Consolidated - CHUNGHWA PICTURE TUBES, LTD.

for unrealized losses on long-term investments, excess of additional pension liability over unrecognized prior
service cost, and foreign currency translation adjustment that are accounted for as deductions to stockholders’
equity. Once the aforementioned deductions to stockholders’ equity are reversed, the related reserve can be
reversed to distributable earnings.
(18) Distributions of earnings
Pursuant to the Company’s Articles of Incorporation, current year’s earnings before tax, if any, shall be
distributed in the following order:
(a) payment of all taxes;
(b) offset of prior years’ operation losses;
(c) set aside 10% of the remaining amount after deducting (a) and (b) as legal reserve;
(d) set aside special reserve in accordance with regulation prescribed by the ROC’s Securities Future Bureau
(SFB) or reverse special reserve previously provided; and
(e) after deduction of items (a), (b), (c) and (d) from current year’s earnings, the remaining is allocated as
follows: 5%-10% as employees’ bonus, and 90%-95% as distributable earnings.
The Company is engaged in high-tech industry and the cycle of high-tech industry is experiencing the
stage of growth. In order to expand scale and improve its strength to compete with other major
companies in the world, the Company adopts a policy of residual dividends. The Company shall base its
budget on capital expenditures and the demands of the fund, taking into account the balance of retained
earnings, to determine dividends or bonuses provided; however, cash dividends shall not be less than 10%
of the sum of the stock dividend and cash dividend.
The information relating to 2003 proposed earnings distribution (or makeup of accumulated deficits of
2002 and 2001) and resolution of stockholders’ meeting is accessible on the website of “Market
observation post system” (mops. tse.com.tw) of TSE.
Pursuant to CPTF Optronics Co. Ltd’s Article of Incorporation and the PRC Law of Corporation, income
after tax, as determined under accounting principles generally accepted in the PRC (“PRC GAAP”), shall
be used to offset prior years’ losses, and then appropriated at 10% as legal reserve and 5% as special
reserve for employees’ welfare. The remaining, if any, shall be distributed and appropriated upon the
resolution of shareholders’ meeting.
(19) Treasury stock
a. The Company repurchased its own shares from open market. The purpose and ending balance of
treasury stock were as follows:
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