Letter To Shareholders - Mitac

009 

ANNUAL 

REPORT 

StockNo:2315 

2009ANNUALREPORT 

MiTACInternationalCorporation 

July5,2010printed 

Website:htp://newmops.tse.com.tw 

www.mitac.com

1 Spokesman of MiTAC: 

2 

3 

4 

5 

6 

Spokesman: Billy Ho / President 

Acting spokesman: Justine / Senior Manager of 

Corporate Marketing Dep. 

Tel.:886-3-396-2888 / 886-2-2652-5888 

E-mail: stock@mic.com.tw 

Justine@mic.com.tw 

MiTAC International Corp. 

Headquarters & Factory 

No.1, Yuan-Far 2nd Rd., Hsinchu Science Park, Hsinchu 

County, Taiwan (R.O.C.) 

Tel.:886-3-577-9250 

Linko Branch 

No.200, Wunhua 2nd Rd., Gueishan Township, 

Taoyuan County, Taiwan (R.O.C.) 

Tel.:886-3-396-2888 

Nangang Office 

6F., Building B, No.209, Sec. 1, Nangang Rd., Nangang 

Dist., Taipei City, Taiwan (R.O.C.) 

Tel.:886-2-2652-5888 

Stock agent (Stock agency) 

Name: Chinatrust Commercial Bank, Stock agent 

Address: 5F, No.83, Sec. 1, Chung-Chin S. Rd., Taipei 

City, Taiwan (R.O.C.) 

Tel.: 886-2-2181-1911 

Website: http://www.chinatrust.com.tw 

CPAs 

CPAs: Yu-Kuan, Lin and Wei-Cheng, Wang 

CPA Firm: PricewaterhouseCoopers 

Address: 27F, No.333, Sec. 1, Keelung Road, Taipei 

City, Taiwan (R.O.C.) 

Tel.: 886-2-2729-6666 

Website: http://www.pwc.com/tw/ 

Offshore marketable security trade: None 

Website: http://www.mitac.com

Contents 

1. 7. Assessment Letter To Shareholders Of Financial Conditions Operational Results And Potential Risks 1 

2. Company Overview 

7.1. Financial Status, Discussion and Analysis 

7.2. Analysis of Business Results 

2.1. 7.3. Cash Date Flow of Establishment 

Analysis 

2.2. 7.4. Influence Company of Profile Major Capital Expenditures in The Most Recent Year on 

Financial Condition 

7.5. Reinvestment Policy in The Most Recent Year, Causes for Reinvestment 

3.1. 

Income 

Organization 

and Loss, Remedial Measures and The Investment Plan Within The 

3.2. 7.6. Information Risk 

Year 

Management of Directors, Supervisors, Presidents, Vice 

Presidents, Assistant Presidents and Managers 

3.3. Corporate Governance Status 

3.4. CPA’s Dues 

3.5. 

8.1. Information 

New CPAs 

of Affiliates 

3.6. 

8.2. MiTAC’s Stocks Held or Disposed by Its Subsidiaries in Most Recent 

The Transfer and Collateralization of Shares Held by Directors, 

Supervisors, Managers, and Major Shareholders with 

Year and Up to The Publication of This Annual Report 

More Than 10% Ownership Interest During the Latest Year 

Up Until the Publication Date of This Annual Report 

3. Corporate Governance 

8. Special Events Of Record 

3.7. 

3.8. 

Disclosure of Relationships between the Top 10 Shareholders as 

Defined by the Statement of Financial Accounting Standards 

No.6 

Investments in Any Single Enterprise Jointly Held by the 

Company, the Company's Directors, Supervisors, Managers, and 

Enterprises to Which the Company Holds Direct or Indirect 

Controlling Interest; Calculated Shareholding Percentage in 

AggregateAggregate 

4. Capital and Shares 

156 

157 

3 

158 

3158 

158 

6 

8 

159 

20 

29 

29 

164 

174 

30 

31 

33 

4.1. Capital and Stock 

4.2. Debenture Issuance 

4.3. Employee’s Stock Option 

34 

38 

45 

5. Operation Highlights 

5.1. Operation Report 

5.2. Market and Sales Overview 

5.3. Workforce 

5.4. Expenses Incurred to Address Environmental Protection Issues 

5.5. Labor/Management Relations 

5.6. Major Contracts 

58 

72 

80 

80 

83 

86 

6. Financial Statement 

6.1. Balance Sheet and Income Statement in Most Recent Five Years 

6.2. Financial Analysis in Most Recent Five Years 

6.3. Supervisors’ Report of the Most Recent Year 

6.4. The Latest Audited Consolidated Financial Statements 

87 

89 

91 

92

Contents 

1. 7. Assessment Letter To Shareholders Of Financial Conditions Operational Results And Potential Risks 1 

2. Company Overview 

7.1. Financial Status, Discussion and Analysis 

7.2. Analysis of Business Results 

2.1. 7.3. Cash Date Flow of Establishment 

Analysis 

2.2. 7.4. Reinvestment Company Profile Policy in The Most Recent Year, Causes for Reinvestment 

Income and Loss, Remedial Measures and The Investment Plan Within 

The Year 

3. Corporate Governance 

3.1. 7.5. Risk Organization Management 

3.2. Information of Directors, Supervisors, Presidents, Vice 

Presidents, Assistant Presidents and Managers 

3.3. Corporate Governance Status 

3.4. CPA’s Dues 

3.5. 

8.1. Information 

New CPAs 

of Affiliates 

3.6. 

8.2. MiTAC’s Stocks Held or Disposed by Its Subsidiaries in Most Recent 

The Transfer and Collateralization of Shares Held by Directors, 

Supervisors, Managers, and Major Shareholders with 

Year and Up to The Publication of This Annual Report 

More Than 10% Ownership Interest During the Latest Year 

Up Until the Publication Date of This Annual Report 

8. Special Events Of Record 

3.7. 

3.8. 

Disclosure of Relationships between the Top 10 Shareholders as 

Defined by the Statement of Financial Accounting Standards 

No.6 

Investments in Any Single Enterprise Jointly Held by the 

Company, the Company's Directors, Supervisors, Managers, and 

Enterprises to Which the Company Holds Direct or Indirect 

Controlling Interest; Calculated Shareholding Percentage in 

AggregateAggregate 


161 

161 

3 

163 

3164 

6164 

8 

20 

38 

38 

169 

179 

39 

41 

43 

4.1. Capital and Stock 

4.2. Debenture Issuance 

4.3. Employee’s Stock Option 

44 

49 

57 

5. Operations Highlights 

5.1. Operation Report 

5.2. Market and Sales Overview 


5.4. Expenses Incurred to Address Environmental Protection Issues 


5.6. Major Contracts 

70 

84 

92 

92 

95 

98 

6. Financial Standing 

6.1. Balance Sheet and Income Statement in Most Recent Five Years 

6.2. Financial Analysis in Most Recent Five Years 

6.3. Supervisors’ Report of the Most Recent Year 

6.4. The Latest Audited Consolidated Financial Statements 

99 

101 

103 

104

competitiveness 

Letter 

in the market 

To 

of professional 

Shareholders 

outdoor GPS navigation devices, thereby offering more 

variety to MiTAC’s GPS and PND product lines in 2010. 

MiTAC is also in the grasp of the latest and most sought after technology - cloud computing. With 

respect to server and storage devices, MiTAC aims to expand from a standard size server supplier into 

a supplier of mainstream data center products. Its branded product line TYAN will broaden its marketing 

Dear channels ladies for and innovative gentlemen: energy-saving servers and high performance computing (HPC) solutions 

etc. As for terminal products, MiTAC will continue its development of thin clients and Internet connectivity 

First allow products me to express provide my integrated sincere gratitude solutions to for all cloud our shareholders computing. for their support to MiTAC for the 

past year. Although the macro environment in 2009 was still shadowed by the global financial crisis, 

In MiTAC terms still of engaged environmental all challenges policies, and MiTAC continuously is deeply concerned increased about our competitiveness the growing global and core warming technology 

within the In business order to environment. meet the requirements This is the time of future for us greenhouse to muster our gas energy (GHG) reduction and capture standards, oppor- 

phenomenon. 

the tunities company in the activated upcoming greenhouse technological gas trend. inspection mechanisms and implemented the relevant 

energy-saving measures since August 2007. Furthermore, MiTAC successfully introduced a halogenfree 

Revenue, production profitability, process, raised research the standard and of development 

its suppliers management, and acquired green partner 

certification from world renowned Japanese manufacturers in 2009. The company also delivers the 

necessary MiTAC generated environmentally revenues friendly totaling standards NTD 58.039 such billion as low in 2009 toxic, and energy-saving, delivered a net and profit recyclability before tax of 

requirements $376 million; earnings demanded per by share its customers. (EPS) amounted to $0.19. Since the company did not produce any 

public financial forecasts for the year 2009, there is no related data available for this report. 

2010 business overview 

MiTAC is committed to its core value on innovative and revolutionary research and development, thus 

We consistently have recovered provides from more the than bottom 3% of its global revenues economic for research recession. and In development 2010,MiTAC shall expenses focus in on order the to 

growth maintain of its its competitive three main businesses: advantage developing technological high and value-adding product innovation. navigation The software company and also outdoor made 

GPS several devices breakthroughs to achieve in 2010 terms sales of that consumer surpass electronics previous year’s design. level. Its proprietary Target corporate GPS navigation servers and products, 

branded devices Mio, to provide wins innovation cloud computing awards almost solutions; every introduce year. In 2009, innovative several energy-saving of its product servers, lines 

storage 

high-performance including Mio Moov380, servers, Moov410, and high and performance MoovS700 computing all received solutions; the ”IF” design increase award, the market while its share navigation 

cell phone network K75 received coverage the of “Best our TYAN Choice” brand. award As of for Computex terminal products, Taipei. These our efforts acknowledgments shall be focused had 

once the again development proven MiTAC’s of Internet superior connectivity innovative and design thin clients capabilities. computers, thereby enabling closer 

and 

distribution 

technological association between cloud computing and terminal products, as well as market growth. 

The impacts of the external competitive environment, the regulatory environment, 

the coming and the year, overall MiTAC is dedicated business to environment 

providing optimal solutions to consumers all over the world 

In 

based on its core values of “innovation”, “evolution”, “teamwork” etc; offering one-stop shopping, 

supply The recent and global services financial from cloud crisis computing had devastated to consumer the IT industry electronics in 2009; for the all product greatest sales interests except of its 

customers, laptops have employees, declined. The and market shareholders. of PND (Portal Navigation Device) with built-in GPS functions also 

encountered a slight decline. Based on the estimation of market research institution – Canalys, the sale 

of PND reached 38 million worldwide 2009; this was a 7% decline from the 41 million units sold in 2008, 

Best and the regards sales volume is expected to reach 39 million worldwide in 2010. 

There is still potential for the growth of the GPS market. In addition to its continual efforts in the PND 

market, which simultaneously involves entertainment, Internet connectivity, and digital TV functions, 

MiTAC will also be focusing on the development of high value-adding navigation software. The 

consumer oriented GPS navigation brand, Magellan, Chairman purchased Mathew in 2009 Miaucontributed to MiTAC’s 

President Billy Ho

competitiveness 

Letter 

in the market 


of professional 


outdoor GPS navigation devices, thereby offering more 

variety to MiTAC’s GPS and PND product lines in 2010. 

MiTAC is also in the grasp of the latest and most sought after technology - cloud computing. With 

respect to server and storage devices, MiTAC aims to expand from a standard size server supplier into 

a supplier of mainstream data center products. Its branded product line TYAN will broaden its marketing 

Dear channels ladies for and innovative gentlemen: energy-saving servers and high performance computing (HPC) solutions 

etc. As for terminal products, MiTAC will continue its development of thin clients and Internet connectivity 

First allow products me to express provide my integrated sincere gratitude solutions to for all cloud our shareholders computing. for their support to MiTAC for the 

past year. Although the macro environment in 2009 was still shadowed by the global financial crisis, 

In MiTAC terms still of engaged environmental all challenges policies, and MiTAC continuously is deeply concerned increased about our competitiveness the growing global and core warming technology 

within the In business order to environment. meet the requirements This is the time of future for us greenhouse to muster our gas energy (GHG) reduction and capture standards, oppor- 

phenomenon. 

the tunities company in the activated upcoming greenhouse technological gas trend. inspection mechanisms and implemented the relevant 

energy-saving measures since August 2007. Furthermore, MiTAC successfully introduced a halogenfree 

Revenue, production profitability, process, raised research the standard and of development 

its suppliers management, and acquired green partner 

certification from world renowned Japanese manufacturers in 2009. The company also delivers the 

necessary MiTAC generated environmentally revenues friendly totaling standards NTD 58.039 such billion as low in 2009 toxic, and energy-saving, delivered a net and profit recyclability before tax of 

requirements $376 million; earnings demanded per by share its customers. (EPS) amounted to $0.19. Since the company did not produce any 

public financial forecasts for the year 2009, there is no related data available for this report. 

2010 business overview 

MiTAC is committed to its core value on innovative and revolutionary research and development, thus 

We consistently have recovered provides from more the than bottom 3% of its global revenues economic for research recession. and In development 2010,MiTAC shall expenses focus in on order the to 

growth maintain of its its competitive three main businesses: advantage developing technological high and value-adding product innovation. navigation The software company and also outdoor made 

GPS several devices breakthroughs to achieve in 2010 terms sales of that consumer surpass electronics previous year’s design. level. Its proprietary Target corporate GPS navigation servers and products, 

branded devices Mio, to provide wins innovation cloud computing awards almost solutions; every introduce year. In 2009, innovative several energy-saving of its product servers, lines 

storage 

high-performance including Mio Moov380, servers, Moov410, and high and performance MoovS700 computing all received solutions; the ”IF” design increase award, the market while its share navigation 

cell phone network K75 received coverage the of “Best our TYAN Choice” brand. award As of for Computex terminal products, Taipei. These our efforts acknowledgments shall be focused had 

once the again development proven MiTAC’s of Internet superior connectivity innovative and design thin clients capabilities. computers, thereby enabling closer 

and 

distribution 

technological association between cloud computing and terminal products, as well as market growth. 

The impacts of the external competitive environment, the regulatory environment, and the overall 

In business the coming environment year, MiTAC is dedicated to providing optimal solutions to consumers all over the world 

based on its core values of “innovation”, “evolution”, “teamwork” etc; offering one-stop shopping, 

supply The recent and global services financial from cloud crisis computing had devastated to consumer the IT industry electronics in 2009; for the all product greatest sales interests except of its 

customers, laptops have employees, declined. The and market shareholders. of PND (Portal Navigation Device) with built-in GPS functions also 

encountered a slight decline. Based on the estimation of market research institution – Canalys, the sale 

of PND reached 38 million worldwide 2009; this was a 7% decline from the 41 million units sold in 2008, 

Best and the regards sales volume is expected to reach 39 million worldwide in 2010. 

There is still potential for the growth of the GPS market. In addition to its continual efforts in the PND 

market, which simultaneously involves entertainment, Internet connectivity, and digital TV functions, 

MiTAC will also be focusing on the development of high value-adding navigation software. The 

consumer oriented GPS navigation brand, Magellan, Chairman purchased Mathew in 2009 Miaucontributed to MiTAC’s 

President Billy Ho

2007 2009 

2008 

2005 

2006 

2007 

Company Overview 

land Established China and the in North Taiwan American to reinforce Office- its MiTAC R&D capability. Digital Corp. 

Incorporated MiTAC received TYAN Green Computer Partner Corp., Certificate ,a solution from SONY. plan supplier of HPC system. 

TYAN MiTAC then was became awarded a Best new Supplier business of division Year 2009 of MiTAC by Riverbed. International for products 

R&D, MiTAC’s logistic proprietary accesses branded sales. motherboard models: TYAN TN28 and B4988 were 

Awarded ranked 16th the and “Supplier 20th, respectively Meritorious Performance among Supercomputer Award” by Sun Institute’s Microsystems top 500 Inc. 

2.1. Mio Rankings. Date won its of fourth establishment: “Excellent Brand Dec. of Taiwan” 8, 1982 award from Taiwan External Trade 

2.2. Development MiTAC’s Company proprietary Council. milestone branded products: TYAN B7029 and S4982 were widely 

Mio accepted C720t by won its customers, the “Best Choice and received of Computex top rankings Taipei 2007. among the world’s top 500 

Indirect investment of US$4.2 million in MiTAC Research (Shanghai) to strengthen 

Mio HPC A702 providers. & P560 won the “iF Design Award China 2007” award. 

its R&D capabilities and raise its overall competitiveness. 

Being MiTAC’s selected proprietary as the branded excellent products: vendor of TYAN “Potential S8208 99 and -- S5376 Taiwan” were by the used ETtoday by the 

Indirect investment of US$5.5 million in MiTAC Technology (Suzhou) Co., Ltd. to 

TV world’s channel. most popular websites including MSN and Amazon. 

strengthen its vertically integrated capabilities and increase its competing ability. 

Canalys MiTAC’s data proprietary indicated branded that “Mio” products: brand Mio became Moov380, worldwide Moov410, top 3 and of navigation MoovS700 

To handle the second underwriting at SYNNEX Corporation, an American based 

products received IF suppliers. design awards. 

subsidiary of MiTAC, and realized its gains. MiTAC disposed of a portion of its 

Globally MiTAC’s proprietary first launched branded the HPC-flex products: BLADE Mio bare-bones K75 navigation system cell for phone workgroups. received 

stocks, which value was approximately US$38 million. 

Using the Best an Choice upgraded award cooling during mechanism Computex design Taipei. and noise control to upgrade the 

Ranked #67 by Business Week for the Tech 100 list. 

HPC Invested server’s NTD work 150 million environment into Loyalty to an ordinary Founder office Enterprise and realized CO., Ltd.; the acquired personal 

Awarded the “Best Quality Supplier of the Year” by Dell Computer, “Best Supplier 

HPC 25.24% idea. ownership interest to enhance vertical integration, create synergies from 

Performance” by Fujitsu Siemens, and “Supplier Excellence Award” by NEC. 

Launched the strategic the alliance, first global and AMD improve Opteron overall Double customer 1U server, service which quality. associates two 

server motherboards into one 1U rack to maximize the space density of the 

rack-based Ranked #71 servers. by Business Week for the Tech 100 listing. 

Exclusively Awarded the acquired “Preferred the Quality Intel Qualified Supplier Server Award” Board by Intel. (IQSB) certification on highend 

Awarded servers, the and “Supplier became Meritorious the only vendor Performance of IQSB Award” plan. by Sun Microsystems Inc. 

Incorporated Mio Technology, Korea to enter Korean market. 

MiTAC signed the contract to be the ONLY navigation devices sponsor in 2010 

Mio DigiWalker H610 was awarded with the “iF design Award China 2006”. 

Shanghai EXPO. 

8.5” portable TV MPV-800 was awarded with the “iF Product Design Award 2007”. 

Mio C230 awarded the “iF Design Award 2008”. 

Mio DigiWalker H610 was ranked on “The Best 20 Products in 2006” by Business 

Mio Leap K1Moov380 and G50 awarded the “iF Design Award 2009”. 

Week. 

Motherboards TN28 and B4988 of TYAN were the 16th and the 20th places at 

Mio DigiWalker H610 was listed by Times magazine at the “Cool Gear 2006 Tech 

Supercomputer Institute Top 500 respectively. 

Buyer’s Guide”. 

NASA chose the Thunder N 6659 W s2915 of TYAN. 

Awarded the “Excellent Supplier” by Sun Microsystems Inc. 

In order to upgrade the competitive advantage of wireless satellite navigation 

Awarded the “Outstanding Supplier” by HP. 

system and global market share, MiTAC had merged the Navman trademark of 

To expand the portable navigation devices and to open new markets, MiTAC 

the Brunswick Corporation and its operating assets and liabilities (excluding cash) 

acquired Magellan’s GPS consumer products divisions, including the brand name, 

and all equipment at Navman Europe Ltd., Naviart Ltd., and Naviart Information 

Magellan, and its related technology and net assets. 

Technology (Shanghai) Co. Ltd. 

Incorporated Navman Technology Australia PTY Ltd. in Sydney, Australia for 

entering local market. 

Incorporated Navman Technology NZ Ltd. in Oakland, New Zealand to enter local 

market. 

Established the mobile communication R&D Centers in Cheng Du City in Main-

2007 2009 

2008 

2005 

2006 

2007 










































Week. 



















market. 


2007 2009 

2008 

2005 

2006 

2007 










































Week. 



















market. 


Corporate Governance 

3.1. Organization 

Shareholders’ Meeting 

Supervisors 

Board of Directs’ Meeting 

Audit Office 

Chairman 

Preside 

Finance Center 

Legal Affairs Center 

Human Resource Development Center 

Corporate Marketing Dep. 

MIS Center 

Coporate Knowledge Management Center 

Technical Support & Service Center 

Purchase Center 

Engineering R&D Center 

Advanced Technologies R&D Center 

Research & Test Dep. 

Enterprise Business Unit 

Client Business Unit 

Mobile Communication Product 

Business Unit 

TYAN Business Unit 

Consumer Product Brand Business Unit 

3.1.1 Organization chart (April 30, 2010)

3.1.2 Responsibilities of major departments 

Departments 

Audit Office 

Financial Center 


Human Resources 

Development Center 

Corporate Marketing 

Department 

MIS Center 

Corporate knowledge 

Management Center 

Technical Support & 

Service Center 

Procurement Center 

Engineering R&D Center 

Advanced Technologies 

R&D Center 

Engineering Design 

Validation Division 

Mobile Communications 

Products Business Unit 

Client System Business 

Unit 

Enterprise Products 

Business Unit 

TYAN Business Unit 

Brand Business Unit 

Responsibilities 

‧ Examine and evaluate internal control mechanisms to ensure they are 

thorough and effective; provide analysis, evaluations, and recommendations. 

‧Financial operations and planning. 

‧Perform research to assess domestic and overseas investment opportunities. 

‧Capital planning and accounting and tax procedures handling. 

‧Coordination of board of directors and shareholder meetings. 

‧Draft and review contracts. 

‧Provide legal consulting services and support and handle other legal 

matters. 

‧Strategy stipulation and management of human resources and administrative 

affairs. 

‧Manage media and investor relationship; 

‧Enhance MiTAC image internally and externally. 

‧Support BtoB BU’s marketing activities. 

‧Promote digitalized operations of global branches and headquarters. 

‧Administration and maintenance of the company’s internal system and 

network environment. 

‧Improvement of workflow and e-commerce. 

‧After-sale customer service. 

‧Overseas technical support. 

‧In charge of strategy development and management for procurement center. 

‧Provides safety certification and EMI compatibility support. 

‧In charge of research and development for future products technologies and 

specifications. 

‧In charge of test of R&D design for compatibility and reliability. 

‧In charge of R&D, sales, and promotion for mobile and wireless 

communications products. 

‧In charge of R&D, sales, and promotion for computer products audio/video 

multimedia products and Digital home products. 

‧In charge of R&D, sales, and promotion for enterprise professional system 

products. 

‧In charge of R&D, sales, and promotion for TYAN brand’s enterprise 

professional system products. 

‧In charge of R&D, sales, and promotion for brand consumer electronic 

products. 

7

3.2. Information of Directors, Supervisors, president, Vice presidents, Assistant presidents, and managers of each department and 

division 

3.2.1 Directors and Supervisors 

Titles Names Date Elected Term 

Date First 

Elected 

Shares held at time of 

election 

Number of shares held 

Shares currently 

held by spouse or 

dependents 

Shares held under 

other name 

Shares Stake Shares Stake Shares Stake Shares Stake 

Chairman Mathew Miau 06.12. 2007 3-y 05.17. 1986 18,192,800 1.42% 21,805,999 1.42% 0 0.00% 0 0.00% 

Director Billy Ho 06.12. 2007 3-y 05.18. 2004 3,572,158 0.28% 4,823,727 0.31% 0 0.00% 0 0.00% 

Education and Experience 

Santa Clara University, 

EMBA 

California Berkley 

University, 

Bachelor, Electrical 

Engineering 

MIS in Computer Science, 

Fairleigh-Dickinson 

University 

Master UC San Diego 

Marketing Manager, Pao 

Hwa 

Trading Co., Ltd. 

Positions currently held at MiTAC 

or other companies 

CEO MiTAC International Corp. 

Chairman, SYNNEX International 

Corp. 

Chairman, Lien Hwa Industrial Corp. 

Chairman, UPC Group 

vice-president, MiTAC Inc. 

president, MiTAC International 

Corp. 

Director, Gemtek Technology Corp. 

Director, Harbinger Venture Capital 

Director, 3-Probe Technologies Co., 

Ltd. 

Director, Loyalty Founder Enterprise 

corp. 

Chairman, DLC Technology Corp. 

Chairman, MIO Technology Corp. 

Apr. 20, 2010 

Spouse or kin within two degrees of 

consanguinity who is executive, 

director, supervisor 

Title Name Relationship 

None None None 


Director MiTAC Inc. 06.25.2008 3-y 06.25.2008 117,747,205 8.08% 122,456,572 7.97% 0 0.00% 0 0.00% None None None None None 

Director 

Director 

UPC Technology 

Corp. 

Rep.Yung-Do 

Way 

UPC Technology 

Corp. 

Rep. Simon Wu 

06.12.2007 3-y 02.29.1989 115,493,040 9.01% 129,628,156 8.44% 0 0.00% 0 0.00% 

06.12.2007. 3-y 02.29. 1989 115,493,040 9.01% 129,628,156 8.44% 0 0.00% 0 0.00% 

Supervisor Arthur Chiao 06.12.2007 3-y 05.18. 2004 0 0% 0 0.00% 0 0.00% 0 0.00% 

Supervisor 

Lien Hwa 

Industrial Corp. 

Rep: Hu-Shi, 

Charles Ching 

06.12.2007 3-y 06.17.1986 81,634,160 6.37% 91,625,310 5.96% 0 0.00% 0 0.00% 

MBA of Georgia 

University 

BA of Accountancy, 

Soochow University 

Director of Deloitte China 

Director of DTT 

CEO of Deloitte 

Independent Director of Delsolar 

Co., Ltd 

MBA, University of Dallas Assistant president, UPC 

CFO, Acer Group affiliated Technology 

company 

Executive VP for Finance 

President of Wei Chen Investment 

Co. 

Best Power Technology 

(U.S.) 

MSEE and researcher in 

Business Administration, President of Walsin Lihwa 

Washington University 

President of Winbon 

Master of Engineering at 

National Tsing Hua 

University 

Council for Economic 

Planning and Development 

President and GM of Lien Hwa 

Industrial Corp. 

Director of Synnex Technology 

International Corp. 





8

Names 

Chairman 

Mathew Miau 

Director 

Billy Ho 

Director 

MiTAC Inc. 

Rep. Yun Kuo 

Qualifications 

Director 

UPC Technology Corp. 

Rep. Yung-Do Way 

Director 


Rep. Simon Wu 

Supervisor 

Lien Hwa Industrial Corp. 

Rep: Charles Ching 

Supervisor 

Arthur Chiao 

College 

Instructors in 

accounting, 

finance, law 

and Business 

Information of Directors and Supervisors 

With qualifications below and 

five-year above experiences 

Judge, Prosecutor, 

Lawyer, CPA or 

other national 

certified 

specialists 

- - 

Work 

Experience in 

business, law 

affairs, 

accountancy or 

other company 

sales 

Independency(Note ) 

1 2 3 4 5 6 7 8 9 10 

People in 

charge of 

other 

public 

companies 

- - - - - - 

- - - - - - - 

- - - - - - - 

- - - 1 

- - - - - - 

- - - - - - - 

- - - - 

Notes: Please check under each box when all Directors and Supervisors fit the descriptions two years before elected and during the term. 

If: 

1. Not an employee of MiTAC and any of the company’s affiliates. 

2. Not a director or supervisor of the company or any of the company’s affiliates (except for the independent directors of the company or 

the parent company of the company and the subsidiary invested by the company directly or indirectly with over 50% shareholding). 

3.Not an individual shareholder owning more than 1% of the company’s outstanding shares nor one of the company’s ten largest 

shareholders. 

4. Not the spouse or relative within two degrees of lineal consanguinity with any person described by conditions [1] or [2]. 

5. Not a director, supervisor, or employee of an institutional shareholder of the company directly or indirectly owning more than 5% of 

the company’s outstanding shares of one of the company’s five largest institutional investors. 

6. Not a director, supervisor, or manager of, nor a shareholder owning more than 5% of the outstanding shares of, any companies or 

institutions that have a financial or business relationship with the company. 

7. Not an individual who has provided financial, business, or legal services or consultancy to the company during the past year, nor the 

owner, partner, director, supervisor, or manager [or spouse of any of the foregoing] of any sole proprietor, partner, company, or 

institution that has provided financial, business, or legal services or consultancy to the company during the past year. 

8. Not the spouse or relative within two degrees of lineal consanguinity with any director. 

9. Not committing an act that is defined by Section 30 of the Company Law, Republic of China. 

10. Not a legal entity [institution] or representative as defined by Section 27 of the Company Law, Republic of China. 

9

Titles 

3.2.2 President, Vice president, Assistant president, and managers 

Names 

Dates took 

position 

Shares held 

Shares held by 

spouse or 

dependents 

Shares held 

under other 

name 

Shares Stake Shares Stake Shares Stake 

CEO Matthew Miau 09.01.1998 21,805,999 1.42% 0 0.00% 0 0.00% 

Education and experience 

Positions currently held at 

MiTAC or other companies 

Santa Clara University, EMBA Chairman, SYNNEX Technology 

California Berkley University, International Corp. 

Bachelor, Electrical Engineering Chairman, Lien Hwa Industrial Corp. 

Chairman, UPC Group 

Vice president, MiTAC Inc. 

Apr 20, 2010 

Spouse or kin within two 

degrees of consanguinity 

who is manager 



President Billy Ho 03.27.2000 4,823,727 0.31% 0 0.00% 0 0.00% 

MIS in Computer Science, Director, Harbinger Venture Capital 

Fairleigh-Dickinson University Chairman, MIO Technology Corp. 

Master UC San Diego Marketing Director, 3-Probe Technology Co., 

Manager, Pao Hwa Trading Co., Ltd. 

Ltd. 


corp. 

Director, Gemtek Technology Corp. 

Chairman, DLC Technology Corp. 


BA of EE of National Taiwan U. 

Senior Vice 

president 

C. J. Lin 

06.15.2007 137,180 0.01% 1,102 0.00% 0 0.00% 


corp. None None None 

Vice 

president 

Percy Chen 03.20.1997 770,626 0.05% 0 0.00% 0 0.00% 

Department of Business 

Management, National Sun 

Yat-Sen U. 

Department of Electronics, 

National Taipei U of Technology. 

Manager, MiTAC Inc. 

Director of Mio Technology 

Director of 3 Probes Technologies 


(CONTINUED) 

10

Titles 

Names 

Dates took 

position 

Shares Held 


spouses or 

dependents 

Shares held 

under other 

name 

Education and experiences 






Shares Stakes Shares Stakes Shares Stakes 

Ph.D., School of Law, Rutgers U. 

Vice 

president James Yuan 06.06,1997 230,003 0.01% 0 0.00% 0 0.00% MJ of Washington University 

Baker & McKenzie 

Director of Mio Technology 

Director of DLC Technology 

Corp. 



Vice 

president 

Vice 

president 

Vice 

president 

Vice 

president 

Vice 

president 

Ted Chang 09.01,1999 5 0.00% 0 0.00% 0 

Department of Medical 

Engineering, Chung Yuan 

0.00% Christian U. 

Engineer, Shen-Jar Engineering 

Co. 

MBA, National Chengchi U. 

B.S., Dept. of Electrical 

Engineering, National Chiao 

Stone Chen 07.01,2002 1,573,310 0.10% 0 0.00% 0 

Tung U. 

0.00% 

Office Manager, Nexcom 

International Co., Ltd. 

Manager, TeleSynery Research 

Inc. 

MBA of National Chiao Tung U 

Michael Lin 07.01,2002 2,149,408 0.14% 11,420 0.00% 0 0.00% Dept. of Electrical Engineering, 

National Taiwan U. 

EMBA of National Taiwan U 

MA in EE, National Taiwan U 

Jack Kuo 03.27,2002 729,039 0.05% 0 0.00% 0 

Vice president, Clevc Computer 

0.00% 

Co. 

Deputy Office Manager, Tatung 

Inc. 

MBA of National Chiao Tung U. 

C.P. Li 02.25,2004 684,756 0.04% 0 0.00% 0 

Lecturer, National Defense 

0.00% 

College 

Sales Director, MiTAC Inc. 

(CONTINUED) 

None None None None 





11

Titles 

Vice 

president 

Vice 

president 

Vice 

president 

Vice 

president 

Vice 

president 

Vice 

president 

Names 

Dates took 

position 

Shares Held 


spouses or 

dependents 

Shares held 

under other 

name 


James Wu 11.04,2004 349,259 0.02% 9,982 0.00% 0 0.00% 

Alice Fang 02.23,2005 736,483 0.05% 0 0.00% 0 0.00% 


MA of EE, Tatung U 

Two years of PhD research, EE, 

Tatung U. 

Certified Electrical Engineer 

Office Manager, Department of 

R&D, 

Marketing and Product Planning, 

Tatung Corp. 

MA of Technology Management, 

National Chengchi U. 








Director of Shen-Tong 

Construction & Development 

Co., Ltd. 


Johnson Wang 12.19,2007 199,532 0.01% 5,884 0.00% 0 0.00% MBA, Duland University None None None None 

Crystal Yang 

02.17,2009 50,868 0.00% 0 0.00% 0 0.00% 

MBA of National Taiwan U 

Sr. Director of MiTAC Finance 

Consulting Center 

Finance, Sales and Project 

Manager of Hwa-Hsia Leasing & 

Financial Corp 

Steve Chang 06.18,2009 1,208 0.00% 0 0.00% 0 

EMBA, National Taiwan 

University 

Department of Electrical 

0.00% Engineering, National Taiwan 

University 

Engineer of Silicon Integrated 

System Corp. 

Department of Electrical 

Engineering, National Taiwan 

King Chen 06.18,2009 1,247,654 0.08% 0 0.00% 0 

University 

0.00% 

Senior Consultant of The 

President’s Office, MiTAC 

International Inc. 

(CONTINUED) 

Director of Harbinger Venture 

Management 

Supervisor of Shen-Tong 

Construction & Development 

Co., Ltd. 

Supervisor of Synnex 

Technology International Corp. 

Direct of DLC Technology 

Corp. 


12

Titles 

Vice 

president 

Vice 

president 

Vice 

president 

Accounting 

Manager 

Names 

Dates took 

position 

Shares Held 


spouses or 

dependents 

Shares held 

under other 

name 



Albert Mu 08.24,2009 100,000 0.01% 0 0.00% 0 

Master of Engineering Administration, 

Stanford University 

Master of Electronics and Electrical 

Engineering, The University of Texas at 

Austin 

Bachelor of Electronic Engineering, 

National Chiaotung University 

President of Intel Global Server Innovation 

0.00% 

Corp. 

Promise Corp.Vice President 

Chief of Technology, Wistron 

Corporation 

Vice President of Clarent Corp. 

Senior Manager of Cisco 

Manager of Hal Computer 

Manager of MIPS Computer 

EMBA, National Taiwan University 

Department of Electronicsm National 

J.J.Huang 01.25,2010 0 0.00% 0 0.00% 0 0.00% Taipei University of Technology 

Head of Quality Control, Ji Yeh 

Electronics., Ltd. 

EMBA, National Central University 

Bachelor of Mechanical Engineering, 

National Cheng Kung University 

Vice President of MiTAC Production 

Center 

Bjorn Tsai 01.25,2010 691 0.00% 0 0.00% 0 

Operations and HP ODM Vice President 

0.00% 

of First International Computer Inc 

Business Vice President of Premier Image 

Technology Corporation 

Procurement Assistant Manager of HP 

Taiwan 

Procurement Department of TI Taiwan 

Tracy Ting 

BA in Accounting at TamKang U 

02.17,2009 0 0.00% 0 0% 0 0% 

Sr. Specialist at Acer Inc. 

Positions currently held 

at MiTAC or other 

companies 






13

Titles 

3.2.3 Remuneration for directors, supervisors, President, and vice President 

Names 

Compensation (A) 

MiTAC 

In the 

consolidate 

MiTAC 

d financial 

statement 

Compensation for Directors 

Pensions (B) 

In the 

consolidate 

MiTAC 

d financial 

statement 

Allocated 

earnings 

(C) (Note 1) 

In the 

consolidate 

MiTAC 

d financial 

statement 

Occupational 

Compensation 

(D) 

In the 

consolidate 

d financial 

statement 

Compensation for Directors 

Total amount 

(A+B+C+D) 

as a percentage of 

2008 net income 

(%) 

MiTAC 

In the 

consolidate 

MiTAC 

d financial 

statement 

Salaries, prize 

monies, and 

special allowances 

(E) 

In the 

consolidate 

MiTAC 

d financial 

statement 

Part-time Employee bonuses 

Pensions (F) 

(Note 4) 

In the 

consolidate 

d financial 

statement 

Employee bonuses (G) 

(Note 1) 

MiTAC 

In the 

consolidated 

financial 

statement 

Number of shares 

obtained as 

employee stock 

options (H) 

MiTAC 

In the 

consolidate 

MiTAC 

d financial 

statement 

Unit: NT$ Thousand/1,000 shares 


(A+B+C+D+E+ 

F+G) as a 

percentage of 2008 

net income (%) 

In the 

consolidate 

d financial 

statement 

Compensation 

from 

investment 

other than 

MiTAC 

subsidiary 

Cash Stocks Cash Stocks 

Chairman Matthew Miau 

Director Billy Ho 

UPC 

Technology 

Director Corp. 

Rep. Yung-Do, 

Way 

408 408 - - 1480 1480 100 100 0.69% 0.69% 4,074 4,074 78 78 912 - 912 - 4,800 4,800 2.44% 2.44% Yes 

UPC 

Director 

Technology 

Corp. 

Rep. Simon Wu 

Director 

MiTAC Inc. 

Rep. Yun Kuo 

Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholders’ Meeting for approval. 

Note 2: The total remuneration amount of MiTAC and the companies in the consolidated financial statements this year amounting to 0.69% of net income is higher than the 0.45% in 2008, but the overall compensation is lower due to the low 

profits than before. 

Note 3: The Statement of Retained Earnings is prepared for the distribution of remuneration to the directors and is submitted to the Board of Directors meeting and the Shareholder’s meeting for distribution. The amount the Board approves is 

based upon the company charter and the standard in the industry. 

Note 4: Pensions funded according to the applicable law. 

(CONTINUED) 

14

Below 2,000,000 

Remuneration 

Ranking to 

MiTAC’s directors 

Matthew Miau / Billy Ho / UPC 

Technology Corp. Rep. Yung-Do 

Way, Simon Wu / MiTAC Inc./ Yun 

Kuo 

Table of Remuneration 

Directors 

Total amount (A+B+C+D) 

In the consolidated 

MiTAC 

financial statements 

(I) 

Matthew Miau / Billy Ho / 

UPC Technology Corp. Rep. 

Yung-Do Way, Simon Wu / 

MiTAC Inc./ Yun Kuo, 

Total amount (A+B+C+D+E+F+G) 


MiTAC 


(J) 


Rep. Yung-Do Way, 

Simon Wu / MiTAC Inc. / 

Yun Kuo 


Rep.Yung-Do Way, 

Simon Wu / MiTAC Inc./ 

Yun Kuo 

2,000,000 (included)~5,000,000 - - Matthew Miau/ Billy Ho Matthew Miau/ Billy Ho 

5,000,000 (included)~10,000,000 - - - - 

10,000,000 (included)~15,000,000 - - - - 

15,000,000 (included)~30,000,000 - - - - 

30,000,000 (included)~50,000,000 - - - - 

50,000,000 (included)~100,000,000 - - - - 

Over 100,000,000 - - - - 

Total 7 7 7 7 

15

Titles 

Supervisor 

Names 

Arthur Chaio 

MiTAC 

Compensation (A) 

In the consolidated financial 

statement 

Compensation for Supervisors 

Supervisor Compensation 

Allocated earnings 

(B) (Note 1) 

MiTAC 

In the 

consolidated 

financial 

statement 

Occupational 

compensations (C) 

In the 

consolidated 

MiTAC 

financial 

statement 

Total amount (A+B+C) 

as a percentage 

of 2008 net income (%) 

MiTAC 

In the 

consolidated 

financial 

statement 

Unit: NT$ Thousand 

Compensation 

from 

investment 

other than 

MiTAC’s 

subsidiaries 

Lien Hwa Industrial 144 144 520 520 24 24 0.24% 0.24% Yes 

Supervisor Corp. Rep: Charles 

Ching 

Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholders’ Meeting for approval. 

Note 2: The total remuneration amount of MiTAC and the company in the consolidated financial statement this year amounting to 0.24% of net income is higher than the 0.13% in 2008, but the 

overall compensation is lower due to the low profits than before. 

Note 3: The Statement of Retained Earnings is prepared for the distribution of remuneration to supervisors and is submitted to the Board of Directors meeting and the Shareholder’s meeting for 

distribution. The amount the Board approves is based upon the company charter and the standard in the industry. 

Note 4: Pensions funded according to the applicable law. 

Remuneration Ranking to 

MiTAC’s supervisors 


Supervisors 

Total amount (D) 

In the consolidated statement (D) 

MiTAC 

Arthur Chiao / Lien Hwa 

Below 2,000,000 

Industrial Corp. / 

/ Charles Ching 

2,000,000 (included)~5,000,000 - - 

5,000,000 (included)~10,000,000 - - 

10,000,000 (included)~15,000,000 - - 

15,000,000 (included)~30,000,000 - - 

30,000,000 (included)~50,000,000 - - 

50,000,000 (included)~100,000,000 - - 

Over 100,000,000 - - 

Total 3 3 

Arthur Chiao / Lien Hwa Industrial Corp. / 

/ Charles Ching 

16

Titles 

Names 

MiTAC 

Salaries (A) 

In the 

consolidated 

financial 

statements 

MiTAC 

Pensions (B) 

(note 5) 

Compensations for President and Vice president 

In the 

consolidated 

financial 

statements 

Prize monies & special 

allowances (C) 

MiTAC 

In the 

consolidated 

financial 

statements 

Employee bonuses from allocated earnings 

(D) (Note 1) 

MiTAC 



Cash Stocks Cash Stocks 

Total 

amount(A+B+C+D) 

as a percentage 

of 2008 net income(%) 

In the 

consolidated 

MiTAC 

financial 

statements 

Unit: NT$ Thousand / 1,000 shares 


obtained as employee 

stock options 

MiTAC 

In the 

consolidated 

financial 

statements 

CEO Matthew Miau 

President Billy Ho 

Senior Vice 

C.J. Lin 

president 

Vice president Percy Chen 

Vice president Johnson Wang 

Vice president James Yuan 

Vice president Ted Chang 

Vice president Stone Chen 

Vice president Michael Lin 

Vice president Crystal Yang 

Vice president Jack Kuo 

Vice president C.P. Lee 

Vice president James Wu 

Vice president King Chen 

Vice president Albert Mu 29,962 35,329 13,189 13,189 - - 3,534 - 3,534 - 16.14% 18.00% 17,630 17,630 Yes 

Vice president Steve Chang 

Vice president Alice Fang 

Stone Lin 

Vice president (Retired on Mar 

9, 09) 

Samuel 

Senior Vice 

Wang(Quit on 

president 

June 5, 09) 

Robert 

Yang(Quit on 

Vice president 

November 1, 

09) 

C.S. Chen 

Vice president (Retired on Feb 

17, 09) 

Note 1: Distribution of retained earnings proposed by the Board of Directors before presenting it to the Shareholder’s Meeting for approval. 

Note 2: The total remuneration amount of MiTAC this year amounting to 16.14% of net income is lower than 16.28% in 2008, due to the low profits than before. 

Note 3: The total remuneration amount of the company in the consolidated financial statements this year amounted to 18.00% of net income is lower than the 19.26% in 2008, the lower profits is due to the global recession. 

Note 4: The remuneration to President and Vice president depends on their performance and contribution to the company and the standard of the industry. 

Note 5: Total paid pension is NT$ 11,955 thousand. 

(CONTINUED) 

Compensatio 

n from 

investment 

other than 

MiTAC‘s 

subsidiaries 

17

Remuneration ranking to president & Vice president 

Below 2,000,000 

2,000,000 (included)~5,000,000 


MiTAC 

Albert Mu/ Steve Chang /King Chen/ Samuel Wang / Robert 

Yang 

C.J. Lin/Percy Chen/James Yuan/ Ted Chang/Stone Chen/ 

Michael Lin/Stone Lin/Jack Kuo/ /C.P. Lee/James Wu/ Alice 

Fang/ /Johnson Wang/ Matthew Miau / Billy Ho/Crystal Yang 

President & Vice president 

In the consolidated financial statements 

Albert Mu/ Steve Chang /King Chen/ Samuel Wang / 

Robert Yang 

C.J. Lin/Percy Chen/James Yuan/ Ted Chang/Stone 

Chen/ Michael Lin/Stone Lin/Jack Kuo/ /C.P. Lee/James 

Wu/ Alice Fang/ /Johnson Wang/ Matthew Miau / Billy 

Ho/Crystal Yang 

5,000,000 (included)~10,000,000 C.S. Chen C.S. Chen 

10,000,000 (included)~15,000,000 - - 

15,000,000 (included)~30,000,000 - - 

30,000,000 (included)~50,000,000 - - 

50,000,000 (included)~100,000,000 - - 

Over 100,000,000 - - 

Total 21 21 

18

Managers Receiving Employee Bonuses 


Titles Names Stock bonuses Cash bonuses Total 

Total as a percentage of 

2008 net income (%) 

CEO 

Matthew Miau 

President 

Billy Ho 

Manager 

Senior Vice 

president 

















Senior Vice 

president 


C.J. Lin 

Crystal Yang 

Steve Chang 

Johnson Wang 

Alice Fang 

Percy Chen 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

King Chen 

Jack Kuo 

Albert Mu 

C.P. Lee 

James Wu 

Stone Lin (Retired 

on Mar. 9, 2009) 

C.S. Chen (Retired 

on Feb. 17, 2009) 

Samuel Wang (Quit 

on June 5, 09) 

Robert Yang(Quit 

on Nov. 1, 2009) 

Tracy Ting 

- 3,609 3,609 1.25% 

Accounting 

manager 

Note: Distribution of retained earnings was proposed by the Board of Directors before presenting it to the Shareholders’ 

Meeting. 

19

3.3 Corporate Governance Status 

3.3.1 Meetings held by the Board of Directors: the Board of Directors held 10 (A) 

meetings in 2009. The attendance is as follows: 

Titles 

Names 

Actual 

attendance (B) 

Frequency 

of proxy 

Actual attendance rate 

(B/A) (%) 

Chairman Matthew Miau 10 0 100.00% 

Director Billy Ho 10 0 100.00% 

Remarks 

Director 

MiTAC Inc. 

Rep. Yun Kuo 

10 0 100.00% 

Director 

Director 


Rep. Yung-Do Way 


Rep. Simon Wu 

9 1 90.00% 

10 0 100.00% 

Other Remarks: 

1. For the occurrence of events that are stated in Article 14.3 of Securities and Exchange Law and 

resolutions of the Board of Directors meeting that have the objection or reservation of independent 

directors documented or in writing - The date and term of the Board of Directors’ meeting, the 

content of proposal, the opinions of all independent directors, and the response of the company to the 

opinions of all independent directors must be detailed: None. 

2. For discussion to sell Nei-Hu office building on March,10,2009. Chairman Matthew Miau and 

director Yun Kuo avoided the discussion and voting with conflicting interest. The rest of directors 

agreed unanimously. 

3. The evaluation and the reinforcement of the functions of the Board of Directors in the year and in 

recent years (i.e., setup an Auditing Committee and improving data transparency): MiTAC completed 

a “Regulations Governing Procedure for Board of Directors Meetings” and have been put into 

practice. The attendance and on-the-job training of directors and supervisors are disclosed 

periodically on MOPS for the realization of data in time and transparency. The job functions of the 

Board of Directors will be reinforced at any time in accordance with the requirement of laws and 

business management of the company. 

20

3.3.2 Supervisors’ participation of Meeting Held by the Board of Directors: The Board of 

Directors held 10 (A) meetings in 2009. The attendance is as follows: 

Titles 

Names 

Actual attendance 

(B) 

Actual attendance rate 

(%) (B/A) 

Remarks 

Supervisor Arthur Chiao 6 60% 


Supervisor 

Rep: Charles Ching 

Other Remarks: 

9 90% 

1. Supervisor’ s chosen and their duties: 

(1) Communication with staff and shareholders: in addition to people in charge of reporting to 

supervisors periodically, all Supervisors are entitled to contact any employee for information. 

(2) Communication with the internal auditors and CPAs: Supervisors are entitled to investigate 

company’s operation and finance and to require the Board of Directors and Managers for 

reports and can contact CPAs when necessary; all internal auditors will report to all Supervisors 

periodically. 

2. When appearing at a Board meeting, any Supervisor makes a statement during the meeting; the 

statement will be listed in the minutes and along with the meeting date, quarter, agenda, agreement and 

the actions for Supervisor’s statements: None. 

21

3.3.3 Enforcement of Corporate Governance Implemented by the Company and Reasons for Differences 

Items Status Differentiation with other publicly-traded companies and why 

1. The company’s equity structure and 

shareholder rights 

(1) The company’s approach to handling 

shareholder’s recommendations or 

disputes. 

(2) Information held on the identities of 

major shareholders and their ultimate 

controlling person. 

(3) The establishment of risk control 

mechanism and firewalls with affiliate. 

2. Constitution of the Board of directors 

and their responsibilities 

(1) The election of independent directors. 

(2) The regular evaluation by the 

independent CPA. 

3. The situation to build the communication 

with stakeholders 

(1) The company has a spokesperson to handle shareholder’s 

recommendations, questions, and disputes. 

(2) The company controls the list of major shareholders and the 

people who control them. And by the “Securities and 

Exchange Law”, the company reports the number of shares 

held by the directors, supervisors, and major shareholders. 

(3) The company has a strong internal control and has been 

executing it. Besides the implementation of self checks, the 

Board and the management review the audit reports and the 

No substantial differences. 

results of self check regularly and irregularly in order to put 

the internal control system into practice. With the auditing 

system, we comply with the requirement of the complete 

finances, sales, and accounting for a public firm and we 

reinforce the regulation and the management of affiliates to 

lower the operation risks. Our relationship with affiliates is 

fair and reasonable. All procedures for financial and sales 

activities with affiliates follow the written regulations. 

(1) The company does not have independent supervisors. But all (1) MiTAC has not yet reached the standard to have an independent 

directors execute by law, the company charter, and Director according to the Securities and Exchange Law or Letter 

shareholders’ meeting agreements. 

of (95) FSC rule No.0950001616. 

(2) The company evaluates the CPA’s independency annually and (2) When an independent director becomes necessary, the company 

considers the need to replace a new CPA every five years. All will follow the “Corporate Governance Best-Practice Principles 

CPAs are appointed by the Board and have no common for TSEC/GTSM Listed Companies” and relevant law. 

interests with the company. Additionally, all appointed CPAs 

are from professional and independent CPA firm in Taiwan. 

Parties whose interests are affected by the actions of the company can 

contact the company through MiTAC spokesperson or his/her proxy 

at any time. The hotlines are: 886-3-396-2888 / 886-2-2652-5888, 

email: stock@mic.com.tw /justine@mic.com.tw。 

Fits the operation and concept of the “Corporate governance 

practices for publicly listed companies” and relevant law. 

(CONTINUED) 

22


4. Information transparency 

(1) Set up a website showing information 

about the company’s finances and 

corporate governance policies. 

(2) The company use of other means (i.e. 

the setup of an English website, the 

designation of a specialist to collect and 

disseminate company information, 

implement a spokesperson system, 

publication of procedures for 

institutional investors’ meeting on 

company’s website). 

5. If the company establishes a nomination 

committee or remuneration committee 

(1) The company’s official website is http://www.mitac.com, and 

designed a section to release financial and sales data for 

investors. 

(2) The company has a spokesperson and an acting spokesperson. 

(3) All Information disclosed by law is posted on the “Market 

Observation Post System” for investors. 

The company does not have a nomination committee or a 

remuneration committee. 

23 

Fits the operation and concept of the “Corporate Governance 

Best-Practice Principles for TSEC/GTSM Listed Companies” and 

relevant law. 

When law or reality requires it, the company will follow “Corporate 

Governance Practices for Publicly Listed Companies” and the 

relevant law. 

6. If the company has a guideline referred by the “Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies”, please specify the differences between its 

actual operation and the guidelines: The company did not have the guideline but all Directors and Supervisors follow the law. 

7.Other important information helped to understand the company’s operation, i.e. employee rights, care, relationship with investors and suppliers, the rights with stakeholders, 

on-the-job trainings for Directors and Supervisors, risk management execution and evaluation, customers’ policies execution and liability insurance for Directors and Supervisors. 

(1) Employee rights: We believe that employees are the dynamics of the corporation; hence we take great care of staff rights in an extra high standard with legality and even more. 

1. Systems: a. insurances, pension plan, staff on-the job training, safety and health precaution and equal gender employment. 

b. Provide great benefits: group accidental insurance, free health check, travel subsidiaries, and gymnasiums. 

2. Execution: a. All rights regulated are followed. 

b. Designated people are in charge of staff benefits. 

c. The company also takes care of individual needs by the Staff Relations specialists. 

(2) Employee care: 

1. Systems: We designated a group of Staff Relations specialists to in charge the employee care. Their services include emergency assistance, employee complaint handling, care 

when employees are hospitalized, problem assistance, prevention of workplace sexual harassment, and complaints and career development counseling. We even 

cooperate with contractors to lead EAP into the Company. We hope to take care of both staff’s physical and mental health by counseling, and giving financial and 

legal assistance. 

2. Execution outcomes: Among all cases dealt last year, we used high standard to both assist employees’ work and life problems based on a win-win concept. The employee care 

had been effective. 

(3) Relationship with investors: We strongly believe in honesty and information disclosure; we manage the company transparently so we release operational and financial 

information to shareholders. We also have a spokesperson and an acting spokesperson. Meanwhile, we have an email account designated for 

investors. 

(4) Relationships with suppliers and rights of stakeholders: We work with all suppliers in long-term relationship to ensure the abundance of materials. 

(5) On-the-job training for Directors and Supervisors: All Directors are professionals and all training is released to Public Information Observation. 

(6) Risk measurement standard and its execution: We have included these in internal handbooks for management and evaluation. 

(CONTINUED)


(7) How Directors avoid the conflict of interests: not join voting. 

(8) Customer policies: We maintain a good and long-term relationship with customers. 

(9) Liability Insurances purchase for Directors and Supervisors: All insurances are purchased and posted to Public Information Observation by the “Corporate Governance 

Best-Practice Principles for TSEC/GTSM Listed Companies”. 

(10) All Directors and Supervisors are responsible and are good administrators. 

(11) We drafted a code of Board Meetings and have been practicing it. 

(12) To more efficiently manage the company, Board meetings are held at least once quarterly. 

(13) Status of Managers participating in educational training: 

Manager Institute Course name Hours 

Accounting Accounting Research and 

3 

2009/11/11 The Nationwide Adoption of IFRS - The Potential Advantages and Responsive Measures to 

manager Development Foundation in 

Directors, Supervisors, and Senior Management 

Tracy Ting 

Taiwan 

24

3.3.4 Social contribution to environmental protection, community involvement, contributions, services, 

welfare, consumer rights, human rights, safety and hygiene and other social responsibilities and their 

implementation: 

1.Environmental protection 

(1)Systems: a. In response to RoHS/WEEE direction, the company has established a management system for 

green products and green supply chains. 

b. For corporate social responsibility, we will regulate the company by a self claimer in products. 

(2)Outcome: a. In order to fulfill the responsibility of the electronics industry, the company is in the down-stream 

of the supply chain; therefore, the company is able to demand suppliers to widely use green 

materials to reduce or stop using hazardous substances by being certified as a green plant, i.e. 

GPMS or QC80000. 

b. Has already announced the self claimer of EU’s environmental requirement for PND products. 

The result of MiTAC’s environmental protection has appeared and promoted MiTAC’s honesty 

and competition. 

2.Community involvement 

(1) System: Encourage employees to start charitable clubs and sponsor and participate in charities. 

(2) Outcome: Employee clubs collect and donate materials to needed groups, including women, children, disabled, 

abused and people receiving life-support. 

3. Social contributions: 

(1) System: a. Sponsor Y.S. Design Award to nurture domestic designers. 

b. Provide internships for students. 

c. Provide different industrial conferences to share managerial and industrial experiences. 

(2) Outcome: a. Y.S. Design Award is open for products for the seventh year and the sixth year’s finale. There are 

two awards: website design and industrial design. The purpose is to cultivate potential designers, 

and increase competing abilities. We invite famous designers to share their experiences via blogs 

and conferences. 

b. Provide awards for corporate internships and encourage other excellent students to apply for 

intern opportunities. 

4. Charity: 

(1)Policy: initiate employees' donations to the needs of society and the nation. 

(2)Progress: the arrival of Typhoon Morakot caused severe disasters to the central and southern parts of 

Taiwan in 2009. To support the nationwide rescue and recovery efforts, MiTAC donated a total of 

$5 million, including $4 million cash donated to The Red Cross Society of the Republic of China 

and 100 units of Mio GPS Navigation Devices that feature the “Mio Traffic Message Channel” 

function to Chiayi, Tainan, and Taitung County Governments to aid their rescue. In addition, 

MiTAC also encouraged employees to donate one-day salary to help rebuild from the disaster. 

5. Consumer rights: 

(1) System: to better service consumers, MiTAC is dedicated to developing innovative and complex system 

management and to promoting this concept to all affiliates worldwide. 

(2) Outcome: Our GPS brands have services for consumers: a. Mio fix: fix machines at any place and any time. b. 

Mio camp: Clients bought Mio can have a free course. c. Mio Express: Clients can update maps and 

get free product instruction in the store. 

6. Safety and Hygiene: 

(1) System: In order to increase precautions and prevent vocational hazards, death and protests, MiTAC has been 

certified as ISO 14001 and OHSAS 18001 and been audited periodically. 

(2)Outcome: 

a. In order to protect employees’ safety and health, and to prevent vocational hazards and diseases 

from happening, MiTAC encourages employees to join the improvement committee. 

b. Continuously improve environmental safety and hygiene: Audit and assess all investments to 

promote continuous improvement. 

25

3.3.5 Internal control system 

1. Declaration of internal control System 

Declaration of the Internal Control System 

Date: April 22, 2010 

The company has the following declaration made for the internal control system valued in 

the period of January 1 and December 31, 2008: 

1. The company is aware that internal control system is the Board of Directors and the 

management’s responsibility to establish, enforce, and maintain. The company has 

systems set up to reasonably assure the operating effectiveness and efficiency in 

profitability, performance, and assets safety, the reliability of financial statements and 

regulation. 

2. The internal control system has its limitations; no matter how perfect an internal control 

system is designed, an effective system provides only a reasonable assurance of the 

aforementioned three objectives. Moreover, the effectiveness of the internal control 

system may be affected by the change of environment and situation. The company’s 

internal control system has a self-supervision mechanism; therefore, the company is able 

to act immediately once any nonconformity is identified. 

3. The Company evaluates the design and operating effectiveness of its internal control 

system based on the criteria provided in the “Regulations Governing Establishment of 

Internal Control Systems by Public Companies” (hereinafter, the “Regulations”). The 

criteria adopted by the Regulations identify five constituent elements of internal control 

based on the process of management control: (1) control environment, (2) risk 

assessment, (3) control activities, (4) information and communication, and (5) 

monitoring. Each constituent element further contains several items. Please refer to the 

Regulations for details. 

4. The company has applied the aforementioned internal control criteria to examine the 

design and performance of the system. 

5. Based on the findings of the evaluation mentioned on Dec,31 2009, the Company 

believes that, during the year 2009, its internal control system (including its supervision 

of subsidiaries), as well as its internal controls to monitor the achievement of its 

objectives concerning operational effectiveness and efficiency, reliability of financial 

reporting, and compliance with applicable laws and regulations, were effective in design 

and operation, and reasonably assured the achievement of the achievement of the 

above-stated objectives. 

6. The declaration will be included in the annual report and all information will be released 

to the public. Any false-hood or concealment will cause a violation against Article 20, 

Article 32, Article 171, and Article 174 of Securities and Exchange Law and will be held 

responsible by law. 

7. The Board of Directors approved the declaration unanimously on April 22, 2010 in the 

presence of five directors. 


Chairman : Matthew Miau 

President : Billy Ho 

26

3.3.6 Important resolutions reached at shareholders’ meetings or board meetings in recent 

years and up to the publication date of this annual report: 

1. Shareholder’s meeting 

Meeting 

Date 

Motions Resolutions Execution 

2009.6.10 1. Recognized the distribution of retained 

earnings in 2008: 

Shareholders’ bonus: 

Unanimously Dividend benchmark date: July 25, 2009, 

and cash and stock dividend distributed in 

August. 

Cash dividend NT$0.2 per share 

Employees’ bonus: Cash NT$ 20,773 

thousand 

Director and Supervisors’ bonus: 

NT$ 2,000 thousand. 

2.Amend MiTAC’s “Procedures for Unanimously Have been operated by the updated 

Derivatives Trading” 

4. To release the non-competition restriction 

of directors. 

2. Board of Directors 

Unanimously 

procedures.. 

Have been followed according to the 

resolution. 

Meeting 

Motions 

Resolutions 

Date 

2009.1.13 Determined the issuing date: Jan 13, 2009 for employees’ Unanimous approval by directors present 

stock option; from the 4 th Quarter in 2008, 7,936 shares of at the meeting 

common stock had been requested. 

2009.2.3 Determined to subscribe common stocks privately for the price Unanimous approval by directors present 

of NT$2.5 per share of Loyalty Founder Enterprise Co., Ltd. at the meeting 

within the budget of NT$150 million. 

2009.2.17 

2009.3.10 

2009.4.24 

2009.6.18 

1. Hired new vice president: Hire Ms. Crystal, Yang to be the 

new Vice president for the Finance Center to replace the 

retired one. 

Unanimous approval by directors present 

at the meeting 

2. Appointed Tracy, Ting to be the Head Accountant. Unanimous approval by directors present 


1. Decided the shareholders’ meeting date and agenda in 2009. Unanimous approval by directors present 


2. Determined to sell Nei-Hu Office Building to MiTAC Inc. 

for more than NT$590,000 thousand. 

1. Drafted up distribution of retained earnings for 2008. 

Shareholders: NT$0.2 for cash bonus per share. 

Employees: NT$20,773 thousand in cash. 

Directors and Supervisors: NT$2 million. 

Matthew Miau and Yuan Kuo are the 

stakeholders so they avoided the discussion 

and voting and the rest of directors agreed 

on unanimously 



2. To release the non-competition restriction of directors. Unanimous approval by directors present 


3. Revised MiTAC’s “Procedures Governing Lending of 

Capital to Others” and “Procedures Governing Endorsement 

and Guarantee”. 



4. Determined the issuing date: April 24, 2009 for employee’s 


stock option; from quarter 1, 2009, 581,782 shares of 


common stock had been requested. 


Designated 25 Jul 2009 as the base date for cash dividends. 

2009.8.24 1. Acknowledged company level and consolidated financial 

statements for 2009 first half. 




27

2. Investments into Mainland China: invested Kunshan 

Lianda Messaging Technology Co., Ltd of no more than 

USD 300 thousand. 

2009.9.4 Passed the 10th issuance of employees' warrants totaling 

95,000 units, which may be exercised to subscribe 95,000 

thousand ordinary shares. 

2009.10.27 Passed the issuance of new ordinary shares to accommodate 

the exercising of employees’ warrants: designated 27 October 

2009 as the base date for new share issues; subscriptions 

exercised during 2009 third quarter amounted to 9,920 

ordinary shares . 

2010.1.25 Passed the issuance of new ordinary shares to accommodate 

the exercising of employees’ warrants: designated 25 January 

2010 as the base date for new share issues; subscriptions 

exercised during 2009 fourth quarter amounted to 141,448 

shares. 









2010.3.10 Set dates and agendas for the company’s 2010 annual general Unanimous approval by directors present 

meeting. 


2010.4.22 1. Presented the 2009 earnings appropriation proposal Unanimous approval by directors present 

Shareholders' dividends: cash dividends of $0.15 per at the meeting 

share. 

Employees' bonus: cash totaling $13,012 thousand . 

Directors' and supervisors' remuneration: $2,000 

thousand in total. 

2. Amended the company’s Memorandum of Association. Unanimous approval by directors present 


3. Amended the company' s “Endorsements and Guarantees Unanimous approval by directors present 

Procedures” and ”Procedures for Lending to Others”. at the meeting 

4. Passed the reelection of directors and supervisors. Unanimous approval by directors present 


5. Removed restrictions on directors' participation in Unanimous approval by directors present 

competing industries. 


6. Reappointed CPA for financial statement audits: as a Unanimous approval by directors present 

result of internal job transfers within the CPA firm, the at the meeting 

company' s CPA s will be changed from Lin Yu-Kuan and 

Wang Wei-Chang of Pricewaterhouse Coopers to Lin 

Yu-Kuan and Liu Yin-Fei since 2010. 

3.3.7 Resignation and discharge of personnel related to financial statements (including 

Chairman, President, Accounting Officer, and Internal Auditor Officer) in recent years or 

up to the publication date of the annual report: 

April 30, 2010 

Titles Names Assuming Dates Releasing Dates 

Reason for 

Releasing Duties 

Vice president C.S. Chen Mar. 27,1996 Feb. 17,2009 Retirement 

28

3.4. CPA’s dues 

Range of Audit Remuneration 

Name of CPA firm Name of CPA Audit period Remarks 

Pricewaterhouse Coopers Lin Wang 

Yu-Kuan Wei-Chang 

2009.1.1-2009.12.31 

Unit: thousand 

Type of remuneration 

Amount range 

Audit Non-audit Total 

1 Below $2,000 thousand v 

2 $2,000 thousand (inclusive) ~ $4,000 thousand 

3 $4,000 thousand (inclusive) ~ $6,000 thousand v 

4 $6,000 thousand (inclusive) ~ $8,000 thousand v 

5 $8,000 thousand (inclusive) ~ $10,000 thousand 

6 More than $10,000 thousand (inclusive) 

3.5. New CPAs 

(1) Former CPA 

Date of change April 2008 April 2010 

Reasons and descriptions As a result of internal job transfers within the As a result of internal job transfers within the 

of change 

CPA firm, the company's CPAs were changed CPA firm, the company's CPAs will be changed 

from Lin Yu-Kuan and Wen Fang-Yu of from Lin Yu-Kuan and Wang Wei-Chang of 

Pricewaterhouse Coopers to Lin Yu-Kuan and Pricewaterhouse Coopers to Lin Yu-Kuan and 

Wang Wei-Chang since 2008. 

Liu Yin-Fei since 2010. 

Was the termination of 

audit services initiated 

by the company or the 

CPA 

Reasons for opinions 

other than unqualified 

opinions issued within 

the recent 2 years 

Participants 

Situation 

Initiated the 

termination 

Service no longer 

accepted (continued) 

None 

CPA 

Not 

applicable 

Not 

applicable 

The 

Participants 

company Situation 

Not Initiated the 

applicable termination 

Not Service no longer 

applicable accepted (continued) 

None 

CPA 

Not 

applicable 

Not 

applicable 

The 

company 

Not 

applicable 

Not 

applicable 

Accounting policy or practice 

Accounting policy or practice 

Disclosure of financial reports 

Disclosure of financial reports 

Yes 

Yes 

Audit coverage or procedures 

Audit coverage or procedures 

Disagreements with the 

issuer 

Others 

Others 

No V No V 

Elabo 

None 

Elabo 

None 

ration 

ration 

Other disclosures None None 

(2) Suceeding CPA 

Name of CPA firm Pricewaterhouse Coopers Pricewaterhouse Coopers 

Name of CPA Lin Yu-Kuan, Wang Wei-Chang Liu Yin-Fei, Lin Yu-Kuan 

Date of Appointment April 2008 April 2010 

Inquiries and replies relating to the accounting 

practices or accounting principles of certain 

transactions, or any audit opinions the CPAs were None 

None 

likely to issue to the financial reports prior to 

reappointment. 

Written disagreements made by the succeeding 

None 

CPA against the opinions of the former CPA 

None 

(3) Former CPAs replies to Section 10-5-1 and 10-5-2-3 of The Policy: Not applicable. 

29

3.6 The transfer and collateralization of shares held by directors, supervisors, managers, and 

major shareholders with more than 10% ownership interest 

(1) Changes of shares held by directors, supervisors, managers and major shareholders 

2009 Year to date 20 Apr 2010 

Increase 

Increase 

Title Name 

Increase 

Increase 

(decrease) of 

(decrease) of 

(decrease) of 

(decrease) of 

shares 

shares 

shares held 

shares held 

colateralized 

colateralized 

Chairman Mathew Miau 0 0 0 0 

Director Billy Ho 0 0 0 0 

Director 


Representative: Way 

0 (68,000,000) 0 0 

Yung-Do and Simon Wu 

Director MiTAC Inc 0 0 0 0 

Supervisor Arthur Chiao 0 0 0 0 

Supervisor 

Lien Hua Industrial Corp 

Representative: Charles 

0 (25,500,000) 0 0 

Ching Hu-Shi 

Senior Vice 

President 

C. J. Lin 0 0 0 0 

Vice President Michael Lin 0 0 (120,000) 0 

Vice President Stone Chen 0 0 0 0 

Vice President Percy Chen (130,000) 0 0 0 

Vice President Alice Fang 0 0 0 0 

Vice President James Yuan (73,000) 0 (70,000) 0 

Vice President Ted Chang 0 0 0 0 

Vice President James Wu 0 0 0 0 

Vice President C.P. Li 0 0 0 0 

Vice President Jack Kuo 0 0 0 0 

Vice President Johnson Wang 0 0 0 0 

Vice President 

Crystal Yang (onboard 

2009.2.17) 

(20,000) 0 0 0 


King Chen (onboard 

2009.6.18) 

0 0 0 0 


Steve Chang (onboard 

2009.6.18) 

0 0 0 0 


Albert Mu (onboard 

2009.8.24) 

100,000 0 0 0 


J.J. Huang (onboard 

2010.1.25) 

0 0 0 0 


Bjorn Tsai (onboard 

2010.1.25) 

0 0 0 0 

Senior Vice Wang Sheng-Min 

President (resigned 2009.6.5) 

0 0 0 0 


Chen Chun-Shou (retired 

2009.2.17) 

0 0 0 0 


Lin Huang-Song (retired 

2009.3.9) 

(50,000) 0 0 0 


Yang Hong-Ching 

(resigned 2009.11.1) 

(44,000) 0 0 0 

Head of Ting Hui-Yuan (onboard 

Accounting 2009.2.17) 

(454) 0 0 0 

Note: the counterparties of share transfer or collateralization arrangements are non-related parties. 

(2) Disclosure of share transfers: not applicable. 

(3) Disclosure of share collateralization: not applicable. 

30

3.7 Relationships between the top ten shareholders 

Name 


Representative:Mathew 

Miau 

MiTAC Inc 

Representative: Kuo Yun 


Representative:Mathew 

Miau 

Shares held in own name 

Shares 

Shareholdin 

g percentage 


spouses and 

underage 

children 

Shares 

Shareh 

olding 

percent 

age 

Shares held in 

the names of 

others 

Shares 

Shareholdi 

ng 

percentage 

20 Apr 2010 

Disclosure of relationships between the top Re 

ten shareholders including spouses, second mar 

ks 

degree relatives or closer, or the relationships 

defined under Statement of Financial 

Accounting Principle No.6. 

Name 

Relationship 

Investee with gains or 

Lien Hua Industrial Corp losses recognized using the 

equity method 

The Chairman of the 

MiTAC Inc 

company is the Vice 

Chairman of this company 

Mathew Miau Chairman of this company 

129,628,156 8.44% 0 0.00% 0 0.00% 


Tsu Fung Investment company also acts as 

Corp. 

Chairman of the parent 

company 


Getac Technology company is the 

Corporation 

representative director of 

this company 

The Vice Chairman of the 

UPC Technology Corp. company Inc is the 



Lien Hua Industrial Corp company is the Chairman 

of this company 

Vice Chairman of this 

Mathew Miau 

company 

122,456,572 7.97% 0 0.00% 0 0.00% 

Tsu Fung Investment 

Corp. 


company also acts as 


company 


Getac Technology company is the 

Corporation 


this company 


UPC Technology Corp. losses recognized using the 

equity method 


MiTAC Inc 

losses recognized using the 

equity method 

Mathew Miau Chairman of this company 

91,625,310 5.96% 0 0.00% 0 0.00% 

The Chairman of MiTAC 

Tsu Fung Investment International Inc also acts 

Corp. 

as Chairman of the 

company’s parent company 

The Chairman of MiTAC 

Getac Technology International Inc is the 

Corporation 


this company 

Mei-An Investment 

Corporation 

Representative: Chu 

30,270,278 1.97% 0 0.00% 0 0.00% None None 

Zong-Bin 

Lien Hua Industrial Corp Chairman of the company 

UPC Technology Corp. Chairman of the company 

Mathew Miau 21,805,999 1.42% 0 0.00% 0 

Vice Chairman of the 

MiTAC Inc 

0.00% 

company 

Tsu Fung Investment Chairman of the parent 

Corp. 

company 

Getac Technology Representative director of 

Corporation 

the company 

31

Name 


Corp.Representative:Bi 

lly Ho 

ABP pension fund 

investment account 

held in trust by J.P. 

Morgan 

Tonda Investment Corp 

Representative: Chou 

De-Chien 

Shares held in own name 

Shares 

Shareholdin 

g percentage 


spouses and 

underage 

children 

Shares 

Shareh 

olding 

percent 

age 

Shares held in 

the names of 

others 

Shares 

Shareholdi 

ng 

percentage 

Disclosure of relationships between the top 

ten shareholders including spouses, second 

degree relatives or closer, or the relationships 

defined under Statement of Financial 

Accounting Principle No.6. 

Name 

Relationship 



company’s parent also acts 

as Chairman of this 

company 





company 


20,366,568 1.33% 0 0.00% 0 

MiTAC Inc 

0.00% 



company 

Mathew Miau 


company 


Getac Technology company’s parent is the 

Corporation 


this company 

The company’s parent is a 

Tonda Investment Corp major shareholder of this 

company 

18,630,000 1.21% 0 0.00% 0 0.00% None None 

17,861,770 1.16% 0 0.00% 0 0.00% 


Corp. 

The company’s major 

shareholder is this 

company’s parent 

Vanguard Emerging 

Stock Market Index Fund 

14,468,739 

held in trust by Standard 

0.94% 0 0.00% 0 0.00% None None 

Chartered Bank 


One of the company’s 

directors is the Chairman of 

this company 

One of the company’s 

Lien Hua Industrial Corp directors is the Chairman of 

Getac Technology 

Corporation 

Representative: Tsai 

Feng-Si 

13,378,094 0.87% 0 0.00% 0 0.00% 

MiTAC Inc 

Mathew Miau 


Corp. 

this company 

One of the directors of the 

company is the Vice 


Director of this company 

The representative director 

of the company is the 

Chairman of this company’s 

parent 

Re 

mar 

ks 

32

3.8 Aggregate shareholding percentage 

Investee 

(Note) 

Held by the company 

Shares 

Shareholding 

percentage 

Held by directors, 

supervisors, managers, and 

enterprises to which the 

company exercises direct or 

indirect controlling interests 

Shares 

Shareholding 

percentage 

30 Apr 2010 

Unit: shares ;% 

Aggregate investment 

interests 

Shares 

Shareholdi 

ng 

percentage 

Getac Technology 

Corporation 

190,396,939 33.51% 19,865,114 3.50% 210,262,053 37.01% 

Tonda Investment Corp 53,145,723 49.99% 0 0.00% 53,145,723 49.99% 

Silver Star Developments Ltd. 215,495,404 100.00% 0 0.00% 215,495,404 100.00% 

Tsu Fung Investment Corp. 106,528,922 100.00% 0 0.00% 106,528,922 100.00% 

3Probe Technologies 1,080,000 23.13% 0 0.00% 1,080,000 23.13% 

Lien Jie Investment Co., Ltd 11,305,650 49.98% 0 0.00% 11,305,650 49.98% 

DLC Technology Corp. 6,600,000 100.00% 0 0.00% 6,600,000 100.00% 

Foreground Technology Ltd. 9,045,492 100.00% 0 0.00% 9,045,492 100.00% 

Loyalty Founder Enterprise 

CO., Ltd. 

60,000,000 25.24% 2,300,000 0.97% 62,300,000 26.21% 

Shen Tong Construction and 

Development Co., Ltd 

8,559,400 47.55% 0 0.00% 8,559,400 47.55% 

MiTAC Inc 28,549,614 8.69% 134,978,626 41.10% 163,528,240 49.79% 

Overseas Investment & 

Development Corp 

1,000,000 1.11% 0 0.00% 1,000,000 1.11% 

Lien Shun Venture Capital 

Investment Co., Ltd 

23,181,675 14.05% 26,730,825 16.20% 49,912,500 30.25% 

Asia Pacific Technology and 

Intellectual Property Services 

Inc 

140,000 0.85% 0 0.00% 140,000 0.85% 

Lien Shun Lu Venture Capital 

Investment Co., Ltd 

7,700,000 13.28% 13,475,000 23.24% 21,175,000 36.52% 

Lien Hua Industrial Corp 23,603,957 2.90% 108,665,014 13.34% 132,268,971 16.24% 

UPC Technology Corp. 12,994,032 1.30% 325,088,265 32.59% 338,082,297 33.89% 

Gemtek Technology Co., Ltd 5,794,411 2.09% 6,071,237 2.18% 11,865,648 4.27% 

Note: presented as the company’s long term investments 

33

4.1. Capital and stocks 

4.1.1 The capital of stocks 

Stock 

type 

Common 

stock 

Authorized Capital Stock 

Outstanding Un-issued 


shares (Note) shares 


1,536,172,411 663,827,589 2,200,000,000 

Apr.20, 2010 Unit: Shares 

Remarks 

Under process of authorization for stock capital: 

70,000 thousand shares are reserved for conversion 

of corporate debenture bonds; 

250,000 thousand shares are reserved for 

redemption of stock option vouchers by employees. 

Note: Outstanding stock shares are listed stock before deducting 10,000 thousand shares of Treasury Stock. 

4.1.2 The Structure of Shareholders 

Apr. 20, 2010 

Structure of 

shareholders 

QTY 

Number of 


Number of 

shares held 

Percentage of 

total shares 

Government 

institutions 

Financial 

institutions 

Other 

institutions 

Qualified 

Foreign 

institutional 

investors 

Individuals 

Reserved 

Shares 


7 33 165 346 122,343 1 122,895 

7,978 40,768,930 467,344,738 206,388,015 811,662,750 10,000,000 1,536,172,411 

0.00% 2.65% 30.42% 13.44% 52.84% 0.65% 100.00% 

4.1.3 Stock shares 

1. Common stocks (Par Value of NT$10 for Each Share) 

Apr 20, 2010 

Level of holdings Number of Shareholders Shares Held Ratio to total 

1-999 41,553 12,295,452 0.80% 

1,000-5,000 50,869 118,370,256 7.71% 

5,001-10,000 14,246 105,031,044 6.84% 

10,001-15,000 5,957 70,087,909 4.56% 

15,001-20,000 2,937 52,922,657 3.45% 

20,001-30,000 2,859 69,688,929 4.54% 

30,001-40,000 1,304 45,272,401 2.95% 

40,001-50,000 771 35,484,614 2.31% 

50,001-100,000 1,389 98,670,855 6.42% 

100,001-200,000 576 79,345,997 5.17% 

200,001-400,000 217 59,205,757 3.85% 

400,001-600,000 69 33,965,467 2.21% 

600,001-800,000 33 22,794,712 1.48% 

800,001-1,000,000 20 18,105,654 1.18% 

Over 1,000,001 95 714,930,707 46.53% 

Total 122,895 1,536,172,411 100.00% 

34

2. Preferred stock: None 

4.1.4 Major shareholders 

Shares held 

Name of major shareholders 

Shares Held 

Ratio 

Apr. 20, 2010 

UPC Technology Corp. 129,628,156 8.44% 

MiTAC Inc. 122,456,572 7.97% 

Lien Hwa Industrial Corp. 91,625,310 5.96% 

Note: The number of shareholders with over 5% of shareholding: 3. 

Items 

Market price 

per share 

4.1.5 Information for market price per share, net worth, earnings, and dividend 

Years 

Before 

adjustment 

2008 2009 

After 

adjustment 

Before 

adjustment 

After adjustment 

Jan 1 to April 30, 

2010 

(Note 6) 

Highest 33.1 30.21 17.00 17.00(Note 9) 16.90 

Lowest 9.50 9.50(Note 8) 10.70 10.50 13.00 

Average (Note 2) 22.04 14.72 15.28 

Net worth 

Before distribution 20.72 21.03 20.97 

per share After distribution 20.50 20.87(Note1) - 

Earnings per 

Weighted average shares 1,502,941 1,502,941 1,502,780 1,502,780 1,503,042 

share Earnings per share 0.31 0.31 0.19 0.19(Note 1) 0.02 

Cash dividend 0.2 0.2 0.15 0.15(Note 1) - 

Dividend per 

Stock 

Retained stock 

earnings 

- - - 

share 

grants 

Additional paid-in 

capital 

- - - 

Cumulatively unpaid dividend - - - 

P/E ratio (Note 3) 65.94 74.63 185.75(Note 7) 

Return on 

Dividend yield (Note 4) 102.2 94.53(Note 1) - 

investment Cash dividend yield 

0.98% 1.06%(Note 1) - 

(Note 5) 

Note 1: The allocation of earnings for 2009 has approved by the Board of Directors, but need to be recognized by 

shareholders’ meeting. 

Note 2: Average market price is calculated by the trade amount and shares each year. 

Note 3: Price/Earnings ratio = Yearly average closing price/Earnings per share. 

Note 4: Price/Dividend ratio = Yearly average closing price /Cash dividend per share. 

Note 5: Cash dividend yield rate = Cash dividend per share/ Yearly average closing price. 

Note 6: Net worth and earnings per share must be stated in the financial statements audited (reviewed) by CPAs; other 

columns should be filled with same year data in the annual report up to the publication of this report. 

Note 7: The earnings per share from the 1st quarter of 2010 need to be conversed to the whole year for comparison. 

Note 8: The lowest market price per share is the price after ex-right day, so no adjustment required. 

Note 9: The highest market price per share is the price after ex-right day, so no adjustment required. 

35

4.1.6 Dividend policy and its implementation 

1. Company dividend policy: 

The company is in a growing industry; hence the life cycle of the company 

grows with the industry. In order to take our industry’s conditions, long-term 

financial planning, and future cash flow into consideration, and also to satisfy 

shareholders’ demand for cash inflow, the company has withdrawn 10% of its 

earnings as a legal reserve. This 10 %, after making up for deficits of previous 

years and tax deductibles, will have 5% leftover for employees’ bonus. The 

other, with remaining amounts from previous years, will be distributed after 

approval during the Board of Directors’ and the shareholders’ meeting. 

If the bonus is decided to be distributed in stocks, any employee who fits the 

profiles, which are set by the CEO, will be entitled to receive the bonus. 

The ratio of cash and stocks allocation will be decided by the Board of 

Directors from different aspects: financial structure, future cash flow, and 

profitability. The cash bonus will not exceed 10% of the stocks bonus. But the 

number needs to be approved by the shareholders. 

2. The resolution for dividend distribution at the shareholders’ meeting: 

Based on the principles above, the Board of Directors drafted a proposal for 

dividend distribution at its meeting on Apr 22, 2010. This proposal covers 

dividends for the fiscal year of 2009 and the dividend per share is NT$0.15. The 

proposal will be presented for approval at the shareholder’s meeting on June 18, 

2010. 

3. Expected change of dividend policy: None. 

4.1.7 Impact on the company’s performance and earnings per share at stock grants set for the 

consideration of this year’s shareholders’ meeting: N/A. 

4.1.8 Employee bonuses and Remuneration for Directors and Supervisors: 

1. Percentage of employees’ bonuses and remuneration for directors and supervisors 

as set forth in the company charter: 

(1) Employee bonus: Where the company has earnings at the end of a business 

year, after all tax deductibles and cumulative deficits from past year, a ten 

percent of legal reserve, plus special earnings surplus and payment of interest 

on stocks, a minimum of 5% of the remainder will be the employees’ bonus. 

(2) Percentage of remuneration for directors and supervisors: not specified in the 

company charter. 

2. After accounting for changes to the basis of estimation for employees’ bonus, 

directors’ and supervisors’ remuneration, changes to the calculation basis for stock 

dividends, and discrepancies between the amounts actually paid and the amounts it 

is estimated: 

(1) The estimation basis for employees' bonus, directors' and supervisors' 

remuneration: the company's 2009 employees' bonus, directors' and supervisors' 

remuneration were determined by applying the appropriate percentage 

prescribed in the Memorandum of Association (5% for employees' bonus) to 

the year to date net profit after tax, after taking into account legal earnings 

reserves and other factors. These sums are recognized as operating expenses. 

(2) That calculation basis for stock dividends: the number of ordinary shares to be 

distributed as stock dividends is calculated based on the fair value per share 

(closing price) one trading day before the general shareholders' meeting of the 

36

latest financial year after taking into account all cash and stock dividend effects. 

(3) Accounting treatments for discrepancies between the amounts estimated and the 

amounts actually paid: any differences between the amounts estimated and the 

amounts resolved during the general shareholders' meeting are treated as gains 

or losses for the next year. 

3. Disclosure relating to employees' bonus approved by the board of directors 

The company's 2009 earnings appropriation proposal was passed during the 

board of directors meeting held on 22 April 2010. The details of earnings 

appropriation are disclosed below: 

(1) Distribute employees' cash bonus totaling NTD13,012,289, and remuneration 

to directors and supervisors totaling NTD2,000,000. These sums were 

consistent with the amounts estimated and recognized as annual expenses. 

(2) Proposed employees' stock dividends as a percentage of net profit after tax and 

total employees' bonus for the current period: the company did not propose to 

pay any employees' bonus in shares, hence it is not applicable. 

(3) Basic earnings per share is calculated at $0.19 after taking into account 

employees' bonus, and remuneration to directors and supervisors. 

4. The 2008 employees' bonus and remuneration to directors and supervisors are as 

follows: 

Actually approved distribution by the 

Shareholders’ meeting 

Employees’ cash bonuses 

NT$20,773 thousand 

Directors and supervisors’ compensation 

NT$2,000 thousand 

Note: the amounts of employees' bonus, remuneration to directors and supervisors 

actually paid were consistent with the amounts previously recognized as expenses. 

4.1.9 Buybacks of the company's shares 

April 30, 2010 

Units: NT$ Thousand / thousand shares 

Retrieval Times 11 th 12 th 

Dates of the Directors’ resolution Dec.19, 2007 Jan.29, 2008 

Purpose of Retrieval Transfer to employees Transfer to employees 

Duration of Retrieval Dec. 20, 2007 to Jan 29, 2008 Jan. 30, 2008 to Feb. 19, 2008 

Price range NT$28 ~32 NT$22~28 

Estimated retrieval types and quantity 5,000 common stocks 5,000 common stocks 

Retrieved types and quantity 5,000 common stocks 5,000 common stocks 

Worth of retrieved amount 131,837 124,579 

Average cost of retrieval NT$26.4 NT$24.9 

Reason for incompletion of buying 

treasure stocks per the Board’s resolution 

- - 

Cancelled and transferred stocks 0 0 

Accumulation for stocks held 5,000 10,000 

Percentage of accumulation of stock held 

to public stocks 

0.33% 0.65% 

37

4.2. Debenture issuance 

April 30, 2010 

Types of debentures 

Domestic 3 rd convertible corporate 

debenture bond 

Issuing (processing) date August 12, 2005 

Face value 

NT$100 thousand 

Issuing location and trade location 

Taiwan 

Issuing price 

Face value 


NT$3 billion 

Interest rate 0% 

Validity 5-year; due date: Aug 11, 2010 

Guarantor 

None 

Trustee 

Wealth Management Business Trust Division of 

the First Bank 

Underwriter 

Yuanta Securities Group 

Attorney 

B.H. Kao 

CPA 

Ying-fei Liu, Wei-cheng Wang 

Sinking fund 

Please refer to Article 6 of the Corporate Debenture 

Bond Issuance and Conversion Act 

Understanding principal 

NT$ 240,500 thousand 

Redemption or liquidation before due date clause 

Please refer to Article 17 of the Corporate Debenture 

Bond Issuance and Conversion Act 

Restrictive clauses 

None 

Rating service, rating date, and corporate debenture 

None 

bond rating 

Other rights 

Converted (exchanged or 

subscribed) amount of common 

stock, GDR or marketable 

security up to the publication 

date of the annual report 

Issuance & Conversion Act 

(exchange or option) 

Issuance & conversion, exchange or stock option 

act, issuance conditions causing stock dilution and 

affecting shareholder’s equity 

Depository service for the exchange 

None 

Please refer to the Corporate Debenture Bond 

Issuance and Conversion Act 

Based on the total stock issuance of NT$ 240,500 

thousand and NT$29.9 per share, 8,043,000 common 

stock shares are issued that is 0.52% of the current 

issuance. 

N/A 

Items 

Debenture converting 

market prices 

Converting prices 

Type of debentures 

Years 

Debenture Conversion 

Domestic 3 rd convertible corporate debenture bond 

2008 2009 Up to April 30, 2010 

Max. 107 99.8 99.9 

Min. 93 94 99 

Average 100.16 97.42 99.54 

1. 01.01, 2008~08.22, 2008: 39.4 

2. 08.23, 2008~12.31, 2008: 29.9 29.9 29.9 

Issuing date and converting prices 

Fulfilling conversion obligation 

Issuing date: 8.12, 2005 

Converting price: 48 

Issuing new stocks 

38


Regulations Governing Domestic 3 rd Convertible Corporate Debenture Bond Issuance 

and Conversion 

1. Bonds 

The Domestic 3 rd Convertible Corporate Debenture Bond (referred to as “the convertible 

bond” hereinafter) of MiTAC (referred to as “the Company” hereinafter). 

2. Issuing date 

August 12, 2005 (referred to as the “issuing date” hereinafter). 

3. Total issuance amount and par value 

Total issuance amount is for NT$3 billion at NT$100,000 par and it is issued at face value. 

4. Issuance period 

Issuance period is for 5-year from August 12, 2005 to August 11, 2010 (referred to as the 

“due date” hereinafter). 

5. Bond face rate 

Face rate is 0%. 

6. Sinking fund and date 

Bondholders may have the bond converted to common stock shares of the Company 

according to Article 10 of the Governing Regulations or exercise the Put right according to 

Article 18 of the Governing Regulations, or, the Company exercises the Call right before 

due date according to Article 17 of the Governing Regulations, or, redeems the bond in a 

lump sum at face value on the due date. 

7. Collateral 

This convertible bond is a bond without collateral. Upon the issuance of the convertible 

bond, if the Company has other guaranteed bond with option or convertible bond issued, 

this convertible bond will be processed equivalently as the guaranteed bond with option or 

convertible bond with equivalent credit or collateral right. 

8. Converting object 

The Company will have new stock shares issued for the conversion to common stock. 

9. Converting period 

Except for the period from the three business days prior to the book closure period, book 

closure ex-right date while the Company contacting Stock Exchange Corporation for stock 

dividend, book closure ex-dividend date for cash dividend, and book closure ex-right date 

for recapitalization of cash to the distribution date, bondholders may inform Taiwan 

Depository & Clearing Corporation (referred to as “the TDCC” hereinafter) by brokers to 

contact the underwriting office of the Company to have the convertible bonds converted to 

the common stock of the Company in accordance with Article 10, Article 11, and Article 15 

of the Governing Regulations since the day after the issuance of this convertible bond for 

one month till ten days before the due date. 

10. Converting procedure 

(1) Bondholders fill out the “Convertible Bond Bank Account Conversion / Redemption / 

Put Application Form” (remarked “conversion”) at the security brokers and then the 

security broker is to have an application filed to the depository & clearing company. 

The depository & clearing company is to have the application forwarded to the 

underwriting office of the Company for immediate conversion and it cannot be 

withdrawn. The conversion process will be completed in five business days upon 

receiving and with common stock of the Company deposited into the account of the 

bondholders. 

(2) Overseas Chinese and foreigners who have applied to have the convertible bond 

converted to the common stock of the Company are to have the process arranged by 

39

ank transfer. 

11. Converting price and price adjustment 

(1) Converting price 

The price of the convertible bond is based on the cutoff date of July 28, 2005.The 

converting price (rounded up to the first decimal of New Taiwan Dollar) of the 

Company’s convertible bond is based on the average closing price of the Company’s 

common stock on the prior business day, prior three business days, or on the prior five 

business days by 112% converting premium rate. For any Ex-right and Ex-dividend 

enforced before the cutoff date, the sampled closing price for calculating the converting 

price must be translated to the Ex-right or Ex-dividend price. If there is any Ex-right or 

Ex-dividend enforced after determining the converting price and before the issuance 

date, the converting price is to be adjusted accordingly. The bond converting price is 

NT$48 per share. 

(2) Converting price adjustment 

1) Except for the Company’s marketable securities with debt-for-equity SWAP or stock 

option exchanged for common stock and private marketable security, upon the 

issuance of the converting bond by the Company, converting price is to be adjusted 

according to the following equation (rounded up to the first decimal of New Taiwan 

Dollars) while there is additional common stock shares issued (recapitalization of 

cash, surplus, additional paid-in capital, employee’s bonus, issuing new stock shares 

for merger or accepting stock shares of another company, stock split and 

recapitalization of cash for attending global depository receipt) by the Company; also, 

please contact GreTai Securities Market (referred to as “GreTai” hereinafter) to have 

the converting price announced and adjusted on the Ex-right cut-off date for new 

bonus shares: 

Converting price 

before × Outstanding Proceeds 

Adjusted 

stock shares + collected per 

converting price = adjustment 

share 

Outstanding stock shares+new bonus shares 

× 

New bonus 

shared 

Note 1: The outstanding shares are the net of the Treasury stock shares that are not 

yet cancelled or transferred. 

Note 2: The proceeds collected per share are zero for stock dividend or stock split. 

Note 3: The proceeds collected per share of the new bonus shares recapitalization of 

merger is the certified net worth per share of the discontinued company 

before the merger cutoff date by SWAP ratio. The proceeds collected per 

share of the new bonus shares for the shares accepted from the other 

company are the certified or reviewed net worth per share of the said 

company by SWAP ratio. 

Note 4: If the price of new bonus shares is adjusted on the Ex-right cut-off date of the 

recapitalization of cash, it is to be adjusted according to the updated new 

bonus share price and the aforementioned equation. If the updated 

converting price is lower than the converting price announced prior to the 

Ex-right cut-off date, please contact the GreTai to have the updated 

converting price announced. 

Note 5: If it is a recapitalization of merger, the converting price is to be adjusted on 

the merger cut-off date. If it is a recapitalization of stock split, the 

40

converting price is to be adjusted on the stock split cut-off date. If the 

recapitalization of cash is by pricing and purchasing or if the recapitalization 

of cash is by attending global depository receipt, since there is not an 

Ex-right cut-off date designated, the converting price is to be adjusted upon 

the completion of stock issuance. 

2) Upon the issuance of the convertible debenture bond, if the Company has marketable 

securities with debt-for-equity SWAP or stock option issued at the price lower than 

the transfer price per share (Note 1) or stock option price, or, if debt-for-equity 

SWAP is offered to others for a reason other than the recapitalization of cash, 

converting price is to be adjusted according to the following equation (rounded up to 

the first decimal of New Taiwan Dollar) also, please contact the GreTai to have the 

converting price adjusted on the issuance date of the marketable security or stock 

option: 

Adjusted 

converting 

price 

Converting 

price before 

=adjustment 

× Outstanding 

stock shares 

Converting price or stock 

+option price of new bonus × 

shares or stock option 

Converting shares or 

stock option shares of 

newly issued marketable 

security or stock option 

Outstanding stock shares + Converting shares or stock option shares of newly issued 

marketable security or stock option 

Note 1: The market price per share is the average closing price of the Company’s 

common stock share for one business day, three business days, or five 

business days prior to the cutoff date of the marketable security with 

debt-for-equity swap or stock option. 

Note 2: The outstanding shares are net of the Treasury stock shares that are not yet 

cancelled or transferred. 

Note 3: If the marketable security with debt-for-equity swap or stock option is paid 

for with the Treasury stock, the outstanding stock shares in the equation are 

net of the new bonus shares for the newly issued marketable security or 

stock option. 

3) Upon the issuance of the convertible debenture bond, if the outstanding common 

stock shares are reduced for a reason other than the cancellation of Treasury stock, 

the converting price is to be adjusted according to the equation below; also, please 

contact the GreTai to have it adjusted on the recapitalization cutoff date: 

Outstanding common shares before decapitalization 

Adjusted converting price=Converting price before adjustment× 

Outstanding common shares after decapitalization 

Note 1: The outstanding shares are net of the Treasury stock shares that are not yet 

cancelled or transferred. 

(3) Converting price reset 

In addition to having the converting price adjusted according to the aforementioned 

anti-dilution clause, the Company is to have the price reset on the date when it is issued 

for six months and the stock dividend ex-right cutoff date or ex-dividend cutoff date 

(whichever is later) from 2007 to 2010.If there is no stock dividend or cash dividend 

distributed in the year, the converting price (no adjustment is needed if it is higher than 

the converting price of the year before the price reset) is to be reset on the cutoff date of 

July 5th according to the pricing model for converting price in clause (1).The adjusted 

converting price may not be lower than an amount equivalent to 80% of the converting 

41

price at the time of issuance (adjustment can be made while the total amount of 

common stock changed); also, please inform GreTai in writing to announce the updated 

converting price. The regulation of converting price reset does not apply to the request 

for conversion made before or on the cutoff date. 

(4) Converting price adjustment on the ex-dividend date 

Upon the issuance of the converting bond, if the ratio of cash dividend distributed for 

the Company’s common stock to common stock capital exceeds 15%, the converting 

price should be adjusted proportionally to the part beyond 15% on the ex-dividend 

cutoff date; also, please inform GreTai in writing to announce the updated converting 

price. The said regulation of having converting price adjusted down does not apply to 

the request for conversion made before the ex-dividend cutoff date. The equation of 

adjustment is illustrated as follows: 

Adjusted converting price = Converting price before adjustment – (The ratio of cash 

dividend distributed for the Company’s common stock to common stock capital-15%) x 

10 

12. OTC and off OTC of converting debenture bond 

The converting bond is traded over-the-counter once an application is filed to the GreTai 

before the issuance date and it is off OTC trade once the Company converts it to common 

stock or call or buyback entirely. 

13. New bonus shares 

The common stock of the Company that is traded for the converting bond will be traded in 

the stock market from the date the common stock delivered. The Company will contact 

the Stock Exchange Corporation to have the said arrangement announced. If the Company 

has the common stock issued virtually, it is to be traded virtually in the stock market from 

the delivery date. 

14. Registration of stock capital change 

The Company is to have the stock shares and stock value issued for the conversion of the 

converting bond in the last quarter announced in 15 days at the end of the quarter. 

Moreover, an application for stock capital change is to be filed to the competent 

authorities at least once quarterly. 

15. Conversion of odd shares 

For debt-for-equity swap, the Company will pay cash for anything less than one share 

(rounded up to New Taiwan Dollars). 

16. Rights and obligations after conversion 

The rights and obligations of the common stock of the debt-for-equity swap are identical 

to the common stock shares issued originally by the Company. 

17. Call right of the Company for the convertible bond 

The Company may exercise Call right against the convertible bond in the following (1) 

and (2) situations: 

(1) Since the day after the issuance of this convertible bond for one month till forty days 

before the due date, if the Company’s common stock closing-price is over 50% higher 

than the converting price for thirty business days consecutively, the Company may 

have a “bond Calls notice” sent to bondholders (to the address stated in the creditor 

log five days prior to the mailing service; also, the investors who have acquired the 

convertible bond by trade or other means are to be informed by announcement) by 

certified mail in the following thirty business days and please inform the GreTai in 

writing to have it announced. 

(2) Since the day after the issuance of this convertible bond for one month till forty days 

before the due date, if the outstanding convertible bond value is lower than 10% of the 

42

total issuance value, the Company may have a “bond Calls notice” sent to bondholders 

(to the address stated in the creditor log five days prior to the mailing service; also, the 

investors who have acquired the convertible bond by trade or other means are to be 

informed by announcement) by certified mail at any time and please inform the GreTai 

in writing to have it announced. 

The Company has the bond call cutoff date set on the date thirty days after the “bond calls 

notice” is mailed. For bondholders who have the underwriting office of the Company 

informed in writing to have the calls made with cash prior to the bond calls cutoff date 

(effective upon arrival according to the postal mark), the Company will have the 

convertible bond called in five business days from the calls cutoff date at the face value. 

For bondholders who have not had the underwriting office of the Company informed in 

writing to have the calls made with cash prior to the bond calls cutoff date, the Company 

may have the convertible bond converted to the common stock on the bond calls cutoff 

date according to the converting price at the time. 

18. Put rights of bondholders 

The Company has the convertible bond Put cutoff date set on the date three years after the 

issuance date. The Company may have a “bond Puts notice” sent to bondholders by 

certified mail thirty days before the Put cutoff date and please inform the GreTai in 

writing to have it announced. Bondholders may inform Taiwan Depository & Clearing 

Corporation or the Company’s underwriting office (effective upon arrival by postal mark 

and it may not be withdrawn) by brokers in writing within thirty days upon announcement 

to demand the Company to have the convertible bonds redeemed at the face value in cash. 

19. Cash dividend and stock dividend in the converting year 

(1) Cash dividend 

Bondholders who have applied for bond conversion in the period from January 1 to 

three business days prior to the book closure ex-dividend date for cash dividend with 

Stock Exchange Corporation are entitled to the cash dividend of the prior year 

resolved in the shareholder’s meeting. 

Bondholders who have applied for bond conversion the day after the cash dividend 

ex-dividend cutoff day to December 31 of the year are not entitled to the cash dividend 

of the prior year resolved in the shareholder’s meeting but are entitled to the cash 

dividend of next year resolved in the shareholder’s meeting. 

(2) Stock dividend 

Bondholders who have applied for bond conversion in the period from January 1 to 

three business days prior to the book closure ex-right date for stock dividend with 

Stock Exchange Corporation are entitled to the stock dividend of the prior year 

resolved in the shareholder’s meeting. 

Bondholders who have applied for bond conversion the day after the stock dividend 

ex-right cutoff day to December 31 of the year are not entitled to the stock dividend of 

the prior year resolved in the shareholder’s meeting but are entitled to the stock 

dividend of the next year resolved in the shareholder’s meeting. 

20. The convertible bond that is call (including the call from GreTai), paid, or converted by 

the Company will be cancelled and will not be sold or issued again along with the 

conversion right. 

21. The convertible bond and the bonus common stock shares are ordered. The booking, 

registration of change, mortgage, and loss of the convertible bond and the bonus shares 

are to be processed according to the “Regulations Governing IPO Underwriting” and 

Company Law; moreover, the bond trade tax is to be processed according to the Tax Law. 

22. Bondholders have the convertible bond trusted to the First Bank. The First Bank is to 

43

audit and supervise the Company in performing the convertible bond on behalf of the 

bondholders. 

Bondholders who have acquired the convertible bond at its initial public offering or during 

the process agree to the trust agreement signed between the Company and the trustee, the 

rights and obligations of trustee, and the issuance and conversion guidelines; also, 

authorize the trustee to represent them and agree not to have the authorization revoked 

throughout the process. Bondholders may have the content of the trust agreement 

examined during the Company’s or the trustee’s office hours. 

23. The underwriting office of the Company is authorized to have the principal, interest, and 

conversion of the convertible bond processed. 

24. According to Article 8 of the Stock Exchange Law, no physical bond will be prepared for 

the converted bond. 

25. The events that are not covered in the Regulations Governing Convertible Bond Issuance 

and Conversion are to be processed according to the relevant regulations. 

44

4.3 Employees’ stock options 

4.3.1. Employees’ stock option processed 

Types of employees’ stock 

options 

3 nd employees’ stock options 

(1 st term) 

(2 st time after merging from 

TYAN Computers Corp. 

shares) 

3 rd employees’ stock option 

(2 st term) 

(2 nd time after merging TYAN 

Computer Corp. shares) 

4 rd employees’ stock option 

(1 nd term) 

(3 nd time after merging TYAN 


4 th employees’ stock option 

(2 st term) 

(3 rd time after merging TYAN 


April 30, 2010 


(1 nd term) 

Date approved by authorities 08.16,2005 08.16, 2005 03.31, 2006 03, 31, 2006 12, 1, 2006 

Issuing (processing) date 08.31, 2005 03.10, 2006 06.30, 2006 03.19, 2007 12, 7, 2006 

Issuance (Note 1) 489.278 units (Note 2) 489.278 units (Note 2) 404.759 units (Note 2) 711.895 units (Note 2) 32.000 units 

Ratio of stock option to 

outstanding shares 

0.08% 0.03% 0.03% 0.05% 2.08% 

Valid duration 6 years 6 years 6 years 6 years 6 years 

Performance Issue new stock shares Issue new stock shares Issue new stock shares Issue new stock shares Issue new stock shares 

Limited stock option period and 

ratio (%) 

Employees hold stock options 

over two years can exercise 

their options until ten days 

before their expiration, except 

for any suspension by law. 

Time Exercise Percentage 

More than 2 years 50% 







































Stock shares exercised 222,855shares 129,953shares 0 share 0 share 0 share 

Stock value exercised NT$ 3,024,254 NT$ 2,495,098 NT$ 0 NT$ 0 NT$ 0 

Unexercised stocks (note 3) 447,855shares 159,922shares 138,887shares 648,403shares 180,000shares 

Stock option price of outstanding 

stock option 

NT$ 13.1 NT$ 16.7 NT$ 20.4 NT$ 20.0 NT$ 30.2 

Ratio of outstanding stock option 

to outstanding shares (%) 

0.03% 0.01% 0.01% 0.04% 0.01% 

Impact on shareholder’s equity 

All employees cannot exercise 

their stock options for two 

years; therefore, it does not 

cause significant dilution effect 

on shareholder’s equity. 











Note 1: Each stock option can exercise 1,000 common shares of MiTAC. 

Note 2: Followed the merger agreement to make the shares-subscription amount and price per unit in a ratio of (MiTAC: TYAN = 1: 1.26). 

Note 3: After deduction of given-up shares. 











45

April 30, 2010 

Type of employees’ stock 

options 


(2 nd term) 


(1 st term) 


(2 nd term) 


(4 th time after merging 

TYANComputer Corp. shares) 


(1 st term) 

Date approved by authorities 12.01, 2006 04.16, 2007 04.16, 2007 08.24, 2007 09.30, 2007 

Issuing (processing) date 01.11,2007 07.30, 2007 08.17, 2007 09.26, 2007 10.13, 2008 

Issuance (Note 1) 32,000 units 32,000 units 32,000 units 1,245.222units(note2) 42,500units 

Ratio of stock option to outstanding 

shares 

2.08% 2.08% 2.08% 0.08% 2.77% 

Valid Duration 6 years 6 years 6 years 6 years 6 years 

Performance Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock shares 

Limited stock option period and ratio 

(%) 














































Stock shares exercised 0 0 0 0 0 

Stock value exercised 0 0 0 0 0 

Unexercised stocks (note 3) 180,000 shares 180,000 shares 169,000 shares 728,356 shares 39,412,000shares 

Stock option price of outstanding stock 

option 

NT$29.7 NT$35 NT$31.7 NT$19.7 NT$13 

Ratio of outstanding stock option to 

outstanding shares (%) 

0.01% 0.01% 0.01% 0.05% 2.57% 





cause significant dilution 

effect on shareholder’s equity. 
























46

April 30, 2010 

Type of employees’ stock 

options 


(2 nd term) 

9th employees’ stock option 

(1 st term) 


(2 st term) 


(1 st term) 


(2 st term) 

Date approved by authorities 09.30, 2008 01.06, 2009 01.06, 2009 09.22, 2009 09.22, 2009 

Issuing (processing) date 10.27, 2008 04.29, 2009 07.03, 2009 10.05, 2009 04.19, 2010 

Issuance (Note 1) 42,500units 21,500 units 21,500 units 47,500 units 23,000 units 

Ratio of stock option to outstanding 

shares 

2.77% 1.4% 1.4% 3.09% 1.50% 

Valid Duration 6 years 6 years 6 years 6 years 6 years 

Performance Issue stock shares Issue stock shares Issue stock shares Issue stock shares Issue stock shares 

Limited stock option period and ratio 

(%) 


over two years can exercise their 

options until ten days before 

their expiration, except for any 

suspension by law. 





Employees hold stock 

options over two years can 

exercise their options until 

ten days before their 

expiration, except for any 

































Stock shares exercised 0 0 0 0 0 

Stock value exercised 0 0 0 0 0 

Unexercised stocks (note 3) 39,437,000shares 20,380,000 shares 20,406,000 shares 47,500,000 shares 23,000,000 shares 

Stock option price of outstanding 

stock option 

$11.2 $14.1 $13.1 $13.9 $14.45 

Ratio of outstanding stock option to 

outstanding shares (%) 

2.57% 1.33% 1.33% 3.09% 1.50% 







All employees cannot 

exercise their stock options 

for two years; therefore, it 

does not cause significant 

dilution effect on 

shareholder’s equity. 



















47

4.3.2 Names, acquisition and subscription of the managers with employees’ stock options and employees who are top ten employees with stock 

options and obtained for more than NT$30 million 

April 30, 2010 Units:NT$ Thousand/ Shares 

5 th Employees’ Stock Options (1 st Term) 

Titles 

N a me s 

CEO Matthew Miau 

President Billy Ho 

Senior Vice 

C.J. Lin 

President 

Vice President Percy Chen 

Vice President Johnson Wang 

Vice President James Yuan 

Vice President Ted Chang 

Vice President Stone Chen 

Vice President Michael Lin 

Vice President Crystal Yang 

Vice President Jack Kuo 

Vice President C.P. Li 

Vice President James Wu 

Vice President King Chen 

Vice President Albert Mu 

Vice President Steve Chang 

Vice President Alice Fang 

Vice President Bjorn.Tsai 

Vice President J.J. Huang 

Stone Lin (Retired on 


Mar 9, 09) 

Senior Vice Samuel Wang(Quit on 

President June 5, 09) 

Robert Yang(Quit on 


November 1, 09) 

C.S. Chen (Retired on 


Feb 17, 09) 

Account 

Tracy Ting 

manager 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 

Exercised options to 


Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


5,240,000 0.34% 0 - 0 0.00% 0 30.2 0 0.00% 

48



Titles 

N a me s 

CEO 

Matthew Miau 

President 

Billy Ho 

Senior Vice President C.J. Lin 



















on Mar 9, 09) 

Samuel Wang(Quit 

Senior Vice President 



Vice President on November 1, 

09) 



on Feb 17, 09) 

Accounting manager Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


5,240,000 0.34% 0 - 0 0.00% 0 29.7 0 0.00% 

49

April 30, 2010 Units:NT$ Thousand/Shares 


Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 

Samuel Wang(Quit on 

June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


5,540,000 0.36% 0 - 0 0.00% 0 35.0 0 0.00% 

50



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


5,550,000 0.36% 0 - 0 0.00% 0 31.7 0 0.00% 

51



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


7,985,000 0.52% 0 - 0 0.00% 7,985,000 13.0 103,805 0.52% 

52



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


8,185,000 0.53% 0 - 0 0.00% 8,185,000 11.2 91,672 0.53% 

53



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


4,565,000 0.30% 0 - 0 0.00% 4,565,000 14.1 64,367 0.30% 


54



Titles 

N a me s 

CEO 

Matthew Miau 

President 

Billy Ho 

Senior Vice President C.J. Lin 



















on Mar 9, 09) 

Samuel Wang(Quit 

Senior Vice President 



Vice President on November 1, 

09) 



on Feb 17, 09) 

Accounting manager Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


4,265,000 0.28% 0 - 0 0.00% 4,265,000 13.1 55,872 0.28% 

55



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


9,300,000 0.61% 0 - 0 0.00% 9,300,000 13.9 129,270 0.61% 

56



Titles 

CEO 

President 

Senior Vice 

President 


















Senior Vice 

President 



Accounting 

manager 

N a me s 

Matthew Miau 

Billy Ho 

C.J. Lin 

Percy Chen 

Johnson Wang 

James Yuan 

Ted Chang 

Stone Chen 

Michael Lin 

Crystal Yang 

Jack Kuo 

C.P. Li 

James Wu 

King Chen 

Albert Mu 

Steve Chang 

Alice Fang 

Bjorn.Tsai 

J.J. Huang 


Mar 9, 09) 


June 5, 09) 




Feb 17, 09) 

Tracy Ting 

Shares of 

obtained 

stock 

options 

Percentage 

of obtained 

stocks to 

outstanding 

shares 

Quantity 

Unit price 

(NT$) 

Exercised 


Percentage of 



Quantity 

(Note 1) 

Unit price 

(NT$) 

Unexercised 


amount 

Percentage of 

unexercised 

options to 


7,000,000 0.46% 0 - 0 0.00% 7,000,000 14.45 101,150 0.46% 


Note 2: 2 nd time stock options 2 nd Term (1 st time after merging TYAN Computer Corp. shares), 3 rd time stock options 1 st and 2 nd Terms (2 nd time after merging TYAN Computer 

Corp. shares), 4 th time stock options 1 st term and 2 nd term (3 rd time after merging TYAN Computer Corp. shares), 7 th time stock options (4 th time after merging TYAN 

Computer Corp. shares): No managers obtained and exercised stocks. 

Note 3: Except for managers obtained stock options, employees who obtained stock options in the top ten list and exercised amounting to NT$ 30million: None. 

57

5. Operation Highlights 

5.1. Operation report 

5.1.1 Business scope 

1. Four major businesses and main current products of MiTAC’s are: (1) client system 

business products; (2) enterprise products, including workstations, servers, and storage 

devices; (3) mobile communications products, including PND (portable navigation 

device), AVN(audio video navigation) and smart phone navigation software, etc. and (4) 

enterprise and channel servers/ workstation, including Intel and AMD’s high-end 

two-way, four-socket & eight-socket X86 processing servers and workstation platforms 

and specialized enterprise servers and workstation platforms for clients in projects. 

2. Business ration 


Years 

Products 

2009 Ratio (%) 

Computer & communication 

products 

58,039,415 100.00 

3. Current Main Products 

(1) Client system business products 

‧ High-end business computers ‧High-end network computers 

‧ Mini multimedia PCs ‧All-In-One LCD computers 

‧ High-end computer motherboards ‧Entry-level and mid-range workstations 

‧ High-end barebones computer systems ‧Thin client computers 

‧ High-performance Point of Sale (POS) * High-end mobile Internet devices 

‧ High-end mobile communication devices 

(2) Enterprise products 

‧ High-end workstations ‧General-purpose servers ‧Rack-mounted servers 

‧ Communicational servers ‧Blade Servers 

‧ Storage 

(3) Mobile communications products 

‧ Portable Navigation Device 

‧Audio Video Navigation 

‧Smart phone Navigation software 

(4) Enterprise and channel server/ workstation products 

‧ High-end workstations ‧General-purpose servers ‧Rack-mounted servers 

‧ Communications servers ‧Blade Servers ‧High-density servers 

‧Cloud computing server ‧GPU Supporting Server 

‧High-performance data center 

4. Products or technology slated for development 


‧High-performance PC gaming computers 

58

‧Personal computers with wire or wireless networking features 

‧High-performance low-cost dual-core processor-based workstations 

‧System protocol and integration of thin client computers & servers 

‧R&D of all-In-One LCD computer technologies 

‧ Integrated technological development for Point of Sale (POS) systems. 

‧ Development of advanced mobile Internet connectivity technology. 

(2) Corporate products 

‧RISC/CISC processor-based structure. 

‧ High-performance server. 

‧Optimized virtual server. 

‧GPU supporting server. 

‧Communication server. 

‧Storage device and system administration software. 

‧High performance workstation. 

(3) Mobile communication products 

‧Technology for integrating computers and communications 

‧ Integration of data access, voice, and wireless broadband communications 

functionality 

‧ Technologies for developing web-centric personal computers, IA products, 

communications devices, and storage solutions 

‧Technology for multimedia applications 

‧Wireless communications and networking technologies 

‧Technology for wireless communications equipment 

‧Development of new digitalized multimedia technologies to create new business 

opportunities and the foundation for related products 

‧Operating systems and application software 

‧GPS and electronic navigation technologies and location based service. 

(4) Enterprise and channel servers/ workstation products 

‧High-performance servers (four-socket or eight-socket HPC server platform) 

‧R&D of high-density servers 

‧Blade servers 

‧Technologies for storage devices 

‧ODM server/ workstation platform development and production 

‧High-density GPU Supporting Server 

‧Cloud computing 

5.1.2. Overview of the industry: 

The following summarizes the situation for MiTAC’s four main product lines. 

1.Client system business products 

(1) According to reports published by IDC, the worldwide PC sales volume had 

recovered during the second half of 2009 and contributed to annual growth of 2.9%, 

59

which was higher than expected. Apart from the price reductions initiated by PC 

manufacturers, it is apparent that PCs had become one of our daily necessities. The 

worldwide PC market is expected to sustain an annual growth over 10% between 

2010 and 2014. 

Shipment and Estimation of PC from vears of 2007-2012 

Units: Million 

Source: DIGITIMES 2009/12 

(NB including netbook) 

(2) IDC projected that PC sales may achieve growth of 12.6% worldwide in 2010, due to 

the rapidly growing demand from emerging markets. Sales in 2011 are likely to hit 

double-digit growth as well. NB will continue to be the main driving force behind 

personal and commercial PC sales. It is estimated that by year 2012, NBs will 

represent nearly 7% of total PC sales, while the desktop (DT) market declines except 

in Japan and other Asia Pacific regions. However, the profit margins of PC products 

had tightened further; despite the rapid growth in sales volume, the growth of PC 

sales revenues is relatively stagnant. The growth rate for PC sales revenues is 

estimated at 5% for 2010 and 7% for 2011. 

(3) In home product market, client system business has been repositioned, with their raw 

processing horsepower deemphasized and the focus shifted to their use in multimedia 

entertainment and digital home applications. As a result, personal computers are 

integrating functionality related to graphics, video, audio, and data, and all of above 

are to initiate a new phase of strong growth. 

(4) Under demands of building high security and a highly-efficient remote control, all 

business computers of MiTAC’s urgently need our vendors to integrate our brand 

with the system. Our goal is to precisely meet MiTAC’s powerful system’s 

integration capability, to work with world-known manufacturers, and then to achieve 

a steady growth in the future. 

(5) Due to the difficulty in increasing demands on client computers world-wide, MiTAC 

will systemically integrate all our superiority in order to supply customers the 

barebones systems, a full system and a total solution. 

60

(6) Since many worldly famous companies have started a price war, it will be a great 

advantage for all Taiwanese companies to obtain orders from other vendors due to 

our low price. While worldwide famous companies continue to outsource, we believe 

that Taiwanese companies will benefit from this. 

(7) The application of Cloud Computing has made thin computers popular. From the 

development of remote control, to local server, and from tiny monitors to VOIP and 

video conference devices, the market is calling for the mainframe supported multiple 

high-definition monitors without fans. In terms of product structure, thin clients had 

evolved from the conventional micro form factors into all-in-one devices with 

integrated screen display, and into portable thin clients. Whereas operating platforms 

had also extended from the x86 structure into silicon on-chip (SOC). The company 

has ready access to comprehensive product lines to meet customers' every need. 

(8) All-in-one computers have been rapidly growing in popularity. In fact, there are many 

reasons to cause AIO DT to be popular again. Firstly, monitors are getting too big for 

computer desks. 22 to 24 inches monitors are already oversized; hence monitors have 

reached their limits. Secondly, the improvement of DT’s modules has made 

computer upgrades less necessary. Therefore, there will be less of a reason to separate 

monitors and DT, so all-in-one DT has been much more stylish and popular. In 2009, 

DT has been developed in two totally different directions: one is slim, small, 

lightweight, inexpensive, low power consumption and a friendly design and is for 

word processing and web browsing purposes. Nettop、AIO DT are type one. The 

other direction is high-end, high-efficiency, high-cost, energy intensive and with a 

metallic look. They are mainly used for video games and high-definition conference. 

“Enthusiastic PC system” is the type of this cutting edge model. 

MiTAC has been working on not only the completion of production lines on 

all-in-one products for their differentiation and design, but also R&D sub-generation 

products with major PC OEM vendors. We hope to increase sales of components and 

high- value-added products. 

(9) The point-of-sale systems (POS) are showing signs of recovery as European and US 

economies stabilized; food, beverages, and other service industries which the POS 

system is mainly targeted to are showing signs of revived business activities. In light 

of the potential of POS systems and the ability to integrate with more powerful 

systems, the company has also begun its preparation for the POS product line. 

(10) Creative and fashionable mobile Internet devices, and the wide ranges of services 

that they enable, are creating a market of their own with the arrival of iPAD. 

The usage of which is designed to liberate users from the complexity of personal 

computers. Mobile Internet devices are creating whole new commercial 

opportunities with a promising future. 

2. Enterprise products 

Servers are used mainly for building corporate information systems, making them an 

essential infrastructure investment for businesses. Because information systems are a 

critical tool for any modern corporation seeking to sustain its operations, companies place 

great importance on Total Cost of Ownership (TCO) when it comes to purchasing servers. 

TCO includes the business costs incurred when the system is not operational as well as 

regular maintenance costs. Therefore, they demand Reliability, Availability, 

Serviceability, Usability, and Manageability – characteristics that are collectively termed 

RASUM – from servers, which consequently require longer time for product development 

61

and testing. Once products are introduced on the market, they have correspondingly 

higher margins and longer product life cycles. As a result, major multinational server 

vendors are relatively cautious when it comes to outsourcing manufacturing or design of 

their server products, and building a business partnership requires a longer time. Besides 

hardware products, software products are another important factor in the quality of 

services provided by servers. 

In terms of product types, traditional pedestal servers are already seeing gradual 

decreases in their share of shipments in the American market. Replacing them as the 

mainstream choice are rack-mounted servers, and this shift should become evident in 

Europe and Asia as well over the next one or two years. Following rack-mounted servers 

are highly computing-density blade servers. Because of the more stringent heat 

dissipation demands of rack-mounted and blade servers stemming from their high 

computation densities, vendors in this segment will be spending more for R&D and allied 

investment than was necessary in the past for pedestal servers. 

As for the storage device market, in the past, under the circumstances of closed supply 

structure and the production amount of uniform model of products were small, vendors 

rarely outsourced from Asian regions since the manufacturing profits were sufficient. 

However, in the past two years, terrible market competition has forced vendors to seek 

outsourcing partners in Asia; this will result in storage vendors outsourcing a greater 

proportion of their manufacturing, which will greatly benefit Taiwanese vendors. 

3. Mobile communications products 

(1) Current state of the industry and prospects 

A. Portable Navigation Device 

In recent years, GPS technologies have made several breakthroughs with 

regards to compactness and energy saving qualities; it is becoming widely 

accepted with the reduced costs of related components and the maturity of 

digitized mapping technologies. According to the statistics of several research 

institutions, GPS navigation will attract billions of users by year 2020; the market 

of similar products is estimated to reach NTD 16 trillion and the demand for GPS 

navigation products may reach EUR270 billion. 

According to the latest market research of Canalys, worldwide PND sales are 

estimated at 39 million in 2010, a slight growth from the 38 million in 2009. 

As more manufacturers and brands enter the PND market, the future of GPS 

lies in its integration with cell phones, cameras and other mobile devices, and the 

introduction of value-added services. With more functionality available, selling 

prices are continually dropping; several GPS brands are trying to control costs by 

acquiring map data providers. However, approximately more than 500 million 

cars in the world have yet to install navigation systems, and on top of which the 

cost of producing cars with embedded GPS navigation remained high, thus there 

is still significant potential to the PND market. 

B. Audio Video Navigation 

With the maturing of navigation technology, more and more car 

manufacturers are considering preinstalling auto navigation devices. Based on the 

analysis of TRG, approximately 9.1 million auto navigation devices will become 

available worldwide in 2010. The European and US markets are the most highly 

developed with penetration rates of 27% and 29%, respectively. As 

62

communication technologies mature in the future, the markets of auto navigation 

shall become a critical industry in the 4C mix, thereby attracting participation 

from world renowned manufacturers. 

(2) Connections among the industry’s upstream, midstream and downstream 

Approximately 80% of personal GPS devices are made and installed by 

Taiwanese vendors, which shows that the powerful integrating capability of 

Taiwanese GPS vendors throughout the GPS industry’s supply chain. Handheld 

devices industry belongs to “short, small, light and thin”, so they are both easy to 

carry and stylish. Therefore, from innovative and fashionable design on the outside, to 

testing and whole machine production, vendors are required to make GPS devices 

all-in-one embedded hardware and software. Specifically, all upstream and 

mid-stream vendors produce key hardware components including microprocessors, 

displays, touch panels, memories, IC drivers, batteries, acoustic filter, quartz 

oscillator, objective devices, antenna, GPS chipset, GPS module, receiver, connectors 

and pushbuttons, etc. They also produce integration devices, GIS graphic data 

terminals, and digital content and software applications. Downstream vendors are 

mainly OEM/ODM clients and channel providers. 

(3) Product trends 

Handheld devices are “portable information” devices. They also incorporate the 

latest web applications and wireless technology to access personal information any 

time anywhere. All handheld products aim at different audiences. Detailed 

description is as below: 

A. Portable Navigation Devices 

In 2008, the trend of PND-embedded products combine with other electronic 

products had been more significant. Many PND products are equipped with GPS, 

digital TV, DAB and PMP, some even with MP3, Blue Tooth, iPod and USB for 

audio identification and voice synchronizer. 

Because it is a trend to equip real-time information, i.e. traffic report, POI 

search and other life assistance, adding all kind of online services into PND will 

make it become a Must-Have for everyone. 

Besides, different countries require different functions for GPS products: the 

Asia-Pacific consumers pay more attention on multimedia entertainment, i.e. 

digital TV and DVD; whereas Japanese who have the No. 1 GPS penetration rate 

in the world pay more attention on traffic information and 3D satellite navigation 

capability. As for Europeans and Americans, consumers rather emphasize driving 

safety and emergency communication, while North Americans prefer a simple 

operating interface. As a result, we can predict that GPS will develop toward 

inexpensive, small, and multi-functional, and will require different marketing 

approaches. 

B. Audio Video Navigation 

With the rapid growth of mobile data, the market is getting used to the idea of 

having multiple SIM cards per person. Combined with multimedia technologies, 

digital TV, GPS, LBS and other wide applications, integrated auto electronics have 

become a new favorite among consumer electronics. In addition to computers, TVs, 

63

and cell phones, vehicle screen displays are starting to become the fourth most 

common display device for the average person. 

C. Outdoor navigation 

GPS is being more widely used than ever in our daily life. For example, during 

cycling, hiking, camping among other diverse activities. Humans’ need for 

navigation is not confined to vehicles, but also during outdoor activities; for this 

reason, outdoor GPS navigation devices are also becoming the market's new 

favorite. 

(4) Competition 

A. Merging 

Many PND and cell phone manufacturers merged graphics vendors or other 

suppliers to lower costs on software and hardware in 2008, such as Navigator 

TomTom who bought Dutch TeleAtlas (TA); Nokia merged graphics company 

Navteq. As for MiTAC, we purchased Navman and will continue to cooperate with 

good graphics companies and will divide markets by providing added-values. 

MiTAC also acquired Magellan, America's third largest navigation provider, while 

CSR acquired SiRF, the world's largest GPS chip supplier, in 2009. 

B. Competition among vendors 

Having so many manufacturers joining in the research, development, and 

production of handheld devices, product variety and competitiveness within the 

market is becoming more intensive than ever. In 2009, MiTAC will continue to 

focus its designs based on consumers' needs; enhancing the convenience and ease 

of operational interfaces while extending the comprehensiveness of its map data 

as well as product differentiation. 

The rapidly growing sales volumes of smart phones also present enormous 

opportunities, for which MiTAC already has extensive involvement in this 

segment. Its 2009, focus will be placed on the development of smart 

phone-compatible navigation software that produce higher profit margins. 

MiTAC continues to outstretch its competitive edge through innovative research 

and development, production quality and cost control, and mobile positioning 

services; its product developments are especially aimed to create market trends, 

customers' satisfaction and needs. Through strategic alliances with world 

renowned hardware and software providers of mobile communication services, 

MiTAC aggressively searches for new buyers in the global PND market, capturing 

the third largest market share at 7%. Its acquisition of Magellan, the world's fourth 

largest GPS brand, will help raise its market share in the north American region 

and capture the outdoor GPS market, thereby providing significant support to the 

company's future revenue growth. 

4. Enterprise and channel server products/ workstation 

(1) Product Status 

The company’s sServer products can be classified into X86 and non-X86 categories. 

Non-X86 servers are targeted at mainframes customized for specialized uses or 

professional users. CISC, RISC, EPICRISC, and Itanium UNIX series have 

relatively fewer users and the market is lead by Sun, IBM, and HP among other 

world renowned manufacturers. On the contrary, X86 servers are developed and 

64

manufactured for the mainstream market; product lines are wide in variety and cater 

to the needs of a larger market across different industries and usages. The company's 

corporate servers/workstations are solutions developed for the X86 market; they are 

suitable in any space arrangements or operating environments, and are capable of 

accomplishing different assignments. 

(2) Introduction to the X86 market 

ITC's third quarter worldwide server market survey (dated 2009.12) revealed 

strong growth of demand for servers in 2009 following the rapid rebound of the X86 

server market. Gartner’s 2009 worldwide server market research report (dated 

2010.03) also suggested the recovery of server demand; under the thriving of X86 

servers in particular, server sales volume increased by 4.5% compared to 2008 to a 

total of 2.24 million units worldwide, producing USD 12.6 billion in revenue. On the 

other hand, the sales volume and revenues of non-X86 mainframe servers had 

consistently declined as more customers switched to X86 servers. The demand for 

X86 servers shall become the main driving force behind the growth of the server 

market; the annual growth rate of the overall server market is estimated between 

5-9% in 2010. 

The company has more than 10 years of experience in the design and 

manufacturing of X86 servers. It had introduced to the market several Intel and 

AMD-based platforms with superior cost/performance ratio which aligned with 

consumers' emphasis towards returns on IT investments (ROI). Since X86 servers 

had become the mainstream product of the server market, the company is setting its 

goals to capture nearly 10% share of the entire X86 server market between 2010 and 

2011. Platform-wise, the company is able to capture approximately 10% of the Intel 

platform and 40% of the AMD platform. As to specialized project customers, the 

company also packages corporate server/workstation solutions to satisfy customers 

with special needs. 

(3) The future of cloud computing 

IDC projected that the market potential of cloud computing services will grow 

by a staggering compound rate of 27% per annum worldwide, reaching USD 42.2 

billion by year 2012 in terms of market size (IDC Taiwan, Tsao Yung-Huei, 

2009/09/12). Investment institution Merrill Lynch believes that the market potential 

of cloud computing may reach as high as USD 160 billion by the year 2011 

(ZDNET, Tsai Yi-Hsiu, 2009/08/27). The technology industry in Taiwan had even 

designated year 2010 as Taiwan's initial year for cloud computing. From world 

renowned manufacturers including IBM, HP, Dell etc. to Taiwan’s leading IT 

manufacturers such as Foxconn, Quanta, Wistron, Inventec, MiTAC etc. and 

software giants such as Oracle, VMware, and Trend Micro, all participants are 

targeting cloud computing as the critical IT development for the upcoming year. We 

can sense the significance of cloud computing based on the level of attention these 

major IT participants are dedicated to. 

In light of the enormous commercial opportunities brought forth by cloud 

computing, the company has spearheaded its entry with the introduction of the 

Yellow River series product line in 2009. The company will continually invest 

integrated resources for the design and production of cloud computing products in 

wide varieties; offering robust hardware platforms to help customers construct ” 

infrastructure as a service” (IaaS) and rack server platform service (RaaS) that meet 

the stringent requirements of cloud computing. 

65

(4) The emerging data server concept: container data center 

The idea of a container server room originated from Google, which involves 

constructing a data server inside a cargo container and using it as a server room; 

several containers can be stacked up like Lego bricks into an enormous data center. 

Using simple management, administrators can identify abnormalities within specific 

server rooms, and have the normally functioning server rooms taking over the 

workload of malfunction server rooms. The abnormalities can then be isolated and 

resolved so that all server rooms can resume normal operation. Since this design 

utilizes standard sized containers and draws natural forces such as wind, climate, and 

water for cooling, the consumption of natural resources can be kept at a minimum, 

thereby saving energy, reducing carbon emissions, and delivering low-cost yet high 

effectiveness. The precision of remote access and highly efficient data services are 

one of the keys to Google’s success, and is the reason for the growing popularity of 

container server rooms. 

Google’s and Microsoft's successful container server room establishments have 

prompted more corporations to develop their own container data centers. To cater to 

the growth of this emerging concept, the company has also developed barebone 

server systems that are suitable for installation and application inside a container 

server room. Meanwhile the company is also researching solutions that enable users 

to install an entire rack server into a container server room, thereby satisfying the 

enormous demand for data flow of high-end data center users. 

5.1.3 Overview for R&D 

1. Research & Development Expenses 


Year 

Item 

2009 Mar 31, 2010(Note) 

R&D expenses 1,897,941 446,077 

Note: Figures taken until the quarter before the publication date of the report. 

2. Recent successful technologies and products before the publication date of the report: 

The R &D directions of MiTAC are to control new technology and new products, 

following the trends developing toward wireless, mobile communication and the Internet 

niche market. Additionally, MiTAC’s human resources are from Taiwan, China and North 

America, who can observe the mainstream market and then use the existing specs to 

create our own similar products, in time to meet the market’s demands. Our advantages 

are product diversity, serial completion, a whole supply chain and global locations. 

(1) Our success: 

A. Allied with leading brands and corporations, using high power processor 

techniques to provide different servers and workstations and become a channel 

leading brand. 

B. Combining Microsoft's and Google’s operating systems and other software for 

mobile devices with wireless broadcast and transmission technologies to develop 

mobile audio/video devices and PNDs using world-class standards. 

C. Embedded GPS chips into handheld mobile communication devices. Integrated 

66

state-of-the-art hardware with navigation software, map data and other 

applications to provide market-leading solutions. 

D. For the next three years, the company will be focusing on broadening PND 

applications and promoting PND users' experience through research toward 

systematic, integrated, and sustainable technologies that facilitate the development 

of more convenient products to market consumers. 

E. Based on MiTAC’s global vertical and horizontal teamwork and integration 

system, from ID design to tooling molds and vertical integration of production, to 

satisfy customers and market demand. Drawing from the comprehensive 

distribution network, and coordination capability of MiTAC to develop high-tech 

wireless Internet and PC technology with international brands. MiTAC aims to 

become one of the major PC suppliers with the core products of PC and home 

computers that combine imagery, sound effects, video, and wireless. 

(2) Products 

A. Client system business products 

a. Business and home PCs: A series of computers with a basic architecture built 

around processors with the newest technologies, and integrating both 

PCI-Express graphics cards and high-definition audio, wireless networking, 

with structural designs that stress efficient thermal performance. 

b. Entry-level and midrange workstations: Based on single and dual Intel and 

AMD X86 processors. 

c. Small form factor multimedia PCs 

Full-featured client system business product solutions for the digital home and 

digital office. 

d. The highly integrated all-in-one LCD PC series in 17”, 19’ , 20” or 22”, 

embedded with touchscreen, web cam, VoIP and other convenient applications. 

e. Thin PCs: are highly integrated terminal computers without fans. Three types: 

Desktops, portable and All-in-one PCs. As for their platforms, there are X86 

and SOC servers. 

f. Portable client PCs and mobile Internet devices: Rather than just traditional 

EeePC, MiTAC added more creativity and various software for end-users to 

manage their personal information and achieve real-time news. 

B. Enterprise products 

a. Workstations: Expand joint development, design, manufacture, and distribution 

of high-performance single- and dual-processor workstations with world-class 

vendors. Become one of the few vendors with UNIX and Windows operating 

system workstations made available. 

b. Servers: MiTAC has accumulated extensive R&D experience with 

multiprocessor servers over the years. In response to market growth and 

demand globally for server storage devices, MiTAC’s R&D team has developed 

single-, dual-, and quad-processor servers, and drowns on high-density system 

integration technologies to develop high-density servers. 

c. Storage equipment: In response to expansion of the storage equipment market, 

67

MiTAC has dedicated R&D resources to developing associated technologies 

and products. 

C. Mobile communications products 

a. Portable Navigation Device: We invented the thinnest PND in the world. It has a 

camera, Wi-Fi, Bluetooth and GPS functions and uses Microsoft operating 

platforms so its interfaces are more user-friendly and practical. 

b. Smart phone navigation software: MiTAC is developing high-end, GPS enabled 

smart phones capable of mobile communication, image capturing, multimedia, 

and wireless Internet connectivity. It is shifting its software development focus 

towards cell phone navigation which provides higher profit margins. 

D. Enterprise and channel server workstation products 

a. High-end server platform: MiTAC adopts the latest upstream and downstream 

technologies to its production of multiple high-end server motherboards and 

barebone systems in line with the latest market trends, customers' demand, as 

well as its commitment to innovation. Combined with virtual technology and 

other technologies offered by software providers, MiTAC is widely acclaimed 

and acknowledged for its broad varieties of high-performance and high C/P 

platforms. As soon as Intel announced its 32 nm, six-core Intel® Xeon® 5600 

processor series in mid-March 2010, and as soon as AMD announced its latest 

12-core AMD Opteron 6000 processor series at the end of March, the company 

immediately launched products that accommodate these radical improvements 

in the hope of offering customers the most advanced selection. 

b. GPU Supporting Server: apart from C/P ratios, server room space is also 

becoming an important consideration. In contrast to conventional servers, GPU 

supporting servers are designed to save space; by packing multiple server 

functionalities into a smaller server with GPU support, this solution greatly 

satisfies customers' restraint on space and expectations toward 

high-performance. To complement NVIDIA’s GPU promotion efforts in 2009, 

the company took the initiative to introduce a series of GPU supporting servers 

that delivered high quality as well as high-performance for its customers. From 

high performance computing to data centers, the company offers multiple 

GPU-supportive products that effectively save server room space and reduce 

customers' server room maintenance costs. 

In the future, the company will continue to strive from its customer centric 

value and relentlessly innovate in line with market trends and customers' 

demand; researching and developing broader varieties of GPU supporting 

server barebond systems to maintain its market leader status in server supplies. 

c. Cloud computing barebone servers: IDC's research report dated December 2009 

indicated that the market potential for cloud computing is valued as high as 

USD 2.4 billion worldwide, with the potential to increase to USD 8.1 billion by 

year 2010. The foundation of cloud computing, which involves a massive 

database center that is remotely accessible (cloud) and users' ultra portable 

electronic devices (client). Users connect to the Internet using their handheld 

68

devices, establishes connection with the data center using remote access 

management protocols, and utilizes the data center's powerful computation and 

storage capabilities to perform any complex task or daily, regular calculations. 

This arrangement facilitates users and corporations to deliver extensively 

complex processing of massive data at the maximum effectiveness and lowest 

costs. 

“Cloud” suppliers construct hardware infrastructure and effectively integrates 

with software into a working platform. Combined with various solutions 

offered by software suppliers, these services can be leased to corporations 

across many industries for a fee. By leasing clouds, corporations can effectively 

reduce their cost of data center establishment and maintenance; they can even 

retrieve products or services that these clouds provide over the Internet and 

deliver them immediately into ultra portable electronic devices at the client’s 

end. End consumers can then access products or services rapidly and easily 

using handheld devices without being tied to the conventional, heavy electronic 

equipment. 

To respond to the trend of cloud computing, the company spearheaded the 

introduction of its Yellow River series in 2009 to offer customers data center 

solutions with high performance computing and storage capabilities. Regardless 

of publicly owned or privately owned cloud structures, MiTAC is able to satisfy 

the customers' every demand. Our hardware platform provides robust support to 

customers' goals toward “Infrastructure as a Service” (IaaS). In addition to the 

Yellow River series, the company will continue broadening its product lines and 

introducing hardware platforms customized for the cloud computing 

environment. 

d. Container server rooms: the concept of container server room complements 

cloud computing in the way that it helps service providers build more efficient, 

more stable, and more environmentally friendly hardware platforms, thereby 

reducing overall operating costs. To accommodate the trend of sustainable 

business growth on planet Earth while improving operational efficiency and 

cost reduction, the company is collaborating with upstream and downstream 

manufacturers for the research, development, and design of container server 

room related products in the hope of offering high performance yet low-cost 

container data center solutions that meet the latest environmental regulations. 

5.1.4 Long- and short-term business plans 

1 Client system business products 

(1). For short-term business plans: The US, Europe, and Japan are the major PC markets. 

MiTAC’s has focused on these markets, and will continue to develop further ODM 

business opportunities in these markets in the future. About product strategies, 

compact systems are getting more attention in the market. So far, the digital appliance 

is starting to get prosperous. For the short-term plan, we will focus on ODM in North 

America and Europe and expand the source of customers from different fields. 

(2). For long-term business plans: The Asia-Pacific region had the highest shipping 

69

volume in the world in 2009. Especially, the Asia-Pacific region has already 

outnumbered Japan, with mainland Chinese being the No 1 supplier in the Asia-Pacific 

region. Therefore, for long-term business development, we plan to explore potential 

markets, like China and Asia-Pacific region. As for product strategy, diversified 

products in all age groups remain the focus of our development. MiTAC had gained 

our R&D capability from all of the ODM digital production and we will expand our 

market from the existing American & European markets to the global ones and to 

develop more leading- edge products. Besides, we are working on making alliances 

with digital services providers in order to open a new audio-video market. 

2. Enterprise products 

(1)For short-term business plans: Our strategy is to maintain and cooperate with existing 

clients at workstations and various types of servers and storages devices in order to 

expand our customer base and increase revenues. 

(2)For long-term business plans: In the next three years, we will continue the 

development and sales for storage devices and servers. On the other hand, we seek 

long-term and stable cooperation with clients in the whole food chain, from entry-level 

to high-end solutions, single product line and multiple ones. We want to strengthen our 

product development capability and speed, product quality and delivery control. Our 

aim is to reinforce our role as a major server ODM supplier. 

3. Mobile communication product series 

(1) Mobile communication products 

A. For short-term business plans: We closely observe market and user’s feedback in 

order to design the most competitive mobile communications products. We use our 

product planning, development, design and production capabilities to provide our 

customers high-value services. We will also give clients cheap mapping and points of 

interest in order to open different markets. 

B. For long-term business plans: We will utilize global distribution, sales models and 

service networks to work closely with partners and vendors. MiTAC SYNNEX 

Group will be the global channel with highly integrated product planning and 

high-value-added products, thus to expand the foundation of major international 

client base and to develop a varsity of clients. 

(2) Handheld devices 

A. Short-term business plan: PND shall remain as the world's most popular navigation 

solution in the next few years; MiTAC shall continue its development of competitive 

PND products based on market demand, while offering customers high value added 

services through innovation and professional product planning, research, 

development, design and manufacturing capabilities. 

B. Long-term business plan: develop products that are horizontally integrated to the 

core GPS navigation technology; e.g. vehicle navigation systems, outdoor navigation, 

and cloud computing-based vehicle fleet administration products in association with 

communication service providers. Extend client interaction with world renowned 

manufacturers and broaden customer variety with highly integrated product planning 

and the introduction of high value adding products. 

4. Enterprise, channel server/ workstation products: 

(1)Short-term business plan: analyze market trends, adopt the latest upstream and 

70

downstream technologies to develop products driven by customers' needs. Actively 

participate in global exhibitions and execute marketing campaigns to enhance brand 

image and explore potential customers. Deliver rapid and accurate production through 

the established global marketing network under the best supply chain management 

practice. Shift businesses and investments toward emerging markets such as Mainland 

China, India, and Russia; strengthen the supply relationship to major customers. 

(2)Long-term business plan: since the USA, Mainland China, and Taiwan are the key 

markets and centers of world's technological development, the company will continue 

its talent investments and market developments within these regions; adopting 

cross-border business models to initiate talent exchange and resource sharing; 

developing products based on different stages of technological development and market 

demand; developing specialized products targeted at niche markets to extend market 

coverage; maintaining a relationship with strategic alliance partners, upstream and 

downstream participants; gaining brand awareness and customers' preference through 

technological collaboration and marketing campaigns. 

71

5.2. Market and sales overview 

5.2.1 Market analysis 

1. Sales regions of main products 


Regions 2009 

N. America 23,481,838 

Europe 14,794,217 

Asia & Australia 19,369,595 

Taiwan 393,765 

Total 58,039,415 

2.. Market share 


According to the statistics provided by IDC, the sales of client computer products 

totaled approximately 127 million units worldwide in 2009; MiTAC’s sale of 

entry-level and mid-level workstations and client computers amounted to 5.1 million 

units, approximating a market share of 4%. 

Currently, MiTAC’s OEM customers mainly consist of the world's top 10 branded PC 

manufacturers. However, the company is striving toward technological integration to 

broaden product variety (such as thin clients, point of sale systems, all-in-one 

integrated computers, mobile Internet devices etc) as well as customer variety. Our 

goal is to expand business scope in multiple directions for optimal risk diversification. 


Because MiTAC’s products are mainly produced for ODM customers, it is more 

difficult to gauge their market share. Drawing on many years of experience, Taiwan’s 

major IT vendors are already able to provide integrated global logistics management, 

providing customers with the best possible competitive advantage by coordinating 

design, testing, manufacturing, assembly, and distribution with the customer’s market 

launch timetable. The evident trend towards international brand vendors continuing to 

seek Taiwanese partners shows that more and more non-PC products will be seeking 

their design and manufacture outsourced to Taiwanese companies. Most Taiwanese 

companies, including MiTAC, can anticipate enhanced competitiveness through this 

type of alliance, helping them expand market share. 

(3) Mobile communication products series 

Sales volume reached 38 million units worldwide in 2009; this was a 7% decline 

compared to the previous year. A small increase of sales volume is projected for 2010 

at 39 million units. The statistics of Canalys indicated that North America consumed 

47% in 2009 while EMEA consumed 39%, and the Asia Pacific region 13%. 

MiTAC has a comprehensive line of entry-level, mid-level, and high-end products. 

MiTAC GPS product sales in 2009 totaled 5.5 million units. The regional breakdown is 

as follows: 

A. European market 

Canalys estimated that 13 million units of PND were sold in western Europe in 

72

2009, and 1.3 million units sold in Eastern Europe; this was a 16% and 20% 

decline, respectively compared to the previous year. Sales to Europe as a whole in 

2010 is estimated to remain stable at 15 million units. MiTAC branded products are 

steadily gaining market share in the Pan-Europe market; it is the leading brand with 

9% market share in Western Europe and 25% market share in Eastern Europe. 

B.North America market 

PND product sales in 2009 totaled 18 million units; this was a much smaller 

decline of 3% compared to the 16% in the European market. Canalys projected a 

similar sales volume of around 18 million units for year 2010. MiTAC captured 

approximately 12% market share in the US, ranking third among other brands. 

C. Asia-Pacific market 

The Pan-Pacific region is the only place where PND showed growth; the growth 

approximated 12% compared to 2008. Product sales totaled 4.7 million units in 

2009, and Canalys projected a further 23% growth in 2010 to a volume of 5.8 

million units. Overall market share is expected to reach 12%. 

MiTAC’s products are well positioned. It gains new buyers through continuous 

product innovation and integrated mobile positioning services that are helpful 

toward further revenue growth and market share expansion. 

(4) Corporate server/workstation series 

Research conducted by IDC and Gartner concurrently indicated that the growth of 

X86 servers is driving the recovery of the entire server market. Compared to 2009, 

the server market is expected to grow by 5-9% in 2010. The low cost and high 

performance characteristics of X86 servers shall become the customers' main 

concern during IT equipment renewals. 

The company offers a wide variety of server/workstation products from entry-level to 

high-end solutions, regardless of Intel or AMD-based setups, MiTAC has them all. In 

view of customers' growing awareness towards C/P ratios and operating cost controls, 

there is great potential to the company’s server/workstation products. MiTAC 

expects to capture 10% of the X86 server market. 

3. Supply and demand projections in the future 


PCs have undergone many changes in the last twenty years and have reached 

maturity. As for the U.S., Europe and Japan markets, the market is quite saturated, so 

there is little room to grow. As for rising markets like China, India and South America, 

because PCs there are not as common as in developed countries, we believe that we 

will be able to maintain a positive growth in the future. 

Besides common PC products, MiTAC has been actively studying high-value 

added products, like all-in-one integration PCs, thin computers, point of sale systems 

(POS) and portable mobiles devices etc for cloud calculating and other high-value 

products. 


With economic recovery more clear, enterprises are more willing to invest in IT; 

73

therefore, the server market has seen some growth, and international servers are also on 

the rise. Global server shipments have grown by 10% since 2003. 

In response to the increase in shipment but the decrease in prices, major 

international vendors have been outsourcing in order to gain more advantages. 

Taiwanese companies have competitive edges in low cost, quick R&D and flexibility 

of delivery time. Therefore, the scale of the server industry has grown because of the 

increase of orders. Even though most are entry-level and low-end products, the 

increase in volume and more expensive rack-optimized and blade servers are 

compensating for falling prices for some components, so that the overall shipment 

value continues to show growth. 

Given the worldwide economic recovery and the growing demand for cloud 

computing, we can expect significant growth from Taiwan's server and storage device 

industries in 2010. 

(3) Mobile communications products 

Despite the economic recession, all suppliers continue to design an innovative and 

creative product. When all the convenience, precision, acceptable prices, common 

applications in recreation and car use start to work, the combination of GPS will 

create a maximum market. 

According to the investigation report of Goldman Sachs, in all global navigation 

devices in 2008, PND weighs 70 % and GPS and PDA take 10% of each in the market, 

and the rest 10% is installed in automobiles. In the report, they predict that GPS will 

grow to 20 % and PND will lower to 61 % in 2010. 

MiTAC has been developing our own brand and committed to the windows CE of 

platform; hence, we believe the strategies of continuous product development, 

technical advantage and strategic alliance with worldly famous vendors will benefit us 

on getting new orders and exploring new market. 

(4) Enterprise and channel / workstation products 

In recent years, corporate users have become increasingly aware of ROI and C/P 

ratios; the availability of low-cost yet high-performance products has become the 

primary concern when it comes to IT procurement. The company's TYAN brand offers 

multiple server products from entry-level to high-end setups, adopting the latest 

production of 6-core and 12-core designs and supports to DDRIII; some of which can 

even support GPU. Hence the company is able to provide suitable products for any 

hardware platforms, regardless of whether they are ordinary server rooms, large-scale 

computing center, database center, cloud computing center, public infrastructures or 

government projects etc. These users are also the main business targets of the 

company's X86 server market. 

4. Favorable and unfavorable factors affecting MiTAC’s competitive edges and their 

fallback plans 

To overcome the challenges presented by the global economic recession, MiTAC 

will take advantage of the new Joint Development Manufacturing (JDM) approach, 

combining global R&D, engineering, manufacturing, designing, electronic 

manufacturing, sales distribution, and technical/after-sales services to achieve a higher 

74

customer satisfaction for a greater competitive advantage over rivals. 

(1) Competitive edges 

The core competitive strength in MiTAC’s wireless communications business and 

products lines in: Sales development, R&D capabilities, effective cost control, stable 

product quality and high-yield production process, fast mass production ramp-up, 

inventory management and component procurement, thorough logistic support 

capabilities, and market cooperation and sound financials. 

MiTAC’s core competitive strengths are as follows: 

A. The understanding of customer requirements and market directions: we work 

hand-in-hand with all software and hardware clients to explore consumer’s needs; 

in addition, MiTAC is trying to get joint ventures with several worldwide IT and 

communications companies. Once we partner with them, we believe that MiTAC 

will be able to know the next step ahead of time. 

B. Collaborates with the best software and hardware vendors to ensure sufficient 

material supply for key hardware components. 

C. R&D innovation: Many of our products have won awards and become market 

leaders. 

D. Continues to improve product quality and production capacity: Our years of 

experience in embedded systems are our unique advantage. 

E. By taking advantages of existing channel markets and our group’s global logistics 

and service network, MiTAC can provide more comprehensive customer service. 

(2) Favorable factors for the prospects 

A. The integration of all supply chains for the Internet infrastructure 

MiTAC has developed an effective distribution approach to combining global 

e-commerce mechanisms and by developing products with high unit prices with a 

direct sales model, which greatly increased our efficiency, reduces costs and raises 

customer satisfaction. 

B. Global e-manufacturing model 

After several years of refining our logistic model, MiTAC’s e-manufacturing 

system has been completed. This system allows us to perform R&D and design in 

Taiwan and in the US, to produce in China and Taiwan for modules and 

semi-parts, and assemble in these BTO/CTO centers in the US, Australia, and the 

UK. The whole system was designed by considering the factors of technicality, 

cost for production, shipping and delivery, and tariffs. Taiwan is a major 

manufacturer of motherboards, workstations servers and storage devices; whereas 

less technical products with longer delivery times are made in Mainland China. 

All high-price major parts can be acquired everywhere in the world. MiTAC’s 

global organization has enabled us to become to an international e-manufacturer. 

C. The expansion of high value-added products 

In response to the connection of wireless network communications and 

computers, MiTAC will continue to form strategic alliances with leading vendors 

too. MiTAC introduced several navigation products ahead of its competitors in the 

GPS market with superior innovation, design, R&D, production, and integration 

capabilities. MiTAC combines voice and data communication through the 

integration of computing and GPSMiTAC introduced several navigation products 

ahead of its competitors in the GPS market with superior innovation, design, R&D, 

production, and integration capabilities. MiTAC combines voice and data 

communication through the integration of computing and GPS, thereby 

maintaining competitiveness in functionality (multimedia, gaming, personal data 

75

management, PC data transmission etc), design, and pricing. 

MiTAC is devoted to developing PND, AVN, mobile TV with embedded GPS, 

out door navigation devices …etc. There are more and more features added 

everyday to PNDs so the products will be more dedicated and practical and can 

create many highly-added values. PND’s navigation combined with digital maps 

and well-designed navigation software will make the PND a must-have gadget in 

the future. 

D. The market keeps growing 

In addition to working at key markets, such as North America and Europe, 

MiTAC will emphasize on developing markets, including in Mainland China, 

Japan and Eastern Europe. 

E. E-supply chain 

For the needs of MiTAC’s global production and to separate local markets, 

MiTAC has not only modularized all designs for key components, but also 

integrated the upstream vendors into B2B in order to use the Just-In-Time system 

to lower our inventory and reduce our risk and to give our clients an 

always-on-time delivery service. 

(3) Unfavorable factors to the future and the way to deal with 

A. Intense competition: Will all major vendors entering the handheld device market, 

Canalys has predicted that prices will become to drop. The average price in 2010 

for a PND device will be US$ 100. Additionally, the functions of PND and 

wireless communications products continue to integrate. GPS smart phones will 

become a necessity, which will cause an even more competitive market. 

Our fallback measures: 

a. Closely observe R&D innovation, strengthen our R&D results, shorten product 

development times, and keep developing new models; utilize differences in 

products and mass produce to maintain our profitability. 

b. Increase customers’ satisfaction from providing design, mass production and 

backup support services and try to ally with major brands in the world. 

c. Utilize our global sales and distribution logistic model and build a 

comprehensive material system, a value chain and the backup support. 

B. Key components remain under control of foreign vendors and software and 

hardware integration: 

Fallback plans: 

a. Maintain a good relationship with providers; in the meantime, train people who 

can operate platform and communication components. 

b. Find more suppliers for key components: Seek alternative suppliers to ensure 

ample sources and gain competitive prices. In addition, maintain good 

relationship with domestic vendors for more options. 

c. Use mass amounts to lower unit price: Our several products are top sellers, so 

we won orders from large OEM/ODM companies; therefore, the procurement 

cost has been greatly reduced. 

76

5.2.2 Important applications and production process for main products 

1. Important product applications: 

Product Types 

Workstations 

Servers 

Storage Equipment 

Desktop PCs 

Mobile Communication Devices 

2. Production procedure 

Important Users and Features 

Graphical computing tool for designers 

Data computing tool for businesses 

Data storage tool for businesses 

For personal, families, schools, and companies’ use to 

manufacture, educate, wireless transmission in home video 

entertainment and share multi-media information. 

Application: In-car navigation system, mobile TV 

navigation,outdoor GPS, track cargo and automobiles and 

instant messengers 

Electronic Components 

SMT Automated Assembly 

ICT Testing 

Manual Assembly 

Substrate Soldering 

Substrate Touch-up 

Substrate Burn 

ATE Automated Testing 

Functional Testing 

System Assembly 

Functional Testing 

Packaging 

Random Testing 

Finished Product 

77

3. Supply of key components 

Names Origins Supply Status 

CPU Original Manufacturer: US Good 

Hard Disk Drives Original Manufacturer: US, Japan, Korea Good 

DRAM 

Original Manufacturer: US, Japan, Germany, 

Korea 

Good 

Flash Original Manufacturer: US, Korea, Taiwan Fair 

Printed Circuit 

Boards 

Original Manufacturer: Taiwan, US, China 

Good 

LCD Panels Original Manufacturer: Taiwan, Korea Good 

CHIPSET Original Manufacturer: Taiwan, US Good 

CDROM Original Manufacturer: Taiwan, Japan, Korea Good 

MODEM Original Manufacturer: Taiwan Good 

Camera Module Original Manufacturer: Taiwan, Japan, Korea Good 

Battery Pack Original Manufacturer: Taiwan, Japan, China Good 

4. Major customers and suppliers in these two years 

(1) List of major customers 


2008 2009 

Percentage to 

Percentage to 

Items 

Customers Amount annual Net Sales Customers Amount annual Net 

(%) 

Sales (%) 

Synnex 

1 “E” 

9,550,157 16 Corporation 8,394,729 14 

2 “D” 7,141,094 12 “E” 6,610,890 11 

3 

MiTAC 

Logistics 

Corporation 5,765,895 10 

Others 44,118,174 72 Others 37,267,901 65 

Net Sales 60,809,425 100 Net Sales 58,039,415 100 

Increases and decreases are reflection of market trends, product demands, business 

prospects, R&D technology, sales profits, and customer contracts. 

(2) List of major suppliers 


2008 2009 

Items 

Supplier 

names 

1 MiTAC 

Computer 

(ShunDe) Ltd. 

2 MiTAC 

Computer 

(Kunshan) 

Co., Ltd. 

Amount 

Percentage to 

the annual’s 

Net Purchases 

(%) 

9,371,45 18 

7,472,996 14 

78 

Supplier names 

MiTAC 

Computer 

(ShunDe)Ltd. 

Amount 

Percentage to 

the annual’s 

Net Purchases 

(%) 

5,962,607 12 

Others 35,984,135 68 Others 45,103,139 88 

Net Purchases 52,828,581 100.00 Net Purchases 51,065,746 100.00 

Increases and decreases are reflection of yearly marketing and sales strategy, material 

requirements, vendor supply prices, delivery terms, and product quality. 

5. Production volume and value in recent two years 

Unit: NT$ Thousand/ Set

Volume/value Year 

2008 2009 

Major products Capacity Volume Value Capacity Volume Value 

Computers and 

21,150,000 12,129,766 55,904,929 18,800,000 9,886,950 53,193,579 

communication 

Note: These figures listed above include overseas processing work. 

6. Sales volume and value in recent two years 

Unit: NT$ Thousand/ Set 

Volume/value Year 

2008 2009 

Import Export Import Export 

Major products Volume Value Volume Value Volume Value Volume Value 

Computers and 

communication 251,700 720,933 11,884,356 60,088,492 161,643 393,765 9,963,653 57,645,650 

7. Key Performance Indicator 

(1) Human Resources cost to sales revenues in recent two years 


2008 2009 

Sales revenues 60,809,425 58,039,415 

Labor cost 1,252,405 1,554,005 

Labor cost / Sales revenues 2% 3% 

(2) Average sales revenue generated by each employee in recent two years 


2008 2009 

Sales revenues 60,809,425 58,039,415 

Number of employees 1,512 1,342 

Sales revenues / Number of 

employees 40,218 43,248 

(3) Financial structure, solvency, and operational ability in recent two years 

2008 2009 

Debt ratio (%) 37.90 39.93 

Current ratio (%) 130.44 128.98 

Quick ratio (%) 91.95 93.23 

Accounts receivable turnover 

(times) 

4.17 4.47 

Inventory turnover (times) 7.14 6.91 

79


5.3.1 Staff’s information in the most recent two years and up to the publication date of this annual 

report 

Number of 

employees 

Year 2008 2009 Ended on April 30, 2010 

Direct personnel 0 0 0 

Indirect personnel 1,512 1,342 1,324 

Total 1,512 1,342 1,324 

Average age 36.52 39.20 35.64 

Average employment years 5.27 4.64 5.54 

PhD 7 3 3 

Level of 

education 

Masters’ 474 435 433 

College 997 876 861 

High school 30 24 24 

Below 4 4 3 

5.3.2 Qualification of personnel who are responsible for financial data transparency 

Internal Auditors of the Republic of China: 2 persons 

Accountant of the Republic of China: 2 person 

5.4. Expenses incurred for environmental protection issues 

Upon to the publication date of the report and in recent years, the company had not been 

punished or been fined by any losses caused by environmental pollution. Hereby describing 

our counter measures: 

We are a professional computer assembly manufacturer; in our production process, there 

are no controlled items of air, water and toxic pollutants involved. In addition, the company 

received an award of top 500 businesses -- the first Environmental Protection Assessment from 

the Environmental Protection Agency in 1992. It was certified by ISO 14001 in 1997, and 

since then, we have kept our commitment to preventing pollution. In 1999, we won a two-year 

honor when passing the Safety and Hygiene System Evaluation conducted by the Council of 

Labor Affairs. The company will continue to promote environmental protection, worker safety, 

zero-pollution and zero-injury as our permanent operation goals. 

5.4.1 Background 

MiTAC International Corp. is a manufacturer of PC/server products, including 

workstation, server, storage device, and mobile communications. We follow the 

environmental plea of the European Union, including WEEE (Directive on the Waste 

Electronics and Electrical Equipment) and we focus on design for environment and apply all 

concepts of recycling, disassembly, and reusing imports design, i.e. applying ACPI operating 

system for power-saving/low-power CPU / module design/ supporting IPMI software and 

optimal resources management. As for ROHS (Restriction of Hazardous Sustenance 

Directive), we aim at controlling hazardous substances, i.e. Pb, Cd, Hg, Cr6+, PBBs, and 

PBDEs, and we started to use green products to introduce design, development review, 

supplier management and material acceptance. We also constructed an internal Green 

Product website and its SOP to initiate the periodical organizational strategy review in 

compliance with the European Union directives. Moreover, we constructed an occupational 

health and safety system to minimize work hazards and to protect employees’ health and 

safety, and to save some relevant costs. As a result, the improvement of working conditions 

has indeed improved employees’ work ethic and their productivity. 

80

5.4.2 MiTAC’s environmental health and safety strategy 

MiTAC International based on the concept of environmental protection to develop our 

policy: 

1. Policies regarding environment, safety and hygiene: 

• Obey regulations: we obey the environmental, health and safety laws and commit 

ourselves to perform superior to the regulations. 

• Guard resources on earth: We increase energy efficiency and advocate energy saving. 

• Develop green production process: Develop and supply environmentally-friendly 

products in order to prevent pollution, to produce cleanly and to care for environment 

from products. 

• A safe and healthy environment: to protect employees’ safety and health, to prevent 

work hazards and diseases from happening, in addition, we encourage employees to 

participate in the improvement plan and our ultimate goal is to create a safe and 

healthy work environment. 

• Continue to improve the performance of environment, safety and hygiene: audit and 

assess investments in resources in order to implement the management system and 

then continuous improvement. 

2. Non-toxic substance policy: 

(1)Earth: We respect the only Earth, so we: 

• Concern ourselves with the climate change, join the act of lowering green house gas 

and decrease the emission to the Earth. 

(2)Principles: obey environmental laws and satisfy clients’ needs 

• Always be on top of laws: Ensure to follow all environmental regulations, i.e. 

EU’s RoHS, WEEE and REACH to meet the demands for green products. 

• Follow the green principles: to build a green products platform and to manage a 

green supply chain in order to satisfy clients’ needs. 

(3)Promises: Ensure management system’s effect, devote to environmental information 

communication and to fulfill our social responsibilities. 

• Employ IECQ QC 080000 management system to activate the monitoring of HSF 

procedure. 

• Build communication mechanisms, and release all critical environmental protection 

information to the public. 

• Promote corporate growth and nature care and perform the global citizens’ 

responsibility. 

(4)realizations: Provide green products that are low-pollution, energy-saving, minimal 

packaging, recyclable and brining the least burden to the Earth. 

• Use environmentally-friendly materials, such as EU’s RoHS and non-adding 

Brominated Flame Retardants shells. 

• Follow International alliances’ requirements, i.e. Energy Star for energy 

consumption to our products. 

• Lightweight packing, optimal sizing and least materials. 

• Reach at least 75% of product reuse, recycling and recovery. 

We believe that all successful businesses will have to face the challenge of “ongoing 

growth”. MiTAC has supported the ITDP for the MOEA (R.O.C) (Ministry of Economic 

Affairs, ROC) since 2003. There were four review stages. We developed the lead-free and 

halogen-free system assembly procedures and technologies. And the development was 

successfully completed in 2005. The internal quality system operation was divided into: 

81

(a) Quality control system: 

Succeeded a 3-year renewal of ISO 9001:2000 version, which was the foundation of the 

development of the TL9000 management system; also, we obtained the certification of 

communications products in the end of 2005. 

(b) Environmental control system: 

Completed ISO 14001:2000 version and OHSAS 18001:1999 auditing according to 

the schedule. The IECQ QC080000 activity has been initiated since August, 2008. The 

purpose of this activity reviews all functions of each department/responsible 

departments/main operational procedures according to the IECQ directives. Therefore, 

after the preliminary audit started, we were authorized by the IECQ in the U.S. to 

delegate SGS for all examinations. We had a great outcome in the first stage in 

September and SGS had audited other three stages and announced that MiTAC is 

officially an organization that follows QC080000 (IECQ HSPM) on Dec. 7, 2006. We 

dedicate ourselves to environmental protection and hope to find a balance between 

business development and the ecosystem. Moreover, we realized that employees’ 

safety and health is a very important part of our enterprises. We will take every possible 

measure to maintain a proper work environment. MiTAC commits ourselves to balance 

between environmental protection requirements and company growth in order to have a 

high standard ecosystem. We are to fulfill the social responsibility as a premium 

enterprise and global citizen. 

5.4.3 Countermeasures to RoHS 

In response to the requirements of RoHS, MiTAC will educate our suppliers through 

executing “Plan G” of the MOEA, R.O.C. We will require class 1 suppliers to be audited on 

the premises to ensure that they follow the RoHS requirements. Some suppliers requested us 

to provide information of MiTAC’s Class 2 suppliers regarding the follow-up of the RoHS 

process. We believe that our management style of raw materials will reduce the risks of 

violating the RoHS regulations from changing design and materials from the upstream 

suppliers’ side. 

MiTAC is taking advantage of the e- control of the supply chain to systemize the RoHS 

reporting procedures and to solve the problems of multiple products, multiple production 

sites, and multiple contact windows; moreover, the RoHS data exchange efficiency has 

benefited from the new procedure. 

Additionally, MiTAC has signed the XRF SEA1000A agreement with TechMaxAsia 

Electron Technical Co., Ltd. in 2007 and purchased ICP facility and a fully-equipped 

laboratory in order ensure all components from the suppliers are in compliance with RoHS. 

5.4.4 Countermeasures of the impact on business from the EU environmental protection 

directives 

MiTAC achieved halogen free production in 2009, conducted testing on the suppliers' 

supply of halogen free components, and successfully developed halogen free electronic 

products. MiTAC continues to improve the ability to produce green products and export 

them to Europe when necessary. As a result, there is no negative impact from EU’s 

environmental directives at MiTAC. 

5.4.5 MiTAC’s responses to environmental protection directives from the EU 

From our observation of the environmental law development in the EU, the green 

production has been changed from self claimer to a must; for instance, all countries in the 

EU will have to finish all required implementation of 2010. MiTAC has listed DfE (Design 

for Environment) and Eco-design to be our product design requirements last year. Currently, 

our SOP in environmental design obliges our R&D departments to meet the EuP’s energy 

82

consumption. To comply with the REACH regulations set forth by the European Union, the 

company had made the mandatory product declaration on REACH SVHC. For consistency 

in supply chain management, the component suppliers' ability to declare REACH SVHC had 

also become a prerequisite. 

5.4.6 Countermeasures to the Greenhouse Gas (GHG) 

Due to the worsening issue of global warming, since Aug 2007, MiTAC has initiated the 

GHG checking operation in order to respond to the trend of CO2 emission and to reduce 

GHG in the future. The scope contains MiTAC’s production site in China. With the 

assistance of SGS, Taiwan, the company performs the courses of checking CO2 gas 

emission and training program for internal inspectors. According to ISO14064-1, we 

started the systematic setup and listed all items to check for CO2 emission; we also built 

interior documentation and examination procedures as a reference of measuring the effects 

afterwards. In the meantime, we actively reduce GHG, introduce energy saving plans, i.e. 

introducing regeneration energies—solar energy, recyclables, electricity saving—lighting 

and air conditioning management in summers, in order to reduce CO2 emission to our 

atmosphere. 

As per the Greenhouse Gas Protocol, MiTAC performs CO2 emission investigation and 

data collection. The company checks the CO2 emission amount annually for the previous 

year. 

Here are the data of CO2 emission amount in 2009: 

• Direct CO2 emission (scope 1): total annual CO2 emission amount is 3,373 tons, about 

7% of our total CO2 emission. 

• Indirect CO2 emission (scope 2): total annual CO2 emission amount is 43,248 tons, about 

93% of the total CO2 emission, which was mainly from externally bought electricity & 

steam gas. 

MiTAC is concerned about the global climate change; we are dedicated to protecting 

the Earth’s resources and fulfilling our duty as an enterprise citizen. We will continuously 

push for the reduction of CO2 emission to reduce operation costs and work toward the 

directions of efficient energy, power saving and environment protection. We will work on 

the goal of creating a low-CO2 economic society. 


The company is an information technology company, and our staff is suitably composed. 

Our philosophy is to create a humane management. The company actively created various 

communication channels for our employees and we respect our employees’ opinions. Hence, 

all employees are encouraged to actively participate in employer and employee relationship 

affairs.. 

5.5.1 Communication and incentives 

The company greatly values our employees’ opinions, hence we have staff designated 

in employees’ relationships. We also have a mailbox to hear our employees’ voices. We 

survey on peers’ satisfaction and on a-360-degree feedback on all supervisors every six 

months; at the end of each year, we perform a survey on employees’ satisfaction in the hope 

that employee needs are being met. 

The company has spared no effort to establish internal communication channels. At 

present, employees commonly use our e-mail system, which reduces paper and reports 

consumption and we believe that these increases the communication efficiency. At the same 

time, the company has set up an internal “speak-out mailbox” where employees can directly 

express their opinions. In addition, the company invested over NT$4 million to set up a 

videoconferencing system, also called Video Conference Room, VCR to link all offices in 

Hsinchu, Linkou, and Taipei so we can save the travel time. After we started to use VCR, 

83

employees in different offices can have video-conference meetings without commuting, so 

that the company’s internal communications have become more efficient. 

Another achievement is the setup of the electronic bulletin board to promote the 

company’s mission, to announce operational performance, and to publish outside 

information. In order to provide an incentive to inspire employees and to enhance morale, 

the company selects employees and honors senior employees who have worked for MiTAC 

for five, ten, fifteen, and twenty years at the year-end party. At the year-end party, the 

Chairman and the Presidents will give them gold medals and cash prizes. 

Hwa-Ya Technology Park, Taoyuan, is one of our major offices. In order to better care for 

our employees, we provide a shuttle bus from Hwa-Ya to Taipei daily. We also encourage 

employees to car pool and we provide ample parking spaces. We want to give all employees 

a more convenient and more comfortable working environment. 

5.5.2 Benefits and training 

1. Benefits 

Employees are very important assets to us. In addition to provide every employee with 

labor and health insurance lawfully, the company also insures employees group and 

overseas travel insurance policies, which include life and business trip insurance and are 

paid by the company. 

We also have a well-organized employee benefit committee whose members are elected 

by different departments. The committee not only holds regular meetings to discuss 

workers’ benefits and all kinds of activities, but also to organize different clubs for 

entertainment and recreational activities with free-of-charge facilities in the company, 

including the gym, the dance studio, the massage room and the indoor ping-pong court to 

help build camaraderie among employees. 

The company also has a library that is open to employees all day long. In the library, 

there is a CD-ROM bank. Besides, the library is a member of the “Chinese Interlibrary 

Cooperation Association” so that employees can easily access information pertinent to their 

work, not limited to this library but from other libraries too. 

To ensure the physical as well as mental health of its employees, the company launches its 

internal “Employees Assistance Program” in association with external consultant expertise. 

This team of experts comprises mental therapists, lawyers, nutritionists, financial 

consultants, and expertise across several fields. They provide professional assistance to 

the lifestyles of its employees and their families, including consultation services on work 

pressure, interpersonal relationships, family and marriage, cross gender interactions, legal 

affairs, financial affairs, medical issues etc; helping employees balance between work, life, 

and health. 

Furthermore, the company budgets substantial funds every year according to our 

comprehensive training programs. The goals are to substantiate employees’ education and 

training, to stimulate employees’ potentials, to upgrade employees’ occupational 

competence, and to allow them to continuously learn and grow with the company. Since 

2000, the company started the e-Learning system; right now, there are more than one 

thousand courses in the system, including various management, professional, and general 

courses. This e-learning program allows employees to learn whenever and wherever. And 

the results have shown after all these years. 

2. Details for employee education and training 

(1) Education and training efforts in 2009 

The company spent a total of NT$2.8 million on employees’ training in 2009. There 

were approximately 8,900 employees who joined the training 

(2) Education system 

In order to accommodate our business philosophy, long-term talent cultivation plans, 

84

and the integration of all our company’s training resources, the company provides the 

following guidelines: a list of required and elective courses, regulations for instructors, 

encouragement for the development of teaching materials within the company, 

off-premises training regulation, material management regulation, and on-the-job 

training regulation. 

5.5.3 Retirement system 

The company has established a comprehensive and legally sanctioned retirement system 

in accordance with the Basic Labor Laws of the Republic of China and Pension Ordinance. 

According to the laws, we prepared a trust fund accountable for employees’ pension and we 

also established a control committee that is comprised of representatives from labor and 

management. This committee monitors the operation of the funds and transfers pensions to 

this account on a monthly basis, at a rate determined by an actuarially neutral third party. 

The company also insures employees who are qualified for “Labor Pension Ordinance” and 

disburse a lawful amount to employee’s designated account monthly. So far, the system 

operates regularly. 

5.5.4 Labor/management agreements 

The company has always had the belief of protecting and sharing gains with the 

employees, by that, we hope to maintain an excellent labor and management relationship. 

We expect ourselves to retain our humane management and multiple communication 

channels; therefore, we hope to further advance our relationship in the future. 

5.5.5 Work environment and Worker Safety Measures 

In order to increase the safety of the work environment and workers and to protect 

workers from injuries, deaths, or protests, the company implemented practices that enable us 

to obtain OHSAS-18001 certification on November 6, 2003, and we actively promote these 

practices. 

5.5.6 Employees’ code of conduct 

In order to ensure a consistent standard for employee behaviors, employees’ 

conduct are confined by service standards, confidentiality agreements, restrictions for 

involvement in competing industries, Internet usage and data security policies, and rules 

of interaction with suppliers. These behavioral guidelines are published on the company's 

internal website for ease of browsing and as a constant reminder to avoid any breaches. 

The employees' service standards are listed below: 

1. Employees must subordinate to work related assignments and administration from 

supervisors of all levels. Supervisors of all levels must guide their employees with due 

diligence. 

2. Employees must be dedicated to their jobs duties, strive to improve work performance 

and quality to meet the demanded level of productivity. 

3. Employees are not allowed to be absent from job duties during working hours; 

responses to any extraordinary events must be approved by the supervisor. 

4. Employees must not bring into the workplace any illegal or prohibited items, 

flammables, explosives, and items that are potentially dangerous and non-related to 

production or business affairs. 

For the purpose of principles, the “Employee Reward and Penalty Guidelines” are also 

drafted as a basis of determining rewards and penalties. 

5.5.7 Losses from labor disputes, projected loss amount and countermeasures in the most 

recent year and up to the publication date of this annual report; if unable to estimate, 

please explain: 

MiTAC did not have any losses from labor disputes happened during the last year and up 

to the publication date of this annual report. MiTAC maintains a harmonious relationship 

85

with employees; therefore, the possibility of potential losses from labor disputes is very low. 

5.6. Major contracts 

Type Party Period of validity Major terms Restrictions 

Master 

Purchase 

Agreement 

Distribution 

Agreement 

OEM 

Agreement 

Customer “E” From August 1, 2002 

to July 31, 2005. It 

can be automatically 

extended for one more 

year if there is not a 

written termination 

notice. 

Customer “M” After October 26, 

2006 for one year. It 

can be automatically 

extended for one more 

year if there is not a 

written termination 

notice. 

Customer B 12 months starting 

from 19 March 2002; 

automatically 

extendable for one 

year in the absence of 

a written termination 

request. 

Set the terms for the 

manufacturing, 

delivery, and warranty 

for computer 

products. 

Set the terms for sales 

of computers and 

electronic-related 

products. 

Contracted terms 

relating to the 

production, delivery, 

sale, and warranty of 

computer hardware 

and components. 

None 

None 

None 

86

6. Financial Statement 

6.1. Most recent five-year Balance Sheet and Income Statement 

6.1.1 Condensed Balance Sheet 


Years 

Most recent five-year financial data 

2010/3/31 

(Reviewed by 

Items 2005 2006 2007 2008 2009 

CPA) 

(Note) 

Current assets 25,390,052 36,117,501 35,901,473 23,797,940 24,961,531 23,434,065 

Funds and investment 16,311,089 18,216,392 22,353,401 22,253,488 22,597,108 22,554,381 

Fixed assets 2,408,847 2,220,427 2,239,867 2,196,827 1,782,672 1,755,731 

Intangible assets - - 613,095 613,095 1,894,511 1,857,718 

Other assets 1,074,115 1,219,528 1,152,041 1,257,969 1,372,991 1,177,958 

Total assets 45,202,603 57,792,348 62,278,377 50,119,319 52,608,813 50,779,853 

Before 

24,121,951 26,219,092 18,244,889 19,353,409 17,610,529 

16,259,451 

Current distribution 

Liabilities 

After 

distribution 17,892,161 

25,944,042 28,555,927 18,550,093 Not yet 

distributed 

Not yet 

distributed 

Long-term liabilities 2,500,000 5,002,374 5,021,478 1,510,983 240,500 1,500,000 

Other liabilities 1,109,112 933,224 586,213 507,968 151,224 147,653 

Before 

distribution 

22,370,937 30,076,653 28,316,288 18,993,357 21,004,633 19,258,182 


Liabilities 

After 

distribution 

24,003,647 31,898,744 30,653,123 19,298,561 

Not yet 

distributed 

Not yet 

distributed 

Common stock 11,561,044 12,797,594 14,565,380 15,354,393 15,361,724 15,361,724 

Capital reserve 3,064,411 3,118,583 4,202,512 4,169,505 4,153,640 4,168,019 

Retained Before 

8,346,259 11,012,564 13,628,008 10,968,317 

earnings distribution 

10,952,275 

10,977,815 

After 

10,509,028 10,663,113 Not yet Not yet 

5,629,076 7,979,746 

distribution 

distributed distributed 

Unrealized financial 

instruments gains (losses) 

(4,244) 628,977 744,699 (406,451) 539,949 392,920 

Cumulative translation 

1,230,696 

591,457 722,552 1,193,436 1,649,701 1,206,095 

adjustment 

Stockholder equity 

Before 

31,604,180 

22,831,666 27,715,695 33,962,089 31,125,962 

distribution 

31,521,671 


After 

Not yet Not yet 

21,198,956 25,893,604 31,625,254 30,820,758 

Amount distribution 

distributed distributed 

Note: Numbers taken until the end of the quarter prior to the publication date of this annual report. 

87

6.1.2 Condensed Income Statement 


Items 

Years 

Most recent five-year financial data 

2005 2006 2007 2008 2009 

2010/3/31 

(Reviewed by 

CPA) 

(Note) 

Operating revenues 74,305,798 82,882,363 82,073,897 60,809,425 58,039,415 12,614,208 

Gross profits 7,271,109 9,079,602 10,130,910 4,718,214 4,107,767 840,492 

Operating income (loss) 3,718,672 4,958,306 4,574,512 (588,485) (33,913) (107,956) 

Non-operating incomes 2,137,707 1,482,530 2,137,177 1,433,674 465,950 152,987 

Non-operating expenses (322,425) (310,042) (219,517) (209,745) (55,927) (16,653) 

Income before income tax from 

continuing operations 

5,533,954 6,130,794 6,492,172 635,444 376,110 28,378 

Income (loss) from continuing 

operations 

4,941,793 5,383,612 5,648,262 459,289 289,162 25,540 

Income from discontinued 

operations 

- - - - - - 

Extraordinary losses - - - - - - 

Cumulative effect of changes in 

accounting principles 

- (124) - - - - 

Net income 4,941,793 5,383,488 5,648,262 459,289 289,162 25,540 

Earnings 

4.53 4.39 4.07 0.31 0.19 0.02 

per share Post-retrospection 3.59 3.80 3.86 0.31 

Note: Numbers taken until the end of the quarter prior to the publication date of this annual report. 

6.1.3 CPAs and Auditor’s opinions for the most recent five years: 

Not yet 

distributed 

Not yet 

distributed 

Years Name of CPA Firm Names of CPAs 

2009 

2008 

2007 

2006 

2005 

PriceWaterhouse Coopers 

Taiwan 


Taiwan 


Taiwan 


Taiwan 


Taiwan 

Yu-Kuan Lin, Wei- Cheng Wang 

Yu-Kuan Lin, Wei- Cheng Wang 

Fang-Yu Wen, Yu-Kuan Lin 

Ying-Fei Liu, Fang-Yu Wen 

Ying-Fei Liu, Fang-Yu Wen 

Auditor’s 

opinions 

Unqualified 

Unqualified 

Unqualified 

Amended unqualified 

Unqualified 

88

6.2. Financial analysis in most recent five years 

Analysis 

Financial 

structure 

(%) 

Solvency 

(%) 

Operational 

capabilities 

(Note 2) 

Profitability 

Years 

Most recent five years financial analysis 

2010/03/31 

(Reviewed by 

2005 2006 2007 2008 2009 CPA) 

(Note 1) 

Debt ratio 49.49 52.04 45.47 37.90 39.93 37.92 

Share of long-term funds in 

fixed assets 1,155.39 1,474.36 1,583.71 1,427.81 1,857.00 1,880.79 

Current ratio 156.13 149.73 136.93 130.44 128.98 133.07 

Quick ratio 118.15 105.93 107.13 91.95 93.23 93.72 

Times interest earned ratio 20.45 31.18 33.11 5.88 9.46 5.42 

A/R turnover (times) 5.87 5.49 4.86 4.17 4.47 3.90 

A/R turnover days 62 67 75 87 82 94 

Inventory turnover (times) 11.52 8.89 7.79 7.14 6.91 5.99 

A/P turnover (times) 8.51 6.64 5.48 5.21 5.21 4.63 

Inventory turnover days 32 41 47 51 53 61 

Fixed assets turnover 

(times) 30.17 35.81 36.80 27.41 29.17 28.52 

Total assets turnover 

(times) 1.78 1.61 1.37 1.08 1.13 0.98 

Return on assets (%) 12.48 10.80 9.70 0.98 0.63 0.06 

Return on shareholders 

equity (%) 24.25 21.30 18.32 1.41 0.92 0.08 

To paid-in 32.17 38.74 31.41 (3.83) (0.22) (0.70) (1.76) 

capital (%) 47.87 47.91 44.57 4.14 2.45 0.18 (1.38) 

Net income ratio (%) 6.65 6.50 6.88 0.76 0.50 0.20 

4.53 4.39 4.07 0.31 0.19 0.02 (0.14) 

Simple EPS 

Post- 

Not yet Not yet 

(NT$) 

retrospection 3.59 3.80 3.86 0.31 distributed distributed 

Cash flow ratio (%) 21.79 18.15 19.96 9.77 5.59 2.64 

Cash flow Cash flow adequacy ratio (%) 151.46 79.63 122.78 126.67 135.10 124.61 

Cash reinvestment ratio (%) 9.60 8.70 10.11 - 2.37 1.42 

Leverage 

Operating leverage 1.56 1.39 1.29 - - - 

Financial leverage 1.08 1.04 1.05 - - - 

Analysis of changes in financial ratio in 2008and 2009(changes less than 20% are exempted): 

1. Due to the economic recession in 2008, all consumer electronics sales are affected , thus the decreased profits 

affected Times interest earned ratio, fixed assets turnover (times), total asset turnover (times), and related ratio 

of profitability. 

2. Because the operating activity net cash flow was decreased in 2008, the cash flow ratio and cash reinvestment 

ratio were decreased. 

3. The decrease of operating income caused the operating leverage and financial leverage declined. 

Note 1: To the end of quarter prior to the publication date of this annual report. 

Note 2: For convenience of marking comparisons, the operational capability for the first quarter of 2010 has been 

converted to a whole year figure. 

89

1. Financial structure 

(1) Debt ratio = Total liabilities / Total assets 

(2) Ratio of long-term funds to fixed assets= (Net shareholders’ equity + Long-term debts) / Net 

fixed assets 

2. Solvency 

(1) Current ratio = Current assets / Current liabilities 

(2) Quick ratio = (Current assets – Inventory – Prepaid expenses) / Current liabilities 

(3) Time-Interest-earned ratio = Income before income tax and interest expense / Interest 

expense 

3. Operational capability 

(1) A/R turnover (times) = Net sales / Average receivables balance (including accounts 

receivable and notes receivable from operations) in various terms 

(2) A/R turnover days= 365 / A/R turnover (times) 

(3) Inventory turnover (times) = Cost of goods sold / Average inventory 

(4) AP turnover (times) = Cost of goods sold / Average accounts payable balance (including 

accounts payable and notes payable from operations) in various terms 

(5) Inventory turnover days = 365 / Inventory turnover (times) 

(6) Fixed assets turnover (times) = Net sales / Net fixed assets 

(7) Total asset turnover (times) = Net sales / Total assets 

4. Profitability 

(1) Return on assets ={Profit after tax +〔Interest expenses x (1 – (tax rate)〕}/Average of 

total assets 

(2) Return on shareholders’ equity = Profit after tax / Average net equity 

(3) Net income ratio = Profit after tax / Net sales 

(4) EPS = (Profit after tax – Dividend from preferred stock) / Weighted average of outstanding 

shares 

5. Cash Flow 

(1) Cash flow ratio = Cash flow from operations / Current liabilities 

(2) Cash flow adequacy ratio = Most recent five-year cash flow from operations / 

Most recent five-year (sum of capital expenditures, increases in inventory, cash dividends) 

(3) Cash reinvestment ratio = (Cash flow from operating activities – Cash dividend) / (Gross 

fixed assets + Long-term investment + other assets + Working capital) 

6. Leverage 

(1) Operating leverage = (Net revenue – Variable cost of goods sold and operating expenses) / 

Operating income 

(2) Financial leverage = Operating income / (Operating income – Interest expense) 

90

6.3. Supervisors’ Report of the most recent year 

MiTAC INTERNATIONAL CORP. 

Supervisors’ Report 

The Board of Directors of the Company has prepared the 2009 Business report, financial report, 

and Earning Distribution Proposal. The undersigned supervisors have reviewed the financial report 

and the aforesaid documents, and did not find any incompliance. In accordance with Article 219 of 

the Company Law, it is hereby submitted for your review and perusal. 

TO: The fiscal year 2010 Annual Shareholders’ Meeting of MiTAC International Corp. 

Supervisor: Arthur Chiao 

Charles Jin 

(Representative of Lien Hwa Industrial Corp.) 

Apr. 28, 2010 

91

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE 

To the Board of Directors and Stockholders of MiTAC International Corp. 

PWCR09000265 

We have audited the accompanying consolidated balance sheets of MiTAC International Corp. 

and its subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of 

income, of changes in stockholder’s equity and of cash flows for the years then ended. These 

financial statements are the responsibility of the Company’s management. Our responsibility is to 

express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with the“Rules Governing the Examination of Financial 

Statements by Certified Public Accountants"and generally accepted auditing standards in the 

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

reasonable assurance about whether the financial statements are free of material misstatement. An 

audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 

financial statements. An audit also includes assessing the accounting principles used and 

significant estimates made by management, as well as evaluating the overall financial statement 

presentation. We believe that our audits provide a reasonable basis for an opinion. 

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

material respects, the financial position of MiTAC International Corp. and its subsidiaries as of 

December 31, 2009 and 2008, and the results of their operations and their cash flows for the years 

then ended in conformity with the “Rules Governing the Preparation of Financial Statements by 

Securities Issuers” and generally accepted accounting principles in the Republic of China. 

April 9, 2010 

----------------------------------------------------------------------------------------------------------------- 

The accompanying consolidated financial statements are not intended to present the financial 

position and results of operations and cash flows in accordance with accounting principles 

generally accepted in countries and jurisdictions other than the Republic of China. The standards, 

procedures and practices in the Republic of China governing the audit of such financial statements 

may differ from those generally accepted in countries and jurisdictions other than the Republic of 

China. Accordingly, the accompanying consolidated financial statements and report of the 

independent accountants are not intended for use by those who are not informed about the 

accounting principles or auditing standards generally accepted in the Republic of China, and their 

applications in practice. 

As the financial statements are the responsibility of the management, PricewaterhouseCoopers 

cannot accept any liability for the use of, or reliance on, the English translation or for any errors 

or misunderstandings that may derive from the translation. 

~92~

MITAC INTERNATIONAL CORP. AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

DECEMBER 31, 

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) 

2009 2008 2009 2008 

ASSETS LIABILITIES AND STOCKHOLDER’S EQUITY 

Current Assets Current Liabilities 

Cash and cash equivalents (Note 4 (1)) $ 5,916,130 $ 7,033,906 Short-term loans (Notes 4 (11) and 6) $ 1,392,031 $ 2,153,444 

Financial assets at fair value through profit or loss Financial liabilities at fair value through profit or loss (Note 4 (12)) 6,068 88,995 

(Note 4 (2)) 26,293 11,977 Notes payable 252 24,730 

Available-for-sale financial assets – current (Note 4 (3)) 738,719 520,783 Accounts payable 9,672,970 9,155,307 

Derivative financial assets for hedging-current (Note 10(1)) - 1,045 Accounts payable – related parties (Note 5) 791,833 452,834 

Notes receivable – net 4,418 15,402 Income tax payable (Note 4 (21)) 1,349,688 1,065,914 

Notes receivable – related party (Note 5) 200,000 416 Accrued expenses 4,771,852 4,389,020 

Accounts receivable – net (Note 4 (5)) 9,999,487 8,100,636 Other payables (Note 5) 344,272 352,679 

Accounts receivable – related parties (Notes 4 (5) and 5) 2,647,292 3,071,199 Receipts in advance 358,146 296,094 

Other receivables (Note 5) 193,772 224,827 Current portion of long-term debts (Notes 4 (13) and 6) 240,500 1,500,000 

Other financial assets – current (Note 6) 34,942 33,539 Provision for product warranty 929,695 856,872 

Inventories - net (Note 4 (6)) 8,170,023 8,072,833 Other current liabilities 617,488 452,181 

Prepayments 531,880 947,233 20,474,795 20,788,070 

Deferred income tax assets – current (Note 4 (21)) 511,474 908,573 Long-term Liabilities 

28,974,430 28,942,369 Bonds payable (Notes 4 (13) and 6) - 240,500 

Long- term loans (Notes 4 (14) and 6) 1,500,000 - 

Long-term Investments 1,500,000 240,500 

Available-for-sale financial assets – non-current Other Liabilities 

(Note 4 (3)) 1,119,666 762,323 Accrued pension payable (Note 4 (15)) 86,256 86,353 

Financial assets carried at cost – non-current (Note 4 (4)) 1,456,963 1,435,961 Deposit in 13,762 11,039 

Long-term investments accounted for under the equity Deferred income tax liability (Note 4 (21)) 63,788 421,435 

method (Note 4 (7)) 10,382,380 10,142,139 Others 38,371 74,434 

12,959,009 12,340,423 202,177 593,261 

Total Liabilities 22,176,972 21,621,831 

Property, Plant and Equipment - net Stockholder’s Equity 

(Notes 4 (8) and 6) 6,821,597 8,366,672 Common stock (Note 4 (16)) 15,361,724 15,354,393 

Capital reserve (Note 4 (17)) 4,153,640 4,169,505 

Intangible Assets (Note 4 (9)) Retained earnings (Note 4 (18)) 

Goodwill 1,547,666 1,289,824 Legal reserve 2,771,835 2,725,906 

Other intangible assets 1,823,299 269,314 Unappropriated earnings 8,180,440 8,242,411 

3,370,965 1,559,138 Unrealized financial instruments gain (loss) 539,949 ( 406,451 ) 

Other Assets Cumulative translation adjustments 1,206,095 1,649,701 

Refundable deposits 56,268 75,865 Treasury stock (Note 4 (20)) ( 609,503 ) ( 609,503 ) 

Deferred charges 273,608 362,422 Total Stockholder’s Equity 31,604,180 31,125,962 

Long term notes and accounts receivables – related parties 

197,650 - Commitments and Contingent Liabilities (Note 7) 

(Note 5) 

Deferred income tax assets – non-current (Note 4 (21)) 176,348 134,317 

Others (Note 4 (10)) 951,277 966,587 

1,655,151 1,539,191 

TOTAL ASSETS $ 53,781,152 $ 52,747,793 TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY $ 53,781,152 $ 52,747,793 

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

~93~


CONSOLIDATED STATEMENTS OF INCOME 

FOR THE YEARS ENDED DECEMBER 31, 

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, 

EXCEPT EARNINGS PER SHARE) 

2009 2008 

Operating revenues-net (Note 5) $ 63,369,191 $ 64,735,047 

Operating costs (Note 5) ( 55,448,087 ) ( 57,026,587 ) 

Gross profit 7,921,104 7,708,460 

Operating expenses (Note 6) 

Selling expenses ( 4,232,206 ) ( 4,332,872 ) 

Administrative expenses ( 1,938,313 ) ( 1,648,786 ) 

Research and development expenses ( 2,882,570 ) ( 2,534,270 ) 

( 9,053,089 ) ( 8,515,928 ) 

Operating loss ( 1,131,985 ) ( 807,468 ) 

Non-operating income and gains 

Interest income 39,294 248,812 

Gain on valuation of financial assets (Note 4 (2)) 14,316 11,977 

Gain on valuation of financial liabilities (Note 4 (12)) 82,973 - 

Investment income accounted for under the equity 

method (Note 4 (7)) 1,179,658 1,059,436 

Dividend income 83,868 174,566 

Gain on disposal of property, plant and equipment 

161,409 - 

(Note 5) 

Gain on disposal of investment 216,690 122,826 

Foreign exchange gain, net - 204,320 

Other income (Note 5) 124,125 87,848 

1,902,333 1,909,785 

Non-operating expenses and losses 

Interest expense ( 53,452 ) ( 144,368 ) 

Loss on valuation of financial liabilities (Note 4 (12)) - ( 67,185 ) 

Loss on disposal of property, plant and equipment - ( 45,157 ) 

Foreign exchange loss, net ( 22,290 ) - 

Impairment loss (Note 4 (4)) ( 50,856 ) - 

Other losses ( 43,710 ) ( 48,868 ) 

( 170,308 ) ( 305,578 ) 

Income before income tax 600,040 796,739 

Income tax expense (Note 4 (21)) ( 310,878 ) ( 337,450 ) 

Consolidated net income $ 289,162 $ 459,289 

Attributable to: 


Before 

income tax 

After 

income tax 

Before 

income tax 

After 

income tax 

Basic earnings per share (in NT dollars) (Note 4 (22)) 

Consolidated net income attributable to the Company $ 0.25 $ 0.19 $ 0.42 $ 0.31 

Diluted earnings per share (in NT dollars) 

Consolidated net income attributable to the Company $ 0.20 $ 0.14 $ 0.37 $ 0.25 


~94~


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY (CONTINUED) 

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 


Retained Earnings 

Unrealized 

Financial 

Instruments 

Gain (loss) 

Cumulative 

Translation 

Adjustments 

Common Capital 

Legal Unappropriated 

Treasury 

2008 

Stock 

Reserve Reserve Earnings 

Stock Total 

Balance at January 1, 2008 $14,565,380 $ 4,202,512 $ 2,161,080 $ 11,466,928 $ 744,699 $ 1,193,436 ( $ 371,946 ) $ 33,962,089 

Distribution of 2007 earnings: 

Legal reserve - - 564,826 ( 564,826 ) - - - - 

Employee bonuses – stock 203,337 - - ( 203,337 ) - - - - 

Employee bonuses – cash - - - ( 305,006 ) - - - ( 305,006 ) 

Stock dividends 578,808 - - ( 578,808 ) - - - - 

Cash dividends - - - ( 2,025,829 ) - - - ( 2,025,829 ) 

Directors’ and supervisors’ remuneration - - - ( 6,000 ) - - - ( 6,000 ) 

Exercise of employee stock option 6,868 1,170 - - - - - 8,038 

Employee compensation plan - employee stock options - 16,591 - - - - - 16,591 

Consolidated net income for 2008 - - - 459,289 - - - 459,289 

Capital reserve due to change in ownership of long-term investments - ( 81,777 ) - - - - - ( 81,777 ) 

Recognition of unrealized profit or loss on available-for-sale financial 

assets - - - - ( 1,163,178 ) - - ( 1,163,178 ) 

Recognition of unrealized gain or loss on derivative financial instruments 

for hedging - - - - 12,028 - - 12,028 

Cash dividends received by subsidiaries from the Company - 31,009 - - - - - 31,009 

Cumulative translation adjustment - - - - - 456,265 - 456,265 

Treasury stock transaction-net - - - - - - ( 237,557 ) ( 237,557 ) 

Balance at December 31, 2008 $15,354,393 $ 4,169,505 $ 2,725,906 $ 8,242,411 ($ 406,451 ) $ 1,649,701 ( $ 609,503 ) $ 31,125,962 

2009 

Balance at January 1, 2009 $15,354,393 $ 4,169,505 $ 2,725,906 $ 8,242,411 ( $ 406,451 ) $ 1,649,701 ( $ 609,503 ) $ 31,125,962 

Distribution of 2008 earnings: 

Legal reserve - - 45,929 ( 45,929 ) - - - - 

Employee bonuses - stock - - - ( 305,204 ) - - - ( 305,204 ) 

Exercise of employee stock option 7,331 ( 1,159 ) - - - - - 6,172 

Employee compensation plan - employee stock options - 120,623 - - - - - 120,623 

Consolidated net income for 2009 - - - 289,162 - - - 289,162 

Capital reserve due to change in ownership of long-term investments - ( 139,845 ) - - - - - ( 139,845 ) 

Recognition of unrealized profit or loss on available-for-sale financial 

assets - - - - 947,445 - - 947,445 

Recognition of unrealized gain or loss on derivative financial instruments 

- - - - ( 1,045 ) - - ( 1,045 ) 

for hedging 

Cash dividends received by subsidiaries from the Company - 4,516 - - - - - 4,516 

Cumulative translation adjustment - - - - - ( 443,606 ) ( 443,606 ) 

Balance at December 31, 2009 $15,361,724 $ 4,153,640 $ 2,771,835 $ 8,180,440 $ 539,949 $ 1,206,095 ( $ 609,503 ) $ 31,604,180 

Note: Directors’ and supervisors’ remuneration of $2,000 and employees’ bonuses of $20,773 for 2008 have been deducted from the consolidated statement of income. 


~95~


CONSOLIDATED STATEMENTS OF CASH FLOWS 



2009 2008 

Cash flows from operating activities: 


Adjustments to reconcile consolidated net income to net cash 

provided by operating activities: 

Bad debts expense 98,296 86,144 

Loss on obsolescence and market value decline 208,848 872,558 

Depreciation 1,255,893 1,234,006 

Amortization 820,251 498,867 

Gain on valuation of financial assets ( 14,316 ) ( 11,977 ) 

(Gain) loss on valuation of financial liabilities ( 82,973 ) 67,185 

Impairment loss in financial assets carried at cost – non-current 50,856 - 

Gain on disposal of investments ( 216,690 ) ( 122,826 ) 

Long-term investment income accounted for under the equiity 

method ( 1,179,658 ) ( 1,059,436 ) 

Cash dividends received from long-term investments accounted 

for under the equity method 218,276 298,876 

(Loss) gain on disposal of property, plant and equipment, net ( 161,409 ) 45,157 

Employee compensation plan - employee stock options 120,623 16,591 

Changes in assets and liabilities: 

(Increase) decrease in: 

Notes receivable 11,400 79,843 

Accounts receivable 175,952 3,261,264 

Other receivables 43,423 382,992 

Inventories 373,745 809,226 

Prepayments 415,353 ( 229,891 ) 

Deferred income tax assets 355,068 ( 13,599 ) 

Increase (decrease) in: 

Notes payable ( 24,478 ) ( 7,207 ) 

Accounts payable ( 1,669,632 ) ( 3,399,952 ) 

Income tax payable 283,774 ( 264,425 ) 

Accrued expenses ( 646,414 ) ( 1,674,625 ) 

Other payables ( 8,407 ) 19,329 

Receipts in advance 62,052 ( 361,218 ) 

Provision for product worranty 72,823 ( 323,201 ) 

Other current liabilities 199,618 ( 6,256 ) 

Accrued pension payable ( 97 ) ( 1,455 ) 

Deferred income tax liabilities ( 357,647 ) ( 148,600 ) 

Other liabilities – other ( 35,285 ) - 

Net cash provided by operating activities 658,407 506,659 

(CONTINUED) 

~96~


CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) 



2009 2008 

Cash flows from investing activities: 

Decrease in financial assets at fair value through profit or loss $ - $ 9,301 

(Inecrease) decrease in other financial asstes ( 1,403 ) 537,129 

Increase in available-for-sale financial assets ( 421 ) - 

Increase in financial assets carried at cost – non-current ( 113,540 ) ( 78,554 ) 

Decrease in financial assets carried at cost – non-current with 

net of cash from return of capital - 40,119 

Proceeds from disposal of financial assets carried at cost – 

non-current 

8,577 - 

Inecrease in long-term investments ( 150,000 ) - 

Decrease in long-term investments – non-current with net of 

cash received from return of capital 

16,893 - 

Proceeds from disposal of long-term investments 1,165,633 821,790 

Acquisition of property, plant and equipment ( 192,628 ) ( 603,538 ) 

Proceeds from disposal of property, plant and equipment 240,438 118,087 

Increase in deferred charges ( 542,986 ) ( 523,238 ) 

Decrease in refundable deposits, net 19,597 32,140 

Purchase of net assets of Consumer Global Navigation Satellite 

Systems Division owned by Magellan Navigation, Inc. and its 

subsidiary ( 1,104,165 ) - 

Net cash provided by (used in) investing activities ( 654,005 ) 353,236 

Cash flows from financing activities: 

Increase in short-term debts, net ( 761,413 ) ( 2,190,386 ) 

Decrease in commercial paper payable, net - ( 44,000 ) 

Repayment of bonds payable ( 1,500,000 ) ( 3,259,500 ) 

Repayment of long-term loans ( 50,000 ) - 

Proceeds from long-term loans 1,550,000 - 

Increase in deposit-in 2,723 10,859 

Exercise of employee stock options 6,172 8,038 

Employee bonuses paid - ( 305,006 ) 

Directors’ and supervisors’ remuneration - ( 6,000 ) 

Cash dividends paid ( 300,628 ) ( 1,994,753 ) 

Purchase of treasury stock - ( 237,557 ) 

Net cash used in financing activities ( 1,053,146 ) ( 8,018,305 ) 

Effects of changes in exchange rates ( 69,032 ) ( 218,973 ) 

Net decrease in cash and cash equivalents ( 1,117,776 ) ( 7,377,383 ) 

Cash and cash equivalents at beginning of year 7,033,906 14,411,289 

Cash and cash equivalents at end of year $ 5,916,130 $ 7,033,906 

Supplemental disclosures of cash flow information: 

Cash paid for interest $ 72,068 $ 182,680 

Cash paid for income tax $ 29,683 $ 749,939 

Net assets acquired from Magellan Navigation, Inc. and its 

subsidiary 

Accounts receivable $ 2,032,736 $ - 

Inventories 728,063 - 

Property, plant and equipment 84,028 - 

Intangible assets 2,047,056 - 

Other assets 12,368 - 

Accounts payable ( 2,762,214 ) - 

Accrued expenses ( 1,037,872 ) - 

Net cash paid for acquisition $ 1,104,165 $ - 

Investing activities partially received in cash 

Decrease in property and equipment $ 638,088 $ 118,087 

Less: property and equipment receivables at end of year ( 397,650 ) - 

Cash received $ 240,438 $ 118,087 


~97~


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

DECEMBER 31, 2009 AND 2008 

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, 

EXCEPT AS OTHERWISE INDICATED) 

1. HISTORY AND ORGANIZATION 

1) The Company 

MiTAC International Corp. (“the Company”) was incorporated as a company 

limited by shares under the provisions of the Company Law of the Republic of 

China (R.O.C) on December 8, 1982 and started its operations on December 15, 

1982. The main activities of the Company include the design, manufacture, sales 

and services of micro-computers, mobile communications and related products as 

well as other related investments. As of December 31, 2009, the Company and its 

subsidiaries had 9,622 employees. 

2) Subsidiaries included in the consolidated financial statements and their changes 

The business activities of the Company and its controlled subsidiaries (collectively 

referred herein as the Group) and the Company’s ownership percentages of its 

controlled subsidiaries are shown below: 

1. General investments holding: 

Subsidiary 

Tsu Fung Investment Corp. 

(TFC) and its subsidiaries 

Ownership (%) 

Investor 

December 31, 

2009 2008 

MiTAC International Corp. 100% 100% 

Description 

Silver Star Developments Ltd. MiTAC International Corp. 100% 100% 

Foreground Technology Ltd. MiTAC International Corp. 100% 100% 

Mio Limited Silver Star Developments Ltd. - 100% Note 2 

System Glory International Ltd. Silver Star Developments Ltd. 100% 100% 

Pacific China Corp. Silver Star Developments Ltd. 100% 100% 

Magicmate Group Ltd. Silver Star Developments Ltd. 100% 100% 

Best Profit Ltd. Silver Star Developments Ltd. 100% 100% 

Sky Universe Enterprise Ltd. Silver Star Developments Ltd. 100% 100% 

Mass Bridge Ltd. Silver Star Developments Ltd. 100% 100% 

Great Rich Ltd. Silver Star Developments Ltd. 100% 100% 

MiTAC Star Service Ltd. Pacific China Corp. 100% 100% 

Software Insights Ltd. Pacific China Corp. 100% 100% 

Start Well Tecnology Ltd. Pacific China Corp. 100% 100% 

Dynamic Star Investments Ltd. Pacific China Corp. 100% 100% 

Huge Extend Ltd. Pacific China Corp. 100% 100% 

Bright Crown Management Ltd. Pacific China Corp. 100% 100% 

MiTAC Cooperatie U.A. Great Rich Ltd. 100% 100% 

Booming Enterprises Inc. Best Profit Ltd. 100% 100% 

Top Sheen Enterprises Ltd. Best Profit Ltd. 100% 100% 

MiTAC Netherlands B.V. MiTAC Cooperatie U.A. 100% 100% 

~98~

2.Research, development, manufacturing and marketing of mobile communications, 

computer peripheral, hardware, software and related products: 

Subsidiary Investor Ownership (%) December 31, Description 

2009 2008 

DLC Technology Corporation MiTAC International Corp. 100% 100% Note 1 

Mio Technology Corp. Tsu Fung Investment Corp. 100% 100% 

Tyan Computer Corporation - USA Foreground Technology Ltd. 100% 100% 

Tyan Computer Corporation - Foreground Technology Ltd. 100% 100% 

GMBH 

MiTAC U.S.A. Inc. Silver Star Developments Ltd. 100% 100% 

MiTAC Japan Corp. Silver Star Developments Ltd. 100% 100% 

Mio Technology Benelux B.V. Silver Star Developments Ltd. 100% 100% 

MiTAC (U.K.) Ltd. Silver Star Developments Ltd. 100% 100% 

MiTAC Pacific (H.K.) Ltd. Silver Star Developments Ltd. 100% 100% 

Mio International Ltd. Silver Star Developments Ltd. 100% 100% 

MiTAC Australia Pty Ltd. Silver Star Developments Ltd. 100% 100% 

Navman Technology NZ Ltd. Silver Star Developments Ltd. 100% 100% 

Naviart Ltd. Silver Star Developments Ltd. - 100% Liquidated 

in 2009 

MiTAC Computer (Kunshan) Ltd. Start Well Tecnology Ltd. 100% 100% 

MiTAC Service (ShangHai) Pacific China Corp. 100% 100% 

Co.,Ltd. 

MiTAC Computers (Shunde) Ltd. MiTAC Star Service Ltd. 100% 100% 

MiTAC Research (Shanghai) Ltd. Software Insights Ltd. 100% 100% 

MiTAC Technology (Kunshan) Co., Dynamic Star Investments Ltd. 100% 100% 

Ltd. 

Mio Technology Korea Magicmate Group Ltd. 100% 100% 

Mio Technology (Chengdu) Ltd. Mio International Ltd. 100% 100% 

Mio Technology Ltd. Mio International Ltd. 100% 100% 

Mio Technology USA Ltd. Booming Enterprises Inc. 100% 100% 

Naviart Information Technolgoy 

(Shanghai) Co., Ltd. 

Naviart Ltd. - 100% Liquidated 

in 2009 

Mio Technology UK Ltd. Best Profit Ltd. 100% 100% 

MiTAC Logistics Corp. Sky Universe Enterprise Ltd. 100% 100% 

MiTAC Computer (Vietnam) Co., Mass Bridge Ltd. 100% 100% 

Ltd. 

MITAC LOGISTIC SERVICE Bright Crown Management Ltd. 100% 100% 

(KUNSHAN) LTD. 

MiTAC Digital Corp. Top Sheen Enterprises Ltd. 100% - New 

established 

MiTAC Information Technology 

Ltd. 

Bright Crown Management Ltd. 100% - New 

established 

Note 1:As of December 31, 2008, the Company and its subsidiary, Tsu Fung 

Investment Corp., held 100% consolidated ownership of DLC Technology 

Corporation. 

Note 2:In 2009, the Company sold its 100% ownership of Mio Limited to the 

subsidiaries of Getac Technology Corp. (GTC). 

3) Majority-owned subsidiaries excluded in the consolidation: None. 

4) Adjustment for subsidiaries with different balance sheet dates 

Some of SSDL’s subsidiaries adopted accounting periods that are different from the 

Company’s accounting period. However, as the difference is not over 3 months, the 

financial reports of these subsidiaries are consolidated without any adjustment. 

5) Special operating risks in foreign subsidiaries: None. 

~99~

6) Nature and extent of the restrictions on fund remittance from subsidiaries to the 

parent company: None. 

7) Contents of subsidiaries’ securities issued by the parent Company: Refer to Note 4 

(20). 

8) Information on convertible bonds and common stock issued by subsidiaries: DLC 

Technology Corporation increased their capital amounting to $65,000 in 2008. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The accompanying consolidated financial statements of the Group are prepared in 

accordance with the “Rules Governing the Preparation of Financial Statements by 

Securities Issuers” and accounting principles generally accepted in the Republic of China. 

The Group’s significant accounting policies are summarized below: 

1) Basis for preparation of consolidated financial statements 

All majority-owned subsidiaries and controlled entities are included in the 

consolidated financial statements. Effective January 1, 2008, the Company prepares 

consolidated financial statements on a quarterly basis. Significant inter-company 

transactions and assets and liabilities arising from inter-company transactions are 

eliminated. 

2) Translation of financial statements of foreign subsidiaries 

Assets and liabilities of foreign subsidiaries are translated into New Taiwan dollars 

using the exchange rates at the balance sheet date. Equity accounts are translated at 

historical rates except for beginning retained earnings, which are carried forward 

from prior year’s balance. Dividends are translated at the rates prevailing at the date 

of declaration. Profit and loss accounts are translated at weighted-average rates of 

the year. The resulting translation differences are included in “cumulative 

translation adjustments” under stockholders’ equity. 

3) Foreign currency transactions 

A. The Company and its consolidated subsidiaries maintain their accounts in New 

Taiwan dollars and their functional currencies, respectively. Transactions 

denominated in foreign currencies are translated into New Taiwan dollars and 

their functional currencies at the spot exchange rates prevailing at the 

transaction dates. Exchange gains or losses due to the difference between the 

exchange rate on the transaction date and the exchange rate on the date of actual 

receipt and payment are recognized in current year’s profit or loss. 

B. Receivables, other monetary assets and liabilities denominated in foreign 

currencies are translated at the spot exchange rates prevailing at the balance 

sheet date. Exchange gains or losses are recognized in profit or loss. 

C. When a gain or loss on a non-monetary item is recognized directly in equity, any 

exchange component of that gain or loss shall be recognized directly in equity. 

Conversely, when a gain or loss on a non-monetary item is recognized in profit 

or loss, any exchange component of that gain or loss shall be recognized in 

profit or loss. However, non-monetary items that are measured on a historical 

cost basis are translated using the exchange rate at the date of the transaction. 

~100~

4) Classification of current and non-current items 

A. Assets that meet one of the following criteria are classified as current assets; 

otherwise they are classified as non-current assets: 

a) Assets arising from operating activities that are expected to be realized or 

consumed, or are intended to be sold within the normal operating cycle; 

b) Assets held mainly for trading purposes; 

c) Assets that are expected to be realized within twelve months from the balance 

sheet date; 

d) Cash and cash equivalents, excluding restricted cash and cash equivalents and 

those that are to be exchanged or used to pay off liabilities more than twelve 

months after the balance sheet date. 

B. Liabilities that meet one of the following criteria are classified as current 

liabilities; otherwise they are classified as non-current liabilities: 

a) Liabilities arising from operating activities that are expected to be paid off 

within the normal operating cycle; 

b) Liabilities arising mainly from trading activities; 

c) Liabilities that are to be paid off within twelve months from the balance sheet 

date; 

d) Liabilities for which the repayment date cannot be extended unconditionally 

to more than twelve months after the balance sheet date. 

5) Cash equivalents 

Cash equivalents refer to highly-liquid, short-term investments with the following 

characteristics: 

A. Investments that can be readily converted into known amount of cash; 

B. Investments of which the values are not significantly affected by the 

fluctuations in interest rates. 

The preparation of cash flow statement is based on cash equivalents. 

6) Financial assets and financial liabilities at fair value through profit or loss 

A. Financial assets and financial liabilities at fair value through profit or loss are 

recognized and derecognized using trade date accounting and are recognized 

initially at fair value. 

B. These financial instruments are subsequently remeasured and stated at fair 

value, and the gain or loss is recognized in profit or loss. The fair value of 

listed stocks, OTC stocks and closed-end mutual funds is based on latest 

quoted fair prices of the accounting period. The fair value of open-end and 

balanced mutual funds is based on the net asset value at the balance sheet date. 

~101~

C. When a derivative is an ineffective hedging instrument, it is initially 

recognized at fair value on the date a derivative contract is entered into and is 

subsequently remeasured at its fair value. If a derivative is a non-option 

derivative, the fair value initially recognized is zero. 

7) Available-for-sale financial assets 

A. Available-for-sale financial assets are recognized and derecognized using trade 

date accounting and are initially stated at fair value plus transaction costs that 

are directly attributable to the acquisition of the financial asset. 

B. The financial assets are remeasured and stated at fair value, and the gain or 

loss is recognized in equity, until the financial asset is derecognized, at which 

time the cumulative gain or loss previously recognized in equity shall be 

recognized in profit or loss. The fair values of listed stocks, OTC stocks and 

closed-end mutual funds are based on latest quoted fair prices of the 

accounting period. The fair values of open-end and balanced mutual funds 

are based on the net asset value at the balance sheet date. 

C. If there is any objective evidence that the financial asset is impaired, the 

cumulative loss that had been recognized directly in equity shall be transferred 

from equity to profit or loss. When the fair value of an equity instrument 

subsequently increases, impairment losses recognized previously in profit or 

loss shall not be reversed. When the fair value of a debt instrument 

subsequently increases and the increase can be objectively related to an event 

occurring after the impairment loss was recognized in profit or loss, the 

impairment loss shall be reversed to the extent of the loss recognized in profit 

or loss. 

8) Financial assets carried at cost 

A. Investment in unquoted equity instruments is recognized or derecognized using 

trade date accounting and is stated initially at its fair value plus transaction 

costs that are directly attributable to the acquisition of the financial asset. 

B. If there is any objective evidence that the financial asset is impaired, the 

impairment loss is recognized in profit or loss. Such impairment loss shall not 

be reversed when the fair value of the asset subsequently increases. 

9) Derivative financial instruments for hedging 

When the transactions qualify for all the conditions of applying hedge accounting, 

the resulting profit or loss is recognized by offsetting the changes in the fair values 

of hedging instrument and hedged items. When the transactions qualify as cash flow 

hedges, the effective portion of any gain or loss on remeasurement of the derivative 

financial instrument to fair value is recognized directly in equity. 

10) Accounts receivable 

Accounts receivable are claims resulting from sale of goods or services. The fair 

value of accounts receivable is calculated based on the imputed interest rate. 

Accounts receivable which is collectible within one year, and where the difference 

between the fair value and the value at maturity is insignificant is measured at 

carrying value. 

~102~

11) Allowance for doubtful accounts 

Allowance for doubtful accounts is provided based on the collectibility of notes, 

accounts and other receivables, taking into account the bad debts incurred in prior 

years and the aging analysis of the receivables. 

12) Inventories 

A. The perpetual inventory system is adopted for inventory recognition. Inventories 

are stated at standard cost, which is adjusted to actual cost at year-end. 

B. At the end of period, inventories are evaluated at the lower of cost or net 

realizable value, and the individual item approach is used in the comparison of 

cost and net realizable value. The calculation of net realizable value should be 

based on the estimated selling price in the normal course of business, net of 

estimated costs of completion and estimated selling expenses. 

13) Long-term equity investments accounted for under equity method 

A. Long-term equity investments in which the Group holds more than 20% of the 

investee company’s voting shares or has the ability to exercise significant 

influence on the investee’s operational decisions are accounted for under the 

equity method. The excess of the initial investment cost over the acquired net 

asset value of the investee attributable to goodwill is no longer amortized, 

effective January 1, 2006. Retrospective adjustment of the amount of goodwill 

amortized in previous year(s) is not required. The excess of acquired net asset 

value of investee over the initial investment cost is allocated proportionately and 

applied as a reduction to the book values of identifiable non-current assets, and 

any remaining amount of such excess after this allocation is credited to 

extraordinary gains. However, negative goodwill occurred prior to December 31, 

2005 is continuously amortized. All majority-owned subsidiaries and controlled 

entities are accounted for under the equity method and are included in the 

consolidated financial statements on a quarterly basis. 

B. For investments accounted for under the equity method, the Company 

recognizes investment gains or losses by quarter. The unrealized profits and 

losses from intercompany transactions between the Company and investee 

companies during the current year shall be eliminated. 

C. Exchange differences arising from translation of the financial statements of 

overseas investee companies accounted for under the equity method are 

recorded as “cumulative translation adjustments” under stockholder’s equity. 

14) Property, plant and equipment 

A. Property, plant and equipment are stated at cost. Interest incurred on loans 

used to finance the construction of property and plant is capitalized and 

depreciated accordingly. 

B. Depreciation is calculated on a straight-line basis over the assets’ estimated 

useful lives. Residual values of fixed assets still in use at the end of the 

original service lives are depreciated based on the newly estimated remaining 

service lives of the assets. The useful lives of the fixed assets are 3 – 10 years, 

except for buildings, which are 3 - 55 years. 

C. Maintenance and repairs are expensed as incurred. Significant renewals and 

improvements are capitalized and depreciated accordingly. 

~103~

D. Idle assets are valued at the lower of book value or net realizable value (based 

on the appraised value by a real estate appraisal company) and classified as 

other assets. Rental assets are valued at cost and classified as other assets; 

current depreciation is recorded as non-operating expense. 

15) Intangible assets 

A. Goodwill represents the excess of the cost of an acquisition over the fair value 

of the Group’s share of the net identifiable assets of the acquired subsidiary at 

the date of acquisition. 

B. Trademark is stated at cost and assessed to generate continuous future economic 

benefits. Accordingly, it is deemed to have an indefinite useful life and shall 

not be amortized. Instead, it is reviewed for impairment testing annually. 

C. Other intangible assets, mainly patent rights, technology, customer relationship 

and non-compete agreement, are stated at cost and amortized on a straight-line 

basis over 5 ~ 10 years. 

D. Land use right is stated at cost and amortized over the useful life of 50 years 

using the straight-line method. 

16) Deferred charges 

A. Telephone installation expenditure is amortized on a straight-line method over 5 

years. 

B. Mold expenses are amortized on a straight-line method over 2 years or the 

units-of-output method. 

C. Issuance costs of bonds are deferred and amortized on a straight-line method 

over the life of the bonds. 

D. Software cost is amortized on a straight-line method over 5 years. 

17) Impairment of non-financial assets 

The Group recognizes impairment loss when there is indication that the recoverable 

amount of an asset is less than its carrying amount. The recoverable amount is the 

higher of the fair value less costs to sell and value in use. The fair value less costs to 

sell is the amount obtainable from the sale of the asset in an arm’s length transaction 

after deducting any direct incremental disposal costs. The value in use is the present 

value of estimated future cash flows to be derived from continuing use of the asset 

and from its disposal at the end of its useful life. When the impairment no longer 

exists, the impairment loss recognized in prior years shall be recovered. 

The recoverable amount of goodwill, intangible assets with indefinite useful lives 

and intangible assets which have not yet been available for use shall be evaluated 

periodically. Impairment loss will be recognized whenever there is indication that 

the recoverable amount of these assets is less than their respective carrying amount. 

Impairment loss of goodwill recognized in prior years is not recoverable in the 

following years. 

~104~

18) Convertible bonds 

For convertible bonds issued prior to and including December 31, 2005, in 

accordance with the EITF 95-78 issued by the Accounting Research and 

Development Foundation of the R.O.C., the Company elected not to bifurcate the 

embedded derivatives and accounted for those convertible bonds as follows: 

A. When bonds are converted, the par value of the bonds is credited to common 

stock and any excess is credited to capital reserve. No gain or loss is recognized 

on bond conversion. 

B. Expenditures incurred on issuance of convertible bonds are classified as deferred 

assets and amortized over the life of the bonds. In cases where the bonds are 

converted or redeemed before the maturity date, the issuance expenditures are 

expensed in proportion to the amount of bonds converted or redeemed. 

19) Pension plan 

Under the defined benefit pension plan, net periodic pension costs are recognized in 

accordance with the actuarial calculations. Net periodic pension costs include 

service cost, interest cost, expected return on plan assets, and amortization of 

unrecognized net transition obligation and gains or losses on plan assets. 

Unrecognized net transition obligation is amortized on a straight-line basis over 15 

years. Under the defined contribution pension plan, net periodic pension costs are 

recognized as incurred. 

20) Warranty 

Warranty is estimated based on historical experience. Service warranty expense is 

included in the current year's operating expense. 

21) Income tax 

A. Income taxes are allocated on the inter- and intra-period basis. Over or under 

provision of prior years’ income tax liabilities is included in current year’s 

income tax. 

B. Investment tax credits arising from expenditures incurred on acquisitions of 

equipment or technology, research and development, employees’ training, and 

equity investments are recognized in the year the related expenditures are 

incurred. 

C. An additional 10% tax is levied on the unappropriated retained earnings and is 

recorded as income tax expense in the year the stockholders resolve to retain the 

earnings. 

D.When a change in the tax laws is enacted, the deferred tax liability or asset should 

be recomputed accordingly in the period of change. The difference between the 

new amount and the original amount, that is, the effect of changes in the deferred 

tax liability or asset, should be recognized as an adjustment to income tax 

expense (benefit) for income from continuing operations in the current period. 

~105~

22) Share-based payment - employee compensation plan 

A. The employee stock options granted from January 1, 2004 through December 31, 

2008 are accounted for in accordance with EITF92-070, EITF92-071 and 

EITF92-072 “Accounting for Employee Stock Options” as prescribed by the 

Accounting Research and Development Foundation, R.O.C., dated March 17, 

2003. Under the share-based employee compensation plan, compensation cost 

is recognized using the intrinsic value method and pro forma disclosures of net 

income and earnings per share are prepared in accordance with the R.O.C. SFAS 

No. 39, “Accounting for Share-based Payment”. 

B. For the grant date of the share-based payment agreements set on or after January 

1, 2009, the Company shall measure the services received during the vesting 

period by reference to the fair value of the equity instruments granted and 

account for those amounts as payroll expenses during that period. 

23) Employees’ bonuses and directors’ and supervisors’ remuneration 

Effective January 1, 2008, pursuant to EITF96-052 of the Accounting Research and 

Development Foundation, R.O.C., dated March 16, 2007, “Accounting for 

Employees’ Bonuses and Directors’ and Supervisors’ Remuneration”, the costs of 

employees’ bonuses and directors’ and supervisors’ remuneration are accounted for 

as expenses and liabilities, provided that such a recognition is required under legal 

or constructive obligation and those amounts can be estimated reasonably. However, 

if the accrued amounts for employees’ bonuses and directors’ and supervisors’ 

remuneration are significantly different from the actual distributed amounts 

resolved by the stockholders at their annual stockholders’ meeting subsequently, the 

differences shall be recognized as gain or loss in the following year. In addition, in 

accordance with EITF97-127 of the Accounting Research and Development 

Foundation, R.O.C., dated March 31, 2008, “Criteria for Listed Companies in 

Calculating the Number of Shares of Employees’ Stock Bonus”, the Company 

calculates the number of shares of employees’ stock bonus based on the closing 

price of the Company's common stock at the previous day of the stockholders’ 

meeting held in the year following the financial reporting year, and after taking into 

account the effects of ex-rights and ex-dividends. 

24) Revenues and expenses 

Revenues are recognized when the earning process is substantially completed and 

are realized or realizable. Costs and expenses are recognized as incurred. 

25) Treasury stock 

A. When a company acquires its outstanding shares as treasury stock, the 

acquisition cost should be debited to the treasury stock account (a contra 

account under stockholders’ equity) if the shares are purchased. 

B. Treasury stocks transferred to employees on or after January 1, 2008 are 

accounted for in accordance with R.O.C. SFAS No. 39, “Accounting for 

Share-based Payment”. 

~106~

C. When a company’s treasury stock is retired, the treasury stock account should 

be credited, and the capital surplus- premium on stock account and capital stock 

account should be debited proportionately according to the share ratio. An 

excess of the carrying value of treasury stock over the sum of its par value and 

premium on stock should first be offset against capital surplus from the same 

class of treasury stock transactions, and the remainder, if any, debited to retained 

earnings. An excess of the sum of the par value and premium on stock of 

treasury stock over its carrying value should be credited to capital surplus from 

the same class of treasury stock transactions. 

D. The cost of treasury stock is accounted for on a weighted-average basis. 

E. When the Company recognizes investment income (loss) and prepares financial 

statements, it regards the shares of the Company held by subsidiaries as treasury 

stocks and discloses the pro forma information in the statement of income about 

the condition assuming that the shares of the Company held by subsidiaries are 

regarded as investments instead of treasury stocks. 

26) Use of estimates 

The preparation of financial statements in conformity with generally accepted 

accounting principles requires management to make estimates and assumptions that 

affect the amounts of assets and liabilities and the disclosures of contingent assets 

and liabilities at the date of the financial statements and the amounts of revenues 

and expenses during the reporting period. Actual results could differ from those 

assumptions and estimates. 

27) Business combination 

The Group adopted the R.O.C. SFAS No. 25, “Accounting for Business 

Combination - Purchase Method” to account for any business combination 

transactions. 

3. EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 

1) Inventories 

Effective January 1, 2009, the Group adopted the amendments to R.O.C. SFAS No. 10, 

“Accounting for Inventories”. This change in accounting principle had no material effect 

on net income for the year ended December 31, 2009. 

2) Share-based payment ─ employee compensation plan 

Effective January 1, 2008, the Group adopted R.O.C. SFAS No. 39, “Accounting for 

Share-based Payment”. This change in accounting principle had no material effect on 

net income for the year ended December 31, 2008. 

3) Employees’ bonuses and directors’ and supervisors’ remuneration 

Effective January 1, 2008, the Group adopted EITF96-052 of the Accounting Research 

and Development Foundation, R.O.C., dated March 16, 2007. As a result of the adoption 

of EITF96-052, net income decreased by $17,080 and earnings per share decreased by 

$0.01 dollar for the year ended December 31, 2008. 

~107~

4. DETAILS OF SIGNIFICANT ACCOUNTS 

1) Cash and cash equivalents 

December 31, 

2009 2008 

Cash: 

Petty cash $ 2,478 $ 3,289 

Checking and savings accounts 3,520,253 2,357,768 

Time deposits 1,068,697 3,213,857 

4,591,428 5,574,914 

Cash equivalents: 

Repurchase bonds 1,324,702 1,458,992 

$ 5,916,130 $ 7,033,906 

2) Financial assets at fair value through profit or loss 

December 31, 

2009 2008 

Current items: 

Adjustment of financial assets held for trading $ 26,293 $ 11,977 

A. The Group recognized net gains of $14,316 and $11,977 for the years ended 

December 31, 2009 and 2008, respectively. 

B. The trading items and contract information of derivatives are described in Note 11. 

3) Available-for-sale financial assets 

December 31, 

2009 2008 


Listed (TSE and OTC) stocks $ 538,465 $ 778,980 

Adjustments of available-for-sale financial assets 200,254 ( 258,197 ) 

$ 738,719 $ 520,783 

Non-current items: 

Listed (TSE and OTC) stocks $ 585,473 $ 630,882 

Adjustments of available-for-sale financial assets 534,193 131,441 

$ 1,119,666 $ 762,323 

4) Financial assets carried at cost 

December 31, 

2009 2008 

Non-current items: 

Emerging stocks $ 645,051 $ 645,051 

Unlisted stocks 811,912 790,910 

$ 1,456,963 $ 1,435,961 

A. The investments were measured at cost since its fair value cannot be measured 

reliably. 

~108~

B. The Company's investee, G. Marso Electronics, Inc., made a capital reduction in 

2009 to cover its accumulated deficit. As a result, the number of shares invested by 

the Company was reduced by 894 thousand shares. The Company assessed that 

the investment value had been impaired and the probability of recovery was remote, 

thus, it recognized impairment loss of $8,982 on its investment in G. Marso 

Electronics, Inc. for 2009. 

C. The Company's investee, Cirocomm Technology Corporation, made a capital 

reduction in 2009 to cover its accumulated deficits. As a result, the number of 

shares invested by the Company was reduced by 631 thousand shares. The 

Company assessed that the investment value had been impaired and the probability 

of recovery was remote, thus, it recognized impairment loss of $25,539 on its 

investment in Cirocomm Technology Corporation for 2009. 

D. The Company assessed that the investment value on its investee, Brilliant Star 

Holdings Ltd., had been impaired and the probability of recovery was remote, thus, 

it recognized impairment loss of $16,335 on its investment in Brilliant Star 

Holdings Ltd. for 2009. 

5) Accounts receivable - net 

December 31, 

2009 2008 

Third parties $ 12,942,250 $ 9,440,135 

Less: Allowance for sales rebate ( 2,658,772 ) ( 1,125,182 ) 

Allowance for doubtful accounts ( 283,991 ) ( 214,317 ) 

9,999,487 8,100,636 

Related parties 2,647,292 3,071,199 

$ 12,646,779 $ 11,171,835 

6) Inventories – net 

December 31, 

2009 2008 

Raw materials $ 4,895,699 $ 3,921,315 

Finished goods 4,679,001 5,674,953 

9,574,700 9,596,268 

Less: Allowance for obsolescence and market value 

decline ( 1,404,677 ) ( 1,523,435 ) 

$ 8,170,023 $ 8,072,833 

Expense and loss incurred on inventories for the years ended December 31, 2009 and 2008 

were as follows: 

For the years ended 

December 31, 

2009 2008 

Cost of goods sold $ 55,029,169 $ 55,996,250 

Market value decline 346,218 872,558 

Others 414,452 479,177 

$ 55,789,839 $ 57,347,985 

~109~

7) Long-term investments accounted for under the equity method 

A. Details of long-term equity investments are set forth below: 

December 31, 

2009 2008 

Percentage 

Percentage 

of direct 

of direct 

Amount ownership Amount ownership 

Equity method: 

Getac Technology Corp. $ 3,919,167 33.97% $ 3,715,813 35.45% 

Tung Da Investment Co., Ltd. 535,774 49.99% 480,360 49.99% 

3 Probe Technology Co., Ltd. 11,112 23.13% 10,353 23.13% 

Lian Jie Investment Co., Ltd. 63,574 49.98% 75,633 49.98% 

Shen-Tong Construction & 

Development Co., Ltd. 83,825 47.55% 83,922 47.55% 

Synnex Corp. 5,133,509 19.69% 5,288,352 23.96% 

Harbinger II (BVI) Venture Capital 

Corp. 48,090 49.96% 50,107 49.96% 

Harbinger Ruyi Venture Ltd. 32,169 28.57% 

- - 

(Note) 

Mainpower International Ltd. 160,803 26.19% 180,730 50.00% 

Suzhou MiTAC Precision Technology 

Co., Ltd. 242,480 21.62% 256,869 29.63% 

Loyalty Founder Enterprise Co., Ltd. 151,877 25.24% - - 

$ 10,382,380 $ 10,142,139 

Note: As the stock capital of Harbinger Ruyi Venture Ltd. changed during 2009, 

the Company’s ownership was adjusted from 18.18% to 28.57%. As a result, 

the investments in Harbinger Ruyi Venture Ltd. were reclassified from 

“Financial assets carried at cost” to “Long-term equity investments 

accounted for under the equity method”. 

B. Investment income (loss) accounted for under the equity method for the years 

ended December 31, 2009 and 2008 is set forth below: 

For the years ended December 31, 

Investee company 2009 2008 

Equity method: 

Getac Technology Corp. $ 478,360 $ 393,721 

Tung Da Investment Co., Ltd. 17,789 32,299 

Synnex Corp. 679,629 650,202 

3 Probe Technology Co., Ltd. 759 ( 38 ) 

Lian Jie Investment Co., Ltd. 4,542 ( 3,664 ) 

Shen-Tong Constuction & Development Co., Ltd. ( 97 ) ( 375 ) 

Harbinger II (BVI) Venture Capital Corp. ( 775 ) 2,479 

Marbinger Ruyi Venture Ltd. 144 - 

Mainpower International Ltd. ( 8,137 ) ( 5,663 ) 

Suzhou MiTAC Preclsion Technology Co., Ltd. ( 11,834 ) ( 9,525 ) 

Loyalty Founder Enterprise Co., Ltd. 19,278 - 

$ 1,179,658 $ 1,059,436 

C. In 2009, the Company subscribed for 60,000 thousand shares of private placement 

stock of Loyalty Founder Enterprise Co., Ltd. totaling $150,000 with the price of 

$2.5 (in dollars) per share. Such stocks are subject to certain transfer restrictions 

pursuant to Article 43-8 of the Securities and Exchange Law. 

~110~

D. Lian Jie Investment Co., Ltd. made a capital reduction in 2009 and returned share 

capital of $16,893 to the Company. 

8) Property, plant and equipment - net 

Cost 

December 31, 

2009 2008 

Land $ 1,027,626 $ 1,236,574 

Buildings 4,911,980 5,233,813 

Machinery 4,904,046 5,356,995 

Computer and communication equipment 907,696 862,268 

Transportation equipment 105,462 124,599 

Furniture and fixtures 736,123 780,510 

Leasehold improvements 63,537 68,140 

Other equipment 965,436 982,364 

13,621,906 14,645,263 

Accumulated depreciation ( 6,871,740 ) ( 6,305,882 ) 

Accumulated impairment ( 12,149 ) ( 12,149 ) 

Construction in progress and prepayments for equipment 83,580 39,440 

Net book value $ 6,821,597 $ 8,366,672 

No interest expense was capitalized for the years ended December 31, 2009 and 2008. 

9) Intangible Assets 

A. 

Patent rights 

and technology Goodwill 

Other intangible 

assets (Note) 

Trademarks 


Cost: 

Book value, January 1, 2009 $ - $ - $ 1,289,824 $ 317,958 $ 1,607,782 

Increase in current period 

– single acquisition 398,368 1,030,223 285,665 332,800 2,047,056 

Effects of exchange rate 

changes - - ( 27,823) ( 20,241) ( 48,064) 

Book value, December 31, 

2009 398,368 1,030,223 1,547,666 630,517 3,606,774 

Accumulated amortization: 

Book value, January 1, 2009 - - - ( 48,644) ( 48,644) 

Amortization for current 

period - ( 147,175) - ( 42,494) ( 189,669) 


changes - - - 2,504 2,504 


2009 - ( 147,175) - ( 88,634) ( 235,809) 

Net book value, December 

31, 2009 $ 398,368 $ 883,048 $ 1,547,666 $ 541,883 $ 3,370,965 

~111~

Patent rights 

and technology Goodwill 

Other intangible 

assets(Note) 

Trademarks 


Cost: 

Book value, January 1, 2008 $ - $ - $ 1,281,236 $ 293,629 $ 1,574,865 

Increase in current period 

– single acquisition - - - - - 


changes - - 8,588 24,329 32,917 


2008 - - 1,289,824 317,958 1,607,782 

Accumulated amortization: 

Book value, January 1, 2008 - - - ( 38,994) ( 38,994) 

Amortization for current 

period - - - ( 6,062) ( 6,062) 


changes - - - ( 3,588) ( 3,588) 


2008 - - - ( 48,644) ( 48,644) 

Net book value, December 

31, 2008 $ - $ - $ 1,289,824 $ 269,314 $ 1,559,138 

Note: Others intangible assets including customer relationships, non-compete 

agreements and land use rights for 2009 and 2008. 

B. The goodwill resulting from the merger with Tyan Computer Technology Co., 

Ltd., acquisition of Navman Corp. and purchase the Consumer Global Navigation 

Satellite Systems Division owned by Magellan Navigation, Inc. and its subsidiary 

represents the excess of acquisition cost over fair value of acquired net assets of 

Tyan Computer Technology Co., Ltd., Navman Corp. and Magellan Navigation, 

Inc. and its subsidiary. 

C. Goodwill impairment test was conducted in accordance with the R.O.C. SFAS 

No. 35 “Impairment of Assets”. On December 31, 2009 and 2008, the Company 

evaluated the recoverable amount of assets used for operations and goodwill 

based on their value in use. The value in use is the present value of estimated 

future cash flows to be derived from continuing use of the asset and goodwill and 

from their disposal at the end of their useful life, which is based on the five-year 

financial forecast with the discount rate of 8.10% and 6.96%, respectively. The 

following sets forth the methods and assumptions used to estimate the 

recoverable amount of assets and goodwill: 

a) Estimated operating revenue: it is calculated based on industrial and market 

information and the Company’s future operations and sales planning. 

b) Estimated operating cost: it is calculated based on the estimated gross profit 

margin, which is derived from prior years’ operating costs and the Company’s 

future operations and sales planning. 

c) Estimated operating expense: it is calculated based on prior years’ operating 

expenses and the Company’s future operations and sales planning. 

The recoverable amount calculated based on the foregoing assumptions is higher 

~112~

than the sum of carrying value of identifiable assets and goodwill on December 

31, 2009 and 2008. Therefore, no impairment loss was recognized. 

D. On January 12, 2009, the Company and its overseas subsidiary-Silver Star 

Developments Ltd. (SSDL) and SSDL’s subsidiary signed an agreement to jointly 

purchase the Consumer Global Navigation Satellite Systems Division owned by 

Magellan Navigation, Inc. and its subsidiary. The total purchasing price 

amounted to US$33,352 thousand. As a result of this purchase, the Company 

acquired patents, rights and technologies and trademarks; SSDL and SSDL’s 

subsidiary acquired tangible net assets and intangible assets - customer 

relationships and non-compete agreements. 

10) Other assets 

December 31, 

2009 2008 

Land $ 790,195 $ 790,098 

Building 115,053 118,096 

Rental buildings, net 97,944 109,117 

Others 38,848 40,039 

1,042,040 1,057,350 

Less: Accumulated impairment ( 90,763) ( 90,763) 

$ 951,277 $ 966,587 

The Company owns a piece of agricultural land, located at Treasure Mountain, 

HsinChu Hsien, with a total area of 140,247.70 square meters, for the employees’ 

housing project. Land of 10,925.10 square meters owned by other parties was 

pledged to the Company. 

11) Short-term loans 

December 31, 

2009 2008 

Unsecured bank loans $ 1,392,031 $ 2,153,444 

Interest rates 0.5123%~1.975% 1.1628%~2.77% 

12) Financial liabilities at fair value through profit or loss - current 

December 31, 

2009 2008 


Adjustment of financial liabilities held for 

trading 

-Derivative financial instruments $ 6,068 $ 88,995 

A. The Group recognized a net gain of $82,973 and a net loss of $67,185 for the 

years ended December 31, 2009 and 2008, respectively. 

B. The nature and contractual terms of derivatives are described in Note 11. 

~113~

13) Bonds payable 

December 31, 

2009 2008 

Secured bonds payable $ - $ 1,500,000 

Less: Current portion ( -) ( 1,500,000) 

- - 

Unsecured bonds payable 240,500 240,500 

Less: Current portion ( 240,500) - 

- 240,500 

$ - $ 240,500 

A. On May 25, 2004, the Company issued secured bonds. The main terms of the 

issue are as follows: 

(a) Total amount: $2,000,000 

(b) Interest rate: 1.60% per annum for par value of $1,500,000. Floating rate 

with approximately 1.60% after hedging for par value of $500,000. 

(c) Maturity date: May 25, 2009 for par value of $500,000, and May 25, 2009 

for par value of $1,500,000. 

(d) Collateral: Equity securities. (Refer to Note 6) 

All of the outstanding first domestic secured bonds stated above had been 

redeemed in May 2009. 

B. On August 12, 2006, the Company issued unsecured convertible bonds. The 

main terms of the issue are as follows: 

(a) Total amount: $3,000,000 

(b) Interest rate: Zero 

(c) Maturity date: August 12, 2010 

(d) Convertible price: NT$48 per share of common stock. The price shall be 

reset when issuance of common shares or distribution of cash dividends 

exceeds 15% of total paid-in capital. The reset of convertible price is based 

on the formula and terms defined in the bond’s prospectus. The reset price 

shall be lower but no less than 80% of the original convertible price. As of 

December 31, 2009, the convertible price is NT$29.9. 

(e) Put and call: After three years from the issuance of bonds, the investors can 

have the Company redeem all the bonds. On August 12, 2009, the investors 

had the Company redeem bonds amounting to $2,759,500. From one month 

after the bonds were issued to ten days before the maturity date, if the 

Company’s closing price in Taiwan Stock Exchange is 50% higher than the 

convertible price then for continuous 30 working days, or the unconverted 

bonds exceed 10% of total amount of bonds issued, the Company can call all 

the bonds at par value. 

~114~

14) Long-term loans 

December 31, 

Bank Due date 2009 2008 

The Land Bank of 

Taiwan (LBOT)-led 10 

bank consortium: 

The last repayment due 

before April 22, 2013 

$ 1,500,000 $ - 

Interest rates 1.3621% - 

Under the syndicated facility agreement, the Company should maintain the following 

financial ratios during the contract period based on its annual consolidated financial 

statements audited by CPA(s): 

a) Current assets to current liabilities ratio of at least 100%; 

b) Liabilities not exceeding 125% at December 31, 2009 and 110% at December 31, 

2010 and 100% from December 31, 2011 to the end of contract; and 

c) Interest coverage of at least 200%. 

When the Company fails to comply with any one of the above financial ratios, it 

should make financial ratios improvement within 5 months from May 1 of the year 

following the audited year (i.e. the consolidated financial statements year) and gain a 

certificate from CPA(s), proving that its financial ratios have improved and met the 

requirements within the prescribed time above. If its financial ratios have improved 

and met the requirements within the prescribed time, the Company is not considered to 

be in default on financial commitments; however, the interest rates of the loans 

charged to the Company shall be added by 0.20% annum from the date of notification 

by the management bank for its financial ratios improvement to the day before 

financial ratios improvement completed. 

15) Pension plan 

A. The Company has a non-contributory and funded defined benefit pension plan in 

accordance with the Labor Standards Law, covering all regular employees. Under 

the defined benefit plan, two units are accrued for each year of service for the 

first 15 years and one unit for each additional year thereafter, subject to a 

maximum of 45 units. Pension benefits are based on the number of units accrued 

and the average monthly salaries and wages of the last 6 months prior to 

retirement. The Company contributes monthly an amount equal to 2% of the 

employees’ monthly salaries and wages to the retirement fund deposited with 

Bank of Taiwan, the trustee, under the name of the independent retirement fund 

committee. 

B. Based on actuarial assumptions for 2009 and 2008, the discount rate is 2.5% and 

2.5%, respectively, expected rate of return on plan assets is 2.5% and 2.5%, 

respectively, and the rate of compensation increase is 2% and 2%, respectively. 

~115~

C. The following sets forth the pension information based on the actuarial report: 

a. Funded status of the pension plan: 

December 31, (the measurement date) 

2009 2008 

Vested benefit obligation ( $ 102,118 ) ( $ 71,492 ) 

Non-vested benefit obligation ( 230,411 ) ( 235,344 ) 

Accumulated benefit obligation ( 332,529 ) ( 306,836 ) 

Effect of projected salary increase ( 100,162 ) ( 101,665 ) 

Projected benefit obligation ( 432,691 ) ( 408,501 ) 

Fair value of plan assets 263,002 263,036 

Funded status ( 169,689 ) ( 145,465 ) 

Unrecognized transition (asset) obligation ( 1,048 ) ( 2,098 ) 

Unrecognized loss 93,376 71,353 

Prepaid pension cost ( $ 77,361 ) ( $ 76,210 ) 

Vested benefit $ 117,404 $ 95,095 

b. Net pension cost comprises the following: 

2009 2008 

Service cost $ 10,116 $ 11,237 

Interest cost 10,212 15,233 

Expected return on plan assets ( 6,722 ) ( 8,957 ) 

Amortization of unrecognized loss on plan 

assets 1,453 3,962 

Amortization of unrecognized transition 

asset ( 1,050 ) ( 1,050 ) 

Net periodic pension cost $ 14,009 $ 20,425 

D. Effective July 1, 2005, the Company established a defined contribution pension 

plan (the “New Plan”) under the Labor Pension Act, covering all regular 

employees of R.O.C. nationality. Employees have the option to be covered under 

the New Plan. Under the New Plan, the Company and its subsidiary contributes 

monthly an amount based on 6% of the employees’ monthly salaries and wages to 

the employees’ individual pension accounts at the Bureau of Labor Insurance. 

The benefits accrued are portable upon termination of employment. Pensions are 

paid by monthly installments or in lump sum based on the accumulated balances 

of the employees’ individual pension accounts. 

E. The Company’s mainland subsidiaries have a defined contribution plan. Monthly 

contributions are based on a certain percentage of employees' monthly salaries 

and wages to an independent fund administered by the government in accordance 

with the pension regulations in the People’s Republic of China. 

F. The pension costs were $107,847 and $160,301 in 2009 and 2008, respectively. 

16) Capital 

As of December 31, 2009, the Companys authorized capital was $22,000,000, 

consisting of 2,200,000 thousand shares of common stock (including 250,000 

thousand shares reserved for employee stock options), and the paid-in capital was 

$15,361,724 with a par value of $10 (in dollars) per share. 

~116~

17) Capital reserve 

The R.O.C. Securities and Exchange Law requires that capital reserve shall be 

exclusively used to cover accumulated deficits or to increase capital and shall not be 

used for any other purpose. However, capital reserve arising from paid-in capital in 

excess of par value on issuance of common stock and donations can be capitalized 

once a year, provided that the Company has no accumulated deficits and the amount 

to be capitalized does not exceed 10% of the paid-in capital; unless legal reserve is 

insufficient to cover accumulated deficits, capital reserve cannot be used for this 

purpose. 

18) Retained earnings 

A. Legal reserve 

Except for covering accumulated deficits or increasing capital, the legal reserve 

shall not be used for any other purpose. Capitalization of the legal reserve is 

permitted, provided that the balance of the reserve exceeds 50% of the 

Company’s paid-in capital and the amount capitalized does not exceed 50% of 

the balance of the reserve. 

B. Undistributed earnings: According to the Company's Articles of Incorporation, 

current year's earnings, if any, shall be distributed in the following order: 

(a) Covering prior years' operating losses, if any; 

(b) Paying all taxes and dues; 

(c) Setting aside 10% of the remaining amount, after deducting (a) and (b), as 

legal reserve; 

(d) Setting aside special retained earnings reserve of the remaining amount, 

after deducting (a), (b) and (c), by the resolution at the stockholder’s 

meeting. 

(e) Allocating dividends and bonuses. 

(f) Allocating at least 5% of the remaining amount, after deducting (a), (b), 

(c), (d) and (e) as employees’ bonus. 

The distribution of the Company’s undistributed earnings shall be proposed 

by the Board of Directors and resolved in the annual Stockholder’s meeting. 

~117~

C. The appropriation of 2008 and 2007 earnings had been resolved at the 

shareholders' meeting on June 10, 2009 and June 25, 2008, respectively. 

Details are summarized below: 

2008 2007 

Amount 

Dividends per 

share (in dollars) Amount 

Dividends per 

share (in dollars) 

Legal reserve $ 45,929 $ - $ 564,826 $ - 

Stock dividends - - 578,808 0.3999 

Cash dividends 305,204 0.2 2,025,829 1.3998 

Directors’ and 

supervisors’ 

remuneration - - 6,000 - 

Employees’ stock 

bonus - - 203,337 - 

Employees’cash bonus - - 305,006 - 

Total $ 351,133 $ 0.2 $ 3,683,806 $ 1.7997 

The amounts of employees’ bonus and directors’ and supervisors’ remuneration 

of 2008 are $20,773 and $2,000, respectively. Employees’ bonus and directors’ 

and supervisors’ remuneration of 2008 as resolved by the stockholders were in 

agreement with those amounts recognized in the 2008 financial statements. 

The appropriation of 2008 and 2007 earnings had been resolved at the 

shareholders’ meeting and coincided with the proposal by the Board of Directors. 

on April 24, 2009 and on April 21, 2008. As of April 9, 2010, the Company had 

not yet held the meeting of Board of Directors to discuss the earnings 

distribution proposal for 2009. Information on the appropriation as resolved by 

the Board of Directors and approved by the stockholders will be posted in the 

“Market Observation Post System” at the website of the Taiwan Stock Exchange. 

The estimated amounts of employees’ bonus and directors’ and supervisors’ 

remuneration of 2009 are $13,012 and $2,000, respectively, and are recognized 

as operating costs or operating expeneses for 2009. The basis of estimates for 

employees’ bonus is based on a 5% percentage (as prescribed by the Company’s 

Articles of Incorporation) of net income in 2009 after taking into account the 

legal reserve and other factors. 

Information on the appropriation of the Company’s employees’ bonus and 

directors’ and supervisors’ remuneration as resolved by the Board of Directors 

and approved by the stockholders will be posted in the “Market Observation Post 

System” at the website of the Taiwan Stock Exchange. If the accrued amounts 

for employees’ bonus and directors’ and supervisors’ remuneration are different 

from the actual distributed amounts resolved by the stockholders at their annual 

stockholders’ meeting subsequently, the differences shall be recognized as gain 

or loss in the following year. 

~118~

19) Share-based payment ─ employee compensation plan 

A.As of December 31, 2009, the Company’s share-based payment transactions are set 

forth below: 

Type of 

arrangement 

Second stock 

option 

incentive plan 

Third stock 

option 


Fourth stock 

option 


Fifth stock 

option 


Sixth stock 

option 

incentive 

plan 

Assumed 

first stock 

option 

incentive 

plan of Tyan 

Computer 

Technology 

Co., Ltd. 

Assumed 

second 

stock option 

incentive 

plan of Tyan 

Computer 

Technology 

Co., Ltd. 

Assumed 

third stock 

option 

incentive 

plan of Tyan 

Computer 

Technology 

Co., Ltd. 

Assumed 

fourth stock 

option 

incentive 

plan of Tyan 

Computer 

Technology 

Co., Ltd. 

Grant date 

2006.12.07 

and 

2007.01.11 

2007.07.30 

and 

2007.08.17 

2008.10.13 

and 

2008.10.27 

2009.04.29 

and 

2009.07.03 

Quantity granted 

(in thousands of 

shares) 

Contract 

period 

Vesting conditions 

64,000 6 years 50% can be exercised 

after 2 years of grant 

75% can be exercised 




64,000 6 years 

〃 

85,000 6 years 

43,000 6 years 25% can be exercised 






2009.10.05 47,500 6 years 30% can be exercised 






2003.03.31 

and 

2003.12.31 

2005.08.31 

and 

2006.03.10 

2006.06.30 

and 

2007.03.19 

2,999 

(Note) 

3,279 

(Note) 

1,117 

(Note) 

2007.09.26 1,245 

(Note) 

〃 

6 years 50% can be exercised 


after 2007.02.01 



after 2008.02.01 



after 2009.02.01 

6 years 50% can be exercised 






Estimated future 

resignation rate 

Actual resignation 

rate in the current 

period 

- - 

- - 

3.75% 15% 

2.21% 20% 

- 20% 

- - 

- - 

6 years 〃 - - 

6 years 〃 - - 

Note:According to the business merger agreement, 1.26 units of employee stock 

options of Tyan Computer Technology Co., Ltd. could be exchanged for 

one unit of the Company’s employee stock options. 

~119~

B. (a) A summary of the movements under the Company’s second stock option is set 

forth below: 

In thousands of 

shares 


2009 2008 

Weighted average 

exercise price In thousands of 

(in NT dollars) shares 


exercise price 

(in NT dollars) 

Options outstanding 

at the beginning of 

the year 47,960 $ 30.15 64,000 $ 33.15 

Options granted - 

Stock dividends or 

adjustment of 

number of options - 

Options exercised - 

Options revoked ( 47,600 ) ( 16,040 ) 


at the end of the 

year 360 29.95 47,960 30.15 

Options exercisable 


year 225 11,990 

Options approved and 

not yet issued at the 

end of the year - - 

(b) As of December 31, 2009, the summary of the outstanding second stock 

option plan was as follows: 

Range of 



In thousands 

of shares 

Expected 

weighted 

average 

residual years 

Weighted 

average 



In thousands 

of shares 

Weighted 

average 



$29.7 and 30.2 360 2.98 $ 29.95 225 $ 29.95 

C. (a) A summary of the movements under the Company’s third stock option is set 

forth below: 

In thousands 

of shares 


2009 2008 



exercisable price In thousands exercisable price 

(in NT dollars) of shares (in NT dollars) 


at the beginning 

of the year 47,350 $ 33.55 64,000 $ 36.75 

Options granted - - - - 


adjustment of 

number of options - - - - 

Options exercised - - - - 

Options revoked ( 47,001 ) ( 16,650 ) 



year 349 33.40 47,350 33.55 



year 174 - 

Options approved 

and not yet issued 


year - - 

~120~

(b) As of December 31, 2009, the summary of the outstanding third stock option 

plan was as follows: 

Number of options outstanding at the end of the year Exercisable options at the end of the year 

Range of 

exercise 

price 


In thousands 

of shares 

Expected 

weighted 

average 


Weighted 

average 



In thousands 

of shares 




$31.7 and 35 349 3.6 $ 33.4 174 $ 33.4 

D. (a) A summary of the movements under the Company’s fourth stock option plan is 

set forth below: 

In thousands 

of shares 


2009 2008 



exercisable price In thousands exercisable price 

(in NT dollars) of shares (in NT dollars) 



of the year 85,000 $ 12.28 85,000 $ 12.28 



adjustment of 


Options exercised - - - - 

Options revoked ( 3,190 ) - - - 



year 81,810 12.10 85,000 12.28 



year - - 




year - - 

(b) As of December 31, 2009, the summary of the outstanding fourth stock option 


Range of 

exercisable 

price 


Number of options outstanding at the end of the year 

In thousands 

of shares 

Expected 

weighted 

average 


Weighted 

average 



Exercisable options at the end of the year 

In thousands 

of shares 




$ 11.2 and 13 81,810 4.8 $ 12.1 - $ - 

~121~

E. (a) A summary of the movements under the Company’s fifth stock option plan is set 

forth below: 

For the year ended December 31, 2009 


shares 




Options outstanding at the beginning of the year - $ - 

Options granted 43,000 13.6 

Stock dividends or adjustment of number of 

- - 

options 

Options exercised - - 

Options revoked ( 950 ) - 

Options outstanding at the end of the year 42,050 13.6 

Options exercisable at the end of the year - 

Options approved and not yet issued at the end 

of the year 

- 

(b) As of December 31, 2009, the summary of the outstanding fifth stock option 


Range of 

exercisable 

price 



In thousands 

of shares 

Expected 

weighted 

average 


Weighted 

average 




In thousands 

of shares 




$13.1 and 14.1 42,050 5.42 $ 13.6 - $ - 

F. (a) A summary of the movements under the Company’s sixth stock option plan is 

set forth below: 



shares 




Options outstanding at the beginning of the year - $ - 

Options granted 47,500 13.9 

Stock dividends or adjustment of number of 

- - 

options 

Options exercised - - 

Options revoked - - 

Options outstanding at the end of the year 47,500 13.9 

Options exercisable at the end of the year - 

Options approved and not yet issued at the end 

of the year 

47,500 

(b) As of December 31, 2009, the summary of the outstanding fifth stock option 


Range of 

exercisable 

price 



In thousands 

of shares 

Expected 

weighted 

average 


Weighted 

average 




In thousands 

of shares 




$ 13.9 47,500 5.76 $ 13.9 - $ - 

~122~

G. (a) A summary of the movements under the Company’s assumed stock option plan 

of Tyan Computer Technology Co., Ltd. is set forth below: 

In thousands 

of shares 


2009 2008 


exercisable price 


In thousands 

of shares 


exercisable price 




of the year 3,922 $ 16.21 5,404 $ 17.45 



adjustment of 


Options exercised ( 733 ) 8.42 ( 687 ) 11.70 

Options revoked ( 913 ) ( 795 ) 



year 2,276 18.19 3,922 16.21 



year 1,495 584 




year - 

(b) As of December 31, 2009, the summary of the outstanding stock option plan 

was as follows: 



Range of 

exercise 

price 


In thousands 

of shares 

Expected 

weighted 

average 


Weighted 

average 



In thousands 

of shares 




$ 13.1 501 1.67 $ 13.1 501 $ 13.1 

16.7 160 2.19 16.7 111 16.7 

20.4 222 2.50 20.4 187 20.4 

20.0 649 3.22 20.0 324 20.0 

19.7 744 3.75 19.7 372 19.7 

2,276 $ 18.19 1,495 

~123~

H. The following sets forth the pro forma net (loss) income and earnings per share 

based on the assumption that the compensation cost is accounted for using the fair 

value method (the intrinsic value method) for the stock options granted before the 

effectivity of R.O.C. SFAS No. 39, “Accounting for Share-based Payment": 

For the year ended 

December 31, 2009 



Net income (loss) 

Net income (loss) 

stated in the 

statement of income 

Pro forma net income 

$ 289,162 

( 153,208 ) 

$ 459,289 

( 131,376 ) 

Basic EPS (in 

dollars) 

EPS stated in the 


0.19 

0.31 

Pro forma EPS 

0.10 

( 0.09 ) 

Diluted EPS (in 

dollars) 

EPS stated in the 


0.14 

0.25 

Pro forma EPS 

0.05 

( 0.12 ) 

(a) The Company estimated the fair value of second stock option as of grant date 

under Black-Scholes option model. The factor’s weighted average information 

and fair value are listed as follows: 

Grant date 

December 7, 

2006 

Grant date 

January 11, 

2007 

Dividend yield rate 0% 0% 

Expected price volatility 29.09% 28.59% 

Risk-free interest rate 1.83% 1.87% 

Expected vesting period 3.75 years 3.75 years 

Options granted (in shares) 32,000,000 32,000,000 

Weighted-average fair value per 


9.39 9.16 

(b) The Company estimated the fair value of third stock option as of grant date 

under Black-Scholes option model. The factor’s weighted average information 

and fair value are listed as follows: 

Grant date 

July 30, 

2007 

Grant date 

August 17, 

2007 




Expected vesting period 3.75 years 3.75 years 

Options granted (in shares) 32,000,000 32,000,000 



11.46 9.25 

~124~

(c) The Company assumed the employee stock options issued by Tyan as a result of 

the merger. The Company estimated the fair value of stock options as of grant 

date under Black-Scholes option model except the grant date of September 26, 

2007 was under Binomial option model. The factor’s weighted average 

information and fair value are listed as follows: 

Grant date 

August 31, 

2005 

Grant date 

March 10, 

2006 



Risk-free interest rate 2% 2.00% 

Expected vesting period 6 years 6 years 

Options granted (in shares) 3,422,000 667,000 



12.44 12.46 

Grant date 

June 30, 2006 

Grant date 

March 19, 

2007 




Expected vesting period 6 years 6 years 

Options granted (in shares) 510,000 897,000 



12.78 10.78 

Grant date 

September 26, 

2007 

Dividend yield rate 0% 

Expected price volatility 27.78% 

Risk-free interest rate 2.52% 

Expected vesting period 

4.375 years 

Options granted (in shares) 1,569,000 


4.68 


I. For the stock options granted after January 1, 2008 with the compensation cost 

accounted for using the fair value method, their fair value on the grant date is 

estimated using Black-Scholes option-pricing model. The weighted-average 

parameters used in the estimation of the fair value are as follows: 

~125~

Type of 

arrangement 

Grant date 

Stock 

price (in 

dollars) 

Exercise 

price (in 

dollars) 

Expected 

price 

volatility 

(Note) 

Expected 

vesting 

period 

Expected 

dividend 

yield rate 

Risk-free 

interest rate 

Fair value 

per unit (in 

dollars) 

Fourth stock 

option 2008.10.13 $13.2 $13.2 28.37% 3.47 years 0% 1.96% $3.12 

incention plan 

〞 2008.10.27 $11.35 $11.35 28.42% 3.47 years 0% 1.89% $2.67 

Fifth stock 

option 2009.04.29 $14.3 $14.3 34.87% 3.67 years 0% 0.93% $3.92 

incention plan 

〞 2009.07.03 $13.3 $13.3 34.36% 3.67 years 0% 1.02% $3.62 

Sixth stock 

optin incentive 2009.10.05 $13.9 $13.9 35.25% 3.61 years 0% 0.55% $3.75 

plan 

Note:In accordance with EITF92-205, if the enterprise’s historical stock prices 

were significantly abnormal, those prices shall be excluded from the reference 

values in calculating expected price volatility rate. Expected price volatility rate 

is determined based on the stock prices for the recent period that is as long as 

the expected vesting period of stock options, and taking into account the effect 

of earnings appropriation every year on stock price. 

J. Expenses incurred on share-based payment transactions are shown below: 

2009 2008 

Equity-settled $ 120,623 $ 16,591 

20) Treasury stock 

A. Changes in the treasury stock for the years ended December 31, 2009 and 2008 

are set forth below: 

2009 

(in thousands of shares) 

Reason for reacquisition Beginning shares Addition Reduction Ending shares 

To be reissued to employees 10,000 - - 10,000 

Company’s common shares held by 

20,366 - - 20,366 

its subsidiaries, TFC Investment 

Co., Ltd. 


its subsidiaries, SSDL 

2,764 - - 2,764 

2008 

(in thousands of shares) 

Reason for reacquisition Beginning shares Addition Reduction Ending shares 

To be reissued to employees 650 9,350 - 10,000 


19,583 783 - 20,366 

its subsidiaries, TFC Investment 

Co., Ltd. 


its subsidiaries, SSDL 

2,658 106 - 2,764 

B. Pursuant to the R.O.C. Securities and Exchange Law, the number of shares 

bought back as treasury stock should not exceed 10% of the number of the 

Company’s issued and outstanding shares and the amount bought back should not 

~126~

exceed the sum of retained earnings, paid-in capital in excess of par value and 

realized capital reserve. As of December 31, 2009, the shares bought back as 

treasury stock amounted to $256,417. 

C. Pursuant to the R.O.C. Securities and Exchange Law, treasury stock should not 

be pledged as collateral and is not entitled to dividends before it is reissued to the 

employees. 

D. Pursuant to the R.O.C. Securities and Exchange Law, treasury stocks should be 

reissued to the employees within three years and shares not reissued within the 

three-year period are to be retired. Treasury shares to enhance the Company’s 

credit rating and the stockholder’s equity should be retired within six months of 

acquisition. 

E. As of December 31, 2009, the total number of the Company’s shares held by its 

subsidiaries, Silver Star Developments Ltd., was 2, 764 (in thousand shares) with 

an average book value of $77,002 and $27.86 (in dollars) per share and market 

vaule of $27.86 (in dollars) per share. 

F. As of December 31, 2009, the total number of the Company’s shares held by its 

subsidiaries, Tsu Fung Investment Corp., was 20,366 (in thousand shares) with an 

average book value of $276,084 and $13.56 (in dollars) per share and market 

value of $16.55 (in dollars) per share. 

G. In accordance with EITF-91-341, when the subsidiaries obtain cash dividends 

from the Company, it should write off investment income and adjust capital 

reserve-treasury stock transaction. As of December 31, 2009 and 2008, the 

adjustment amount was $4,516 and $31,009, respectively. 

~127~

21) Income tax 

A. Income tax expense and payable are reconciled as follows: 

2009 2008 

Income tax at statutory tax rate $ 174,110 $ 242,735 

Tax effect of permanent differences ( 962,155 ) ( 212,258 ) 

10% tax on unappropriated earnings 5,408 196,446 

Tax effect of investment tax credits ( 268,196 ) ( 172,224 ) 

Loss carryforwards ( 340,819 ) - 

Overdue tax assessed and approved by the Tax 

Authority 197,735 560,947 

Tax effect of amendments to the tax laws 13,963 ( 275,277 ) 

Adjustment of prior year’s income tax expense 78,192 - 

Valuation allowance on deferred income tax assets and 

liabilities 1,412,640 ( 3,406 ) 

Tax which is subjected to separate withholding 

income tax - 487 

Income tax expense 310,878 337,450 

Net effect of deferred income tax liabilities 2,580 162,199 

Adjustment of prior year’s income tax expense ( 13,964 ) 275,277 

Overdue tax assessed and approved by the Tax 

Authority 1,065,914 479,292 

Prepaid income tax ( 229 ) ( 98,307 ) 

Income tax paid by subsidiary ( 15,457 ) ( 97,454 ) 

Tax which is subjected to separate withholding 

income tax - ( 487 ) 

Translation adjustment ( 34 ) 7,944 

Income tax payable $ 1,349,688 $ 1,065,914 

B. Deferred income tax assets and liabilities: 

December 31, 

2009 2008 

Deferred income tax assets – current $ 522,071 $ 918,791 

Valuation allowance ( 10,597 ) ( 10,218 ) 

$ 511,474 $ 908,573 

Deferred income tax assets – non-current $ 2,548,817 $ 647,132 

Deferred income tax liabilities – non-current ( 422,170 ) ( 527,714 ) 

Valuation allowance ( 2,014,087 ) ( 406,536 ) 

$ 112,560 ( $ 287,118 ) 

~128~

C. Components of deferred income tax assets and liabilities: 

December 31, 2009 December 31, 2008 

Amount Tax Effect Amount Tax Effect 

Current (shown in other current assets): 

Temporary differences 

Provision for loss on obsolete 

inventories $ 1,170,946 $ 234,189 $ 1,123,376 $ 280,844 

Allowance for sales rebate 237,379 47,476 826,152 206,538 

Unrealized warranty 571,682 114,336 763,168 190,791 

Others 466,826 99,321 787,335 196,834 

Loss carryforward 133,743 26,749 175,135 43,784 

Valuation allowance ( 10,597 ) ( 10,218 ) 

$ 511,474 $ 908,573 

Non-current: 

Temporary differences 

Unrealized investment gain ( $ 2,110,854 ) ( $ 422,170 ) ( $ 2,110,854 ) ( $ 527,714 ) 

Provision for market value decline and 231,518 92,607 - - 

obsolescence of inventories 

Allowance for doubtful accounts 195,314 78,126 - - 

Allowance for sales rebate 1,828,508 731,403 - - 

Unrealized marketing expenses 442,086 176,835 - - 

Others 2,206,280 450,676 1,713,514 428,379 

Loss carryforward 785,175 314,070 - - 

Investment tax credits 705,100 218,753 

Valuation allowance ( 2,014,087 ) ( 406,536 ) 

$ 112,560 ( $ 287,118 ) 

D. The Company is eligible for investment tax credits under the statute for 

Upgrading Industry and losses available to be carry forward as of December 31, 

2009 are as follows: 

Item Total tax credits Unused tax credits 

Final year tax 

credits are due 

Research and Development $ 468,884 $ 370,661 2012 

Research and Development 273,935 268,527 2013 

Loss carryforward 26,749 26,749 2019 

$ 665,937 

The Company assumed investment tax credits of Tyan Computer Technology Co., 

Ltd. as follows: 

Final year tax 

Item Total tax credits Unused tax credits credits are due 

Research and Development $ 65,912 $ 65,912 2012 

E. As of December 31, 2009, the Company's income tax returns through 2007 have 

been assessed and approved by the Tax Authority. The Company had appealed to 

the Supreme Court of R.O.C. for its 2000, 2001 and 2003 income tax returns, 

because taxable incomes were adjusted and parts of the research and 

development for tax credits were assessed as not qualified for tax credits, which 

resulted in no income tax refundable for year 2000 and an additional tax payable 

for year 2001. However, the tax appeals had been dismissed by the Supreme 

Court in 2000 and were sent back to the Taiwan High Court for retrial in 2001. 

The Company has paid half of the additional tax payable for year 2001. In 

addition, the Company had applied for tax re-examination with the Tax Authority 

for the 2004, 2005, 2006 and 2007 income tax returns, because all the research 

~129~

and development and parts of employees’ training for tax credits were assessed as 

not qualified for tax credits and other incomes were added, which resulted in 

additional tax payable for years 2005, 2006 and 2007. Since there were unused 

tax credits before 2004, the Company was not assessed an additional tax payable 

for year 2004. The tax re-examination for the 2004 income tax return had been 

dismissed by the Tax Authority, so the Company filed a tax appeal for that year. 

The Company has assessed the income tax effects for all the above cases and 

accrued relevant tax liabilities in the financial statements. 

F. Under the PRC tax regulations, the corporate income tax for the Mainland China 

subsidiary shall be levied at the rate of 25 %. However, as MiTAC Computer 

(Kunshan) Co. Ltd. is a foreign-invested manufacturing enterprise established in 

the PRC, according to the Corporate Income Tax Law of the PRC, it is exempt 

from corporate income tax for the first and second profit-making years and is 

subject to a 50% reduction of corporate income tax from the third through fifth 

profit-making years. Pursuant to Article 57 of the Corporate Income Tax Law 

of the PRC (“new tax law”) passed at the National People’s Congress held on 

March 16, 2008, those enterprises which were established before the effective 

date of new tax law and have enjoyed tax relief shall be assessed at the tax rate 

regulated by new tax law after five-year enforcement of the law, and those 

enterprises which enjoy tax relief for a specific period can continue enjoying tax 

relief until due date, while for those enterprises which have not reported any 

profit and not enjoyed tax relief, the tax grace period starts from January 1, 2008. 

Accordingly, the regulatory corporate income tax rate was 20% for 2009. 

However, MiTAC Computer (Kunshan) Co. Ltd. was assessed at the tax rate of 

10% for that year because of the 50% tax reduction; MiTAC Research (ShangHai) 

Ltd. was assessed at the tax rate of 15% for meeting the qualification for national 

supportive high-tech enterprise on November 25, 2008. 

G. Unappropriated earnings 

December 31, 

2009 2008 

Earnings earned before 1998 $ 305,502 $ 305,502 

Earnings earned in and after 

1998 7,874,938 7,936,909 

$ 8,180,440 $ 8,242,411 

H. 


Balance of stockholders’ 

tax credit account $ 1,425,742 $ 1,439,758 

2009 (estimated) 2008 

Ratio of deductible tax 

credit $ 18.10% $ 17.62% 

~130~

21) Earnings per share 

Income before 

income tax 

Amount 


Earnings per share (in dollars) 

Weighted 

Average 

Outstanding 

Common 

Shares 

(in thousands Income before 

Net income of shares) income tax Net income 

Basic earnings 

per share: 

Consolidated net $ 600,040 $ 289,162 

income 

Net income 

attributable to 

Majority 

stockholders $ 376,110 $ 289,162 1,502,780 $ 0.25 $ 0.19 

Less: effect of 

dilutive 

potential 

common stocks 

issued by 

investee 

companies ( 76,973 ) ( 76,973 ) 

Effect of dilutive 

potential 

common stocks: 

Convertible bonds - - 8,044 

Employee stock 

options - - 13,898 

Employees’ bonus - - 786 

Diluted earnings 

per share 

Net income 


common 

stockholders 

plus dilutive 

effect of 

common stock 

equivalents $ 299,137 $ 212,189 1,525,508 $ 0.20 $ 0.14 

~131~

Income before 

income tax 

Amount 


Earnings per share (in dollars) 

Weighted 

Average 

Outstanding 

Common 

Shares 

(in thousands Income before 

Net income of shares) income tax Net income 

Basic earnings 

per share: 

Net income $ 796,739 $ 459,289 

Consolidated net 

income 


Majority 

stockholders $ 635,444 $ 459,289 1,502,941 $ 0.42 $ 0.31 

Less: effect of 

dilutive 

potential 

common stocks 

issued by 

investee 

companies ( 58,634 ) ( 58,634 ) 

Effect of dilutive 

potential 

common stocks: 

Convertible bonds - - 64,956 

Employee stock 

options - - 1,678 

Employees’ bonus - - 1,938 

Diluted earnings 

per share 

Net income 


common 

stockholders 

plus dilutive 

effect of 

common stock 

equivalents $ 576,810 $ 400,655 1,571,513 $ 0.37 $ 0.25 

a. Effective January 1, 2009, as employees’ bonus could be distributed in the form 

of stock, the diluted EPS computation shall include those estimated shares that 

would be increased from employees’ stock bonus issuance in the 

weighted-average number of common shares outstanding during the reporting 

year, which taking into account the dilutive effects of stock bonus on potential 

common shares; whereas, basic EPS shall be calculated based on the 

weighted-average number of common shares outstanding during the reporting 

year that include the shares of employees’ stock bonus for the appropriation of 

prior year earnings, which have already been resolved at the stockholders’ 

meeting held in the reporting year. Since capitalization of employees’ bonus no 

longer belongs to distribution of stock dividends (or retained earnings and capital 

reserve capitalized), the calculation of basic EPS and diluted EPS for all periods 

presented shall not be adjusted retroactively. However, the accounting treatment 

for the appropriation of employees’ bonus for 2008 earnings resolved at the 

stockholders’ meeting held in 2009 is still in accordance with the regulations on 

capitalization of employees’ bonus under paragraphs 19 and 39 of R.O.C. SFAS 

No. 24, “Earnings per Share”. 

b. The weighted-average outstanding common stock for 2009 and 2008 excluded 

~132~

treasury stock. 

23) Personnel, depreciation and amortization expenses 

The personnel, depreciation and amortization expenses for 2009 and 2008 were as 

follows: 


Operating costs 

Operating 

expenses 

Non-operating 

expenses 


Personnel expenses $ 809,707 $ 3,904,411 $ - $ 4,714,118 

Salaries 747,601 3,345,379 - 4,092,980 

Labor and health insurance 35,072 297,838 - 332,910 

Pension 6,333 101,514 - 107,847 

Others 20,701 159,680 - 180,381 

Depreciation 841,221 403,237 11,435 1,255,893 

Amortization 413,421 406,830 - 820,251 


Operating costs 

Operating 

expenses 

Non-operating 

expenses 


Personnel expenses $ 918,285 $ 3,527,660 $ - $ 4,445,945 

Salaries 759,706 2,990,677 - 3,750,383 

Labor and health insurance 31,339 204,996 - 236,335 

Pension 6,900 153,401 - 160,301 

Others 120,340 178,586 - 298,926 

Depreciation 830,440 391,909 11,657 1,234,006 

Amortization 375,453 123,414 - 498,867 

5. RELATED PARTY TRANSACTIONS 

1) Names of the related parties and their relationship with the Company 

Names of the related parties 

MiTAC Inc. 

3Probe Technologies Corp. 

Lian Jie Investment Co., Ltd. 

Shen-Tong Construction & Development Co., 

Ltd. 

Loyalty Founder Enterprise Co., Ltd. 

Getac Technology Corp.(GTC) and its 

subsidiaries 

Synnex Corp. (SYNNEX) and its subsidiaries 

Synnex Technology International Corp. (SIC) 

Harbinger Venture Management Co., Ltd. 


Harbinger II (BVI) Venture Capital Corp. 

UPC Technology Corporation 

Harbinger VI 

BOC Lien Hwa Industrial Gas Corp. 

United Industrial Gas Corporation 

MiTAC Communication Co., Ltd. 

Gemtek Technology Co., Ltd. (Gemtek) 

The relationship with the Company 

Investor company accounted for under the equity method. 

Investee company accounted for under the equity method. 




Investee company accounted for under the equity method 

(Note) 

Indirect investee company accounted for under the equity method. 

Common board chairman. 






The Company’s chairman is BOC’s director 

The Company’s chairman is United’s director 

The Company’s chairman is MiTAC Communication Co., Ltd.’s 

director. 

The Company is Gemtek’s director 

Note: Formerly“Mitac Technology Corporation” prior to August 21, 2009. 

~133~

2) Significant related party transactions and balances 

A. Purchases (including process expenditures) 

For the years ended December 31, 2009 and 2008, the Company had purchases from 

related parties amounting to $4,065,089 and $4,101,975, respectively. 

The purchase price to related parties is based on market value. The payment period is 

150 days and 90 days after offsetting certain receivables and payables according to 

payment terms to overseas and domestic related parties, respectively. The payment 

period to regular suppliers is approximately 90 days after purchase date. 

B. Sales 

2009 2008 

SYNNEX and its subsidiaries $ 10,428,687 $ 8,423,052 

Others 549,121 1,235,341 

$ 10,977,808 $ 9,658,393 

The selling price to related parties is based on market value. The collection period is 

150 days and 90 days after offsetting certain receivables and payables according to 

collection terms to overseas and domestic related parties, respectively. The collection 

period for regular customers is approximately 90 days after shipping date. 

C. Accounts and notes receivable 

December 31, 

Notes receivable- 2009 2008 

MiTAC Inc. $ 200,000 $ 264 

Others - 152 

$ 200,000 $ 416 

Long- term notes receivable- 

MiTAC Inc. $ 197,650 $ - 

December 31, 

Accounts receivable- 2009 2008 

SYNNEX and its subsidiaries $ 2,495,230 $ 2,879,557 

Others 152,062 191,642 

$ 2,647,292 $ 3,071,199 

D. Other receivables 

December 31, 

2009 2008 

GTC and its subsidiaries $ 80,529 $ 66,314 

SYNNEX and its subsidiaries 76 35,061 

Others 16,463 2,172 

$ 97,068 $ 103,547 

~134~

E. Accounts payable 

As of December 31, 2009 and 2008, the accounts payable to related parties were 

$791,833 and $452,834, respectively. 

F. Other payables 

As of December 31, 2009 and 2008, the other payables to related parties were $32,377 

and $42,757, respectively. 

G. During 2009 and 2008, the Company paid to related parties expenses amounting to 


H. (a) During 2009 and 2008, the Company sold machinery and mold equipment to 

related parties at the sales price of $4,640 and $2,999 and recognized a gain of 

$254 and $1,210, respectively. In 2009, the Company disposed of land and 

buildings to MiTAC Inc. in the amount of $587,000. Gain on disposal was 

$196,386. According to the sales agreement, the total selling price will be 

collected in three installments within two years. MiTAC Inc. had issued 

installment notes to the Company. As of December 31, 2009, notes of $397,650 

had not been cashed yet. 

(b) During 2009 and 2008, the Company purchased machinery and mold equipment 

from Getac Technology Corp.(GTC) and its subsidiaries at the purchase price of 


During 2009 and 2008, the Company purchased machinery and mold equipment 

from other related parties at the purchase price of $4,407 and $1,669, 

respectively. 

I. As of December 31, 2009 and 2008, MiTAC Technology Corp. provided guarantees 

for rent to the Company amounting to $3,600. 

J. In 2009 and 2008, the Company earned rent revenue from related parties amounting to 


In 2009 and 2008, the Company paid rent expenses to related parties amounting to 


K. Directors’, supervisors’ and key managers’ salary, bonus, and remuneration 

2009 2008 

Salaries, bonus, and service execution fees $ 94,099 $ 129,439 

Remuneration 5,534 4,008 

$ 99,633 $ 133,447 

(a)Salaries included wages, bonuses, meal expense, retirement pension, employees’ 

bonuses and travel allowance. 

(b)Remuneration included appropriation of directors’ and supervisors’ remuneration and 

employees’ bonuses. 

(c)The relevant information above was disclosed in the Company’s annual report. 

~135~

6. ASSETS PLEDGED AS COLLATERAL 

December 31, 

ASSETS 2009 2008 Subject of collateral 

Building $ 510,280 $ 507,316 Short-term debts 

Long-term investments accounted 

for under the equity method: 

Marketable securities 977,749 - Medium-term loans from banks 

Marketable securities - 927,016 Bonds payable 

Other financial assets: 

Time deposits 3,283 - Guarantee deposit for land 

leasing in Science Park 

Time deposits 1,404 - Guarantee deposit for dorm 

leasing in Science Park 

Time deposits 9,500 9,500 Guarantee for application for 

letters of credit 

Time deposits - 24,150 Letter for guarantee of sponoring 

Expo 2010 

Saving account 20,755 - Trading agreement of forward 

foreign exchange for hedging 

Time deposits - 24,039 Development of Treasure 

Mountain, Letter for guarantee 

of customs duties, and royalty 

contract 

$ 1,522,971 $ 1,492,021 

7. COMMITMENTS AND CONTINGENT LIABILITIES 

1) The Company has credit lines for guarantee of customs duties in 2009 and 2008. As 

of December 31, 2009 and 2008, the amount of customs duties guaranteed by the 

bank was $3,200 and $3,400, respectively. 

2) The Company leased certain land (from 2008 to 2026), factories and offices (up to 

December 2026 and March 2011) under operating leases. Annual rental payments 

are approximately $84,175. 

3) Mio International Limited, the Company’s subsidiary, entered into a software 

technology transfer agreement with Nav N Go Kft (NNG). Because the two parties 

were involved in a dispute about contract termination, NNG filed a separate lawsuit 

against the Company’s three subsidiaries, Mio International Limited, Mio 

Technology Benelux NV and Mio Technology USA Limited, alleging their violation 

of contract and infringement of its copyright. The concerned parties had reached an 

agreement and NNG received the settlement money prescribed by the agreement. As 

a result, the case was subsequently closed and there is no possibility that the 

Company will incur any loss caused by the case. 

8. SIGNIFICANT DISASTER LOSS 

None. 

9. SIGNIFICANT SUBSEQUENT EVENTS 

None. 

~136~

10. OTHER INFORMATION 

1) The fair values of the financial instruments. 

Financial Assets 

Book value 


Quotations 

in an active 

market 

Fair value 

Evaluation 

model 

Book value 

Quotations 

in an active 

market 

Fair value 

Evaluation 

model 

Financial assets with 

fair value equal to 

book value $ 19,249,959 $ - $ 19,249,959 $ 18,555,790 $ - $ 18,555,790 

Available-for-sale 

financial assets 1,858,385 1,858,385 - 1,283,106 1,283,106 - 

Financial assets carried 

at cost 1,456,963 - - 1,435,961 - - 

$ 22,565,307 $ 1,858,385 $ 19,249,959 $ 21,274,857 $ 1,283,106 $ 18,555,790 

Forward foreign 

exchange $ 26,293 $ - $ 26,293 $ 11,977 $ - $ 11,977 

Interest rate Swap $ - $ - $ - $ 1,045 $ - $ 1,045 


Fair value 

Fair value 

Quotations 

in an active 

market 

Evaluation 

model 

Quotations 

in an active 

market 

Evaluation 

model 

Book value 

Book value 

Financial Liabilities 

Financial liabilities 

with fair value equal 

to book value $ 19,883,843 $ - $ 19,883,843 $ 18,914,020 $ - $ 18,914,020 

Bonds payable 240,500 237,734 - 1,740,500 1,712,369 - 

Long term loans 1,500,000 - 1,500,000 - - - 

$ 21,624,343 $ 237,734 $ 21,383,843 $ 20,654,520 $ 1,712,369 $ 18,914,020 

Purchase of forward 

foreign exchange $ 6,068 $ - $ 6,068 $ 88,995 $ - $ 88,995 

The methods and assumptions used to measure the fair value of financial instruments are as 

follows: 

A. For short-term instruments, the fair values were determined based on their carrying 

values because of the short maturities of the instruments. This method was applied to 

Cash and cash equivalents, Notes receivable, Accounts receivable. Other receivables, 

Other financial assets, Refundable deposits, Long term notes and accounts receivables, 

Short-term loans, Notes payable, Accounts payable, Income tax payable, Accrued 

expenses, Other payables, Provision for product warranty, Other current liabilities and 

Deposit in. The book value of long-term loans is used as fair value as the loans bear 

floating interest rates. 

B. Available-for-sale financial instruments are based on the market value of securities. 

C. Fair value of bonds payable is estimated using the market value. 

D. The book value of long-term loans is used as fair value as the loans bear floating 

interest rates. 

E. Derivative financial instruments: The estimated fair values are the expected cash flow 

(using rates quoted by financial institutions) if the contracts are terminated at the 

balance sheet date, including unrealized gains or losses. The quotes from financial 

institutions are available for most of the Company’s derivate financial instruments. 

~137~

2) As of December 31, 2009 and 2008, the financial assets and the financial liabilities with 

fair value risk due to the change of interest amounted to $1,324,702 and $1,458,992; 

$240,500 and $1,240,500, respectively, and the financial assets and the financial 

liabilities with cash flow risk due to the change of interest amounted to $3,928,742 and 

$5,015,906; $2,892,031 and $2,653,444, respectively. 

3) For the years ended December 31, 2009 and 2008, total interest income and total 

interest expense for financial assets and financial liabilities that are not at fair value 

through profit or loss amounted to $38,614 and $248,416; $53,452 and $141,168, 

respectively. 

4) Financial risk management 

In order to identify, evaluate and manage market risk, credit risk, liquidity risk and cash 

flow risk, the Group has established a risk management program and carries out 

procedures to monitor the fluctuations in exchange rate and interest rate, as well as 

implement credit controls over its transaction counterparties. 

By considering factors such as changes in industrial environment, competitive position, 

and market risks, the Group adjusts related positions of financial assets and liabilities in 

order to optimize its risk exposure, maintain liquidity and centrally manage all market 

risks. The Group mainly use derivative financial instruments to hedge the operating risk. 

To meet its risk management objectives, the Group adopts the following strategies to 

control financial risk: 

A. Interest rate risk 

The Group undertakes derivative financial instruments such as interest rate swaps, to 

hedge cash flow risk and fair value risk arising from fluctuations in interest rates. 

B. Foreign exchange risk 

To hedge cash flow fair value risk arising from fluctuations in exchange rates, the 

Group undertakes derivative financial instruments such as forward exchange 

contracts to hedge recognized assets and liabilities denominated in foreign 

currencies and highly probable forecast transactions. 

C. Credit risk 

The Group has a stringent credit policy in place. Transactions are conducted only 

with counterparties with good credit conditions. Appropriate measures are also 

undertaken where necessary to protect the Group’s credit rights and thereby mitigate 

credit risk. 

5) Information of financial risk 

A. Market risk 

(a) Equity financial instruments: The investment in these financial instruments is 

influenced by market price. The Group evaluates the investment performance 

periodically. Thus, the market risk is low. 

(b) The Group issues secured and unsecured bonds payable. Although the fair value 

of bonds payable would be changed due to changes in market interest rate and 

market price, the Group evaluates the market risk periodically. Thus, the Group 

expects to have no significant market risk. 

~138~

(c) Short-term financial instruments: Maturities of these financial instruments are 

within one year. Therefore, the Group expects to have no significant market risk. 

(d) Derivative financial instruments: The forward contract was entered into for 

hedging the fluctuation of exchange rate. Gains or losses on this contract is likely 

to be offset from the hedged items. Therefore, the market risk is low. 

(e) Long-term liabilities of financial instruments: The Group borrows loans, with 

floating interest rate. Thus, the Group expects to have no significant market risk. 

B. Credit risk 

(a) Equity financial instruments: The Group trades with reputable counter-parties. 

Thus, there is no significant credit risk. 

(b) There are no credit risks in the Group’s bonds payable. 

(c) Short-term financial instruments: The Group has established control procedures 

over the credit management on counter-parties, and the counter-parties are 

reputable companies and financial institutions with high credit ratings. The Group 

believes its exposure to potential default risk is low. 

(d) Derivative financial instruments: The Group believes its exposure to potential 

default risk is low due to the counter-parties being reputable institutions, and the 

Group diversifies the credit risks by entering into transactions with multiple 

counter-parties. 

(e) Long-term liabilities of financial instruments: No credit risk is expected to arise 

from the debt instruments. 

C. Liquidity risk 

(a) Equity financial instruments: 

The Group invests in available-for-sale financial assets, which are traded in 

active markets and can be readily converted into certain amount of cash 

approximate to their fair vaules. The liquidity risk exposure is low. 

The Group is exposed to a higher liquidity risk since its investments in financial 

assets carried at cost have no active market. However, the Group has no intention 

to hold these financial assets for trading and does not expect to sell those 

financial assets frequently. Therefore, the exposure to liquidity risk would be 

effectively reduced. 

(b) Bonds payable: 

The Group manages its financing and investing activities based on its operating 

capital requirements and capital expenditure budgets, thus, the liquidity risk is 

expected to be low. 


within one year. And the Group has set operating plans to deal with future cash 

needs. Thus, liquidity risk is believed to be minimal. 

~139~

(d) Derivative financial instruments: The forward for trading was entered for hedging 

the foreign exchange risk. It results cash in and cash out, respectively, at maturity. 

Because the Group will receive and pay the cash on settlement dates and the 

future working capital is sufficient, therefore, the liquidity risk and cash flow risk 

is low. 

(e) Long-term liabilities of financial instruments: The Group has sufficient working 

capital to meet various funding needs and major capital expenditures. Thus, the 

Group expects to have no significant liquidity risk. 

D. Cash flow risk 

(a) The Group issues parts of secured bonds payable with fixed interest rate and parts 

of secured bonds payable with floating interest rate. The Group undertakes 

interest rate swaps to hedge cash flow risk arising from fluctuations in interest 

rates. 

The Group issues unsecured bonds payable with zero interest and there is no cash 

flow risk arising from fluctuations in interest rates. 

(b) Derivative financial instruments: These financial instruments are non-interest 

bearing financial instruments. Thus, there is no cash flow risk. 


within one year, there is no material cash flow risk. 

(d) Long-term liabilities of financial instruments: The Group borrows loans, with 

floating interest rate. The effective interest rate of loans would be changed due to 

changes in market interest rates, which would cause the fluctuations in future 

cash flows. The Group also has established a risk management program and 

carries out procedures to monitor cash flow risk arising from fluctuations in 

interest rates. Thus, the Group expects to have no significant cash flow risk. 

6) The Group’s interest rate risk arises from floating rate bonds payables. Bonds payables 

issued at variable rates expose the Group to cash flow interest rate risk, therefore the 

Group undertakes interest rate swaps to hedge cash flow risk. 

Hedge item 

Interest expense of 

bonds payable with 

floating interest 

rate 

Designated for hedging 

Financial 

instrument was 

designated for 

December 31, 

hedging 

instrument 2009 2008 

Interest rate 

SWAP 

Period of 

anticipated cash 

flow 

$ - $ 1,045 2004.05.25~ 

2009.05.25 

Period of gain 

(loss) recognized 

in income 

statements 

N/A 





Items 

Amount of gain or loss recognized directly 

in equity ($ 1,045 ) $ 12,028 

Amount removed from equity and 

recognized in profit or loss - 

Amount removed from equity and adjusted 

in non-financial assets / liabilities - 

~140~

11.SUPPLEMENTARY DISCLOSURES 

A. Information of Significant Transactions: 

(1) Loans granted during the year ended December 31, 2009: 

Creditor Borrower 

MiTAC 

International 

Corp. 

Silver Star 

Developments 

Ltd. 

General 

ledger 

account 

Other 

receivables 

Maximum 

outstanding 

Ending 

balance 

Interest 

rate 

Nature of 

loan 

Amount of 

transaction 

with 

borrower 

Reason of 

short-term 

financing 

Collateral 

Allowance 

for 

doubtful 

accounts Item Value 

Limit on loans granted 

to a singly party 

$1,398,000 $ - - Note 1 - Operations $ - None $ - $3,131,238 

(Note 2) 

Note 1: The borrowers required short-term capital. 

Note 2: Equal to 10% of the net worth based on the financial statements audited or reviewed by independent accountants. 


(2) Endorsements and guarantees provided during the year ended December 31, 2009: 

Endorser / guarantor 

MiTAC 


Party being 

endorsed / 

guaranteed 

Tsu Fung 

Investment Corp. 

〃 Silver Star 

Developments Ltd. 

〃 MiTAC Japan 

Corp. 

Relationship with 

the endorser / 

guarantor 

Limit on 

endorsements / 

guarantees 

provided for a 

single party 

Maximum 

outstanding 


guarantees amount 

during 2009 

the Outstanding 



at Dec. 31, 2009 

the Amount of 


guarantees with 

collateral placed 

Ratio of 

accumulated 



to net asset value 

of the Company 

Ceiling on total 

loans granted 

$6,262,477 

(Note 3) 


amount of 


guarantees 

provided 

Subsidiary $15,656,192 $160,000 $100,000 - 0.32% $31,312,383 

(Note) 

〃〃 388,800 - - 0.00% 〃 

〃〃 116,000 116,000 - 0.37% 〃 

〃 MiTAC U.K. Ltd. 〃〃 16,787 13,771 - 0.04% 〃 

〃 Mio Technology 

〃〃 206,964 206,964 - 0.66% 〃 

UK Ltd. 

〃 MiTAC Australia 

〃〃 17,247 17,247 - 0.06% 〃 

Pty Ltd. 

〃 Tyan Computer 

Corp. -USA 

〃〃 81,187 81,187 - 0.26% 〃 

Note: Equal to the net worth based on the financial statements audited or reviewed by independent accountants. 

~141~

(3) Marketable securities held as of December 31, 2009: 

Securities held by Type 

MiTAC 

International 

Corp. 

Name of marketable 

securities 

Relationship with the 

issuer 

Stocks Getac Technology Corp. Investee company 

accounted for under the 

equity method 

General ledger 

account 

Long-term 

investment 

accounted for 

under the equity 

method 


Number of shares Book value Percentage Market value (Note 1) 

190,396,939 $3,919,167 33.97% $5,826,146 

(Note 2) 

〃〃 Tung Da Investment Co., 

〃〃 53,145,723 535,774 49.99% 535,774 

Ltd. 

〃〃 Tsu Fung Investment 

Corp. 

〃〃 106,528,922 1,303,629 100.00% 1,584,532 

(Note 3) 

〃〃 3 Prode Technologies 

〃〃 1,080,000 11,112 23.13% 11,112 

Co., Ltd. 

〃〃 DLC Technology 

〃〃 6,600,000 48,579 100.00% 48,579 

Corporation 

〃〃 Lian Jie Investment Co., 

〃〃 11,305,650 63,574 49.98% 63,574 

Ltd. 

〃〃 Silver Star Developments 

Ltd. 

〃〃 215,495,404 14,155,790 100.00% 14,463,398 

(Note 3) 

〃〃 Loyalty Founder 

〃〃 60,000,000 151,877 25.24% 451,800 

Enterprise Co.,Ltd. 

〃〃 Foreground Technology 

〃〃 9,045,492 494,827 100.00% 534,692 

Ltd. 

〃〃 Shen-Tong Construction 

〃〃 8,559,400 83,825 47.55% 83,825 

& Development Co., Ltd. 

〃〃 MiTAC Inc. Investor company Financial assets 28,549,614 645,051 8.69% 645,051 


equity method 

carried at 

cost-non current 

〃〃 Overseas Investment & 

None 〃 1,000,000 10,000 1.11% 10,000 

Development Corp. 

〃〃 Asia-Pacific Technology Board member of 

〃 140,000 - 0.85% - 

& Intellectual Property Asia-Paicfic 

Service Inc. 

〃〃 Harbinger Venture Common board 

〃 23,181,675 189,128 14.05% 189,128 

Management Co., Ltd. chairman 

〃〃 Harbinger VI 〃〃 5,200,000 52,000 13.28% 52,000 

〃〃 UPC Technology 

Corporation 

〃〃 Lien Hwa Industrial 

Corp. 

〃〃 Gemtek Technology Co., 

Ltd. 

Board member of 

Gemtek 

〃 


financial 

assets-non 

current 

12,994,032 226,096 1.53% 226,096 

〃〃 23,603,957 371,762 2.90% 371,762 

〃 5,794,411 334,917 2.12% 334,917 

Note 1: The market value of listed securities was based on the closing price as at December 31, 2009, while, the market value of unlisted securities accounted for under the 

equity method was based on the net asset value per share of the investee company; the fair value of financial assets carried at cost was based on their carrying value. 

~142~

Note 2: 47,500,000 shares were pledged for medium-term loans. 

Note 3: The book value decreased by $353,086 as the Company accounted for shares held by Tsu Fung Investment Corp. and Silver Star Developments Ltd. and its 

subsidiaries in accordance with the Statement of Financial Accounting Standards for treasury stocks. 

Note 4: 60,000,000 shares of Loyalty Founder Enterprise Co., Ltd. were acquired through private placement. Such stocks are subject to certain transfer restrictions pursuant to 

Article 43-8 of the Securities and Exchange Law. 

(4) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2009: 

Investor 

MiTAC 

International 

Corp. 

Name of the 

securities 

Loyalty 

Founder 

Enterprise 

Co.,Ltd 


account 

Long-term 

equity 

investments 

accounted for 


method 

Name of 

related 

parties 

Private 

placement 

stocks 

Beginning balance Additions Disposals Ending balance 

Relationship 

with the Number of 

Number of 

Number of 

Gain/Loss Number of 

company share Amount shares Amount shares Amount Book value on disposal shares Amount 

None - $ - 60,000,000 $150,000 - $ - $ - $ - 60,000,000 $151,877 

(Note) 

Note: The ending balance contains investment income (loss), cumulative translation adjustments and unrealized financial instruments gain (loss). 

(5) Real estate acquired amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2009: None. 

(6) Real estate disposed amounting to over $100,000 or 20 percent of the Company’s capital stock for the year ended December 31, 2009: 

Property disposed 

of by Property 

MiTAC 

International 

Corp. 

Building and 

land 

Date of 

disposal 

Date of 

acquisition 

Book value 

Disposal 

amount 

Status of 

collection of 

proceeds 

Gain (loss) 

on disposal 

Counterparty 

Relationship 

with the 

Company 

2009.3.10 1998.4 $390,614 $587,000 Note1 $196,386 MiTAC Inc. Investor 

company 

accounted 

for under the 

equity 

method 

Reason for 

disposal 

capital 


integrate 

offices in 

Taipei area 

Basis or reference 

used in setting the 

price 

Other 

commitments 

Note2 None 

Note 1: According to the sales agreement, the total selling price will be collected in three installments within two years. MiTAC Inc. had issued installment notes to the 

Company. As of December 31, 2009, notes of $397,650 had not been cashed yet. 

Note 2: The transaction price was set by reference to the appraisement report issued by appraisal company and the average market price of relevant real estate transactions in 

that area and negotiated by both parties. 

~143~

(7) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2009: 

The company 

buying /selling 

products 

MiTAC 


Transactions 

~144~ 

Reason and situation of having different 

transaction terms between related parties 

Accounts and notes receivable 

(payable) 

Name of related 

parties 


the counterparty 

Purchases / 

Sales Amount 

Percentage of 

purchase / 

sales Credit Term Unit price Credit Term Balance 

Percentage of 

account Footnote 

MiTAC Logistics Indirect investee Sales $5,765,895 10% Note 1 Note 2 Note 1 $1,123,386 8% 

Corporation company 

accounted for 


method. 

〃 MiTAC Digital 

Corporation 

〃 Sales 3,709,686 6% Note 1 〃 Note 1 3,370,378 24% 


Benelux N.V. 

〃 Sales 1,184,338 2% Note 1 〃 Note 1 134,319 1% 



UK LTd. 

〃 MiTAC Australia 〃 Sales 1,092,648 2% Note 1 〃 Note 1 725,893 5% 

Pty Ltd. 


〃 Sales 264,896 0% Note 1 〃 Note 1 - - 

Ltd. 

〃 MiTAC 

〃 Purchases 5,962,607 12% Note 3 〃 Note 3 ( 2,486,416) 22% 

Computer 

(Kunshan) Co., 

Ltd. 

〃 MiTAC 

〃 Purchases 1,650,922 3% Note 3 〃 Note 3 ( 447,141) 4% 

Computer 

(Shunde) Corp. 

〃 Pacific Metal 

〃 Purchases 2,929,345 6% Note 3 〃 Note 3 ( 574,091) 5% 

Developments 

Ltd. 

〃 MiTAC Japan 

〃 Purchases 119,085 0% Note 3 〃 Note 3 ( 21,518) 0% 

Corp. 

〃 Tyan Computer 


Corp.-USA 

〃〃〃 Purchases 478,594 1% Note 3 〃 Note 3 - - 

〃 Gemtek 

Board member of Sales 459,555 1% Note 1 〃 Note 1 86,085 1% 

Technology Co., Gemtek 

Ltd. 

〃 

〃 

〃 

〃 

Synnex 

Corporation 

Synnex 

Corporation 

Synnex 

Corporation(UK) 

Synnex 

Technology 

International 

(HK) Ltd. 

Indirect investee 

company 

accounted for 


method. 

Sales 8,394,729 14% Note 1 〃 Note 1 1,787,493 13% 

〃 Purchases 110,234 0% Note 3 〃 Note 3 - - 


〃 Purchases 378,838 1% Note 3 〃 Note 3 ( 92,705) 1% 

Note 1:The collection period is 150 days and 90 days after offsetting certain receivables and payables according to collection terms to overseas and domestic related parties, 

respectively. The collection period for regular customers is approximately 90 days after shipping date. 

Note 2:The selling price to related parties is based on market value. 

Note 3:The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties, 

respectively. The payment period for regular suppliers is approximately 90 days after purchase date.

(8) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2009: 

Company Name 

MiTAC 


〃 

〃 

〃 

〃 

〃 

〃 

Name of the 

counterparty 

Synnex Corporation 

Synnex 

Corporation(UK) 

MiTAC Logistics 

Corporation 

MiTAC Digital 

Corporation 

Mio Technology UK 

LTd. 

Mio Technology 

Benelux N.V. 

MiTAC Australia Pty 

Ltd. 


counterparty 

Indirect investee 

company accounted 

for under the equity 

method. 

Balance of receivable from related party Overdue receivables 

Notes/Accounts 

receivable 

Other 

receivables 


Turnover rate 

(times) 

Amount 

Collection 

method 

Subsequent 

received amount 

Bad debts allowance 

provided 

$1,787,493 $ - $1,787,493 4.72 $ - N/A $ 1,682,107 $ - 

〃 659,873 - 659,873 2.22 - N/A 345,718 - 

〃 1,123,386 19,932 1,143,318 3.71 - N/A 950,371 - 

〃 3,370,378 29,023 3,399,401 2.20 - N/A 1,221,131 - 

〃 623,765 465 624,230 2.53 - N/A 198,086 - 

〃 134,319 - 134,319 6.53 - N/A 92,200 - 

〃 725,893 14,011 739,904 1.70 - N/A 727,525 - 

(9) Information on derivative transactions. 

(a) Purpose: Derivative financial instruments are undertaken for non-trading purposes and to hedge the fluctuation of exchange rate of foreign currency denominated assets 

and liabilities. 

(b) To hedge existing assets denominated in foreign currencies: 


Contract Terms 

Item 

Notional Amount Fair Market Value 

(in thousands) 

Trade date Strike Rate Settlement Date 

Sales forward Foreign exchange USD 60,000 NTD 7,762 2009.9.29~2009.12.2 32.095~32.483 2010.1.4~2010.3.8 

″ EUR 13,700 NTD 12,586 2009.10.21~2009.12.28 46.138~48.775 2010.1.4~2010.3.29 

″ AUD 18,650 NTD 1,669 2009.10.6~2009.12.31 28.392~30.049 2010.1.4~2010.3.31 

″ NZD 400 ( NTD 10) 2009.12.31 23.36 2010.1.29 

″ GBP 4,390 NTD 2,386 2009.10.5~2009.12.29 51.735~54.042 2010.1.4~2010.3.29 

Purchase of forward foreign exchange USD 25,000 ( NTD 5,203) 2009.11.12~2009.12.3 31.783~32.197 2010.2.4~2010.3.4 

″ JPY 80,000 ( NTD 819) 2009.11.12~2009.11.18 0.3599~0.3615 2010.1.19~2010.1.20 

Purchase of currency SWAP USD 5,000 NTD 1,900 2009.11.13 32.412 2010.1.15 

~145~

Item 

Notional Amount 

(in thousands) 

Fair Market Value 



Trade date Strike Rate Settlement Date 

Sales of forward foreign exchange USD 31,000 ( NTD 445) 2008.10.13~2008.12.11 32.152~33.33 2009.1.15~2009.1.23 

″ EUR 20,400 ( NTD 77,346) 2008.10.30~2008.12.12 41.541~44.524 2009.1.5~2009.3.16 

″ JPY 50,000 NTD 42 2008.12.23 0.365 2009.2.26 

″ AUD 13,000 ( NTD 9,732) 2008.10.16~2008.12.24 21.83~22.352 2009.1.12~2009.3.16 

″ NZD 1,300 ( NTD 1,514) 2008.11.14~2008.12.8 17.697~18.602 2009.1.12~2009.1.23 

Purchase of forward foreign exchange USD 16,000 NTD 11,977 2008.10.13~2008.10.17 31.962~32.252 2009.1.15~2009.1.21 

Interest rate SWAP NTD 500,000 NTD 1,045 2004.5.25 Note 2009.5.25 

Note : On exercise of SWAP, the amount of cash outflow is calculated at a fixed rate of 1.6%, and the amount of cash inflow is calculated using a floating rate (6-month 

USD-LIBOR-BBA), observed as follows: 

If 6M LIBOR2.0%, the floating rate is 4.5% less 6M LIBOR, which is above or equal to 0%. 

~146~

B. Information of Subsidiaries: 

(1) Related information of Subsidiaries as of December 31, 2009: 

Investor 

MiTAC 

International 

Corp. 

〃 

〃 

〃 

〃 

〃 

〃 

〃 

〃 

〃 

Investee 

Company 

Getac 

Technology 

Corp. 

Tung Da 

Investment Co., 

Ltd. 

Silver Star 

Developments 

Ltd. and its 

subsidiaries 

Tsu Fung 


and its 

subsidiaries 

3Probe 

Technologies 

Corp. 

Lian Jie 

Investment Co., 

Ltd. 

Shen-Tong 

Construction & 

Development 

Co., Ltd. 

Foreground 

Technology Ltd. 

and its 

subsidiaries 

DLC Technology 

Corporation 

Loyalty Founder 

Enterprise 

Co.,Ltd. 

Location 

(Country) 

Taiwan 

British Virgin 

Islands 

Main business 

operations 

Manufacturing and 

sale of notebook 

computer, military 

and industrial 

computer systems, 

etc. 

Ending 

balance 

Original amount Shares held by the Company 

Beginning 

balance 

~147~ 


Percentage 

owned 

Book value 

Income (loss) of the 

investee Company 

Gain/Loss 

recognized by 

the Company 

$ 1,391,549 $ 1,391,549 190,396,939 33.97% $ 3,919,167 $ 1,342,185 $ 478,360 Investee 

accounted for 

under equity 

method 

〃 Investment 299,985 299,985 53,145,723 49.99% 535,774 35,519 17,789 〃 

〃 6,902,318 

(US$215,495) 

6,902,318 

(US$215,495) 

215,495,404 100.00% 14,155,790 ( 637,026) (595,857) Subsidiary 

Taiwan 〃 625,000 625,000 106,528,922 100.00% 1,303,629 105,154 100,578 〃 

〃 

Information 

process service, 

sales of software 

and international 

trading. 

16,800 16,800 1,080,000 23.13% 11,112 3,279 759 Investee 

accounted for 

under equity 

method 

〃 Investment 113,057 129,950 11,305,650 49.98% 63,574 9,087 4,542 〃 

〃 


Islands 

Taiwan 

〃 

Building and 

factory 

construction, 

leasing and sales 

Investment 289,727 

(US$9,045) 

Manufacturing of 

data storage 

media , computer 

and 

communication 

equipment 

Sales and 

manufacturing of 

metal and plastic 

electronics 

enclosure 

85,594 85,594 8,559,400 47.55% 83,825 (203) (97) 〃 

289,727 

(US$9,045) 

9,045,492 100.00% 494,827 3,799 10,917 Subsidiary 

65,755 65,755 6,600,000 100.00% 48,579 (856) (856) 〃 

150,000 - 60,000,000 25.24% 151,877 (83,937) 19,278 Investee 

accounted for 

under equity 

method 

Note

Investor 

Silver Star 

Developments 

Ltd. (SSDL) 

〃 

〃 

〃 

〃 

Tsu Fung 

Investment 

Corp. 

Investee 

Company 

Harbinger II 

(BVI) Venture 

Capital Corp. 

Mainpower 

International Ltd. 

Synnex 

Corporation 

Suzhou MiTAC 

Precision 

Technology Co., 

Ltd. 

Harbinger Ruyi 

Venture Ltd. 


Corp. 

Location 

(Country) 


Islands 

Main business 

operations 

Ending 

balance 

Investment $ 46,695 

(US$1,458) 

〃〃 176,165 

(US$5,500) 

USA Information 

633,142 

process services, (US$19,767) 

sales of computer 

peripheral, system 

and network 

products 

China 


Islands 

Taiwan 


mainboard, 

desktop computers, 

interfere cards, etc. 

(2) Loans granted during the year ended December 31, 2009: 

Creditor Borrower 

Silver Star 

Developments 

Ltd. 

〃 

〃 

〃 

Tyan Computer 

Corp.-USA 

MiTAC 

Cooperatie 

U.A. 

Mio 

Technology 

UK LTd. 

MiTAC Digital 

Corporation 

MiTAC 

International 

Corp. 

MiTAC Digital 

Corporation 

General 

ledger 

account 

Affiliated 

loans 

receivable 

Original amount Shares held by the Company 

432,405 

(US$13,500) 

Investment $32,030 

(US$1,000) 

Information 

process service and 

sales of software. 

Maximum 

outstanding 

Ending 

balance 

Beginning 

balance 

$ 46,695 

(US$1,458) 

176,165 

(US$5,500) 

728,458 

(US$22,743) 

432,405 

(US$13,500) 

~148~ 


Percentage 

owned 

Book value 

Income (loss) of the 

investee Company 

Gain/Loss 

recognized by 

the Company 

1,457,850 49.96% $ 48,090 ($ 1,551) Investee 

accounted for 

under equity 

method by 

SSDL 

5,500,001 26.19% 160,803 (22,499) 〃 

6,738,412 19.69% 5,133,509 3,044,185 〃 

- 21.62% 242,480 (46,182) 〃 

$32,030 

(US$1,000) 

1,000,000 28.57% 32,169 31 〃 

5,000 5,000 500,000 100.00% 25,620 2,854 Subsidiary of 

Tsu Fung 

Investment 

Corp. 

Interest 

rate 

Nature of 

loan 

Amount of 

transaction 

with 

borrower 

Reason of 

short-term 

financing 

Collateral 

Allowance 

for 

doubtful 

accounts Item Value 

Limit on loans granted 

to a singly party 

$ 982 $ 900 - Note 1 $ - Operations $ - None $ - $6,004,347 

(Note 2) 

Note 


loans granted 

$6,004,347 

(Note 2) 

〃 236,592 - - 〃 - 〃 - 〃 - 〃〃 

〃 678,340 - - 〃 - 〃 - 〃 - 〃〃 

〃 1,441,350 1,441,350 - 〃 - 〃 - 〃 - 〃〃 

Accounts 

receivable 

from related 

parties 

224,210 224,210 0.69% 〃 - 〃 - 〃 - 252,956 

(Note 3) 

Note 1: The borrowers required short-term capital. 


252,956 

(Note 3)


(3) Endorsements and guarantees provided during the year ended December 31, 2009: 

Endorser / guarantor 

Party being endorsed 

/ guaranteed 

Silver Star Developments Ltd. MiTAC Computer 



endorser / guarantor 

Limit on 


guarantees provided 

for a single party 

Note: Equal to the net worth based on the financial statements audited by independent accountants. 

(4) Marketable securities as held of December 31, 2009: 

Security held by Type 


securities 

Tsu Fung 

Stocks Synnex Technology 



〃〃 UPC Technology 

Corporation 

〃〃 Lien Hwa Industrial 

Corp. 

〃〃 MiTAC International 

Corp. 

Maximum 

outstanding 

endorsements 

guarantee amount 

during 2009 

the Outstanding 


guarantees amount at 

Dec.31, 2009 

the Amount of 


guarantees with 

collateral placed 

Ratio of accumulated 


guarantees amount to 

net asset value of the 

Company 


amount of 


guarantees provided 

Subsidiaries $15,010,867 $388,800 $ - $ - - $15,010,867 

(Note) 


Relationship with the issuer General ledger account 

Number of 

Market value 

Book value Percentage 

shares 

(Note ) 

None 

Available-for-sale financial 2,023,081 $140,604 0.15% $140,604 

assets -current 

〃〃 6,402,969 111,412 0.76% 111,412 

〃〃 1,192,884 18,788 0.15% 18,788 

Tsu Fung’s investor company 

accounted for under the equity 

method 

〃 20,366,568 337,067 1.33% 337,067 

〃〃 Getac Technology Corp. None 〃 14,329,741 443,308 2.56% 443,308 

〃〃 Loyalty Founder 

〃〃 100,000 753 0.04% 753 

Enterprise Co.,Ltd. 

〃〃 Linpus Technology Corp. 〃 Financial assets carried at 3,613,532 3,485 18.68% 3,485 


〃〃 Harbinger Venture 

〃〃 536,500 479 19.99% 479 

Management Co., Ltd. 

〃〃 3Probe Technologies 

〃〃 6,000 30 0.13% 30 

Corp. 

〃〃 Cirocomm Technology 

〃〃 2,352,086 24,560 4.73% 24,560 

Corp. 

〃〃 Lien Yung Investment 

〃〃 9,015,254 87,969 19.99% 87,969 

Corp. 

〃〃 G. Marso Electronics, Inc. 〃〃 773,488 8,622 4.50% 8,622 

〃〃 Mio Technology Corp. Tsu Fung’s investee company 


methods. 

Long-term investment 


equity method. 

500,000 25,620 100.00% 25,620 

~149~


Security held by Type 


securities 

Relationship with the issuer 

General ledger account 

Number of 

shares 

Book value 

Percentage 

Market value 

(Note ) 

Silver Star 

Developments 

Ltd. 

Stocks Harbinger II (BVI) 

Venture Capital Corp. 

SSDL’s investee company 


method 

Long-term investment 


equity method. 

1,457,850 $ 48,090 49.96% $ 48,090 

〃〃 Synnex Corporation 〃〃 6,738,412 5,133,509 19.96% 6,600,122 

〃〃 Suzhou MITAC Precision 

〃〃 - 242,480 21.62% 242,480 

Technology Co., Ltd. 

〃〃 Mainpower International 

〃〃 5,500,001 160,803 26.19% 160,803 

Ltd. 

〃〃 Harbinger Ruyi Venture 

〃〃 1,000,000 32,169 28.57% 32,169 

Ltd. 

〃〃 Brilliant Star Holdings 

None 

Financial assets carried at 7,115,000 210,851 15.29% 210,851 

Ltd. 


〃〃 Budworth Investments 

〃〃 4,744,000 89,462 14.83% 89,462 

Ltd. 

〃〃 Gapura Inc. 〃〃 295,831 - 5.55% - 

〃〃 Global Strategic 

〃〃 1,000,000 22,507 1.26% 22,507 

Investment Inc. 

〃〃 Panasas Inc. 〃〃 1,391,354 - 0.99% - 

〃〃 Cirocomm Technology 

〃〃 2,352,086 24,279 4.73% 24,279 

Corp. 

〃〃 Rasilent Systems, Inc. 〃〃 1,210,763 19,390 3.53% 19,390 

〃〃 MIREO d.d. 〃〃 80,168 69,150 8.00% 69,150 

〃〃 Synnex Technology 

〃 

Available-for-sale financial 2,689,079 186,891 0.20% 186,891 


assets-non current 

〃〃 MiTAC International 

SSDL’s investor company 

〃 2,763,889 45,742 0.18% 45,742 

Corp. 


method 

〃〃 Silicon Storage 

Technology Inc. 

None 

Available-for-sale financial 

assetscurrent 

290,909 23,854 0.28% 23,854 

Note: The market value of marketable securities held was based on the closing price as of December 31, 2009, if listed, while the market value of marketable securities held was 

based on the net asset value of the investee company, if not listed. 

~150~

(5) Marketable securities for which total buying or selling exceeded $100,000 or 20 percent of capital for the year ended December 31, 2009: 

Investor 

Silver Star 

Development 

Ltd. 

Best Profit Ltd. 

〃 

Top Sheen 

Enterprises Ltd. 

Silver Star 

Development 

Ltd. 

Booming 

Enterprises Inc. 

Tsu Fung 

Investment 

Corp. 

〃 

Marketable 

securities 

Best Profit 

Ltd. 

Top Sheen 

Enterprises 

Ltd. 

Booming 

Enterprises 

Inc. 

MiTAC 

Digital 

Corporation 

Synnex 

Corporation 

Mio 

Technology 

USA Ltd. 

Getac 

Technology 

Corp. 

Synnex 

Technology 

International 

Corp. 


account 

Long-term 

investments 

accounted for 


method 

Balance as at January 1, 

2009 Addition Disposal 

Balance as at December 31, 

2009 

Number of 

shares (in Amount 

thousands) (Note 2) 

Counterparty 

Relationship 

with the 

Company 

Number of 

shares (in 

thousands) Amount 

Number of 

shares (in 

thousands) Amount 

Number of 

shares (in 

thousands) 

Selling 

price 

Book 

value 

Gain (loss) 

on disposal 

Note 1 Subsidiary 10,131,236 $324,506 27,000,000 $ 864,810 - $ - $- $ - 37,131,236 $1,189,316 

〃 Note 1 〃 439,579 10,698 20,000,000 640,600 - - - - 20,439,579 640,600 

〃 Note 1 〃 800,001 25,624 7,000,000 224,210 - - - - 7,800,001 249,834 

〃 Note 1 〃 - - 20,000,000 640,600 - - - - 20,000,000 ( 75,378) 

〃 Third party None 7,752,824 5,218,022 - - 1,014,412 796,723 717,526 79,197 6,738,412 5,133,509 

〃 Note 1 Subsidiary 800,000 224,210 7,000,000 224,210 - - - - 7,800,000 21,920 


financial assetscurrent 

Third party None 21,395,741 310,211 - - 7,066,000 230,148 165,768 64,380 14,329,741 443,309 

〃〃〃 3,293,710 111,986 - - 1,270,629 108,181 63,440 44,741 2,023,081 140,604 

Note 1: Stock capital increase by cash. 

Note 2: The ending balance contains investment income (loss) and cumulative translation adjustments. 

(6) Real estate acquired exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2009: None. 

(7) Real estate disposed exceeding $100,000 or 20 percent of the Company’s capital for the year ended December 31, 2009: None. 

~151~

(8) Purchases or sales transactions with related parties exceeding $100,000 or 20 percent of capital for the year ended December 31, 2009: 

The company 

buying/selling 

products 

Silver Star 

Developments 

Ltd. (SSDL) and 

its subsidiaries 

Name of 

related parties 

MiTAC 

International 

Corp. 


counterparty Purchase / Sales Amount 

SSDL’s parent 

company 

Transactions 

Reason and situation of having 

different transaction term 

between related parties and 

others 

Percentage of 

purchase / 

sales Credit Term Unit price Credit Term Balance 

Accounts and notes receivable (payable) 

Sales $7,877,074 23.04% Note 1 Note 3 Note 1 $2,998,770 25.74% 

Percentage of 

account Note 

〃〃〃 Purchases 13,568,327 44.77% Note 2 〃 Note 2 (6,134,713) 76.05% 

〃 Getac 

Affiliated company Purchases 682,340 2.25% Note 2 〃 Note 2 (101,206) 1.25% 

Technology 

Corp. and its 

subsidiaries 

Tyan Computer MiTAC Tyan’s Investeor 

Sales 478,594 33.55% Note 4 〃 Note 4 - - 

Corp.-USA International 

Corp. 

company accounted 

for under the equity 

method 

〃〃〃 Purchases 1,232,138 86.38% Note 5 〃 Note 5 (11,478) - 

Note 1:The collection period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties, 

respectively. The collection period for regular customers is approximately 90 days after shipping date. 

Note 2:The payment period is 150 days and 90 days after offsetting certain receivables and payables according to payment terms to overseas and domestic related parties, 

respectively. The payment period to regular supplies is approximately 90 days after purchase date. 

Note 3:The selling price to overseas related parties is based on market value. The selling price to domestic related parties is based on common domestic price. 

Note 4:The collection period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The collection period for regular 

customers is approximately 90 days after shipping date. 

Note 5:The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The payment period to regular 

supplies is approximately 90 days after purchase date. 

(9) Receivables from related parties exceeding $100,000 or 20 percent of capital as of December 31, 2009: 

Company Name 

Silver Star 

Developments Ltd. 

and its subsidiaries 

Name of the 

counterparty 

MiTAC 

International 

Corp. 


the counterparty 

SSDL’s parent 

company 

Balance of receivables from related party Overdue receivable 

Bad debt 

Notes / Accounts 

Turnover rate 

Subsequent 

Other receivables Total 

Amount Collection method 

allowance 

receivable 

(times) 

amount received 

provided 

$2,998,770 $1,644,764 $4,643,534 3.15 $ - N/A $2,787,623 $ - 

~152~

(10) Information on derivative transactions: 

As of December 31, 2008, the subsidiaries had no derivative financial instruments transactions. Details of derivative financial instruments transactions as at December 31, 

2009 undertaken by subsidiaries for non-trading purposes are set out below: 



Item Notional Amount (in thousands) Fair Market Value (in thousands) Trade date Strike Rate Settlement Date 

MiTAC Computer (Shunde) Corp. 

Sales of forward foreign exchange USD 12,000 ( CNY 17) 2009.7.28~2009.11.12 6.7900~6.8455 2010.2.26~2010.6.17 

C. Relevant Information Regarding Investments In Mainland China: 

a) Basic information, change in investment balance and profits/losses recognized from the direct investment: 

Amount of remittance 

out in 2009 

Name of investee 

in Mainland China 

Main activities of 

investee 

Capital 

Method of 

investment 

Beginning balance of 

remittance in 2009 

Remittance 

out 

Remittance 

in 

Ending balance of 

remittance from 

Taiwan on 

December 31, 

2009 


the Company 

(Direct/indirect) 

Profit/loss 

recognized in 

2009 (Note 1) 

Ending balance of book value 

on December 31, 2009 


profit remittance 

into Taiwan 

MiTAC Computer 



computer cases and 

monitors, etc. 

$2,893,482 

(CNY616,837) 

Invest in 

Mainland 

China through 

investing 

company in 

third area 

$2,235,694 

(US$ 69,800) 

$ - $ - $2,235,694 

(US$ 69,800) 

100.00% ($90,723) $3,349,230 $ - 

MiTAC Computer 


Ltd. 

Sales and 


computer accessories, 

hardware, software and 

related services. 

1,427,519 

(CNY304,321) 

〃 919,261 

(US$ 28,700) 

- - 919,261 

(US$28,700) 

100.00% 41,216 1,968,353 - 

MiTAC Service 

(Shanghai) Co., 

Ltd. 

Manufacturing, 

assembling computers 

and provide test, 

maintenance and 

service for related 

product. 

38,827 

(CNY8,277) 

〃 32,030 

(US$1,000) 

- - 32,030 

(US$1,000) 

100.00% 2,892 56,343 - 

MiTAC 

Technology 


Ltd. 

Sales and 


computer accessories, 

hardware, software and 

related service. 

38,826 

(CNY8,277) 

〃 32,030 

(US$1,000) 

- - 32,030 

(US$1,000) 

100.00% 5,400 67,284 - 

Catac Electronic 

(Zhong-Shan) Co., 

Ltd. 

Sales and 

manufacturing of PCB. 

1,491,362 

(CNY317,931) 

〃 227,413 

(US$7,100) 

- - 227,413 

(US$7,100) 

15.29% - - - 

~153~

Amount of remittance 

out in 2009 

Name of investee 

in Mainland China 

Main activities of 

investee 

Capital 

Method of 

investment 

Beginning balance of 

remittance in 2009 

Remittance 

out 

Remittance 

in 


remittance from 

Taiwan on 

December 31, 

2009 


the Company 

(Direct/indirect) 

Profit/loss 

recognized in 

2009 (Note 1) 

Ending balance of book value 

on December 31, 2009 


profit remittance 

into Taiwan 

MiTAC Research 

(ShangHai) Ltd. 

Suzhou MITAC 

Precision 

Technology Co., 

Ltd. 


(Chengdu) Ltd. 


Ltd. 

MITAC 

LOGISTIC 

SERVICE 

(KUNSHAN) 

LTD. 

MiTAC 

Information 


Design and 


computers and related 

accessories 

Manutacturing of 

mainboard, desktop 

computers, interf are 

cards, etc. 

Manufacturing 

assembling computers 

and provide test, main 

tenance and service for 

related products 

Sales computer 

accessories and related 

service. 

Service of good import 

and export in domestic 

of Manland china , 

international 

distribution and simple 

processing 

After-sales 

maintenance, testing, 

consulting services and 

related supporting 

technology services 

$201,894 

(CNY43,040) 

818,907 

(CNY174,576) 

49,021 

(CNY10,450) 

9,194 

(CNY1,960) 

13,135 

(CNY2,800) 

9,609 

(CNY2,048) 

〃 $166,556 

(US$5,200) 

〃 432,405 

(US$13,500) 

〃 48,045 

(US$1,500) 

〃 8,008 

(US$250) 

〃 12,812 

(US$400) 

〃 - 9,609 

(US$300) 

$ - $ - $166,556 

(US$5,200) 

- - 432,405 

(US$13,500) 

- - 48,045 

(US$1,500) 

- - 8,008 

(US$250) 

- - 12,812 

(US$400) 

- 9,609 

(US$300) 

100% $ 22,375 $ 287,878 $ - 

36.49% ( 19,971) 409,203 - 

100.00% 2,011 50,598 - 

100.00% 6,966 17,057 - 

100.00% 226 12,345 - 

100.00% - 9,609 - 

Ending balance of investment from Taiwan on 


$4,563,538 

(US$138,049) 

Approved investment amount by Ministry of 

Economic Affairs R.O.C. 

$4,573,455 

(US$138,349) 

The ceiling amount of the Company for investment in 

Mainland China 

Note 3 

Note 1: Profit/Loss recognized based on the unaudited financial statements, except for MiTAC Computer (Shunde) Corp., MiTAC Computer (Kunshan) CO., Ltd., MiTAC Research 

(ShangHai) Ltd., Mio Technology Ltd. and Suzhou MITAC Precision Technology Co., Ltd. 

Note 2:The Company had obtained a certificate of conforming to the business scope of headquarters (Certificate No.: Gong-Zhi-Zi Letter No. 09601048060) on December 25, 2007, 

issued by the Industrial Development Bureau, MOEA, in accordance with “Criteria for Identifying Business Headquarters”, promulgated on September 26, 2008. Accordingly, 

the amount of the Company’s investments in Mainland China has no limitation. 

~154~

) Major transactions with the subsidiaries in third region and Mainland China: 

1) Purchases 

The Company’s purchases from Mainland China subsidiaries: 

2009 2008 

MiTAC Computer (Shunde) Corp. $ 1,650,922 $ 16,966,988 

MiTAC Computer (Kunshan) Co., Ltd. 12,245,198 15,158,299 

$ 13,896,120 $ 32,125,287 

Note: The above purchase amounts included raw materials and supplies and 

processing overhead charged to the Company since the Company 

commissioned its Mainland China subsidiaries to process products for it. In 

addition, some of the Company’s transactions with MiTAC Computer 

(Kunshan) Co., Ltd. were conducted indirectly through Mio International Ltd. 

located at the third territory which amounted to $11,710,947 and $14,153,452 

for the years ended December 31, 2009 and 2008, respectively. 

The purchase prices from Mainland China subsidiaries are negotiated based on the 

material and manufacturing cost. The payment period is 150 days after offsetting 

certain receivables and payables according to the payment terms. 

The purchase prices that the Company purchases from regular suppliers are 

negotiated based on local market value. The payment period is approximately 90 days 

from shipping date. 

As of December 31, 2009, the unrealized intercompany gain due to up 

stream sales is $0. 

2) Sales 

The Company sales to Mainland China subsidiaries: 

2009 2008 

MiTAC Computer (Shunde) Corp. $ - $ 7,595,538 


Others 264,896 164,314 

$ 6,547,487 $ 15,445,155 

The sales prices to Mainland China subsidiaries are negotiated based on the product 

cost. The collection period is 150 days after offsetting certain receivables and 

payables according to the collection terms. 

The sales prices to regular customers are negotiated based on local market value. The 

collection period is approximately 90 days from shipping date. 

As of December 31, 2009 and 2008, the unrealized intercompany gain due to down 

stream sales is $0. 

~155~

3) Property transactions: 

In 2009 and 2008, the Company sold equipment and molds to third region and 

Mainland China subsidiaries amounting to $20 and $267, respectively. The total 

disposal gain was $4 and $109, respectively. 

In 2009 and 2008, the Company purchased equipments and molds from third region 

and Mainland China subsidiaries amounting to $1,095 and $0, respectively. 

4) Accounts payable: 

The Company to Mainland China subsidiaries: 

December 31, 

2009 2008 

MiTAC Computer (Shunde) Corp. $ 447,141 $ 415,004 


$ 2,933,557 $ 1,999,519 

5) Loans to third region and Mainland China subsidiaries: None. 

6) The endorsements and guarantees provided by the Company to Mainland China 

subsidiaries: 

i) As of December 31, 2009 and 2008, the Company guaranteed and endorsed the 

bank loans of MiTAC Computer (Shunde) Corp. through Silver Star 

Developments Ltd. amounting to $0 and $388,800, respectively. 

7) Other significant transactions which affect current income or financial conditions: 

i) In 2009 and 2008, the Company paid warranty expense to the subsidiaries in 

Mainland China amounting to $266,707 and $343,516, respectively. 

~156~

D) The relation of business and important transactions between the Company and its subsidiaries 


Company Name 


Name of the counterparty 

Silver Star Developments Ltd. 

(SSDL) and its subsidiaries 

~157~ 

Transaction 


counterparty (Note 1) General Ledger Account Amount Transaction terms 

Percentage of consolidated total operating 

revenue or total assets (Note 2) 

(1) Sales $ 13,568,327 Note 3 21.41% 

" " (1) Purchases 7,877,074 Note 4 12.43% 

" " (1) Accounts receivable 6,134,713 Note 3 11.41% 

" " (1) Accounts payable 2,998,770 Note 4 5.58% 

" " (1) Warranty expense 780,511 Note 4 1.23% 

" " (1) Accrued expenses / Other payables 203,414 Note 4 0.38% 

" " Other payable(Loans) 1,441,350 2.68% 

" " (1) Endorsements and guarantees 353,982 0.66% 

" Tsu Fung Investment Corp. and 


" Foreground Technology Ltd. and 


(1) Endorsements and guarantees 100,000 0.19% 

(1) Sales 1,232,138 Note 3 1.94% 

" " (1) Purchases 478,594 Note 4 0.76% 



MiTAC International Corp. (2) Sales 7,613,529 Note 3 12.01% 



" " (2) Accounts Payable 6,134,713 Note 4 11.41% 

" " (2) Other receivables 1,644,764 Note 3 3.06% 

" " (2) Other revenues 780,511 Note 3 1.23% 

Foreground Technology Ltd. and 


MiTAC International Corp. (2) Sales 478,594 Note 3 0.76% 



Transaction 

Company Name 






MiTAC International Corp. Silver Star Developments Ltd. 

(1) Sales $ 9,924,934 Note 3 15.33% 



" " (1) Accounts receivable 4,601,723 Note 3 8.72%

Company Name 


Transaction 






" " (1) Warranty expense 1,260,237 Note 4 1.94% 

" " (1) Accrued expenses / Other payables 526,813 Note 4 1.00% 

" " (1) Endorsements and guarantees 734,819 1.39% 

" " (1) Other receivables 170,168 Note 3 0.32% 

" Tsu Fung Investment Corp. and 


(1) Sales 159,902 Note 3 0.25% 

" " (1) Endorsement and guarantees 160,000 0.30% 

" Foreground Technology Ltd. and 


(1) Sales 1,250,246 Note 3 1.93% 

" " (1) Purchases 401,240 Note 4 0.62% 



MiTAC International Corp. (2) Sales 17,359,253 Note 3 26.82% 




" " (2) Accounts receivable 526,813 Note 3 1.00% 

" " (2) Other payables 170,168 Note 4 0.32% 

" " (2) Other revenues 1,260,237 Note 3 1.95% 

Foreground Technology Ltd. and 


MiTAC International Corp. (2) Purchases 1,250,246 Note 4 1.93% 

" " (2) Sales 401,240 Note 3 0.62% 

Tsu Fung Investment Corp. and its 

subsidiaries 

MiTAC International Corp. (2) Purchases 159,902 Note 4 0.25% 

Note 1: The relationship with the transaction parties are as follows: 

(1) The Company to the consolidated subsidiary. 

(2) The consolidated subsidiary to the Company. 

(3) The consolidated subsidiary to the consolidated subsidiary. 

Note 2: Ratio of asset/liability is divided by consolidated total assets, and ratio of profit/loss accounts is divided by consolidated sales revenue. 

Note 3: The collection period is 150 days after offsetting certain receivables and payables according to collection terms to overseas related parties. The sales price to related parties is 

based on market value. 

Note 4: The payment period is 150 days after offsetting certain receivables and payables according to payment terms to overseas related parties. The purchase price from related parties 

is based on market value. 

Note 5: The standard of disclosure is the transantion amounts exceeding $100,000 or 20 percent of the Company’s capital. 

~158~

12. SEGMENT INFORMATION 

1) Operations in different industries: 

The Company operates principally in one industry. The Company’s major operation is 

the design, manufacture, sales and services of micro-computers and related products. 

2) Operations in different geographic areas: 


Adjustments and 

Asia Others Taiwan Eliminations Consolidation 

Revenue from third parties $ 1,023,065 $ 19,296,686 $ 43,772,115 $ - $ 64,091,866 

Revenue from parent and 

consolidated subsidiaries 26,076,162 1,102,541 14,942,307 ( 42,121,010 ) - 

Total $ 27,099,227 $ 20,399,227 $ 58,714,422 ( $ 42,121,010 ) $ 64,091,866 

Income per area $ 191,301 ( $ 1,266,667 ) $ 510,139 $ 39,061 ( $ 526,166 ) 

Interest expense ( 53,452 ) 

Investment income 1,179,658 

Income before income tax $ 600,040 

Identifiable assets $ 14,788,574 $ 10,897,900 $ 33,551,484 ( $ 15,839,186 ) $ 43,398,772 

Long-term investments 10,382,380 

Total assets $ 53,781,152 

In order to reconcile the amounts of segment information and the amounts shown on the 

consolidated financial statements, the following adjustments and eliminations have 

been made: 

A. Revenue from parent and consolidated subsidiaries: $42,121,010. 

B. Income from parent and consolidated subsidiaries: ($39,061), which is equal to the 

revenues from the parent and consolidated subsidiaries of $42,121,010 less the 

related costs and expenses of $42,160,071. 


Adjustments and 

Asia Others Taiwan Eliminations Consolidation 

Revenue from third parties $ 1,581,000 $ 13,329,422 $ 50,676,809 $ - $ 65,587,231 

Revenue from parent and 

consolidated subsidiaries 47,314,191 1,724,579 10,998,896 ( 60,037,666 ) - 

Total $ 48,895,191 $ 15,054,001 $ 61,675,705 ( $ 60,037,666 ) $ 65,587,231 

Income per area $ 531,494 ( $ 285,886 ) ( $ 40,177 ) ( $ 323,760 ) ( $ 118,329 ) 

Interest expense ( 144,368 ) 

Investment income 1,059,436 

Income before income tax $ 796,739 

Identifiable assets $ 15,510,468 $ 6,609,150 $ 30,431,375 ( $ 9,945,339 ) $ 42,605,654 

Long-term investments 10,142,139 

Total assets $ 52,747,793 

In order to reconcile the amounts of segment information and the amounts shown on the 

consolidated financial statements, the following adjustments and eliminations have 

been made: 

A. Revenue from parent and consolidated subsidiaries: $60,037,666. 

B. Income from parent and consolidated subsidiaries: $323,760, which is equal to the 

revenues from the parent and consolidated subsidiaries of $60,037,666 less the 

related costs and expenses of $59,713,906. 

~159~

3) Export sales 

2009 2008 

North America $ 13,995,978 $ 17,172,002 

Europe 12,290,234 14,404,590 

Asia and Australia 17,096,244 18,247,966 

4) Major customers 

$ 43,382,456 $ 49,824,558 

List of customers which accounted for more than 10% of total sales: 

Customer name 

Sales amount 


Percentage of 

total sales 

Sales department 

E customer $ 12,791,743 20% Total company 

Synnex Corp. 

(SYNNEX) and its 

subsidiaries 

10,428,687 16% Total company 

Customer name 

Sales amount 


Percentage of 

total sales 

Sales department 

E customer $ 12,489,541 19% Total company 

Synnex Corp. 

(SYNNEX) and its 

subsidiaries 

8,423,052 13% Total company 

B customer 7,141,094 11% Total company 

~160~

7 Assessment of financial conditions, operational result, 

and potential risks 

7.1. Financial status, discussion, and analysis 


Years 

Differential 

2008 2009 

Items 

Amount % 

Current assets 23,797,940 24,961,531 1,163,591 4.89 

Fixed assets 2,196,827 1,782,672 (414,155) (18.85) 

Intangible assets 613,095 1,894,511 1,281,416 209.01 

Other assets 1,257,969 1,372,991 115,022 9.14 

Total assets 50,119,319 52,608,813 2,489,494 4.97 

Current liabilities 18,244,889 19,353,409 1,108,520 6.08 

Long-term debt 240,500 1,500,000 1,259,500 523.70 

Total liabilities 18,993,357 21,004,633 2,011,276 10.59 

Capital 15,354,393 15,361,724 7,331 0.05 

Capital reserves 4,169,505 4,153,640 (15,865) (0.38) 

Retained earnings 10,968,317 10,952,275 (16,042) (0.15) 

Total shareholder equity 31,125,962 31,604,180 478,218 1.54 

1. Analysis of changes in assets, liabilities, and shareholders’ equity in the most recent two 

years (changes over 20% and NT$10 million): 

(1) Intangible assets: the increase of intangible assets was mainly due to the trademark and 

patent acquired from the brand Magellan during the year. 

(2) Long-term liabilities: the increase of long-term liabilities was mainly due to the 

additional long-term borrowings taken during the year 

2. The aforementioned changes did not have a significant impact on the company’s operation. 

7.2. Analysis of business results 

Years 

2008 2009 


Amount 

changed 

Change in 

percentage % 

Items 

Gross operating revenue 65,271,859 60,760,648 (4,511,211) (6.91) 

Minus: Sales return and allowance (4,462,434) (2,721,233) (1,741,201) (39.02) 

Net operating revenue 60,809,425 58,039,415 (2,770,010) (4.56) 

Operating costs (56,091,211) (53,931,648) (2,159,563) (3.85) 

Gross profit 4,718,214 4,107,767 (610,447) (12.94) 

Operating expenses (5,306,699) (4,141,680) (1,165,019) (21.95) 

Operating income (losses) (588,485) (33,913) 554,572 94.24 

Non-operating income and gains 1,433,674 465,950 (967,724) (67.50) 

Non-operating expenses and 

losses (209,745) (55,927) 

(153,818) (73.34) 

Income before income tax from 

continuing operations 635,444 376,110 

(259,334) (40.81) 

Income tax expense (176,155) (86,948) (89,207) (50.64) 

Cumulative effect of changes in 

accounting principles - - 

- - 

Net income from continuing 

operations 459,289 289,162 

(170,127) (37.04) 

~161~

1. Analysis of changes in percentage increases/decreases (changes less than 20% are 

exempted): 

(1) Sales return and allowance: Primarily due to the recession and the clearance sale 

because of the stock clearance, the amount of the sales returns and allowances 

increased in 2008. But it gets stable in 2009. 

(2) Operating expenses: Mainly because the decline of the operating revenue, the 

expenses declined as well. 

(3)Operating income: Affected by the factors above. 

(4)Non-operating income and gains: Mainly because the investment incomes decrease 

from the equity assessment caused the decrease of non-operating income and gains. 

(5) Non-operating expenses and losses: Mainly because the interest decreases, 

non-operating expenses and losses decrease as well. 

(6) Income before income tax and income tax expense: Affected by the factors above, 

income before incomes tax decrease, income tax expenses decline as well. 

(7) Net income from continuing operations: Also affected by the factors above. 

2. Reasons for changing the company’s major businesses: The company did not change its 

major businesses. 

3. The forecasts for sales volumes and their evidence and the possible impacts and their 

countermeasures: 

Based on the strategic plans and assessments of the future environment made by the 

company's management this year (2009), MiTAC shall focus on the growth of its three 

main businesses: developing high value-adding navigation software and outdoor GPS 

devices to achieve 2010 sales that surpass the previous year’s level. Target corporate 

servers and storage devices to provide cloud computing solutions; introduce innovative 

energy-saving servers, high-performance servers, and high performance computing 

solutions; increase the market share and distribution network coverage of our TYAN 

brand. As for client products, our efforts shall be focused on the development of 

Internet-enabled GPS devices and thin clients’ computers, thereby enabling closer 

technological association between cloud computing and MiTAC’s client products, as well 

as market growth. 

~162~

7.3 Cash flow analysis 


Measures for rectifying 

Cash outflows 

Initial cash Net cash flow from 

Cash surplus cash shortfall 

for the full 

balance operating activities 

(shortfall) 

year 

Investment Financing 

plans plans 

3,727,780 1,081,726 (4,823,842) (14,336) 220,593 2,998,522 

7.3.1. Analysis of cash flow for the current year 

1. Operating activities: Due to the proper capital management, operations in 2008 resulted in 

a net cash inflow. 

2. Cash outflow for the full year: Primarily caused by the partial repayments of bank 

borrowings, corporate bond redemptions, cash dividends, increases of intangible assets and 

deferred expenses. 

7.3.2 Remedy for cash shortfalls: funded with additional long-term borrowings and sale of fixed 

assets. 

7.3.3 Cash flow analysis for the next year 

Initial cash balance 

Net cash flow 

from operations 

Cash outflows 

for the full year 

Cash surplus 

(shortfall) 


Measures for rectifying 

cash shortfall 

Investment 

Financing plans 

plans 

3,204,779 1,442,311 (1,726,862) 2,920,228 - - 

1. Analysis of cash flow changes for the next year: 

(1)Operating activities: We forecasted that operating activities for 2010 will have a net 

cash inflow. 

(2)Cash outflow for the full year: We plan to increase long-term investments, purchase 

patent rights and techniques, buy fixed assets, redeem corporate bonds, and distribute 

cash dividends and employees’ bonuses. 

2. Remedies for cash shortfalls: N/A 

~163~

7.4 Major reasons for profits or losses caused by the reinvestment policy in the most recent 

year and rectifications: 

1. Major reasons for profits or losses caused by the reinvestment policy in the most recent year. 

Item Investment amount Reinvestment policy 

MiTAC and 

SSDL and 

its 

subsidiaries 

The acquisition 

transaction amounted 

to USD33,352 

thousand 

To complement the company's 

competitive advantage in GPS 

products and to increase market 

share in the global market, the 

company acquired, jointly with 

overseas subsidiary Silver Star 

Developments Ltd. and its 

subsidiaries on 12 Jan 2009, all 

assets and liabilities owned by 

the Consumer GPS Department 

of Magellan Navigation, Inc. 

and its subsidiaries. The 

acquisition included net 

tangible assets, and intangible 

assets such as patents, 

technologies, trademarks, 

customers relationships, and 

non-competing agreements etc. 

Major reasons for causing 

profits or losses 

SSDL incurred losses 

in 2009 due to the 

downturn of the global 

economy, which made 

the US market 

unprofitable in 2009. 

Improvement 

plan 

Increase 

revenues 

and market 

share 

through 

product 

innovation, 

market 

exploration, 

and more 

intense 

competition 

for new 

supply 

contracts. 

2. Investment plan within the year: We will follow the company’s operating strategies and 

perform global investment plan. 

7.5 Risk management 

7.5.1 Organization structure 

Responsible units 

Tasks and missions 

Is responsible for business decision planning, mid-term and long-term investment 

assessment, financial coordination and operation, risk avoidance mechanism, 

Finance Center 

making reliable financial statements, business performance, efficiency, and 

obedience of law in order to minimize financial, taxable, and strategic risks. 

Is responsible for planning, constructing, and maintaining the Internet safety and 

MIS Center information software and hardware equipment or systems; in the meantime, 

measure the Internet and system quality to minimize risks. 

Is responsible for regulatory risk control, obeying governmental supervision 


policies and handling contracts and litigation disputes to minimize legal risks. 

Resources 

Development Center 

Is responsible for personnel and real estate risk management; also, it is to obey 

governmental regulations in order to secure ongoing concerns and property safety. 

~164~

7.5.2 Influences of the interest rates, the exchange rate fluctuations and the inflation on the 

company’s profits or losses in 2009 & 2010, and countermeasures for the future: 

1. Influences from factors above during Jan 1, 2009 and Mar 31, 2010 


2009 2010/3/31 

(Reviewed by CPA) (Note 1) 

Amount Percentage Amount Percentage to 

to the sales 

the sales 

Items (NT$ Thousand) revenue (%) (NT$ Thousand) revenue (%) 

Interest expense 44,483 0.08 6,426 0.05 

Exchange gain/loss 16,174 0.03 30,964 0.25 

Losses (Gains) on 

evaluation of 

financial assets 

97,289 0.17 (1,582) (0.01) 

Note 1: To the end of the quarter prior to the publication date of this annual report. 

Note 2: Inflation was negligible. 

2. MiTAC’s substantial measures to respond to the variation of the interest, exchange 

rate and inflation are: 

(1) All accounts receivable and payable are received and paid in USD so minimize 

the effects on overall profits from variable currency exchange. 

(2) At present, the trading of derivative products is to avoid risks of the actual 

foreign currency assets and the liabilities; also, to undertake financial instruments 

through banks and periodically evaluate gains and losses per the “Procedure for 

Derivative Trading”. 

(3) The team of foreign currency specialists collects exchange rate, interest rate, and 

market information on a daily basis, and conducts regular discussions on how 

best to react to market movements. In the event of extraordinary market 

movements, the top management is informed immediately to take actions 

accordingly. 

(4) We evaluate announced interest rates and work closely with banks in order to 

obtain preferred interest on loans, so that we can minimize the impact of rate 

fluctuations on the company. 

(5) As oil and commodity prices continue to rise, protection against inflation is 

becoming a critical issue. In anticipation to future market 於 movements, the 

company undertakes long futures positions in advance to hedge against increases 

to the prices of its purchases, in addition to its proactive procurement 

management and searches for substitute materials. Since the time to delivery had 

lengthened for every stage along the commodity supply chain, the management 

of unpredictable threats such as long supply cycles, labor shortage. and the 

control of inventory levels and the costs of non-production related materials has 

become crucial. Commodity supply agents can respond to this threat by 

increasing their inventory on hand, thereby minimizing adverse impacts to the 

company’s earnings due to uncertain material supply or unstable costs. 

7.5.3 Policies regarding participation in high-risk, highly leveraged investments, loans to 

other parties, endorsements, guarantees, and derivatives; major reasons for gains or losses 

in the recent year, and countermeasures for the future 

1. MiTAC did not pursue high-risk, highly leveraged investments. 

2. All loans to others follow the “Procedures Governing Lending Capital to others”. The 

~165~

alances of loans made to others as at the end of 2009 and 30 Apr 2010 were both 0. 

3. Endorsements and guarantees to outsiders were conducted in accordance with 

“Procedures for Endorsements and Guarantees”. The maximum 

endorsement/guarantee limit was capped at NTD31,312,383 thousand as at the end of 

2009 and NTD31,521,671 thousand as at 30 Apr 2010; outstanding balances of 

endorsements/guarantees made on these dates were NTD535,169 thousand and 

NTD513,923 thousand, respectively. 

4. The company has derivative transactions conducted according to the “Procedure for 

Derivative Trading”. 

7.5.4 Future R&D and budgeted R&D expenditures: 

1. In 2010, R&D expenditures are budgeted to be NT$ 2 billion. 

2. Future R&D projects 


‧High-performance PC gaming computers 

‧Personal computers with wire or wireless networking features 

‧High-performance low-cost dual-core processor-based workstations 

‧System protocol and integration of thin client computers & servers 

‧R&D of all-In-One LCD computer technologies 

‧Development of point of sale (POS) technology. 

‧Technological development relating to mobile Internet connectivity. 


‧RISC/CISC processor based structure. 

‧High performance servers. 

‧Optimized virtual servers. 

‧GPU supporting servers. 

‧Communication servers. 

‧Storage devices and system administration software. 

‧High performance workstation. 

(3) Mobile communication product series and mobile positioning services 

‧Technology for integrating computers and communications 

‧ Integration of data access, voice, and wireless broadband communications 

functionality 

‧ Technologies for developing web-centric personal computers, IA products, 

communications devices, and storage solutions 

‧Technology for multimedia applications 

‧Wireless communications and networking technologies 

‧Technology for wireless communications equipment 

‧Development of new digitalized multimedia technologies to create new business 

opportunities and the foundation for related products 

‧Operating systems and application software 

‧GPS and electronic navigation technologies and location based service. 

~166~

(4) Enterprise and channel servers/ workstation products 

‧High-performance servers/ workstation (four-socket or eight-socket HPC server/ 

workstation) 

‧R&D of high-density servers 

‧Blade servers 

‧Technologies for storage devices 

‧ODM server/ workstation platform development and production 

‧Cloud computing server development. 

7.5.5. The impact of major changes in domestic or foreign government policies and laws in 

recent years on the company’s financial condition and business, and our countermeasures: 

None. 

7.5.6. Technology changes and industry changes in the most recent year and the impact on 

the company’s finances and sales, and our countermeasures 

1. Client system business products: 

Due to the intense competition and the rapid price decline in computer hardware, our 

countermeasures are to develop lower-cost products and to speed up the development 

for new products, and to increase the differentiation in products and shorten the time 

needed for mass production. 

Also, to deal with the economic recession, we will continue to lower production costs 

and differentiate our products, increase added-values for understanding users’ needs 

and shorten the time needed for mass production. 

2. Enterprise products: 

Due to the recession, enterprises generally invest less in technologies. As a result, 

each single product contributes less to our revenue. In addition, vendors are cutting 

prices in order to obtain more orders, thus putting pressure on profit margins. Therefore, 

we need to use more R&D workers to devote to new product projects in order to 

achieve the same level of revenues and profits as in the past. The invention of 

high-density server products should increase average per-unit prices and production 

value. 

3. Mobile communication product series: 

The focus of mobile communication technology development is shifting towards 

energy-saving, highly integrated functions, and faster data transmission speed; whereas 

the focus of product development is shifting towards portability, fashionable design, 

quality finish, and simplified operational interface. Combined with advanced 

technologies, the industry has set goals to accomplish absolute wireless connection, 

hands free, and voice recognition. The company plans to integrate wireless broadband 

technologies into future handheld devices, research and develop duplex communication 

to embrace the unlimited opportunities of connected digital services. 

4. Enterprise and channel server/ workstation products: 

The hardware and software technology of the server industry is constantly improving. 

CPUs used in servers evolved from dual core, 4-core to 6-core or even 12 –core; the 

production of which also improved from 65 nm, 45nm, to 32nm while memory 

modules expanded from 1GB to 16GB with DDR III standard. GPUs that deliver faster 

performance than CPUs have also become available; combined with the rapid growth 

of the cloud computing industry, the server industry is attracting competition from IT 

participants around the world. How a company maintains a stable working relationship 

~167~

with its upstream and downstream manufacturers, and how a company integrates 

advanced technologies into its products are the keys to success in the server market. 

For these reasons, the company not only strengthens its relationship with hardware 

suppliers such as Intel, AMD, and NVIDIA etc, but also maintains close interaction 

with software providers to secure market share through collaborated product 

authentication, integrated high-performance yet low-cost solutions, and sustained 

product competitiveness. Meanwhile, the company co-operates closely with cloud 

computing providers to offer hardware server platforms that are optimal for the cloud 

computing structure. Whether the customer is a Software as a Service (SaaS) provider, 

Platform as a Service (PaaS) provider, or an Infrastructure as a Service (IaaS) provider, 

the company supplies the right server/workstation to build the most robust hardware 

platform, thereby providing corporate and client users with the most comprehensive 

cloud computing services. 

7.5.7 The impact of the company’s image change, of our crisis management capabilities, 

and countermeasures in the most recent year: None. 

7.5.8 Expected values, possible risks and countermeasures for recent merger: None. 

7.5.9 Risks faced in centralized stocking and selling and their countermeasures: 

About stocking: 

The subsidiaries in China are our OEM factories, so we have to buy finished goods 

back and pay for processing charges. But MiTAC owns 100% of the subsidiaries so there 

is no risk for stock control. Also, our procurement policy for main materials is to have at 

least two suppliers and spread out the sources for material supply; furthermore, MiTAC 

has maintained a long-term relationship with all suppliers to ensure a stable source of 

material supply. 

About sales: 

The company does not get most of its revenue from any single client, so there is no 

obvious risk in this area. The sales ratio to each client has been kept under 20% in the 

last two years. Based on our strong R&D and production capabilities, on one hand, 

MiTAC has maintained a long-term relationship with the existing customers; on the 

other hand, we have striven to develop new customers in order to expand the source of 

business. Therefore, MiTAC expects no risk from a centralized practice. 

7.5.10 Impact and risks associated with large transfers or conversions of equity by directors, 

supervisors or major shareholders holding stake over 10%: 

MiTAC is aware of the major shareholders and the final controller of the major 

shareholders, so the holdings of the Directors, Supervisors, and the top ten shareholders 

are reported according to the Stock Exchange Law. 

7.5.11 Litigation and non-litigious disputes: 

The company and its directors, supervisors, general manager, actual representative, 

major shareholders with more than 10% ownership interest, and companies to whom the 

company holds controlling interests were not involved in any major litigations, 

non-contentious cases, or administrative litigations which may materially impact 

shareholders’ equity or security prices in the latest year up until the publication date of 

this annual report, listed under Section 20-6-12 of “Regulations Governing Information 

to be Published in Annual Reports of Public Companies”. 

~168~

8.1. Information of affiliates 

8.1.1 Consolidated operational statement for affiliates 

1. Organization chart to affiliates 

8. Special events of record 

~169~

~170~

2. Affiliated companies – basic data: 

Unit: Thousand Dollars 

Company Name Date established Address Paid-in capital Main business or production items 

Tsu Fong Investment Corp. Feb. 16, 1998 10/F, 77, Minsheng East Road, Section 3, Taipei NT$984,556 General investment 

Silver Star Developments Ltd. Jun. 05, 1990 P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands US$215,495 General investment 

MiTAC U.S.A. Inc. Mar. 15, 1993 47988 Fremont Blvd, Fremont, CA 94538 U.S.A. 

Sales of wireless Communication products, 

US$2,750 computer peripherals, software and hardware, 

and associated products 


computer peripherals, software and hardware, 

MiTAC Japan Corp. Apr. 30, 1983 1-2-8 Showajima, Ohta-Ku, Tokyo, Japan 143-0004 YEN 50,000 




Mio Technology Benelux N.V. Sept. 13, 1993 Z5 Mollem 318 - 1730 Asse (Mollem), Belgium EUR 1,618 




MiTAC (U.K.) Ltd. Nov. 21, 2000 Synnex House, Nedge Hill, Telford, Shropshire TF3 3AH, U.K. US$852 


MiTAC Pacific (H.K.) Ltd. Jun. 13, 1991 Room 1221, 12/F, Leighton Centre, 97 Leighton Rd. Causeway Bay, HK US$10 

System Glory International Ltd. Oct. 25, 1995 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$0 General investment 

Pacific China Corp. Dec. 27, 1996 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$120,924 General investment 

MiTAC Star Service Ltd. Jan. 12, 2001 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$74,500 General investment 

Software Insights Ltd. Jul. 18, 2000 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$5,200 General investment 




Produces computers and peripheral 

MiTAC Computer (KunShan) Co., Ltd. Nov. 01, 2000 Kunshan Export Processing Zone, Jiangsu Province, China RMB 304,321 equipment, hardware and software and related 

products; sales of own manufactured product 

MiTAC Service (Shanghai) Co. Ltd. Oct. 11, 2001 2 Fl. No. 129, Fute Rd., (N.), Waigaoqiao Free Trade Zone, Shanghai, China RMB 8,277 

MiTAC Computer (ShunDe) Ltd. Jan. 18, 1993 

No. 1, ShunDa Rd., Lunjiao Town, ShunDe City, Guangdong Province, 

China 

RMB 616,837 

Testing, repairs, displays of calculator 

components and related products; technical 

support and after-sales service for related 

products. 

Manufactures computer, mainboards, 

interface cards, monitors, power supplies, 

keyboards, related pressed metal parts, plastic 

components; mainboard repair services 

R&D and manufacture of computer software; 

MiTAC Research (Shanghai) Ltd. Nov. 23, 2004 213, Jiang Chang 3rd Road, Zha-Bei District, Shanghai RMB 43,040 sales of own manufactured product and 

provision of related technical support service 

Mio Technology Corp. Jan. 17, 2000 2/F, 77, Minsheng East Road, Section 3, Taipei NT$5,000 

Data processing services, software, 

wholesales and retail sales of electronic 

communications software 

Start Well Technology Ltd. Apr. 20, 2000 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$29,900 General investment 

Dynamic Star Investments Ltd. Nov. 28, 2001 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$550 General investment 

~171~



Testing, repairs, displays of calculator 

MiTAC Technology (Kunshan) Co., 

components and related products; technical 

Jan. 28,2002 Kunshan Export Processing Zone, Jiangsu Province, China RMB 8,277 

Ltd. 

support and after-sales service for related 

products. 


Mio International Ltd. Feb. 06, 2004 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$1,275 computer peripherals, software and hardware, 


Magicmate Group Ltd. Jul. 27, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$111 General investment 

Mio Technology Korea Jul. 27, 2006 53-5, 7F, ChungJin BD., Wonhuyro3 ga, Youngsan Gu, Seoul, Korea KRW 100,000 

Huge Extent Limited Jun. 22, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$8,000 General investment 

Mio Technology (Cheng Du) Ltd. Oct. 24, 2006 2f, Building A7, Tian-Fu Software Park, Gao-Xin District, Cheng Do China RMB 10,450 

Booming Enterprises Inc. May. 18, 2006 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$800 General investment 




R&D and manufacture of computer software; 

sales of own manufactured product and 

provision of related technical support service 



Mio Technology USA Ltd. Jul. 17, 2006 47988 Fremont Blvd, Fremont, CA 94538 U.S.A. US$800 




MiTAC Australia Pty Ltd. Mar. 06, 2007 Suite 2, 408 Victoria Rd, Gladesville NSW 2111 Australia A$127 




Navman Technology NZ Ltd. Mar. 06, 2007 7-11 Kawana Street, Northcote, PO Box. 36 173, Northcote Auckland, New Zealand NZ$140 




Mio Technology UK Ltd. May. 10, 2001 

Spectrum House, Beehive Ring Road, London Gatwick Airport, RH6 0LG, UNITED 

EUR 6,665 

KINGDOM 



DLC Technology Corp. Jun. 20, 2007 2F, No.26, Lane 513, Rui Guang Rd., Neihu District, Taipei City NT$66,000 computer peripherals, software and hardware, 


Mio Technology (Shuzhou) Ltd. Dec. 04, 2003 

International Business Building, No.8, Zhao Feng Rd., International Business Zone, Economic 

Run and agent for import & export of 

RMB 1,960 

& Technologies Development District, KunShan City, China 

commodities and technologies. 

Foreground Technology Limited Jun. 05, 2002 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$9,045 General investment 


Tyan Computer Corporation - USA Jul. 17, 1989 3288 Laurelview Ct., Fremont, CA 94538 US$17 computer peripherals, software and hardware, 



Tyan Computer Corporation - GMBH Dec. 03, 1998 Einsteinstr. 14 85716 Unterschleißheim Germany EUR 26 computer peripherals, software and hardware, 




Top Sheen Enterprises Ltd. Jan. 23, 2003 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$440 General investment 

Best Profit Ltd. Jan. 03, 2007 

Scotia Centre, 4th Fl., P.O. Box 2804, George Town, Grand Cayman KY1-1112, Cayman 

Islands 

US$10,131 General investment 

~172~


Bright Crown Management Ltd. Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$400 General investment 

Sky Universe enterprises Ltd. Mar. 13, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$100 General investment 

MiTAC Logistics Corporation Apr. 17, 2007 47988 Fremont Blvd, Fremont, CA 94538 U.S.A. 


US$100 computer peripherals, software and hardware, 


Mass Bridge Ltd. Aug. 16, 2007 P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands US$5,500 General investment 

MiTAC Computer (Vietnam) Co., Ltd Mar. 25, 2008 Lot No.1-2-3-5-6-7, Que Vo industrial Park, Que Vo Distric BacNinh Province. 

Produces Wireless communication products、 

US$5,500 Computer peripherals, software and hardware, 


Great Rich Ltd. Jan. 08, 2007 

Scotia Centre, 4th Floor, P.O.Box 2804, George Town, Grand Cayman KY1-1112, Cayman 

Islands 

US$0 General investment 

MiTAC Cooperatie U.A. Nov. 08, 2007 Fortunaweg 11, Schiedam 3113AN, The Netherlands US$0 General investment 

MiTAC Netherlands B.V. Mar. 17, 2008 Fortunaweg 11, Schiedam 3113AN, The Netherlands 

Sales of mobile Communication products, 

US$28 computer peripherals, software and hardware, 


Mitac Digital Corporation Nov. 21, 2008 471 El Camino Real, Santa Clara, CA 95050 USA 

Sales of Communication products,and have 

US$20,000 

after service. 

MiTAC Information Technology Ltd. Nov. 19, 2009 No. 200, 1 nd Communication products and consumer 

Blvd. , Kunshan Export Processing Zone, Jiangsu Province, China CNY 2,048 

electronics after service and test. 

MiTAC Logistic Service (KunShan) 

Mar. 17, 2008 No. 269, 2 nd Run and agent for import & export of 

Blvd. , Kunshan Export Processing Zone, Jiangsu Province, China 

RMB 2,800 

Ltd. 

commodities, and warehousing service 

3. Shareholders of the affiliates or subsidiaries: None 

~173~

4. Business operation of and relation with the affiliates: 

Type of business Name of affiliated company Relations with business of affiliated company 

Production and sales of MiTAC International products, provision of 

Manufacture MiTAC Computer (Kunshan) Co., Ltd. 

after-sales service 

and sales of 

Production and sales of MiTAC International products, provision of 

communication MiTAC Computer (Shunde) Ltd. 


& computer 

MiTAC Computer (Vietnam) Co., Production and sales of MiTAC International products, provision of 

products 

Ltd 



Investment in overseas subsidiaries for production and sales of MiTAC 

International Products, provision of after-sales service 

System Glory Int’l Ltd. 

Investment in overseas subsidiaries for sales of MiTAC International 

Products, provision of after-sales service. 

Pacific China Corp. 


International Products, provision of after-sales service. 

Software Insights Ltd. 



Start Well Technology Ltd. 



MiTAC Star Service Ltd. 



Dynamic Star Investments Ltd. 



Magicmate Group Ltd. 




Huge Extent Limited 


Investment 

Investment in overseas subsidiaries, for sales of MiTAC International 

Booming Enterprises Inc. 

holding company 


Foreground Technology Limited 



Top Sheen Enterprises Ltd. 






Bright Crown Management Ltd. 



Sky Universe Enterprises Ltd. 



Mass Bridge Ltd. 



Great Rich Ltd. 



MiTAC Cooperatie U.A. 



Tsu Fong Investment Corp. 

General investment 

MiTAC Research (Shanghai) Ltd. 

Computer software R&D and sales of its own products, provision of 

associated technology query services 


Mio Technology (Cheng Du) Ltd. 


Technical 


services DLC Technology Corp. 


MiTAC Technology (Kunshan) Co., Ltd. Provision of after-sales service to MiTAC International products 

MiTAC Service (Shanghai) Co., Ltd. Provision of after-sales service to MiTAC International products 

MiTAC Information Technology Ltd. Provision of after-sales service to MiTAC International products 

Trading MiTAC Pacific (H.K.) Ltd. 

Sales of MiTAC’s products 

Mio Technology Corp. 

Sales of MiTAC’s products, provision of after-sales service. 

MiTAC U.S.A. Inc. 


MiTAC Japan Corp. 


Mio Technology Benelux N.V. Sales of MiTAC’s products, provision of after-sales service. 

Mio International Ltd. 


~174~

MiTAC (U.K.) Ltd. 


Type of business Name of affiliated company Relations with business of affiliated company 

Trading 

Agent for import & 

export trading and 

related services 

Mio Technology Korea 


Mio Technology (Shuzhou) Ltd. Sales of MiTAC’s products, provision of after-sales service. 

Mio Technology USA Ltd. 


MiTAC Australia Pty Ltd. 


Navman Technology NZ Ltd. Sales of MiTAC’s products, provision of after-sales service. 

Mio Technology UK Ltd. 


Tyan Computer Corporation - USA Sales of MiTAC’s products, provision of after-sales service. 

Tyan Computer Corporation - GMBH Sales of MiTAC’s products, provision of after-sales service. 

MiTAC Logistics Corporation Sales of MiTAC’s products, provision of after-sales service. 

Mitac Digital Corporation 


MiTAC Logistic Service (KunShan) 

Ltd. 

Run and agent for import & export of commodities, and warehousing 

service 

5.Directors, supervisors, General Managers of affiliated companies 

Company name Title Name or Rep. 

Holdings 

Shares Stake 

Tsu Fong Investment Corp. Chairman MiTAC International Corp. Rep. Billy Ho 106,528,922 100% 

Director MiTAC International Corp. Rep. Crystal Yang 106,528,922 100% 

Director MiTAC International Corp. Rep. Jessica Chiu 106,528,922 100% 

Supervisor MiTAC International Corp. Rep. C.S. Chen 106,528,922 100% 

Director Billy Ho 0 0% 

Silver Star Developments Ltd. Director Crystal Yang 0 0% 

Director James Yuan 0 0% 

MiTAC U.S.A. Inc. 

Director Crystal Yang 0 0% 



MiTAC Japan Corp. 


Director Iida 0 0% 

Supervisor Vicky Hsieh 0 0% 


Mio Technology Benelux N.V. Director Crystal Yang 0 0% 

MiTAC (U.K.) Ltd. 



MiTAC Pacific (H.K.) Ltd. 





System Glory International 

Ltd. 

Pacific China Corp. 

MiTAC Star Service Ltd. 

Software Insights Ltd. 

MiTAC Computer (KunShan) 

co., Ltd. 











Chairman Start Well Technology Ltd. Rep.C.J. Line N/A 100% 

Director Start Well Technology Ltd. Rep. Billy Ho N/A 100% 

Director/General 

Manager 

Start Well Technology Ltd. Rep. C.P. Lee N/A 100% 

Supervisor C.S. Chen N/A 0% 

~175~

Holdings 


Shares Stake 

Chairman Pacific China Corp. Rep. Billy Ho N/A 100% 

MiTAC Service (Shanghai) co., Vice Chairman/ 

Ltd. 

General Manager 

Pacific China Corp. Rep. Percy Chen N/A 100% 

Director Pacific China Corp. Rep. C.P. Lee N/A 100% 

Chairman MiTAC Star Service Ltd.Rep. Billy Ho N/A 100% 

Director MiTAC Star Service Ltd. Rep. C.S. Chen N/A 100% 

Mitac Computer (Shunde) Ltd. Director MiTAC Star Service Ltd. Rep. Matthew Miau N/A 100% 

Director MiTAC Star Service Ltd. Rep. Francis.tsai N/A 100% 

General Manager Stone Lin N/A 0% 

Chairman Software Insights Ltd. Rep. Crystal Yang N/A 100% 

Mitac Research (Shanghai) Ltd. Director Software Insights Ltd. Rep. N. Y. Yeh N/A 100% 

Director Software Insights Ltd. Rep. Billy Ho N/A 100% 

Chairman Tsu Fung Investment Corp. Rep. Billy Ho 500,000 100% 

Director Tsu Fung Investment Corp. Rep. James Yuan 500,000 100% 

Mio Technology Corp. Director Tsu Fung Investment Corp. Rep. Percy Chen 500,000 100% 

Supervisor Tsu Fung Investment Corp. Rep. C.S. Chen 500,000 100% 

General Manager Rebecca Tasi 0 0% 


Start Well Technology Ltd. Director Crystal Yang 0 0% 



Dynamic Star Investments Ltd. Director Crystal Yang 0 0% 


Chairman Dynamic Star Investments Ltd. Rep. Billy Ho N/A 100% 

MiTAC Technology (KunShan) Director Dynamic Star Investments Ltd. Rep. C.P. Lee N/A 100% 

Co., Ltd. 

Director/General Dynamic Star Investments Ltd. Rep. Percy 

Manager 

Chen 

N/A 100% 


Mio International Ltd. Director Crystal Yang 0 0% 



Magicmate Group Ltd. Director Crystal Yang 0 0% 



Mio Technology Korea Director Crystal Yang 0 0% 

Director Samuel Wang 0 0% 


Huge Extent Limited Director Billy Ho 0 0% 


Director Mio International Ltd. Rep. Crystal Yang N/A 100% 


Mio Technology (Cheng Du) 

Mio International Ltd. Rep. N.Y. Yeh N/A 100% 

Manager 

Ltd. 

Director Mio International Ltd. Rep. Billy Ho N/A 100% 



Booming Enterprises Inc. 




Mio Technology USA Ltd. Director Billy Ho 0 0% 


MiTAC Australia Pty Ltd. Director Crystal Yang 0 0% 

Director Liu Fung Kiu 0 0% 

~176~


Shares 

Holdings 

Navman Technology NZ Ltd. 



Mio Technology UK Ltd. 



DLC Technology Corp. 

Chairman MiTAC Internal Corp. Rep. Billy Ho 6,600,000 100% 

Director MiTAC Internal Corp. Rep. James Yuan 6,600,000 100% 

Director MiTAC Internal Corp. Rep. King Chen 6,600,000 100% 

Supervisor MiTAC Internal Corp. Rep. Crystal Yang 6,600,000 100% 

Chairman/General 

Mio International Ltd. Rep. Rebecca Tasi N/A 100% 

Manager 

Mio Technology Ltd. 

Director Mio International Ltd. Rep Billy Ho N/A 100% 

(Shuzhou) 

Director Mio International Ltd. Rep C.P. Lee N/A 100% 



Foreground Technology Ltd. Director Billy Ho 0 0% 


Tyan Computer Corporation - Director Crystal Yang 0 0% 

USA Director Billy Ho 0 0% 

Tyan Computer Corporation – Director Crystal Yang 0 0% 

GMBH Director Billy Ho 0 0% 


Top Sheen Enterprises Ltd. Director Billy Ho 0 0% 







Bright Crown Management Ltd. Director Billy Ho 0 0% 



Sky Universe Enterprises Ltd. Director Billy Ho 0 0% 


MiTAC Logistics Corporation 




Mass Bridge Ltd. 





MiTAC Computer (Vietnam) 

Co., Ltd. 

Great Rich Ltd. 

MiTAC Cooperatie U.A. 

MiTAC Netherlands B.V. 

Mitac Digital Corporation 

MiTAC Information 


MiTAC Logistic Service 

(KunShan) Ltd. 

Stake 










Director Kevin Chung 0 0% 


Chairman Bright Crown Management Ltd. Rep Billy Ho N/A 100% 

Director Bright Crown Management Ltd. Rep P.C. Lee N/A 100% 

Direct/GM Bright Crown Management Ltd.Rep Percy Chen N/A 100% 

Supervisor Crystal Yang N/A 0% 

Chairman Bright Crown Management Ltd. Rep. Billy Ho N/A 100% 

Director Bright Crown Management Ltd. Rep. Percy Chen N/A 100% 


Manager 

Bright Crown Management Ltd. Rep. C.P. Lee N/A 100% 

Supervisor Doris Huang N/A 0% 

~177~

6. Operations overview of affiliated companies: (Unit: NT$ Thousand) 

Total Stockholder’s Operating Operating Net Income EPS(NT$) 

Company name Capital Total assets 

liabilities Equity Revenues Income (after tax) (after tax) 

MiTAC International Corp. 15,361,724 52,608,813 21,004,633 31,604,180 58,039,415 (33,913) 289,162 0.19 

Tsu Fung Investment Corp. 1,065,289 1,655,270 19,394 1,635,876 150,766 124,261 105,154 0.99 

Silver Star Developments Ltd. - Consolidated 6,902,318 26,658,045 12,120,200 14,537,845 34,186,658 (1,496,607) (637,026) (2.96) 

MiTAC U.S.A. Inc. 88,083 131,308 30,812 100,496 172,754 8,219 4,947 3.71 

MiTAC Japan Corp. 17,360 134,464 152,759 (18,295) 328,728 (15,785) (39,081) (39,080.58) 

Mio Technology Benelux N.V. 74,599 592,298 470,585 121,713 1,954,277 (180,435) (191,033) (2,927.71) 

MiTAC(UK)Ltd. 27,296 25,882 19,033 6,849 62,647 2,171 1,076 2.15 

MiTAC Pacific (H.K.) Ltd. 320 83,483 80,332 3,151 0 (198) (196) (19.62) 

System Glory International Ltd. 0 241,183 38,191 202,992 0 0 34,253 34,253,398.17 

Pacific China Corp. 3,873,192 3,982,654 3,203 3,979,451 0 (6) (475) 0.00 

MiTAC Star Service Ltd. 2,386,235 2,403,876 0 2,403,876 0 0 0 0.00 

Software Insights Ltd. 166,559 140,495 0 140,495 0 0 0 0.00 

MiTAC Computer (KunShan) co., Ltd. 1,427,519 3,959,668 1,991,315 1,968,353 11,105,740 13,384 41,216 N/A 

MiTAC Service (Shanghai) co., Ltd. 38,827 72,885 16,542 56,343 84,102 3,731 2,892 N/A 

MiTAC Computer (Shunde) Ltd. 2,893,482 4,002,150 652,920 3,349,230 1,660,461 71,468 (90,723) N/A 

MiTAC Research (Shanghai) Ltd. 201,894 368,551 80,673 287,878 347,928 12,243 22,375 N/A 

Mio Technology Corp. 5,000 32,270 6,650 25,620 95,672 3,879 2,854 5.71 

Start Well Technology Ltd. 957,697 1,220,455 6,500 1,213,955 0 0 0 0.00 

Dynamic Star Investment Ltd. 17,617 32,038 0 32,038 0 0 0 0.00 

MiTAC Technology (KunShan) co., Ltd. 38,826 95,165 27,881 67,284 76,377 6,355 5,400 N/A 

Mio International Ltd 40,838 1,922,514 1,880,643 41,871 12,396,114 0 0 0.00 

Magicmate Group Ltd. 3,559 3,566 0 3,566 0 0 0 0.00 

Mio Technology Korea 2,752 103,770 102,631 1,139 120,035 4,850 5,070 253.5 

Huge Extent Limited 256,240 256,240 0 256,240 0 0 0 0.00 

Mio Technology (Cheng Du) Ltd. 49,021 58,452 7,854 50,598 38,953 2,150 2,011 N/A 

Booming Enterprises Inc. 249,834 249,834 0 249,834 0 0 0 0.00 

Mio Technology USA Ltd. 73,575 124,889 102,969 21,920 414,712 (21,731) (53,311) (6,663.87) 

MiTAC Australia Pty Ltd. 3,656 1,135,398 1,143,412 (8,014) 1,627,319 20,379 38,778 305.34 

Navman Technology NZ Ltd. 3,254 145,987 92,305 53,682 371,517 17,127 11,301 80.72 

Mio Technology UK Ltd. 307,257 586,137 1,148,831 (562,694) 2,196,298 (336,565) (380,949) (69.17) 

DLC Technology Corp. 66,000 48,905 326 48,579 0 (1,093) (856) (0.13) 

Mio Technology Ltd. (Shuzhou) 9,194 171,446 154,389 17,057 541,561 9,023 6,966 N/A 

Foreground Technology Limited 289,727 505,600 47 505,553 0 0 (4,611) (0.51) 

Tyan Computer Corporation - USA 126,529 623,948 109,338 514,610 1,426,451 13,087 8,977 8,977.11 

Tyan Computer Corporation - GMBH 1,179 6,389 188 6,201 0 (586) (567) N/A 

Top Sheen Enterprises Ltd. 654,680 640,600 0 640,600 0 0 (11,041) (0.54) 

Best Profit Ltd. 1,189,313 1,189,316 0 1,189,316 0 0 0 0.00 

Bright Crown Management Ltd. 22,421 22,421 0 22,421 0 0 0 0.00 

Sky Universe Enterprises Ltd. 3,203 3,203 0 3,203 0 0 0 0.00 

MiTAC Logistics Corporation 3,203 1,201,648 1,185,653 15,995 6,190,975 33,272 22,164 221.64 

Mass Bridge Ltd. 176,165 176,872 0 176,872 0 0 (330) (0.06) 

MiTAC Computer (Vietnam) Co., Ltd 176,165 176,782 0 176,782 0 (6) 143 N/A 

Great Rich Limited 67,743 67,743 0 67,743 0 0 0 0.00 

MiTAC Cooperatie U.A. 69,150 69,997 1,165 68,832 0 (89) (317) N/A 

MiTAC Netherlands B.V. 69,980 69,547 69 69,478 0 (515) (501) (32.99) 

MiTAC Information Technology Ltd. 9,609 9,609 0 9,609 0 0 0 N/A 

Mitac Digital Corporation 640,600 6,255,309 6,330,687 (75,378) 5,969,222 (742,694) (738,943) (36.95) 

MiTAC Logistic Service (KunShan) LTD. 13,135 12,677 332 12,345 4,210 114 226 N/A 

Note1::If the affiliated enterprise is a foreign company, relevant figures are quoted in NT Dollars and are calculated based on th exchange rate on 

the day they were reported. 

Note2:Silver Star Developments Ltd. – Consolidated information is combine Silver Star Developments Ltd and it’s subsidiary company. 

Note3:Based on exchange rates at the end of 2009: 

Month-end Average Month-end Average Month-end Average 

USD: 32.030 33.057 AUD: 28.790 26.111 RMB: 4.691 4.839 

GBP: 51.600 51.666 NZD: 23.240 20.945 KRW: 0.028 0.026 

EUR: 46.100 46.006 JPY: 0.347 0.354 

~178~

8.2. MiTAC’s stocks held or disposed by its subsidiaries in the most recent year and up to the 

publication of this annual report: 

Subsidiary 

Capital 

collected 

Source 

Of 

fund 

Holdings 

of 

MiTAC 

Acquisition or 

disposition date 

Stock shares 

and value 

acquired 

Stock 

shares and 

value 

disposed 

Return 

on 

invest 

ment 

Shares and 

value holdings 

up to the 

publication of 

the annual 

report 

Mortgage 

April 30, 2010 

Unit: NT$ Thousand; shares; % 

Endorsement 

amount for 

MiTAC’s 

subsidiary 

Loans to 

subsidiary 

2009 - - - 

Silver Star 

Developments 

Ltd. 

US$215,495 

Selfsufficient 

fund and 

loans 

100% 

2010 up to the 


the annual 

Report. 

- - - 

2,763,889 

shares 

$77,002 

- - - 

Tsu Fong 

Investment 

Corp. 

1,065,289 

Selfsufficient 

fund and 

loans 

100% 

2009 - - - 

2010 up to the 


the annual 

Report. 

- - - 

20,366,568 

shares 

$276,084 

- 160,000 - 

~179~

Letter To Shareholders - Mitac

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