equipment
and construction in progress payables and short-term borrowings
approximate their fair value due to the short-term nature of these
items.
|
(2)
|
The
fair value of financial instruments is based on publicly quoted market
prices. If market price is unavailable, fair value is determined
using
valuation technique, with estimates and assumptions consistent with
that
made by market participants.
|
(3)
|
Long-term
borrowings are obtained at floating interest rates which are calculated
based on prevailing market rate adjusted by the Company’s credit spread.
Management believes the carrying value of the long-term
borrowings approximates fair value. Refer to note
13.
|
(c)
|
The
fair value of the Company’s
financial assets and liabilities
determined
by publicly
quoted
market price, if
available
and fair value
determined
using valuation technique
were
as
follows:
|
December
31, 2006
|
||||||||||||||||
Publicly
quoted market
prices
|
Fair
value based on valuation
technique
|
|||||||||||||||
NT$
|
US$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Financial
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
43,925,540
|
1,347,823
|
-
|
-
|
||||||||||||
Notes
and accounts receivable
|
-
|
-
|
57,830,981
|
1,774,501
|
||||||||||||
Available-for-sale
financial assets—current
|
1,848,758
|
56,728
|
-
|
-
|
||||||||||||
Other
current financial assets
|
-
|
-
|
1,112,729
|
34,143
|
||||||||||||
Deposit-out
|
-
|
-
|
274,248
|
8,415
|
||||||||||||
Financial
liabilities:
|
||||||||||||||||
Notes
and accounts payable
|
-
|
-
|
76,234,335
|
2,339,194
|
||||||||||||
Equipment
and construction in progress payables
|
-
|
-
|
30,719,178
|
942,595
|
||||||||||||
Short-term
borrowings
|
-
|
-
|
3,729,465
|
114,436
|
||||||||||||
Long-term
borrowings (including current portion)
|
-
|
-
|
182,900,276
|
5,612,159
|
||||||||||||
Convertible
bonds payable (including current portion)
|
- | - | 21,464,841 | 658,633 | ||||||||||||
Bonds
payable (including current portion)
|
- | - | 17,077,390 | 524,007 | ||||||||||||
Foreign
currency forward contracts
|
- | - | 506,632 | 15,546 |
December
31, 2006
|
||||||||||||||||
Publicly
quoted
market
prices
|
Fair
value based on
valuation
technique
|
|||||||||||||||
NT$
|
US$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Interest
rate swaps contracts
|
-
|
-
|
324,153
|
9,946
|
(d)
|
The
Company
pledged
certain
of
its financial
assets to secure long-term
borrowings as
of December 31, 2005
and
2006,
see note
20.
|
(e)
|
Loss
on
valuation of financial
instruments resulting
from the change
in fair
value amounted NT$647,157
thousand for the year
ended December 31,
2006.
|
(f)
|
Financial
liabilities with exposure
to cash flow risk
resulting
from change in interest
rates amounted
to NT$135,629,741
thousand as of December
31,
2006.
|
(g)
|
Financial
risks relating to financial
instruments
|
(1)
|
Market
risk
|
(2)
|
Credit
risk
|
(3)
|
Liquidity
risk
|
(4)
|
Cash
flow risk resulting from change in interest
rates
|
19.
|
Related-party
Transactions
|
(a)
|
Name
and
relationship
|
Name
of related party
|
Relationship
with the Company
|
|
BenQ
Corporation (“BenQ”)
|
Shareholder
and represented on the Company’s board of directors; the Company’s
affiliate
|
|
Gallant
Precision Machining Co., Ltd. (“GPM”)
|
Investee
of BenQ
|
|
BenQ
Mexican, S.A. De C. V. (“BQX”)
|
Subsidiary
of BenQ
|
|
BenQ
Technologies Czech S.V.O. (“BQZ”)
|
Subsidiary
of BenQ
|
|
Daxon
Technology Inc. (“Daxon”)
|
Subsidiary
of BenQ
|
|
Darfon
Electronics Corp. (“Darfon”)
|
Subsidiary
of BenQ
|
|
BenQ
(IT) Co., Ltd. Suzhou (“BQS”)
|
Subsidiary
of BenQ
|
|
BenQ
Optronics (Suzhou) Co., Ltd. (“BQOS”)
|
Subsidiary
of BenQ
|
|
Acer
Inc. (“Acer”)
|
Shareholder
and represented on BenQ’s board of directors prior to June 30, 2006 (Note
1)
|
|
Aspire
Service & Development Inc. (“ASD”)
|
Subsidiary
of Acer (Note 1)
|
|
Wistron
Corp. (“Wistron”)
|
Investee
of Acer (Note 1)
|
|
Cowin
Worldwide Corp. (“Cowin”)
|
Subsidiary
of Wistron (Note 1)
|
|
Wistron
Infocomm (Philippines) Corp. (“WPH”)
|
Subsidiary
of Wistron (Note 1)
|
|
Wistron
Infocomm Manufacturing (Kunshan) Co., Ltd. (”WEKS”)
|
Subsidiary
of Wistron (Note 1)
|
|
Wistron
Infocomm (Kunshan) Corp. (“WKS”)
|
Subsidiary
of Wistron (Note 1)
|
|
Toppan
CFI (Taiwan) Co., Ltd. (“Toppan CFI”)
|
Investee
of AUO (Note 2)
|
|
Cando
Corporation (“Cando”)
|
Investee
of the Company
|
|
Raydium
Semiconductor Corporation (“Raydium”)
|
Investee
of Konly
|
Name
of related party
|
Relationship
with the Company
|
|
Orise
Technology Co., Ltd. (“OTC”)
|
Investee
of Konly
|
|
Quanta
Computer Inc. (“QCI”)
|
Common
vice president, QCI’s vice chairman and president represented on the
Company’s board of directors (Note 3)
|
|
Tech-Front
(Shanghai) Computer Co., Ltd. (“TFC”)
|
Subsidiary
of QCI (Note 3)
|
|
Tech-Yeh
(Shanghai) Computer Co., Ltd. (“TYC”)
|
Subsidiary
of QCI (Note 3)
|
|
Tech-Pro
(Shanghai) Computer Co., Ltd. (“TPC”)
|
Subsidiary
of QCI (Note 3)
|
|
Tech-Com
(Shanghai) Computer Co., Ltd. (“TCC”)
|
Subsidiary
of QCI (Note 3)
|
Note 1:
|
As
Acer reduced its investment
in BenQ
and resigned its
membership to the
board of
directors during the
year, BenQ
ceased
accounting
for its investment in
Acer using
the equity-method
of
accounting. Accordingly,
effective
June 30, 2006,
Acer is no
longer a related party of
the Company. As
a result, related-party
transactions with
Acer were disclosed
until the
end of June
2006.
|
Note 2:
|
The
Company
invested
in Toppan CFI
during the year and
accounted
for its
investment in Toppan CFI using
the equity
method
of
accounting. Effective
August 31, 2006,
Toppan CFI
is considered as a
related party of the Company
and
related party
transactions were
disclosed
therefrom.
|
Note 3:
|
The
Company acquired
QDI
on October 1, 2006. As a result,
effective October 1,
2006, these companies
become related
parties of
the Company and related
party
transactions were
disclosed
therefrom.
|
(b)
|
Significant
transactions with related parties
|
(1)
|
Sales
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
BQS
|
30,030,189
|
26,532,871
|
21,647,010
|
664,222
|
||||||||||||
Acer
|
6,733,616
|
8,999,415
|
3,909,532
|
119,961
|
||||||||||||
BenQ
|
2,310,915
|
2,083,647
|
1,997,401
|
61,289
|
||||||||||||
WKS
|
819,631
|
961,816
|
322
|
10
|
||||||||||||
WEKS
|
-
|
826,929
|
-
|
-
|
||||||||||||
Wistron
|
931,678
|
393,157
|
13,871
|
426
|
||||||||||||
BQOS
|
132,753
|
354,655
|
1,227,909
|
37,677
|
||||||||||||
BQZ
|
-
|
210,846
|
209,841
|
6,439
|
||||||||||||
BQX
|
850,691
|
370,150
|
164,455
|
5,046
|
||||||||||||
Cowin
|
-
|
-
|
123,565
|
3,792
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
WPH
|
906,906
|
167,742
|
22,613
|
694
|
||||||||||||
FDTC
|
2,136,101
|
-
|
-
|
-
|
||||||||||||
ACT
|
164,972
|
-
|
-
|
-
|
||||||||||||
QCI
|
-
|
-
|
562,388
|
17,256
|
||||||||||||
TYC
|
-
|
-
|
382,428
|
11,735
|
||||||||||||
TFC
|
-
|
-
|
263,497
|
8,085
|
||||||||||||
TPC
|
-
|
-
|
226,261
|
6,943
|
||||||||||||
Others
|
64,325
|
129,159
|
50,134
|
1,538
|
||||||||||||
Less: allowance
for sales returns and discounts
|
-
|
(31,264 | ) | (131,735 | ) | (4,042 | ) | |||||||||
45,081,777
|
40,999,123
|
30,669,492
|
941,071
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
BQS
|
4,821,840
|
8,342,590
|
255,986
|
|||||||||
BQOS
|
63,456
|
432,137
|
13,260
|
|||||||||
BenQ
|
409,520
|
381,674
|
11,711
|
|||||||||
BQZ
|
132,768
|
69,620
|
2,136
|
|||||||||
BQX
|
215,997
|
18,932
|
581
|
|||||||||
Acer
|
1,967,407
|
8,931
|
274
|
|||||||||
WEKS
|
103,771
|
-
|
-
|
|||||||||
QCI
|
-
|
312,397
|
9,586
|
|||||||||
TYC
|
-
|
230,103
|
7,061
|
|||||||||
TFC
|
-
|
225,100
|
6,907
|
|||||||||
TPC
|
-
|
184,349
|
5,657
|
|||||||||
Others
|
100,569
|
20,899
|
641
|
|||||||||
Less:
allowance for doubtful accounts
|
(4,123 | ) | (51,903 | ) | (1,593 | ) | ||||||
Less:
allowance for sales returns and discounts
|
(95,358 | ) | (26,589 | ) | (816 | ) | ||||||
7,715,847
|
10,148,240
|
311,391
|
(2)
|
Purchases
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Daxon
|
-
|
676,729
|
3,730,519
|
114,468
|
||||||||||||
Cando
|
2,551,073
|
2,986,751
|
3,365,891
|
103,280
|
||||||||||||
Toppan
CFI
|
-
|
-
|
2,241,338
|
68,773
|
||||||||||||
Darfon
|
113,266
|
203,737
|
254,017
|
7,794
|
||||||||||||
Raydium
|
-
|
-
|
157,084
|
4,820
|
||||||||||||
OTC
|
-
|
-
|
134,647
|
4,132
|
||||||||||||
Novatek
|
537,578
|
-
|
-
|
-
|
||||||||||||
FDTC
|
316,122
|
-
|
-
|
-
|
||||||||||||
Faraday
|
60,432
|
-
|
-
|
-
|
||||||||||||
BenQ
|
-
|
-
|
-
|
-
|
||||||||||||
Others
|
433
|
58,626
|
148,993
|
4,572
|
||||||||||||
3,578,904
|
3,925,843
|
10,032,489
|
307,839
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Toppan
CFI
|
-
|
2,214,130
|
67,939
|
|||||||||
Daxon
|
608,060
|
1,433,875
|
43,997
|
|||||||||
Cando
|
1,111,363
|
881,006
|
27,033
|
|||||||||
OTC
|
-
|
118,073
|
3,623
|
|||||||||
Others
|
133,686
|
212,448
|
6,519
|
|||||||||
1,853,109
|
4,859,532
|
149,111
|
(3)
|
Acquisition
of property, plant and equipment, operating leases and
others
|
(4)
|
Disposal
of property, plant and equipment, operating leases and
others
|
20.
|
Pledged
Assets
|
December
31,
|
|||||||||||||
Pledged
assets
|
Pledged
to
secure
|
2005
|
2006
|
||||||||||
NT$
|
NT$
|
US$
|
|||||||||||
(in
thousands)
|
|||||||||||||
Restricted
cash in banks
|
Oil
purchase, customs duties and guarantees for foreign
workers
|
32,200
|
43,200
|
1,326
|
|||||||||
Building
|
Long-term
borrowings
|
6,867,162
|
30,148,367
|
925,080
|
|||||||||
Machinery
and equipment
|
Long-term
borrowings and bonds payable
|
108,651,713
|
223,146,823
|
6,847,095
|
|||||||||
115,551,075
|
253,338,390
|
7,773,501
|
21.
|
Commitments
and Contingencies
|
(a)
|
Outstanding
letters of
credit
|
December
31,
|
||||||||
Currency
|
2005
|
2006
|
||||||
(in
thousands)
|
||||||||
USD
|
4,884
|
17,359
|
||||||
JPY
|
11,731,873
|
25,752,573
|
||||||
EU
|
-
|
14,070
|
||||||
NTD
|
93,578
|
-
|
||||||
RMB
|
-
|
39,000
|
(b)
|
Technology
and licensing agreements
|
(c)
|
Purchase
commitments
|
(d)
|
As
of December 31, 2005 and
2006, outstanding
commitments for
purchase agreements for major property, plant and equipment totaled
NT$41,967,317
thousand and NT$37,586,917
thousand,
respectively.
|
(e)
|
Operating
lease
agreements
|
Years
|
Minimum
lease payments
|
|||
NT$
|
||||
(in
thousands)
|
||||
2007
|
209,803
|
|||
2008
|
193,950
|
|||
2009
|
193,950
|
|||
2010
|
193,950
|
|||
2011
|
193,950
|
|||
Thereafter
|
2,010,701
|
(f)
|
Litigation
|
22.
|
Subsequent
Events
|
23.
|
Segment
Information
|
(a)
|
Industrial
information
|
(b)
|
Geographic
information
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Taiwan
|
68,274,912
|
82,473,265
|
89,840,936
|
2,756,703
|
||||||||||||
The
People’s Republic of China
|
64,288,311
|
76,147,847
|
80,559,955
|
2,471,922
|
||||||||||||
Other
(individually less than 10% of total net sales)
|
35,548,346
|
58,767,276
|
122,705,879
|
3,765,139
|
||||||||||||
168,111,569
|
217,388,388
|
293,106,770
|
8,993,764
|
December
31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Taiwan
|
151,409,890
|
211,863,809
|
377,307,330
|
11,577,396
|
||||||||||||
The
People’s Republic of China
|
10,645,228
|
12,904,003
|
26,155,953
|
802,576
|
||||||||||||
Other
|
10,373
|
8,137
|
6,902
|
212
|
||||||||||||
162,065,491
|
224,775,949
|
403,470,185
|
12,380,184
|
(c)
|
Major
customer
information
|
For
the year ended December 31,
|
||||||||||||||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||||||||||||||
Amount
|
%
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||
BQS
|
30,030,189
|
18
|
26,532,871
|
12
|
21,647,010
|
664,222
|
7
|
|||||||||||||||||||||
Samsung
|
6,018,337
|
4
|
19,903,556
|
9
|
32,824,794
|
1,007,204
|
11
|
|||||||||||||||||||||
36,048,526
|
22
|
46,436,427
|
21
|
54,471,804
|
1,671,426
|
18
|
24.
|
Business
Combination
|
October
1, 2006
|
||||
NT$
|
||||
(in
thousands)
|
||||
Current
assets
|
44,805,553
|
|||
Long-term
investments
|
685,065
|
|||
Property,
plant and equipment
|
122,453,035
|
|||
Intangible
assets—core technologies
|
3,675,700
|
|||
Other
assets
|
4,818,256
|
|||
Current
liabilities
|
(55,196,602 | ) | ||
Long-term
liabilities
|
(67,681,426 | ) | ||
Other
liabilities
|
(9,734 | ) | ||
Goodwill
|
14,288,008
|
|||
67,837,855
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands, except for per share data)
|
||||||||||||
Net
sales
|
279,060,413
|
344,804,286
|
10,580,064
|
|||||||||
Income
(loss) before income tax
|
6,202,917
|
(3,585,706 | ) | (110,025 | ) | |||||||
Net
income (loss)
|
5,852,711
|
(4,654,044 | ) | (142,806 | ) | |||||||
Earnings
(loss) per share—basic
|
0.86
|
(0.63 | ) | (0.02 | ) |
25.
|
Summary
of Significant Differences Between Accounting Principles Followed
by the
Company and Accounting Principles
Generally Accepted in the United States of
America
|
(a)
|
Business
combinations
|
(1)
|
Merger
with Unipac
|
September
1, 2001
|
||||
NT$
|
||||
(in
thousands)
|
||||
Current
assets
|
10,566,296
|
|||
Long-term
investments
|
38,767
|
|||
Property,
plant and equipment
|
30,568,067
|
|||
Intangible
assets
|
8,730,382
|
|||
Goodwill
|
11,599,692
|
|||
Other
assets acquired
|
443,961
|
|||
Total
assets
|
61,947,165
|
|||
Current
liabilities
|
2,763,917
|
|||
Long-term
debt
|
18,615,702
|
|||
Other
liabilities
|
930,645
|
|||
Total
liabilities assumed
|
22,310,264
|
|||
Net
assets acquired
|
39,636,901
|
(2)
|
Merger
with QDI
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands, except for per share data)
|
||||||||||||
Net
sales
|
279,060,413
|
344,804,286
|
10,580,064
|
|||||||||
Net
loss
|
(2,788,085 | ) | (13,190,084 | ) | (404,728 | ) | ||||||
Loss
per share—basic
|
(0.48 | ) | (2.05 | ) | (0.06 | ) |
(b)
|
Compensation
|
(1)
|
Remuneration
to directors and supervisors
|
(2)
|
Employee
bonuses
|
(3)
|
Transfer
of treasury stock to employees
|
(c)
|
Equity
method investments
|
(d)
|
Marketable
securities
|
(e)
|
Land
cost
|
(f)
|
Convertible
bonds
|
(g)
|
Shareholders
stock dividends paid
|
(h)
|
Pension
benefits
|
(i)
|
Depreciation
of property, plant and equipment
|
(j)
|
Derivative
financial instruments and hedging
activities
|
(k)
|
Compensated
absences
|
(l)
|
Research
and development expense
|
(m)
|
Operating
leases
|
(n)
|
Income
tax
|
(o)
|
Earnings
per share
|
(p)
|
Reclassification
|
(q)
|
Recent
accounting pronouncements
|
(r)
|
US
GAAP reconciliations
|
(1)
|
Reconciliation
of consolidated net income
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands, except for per share data)
|
||||||||||||||||
Net
income attributable to equity holders of the parent company, ROC
GAAP
|
27,962,852
|
15,626,991
|
9,103,472
|
279,333
|
||||||||||||
US
GAAP adjustments:
|
||||||||||||||||
(a)
Purchase method of accounting for acquisition of Unipac
|
||||||||||||||||
-
Amortization of intangible assets
|
(1,049,496 | ) | (1,049,496 | ) | (1,049,496 | ) | (32,203 | ) | ||||||||
-
Amortization of premium on bonds payable
|
12,364
|
-
|
-
|
-
|
||||||||||||
-
Depreciation
|
209,138
|
118,490
|
(70,961 | ) | (2,177 | ) | ||||||||||
(b)
Compensation
|
||||||||||||||||
-
Remuneration to directors and supervisors
|
(37,447 | ) | (21,096 | ) | (24,000 | ) | (736 | ) | ||||||||
-
Employee bonuses
|
||||||||||||||||
-
Provision
|
(1,622,709 | ) | (1,265,786 | ) | (737,381 | ) | (22,626 | ) | ||||||||
-
Adjustment to fair value
|
(5,593,883 | ) | (4,137,909 | ) | (3,265,096 | ) | (100,187 | ) | ||||||||
-
Compensation cost arising from ESPP
|
-
|
(283,502 | ) | (147,658 | ) | (4,531 | ) | |||||||||
(c)
Investment gain (loss) on foreign subsidiaries and long-term equity
investments
|
209,694
|
139,516
|
(334,340 | ) | (10,259 | ) | ||||||||||
(c)
Equity portion investee extraordinary gain
|
-
|
308,702
|
-
|
-
|
||||||||||||
(d)
Investment loss on marketable securities
|
(922,901 | ) |
-
|
-
|
-
|
|||||||||||
(f)
Accretion of interest expense on convertible bonds
|
-
|
-
|
(1,223,176 | ) | (37,532 | ) | ||||||||||
(h)
Pension expense
|
3,058
|
1,057
|
1,108
|
34
|
||||||||||||
(i)
Depreciation of property, plant and equipment
|
(359,310 | ) | (756,783 | ) | (1,147,039 | ) | (35,196 | ) | ||||||||
(j)
Derivative financial instruments recorded at fair value
|
(249,585 | ) | (45,051 | ) |
144,730
|
4,441
|
||||||||||
(k)
Compensated absences expense
|
(49,232 | ) |
40,952
|
(88,171 | ) | (2,706 | ) | |||||||||
(m)
Escalation adjustment of rent expense
|
2,080
|
2,129
|
2,130
|
65
|
||||||||||||
Tax
effect of change in tax law
|
-
|
-
|
9,086
|
279
|
||||||||||||
Deferred
tax effect of US GAAP adjustments
|
416,978
|
556,036
|
1,089,033
|
33,416
|
||||||||||||
(n)
Valuation allowance for deferred tax assets
|
(819,053 | ) | (556,036 | ) | (1,089,033 | ) | (33,416 | ) | ||||||||
Net
income, US GAAP
|
18,112,548
|
8,678,214
|
1,173,208
|
35,999
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands, except for per share data)
|
||||||||||||||||
Earnings
per share—Basic:
|
||||||||||||||||
Income
before extraordinary
item
|
3.39
|
1.46
|
0.18
|
0.01
|
||||||||||||
Extraordinary
item
|
-
|
0.05
|
-
|
-
|
||||||||||||
Net
income
|
3.39
|
1.51
|
0.18
|
0.01
|
||||||||||||
Earnings
per share—Diluted:
|
||||||||||||||||
Income
before extraordinary
item
|
3.39
|
1.46
|
0.18
|
0.01
|
||||||||||||
Extraordinary
item
|
-
|
0.05
|
-
|
-
|
||||||||||||
Net
income
|
3.39
|
1.51
|
0.18
|
0.01
|
||||||||||||
Basic—Weighted-average
number of shares outstanding (in thousands)
|
5,350,187
|
5,762,865
|
6,426,872
|
|||||||||||||
Diluted—Weighted-average
number of shares outstanding (in
thousands)
|
5,350,187
|
5,762,865
|
6,426,928
|
(2)
|
Reconciliation
of consolidated stockholders’
equity
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Total
stockholders’ equity, ROC GAAP
|
155,702,187
|
230,734,304
|
7,079,912
|
|||||||||
(a)
Purchase method of accounting for acquisition of Unipac
|
||||||||||||
-
Goodwill
|
10,946,732
|
10,946,732
|
335,892
|
|||||||||
-
Intangible assets, net of amortization
|
3,148,486
|
2,098,990
|
64,406
|
|||||||||
-
Other assets
|
602,789
|
531,829
|
16,319
|
|||||||||
(b)
Compensation
|
||||||||||||
-
Remuneration to directors and supervisors
|
(21,096 | ) | (24,000 | ) | (736 | ) | ||||||
-
Employee bonuses accrual
|
(1,265,786 | ) | (737,381 | ) | (22,626 | ) | ||||||
-
Deferred expense arising from ESPP
|
147,658
|
-
|
-
|
|||||||||
(c)
Foreign subsidiaries and long-term equity investments
|
554,448
|
258,742
|
7,939
|
|||||||||
(c)
Cumulative translation adjustment
|
12,719
|
12,719
|
390
|
|||||||||
(d)
Marketable securities
|
(544,867 | ) | (519,920 | ) | (15,954 | ) | ||||||
(e)
Land cost
|
(86,278 | ) | (86,278 | ) | (2,647 | ) | ||||||
(f)
Convertible bonds
|
-
|
(1,223,176 | ) | (37,532 | ) | |||||||
(h)
Defined benefit plan
|
||||||||||||
-
Accrued pension cost
|
(28,630 | ) | (27,522 | ) | (845 | ) | ||||||
-
Adoption of SFAS No. 158
|
-
|
(234,510 | ) | (7,196 | ) | |||||||
(i)
Accumulated depreciation of property, plant and equipment
|
(1,729,190 | ) | (2,869,001 | ) | (88,033 | ) | ||||||
(j)
Derivative financial instruments recorded at fair value
|
(353,836 | ) |
-
|
-
|
||||||||
(k)
Compensated absences accrual
|
(142,991 | ) | (231,162 | ) | (7,093 | ) | ||||||
(m)
Accrued rental expense
|
(23,451 | ) | (21,321 | ) | (654 | ) | ||||||
(n)
Tax effect of US GAAP adjustments
|
-
|
9,086
|
279
|
|||||||||
Total
stockholders’ equity, US GAAP
|
166,918,894
|
238,618,131
|
7,321,821
|
(s)
|
US
GAAP consolidated condensed financial
statements
|
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
Assets
|
||||||||||||
Current
assets
|
93,469,821
|
150,826,764
|
4,628,008
|
|||||||||
Long-term
investments
|
5,887,920
|
12,639,537
|
387,834
|
|||||||||
Property,
plant and equipment, net
|
220,973,967
|
380,859,841
|
11,686,402
|
|||||||||
Goodwill
and intangible assets
|
16,578,548
|
33,188,496
|
1,018,364
|
|||||||||
Other
assets
|
5,899,022
|
10,884,969
|
333,998
|
|||||||||
Total
Assets
|
342,809,278
|
588,399,607
|
18,054,606
|
|||||||||
Liabilities
and Stockholders’ Equity
|
||||||||||||
Current
liabilities
|
91,287,977
|
169,515,030
|
5,201,443
|
|||||||||
Long-term
liabilities
|
84,485,102
|
179,924,432
|
5,520,848
|
|||||||||
Minority
interest
|
117,305
|
342,014
|
10,494
|
|||||||||
Stockholders’
equity
|
166,918,894
|
238,618,131
|
7,321,821
|
|||||||||
Total
Liabilities and Stockholders’ Equity
|
342,809,278
|
588,399,607
|
18,054,606
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Net
sales
|
168,111,569
|
217,388,388
|
293,106,770
|
8,993,764
|
||||||||||||
Cost
of goods sold
|
135,255,952
|
195,261,896
|
269,734,794
|
8,276,612
|
||||||||||||
Gross
profit
|
32,855,617
|
22,126,492
|
23,371,976
|
717,152
|
||||||||||||
Operating
expenses
|
12,686,795
|
12,642,678
|
15,819,338
|
485,405
|
||||||||||||
Income
from operations
|
20,168,822
|
9,483,814
|
7,552,638
|
231,747
|
||||||||||||
Non-operating
income (expenses), net
|
(1,592,854 | ) | (646,725 | ) | (5,330,269 | ) | (163,555 | ) | ||||||||
Income
before income tax, minority interest and extraordinary
item
|
18,575,968
|
8,837,089
|
2,222,369
|
68,192
|
||||||||||||
Income
tax expense
|
(463,420 | ) | (473,429 | ) | (1,059,238 | ) | (32,502 | ) | ||||||||
Income
before minority interest and extraordinary item
|
18,112,548
|
8,363,660
|
1,163,131
|
35,690
|
||||||||||||
Minority
interest in loss
|
-
|
(5,852 | ) | (10,077 | ) | (309 | ) | |||||||||
Income
before extraordinary item
|
18,112,548
|
8,369,512
|
1,173,208
|
35,999
|
||||||||||||
Extraordinary
item—equity in extraordinary gain of equity method
investee
|
-
|
308,702
|
-
|
-
|
||||||||||||
Net
income
|
18,112,548
|
8,678,214
|
1,173,208
|
35,999
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Net
income
|
18,112,548
|
8,678,214
|
1,173,208
|
35,999
|
||||||||||||
Other
comprehensive income (loss) before tax:
|
||||||||||||||||
Unrealized
holding gains (loss) on securities available-for-sale
|
578,620
|
(208,705 | ) |
292,017
|
8,960
|
|||||||||||
Foreign
currency cumulative translation adjustment
|
(291,708 | ) |
372,700
|
327,996
|
10,064
|
|||||||||||
Reclassification
adjustments for securities sold
|
(3,625 | ) |
-
|
-
|
-
|
|||||||||||
Amortization
of fair value adjustment for interest rate swap
|
4,166
|
-
|
-
|
-
|
||||||||||||
Derivative
and hedging activities—interest rate swap
|
-
|
-
|
(104,907 | ) | (3,219 | ) | ||||||||||
Other
comprehensive income before income taxes
|
287,453
|
163,995
|
515,106
|
15,805
|
||||||||||||
Income
tax expense (benefit)
|
(65,917 | ) |
86,626
|
-
|
-
|
|||||||||||
Other
comprehensive income
|
353,370
|
77,369
|
515,106
|
15,805
|
||||||||||||
Comprehensive
income
|
18,465,918
|
8,755,583
|
1,688,314
|
51,804
|
||||||||||||
Common
stock
|
Additional
paid-in
capital
|
Retained
earnings (accumulated
deficits)
|
Accumulated
other comprehensive
income
(loss)
|
Treasury
stock
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2003
|
43,522,372
|
55,306,778
|
8,905,924
|
(505,214 | ) | (250,981 | ) |
106,978,879
|
||||||||||||||||
Cash
dividends
|
-
|
-
|
(5,208,285 | ) |
-
|
-
|
(5,208,285 | ) | ||||||||||||||||
Issuance
of shareholders stock dividends
|
2,170,119
|
13,671,747
|
(15,841,866 | ) |
-
|
-
|
-
|
|||||||||||||||||
Issuance
of employee stock bonus
|
887,918
|
5,593,883
|
-
|
-
|
-
|
6,481,801
|
||||||||||||||||||
Issuance
of common stock for cash
|
3,000,000
|
12,967,194
|
-
|
-
|
-
|
15,967,194
|
||||||||||||||||||
Net
income
|
-
|
-
|
18,112,548
|
-
|
-
|
18,112,548
|
||||||||||||||||||
Other
comprehensive income, net of tax
|
-
|
-
|
-
|
353,370
|
-
|
353,370
|
||||||||||||||||||
Others
|
-
|
109
|
-
|
-
|
-
|
109
|
||||||||||||||||||
Balance
at December 31, 2004
|
49,580,409
|
87,539,711
|
5,968,321
|
(151,844 | ) | (250,981 | ) |
142,685,616
|
||||||||||||||||
Cash
dividends
|
-
|
-
|
(5,935,249 | ) |
-
|
-
|
(5,935,249 | ) | ||||||||||||||||
Issuance
of shareholders stock dividends
|
4,451,437
|
18,918,606
|
(23,370,043 | ) |
-
|
-
|
-
|
|||||||||||||||||
Issuance
of employee stock bonus
|
973,625
|
4,137,909
|
-
|
-
|
-
|
5,111,534
|
||||||||||||||||||
Cash
employees’ profit sharing
|
3,300,000
|
12,294,150
|
-
|
-
|
-
|
15,594,150
|
||||||||||||||||||
Issuance
of treasury stock to employees
|
-
|
431,160
|
(73,076 | ) |
-
|
250,981
|
609,065
|
|||||||||||||||||
Net
income
|
-
|
-
|
8,678,214
|
-
|
-
|
8,678,214
|
||||||||||||||||||
Other
comprehensive income
|
-
|
-
|
-
|
77,369
|
-
|
77,369
|
||||||||||||||||||
Others
|
-
|
98,195
|
-
|
-
|
-
|
98,195
|
||||||||||||||||||
Balance
at December 31, 2005
|
58,305,471
|
123,419,731
|
(14,731,833 | ) | (74,475 | ) |
-
|
166,918,894
|
||||||||||||||||
Cumulative
effect adjustment for adoption of SAB 108
|
-
|
(767,694 | ) |
767,694
|
-
|
-
|
-
|
|||||||||||||||||
Balance
at January 1, 2006, as adjusted
|
58,305,471
|
122,652,037
|
(13,964,139 | ) | (74,475 | ) |
-
|
166,918,894
|
||||||||||||||||
Cash
dividends
|
-
|
-
|
(1,749,164 | ) |
-
|
-
|
(1,749,164 | ) | ||||||||||||||||
Issuance
of shareholders stock dividends
|
1,749,164
|
5,439,900
|
(7,189,064 | ) |
-
|
-
|
-
|
|||||||||||||||||
Issuance
of employee stock bonus
|
886,051
|
3,265,095
|
-
|
-
|
-
|
4,151,146
|
||||||||||||||||||
Issuance
of new shares for merger
|
14,791,100
|
52,957,471
|
-
|
-
|
-
|
67,748,571
|
||||||||||||||||||
Employee
stock options assumed from merger with QDI
|
-
|
73,383
|
-
|
-
|
-
|
73,383
|
||||||||||||||||||
Net
income
|
-
|
-
|
1,173,208
|
-
|
-
|
1,173,208
|
||||||||||||||||||
Other
comprehensive income
|
-
|
-
|
-
|
515,106
|
-
|
515,106
|
||||||||||||||||||
Adoption
of SFAS No. 158
|
-
|
-
|
-
|
(234,510 | ) |
-
|
(234,510 | ) | ||||||||||||||||
Others
|
2,242
|
19,255
|
-
|
-
|
-
|
21,497
|
||||||||||||||||||
Balance
at December 31, 2006
|
75,734,028
|
184,407,141
|
(21,729,159 | ) |
206,121
|
-
|
238,618,131
|
|||||||||||||||||
Balance
at December 31, 2006 (in US$)
|
2,323,843
|
5,658,396
|
(666,743 | ) |
6,325
|
-
|
7,321,821
|
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
Net
cash provided by (used in):
|
||||||||||||||||
Operating
activities
|
48,943,756
|
46,951,914
|
67,955,306
|
2,085,158
|
||||||||||||
Investing
activities
|
(88,000,970 | ) | (81,428,055 | ) | (83,130,667 | ) | (2,550,802 | ) | ||||||||
Financing
activities
|
38,066,233
|
43,783,879
|
32,951,652
|
1,011,096
|
||||||||||||
Effect
of exchange rate change on
cash
|
(173,438 | ) |
157,864
|
(114,291 | ) | (3,507 | ) | |||||||||
Net
change in cash and cash equivalents
|
(1,164,419 | ) |
9,465,602
|
17,662,000
|
541,945
|
|||||||||||
Cash
and cash equivalents at
beginning of year
|
17,962,082
|
16,797,663
|
26,263,265
|
805,869
|
||||||||||||
Cash
and cash equivalents at
end of year
|
16,797,663
|
26,263,265
|
43,925,265
|
1,347,814
|
(t)
|
Additional
US GAAP disclosure
|
(1)
|
Securities
available-for-sale
|
Total
unrealized
|
Total
unrealized
|
|||||||||||||||
Cost
|
Fair
value
|
gains
|
losses
|
|||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Current
assets:
|
||||||||||||||||
As
of December 31, 2005
|
1,618,209
|
1,551,696
|
46,532
|
(113,045 | ) | |||||||||||
As
of December 31, 2006
|
1,623,291
|
1,849,032
|
225,741
|
-
|
||||||||||||
Long-term
investments:
|
||||||||||||||||
As
of December 31, 2005
|
10,000
|
19,861
|
9,861
|
-
|
||||||||||||
As
of December 31, 2006
|
71,596
|
177,175
|
105,579
|
-
|
Proceeds
|
Gross
realized
|
Gross
realized
|
||||||||||
from
sales
|
gains
|
losses
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
For
the year ended December 31, 2004
|
4,057,400
|
5,131
|
-
|
|||||||||
For
the year ended December 31, 2005
|
1,000,000
|
-
|
-
|
|||||||||
For
the year ended December 31, 2006
|
-
|
-
|
-
|
(2)
|
Allowance
for doubtful accounts, and sales returns and
discounts
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Allowance
for doubtful accounts,
and sales returns
and
discounts:
|
||||||||||||||||
Balance
at beginning of year
|
126,841
|
788,812
|
505,508
|
15,511
|
||||||||||||
Allowance
assumed from merger with QDI
|
-
|
-
|
248,056
|
7,611
|
||||||||||||
Provision
charged to current operations
|
705,549
|
338,944
|
2,601,072
|
79,812
|
||||||||||||
Write-offs
|
(43,578 | ) | (622,248 | ) | (2,047,087 | ) | (62,813 | ) | ||||||||
Balance
at end of year
|
788,812
|
505,508
|
1,307,549
|
40,121
|
(3)
|
Pension
Related Benefits
|
(i)
|
Obligation
and funded status
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Projected
benefit obligation at beginning of year
|
486,441
|
565,492
|
17,352
|
|||||||||
Service
cost
|
69,596
|
8,100
|
248
|
|||||||||
Interest
cost
|
17,835
|
20,508
|
629
|
|||||||||
Merger
of QDI’s plan
|
-
|
127,189
|
3,903
|
|||||||||
Actuarial
loss (gain)
|
(8,380 | ) |
240,357
|
7,375
|
||||||||
Projected
benefit obligation at end of year
|
565,492
|
961,646
|
29,507
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Fair
value of plan assets at beginning of year
|
299,030
|
398,478
|
12,227
|
|||||||||
Actual
return on plan assets
|
2,955
|
7,531
|
231
|
|||||||||
Merger
of QDI’s plan
|
-
|
281,016
|
8,623
|
|||||||||
Actual
contribution
|
96,493
|
104,281
|
3,200
|
|||||||||
Fair
value of plan assets at end of year
|
398,478
|
791,306
|
24,281
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Funded
status—plan assets less than benefit obligations
|
(167,014 | ) | (170,340 | ) | (5,227 | ) | ||||||
Unrecognized
transition obligation
|
5,946
|
-
|
-
|
|||||||||
Unrecognized
loss (gain)
|
(38,577 | ) |
-
|
-
|
||||||||
Accrued
liability
|
(199,645 | ) | (170,340 | ) | (5,227 | ) |
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Accrued
liability at beginning of year
|
(220,002 | ) | (199,645 | ) | (6,126 | ) | ||||||
Net
periodic pension cost
|
(76,136 | ) | (15,384 | ) | (472 | ) | ||||||
Actual
contribution
|
96,493
|
104,281
|
3,200
|
|||||||||
Merger
of QDI’s plan
|
-
|
153,827
|
4,720
|
|||||||||
Adoption
of SFAS No. 158(1)
|
-
|
(213,419 | ) | (6,549 | ) | |||||||
Accrued
liability at end of year
|
(199,645 | ) | (170,340 | ) | (5,227 | ) |
(ii)
|
The
amount included effect of adoption of SFAS No. 158 for AUO and
consolidated subsidiaries, but excluded that of equity-method
investees.
|
(iii)
|
Components
of net periodic benefit
cost
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Service
cost
|
127,467
|
69,596
|
8,100
|
249
|
||||||||||||
Interest
cost
|
15,213
|
17,835
|
20,508
|
629
|
||||||||||||
Expected
return on plan assets
|
(7,571 | ) | (11,322 | ) | (15,208 | ) | (467 | ) | ||||||||
Amortization
of net transition cost
|
472
|
472
|
472
|
15
|
||||||||||||
Recognized
net actuarial loss (gain)
|
542
|
(445 | ) |
1,512
|
46
|
|||||||||||
Net
periodic benefit cost
|
136,123
|
76,136
|
15,384
|
472
|
(iv)
|
Assumptions
|
December
31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Discount
rate
|
3.50 | % | 3.50 | % | 2.75%-3.50 | % | ||||||
Rate
of increase in compensation levels
|
3.50 | % | 3.50 | % | 3.50 | % |
For
the year ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
Discount
rate
|
3.50 | % | 3.50 | % | 2.75%-3.50 | % | ||||||
Rate
of increase in compensation levels
|
3.50 | % | 3.50 | % | 3.50 | % | ||||||
Expected
long-term rate of return on plan assets
|
3.50 | % | 3.50 | % | 2.75%-3.50 | % |
(v)
|
Contributions
|
(vi)
|
Expected
benefit payment
|
Year
|
Retirement
benefit payment
|
|||
NT$
(in
thousands)
|
||||
2007
|
419
|
|||
2008
|
2,543
|
|||
2009
|
774
|
|||
2010
|
2,869
|
|||
2011
|
36,019
|
|||
2012-2016
|
111,199
|
(4)
|
Income
taxes
|
(i)
|
The
components of provision for income tax expense (benefit) are summarized
as
follows:
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Current
income tax expense
|
355,761
|
1,521,732
|
1,218,824
|
37,399
|
||||||||||||
Deferred
income tax expense (benefit)
|
107,659
|
(1,048,303 | ) | (159,586 | ) | (4,897 | ) | |||||||||
Income
tax expense
|
463,420
|
473,429
|
1,059,238
|
32,502
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Expected
income tax expense
|
6,037,190
|
2,974,284
|
555,592
|
17,048
|
||||||||||||
Increase
of investment tax credits, net of expired portion
|
(7,144,655 | ) | (5,051,650 | ) | (4,359,577 | ) | (133,770 | ) | ||||||||
Increase
in valuation allowance
|
840,313
|
1,462,798
|
3,681,893
|
112,976
|
||||||||||||
Tax
exemption
|
(1,851,314 | ) | (623,963 | ) | (838,410 | ) | (25,726 | ) | ||||||||
Employee
stock bonus
|
2,345,392
|
1,756,201
|
1,000,619
|
30,703
|
||||||||||||
Impairment
loss on available-for-sale securities
|
299,943
|
-
|
-
|
-
|
||||||||||||
Tax
on undistributed retained earnings
|
-
|
-
|
910,347
|
27,933
|
||||||||||||
Non-deductible
expense and others
|
(63,449 | ) | (44,241 | ) |
108,774
|
3,338
|
||||||||||
Income
tax expense
|
463,420
|
473,429
|
1,059,238
|
32,502
|
(ii)
|
The
components of deferred income tax assets and liabilities are summarized
as
follows:
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Deferred
tax assets:
|
||||||||||||
Inventories
|
384,799
|
937,925
|
28,780
|
|||||||||
Unrealized
loss and expenses
|
357,874
|
328,493
|
10,080
|
|||||||||
Other
current liabilities
|
1,195,358
|
465,792
|
14,292
|
|||||||||
Investment
tax credits
|
11,180,324
|
24,139,172
|
740,693
|
|||||||||
Net
operating loss carryforwards
|
15,072
|
-
|
-
|
|||||||||
Convertible
bonds
|
-
|
388,971
|
11,935
|
|||||||||
Property,
plant & equipment
|
-
|
588,461
|
18,056
|
|||||||||
Other
|
256,699
|
313,838
|
9,630
|
|||||||||
Gross
deferred tax assets
|
13,390,126
|
27,162,652
|
833,466
|
|||||||||
Valuation
allowance
|
(7,742,750 | ) | (20,813,826 | ) | (638,657 | ) | ||||||
Net
deferred tax assets
|
5,647,376
|
6,348,826
|
194,809
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Deferred
tax liabilities:
|
||||||||||||
Property,
plant & equipment
|
(483,027 | ) |
-
|
-
|
||||||||
Intangible
assets resulting from combination with Unipac
|
(1,023,258 | ) | (667,479 | ) | (20,481 | ) | ||||||
Long-term
investment—equity method
|
(127,465 | ) | (265,088 | ) | (8,134 | ) | ||||||
Others
|
(81,583 | ) | (313,233 | ) | (9,611 | ) | ||||||
Total
deferred tax liabilities
|
(1,715,333 | ) | (1,245,800 | ) | (38,226 | ) | ||||||
Net
deferred tax assets
|
3,932,043
|
5,103,026
|
156,583
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Deferred
tax assets—current
|
3,199,569
|
3,220,232
|
98,811
|
|||||||||
Deferred
tax assets—noncurrent
|
2,447,807
|
2,540,133
|
77,942
|
|||||||||
Deferred
tax liabilities—current
|
(62,230 | ) | (122,377 | ) | (3,755 | ) | ||||||
Deferred
tax liabilities—noncurrent
|
(1,653,103 | ) | (534,962 | ) | (16,415 | ) | ||||||
3,932,043
|
5,103,026
|
156,583
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Income
tax benefit (expense)
|
(463,420 | ) | (473,429 | ) | (1,059,238 | ) | (32,502 | ) | ||||||||
Other
comprehensive income
|
65,917
|
(86,623 | ) |
-
|
-
|
|||||||||||
Total
income taxes
|
(397,503 | ) | (560,052 | ) | (1,059,238 | ) | (32,502 | ) |
(5)
|
Non-derivative
financial instruments
|
December
31, 2005
|
||||||||
Fair
value
|
Carrying
amount
|
|||||||
NT$
|
NT$
|
|||||||
(in
thousands)
|
||||||||
Assets:
|
||||||||
Cash
and cash equivalents
|
26,263,265
|
26,263,265
|
||||||
Notes
and accounts receivable
|
34,848,588
|
34,848,588
|
||||||
Receivables
from related parties
|
7,766,800
|
7,766,800
|
||||||
Other
financial assets—current
|
1,074,754
|
1,074,754
|
||||||
Securities
available-for-sale—current
|
1,551,696
|
1,551,696
|
||||||
Long-term
investments—equity method
|
||||||||
Fair
value (available)
|
6,348,344
|
4,189,221
|
||||||
Fair
value (not available)
|
-
|
1,615,299
|
||||||
Long-term
investments—other
|
||||||||
Fair
value (available)
|
19,862
|
19,862
|
||||||
Fair
value (not available)
|
-
|
63,538
|
||||||
Restricted
cash in bank
|
32,200
|
32,200
|
||||||
Liabilities:
|
||||||||
Accounts
payable
|
48,642,321
|
48,642,321
|
||||||
Payables
to related parties
|
2,197,285
|
2,197,285
|
||||||
Equipment
and construction in process payable
|
19,694,213
|
19,694,213
|
||||||
Bonds
payable
|
11,951,724
|
12,000,000
|
||||||
Long-term
borrowings, including current installments
|
81,773,029
|
81,773,029
|
December
31, 2006
|
||||||||||||||||
Fair
value
|
Carrying
amount
|
|||||||||||||||
NT$
|
US$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Cash
and cash equivalents
|
43,925,265
|
1,347,814
|
43,925,265
|
1,347,814
|
||||||||||||
Notes
and accounts receivable
|
47,309,900
|
1,451,669
|
47,309,900
|
1,451,669
|
||||||||||||
Receivables
from related parties
|
10,521,081
|
322,832
|
10,521,081
|
322,832
|
||||||||||||
Other
financial assets—current
|
1,110,680
|
34,081
|
1,110,680
|
34,081
|
||||||||||||
Securities
available-for-sale—current
|
1,849,032
|
56,736
|
1,849,032
|
56,736
|
||||||||||||
Long-term
investments—equity method
|
||||||||||||||||
Fair
value (available)
|
3,904,484
|
119,806
|
2,207,059
|
67,722
|
||||||||||||
Fair
value (not available)
|
-
|
-
|
9,718,342
|
298,200
|
||||||||||||
Long-term
investments—other
|
||||||||||||||||
Fair
value (available)
|
177,175
|
5,436
|
177,175
|
5,436
|
||||||||||||
Fair
value (not available)
|
-
|
-
|
536,961
|
16,476
|
||||||||||||
Restricted
cash in bank
|
43,200
|
1,326
|
43,200
|
1,326
|
||||||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Accounts
payable
|
69,495,532
|
2,132,419
|
69,495,532
|
2,132,419
|
||||||||||||
Payables
to related parties
|
6,738,803
|
206,775
|
6,738,803
|
206,775
|
||||||||||||
Equipment
and construction in process payable
|
30,719,178
|
942,595
|
30,719,178
|
942,595
|
||||||||||||
Bonds
payable, including current installments
|
38,542,231
|
1,182,640
|
37,797,647
|
1,159,793
|
||||||||||||
Long-term
borrowing, including current installments
|
182,900,276
|
5,612,160
|
182,900,276
|
5,612,160
|
(6)
|
Property,
plant and equipment
|
December
31, 2005
|
||||||||||||
Cost
|
Accumulated
depreciation
|
Carrying
amount
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
Land
|
3,504,258
|
-
|
3,504,258
|
|||||||||
Buildings
|
37,962,042
|
(4,092,454 | ) |
33,869,588
|
||||||||
Machinery
and equipment
|
239,565,644
|
(79,006,735 | ) |
160,558,909
|
||||||||
Other
equipment
|
13,661,181
|
(7,881,070 | ) |
5,780,111
|
||||||||
Construction
in progress
|
1,704,372
|
-
|
1,704,372
|
|||||||||
Prepayments
for purchases of land and equipment
|
15,556,729
|
-
|
15,556,729
|
|||||||||
311,954,226
|
(90,980,259 | ) |
220,973,967
|
December
31,
2006
|
||||||||||||
Cost
|
Accumulated
depreciation
|
Carrying
amount
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
Land
|
6,187,337
|
-
|
6,187,337
|
|||||||||
Buildings
|
58,976,016
|
(6,347,165 | ) |
52,628,851
|
||||||||
Machinery
and equipment
|
410,855,911
|
(123,284,102 | ) |
287,571,809
|
||||||||
Other
equipment
|
22,561,855
|
(14,142,044 | ) |
8,419,811
|
||||||||
Construction
in progress
|
6,254,058
|
-
|
6,254,058
|
|||||||||
Prepayments
for purchases of land and equipment
|
19,797,975
|
-
|
19,797,975
|
|||||||||
524,633,152
|
(143,773,311 | ) |
380,859,841
|
(7)
|
The
changes in the components of accumulated other comprehensive income
are as
follows:
|
Derivative
and hedging activities—interest rate swap
|
Unrealized
gains (losses) on
securities
|
Foreign
currency translation adjustment
|
Defined
benefit plan
|
Accumulated
other comprehensive income
( loss)
|
||||||||||||||||
NT$
|
NT$
|
NT$
|
NT$
|
NT$
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||||||
Balance
at December 31, 2003
|
(2,810 | ) | (512,700 | ) |
10,296
|
-
|
(505,214 | ) | ||||||||||||
Other
comprehensive income (loss)
|
-
|
578,620
|
(224,435 | ) |
-
|
354,185
|
||||||||||||||
Reclassification
adjustments for gains (losses) reclassified into income
|
2,810
|
(3,625 | ) |
-
|
-
|
(815 | ) | |||||||||||||
Balance
at December 31, 2004
|
-
|
62,295
|
(214,139 | ) |
-
|
(151,844 | ) | |||||||||||||
Other
comprehensive income (loss)
|
-
|
(208,705 | ) |
286,074
|
-
|
77,369
|
||||||||||||||
Balance
at December 31, 2005
|
-
|
(146,410 | ) |
71,935
|
-
|
(74,475 | ) | |||||||||||||
Other
comprehensive income (loss)
|
(104,907 | ) |
292,017
|
327,996
|
-
|
515,106
|
||||||||||||||
Adoption
of SFAS No. 158
|
-
|
-
|
-
|
(234,510 | ) | (234,510 | ) | |||||||||||||
Balance
at December 31, 2006
|
(104,907 | ) |
145,607
|
399,931
|
(234,510 | ) |
206,121
|
For
the year ended December 31, 2004
|
||||||||||||
Before-tax
amount
|
Tax
(expense)benefit
|
Net-of-tax
amount
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
Derivative
and hedging activities— interest rate swap:
|
||||||||||||
Reclassification
adjustment for gains realized in income
|
4,166
|
(1,356 | ) |
2,810
|
||||||||
Unrealized
gains (losses) on securities:
|
||||||||||||
Unrealized
gains (losses) arising during the period
|
578,620
|
-
|
578,620
|
|||||||||
Reclassification
adjustment for gains realized in income
|
(3,625 | ) |
-
|
(3,625 | ) | |||||||
Foreign
currency translation adjustment
|
(291,708 | ) |
67,273
|
(224,435 | ) | |||||||
Other
comprehensive income
|
287,453
|
65,917
|
353,370
|
For
the year ended December 31, 2005
|
||||||||||||
Before-tax
amount
|
Tax
(expense)
benefit
|
Net-of-tax
amount
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
Unrealized
gains (losses) on securities:
|
||||||||||||
Unrealized
gains (losses) arising during the period
|
(208,705 | ) |
-
|
(208,705 | ) | |||||||
Foreign
currency translation adjustment
|
372,700
|
(86,626 | ) |
286,074
|
||||||||
Other
comprehensive income
|
163,995
|
(86,626 | ) |
77,369
|
For
the year ended December 31, 2006
|
||||||||||||
Before-tax
amount
|
Tax
(expense)
benefit
|
Net-of-tax
amount
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands)
|
||||||||||||
Derivative
and hedging activities—interest rate swap:
|
(104,907 | ) |
-
|
(104,907 | ) | |||||||
Unrealized
gains (losses) on securities:
|
||||||||||||
Unrealized
gains (losses) arising during the period
|
292,017
|
-
|
292,017
|
|||||||||
Foreign
currency translation adjustment
|
327,996
|
-
|
327,996
|
|||||||||
Other
comprehensive income
|
515,106
|
-
|
515,106
|
(8)
|
Product
revenue information
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Panels
for Computer Products:
|
||||||||||||||||
Panels
for notebook computers
|
32,268
|
33,265
|
50,306
|
1,544
|
||||||||||||
Panels
for desktop monitors
|
99,000
|
108,623
|
104,833
|
3,217
|
||||||||||||
Total
panels for computer products
|
131,268
|
141,888
|
155,139
|
4,761
|
||||||||||||
Panels
for Consumer Electronics Products
|
21,044
|
28,637
|
31,331
|
961
|
||||||||||||
Panels
for LCD Television
|
14,586
|
46,148
|
104,949
|
3,220
|
||||||||||||
Other(1)
|
1,214
|
715
|
1,688
|
52
|
||||||||||||
Total
|
168,112
|
217,388
|
293,107
|
8,994
|
|
(1)
|
Includes
revenues generated
from sales
of raw
materials and components and other TFT-LCD panel products, and from
service charges.
|
(9)
|
Earnings
per common share in 2004, 2005 and 2006 are computed as
follows:
|
For
the year ended December 31,
|
||||||||||||
2004
|
2005
|
2006
|
||||||||||
NT$
|
NT$
|
NT$
|
||||||||||
(in
thousands, except for per share data)
|
||||||||||||
Net
income for computing basic earnings per share:
|
||||||||||||
Income
before extraordinary item
|
18,112,548
|
8,369,512
|
1,173,208
|
|||||||||
Extraordinary
gain
|
-
|
308,702
|
-
|
|||||||||
Net
income
|
18,112,548
|
8,678,214
|
1,173,208
|
|||||||||
Weighted
average number of shares outstanding (thousand shares):
|
||||||||||||
Shares
of common stock at the beginning of the year
|
4,340,237
|
4,958,041
|
5,830,547
|
|||||||||
Issuance
of common stock for cash
|
156,667
|
146,465
|
-
|
|||||||||
Common
stock issued in connection with the acquisition of QDI
|
-
|
-
|
372,817
|
|||||||||
Issuance
of shareholders stock dividends
|
268,560
|
498,760
|
223,467
|
|||||||||
Stock
options
|
-
|
-
|
41
|
|||||||||
Treasury
stock
|
-
|
(8,252 | ) |
-
|
||||||||
Retroactive
adjustment of capitalization of retained earnings
|
584,723
|
167,851
|
-
|
|||||||||
Weighted
average number of shares outstanding during the year
|
5,350,187
|
5,762,865
|
6,426,872
|
|||||||||
Basic
earnings per share:
|
||||||||||||
Income
before extraordinary item
|
3.39
|
1.46
|
0.18
|
|||||||||
Extraordinary
item
|
-
|
0.05
|
-
|
|||||||||
Net
income
|
3.39
|
1.51
|
0.18
|
For
the year ended December 31,
|
||||
2006
|
||||
NT$
|
||||
(in
thousands, except for per share data)
|
||||
Net
income for computing diluted earnings per share:
|
1,173,208
|
|||
Weighted
average number of shares outstanding (thousand shares):
|
||||
Shares
of common stock at the beginning of the year
|
5,830,547
|
|||
Potential
number of common shares assumed upon stock options
|
97
|
|||
Common
stock issued in connection with the acquisition of QDI
|
372,817
|
|||
Issuance
of shareholders stock dividends and employee stock bonus
|
223,467
|
|||
Weighted
average number of shares outstanding during the year
|
6,426,928
|
|||
Diluted
earnings per share
|
0.18
|
(10)
|
Goodwill
and other intangible assets
|
(i)
|
Goodwill
|
December
31,
|
||||||||||||
2005
|
2006
|
|||||||||||
NT$
|
NT$
|
US$
|
||||||||||
(in
thousands)
|
||||||||||||
Balance
at beginning of year
|
10,946,732
|
10,946,732
|
335,892
|
|||||||||
Goodwill
acquired during the year
|
-
|
14,288,008
|
438,417
|
|||||||||
Balance
at end of year
|
10,946,732
|
25,234,740
|
774,309
|
(ii)
|
Other
intangible assets
|
December 31, 2005 | ||||||||
Gross
carrying
amount
|
Accumulated
amortization
|
|||||||
NT$
|
NT$
|
|||||||
(in
thousands)
|
||||||||
Amortizable
intangible assets:
|
||||||||
Patents
|
16,200,809
|
10,568,993
|
December
31,
2006
|
||||||||||||||||
Gross
carrying Amount
|
Accumulated
amortization
|
|||||||||||||||
NT$
|
US$
|
NT$
|
US$
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Amortizable
intangible assets:
|
||||||||||||||||
Patents
|
17,230,259
|
528,698
|
12,645,895
|
388,030
|
||||||||||||
Core
technologies
|
3,675,700
|
112,786
|
306,308
|
9,399
|
||||||||||||
20,905,959
|
641,484
|
12,952,203
|
397,429
|
Year
|
December
31, 2006
|
|||||||
NT$
|
US$
|
|||||||
(in
thousands)
|
||||||||
2007
|
2,537,363
|
77,857
|
||||||
2008
|
2,519,455
|
77,308
|
||||||
2009
|
1,161,834
|
35,650
|
||||||
2010
|
241,881
|
7,422
|
||||||
2011
|
241,881
|
7,422
|
||||||
Thereafter
|
1,251,342
|
38,396
|
||||||
Total
|
7,953,756
|
244,055
|
(11)
|
Summarized
financial information of equity method
investees
|
For
the year ended December 31,
|
||||||||||||||||
2004
|
2005
|
2006
|
||||||||||||||
NT$
|
NT$
|
NT$
|
US$
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Current
assets
|
119,652
|
75,622
|
2,320
|
|||||||||||||
Noncurrent
assets
|
69,609
|
88,245
|
2,707
|
|||||||||||||
Current
liabilities
|
108,564
|
80,065
|
2,456
|
|||||||||||||
Long-term
liabilities
|
17,280
|
28,734
|
882
|
|||||||||||||
Minority
interests
|
2,915
|
4,010
|
123
|
|||||||||||||
Stockholders’
equity
|
60,502
|
51,058
|
1,567
|
|||||||||||||
Net
sales
|
177,815
|
183,727
|
255,970
|
7,855
|
||||||||||||
Gross
profit
|
21,458
|
16,217
|
20,958
|
643
|
||||||||||||
Net
income (loss)
|
5,080
|
(2,151 | ) | (31,908 | ) | (979 | ) |