Consolidated - CHUNGHWA PICTURE TUBES, LTD.

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Pension 417,108 112,730 529,838 224,730 44,933 269,663 Depreciation 10,501,870 296,743 10,798,613 11,601,835 291,299 11,893,134 Amortization 59,529 877,978 937,507 13,265 727,151 740,416 (22) Income tax a. The ROC income tax authorities have assessed the income tax returns of the Company through 2002 except for 2000 and 2001. b. There is no taxation charge on the profit of the Company and certain operating subsidiaries due to the following: The Company is entitled to an income tax exemption for a period of five consecutive years for the income generated by sales of its TFT-LCD and 17 inches color display tubes (“CDT”). The following are details of the Company’s effective tax exemption periods: Tax exemption products TFT-LCD and 17 inches color display tubes TFT-LCD TFT-LCD Tax exemption period 2000~2004 2002~2006 2004~2008 The Company obtained the approval letter for claiming tax exemption in respect of setting its headquarters in Taiwan. Chunghwa Picture Tubes (Malaysia) Sdn. Bhd. has been granted a tax holiday of five years starting July 1, 1996 under the Promotion of Investments Act, 1986 of Malaysia for the production of color cathode ray tubes (“CCRT”). The pioneer status expired on June 30, 2001. Subsequently, Chunghwa Picture Tubes (Malaysia) Sdn. Bhd. was granted an extension of pioneer status for the period from July 1, 2001 to June 30, 2006. CPTF Optronics Co., Ltd.、Chunghwa Picture Tubes (Wujiang) Ltd.、CPT Display technology (Fujian) Ltd. and CPTF Visual Display (Fuzhou) Ltd. are exempted from income tax in the first two profit making years, net of previous years losses, and allowed a 50% reduction in the next three years. c. The provision for income tax expenses consists of the following: 2003 2004 Income tax-current $(74,092) $(309,682) Income tax – deferred Net change in deferred income tax assets (liabilities): Investment tax credits 633,878 423,239 Operating loss carryforward 235,793 (25,686) Temporary differences 1,094,194 319,431 Valuation allowances (1,319,529) (964,546) Prior year adjustment (863,284) - 29
Others 3,248 9,606 Income tax expenses $(289,792) $(547,638) d. Significant components of the Company’s deferred tax assets and liabilities at fiscal year-ends are as follows: December 31, Components 2003 2004 Deferred tax assets: Allowance for bad debts $9,018 $65,488 Employees’ welfare fund 1,836 520 Deferred pension expense 238,400 263,443 Unrealized loss on foreign currency exchange, net 58,507 27,444 Unrealized loss on decline in market value and obsolescence of inventory 27,500 72,750 Unrealized intercompany losses 101,446 83,528 Unrealized loss on long-term investments of overseas investee company 782,053 594,984 Investment tax credits 5,229,576 5,652,815 Operating loss carryforwards 1,602,545 1,576,859 Compensation interest payable 53,467 133,965 Deferred tax assets resulting from consolidated subsidiaries 31,034 20,206 Allowance for sales discounts - 164,405 Foreign currency translation adjustment - 187,995 Others 9,687 7,750 Valuation allowance (5,881,278) (6,845,824) $2,263,791 $2,006,328 December 31, Components 2003 2004 Deferred tax liabilities: Overseas investment income accounted for under equity method $(2,502,445) $(2,502,445) Foreign currency translation adjustment (357,522) - Deferred tax liabilities resulting from consolidated subsidiaries (28,490) (28,550) $(2,888,457) $(2,530,995) December 31, 2003 2004 e. Deferred tax assets-current $351,733 $2,790,334 Valuation allowance-current (320,699) (2,742,684) Deferred tax assets-net-current $31,034 $47,650 December 31, 2003 2004 f. Deferred tax assets-non-current $7,793,336 $6,061,818 Valuation allowance-non-current (5,560,579) (4,103,140) Deferred tax assets-net-non-current 2,232,757 1,958,678 30
Page 1 and 2: CHUNGHWA PICTURE TUBES, LTD. AND SU
Page 9 and 10: The following diagram presents the
Page 11 and 12: Allowance for Doubtful Accounts The
Page 13 and 14: Convertible Bonds The excess of the
Page 15 and 16: customer, transfer of title and acc
Page 17 and 18: Net 2,305,908 2,695,770 Equity meth
Page 19 and 20: (9) Short-term bank loans December
Page 21 and 22: .Conversion The conversion price is
Page 23 and 24: .Converting All bonds have been A t
Page 25 and 26: December 31, 2003 2004 Discount rat
Page 27 and 28: Approval (in dollars) Life (in year
Page 29: Number of Shares Repurchased Purpos
Page 33 and 34: share: Numerator: Net income availa
Page 35 and 36: Corporation September 2006 for usin
Page 37 and 38: 2003 2004 Region Related parties Or
Page 39 and 40: Name of Related Parties Amount % Am
Page 41 and 42: Certificate of deposit restricted T
Page 43 and 44: Depreciation expenses $2,535,787 $8
Page 45 and 46: (3) Export sales Export sales by re
Page 47 and 48: Market price risk relating to deriv
Page 49 and 50: December 31, 2004 Non-derivative Ca

Consolidated - CHUNGHWA PICTURE TUBES, LTD.

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