Letter To Shareholders - Mitac

) 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
MiTAC Computer (Kunshan) Co., Ltd. 6,282,591 7,685,303
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~