Yageo Corporation and Subsidiaries

Yageo Corporation and SubsidiariesConsolidated Financial Statements for theSix Months Ended June 30, 2011 and 2010 andIndependent Auditors’ Report

INDEPENDENT AUDITORS’ REPORTThe Board of Directors and StockholdersYageo CorporationWe have audited the accompanying consolidated balance sheets of Yageo Corporation (the“Corporation”) and subsidiaries as of June 30, 2011 and 2010, and the related consolidatedstatements of income, changes in stockholders’ equity and cash flows for the six months then ended.These consolidated financial statements are the responsibility of the Corporation’s management.Our responsibility is to express an opinion on these consolidated financial statements based on ouraudits. However, we did not audit the financial statements of a consolidated subsidiary, YageoEurope Holding B.V. (“Yageo Europe”) as of and for the six months ended June 30, 2011 and 2010.The total assets of this consolidated subsidiary were 14.72% (NT$7,618,280 thousand) and 14.66%(NT$7,098,981 thousand) of the related consolidated totals as of June 30, 2011 and 2010,respectively, and the total revenues of this consolidated subsidiary were 18.00% (NT$2,404,682thousand) and 15.86% (NT$2,138,629 thousand), of the related consolidated totals in the sixmonths ended June 30, 2011 and 2010, respectively. We also did not audit the financialstatements of Chilisin Electronics Corp. as of and for the six months ended June 30, 2011 and 2010.The total investments in the above equity-method investee were 1.30% (NT$671,054 thousand) and1.40% (NT$678,551 thousand) of the related consolidated assets as of June 30, 2011 and 2010, andthe total investment incomes on this investee were 1.28% (NT$21,352 thousand) and 1.90%(NT$49,534 thousand) of the related consolidated income before income tax in the six monthsended June 30, 2011 and 2010, respectively. The financial statements of the consolidatedsubsidiary and the other equity-method investee were audited by other auditors, whose reports havebeen furnished to us, and our opinion, insofar as it relates to the investees’ amounts included herein,is based solely on the reports of the other auditors.We conducted our reviews in accordance with Statement of Auditing Standards No. 36 -“Engagements to Review Financial Statements” of the Republic of China. A review consistsprincipally of applying analytical procedures to financial data and making inquiries of personsresponsible for financial and accounting matters. It is substantially less in scope than an audit inaccordance with generally accepted auditing standards, the objective of which is the expression ofan opinion regarding the financial statements taken as a whole. Accordingly, we do not expresssuch an opinion.- 1 -

YAGEO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSSIX MONTHS ENDED JUNE 30, 2011 AND 2010(In Thousands of New Taiwan Dollars)2011 2010CASH FLOWS FROM OPERATING ACTIVITIESNet consolidated income $ 1,135,374 $ 2,120,465Adjustments to reconcile net consolidated income to net cash providedby operating activities:Depreciation and amortization 1,455,713 1,580,617Loss (gain) on disposal of property, plant and equipment, net 451 (1,950)Valuation gain on financial instruments, net (64,553) (212,634)Allowance (reversal of allowance) for loss on inventories 80,805 (43,568)Investment gain recognized under the equity method, net (25,557) (73,591)Loss (gain) on sale of investments, net (82) 1,328Exchange loss (gain) on foreign-currency financial instruments, net (74,965) 50,229Amortization of discount on available-for-sale debt instruments (5,308) (5,625)Interest expense on bonds payable 100,264 107,111Deferred income taxes 356,772 264,909Net changes in operating assets and liabilities:Financial instrument at fair value through profit or loss (14,491) 51,105Notes receivable (19,562) 11,408Accounts receivable (705,627) (1,652,494)Accounts receivable from related parties 360 5,897Income tax refund receivable (1,093) (1,461)Other receivables 21,057 (52,692)Inventories (389,005) (685,795)Other current assets 132,576 (182,794)Notes payable 1,706 (35,198)Accounts payable (533,289) 1,183,309Accounts payable to related parties 92,359 (53,330)Income tax payable 14,370 79,629Accrued expenses (202,127) 138,701Other current liabilities 37,312 (80,831)Accrued pension costs 8,296 (20,411)Net cash provided by operating activities 1,401,756 2,492,334CASH FLOWS FROM INVESTING ACTIVITIESProceeds of the disposal of available-for-sale financial assets 500,082 184,467Acquisition of available-for-sale financial assets (502,000) (356,144)Acquisition of investments accounted for by the equity method - (6,080)Return of capital on investments accounted for by the equity method - 12,784Return of capital on the liquidation of financial assets carried at cost 18,000 -Proceeds of the disposal of property, plant and equipment 1,208 31,793Acquisition of property, plant and equipment (1,554,562) (1,155,622)Decrease in refundable deposits 429 1,998Increase in other assets (166,586) (331,999)Net cash used in investing activities (1,703,429) (1,618,803)(Continued)- 7 -

YAGEO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSSIX MONTHS ENDED JUNE 30, 2011 AND 2010(In Thousands of New Taiwan Dollars)2011 2010CASH FLOWS FROM FINANCING ACTIVITIESIncrease (decrease) in short-term bank loans $ 2,706,816 $ (191,921)Increase (decrease) in short-term bills payable 453,379 (964,950)Decrease in long-term bank debts (1,700,000) (2,500,000)Increase (decrease) in guarantee deposits received (12,178) 10,811Cash dividends paid (329,163) -Issuance of common stock on the exercise of employee stock options 36,900 -Net cash provided by (used in) financing activities 1,155,754 (3,646,060)EFFECT OF EXCHANGE RATE CHANGES 82,878 (118,229)NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS 936,959 (2,890,758)CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,700,536 10,028,357CASH AND CASH EQUIVALENTS, END OF YEAR $ 9,637,495 $ 7,137,599SUPPLEMENTAL CASH FLOW INFORMATIONInterest paid $ 23,399 $ 24,761Less: Capitalized interest 3,450 8,775Net interest paid excluding capitalized interest $ 19,949 $ 15,986Income tax paid $ 156,414 $ 132,424NONCASH INVESTING AND FINANCING ACTIVITIESDeferred expense reclassified to property, plant and equipment $ 19,335 $ -Assets leased to others reclassified to idle assets $ - $ 92,830Current portion of long-term liabilities $ - $ 312,500Cash dividend payable $ 220,531 $ 329,229INVESTING ACTIVITIES AFFECTING BOTH CASH ANDNONCASH ITEMSProceeds of the disposal of available-for-sale financial assets $ 500,082 $ 94,648Decrease in receivables for the disposal of available-for-sale financialassets - 89,819Cash received for the disposal of available-for-sale financial assets $ 500,082 $ 184,467Acquisition of property, plant and equipment $ 1,289,851 $ 1,794,683Decrease (increase) in payables for equipment purchased (recognizedunder other current liabilities) 264,711 (639,061)Cash paid for the acquisition of property, plant and equipment $ 1,554,562 $ 1,155,622The accompanying notes are an integral part of the consolidated financial statements.(With Deloitte & Touche audit report dated August 19, 2011)(Concluded)- 8 -

YAGEO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSSIX MONTHS ENDED JUNE 30, 2011 AND 2010(In Thousands of New Taiwan Dollars, Except Exchange Rate and Unless Stated Otherwise)1. ORGANIZATION AND OPERATIONSYageo Corporation (the “Corporation”) was incorporated in 1987 in the Republic of China (ROC). TheCorporation’s shares are traded on the Taiwan Stock Exchange.The Corporation manufactures and sells passive components. It also produces and sells equipment used tomanufacture passive components.The Corporation and the consolidated subsidiaries (the “Group”) had 10,317 and 10,698 employees as ofJune 30, 2011 and 2010, respectively.The Corporation’s subsidiaries were as follows:a. Subsidiaries that manufacture and market passive components - Ferroxcube Taiwan, Ltd. (“FerroxcubeTaiwan”), Yageo Electronics (Dongguan) Co., Ltd. (“Yageo Dongguan”), Yageo Electronics (China)Co., Ltd. (“Yageo China”), Ferroxcube Electronics (Dongguan) Co., Ltd. (“Ferroxcube Dongguan”),Yageo Components (Su Zhou) Co., Ltd., Yageo SZ Trade Co., Ltd., Yageo USA (H.K.) Limited,Compostar Technology (Dongguan) Co., Ltd. (“Compostar Dongguan”), Compostar Technology (SuZhou) Co., Ltd. (“Compostar Su Zhou”), Ko-E Corp. (“Ko-E”), Ko-E (H.K.) Limited (“Ko-E H.K.”),Ko-E Technology (Shenzhen) Co., Ltd. (“Ko-E Shenzhen”), Vitrohm Portuguesa LDA (“VitrohmPortuguesa”), Yageo Europe Holding B.V. (“Yageo Europe”), Ferroxcube International Holding B.V.(“Ferroxcube”), Yageo Korea, Yageo Japan, Yageo America Corporation, Yageo Corporation (SouthAsia) PTE. LTD., and Phycomp Malaysia SDN. BHD.b. Investment holding subsidiaries - Yageo Holding (Bermuda) Limited (“Yageo Holding Bermuda”),Ko-E Holding (Cayman Islands) (“Ko-E Holding Cayman”), Ltd., Vitrohm Holding GmbH, Kuo ShinInvestment Limited (“Kuo Shin Investment”), Ferroxcube Holding (Samoa), Ltd. (“Ferroxcube HoldingSamoa”), Hsu Tai International (H.K.) (“Hsu Tai H.K.”), Compostar Technology (Cayman), Ltd.(“Compostar Cayman”), Yageo (Hong Kong) Limited (“Yageo Hong Kong”), Ferroxcube Technology(H.K.), Ltd. (“Ferroxcube Technology H.K.”), Compostar Technology (H.K.) Co., Ltd. (“CompostarH.K.”) and Rextron International.The organization chart of the Group as of June 30, 2011 is shown as Table 10.2. SIGNIFICANT ACCOUNTING POLICIESThe accompanying consolidated financial statements have been prepared in conformity with the GuidelinesGoverning the Preparation of Financial Reports by Securities Issuers, and accounting principles generallyaccepted in the Republic of China (ROC).For readers’ convenience, the accompanying consolidated financial statements have been translated intoEnglish from the original Chinese version prepared and used in the ROC. If inconsistencies arise betweenthe English version and the Chinese version or if differences arise in the interpretations between the twoversions, the Chinese version of the financial statements shall prevail.- 9 -

Significant accounting policies are summarized as follows:Foreign-currency TransactionsNonderivative foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange ineffect when the transactions occur. Exchange differences arising from the settlement of foreign-currencyassets and liabilities are recognized in profit or loss.At the balance sheet date, foreign-currency monetary assets and liabilities are revalued at prevailingexchange rates, and the exchange differences are recognized as gain or loss.At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilitiesthat are measured at fair value are revalued using prevailing exchange rates, with the exchange differencestreated as follows:a. Recognized in stockholders’ equity if the changes in fair value are recognized in stockholders’ equity;b. Recognized in profit and loss if the changes in fair value are recognized in profit or loss.Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchangerates at trade dates.If the functional currencies of equity-method investees are foreign currencies, translation adjustments willresult from the translation of the investees’ financial statements into the reporting currency of the parentcompany. These adjustments are accumulated and reported as a separate component of stockholders’equity.Accounting EstimatesUnder the above guidelines and principles, certain estimates and assumptions have been used for theallowance for doubtful accounts; allowance for loss on inventories; depreciation and impairment ofproperty, plant, and equipment; assets leased to others and idle assets; impairment of intangible assets;income tax; pension cost; bonuses to employees; remuneration to directors and supervisors, etc. Actualresults may differ from these estimates.Current and Noncurrent Assets and LiabilitiesCurrent assets include cash and cash equivalents and those assets held primarily for trading purposes or tobe realized, sold or consumed within one year from the balance sheet date. All other assets such asproperty, plant and equipment and intangible assets are classified as noncurrent. Current liabilities areobligations incurred for trading purposes or to be settled within one year from the balance sheet date. Allother liabilities are classified as noncurrent.Basis for ConsolidationThe accompanying consolidated financial statements include the accounts of all directly and indirectlysubsidiaries of the Corporation.All significant intercompany balances and transactions are eliminated upon consolidation. Goodwill is theacquisition cost of the investment in excess of the Group’s proportionate equity in the fair value of thesubsidiary’s identifiable net assets. Goodwill will be tested for impairment at least annually. If an eventor circumstance shows that it is more likely than not that goodwill is impaired, an impairment test is made.For consolidated subsidiaries with financial statements not expressed in New Taiwan dollars, thosefinancial statements were translated into New Taiwan dollars for consolidation purposes at the followingforeign exchange rates: (a) assets and liabilities - prevailing exchange rates on the balance sheet dates, (b)stockholders’ equity - historical rates, and (c) profit and loss accounts - weighted average rates for the year.- 10 -

For the six months ended June 30, 2011 and 2010 consolidated financial statement include the Corporation,Ferroxcube Taiwan, Yageo Dongguan, Yageo China, Ferroxcube Dongguan, Yageo Components (Su Zhou)Co., Ltd., Yageo SZ Trade Co., Ltd., Yageo USA (H.K.), Compostar Cayman, Compostar Dongguan,Compostar Su Zhou, Vitrohm Portuguesa, Yageo Europe, Ferroxcube, Yageo Korea, Yageo Japan, YageoAmerica Corporation, Yageo Corporation (South Asia) PTE. LTD., Phycomp Malaysia SDN. BHD., YageoHolding Bermuda, Vitrohm Holding GmbH, Kuo Shin Investment, Yageo Hong Kong, Compostar H.K.,Ferroxcube Holding Samoa, Ferroxcube Technology H.K., Hsu Tai H.K., Ko-E Holding Cayman, Ko-E,Ko-E H.K., Ko-E Shenzhen and Rextron International.We did not review the financial statements as of and for the six months ended June 30, 2011 and 2010 ofthe following consolidated subsidiaries: Yageo Corporation (South Asia) PTE. Ltd.; Phycomp MalaysiaSDN. BHD.; Yageo America Corporation; Compostar Cayman; Compostar Dongguan; Compostar H.K.;Ferroxcube Taiwan; Ferroxcube Holding Samoa; Ferroxcube Technology H.K.; Yageo Japan; YageoKorea; Vitrohm Holding GmbH; Vitrohm Portuguesa; Yageo Components (Su Zhou) Co., Ltd.; and HsuTai H.K. As of June 30, 2011 and 2010, these subsidiaries’ total assets were 3.17% (NT$1,639,332thousand) and 3.13% (NT$1,516,457 thousand), respectively, of the consolidated total assets, and their totalliabilities were 1.39% (NT$261,708 thousand) and 1.49% (NT$261,942 thousand), respectively, of theconsolidated total liabilities. In the six months ended June 30, 2011 and 2010, the operating revenues ofthese subsidiaries were 6.21% (NT$829,067 thousand) and 7.23% (NT$974,726 thousand), respectively, ofthe consolidated operating revenues, and the net incomes were 1.90% (NT$21,584 thousand) and 7.40%(NT$157,015 thousand), respectively, of the consolidated total net income.Cash EquivalentsCash equivalents (commercial paper) are highly liquid financial instruments with maturities of three monthsor less when acquired and with carrying amounts that approximate their fair values.Financial Instruments at Fair Value Through Profit or LossFinancial instruments classified as financial assets or financial liabilities at fair value through profit or loss(FVTPL) include financial assets or financial liabilities held for trading and those designated as at FVTPLon initial recognition. The Group recognizes a financial asset or a financial liability in its balance sheetwhen the Group becomes a party to the contractual provisions of the financial instrument. A financialasset is derecognized when the Group loses control of its contractual rights over the financial asset. Afinancial liability is derecognized when the obligation specified in the relevant contract is discharged,canceled or expired.Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributableto the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profitor loss. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilitiesat FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss in theyear in which they arise. Cash dividends received subsequently (including those received in the year ofinvestment) are recognized as income for the year. On derecognition of a financial asset or a financialliability, the difference between its carrying amount and the sum of the consideration received andreceivable or consideration paid and payable is recognized in profit or loss. All regular way purchases orsales of financial assets are recognized and derecognized on a settlement date basis.A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or afinancial liability held for trading. If the fair value of the derivative is positive, the derivative isrecognized as a financial asset; otherwise, the derivative is recognized as a financial liability.Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows:publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds - at pricesquoted by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quotedprices in an active market - at values determined using valuation techniques.- 11 -

Available-for-sale Financial AssetsAvailable-for-sale financial assets are initially measured at fair value plus transaction costs that are directlyattributable to the acquisition. At each balance sheet date subsequent to initial recognition,available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized inequity until the financial assets are disposed of, at which time, the cumulative gain or loss previouslyrecognized in equity is included in profit or loss for the year. All regular way purchases or sales offinancial assets are recognized and derecognized on a settlement date basis.The recognition, derecognition and the fair value basis of available-for-sale financial assets are the samewith those of financial assets at FVTPL.Cash dividends are recognized on the ex-dividend date, except for dividends distributed from thepre-acquisition profit, which are treated as a reduction of investment cost. Stock dividends are notrecognized as investment income but are recorded as an increase in the number of shares. The totalnumber of shares subsequent to the increase is used for the recalculation of cost per share. The differencebetween the initial cost of a debt instrument and its maturity amount is amortized using the effective interestmethod, with the amortized interest recognized in profit or loss.An impairment loss is recognized when there is objective evidence that the financial asset is impaired.Any subsequent decrease in impairment loss for an equity instrument classified as available-for-sale isrecognized directly in equity. If the fair value of a debt instrument classified as available-for-salesubsequently increases as a result of an event which occurred after the impairment loss was recognized, thedecrease in impairment loss is reversed to profit.Impairment of Accounts ReceivableAn allowance for doubtful accounts is provided on the basis of a review of the collectability of accountsreceivable. This review involves the aging analysis of the outstanding receivables, credit evaluation andassessment of relevant economic circumstances.As discussed in Note 3 to the financial statements, the Group early adopted the third-time revised Statementof Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition andMeasurement.” One of the main revisions is that the impairment of receivables originated by the Groupshould be covered by SFAS No. 34. Accounts receivable are assessed for impairment at the end of eachreporting period and considered to be impaired when there is objective evidence that, as a result of one ormore events that occurred after the initial recognition of the accounts receivable, the estimated future cashflows of the asset have been affected. Objective evidence of impairment could include:• Significant financial difficulty of the debtor;• The accounts receivable becoming overdue; or• Probability that the debtor will enter into bankruptcy or undergo financial reorganization.Accounts receivable that are assessed as not impaired individually are further assessed for collectiveimpairment. Objective evidence of impairment for a portfolio of accounts receivable could include theGroup’s past difficulty in collecting payments and an increase in the number of delayed payments as well asobservable changes in national or local economic conditions that correlate with defaults on receivables.The impairment loss recognized is the difference between the asset carrying amount and the present valueof estimated future cash flows, after taking into account the related collaterals and guarantees, discounted atthe receivable’s original effective interest rate. The carrying amount of the accounts receivable is reducedthrough the use of an allowance account. When accounts receivable are considered uncollectible, they arewritten off against the allowance account. Recoveries of amounts previously written off are credited to theallowance account. Changes in the carrying amount of the allowance account are recognized as bad debtin profit or loss.- 12 -

InventoriesInventories consist of raw materials, supplies, finished goods, merchandise and work-in-process and arestated at the lower of cost or net realizable value. Inventory write-downs are made by item, except whereit may be appropriate to group similar or related items. Net realizable value is the estimated selling priceof inventories less all estimated costs of completion and costs necessary to make the sale. Inventory costsare determined using the weighted-average method.Investments Accounted for by the Equity MethodInvestments in which the Group holds 20 percent or more of the investees’ voting shares or exercisessignificant influence over the investees’ operating and financial policy decisions are accounted for by theequity method. Under the equity method, the Group’s investment is stated at cost on the acquisition dateand subsequently adjusted for the proportionate share of the Group in the net income or net loss of theinvestees. Any cash dividends received from the investees are accounted for as a reduction of the carryingvalue of the investments.Under the equity method, the acquisition cost is analyzed, and the acquisition cost in excess of the Group’sshare of the fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill is notamortized but instead is tested for impairment annually or whenever there are indications that theinvestments are impaired.When the Group subscribes for its investee’s newly issued shares at a percentage different from itspercentage of ownership in the investee, the Group records the change in its equity in the investee’s netassets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus.When the adjustment should be debited to capital surplus, but the capital surplus arising from long-terminvestments is insufficient, the shortage is debited to retained earnings.When an indication of impairment is identified in an investment, the carrying amount of the investment isreduced, with the related impairment loss charged to current income. For long term equity investments onwhich the Group has significant influence but over which it has no controlling interests, the carryingamount (including goodwill) of each investment is compared with its own recoverable amount forimpairment testing.Stock dividends are not recognized as investment income but are recorded as an increase in the number ofshares. The total number of shares subsequent to the increase is used for recalculation of cost per share orbook value. Costs of investments sold are determined using the weighted-moving-average method.If the Group loses its significant influence over equity-method investments with no quoted market prices inan active market and with fair values that cannot be reliably measured, such as non-publicly traded stocksand stocks traded in the Emerging Stock Market, the carrying values of the investments will be reclassifiedto financial assets measured at holding cost.Financial Assets Carried at CostInvestments in equity instruments with no quoted prices in an active market and with fair values that cannotbe reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market,are measured at their original cost. The accounting treatment for dividends on financial assets carried atcost is the same as that for dividends on available-for-sale financial assets. An impairment loss isrecognized when there is objective evidence that the asset is impaired. A reversal of this impairment lossis disallowed.- 13 -

Bond Investments with No Active MarketBond investments with fixed or determinable payments and with no quoted prices in an active market arecarried at amortized cost using the effective interest method and are without restriction on the timing ofdisposal. Bond investments with no active market are initially measured at fair value plus transactioncosts that are directly attributable to the acquisition. Profit or loss is recognized when the financial assetsare derecognized, impaired or amortized. All regular way purchases or sales of financial assets areaccounted for using a trade date basis.An impairment loss is recognized when there is objective evidence that the investment is impaired. Theimpairment loss is reversed if an increase in the investment’s recoverable amount is due to an event thatoccurred after the impairment loss was recognized; however, the adjusted carrying amount of theinvestment may not exceed the carrying amount that would have been determined had no impairment lossbeen recognized for the investment in prior years.Property, Plant and Equipment and Assets Leased to OthersProperty, plant and equipment and assets leased to others are stated at cost less accumulated depreciationand accumulated impairment losses. Borrowing costs directly attributable to the acquisition orconstruction of property, plant and equipment and assets leased to others are capitalized as part of the costof those assets. Major additions and improvements to property, plant and equipment and assets leased toothers are capitalized, while costs of repairs and maintenance are expensed currently.Depreciation is provided on a straight-line basis over estimated useful lives as follows: buildings - 3 to 55years; and machinery and other equipment - 1 to 15 years. Property, plant and equipment and assetsleased to others that have reached their full residual values but are still being used by the Group aredepreciated over their newly estimated service lives.An impairment loss should be recognized whenever the carrying amount of assets leased to others exceedstheir recoverable amount, and this impairment loss should be charged to current income. An impairmentloss recognized in prior years could be reversed if there is a recovery in the estimates used to determinerecoverable amount since the last impairment loss was recognized. However, an impairment loss isreversed only to the extent that it does not increase the carrying amount of an asset above the carryingamount that would have been determined for the asset (net of depreciation) had no impairment loss beenrecognized in prior years. A reversal of an impairment loss should be recognized in the income statementfor assets carried at cost and treated as a revaluation increase for assets carried at the revalued amount.The accounting treatment of the impairment of property, plant and equipment is the same as that of assetimpairment.The related cost, accumulated depreciation and accumulated impairment losses of an item of property, plantand equipment and assets leased to others are derecognized from the balance sheet upon its disposal. Anygain or loss on disposal of the asset is included in nonoperating gains or losses in the year of disposal.Idle AssetsThese assets are stated at the lower of recoverable amount or carrying value.Deferred ExpensesDeferred expenses refer to product molds, which are initially recorded at cost when acquired and areamortized over their estimated economic useful lives using the straight-line method.An impairment loss should be recognized if the recoverable amount of the deferred expenses as of thebalance sheet date is estimated to be less than its carrying amount, and this impairment loss should becharged to current income. An impairment loss recognized in prior years could be reversed if there is asubsequent recovery in the estimates used to determine recoverable amount since the last impairment loss- 14 -

was recognized. However, an impairment loss is reversed only to the extent that it does not increase theasset carrying amount that would have been determined had no impairment loss on the asset beenrecognized in prior years.Asset ImpairmentThe Group determine the cash-generating unit to which tangible and intangible asset belong in accordancewith Statement of Financial Accounting Standards No. 35 - “Accounting for Asset Impairment” before animpairment test is done. An impairment loss should be recognized whenever the aggregate carryingamount of specific cash-generating units exceeds their recoverable amount, and this impairment loss shouldbe charged to current income. For the reduction of the carrying amounts of the assets of cash-generatingunits, the impairment loss should be allocated in the following order:a. Unidentifiable intangible assets (goodwill) should be allocated to the cash-generating unit if any; andb. he sum of the amounts of all identifiable intangible and tangible assets of the unit should be allocatedpro rata on the basis of the carrying amount of each asset in the unit.An impairment loss recognized in prior years may be reversed if there is a recovery in the estimates used todetermine the recoverable amount since the last impairment loss was recognized. However, animpairment loss is reversed only to the extent that it does not increase the carrying amount of an asset abovethe carrying amount that would have been determined for the asset (net of depreciation) had no impairmentloss been recognized in prior years. Reversal of a previously recognized impairment loss on goodwill isprohibited.The estimated loss on fixed assets arising from accidents is recognized as asset impairment. Subsequentmajor improvements or renewals are capitalized.Convertible BondsFor convertible bonds issued on or after January 1, 2006, the Group first determines the carrying amount ofthe liability component by measuring the fair value of a similar liability that does not have an associatedequity component, then determines the carrying amount of the equity component, representing the equityconversion option, by deducting the fair value of the liability component from the fair value of theconvertible bonds as a whole. The liability component (excluding embedded derivatives) is measured atamortized cost using the effective interest method, while the embedded non-equity derivatives are measuredat fair value. Upon conversion, the Group uses the aggregate carrying amount of the liability and equitycomponents of the bonds at the time of conversion as a basis to record the common shares issued.Based on a newly released Statement of Financial Accounting Standards (SFAS) No. 34 - “FinancialInstruments: Recognition and Measurement,” transaction costs of bonds issued on or after January 1,2006, net of related income tax benefit, are allocated in proportion to the liability and equity components ofthe bonds.Pension CostsPension cost under a defined benefit plan of the Group is determined by actuarial valuations. Curtailmentor settlement gains or losses on the defined benefit plan are recognized as part of the net pension cost forthe year. Contributions made under a defined contribution plan of the Group are recognized as pensioncost during the year in which employees render services.Income TaxDeferred tax assets are recognized for the tax effects of deductible temporary difference, unused operatingloss carryforwards, and unused income tax credits, and deferred tax liabilities are recognized for the taxeffects of taxable temporary differences. A valuation allowance is recognized for deferred income tax- 15 -

assets when it is more than 50% probable that these assets will not be realized. Deferred tax assets orliabilities are classified as current or noncurrent on the basis of the classification of the related assets orliabilities for financial reporting. A deferred tax liability or asset that cannot be related to an asset orliability for financial reporting, including deferred tax assets related to net loss carryforwards, is classifiedon the basis of the expected realization date of the temporary difference.If the Group can control the timing of the reversal of a temporary difference arising from the differencebetween the book value and the tax basis of a long-term equity investment in a foreign subsidiary or jointventure and if the temporary difference is not expected to reverse in the foreseeable future and will, ineffect, exist indefinitely, then a deferred tax liability or asset is not recognized.Tax credits for purchases of machinery, equipment and technology, research and development expendituresand personnel training expenditures and investments in shares of stock are recognized using theflow-through method.Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.Based on the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for asincome tax in the year the stockholders approve the retention of these earnings.Stock-based CompensationEmployee stock options granted after January 1, 2008 are accounted for in accordance with statement ofFinancial Accounting Standards No. 39 - “Share-based Payment.”.Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for underthe interpretations issued by the Accounting Research and Development Foundation (ARDF). The Groupadopted the intrinsic value method, under which compensation cost was recognized on a straight-line basisover the vesting period. In addition, under the ARDF letter 96-330, if the employee stock option plan ischanged in accordance with the terms and conditions of the original compensation agreement, thecompensation cost under the original stock option plan is maintained if (a) the total intrinsic value after planchange is not greater than that before the plan change; and (b) the ratio of exercise price to market price isnot lowered. If these two conditions are not met at the same time, it is deemed that a new stock optionplan has replaced the original plan, and the additional compensation cost incurred should be calculatedusing the intrinsic value method, and costs incurred are recognized as expense over the years of serviceunder the employee stock option plan.Revenue RecognitionRevenue from sales of goods is recognized when the Group has transferred to the buyer the significant risksand rewards of ownership of the goods because the earnings process has been completed and the economicbenefits associated with the transaction have been realized or are realizable.Revenue is measured at the fair value of the consideration received or receivable and represents amountsagreed between the Group and the customers for goods sold in the normal course of business, net of salesdiscounts and volume rebates. For trade receivables due within one year from the balance sheet date, asthe nominal value of the consideration to be received approximates its fair value and transactions arefrequent, fair value of the consideration is not determined by discounting all future receipts using animputed rate of interest.ReclassificationsCertain accounts in the consolidated financial statements as of and for the six months ended June 30, 2011have been reclassified to be consistent with the presentation of the consolidated financial statements as ofand for the six months ended June 30, 2011.- 16 -

3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLESFinancial InstrumentsOn January 1, 2011, the Group adopted the newly revised Statement of Financial Accounting Standards(SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” The main revisions include(1) impairment of finance lease receivables being now covered by SFAS No. 34; (2) amendment of thescope of the applicability of SFAS No. 34 to insurance contracts; (3) inclusion of loans and receivablesoriginated by the Group in the items covered by SFAS No. 34; (4) the requirement to disclose additionalguidelines on impairment testing of financial assets carried at amortized cost if the asset issuer or obligorhas financial difficulties and the terms of obligations on the assets have been modified; and (5) therequirement to disclose the Group’s accounting treatment for modifications in the terms of its obligations.This accounting change had no significant impact on the Group’s financial statements as of and for the sixmonths ended June 30, 2011.Operating SegmentsOn January 1, 2011, the Group adopted the newly issued SFAS No. 41 - “Operating Segments.” SFAS No.41 regulates the disclosure of segment information that management uses to make decisions on operatingmatters. It requires the identification of operating segments on the basis of internal reports that areregularly reviewed by the Group’s chief operating decision maker in order to allocate resources to thesegments and assess their performance. This statement supersedes SFAS No. 20 - “Segment Reporting.”For this accounting change, the Group restated its segment disclosures as of and for the six months endedJune 30, 2010 to conform to the disclosures as of and for the six months ended June 30, 2011.4. CASH AND CASH EQUIVALENTS2011 2010CashCash on hand $ 1,811 $ 2,059Checking and demand deposits 4,579,530 5,136,693Time deposits - yield rate 0.20%-5.00% in 2011 and 0.30%-2.45%in 2010 4,651,909 1,878,801Cash equivalentsShort-term notes and bills - yield rate 0.34%-0.64% in 2011 and0.24%-0.30% in 2010 404,245 120,046$ 9,637,495 $ 7,137,599- 17 -

5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS -CURRENTFinancial assets held for trading purpose2011 2010Stock option $ 226,545 $ 306,540Forward exchange contracts 6,652 78,253233,197 384,793Financial assets at fair value through profit and lossDomestic convertible bonds - 20,798233,197 405,591Less: Stock option226,545 306,540Financial liabilities held for trading purpose$ 6,652 $ 99,051Forward exchange contracts $ 3,104 $ 5,768The Corporation and Kuo Shin Investment bought the five-year, zero-coupon, third domestic unsecuredconvertible bonds of Chilisin Electronics Corp. (“Chilisin Electronics”) on the GreTai Securities Market in2008 and 2009 for NT$531,457 thousand. The convertible bonds issued by Chilisin Electronics are ahybrid product, that is, bonds with the embedded conversion option and embedded buyback options.Because the Corporation and Kuo Shin Investment classify these convertible bonds as available-for-salefinancial assets and the economic characteristics and risk of the embedded options are not closelyassociated with the convertible bonds, the embedded derivatives and the bonds are recognized by valuationtechniques at the amounts of NT$36,345 thousand and NT$495,112 thousand, respectively. TheCorporation and Kuo Shin Investment also recognized an option valuation loss of NT$82,145 thousand andan option valuation gain of NT$87,360 thousand for the six months ended June 30, 2011 and 2010. (Theaccumulated option valuation gain was NT$190,200 thousand for the six months ended June 30, 2011.)The Corporation bought the five-year, zero-coupon, first domestic unsecured convertible bonds of FoxconnTechnology Co., Ltd. in June 2009 for NT$20,302 thousand. The Corporation treated this hybrid productas a financial asset at fair value through profit or loss and recognized on June 30, 2010 a valuation gain ofNT$216 thousand based on the bond market price. The bonds were fully disposed of in the third quarterof 2010.The Group entered into derivative contracts for the six months ended June 30, 2011 and 2010 to manageexposures due to exchange rate and interest rate fluctuations. The financial risk management objective ofthe Group is to minimize risks due to changes in fair value or cash flows. However, since certain financialassets and liabilities are not qualified for hedge accounting, those financial assets and liabilities arecategorized as financial assets and liabilities held for trading. The fair values are estimated usingvaluation techniques and the changes in fair values are charged to current income.- 18 -

There was no open foreign-currency option contract as of June 30, 2011. The open forward exchangecontracts as of June 30, 2011 and 2010 are summarized as follows:a. Forward exchange contractsCurrencyMaturityContract Amount(In Thousands)June 30, 2011Financial assets at fair value throughprofit or loss - currentSell EUR/JPY July 25, 2011 EUR1,000/JPY117,060Sell USD/JPY July 25, 2011 USD2,000/JPY161,040Buy JPY/RMB July 6, 2011 JPY241/RMB19Buy JPY/RMB July 6, 2011 JPY124,691/RMB10,000Buy JPY/RMB August 2, 2011 JPY127,243/RMB10,000Buy JPY/RMB August 2, 2011 JPY64,139/RMB5,000Buy EUR/USD July 28, 2011 EUR425/USD600Financial liabilities at fair valuethrough profit or loss - currentSell EUR/USD July 19, 2011 EUR2,000/USD2,828Sell EUR/NTD July 28, 2011 EUR700/NTD29,012Sell EUR/NTD July 29, 2011 EUR1,500/NTD61,668June 30, 2010Financial assets at fair value throughprofit or loss - currentSell EUR/JPY August 27, 2010 EUR1,000/JPY112,695Sell USD/JPY July 29, 2010 USD1,000/JPY92,020Sell EUR/JPY July 27, 2010 EUR1,500/JPY164,220Sell USD/JPY July 29, 2010 USD2,000/JPY180,760Sell USD/NTD August 30, 2010 USD5,000/NTD161,760Sell USD/NTD August 30, 2010 USD2,000/NTD64,760Sell USD/JPY July 29, 2010 USD2,000/JPY180,300Sell USD/JPY July 29, 2010 USD2,000/JPY181,420Sell USD/JPY July 29, 2010 USD1,000/JPY92,220Sell USD/JPY July 29, 2010 USD1,500/JPY137,745Sell EUR/USD July 27, 2010 EUR1,000/USD1,238Buy JPY/NTD September 28, 2010 JPY100,000/NTD35,510Buy USD/NTD August 31, 2010 USD5,000/NTD161,320Buy USD/NTD August 31, 2010 USD5,000/NTD161,325Buy USD/NTD August 31, 2010 USD5,000/NTD161,150Buy USD/NTD September 1, 2010 USD5,000/NTD159,850Buy USD/NTD September 1, 2010 USD5,000/NTD159,900Buy USD/NTD August 2, 2010 USD5,000/NTD159,895Buy USD/NTD May 16, 2011 USD10,000/NTD316,050Buy USD/NTD April 22, 2011 USD5,000/NTD157,105Buy USD/NTD April 25, 2011 USD5,000/NTD157,050Buy USD/NTD May 16, 2011 USD5,000/NTD158,155Buy USD/NTD August, 24, 2010 USD5,000/NTD160,470Buy USD/NTD August, 31, 2010 USD5,000/NTD161,150Buy USD/NTD August 31, 2010 USD5,000/NTD161,340(Continued)- 19 -

CurrencyMaturityContract Amount (InThousands)Buy USD/NTD August 31, 2010 USD5,000/NTD161,300Buy USD/NTD August 31, 2010 USD10,000/NTD322,050Buy USD/NTD September 2, 2010 USD5,000/NTD159,870Buy USD/NTD April 22, 2011 USD10,000/NTD314,210Buy USD/NTD April 25, 2011 USD5,000/NTD157,050Buy USD/NTD May 16, 2011 USD5,000/NTD158,025Buy USD/NTD April 22, 2011 USD10,000/NTD314,210Buy USD/NTD April 25, 2011 USD5,000/NTD157,050Buy USD/NTD May 16, 2011 USD5,000/NTD158,155Buy USD/NTD April 22, 2011 USD5,000/NTD157,105Buy JPY/RMB July 29, 2010 JPY150,000/RMB11,310Sell USD/PLN August 27, 2010 USD200/PLN695Sell EUR/PLN August 27, 2010 EUR350/PLN1,455Buy USD/RMB July 27, 2010 USD2,000/RMB13,505Buy USD/RMB July 28, 2010 USD2,000/RMB13,498Buy USD/RMB August 5, 2010 USD2,000/RMB13,484Financial liabilities at fair valuethrough profit or loss - currentSell USD/NTD July 1, 2010 USD5,000/NTD158,730Sell USD/NTD July 1, 2010 USD5,000/NTD159,130Sell USD/PLN July 29, 2010 USD300/PLN977Sell EUR/PLN July 29, 2010 EUR800/PLN3,269(Concluded)On financial instruments at fair value through profit or loss, the Group incurred net gains of NT$64,533thousand and NT$212,634 thousand for the six months ended June 30, 2011 and 2010, respectively.6. AVAILABLE-FOR-SALE FINANCIAL ASSETS2011 2010Foreign common stock with quoted market priceSHS KOA Corp. $ 1,892,864 $ 1,629,195Domestic open-end mutual fundsFSITC Taiwan Money Market 2,001 -Domestic common stocks with quoted market pricesTA-I Technology Co., Ltd. 1,015,490 1,092,339Tait Marketing & Distribution Co., Ltd. - 49,8161,015,490 1,142,155Domestic convertible bondsChilisin - third issue 270,789 190,7943,181,144 2,962,144Less: Shown as current assetsFSITC Taiwan Money Market 2,001 -Tait Marketing & Distribution Co., Ltd. - 49,816$ 3,179,143 $ 2,912,328- 20 -

7. INVENTORIES, NET2011 2010Finished goods $ 3,349,408 $ 2,232,051Work in process 451,988 516,990Raw materials 1,620,845 1,122,376Supplies 61,224 66,062Goods in transit 32,653 43,800$ 5,516,118 $ 3,981,279As of June 30, 2011 and 2010, the allowances for loss were NT$393,747 thousand and NT$229,980thousand, respectively.The cost of inventories recognized as cost of goods sold as of June 30, 2011 was NT$10,352,868 thousand,which included an allowance for loss of NT$80,805 thousand. The cost of inventories recognized as costof goods sold as of June 30, 2010 was NT$9,621,259 thousand, which included a reversal of allowance forloss of NT$43,568 thousand. Previous write-downs have been reversed as a result of an increase in sellingprices or a decrease in the amount of inventories in certain markets.8. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD2011 2010Carrying % of Carrying % ofValue Ownership Value OwnershipEquity method (with quoted marketprices)Global Testing Corporation Limited(GTCL) $ 699,552 24.8 $ 767,269 23.8Chilisin Electronics Corporation 671,054 21.2 678,551 21.3Ralec Electronic Corp. 467,001 15.9 486,492 15.9Teapo Electronics Corporation 441,214 21.0 494,553 21.0Equity method (with no quoted marketprices)Strong Components Co., Ltd. 96,373 31.4 107,882 31.4Belkin International 72,146 46.0 82,027 46.0Guo Chuang Electronics (Dongguan)Co., Ltd. 35,441 35.0 35,762 35.0Greater China Distributors Ltd.(B.V.I.) - 27.2 22 27.2$ 2,482,781 $ 2,652,558The fair values of listed equity-method investments calculated at their closing prices as of June 30, 2011and 2010 were as follows:2011 2010Global Testing Corporation Limited (GTCL) $ 330,650 $ 372,642Chilisin Electronics Corp. 712,949 980,304Ralec Electronic Corp. 541,646 564,522Teapo Electronics Corp. 277,108 551,913$ 1,862,353 $ 2,469,381- 21 -

The investment in Ralec Electronic Corp. was accounted for by the equity method since the Group hadsignificant influence over it.Numbers of the above companies’ outstanding shares changed because these companies continuouslybought back their own stock, convertible bonds and employee stock options convertible to common stock in2011 and 2010. The subsidiary Kuo Shin Investment acquired 218 thousand shares of Chilisin Electronicsin 2010, thus, the percentage of ownership owned by the Group changed.The financial statements used as basis of the consolidated subsidiaries’ information and related investmentamounts were all reviewed, except those of (a) Global Testing Corporation Limited (GTCL) and StrongComponents Co., Ltd. for the six months ended and as of June 30, 2011; (b) Global Testing CorporationLimited (GTCL), Strong Components Co., Ltd., and Belkin International for the six months ended and as ofJune 30, 2010. As of June 30, 2011 and 2010, the carrying values of these investments were NT$795,925thousand and NT$957,178 thousand, respectively, of the consolidated total assets, and the net investmentlosses were NT$14,222 thousand and NT$10,610 thousand for the six months ended June 30, 2011 and2010, respectively.9. FINANCIAL ASSETS CARRIED AT COST2011 2010Carrying % of Carrying % ofValue Ownership Value OwnershipStock with no quoted market prices:Luminous Town Electric Co., Ltd. $ 100,870 15.8 $ 100,870 15.8Parawin Venture Capital Corp. 76,628 10.0 76,628 10.0Xmholder Technology Co., Ltd. 42,882 17.0 39,736 17.0HuaYi HK Technology Co., Ltd. 40,298 17.0 45,162 17.0King Power International Co., Ltd. 33,622 16.6 33,622 16.6SEMR China Technology Co., Ltd. 10,321 17.0 11,590 17.0Fubon Venture Capital Corp. - - 18,000 20.0Others 12,482 - 12,482 -$ 317,103 $ 338,090The above investments, which had no quoted market prices in an active market and had fair values thatcould not be reliably measured, were carried at their original cost.Fubon Venture Capital Corp. was fully liquidated in April 2011 and had returned a capital of NT$18,000thousand to the Group.10. BOND INVESTMENTS WITH NO ACTIVE MARKETIn November 2006, Kuo Shin Investment Limited purchased subordinated bonds issued at par with anaggregate value of NT$50,000 thousand. The subordinated bonds were issued by Ta Chong Bank with nomaturity due date. Among the bond terms is that Ta Chong Bank can exercise its redemption right at thebond principal amount, with interest payable from November 2016. The interest payable is calculated at5.5% per annum for 10 years after the bond issuance. If, after 10 years from the date of issuance, TaChong Bank does not redeem the bonds, the coupon interest rate will rise to 6.5% per annum. If TaChong Bank does not make profits within a year as stated in its financial report and cannot issue commondividends, Ta Chong Bank may be exempted from paying interest payments, as stated in the bondagreement. As a result, any interest payments not received by Kuo Shin Investment were not accountedfor by Kuo Shin Investment.- 22 -

11. PROPERTY, PLANT AND EQUIPMENTAccumulated depreciation and accumulated impairment consisted of:2011 2010Accumulated depreciationBuildings $ 2,589,112 $ 2,555,896Machinery and equipment 14,456,245 12,725,606Miscellaneous equipment 1,249,197 1,262,144$ 18,294,554 $ 16,543,646Accumulated impairmentLand $ 3,808 $ 3,808Building 46,680 81,523Machinery and equipment 154,042 154,243Miscellaneous equipment 2,052 2,058$ 206,582 $ 241,632Depreciation expenses for property, plant and equipment, properties leased to others and idle assets wereNT$1,241,090 thousand and NT$1,413,119 thousand for the six months ended June 30, 2011 and 2010,respectively.For the six months ended June 30, 2011 and 2010, interest expenses before capitalization was NT$122,453thousand and NT$130,297 thousand, respectively, while capitalized interests were NT$3,450 thousand andNT$8,775 thousand, respectively, and capitalization rates ranged from 2.29% to 2.48% and from 2.15% to2.59%, respectively.The Corporation’s capacitor plant in Dahe Hsiang in Kaohsiung had a fire on September 25, 2006. Theloss recognized in connection with partially damaged fixed assets consisted of the expected repair andmaintenance expenditure, which was estimated at NT$307,795 thousand, and accumulated impairment wasalso recognized in the Corporation’s property, plant, and equipment account. The Corporation’s increasedaccumulated impairment increased by NT$65,804 thousand because of the Corporation’s merger withComposter Electronics and Chipcera Technology in 2008, with the Corporation as survivor entity. As ofDecember 31, 2009, the Corporation recognized estimated impairment losses of NT$66,311 thousand on abuilding and NT$33,689 thousand on machinery and equipment, which corresponded to a future productionplan adjustment. As of June 30, 2011, the Corporation had disposed a portion of partially damaged fixedassets and thus deducted the corresponding accumulated impairment of NT$267,017 thousand fromproperty, plant, and equipment. As of June 30, 2011, the balance of the accumulated impairment ofproperty, plant and equipment was NT$206,582 thousand.12. ASSETS LEASED TO OTHERS2011 2010Land $ 22,474 $ 22,474Buildings 56,549 58,840Less: Accumulated depreciation 19,104 18,91237,445 39,928$ 59,919 $ 62,402- 23 -

Yageo Dongguan leased a factory building to Teapo Electronics Dongguan and terminated the rentalagreement as of June 30, 2010. Thus, Yageo Dongguan reclassified this building from leased to others toidle assets.13. SHORT-TERM LOANSShort-term loans were unsecured bank credit loans. Interest rates on these loans were from 0.82% to1.37% and from 0.70% to 0.75% as of June 30, 2011 and 2010, respectively.14. SHORT-TERM BILLS PAYABLE, NETBank-guaranteed commercial paper with less than one-year maturities were issued by the Group at discountrates of 0.750% to 1.248% as of June 30, 2011.As of June 30, 2011, the carrying value of the commercial paper issued was net of the unamortizeddiscount of NT$1,775 thousand.15. LONG-TERM BANK DEBT2011 2010Secured bank loans $ 500,000 $ 2,000,000Less: Current portion - 312,500$ 500,000 $ 1,687,500For long-term financial planning, replenishing working capital and meeting the need for capitalexpenditure, the Group obtained medium and long-term loans from several banks, summarized below:a. The Corporation signed a NT$6,500,000 thousand syndicated loan agreement with Hua NanCommercial Bank and nine other financial institutions on September 21, 2010. The balances of thebank loan were NT$500,000 thousand for the six months ended June 30, 2011. The terms of the loansare summarized as follows:Credit Lines Credit Period Interest Rate Repayment Agreement$ 6,500,000 Five years after the dateof contractFixed rate (0.60%) basedon a specific averagerate of notestransacted in Taiwan.Eight quarterly installmentsfrom the third month of thethird year after the contractsigning dateUnder the loan agreement, the Corporation should collateralize the office building, machinery andequipment of a factory located in the Administrative office in Hsin Tien, New Taipei City and in theNan-Zi Branch and a capacitor-line factory in a village in Dashe, Kaohsiung City. The Corporationwill have to maintain the its interim and annual current ratios, debt ratios and interest coverage ratios atpercentages specified in the agreement.- 24 -

. The Corporation signed a NT$4,500,000 thousand syndicated loan agreement with Hua NanCommercial Bank and 11 other financial institutions (collectively, the “banking syndicate”) on January22, 2007. The terms of the loans are summarized as follows:Credit Lines Credit Period Interest Rate Repayment Agreement$ 4,500,000 Five years after the dateof contractFixed rate (0.65%) basedon a specific averagerate of notestransacted in Taiwan.Eight quarterly installmentsfrom the third month of thethird year after the contractsigning dateUnder the loan agreement, the Corporation should collateralize the building, machinery and equipmentof a factory located in the Nan-Zi Branch, a capacitor-line factory in a village of Dashe, Kaohsiung Cityand some of the common stocks held by the Group. In addition, in June 2009, the Corporation wasapproved by the banking syndicate to provide a building, machinery and equipment of the main officebuilding located in Hsin Tien, in New Taipei City as collateral for retrieving the common stocks held bythe Group. The Corporation should also maintain its interim and annual current ratios, debt ratios andinterest coverage ratios at percentages specified in the agreement. The balance of the bank loans wasNT$2,000,000 thousand for the six months ended June 30, 2012. The Corporation requested an earlytermination of the loan agreement in September 2010, and hence completed the related procedures andretrieved all the collaterals and documents.16. BONDS PAYABLE2011 2010The fourth unsecured zero-coupon foreign convertible bonds $ 5,937,324 $ 6,499,081On June 11, 2007, the Corporation issued seven-year unsecured zero-coupon foreign convertible bonds withaggregate face value of US$230,000 thousand. The bonds have a par value of US$100 thousand or integermultiples of US$100 thousand and were subscribed mainly by the affiliates of the Corporation’s strategicinvestor, Kohlberg Kravis Roberts & Co. Under the terms of issue, the bondholders may convert thebonds into common shares at the fixed exchange rate of NT$33.01 to US$1.00, and then at the conversionprice from July 12, 2007 to June 1, 2014, except during title transfer suspension periods. Upon anydilutive events or any capital restructuring events that will cause the outstanding shares of the Corporationto change, including the issue of new shares, recapitalization of retained earnings and similar transactionsaffecting the common shares, the conversion price will be decreased in accordance with the indenture (thatis, the Corporation may not increase conversion price). If the average of the trading prices in 14consecutive trading days (which do not fall within a title transfer suspension period) immediately prior toany anniversary of the issuance of the bonds (a “reset date”) is less than the adjusted conversion priceprevailing at this time, the adjusted conversion price should be adjusted to the reset trading price. At anytime after the issuance of the bonds, if the Corporation distributes any cash dividends, the conversion priceshould be adjusted on the basis of the conversion price minus 90% of per share cash dividend. On (a) thefourth anniversary of the issue date, when the closing price of the shares for each trading day during 14consecutive trading days is at least 145% of the adjusted conversion price, and (b) when the closing pricesof the shares for each trading day during 14 consecutive trading days are at least 120%, 130% and 140%of the adjusted conversion price in the fifth, sixth, and seventh years, respectively, of the issue date, theCorporation is entitled to redeem the bonds from the bondholders at face value up to the agreed amountspecified in contract terms and conditions. The Corporation should redeem all the bonds outstanding atface value upon maturity on June 11, 2014.Based on the terms of issuance, the conversion price on the date of bond issue (June 11, 2007) wasNT$16.15. In 2007 and 2008, the conversion price decreased to NT$12.21 because of the Corporation’sdistribution of cash dividends and reset of the conversion price based on the issuance terms.- 25 -

The Corporation separated the conversion option embedded in the convertible bonds from their debt featureto present the equity component and liability component, respectively. The equity component amountingto NT$2,749,975 thousand represents the bond initial carrying value less the fair value of the liabilitycomponent, net of the allocated bond issue costs, and is classified as capital surplus - warrant. Theliability component is the host debt instrument and the price-reset derivative financial instrument. Thehost debt instrument was initially recognized at NT$4,326,375 thousand, its fair value on June 11, 2007(issue date), net of the allocated bond issue costs. The effective interest rate is 8.06%. The price-resetderivative instrument was initially recognized at NT$509,789 thousand, which was the fair value on theissue date and was recorded under long-term liabilities - financial liabilities at fair value through profit orloss.Under Interpretation 98-046 issued by the Accounting Research and Development Foundation (ARDF) onJanuary 21, 2009, the Corporation needed to disclose the convertible bonds it had issued between January 1,2006 and December 31, 2008 and any adjustment within this period of the conversion prices of the bondsbased on market prices. In addition, the accounting treatment of the bonds starting from their issue dateshould be in accordance with Points 2 and 3 of ARDF Interpretation 97-331. Thus, the Corporation thencombined the conversion right and call option, both with reset terms, and recognized them as financialliability held for trading purposes amounting to NT$3,455,107 thousand and recognized the principal debtinstruments as bonds payable amounting to NT$4,131,032 thousand with an effective interest rate of8.71%, but the Corporation did not recognize any equity instruments. The Corporation also restated theconsolidated financial statements for 2007. For the period from January 1, 2009 to June 16, 2009, theCorporation recognized (a) NT$196,797 thousand as the bond discount amortized to interest expenses; (b)a foreign exchange gain of NT$760 thousand due to exchange rate fluctuations; and (c) a financial liabilityvaluation gain of NT$179,620 thousand. On June 16, 2009, the fair value of the convertible bonds wasNT$2,660,544 thousand, and the valuation gain recognized on these bonds was NT$794,563 thousand.At the end of November 2008, the Corporation had a negotiation with the creditors and these parties agreedto revise some issue terms of the convertible bonds. The major revisions agreed upon by the Corporationand creditors were as follows:a. The conversion price was changed to NT$11.18, which was not to be subject to resets (however, theconversion price was adjusted to NT$11.09 in July 2009 and to NT$10.955 in December 2010 becauseof the Corporation’s distribution of cash dividends).b. Between the date of issue and the fourth anniversary of issue, (a) if the closing price of theCorporation’s common shares traded on the Taiwan Stock Exchange reaches at least 280% of theconversion price for 14 consecutive trading days, and (b) if on the fifth, sixth and seventh year of issue,the closing prices of the shares reach at least 240%, 250% and 260%, respectively, of the thenconversion price for 14 consecutive trading days, the Corporation is entitled to redeem the bonds fromthe bondholders at par value to the extent of the amount as agreed upon in the terms and conditions ofissuance.All the above modifications were approved in 2009 by the board of directors on March 30, by the creditorson April 30 and by the stockholders on June 16. The modifications resulted in a difference of 10.5%between (a) the current value of the bonds payable (the current value of future cash flows was calculated atthe original effective rate) after the modification and (b) the current value of the bonds payable (the currentvalue of the residual future cash flows was calculated using the original effective rate) before themodification; thus, the Corporation deemed this difference as significant. For this reason, the Corporationrecognized the new convertible bonds and eliminated the original one on June 16, 2009. The Corporationthen separated the call option and debt feature of the bonds and recognized them as equity component andliability component, respectively. The equity component amounted to NT$1,169,325 thousand, whichwas the convertible bond fair value of NT$7,563,550 thousand less the fair value of the liability componentof NT$6,394,225 thousand. The liability component is a debt instrument, with an effective rate of 3.36%.For the six months ended June 30, 2011 and 2010, the Corporation recognized the bond discount amortizedto interest expenses at NT$100,264 thousand and NT$107,111 thousand, respectively. Exchange rate- 26 -

fluctuations resulted in a gain of NT$74,965 thousand as of the six months ended June 30, 2011 and a lossof NT$50,229 as of the six months ended June 30, 2010.In 2010, the convertible bonds with a par value of US$2,300 thousand (the carrying value less theunamortized discount was NT$63,614 thousand), were converted to 6,846 thousand common shares withthe price of NT$11.09. The bonds payable at the six months ended June 30, 2011 and 2010 amounted toNT$5,937,324 thousand and NT$6,499,081 thousand, respectively.17. STOCKHOLDERS’ EQUITYOn August 3, 2001, the Corporation issued 40,000 thousand global depositary receipts (GDRs) representing200,000 thousand new common shares, with net proceeds of NT$4,573,292 thousand. As of June 30,2011, there were 184 thousand units of GDRs outstanding.Based on the Corporation’s Articles of Incorporation, annual earnings should be appropriated in thefollowing order:a. Income tax;b. Prior years’ deficits;c. 10% of remainder as legal reserve;d. At least 2% of the remainder plus the reversal of prior years’ special capital reserves are provided asemployees’ bonus, subject to the approval at the stockholders’ meeting;e. Up to 2% of the remainder plus the reversal of prior years’ special capital reserves as remuneration ofdirectors and supervisors, subject to the approval at the stockholders’ meeting,f. The remainder plus accumulated unappropriated earnings as dividends, as proposed by the board ofdirectors and approved at the stockholders’ meeting.The Corporation’s dividend policy takes into account the Corporation’s current and future competitivenessin the domestic and foreign markets, the investment environment and cash requirements. The policyprovides that above 80% of any earnings distribution could be in the form of shares if the Corporationneeds to undertake a major expansion project; otherwise, earnings distribution may be in cash.For the six months ended June 30, 2011, the bonus to employees and the remuneration to directorssupervisors were estimated at NT$20,319 thousand each. For the six months ended June 30, 2010, thebonus to employees and the remuneration to directors and supervisors were estimated at NT$37,951thousand each. These estimates were based on Corporation’s Articles of Incorporation and pastexperience. Material differences between these estimates and the amounts proposed by the Board ofDirectors in the following year are adjusted for in the current year. If the actual amounts subsequentlyresolved by the stockholders differ from the proposed amounts, the differences are recorded in the year ofstockholders’ resolution as a change in accounting estimate. If bonus shares are resolved to be distributedto employees, the number of shares is determined by dividing the amount of bonus by the closing price(after considering the effect of cash and stock dividends) of the shares of the day preceding thestockholders’ meeting.A special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity(for example, unrealized loss on financial instrument, cumulative translation adjustments and net loss notrecognized as pension cost), should be made from unappropriated earnings in accordance with regulations.Any special capital reserve appropriated may be reserved to the extent that the net debit balance reverses.- 27 -

Under relevant regulations, capital surplus may be used to offset deficit. Additional paid-in capital fromthe issue of stock in excess of par value and donated surplus may be capitalized (distributed as stockdividends). However, capital surplus from long-term equity investments accounted for by the equitymethod cannot be used for any purpose.The Company Law provides that legal reserve should be appropriated until the reserve equals theCorporation’s paid-in capital. This reserve may only be used to offset a deficit. When the legal reservehas exceeded 50% of the paid-in capital, 50% of this reserve may be distributed as stock dividends.The stockholders approved the Corporation’s appropriations from the earnings of 2010 and 2009 on June10, 2011 and June 18, 2010, respectively. These appropriations are summarized as follows:AppropriationEarnings Per Share2010 2009 2010 2009Legal reserve $ 414,754 $ 67,388Special reserve 384,635 -Cash dividends 220,531 329,229 $ 0.10 $ 0.15The above appropriations approved at the stockholders’ meeting were the same as those approved by theboard of directors on April 28, 2011 and March 25, 2010. Of the distributed cash dividends at less thanNT$1.00 per share, NT$66 thousand was reclassified to other revenue, and the rest of the cash dividends ofNT$329,163 thousand were distributed in January 2011.The bonus to employees and the remuneration to directors and supervisors of NT$66,963 thousand eachwere approved in the stockholders’ meeting on June 10, 2011. The bonus to employees and theremuneration to directors and supervisors of NT$12,130 thousand each were approved in the stockholders’meeting on June 18, 2010. The approved amounts of bonus to employees and remuneration to directorsand supervisors were the same as the accrual amounts reflected in the financial statements for 2010 and2009.A proposal to raise funds through a private issuance of common stock was approved in the Corporation’sstockholders’ meeting on June 18, 2010, but this proposal was canceled at the board of directors’ meetingon March 18, 2011, and this cancellation was approved in the 2011 stockholders’ meeting. At the sameboard of directors’ meeting on March 18, 2011, for increasing the Corporation’s working capital andenhancing its financial structure, a proposal was made to issue up to 500,000 thousand domestic commonshares for cash through private placement after evaluating the fund condition in the market, effectiveness offund-raising and the issuance cost, and the stockholders approved this proposal at their meeting in 2011.However, this resolution had not yet been implemented by the Corporation as of June 30, 2011.Information on the earnings distribution, bonus to employee, remuneration to directors and supervisors andrelated information on the issuance of common stock through private placement can be accessed onlinethrough the Market Observation Post System on the Web site of the Taiwan Stock Exchange Corporation.18. EMPLOYEE STOCK OPTION PLANSUpon the approval by the board of directors on August 18, 2003, the Corporation adopted a stock optionplan (the “Plan”) to grant employees 150,000 thousand units of stock options. The Plan was approved bythe Securities and Futures Bureau and the Financial Supervisory Commission (previously the Securities andFutures Commission, Ministry of Finance). Stock options consisting of 100,000 thousand units and50,000 thousand units had been issued on September 15, 2003 and March 31, 2004, respectively, with eachunit representing one share of the Corporation’s common stock and the exercise prices at NT$13.8 andNT$17.9, respectively, which were later revised to NT$13.6 and NT$17.5 in 2005, respectively. Basedon the Corporation’s Employee Stock Option Issuance and Subscription Rules, the vesting period of theseoptions is six years. Employees may exercise up to half of these options vested after two years from the- 28 -

grant date, or all options vested may be exercised after three years from the grant date. If the number ofthe Corporation’s common shares changes, the exercise price will be adjusted, as required under the Planterms.On November 30, 2007, the Corporation’s board of directors again approved the issue of an additional100,000 thousand units of stock options, which had been approved by the Securities and Futures Bureauunder the Financial Supervisory Commission of Executive Yuan. The Corporation issued the entire100,000 thousand units on December 20, 2007. Each option represents one share of the Corporation’scommon stock, and the exercise price per share is NT$10.25. The vesting period of these options is 10years. Qualified employees may exercise up to 10%, 20%, 40% and 70% of the vested options after twoyears, three years, four years and five years, respectively, from the grant date. All options vested may beexercised after six years from the grant date. If the number of the Corporation’s common shares changes,the exercise price will be revised, as required under the Plan terms. As of June 30, 2011, there 3,600thousand units of employee stock options exercised and converted to 3,600 thousand common shares.The Corporation’s stock options in 2011 and 2010 were as follows:Stock OptionThousandUnitsSix Months Ended June 302011 2010WeightedaverageExercisePrice Thousand(In Dollars) UnitsWeightedaverageExercisePrice(In Dollars)Outstanding units - beginning of year 90,000 $10.25 131,834 $12.55Granted units - - - -Exercised units (3,600) 10.25 - -Eliminated units - - - -Forfeited units - - (41,834) 17.50Outstanding units - end of year 86,400 10.25 90,000 10.25Exercisable units, end of year 14,400 9,000The Corporation calculated the fair value of the 50,000 thousand units of the stock options granted in 2004and 100,000 thousand units granted in 2007 using the Black-Scholes model. The valuation results andrelated assumptions used were as follows:50,000 Thousand Units ofStock Options Granted in2004100,000 Thousand Units ofStock Options Granted in2007Fair value $286,000 thousand $319,000 thousandExercise price$17.90 (in dollars) per shareprior to amendment$10.25 (in dollars) per shareprior to amendmentRisk-free rate 2.01% 2.48%Weighted average remaining life (in 4.25 years 7.30 yearsyears)Expected volatility of the Corporation’s 51.66% 48.60%stock priceExpected dividend yield 5.15% 4.87%- 29 -

Stock options outstanding as of June 30, 2011 and 2010 are summarized as follows:Outstanding Stock Options as ofJune 30, 2011Exercisable Stock Optionsas of June 30, 2011Anticipated Weighted- Weighted-Weighted- average averageaverage Exercise ExerciseThousand Existence Price Thousand PriceExercise Price Units Years (In Dollars) Units (In Dollars)$10.25 (in dollars) 86,400 3.80 years $10.25 14,400 $10.25Outstanding Stock Options as ofJune 30, 2010Exercisable Stock Optionsas of June 30, 2010Anticipated Weighted- Weighted-Weighted- average averageaverage Exercise ExerciseThousand Existence Price Thousand PriceExercise Price Units Years (In Dollars) Units (In Dollars)$10.25 (in dollars) 90,000 4.80 years $10.25 9,000 $10.25There was no compensation cost based on the intrinsic value method for the six months ended June 30,2011 and 2010. Had the Corporation used the fair value method, the pro forma consolidated net incomeand basic and diluted earnings per share (EPS) would have been as follows:(In Thousands of Dollars, Except Per Share Information)Six Months Ended June 302011 2010Consolidated net income Actual $ 1,128,840 $ 2,108,371Pro forma 1,105,872 2,080,618Earnings per share - basic (in dollars) Actual 0.51 0.96Pro forma 0.50 0.95Earnings per share - diluted (in dollars) Actual 0.40 0.78Pro forma 0.39 0.7719. EARNINGS PER SHAREThe data used in calculating earnings per share were as follows:Six months ended June 30, 2011WeightedaveragePer Share (In Dollars)Income Number of IncomeIncome Outstanding BeforeBefore Shares Income NetIncome Tax Net Income (Thousands) Tax IncomeBasicConsolidated net income attributed to theCorporation $ 1,663,862 $ 1,128,840 2,203,240 $ 0.76 $ 0.51(Continued)- 30 -

WeightedaveragePer Share (In Dollars)Income Number of IncomeIncome Outstanding BeforeBefore Shares Income NetIncome Tax Net Income (Thousands) Tax IncomeDilutive effect of common stock equivalentZero-coupon foreign convertible bonds $ 25,299 $ 38,043 686,114Employee stock options - - 27,546Employee bonus - - 5,694DilutedConsolidated net income attributed to theCorporation’s stockholders plus the effectof common stock equivalent $ 1,689,161 $ 1,166,883 2,922,594 $ 0.58 $ 0.40Six months ended June 30, 2010BasicConsolidated net income attributed to theCorporation $ 2,585,376 $ 2,108,371 2,194,862 $ 1.18 $ 0.96Dilutive effect of common stock equivalentZero-coupon foreign convertible bonds 157,340 148,801 684,608Employee stock options - - 4,004Employee bonus - - 2,406DilutedConsolidated net income attributed to theCorporation plus the effect of commonstock equivalent $ 2,742,716 $ 2,257,172 2,885,880 $ 0.95 $ 0.78(Concluded)If the Corporation decides to settle the bonus to employees by cash or shares, the Corporation shouldpresume that the entire amount of the bonus will be settled in shares, and the resulting potential sharesshould be included in the weighted average number of shares outstanding used in the calculation of dilutedEPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the entire amountof the bonus by the closing price of the shares at the balance sheet date. The dilutive effect of the potentialshares should be included in the calculation of diluted EPS until the stockholders resolve the number ofshares to be distributed to employees at their meeting in the following year.20. INCOME TAXa. Income tax expense consisted of the following:Six Months Ended June 302011 2010Income tax expense - current $ 261,019 $ 219,504Income tax expense - deferred 328,108 262,476Adjustment for prior years’ tax (51,770) (2,065)Income tax expense $ 537,357 $ 479,915Under Article 10 of the Statute for Industrial Innovation (SII) passed by the Legislative Yuan in April2010, a profit-seeking enterprise may deduct up to 15% of its research and development expendituresfrom its income tax payable for the fiscal year in which these expenditures are incurred, but thisdeduction should not exceed 30% of the income tax payable for that fiscal year. This incentive iseffective from January 1, 2010 till December 31, 2019.- 31 -

In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, whichreduced a profit-seeking enterprise’s income tax rate from 20% to 17%, effective January 1, 2010.b. Current and noncurrent net deferred taxes assets (liabilities) comprised the following:2011 2010CurrentInvestment tax credits $ 91,247 $ 42,260Deferred income 48,794 34,788Allowance for loss on inventories 17,661 7,596Unrealized compensation loss 15,897 3,400Loss carryforwards 14,393 26,010Unallocated overheads 3,286 3,612Valuation loss (gain) on financial instruments, net 469 (12,070)Unrealized exchange gains (91,136) (44,662)Others 11,760 4,806112,371 65,740Less: Valuation allowance 2,344 19,158$ 110,027 $ 46,582NoncurrentImpairment loss on assets $ 455,064 $ 510,211Loss carryforwards 317,247 325,506Loss on foreign investments 286,810 286,810Investment tax credits 215,630 579,154Difference in estimated useful lives of depreciation andamortization 161,304 177,275Accrued pension costs 20,983 20,434Deferred income 8,216 11,579Others 1,809 3,4071,467,063 1,914,376Less: Valuation allowance 132,268 132,586As of June 30, 2011, investment tax credits and loss carryforwards were as follows:$ 1,334,795 $ 1,781,790EntityRegulatory Basis ofInvestment TaxCreditsItemTax Effectof UnusedInvestmentTax CreditsExpiryYearYageo Corporation Statute for Upgrading Machinery and equipment $ 57,209 2011(the “Corporation”) Industries Machinery and equipment 4,454 2012Machinery and equipment 31,559 2014R&D and personnel training 6,066 2011R&D and personnel training 4,676 2012R&D and personnel training 202,913 2013$ 306,877- 32 -

EntityYear of LossTax Effect ofUnused LossCarryforwardsExpiry YearYageo Corporation (the “Corporation”) 2008 $ 14,393 20182009 118,197 2019Ferroxcube Taiwan 2003 13,181 20132004 3,310 20142008 381 2018Kuo Shin Investment 2009 42,231 20192010 2,013 2020$ 193,706The loss carryforwards of Ferroxcube (Spain-based factory) of NT$137,934 thousand included deferredincome tax assets - noncurrent. Their expiry is in the 15th year from the year of loss incurrence.The Corporation’s income tax returns through 2007 had been examined by the tax authorities.However, the Corporation disagreed with the result of the examination of its 2007 return and thus filedfor a reexamination of this return. Nevertheless, under the conservatism principle, the Corporationadjusted relevant accounts for tax effects that might result from the reexamination.Compostar Technology Co., Ltd., Chipcera Technology Co., Ltd. and Kuo Chung DevelopmentLimited merged with the Corporation in 2008, with the Corporation as the survivor entity; these abovecompanies’ income tax returns through 2008 had been all examined and cleared.c. Information on the integrated income tax is as follows:June 302011 2010Balance of the imputation credit account (ICA) of theCorporation $ 218,406 $ 243,674The creditable ratios for distribution of the earnings of 2011 and 2010 were 3.31% (estimate) and8.81%, respectively. Since the imputed credit allocable to the stockholders is based on the balance asof the date of the earnings distribution, the expected imputed credit rate may differ from the actualimputed credit rate. The expected creditable ratio for the 2011 earnings may differ from the actualratio depending on the ICA balance on the dividend distribution date.As of June 30, 2011 and 2010, there were no unappropriated retained earnings generated before January1, 1998.21. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSESSix Months Ended June 30, 2011Cost ofGood SoldOperatingExpense TotalPersonnel $ 1,365,889 $ 635,936 $ 2,001,825Depreciation $ 1,127,427 $ 93,878 $ 1,221,305Amortization $ 194,620 $ 20,003 $ 214,623- 33 -

Six Months Ended June 30, 2010Cost ofGood SoldOperatingExpense TotalPersonnel $ 1,279,245 $ 648,257 $ 1,927,502Depreciation $ 1,298,289 $ 96,014 $ 1,394,303Amortization $ 138,540 $ 28,958 $ 167,49822. PENSION PLANSThe Labor Pension Act provides for a defined contribution plan featuring a portable pension. TheCorporation and subsidiaries Ferroxcube Taiwan and Ko-E have made monthly contributions at 6% ofmonthly salaries and wages to the pension fund. The pension costs recognized by the foregoing entitiesfor the six months ended June 30, 2011 and 2010 were NT$35,566 thousand and NT$30,407 thousand,respectively.Under the Labor Standards Law, the Corporation and Ferroxcube, for some of its employees, have definedbenefit plans. The benefits under the plan are based on length of service and average basic pay of the finalsix months of employment. The Corporation and Ferroxcube make monthly contributions to theirrespective pension funds. The funds are administered by the employees’ pension fund committees anddeposited in the committees’ names in the Bank of Taiwan. The pension costs recognized under thedefined benefit pension plans of both the Corporation and Ferroxcube were NT$4,706 thousand andNT$4,850 thousand for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011and 2010, the balances of the pension funds were NT$203,593 thousand and NT$199,128 thousand,respectively.For some employees of Ferroxcube and all employees of Vitrohm Holding GmbH and Yageo Korea whoare under defined benefit plans, the pension liabilities as of June 30, 2011 and 2010 amounted toNT$125,609 thousand and NT$129,059 thousand, respectively, shown as accrued pension costs.Yageo Dongguan, Yageo China, Ferroxcube Dongguan, Yageo Components (Su Zhou) Co., Ltd., YageoSZ Trade Co., Ltd., Yageo USA (H.K.) Limited, Yageo Europe, Ferroxcube (except for employees underdefined benefit plan as described above), Vitrohm Portuguesa, Yageo Japan, Yageo America Corporation,Yageo Corporation (South Asia) PTE. LTD., Phycomp Malaysia SDN. BHD., Compostar Dongguan,Compostar Su Zhou, Ko-E H.K., and Ko-E Shenzhen have defined contribution plans and makecontributions based on a fixed rate of salaries and wages. Yageo Holding Bermuda, Kuo Shin Investment,Ferroxcube Holding Samoa, Compostar Cayman, Hsu Tai H.K., Ko-E Holding Cayman, Yageo HongKong, Ferroxcube Technology H.K., Compostar H.K. and Rextron International do not have pension plans.23. RELATED-PARTY TRANSACTIONSa. The Group has transactions with related parties in the normal course of business. The relationships aresummarized as follows:Related PartyChilisin Electronics Corp.Chilisin International Ltd.Chilisin Su Zhou Ltd.Teapo Electronics Corp.Teapo Holding (Bermuda) Ltd.Relationship with the GroupEquity-method investee of the CorporationSubsidiary of Chilisin Electronics Corp.Indirect subsidiary of Chilisin Electronics Corp.Equity-method investee of the CorporationSubsidiary of Teapo Electronics Corp.(Continued)- 34 -

Related PartyRelationship with the GroupTeapo Electronics (H.K.)Subsidiary of Teapo Electronics Corp.Teapo Electronics (Su Zhou)Indirect subsidiary of Teapo Electronics Corp.Teapo Electronics (Dongguan)Indirect subsidiary of Teapo Electronics Corp.Ralec Electronic Corp.Equity-method investee of the CorporationStrong Components Co., Ltd.Equity-method investee of the CorporationBelkin InternationalEquity-method investee of Yageo Holding (Bermuda)LimitedHorstrong LimitedSubsidiary of Belkin InternationalChengxin (Dongguan)Indirect subsidiary of Horstrong LimitedGuo Chuang Electronics (Dongguan) Co., Ltd. Equity-method investee of Yageo Hong Kong(Concluded)b. The transactions with the foregoing related parties are summarized as follows:For the year2011 2010Amount % Amount %SalesStrong Components Co., Ltd. $ 9,131 - $ 9,855 -Horstrong Limited 7,131 - 18,654 -Others 356 - 741 -$ 16,618 - $ 29,250 -PurchasesChilisin International Ltd. $ 145,895 1 $ 25 -Belkin International 124,785 1 302,136 3Chilisin Electronics Corp. 70,882 1 33,117 -Teapo Electronics Corp. 61,051 1 - -Teapo Electronics (H.K.) 42,650 1 2,133 -Chilisin Su Zhou Ltd. 40,039 - - -Chengxin (Dongguan) 7,125 - 18,650Teapo Electronics (Su Zhou) 1,603 - 42,570 1Others 657 - 61 -$ 494,687 5 $ 398,692 4Factory rental revenueTeapo Electronics Corp. $ 1,288 21 $ 2,738 22Guo Chuang Electronics (Dongguan) Co.,Ltd. 1,106 18 1,229 10Chilisin Electronics Corp. 342 6 342 3Teapo Electronics (Dongguan) - - 4,392 35Belkin International - - 108 -$ 2,736 45 $ 8,809 70- 35 -

2011 2010Amount % Amount %As of June 30Receivables from related partiesNotes receivableStrong Components Co., Ltd. $ 3,072 2 $ 4,882 3Accounts receivableHorstrong Limited 4,960 3 6,116 4Strong Components Co., Ltd. 3,926 2 3,283 2Other 79 - 709 -Other receivableBelkin International 447 - 27,916 17Other 790 - - -Dividend receivableRalec Electronic Corp. 58,034 34 36,781 23Chilisin Electronics Corp. 38,888 23 16,202 10Payment on behalf of othersGuo Chuang Electronics (Dongguan) Co.,Ltd. 62,083 36 67,011 41$ 172,279 100 $ 162,900 100Payables to related partiesAccounts payableChilisin International Ltd. $ 112,074 31 $ 341 -Belkin International 87,681 24 - -Chilisin Electronics Corp. 57,640 16 37,586 49Teapo Electronics Corp. 38,034 11 - -Chilisin Su Zhou Ltd. 34,511 9 - -Teapo Electronics (H.K.) 27,743 8 1,478 2Chengxin (Dongguan) 4,938 1 6,050 8Teapo Electronics (Su Zhou) 317 - 31,591 41Others 661 - - -$ 363,599 100 $ 77,046 100The payment terms for the receivables from (payables to) the related parties were based on the terms ofthe related contracts. Other related-party transactions were conducted under normal terms.24. MORTGAGED OR PLEDGED ASSETSAs of June 30, 2011 and 2010, the following assets of the Group had been pledged as collateral for bankloans:Six Months Ended June 302011 2010Property, plant and equipment, net $ 4,758,137 $ 4,524,717Assets leased to others, net 38,864 39,266$ 4,797,001 $ 4,563,983- 36 -

25. SIGNIFICANT COMMITMENTS AND CONTINGENCIESIn addition to the transactions disclosed in other notes to the financial statements, the other commitmentsand contingent liabilities as of June 30, 2011 were as follows:a. Unused letters of credit were about NT$102,964 thousand.b. Contracts for purchase of machinery and equipment totaled NT$646,823 thousand.c. Guarantees the Corporation provided for Yageo Holding (Bermuda) Limited amounted toNT$1,374,569 thousand.d. The Securities and Future Investors Protection Center (SFIPC) alleged that Far Eastern Air TransportLtd. (FEATL) had been involved in exaggerating the turnover and accounts receivable. The SFIPCcharged that FEATL window-dressed its financial reports and thus harmed its investors’ welfare.Under these investors’ authorization, the SFIPC sued 33 defendants, including FEATL and itsmanagement, directors and supervisors, certified public accountant, its accounting firm, etc., (excludingthe Corporation) and filed a civil action lawsuit to demand compensation for damages with the districtcourt of Taipei on June 23, 2009.In January 2010, the SFIPC included in its lawsuit the Corporation and two other companies becausethey were FEATL’s directors and supervisors from 2005 to 2007. Since the joint defendants increasedto 36, SFIPC appealed for a compensation amounted of NT$297,061 thousand. But because this casewas still under court review as of December 31, 2011, the Corporation could not determine the outcomeof this case. Nevertheless, since the Corporation has business liability insurance, the Corporationbelieves that if the court’s ruling is not favorable to the Corporation, the compensatory damages wouldnot significantly affect its finance and business status.e. The Corporation terminated the position of its staff, Employee L, in July 2010. However, Employee Ldisagreed with the Corporation’s decision and applied for voluntary retirement. Employee L allegedthat the Corporation did not not follow the Labor Standards Act and had thus terminated hisemployment contract improperly. Employee L filed a lawsuit against the Corporation with the TaipeiDistrict Court and demanded retirement payments along with other expense payables, which all totaledabout NT$19,997 thousand. However, the Corporation considered Employee L’s contract as that witha contractual employee rather than a regular employee. Under the Labor Standards Act, a contractualemployee is not entitled to retirement payments. Hence, the Corporation claimed it had noresponsibility to make retirement payments to Employee L.26. FINANCIAL INSTRUMENTSa. The fair values of financial instrumentsCarryingValueJune 302011 2010CarryingFair Value ValueFair ValueNonderivative financial instrumentsAssetsCash and cash equivalents $ 9,637,495 $ 9,637,495 $ 7,137,599 $ 7,137,599Financial assets at fair value through profit orloss - noncurrent - - 20,798 20,798Available-for-sale financial assets - current 2,001 2,001 49,816 49,816Notes receivable 55,849 55,849 26,483 26,483(Continued)- 37 -

CarryingValueJune 302011 2010CarryingFair Value ValueFair ValueAccounts receivable, net $ 6,966,362 $ 6,966,362 $ 7,224,830 $ 7,224,830Accounts receivable from related parties 172,279 172,279 162,900 162,900Other receivables 99,525 99,525 129,715 129,715Available-for-sale financial assets - noncurrent 3,179,143 3,179,143 2,912,328 2,912,328Financial assets carried at cost - noncurrent 317,103 343,409 338,090 372,574Bond investments with no active market 50,000 50,000 50,000 50,000Refundable deposits 20,368 20,368 17,315 17,315LiabilitiesShort-term loans 4,123,436 4,123,436 1,243,703 1,243,703Short-term bills payable, net 998,225 998,225 - -Notes payable 6,249 6,249 8,277 8,277Accounts payable 4,110,742 4,110,742 4,681,154 4,681,154Accounts payable to related parties 363,599 363,599 77,046 77,046Accrued expenses 1,107,768 1,107,768 1,201,778 1,201,778Cash dividends payable 220,531 220,531 329,229 329,229Bonds payable 5,937,324 5,937,324 6,499,081 6,499,081Long term bank debt (including current portion) 500,000 500,000 2,000,000 2,000,000Guarantee deposits received 17,756 17,756 24,340 24,340Classification of derivate instruments on the basisof trader’s territoryDomesticFinancial assets at fair value through profit orloss - stock option 226,545 226,545 306,540 306,540Financial assets at fair value through profit orloss - forward exchange contracts 682 682 44,612 44,612Financial liabilities at fair value through profit orloss - forward exchange contracts 2,188 2,188 29 29ForeignFinancial assets at fair value through profit orloss - forward exchange contract 5,970 5,970 33,641 33,641Financial liabilities at fair value through profit orloss - forward exchange contracts 916 916 5,739 5,739(Concluded)b. Methods and assumptions used to estimate the fair values of financial instruments were as follows:1) The fair values of some financial instruments are estimated on the basis of their carrying values inthe balance sheet. Because the maturity periods of those instruments are short or their futurereceipts/payments are similar to their carrying values, their carrying values provide reasonable basisfor the estimation of fair value.2) The fair values of the financial assets measured at fair value through profit or loss andavailable-for-sale financial assets - the domestic and foreign common stocks of listed companiesand convertible bonds - are based on their quoted market prices.3) Financial assets carried at cost are based on the Group’s equity in the investees’ net assets.4) The fair values of bond investments with no active market are based on the fair values provided byissuers.5) The fair values of refundable deposits and guarantee deposits received approximate their carryingamounts because there are no definite receipt or payment terms.- 38 -

6) The fair values of long-term bank debts are estimated using discounted cash flow analysis based oncurrent interest rates for borrowings with similar maturities. If the interest rate of thesimilar-maturity borrowings is close to the interest rate of long-term bank debts, the fair value isbased on the carrying amounts of loans.7) The fair values of the bonds payable are estimated using discounted cash flow analysis based oncurrent interest rates for borrowings with similar maturities. If the interest rate is close to discountrate of bonds, the fair value is based on carrying amounts of bonds payable.8) The fair values of derivatives with quoted market prices in active markets are based on their quotedmarket prices, or, if quoted market prices are not available, are determined using the valuationtechniques. The estimations and assumptions incorporated in the valuation techniques by theGroup are the same as those used by participants in the market, which can be obtained by theGroup.c. Financial assets and liabilities with fair values based on quoted market prices or on estimates madeusing valuation techniques were as follows:AssetsQuoted Market PricesValuation TechniquesJune 30 June 302011 2010 2011 2010Financial assets at fair value through profit or loss -current $ - $ 20,798 $ 6,652 $ 78,253Financial assets at fair value through profit or loss -noncurrent - - 226,545 306,540Available-for-sale financial assets - current 2,001 49,816 - -Available-for-sale financial assets - noncurrent 2,908,354 2,721,534 270,789 190,794LiabilitiesFinancial liabilities at fair value through profit orloss - current - - 3,104 5,768d. On financial instruments with fair values estimated using valuation techniques, there were a net gain ofNT$64,553 thousand and a net gain of NT$212,634 thousand for the six months ended June 30, 2011and 2010, respectively.e. As of June 30, 2011 and 2010, the financial assets exposed to fair value interest rate risks amounted toNT$5,376,943 thousand and NT$2,239,641 thousand, respectively, and the financial liabilities exposedto fair value interest rate risks amounted to NT$5,621,661 thousand and NT$3,243,703 thousand,respectively. The financial assets exposed to cash flow interest rate risks amounted toNT$4,579,530 thousand and NT$5,136,693 thousand as of June 30, 2011 and 2010, respectively.f. Financial risks1) Market riska) Foreign exchange risk: The foreign exchange rate fluctuations would result in the exposure ofthe Group’s foreign-currency-dominated assets and liabilities, open forward exchange contractsand foreign exchange option to fair value risk and cash flow risk.b) Price risk: The fluctuations in market price would result in changes in the fair values of theGroup’s financial instruments at fair value through profit or loss and available-for-sale financialassets- 39 -

2) Credit riskCredit risk represents the potential loss that would be incurred by the Group if counter-partiesbreach financial instrument contracts. The amount of the largest credit risk of financialinstruments held by the Group is the same as their carrying amount.3) Liquidity riskThe Group has sufficient operating capital to meet cash flow requirement. Thus, the Group doesnot have liquidity risk.The Group’s available-for-sale financial instruments are publicly-traded in an active market andmay readily be sold at prices approximating their fair values in the market; thus, no materialliquidity risk is anticipated. Financial assets carried at cost and bond investments have no quotedmarket prices in an active market; thus, they have material liquidity risk. On forward contracts,those outstanding as of June 30, 2011 were anticipated to generate cash inflows of JPY594,414thousand, US$2,828 thousand, EUR425 thousand and NT$90,680 thousand, and cash outflowswould amount to EUR5,200 thousand, US$2,600 thousand and RMB25,019 thousand. In addition,the exchange rates of forward exchange contracts have been determined; thus, no material cash flowrisk on these contracts is anticipated.27. SIGNIFICANT FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIESSignificant financial assets and liabilities in foreign currency were as follows:Unit:In thousands of Foreign Currencies/New Taiwan DollarsForeignCurrenciesJune 302011 2010Exchange New Taiwan Foreign ExchangeRate Dollars Currencies RateNew TaiwanDollarsFinancial assetsMonetary itemsUSD $ 321,450 28.8020 $ 9,258,398 $ 239,247 32.2780 $ 7,722,426RMB 826,714 4.4558 3,683,670 504,345 4.7598 2,400,580EUR 45,528 41.7226 1,899,559 31,529 39.5309 1,246,357HKD 220,576 3.7010 816,353 310,158 4.1464 1,286,041JPY 754,428 0.3584 270,387 1,466,826 0.3642 534,218PLN 6,822 10.4719 71,439 8,002 9.5650 76,539KRW 1,104,536 0.0270 29,822 1,989,919 0.0264 52,534GBP 104 46.1034 4,775 107 48.4945 5,210HUF 23,818 0.1572 3,744 66,637 0.1382 9,209SGD 64 23.4506 1,504 238 23.1251 5,499SEK 184 4.5530 837 52 4.1582 216Nonmonetary itemsJPY 5,281,429 0.3584 1,892,864 4,473,353 0.3642 1,629,195HKD 13,677 3.7010 50,619 13,687 4.1464 56,752RMB 9,624 4.4558 42,882 8,348 4.7598 39,736Investments accounted forby the equity methodUSD 26,793 28.8020 771,698 26,313 32.2780 849,318RMB 7,954 4.4558 35,441 7,513 4.7598 35,762(Continued)- 40 -

ForeignCurrenciesJune 302011 2010Exchange New Taiwan Foreign ExchangeRate Dollars Currencies RateNew TaiwanDollarsFinancial liabilitiesMonetary itemsUSD $ 314,514 28.8020 $ 9,058,628 $ 283,479 32.2780 $ 9,150,140RMB 298,252 4.4558 1,328,953 343,761 4.7598 1,636,236JPY 2,672,954 0.3584 957,987 4,181,735 0.3642 1,522,988EUR 3,983 41.7226 166,172 12,091 39.5309 477,963HKD 41,576 3.7010 153,874 45,026 4.1464 186,695PLN 9,718 10.4719 101,766 9,593 9.5650 91,757SGD 111 23.4506 2,594 128 23.1251 2,970KRW 60,505 0.0270 1,634 61,974 0.0264 1,636HUF 9,145 0.1572 1,438 8,111 0.1382 1,121GBP 15 46.1034 686 - - -SEK 109 4.5530 497 181 4.1582 752(Concluded)28. ADDITIONAL DISCLOSURESa. Following are the additional disclosures required by the Securities and Futures Bureau for the group:1) Financing provided: Table 1 (attached)2) Endorsement/guarantee provided: Table 2 (attached)3) Marketable securities held: Table 3 (attached)4) Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% ofthe capital stock: Table 4 (attached)5) Acquisition of individual real estates at costs of at least $100 million or 20% of the capital stock:None6) Disposal of individual real estates at prices of at least $100 million or 20% of the capital stock:None7) Total purchase from or sale to related parties amounting to at least $100 million or 20% of thecapital stock: Table 5 (attached)8) Receivables from related parties amounting to at least $100 million or 20% of the capital stock:Table 6 (attached)9) Names, locations, and related information of investees on which the Corporation exercisessignificant influence: Table 7 (attached)10) Information of derivative transactions: Note 5 and 26b. Investment in Mainland China1) Investee company name, the description of the primary business activity and products, issuedcapital, nature of the relationship, capital inflow or outflow, ownership interest, gain or loss oninvestment, amounts received on investment, and the limitation on investment: Table 8 (attached)- 41 -

2) Significant direct or indirect transactions with the investee company, prices, payment terms, loans,guarantee and unrealized gain or loss:a) Purchase, purchase percentage and related ending balance, percentage of accounts payable:Note 23 and Table 5 (attached)b) Sales, sales percentage and related ending balance, percentage of accounts receivable: Note 23and Table 5 (attached)c) The amount of property transactions and related transaction’s gain or loss: Eliminated in theconsolidated statementsd) Providing collaterals or endorsements, the ending balance and purpose: Table 2 (attached)e) Financing to others, related information including highest balance, ending balance, interval ofinterest rate and total current interest: Table 1 (attached)f) Other transactions that significantly impacted current period’s profit or loss or financialposition: For example, professional services provided or received: Nonec. Intercompany relationships and significant transactions: Table 9 (attached)29. OPERATING SEGMENT FINANCIAL INFORMATIONa. Basic information1) Classification of operating segmentThe Group’s reportable segments under Statement of Financial Accounting Standards No. 41 -“Operating Segments” are as follows:a) Resistors business segmentb) Capacitors business segmentc) Ferrite business segmentd) Other electronic components business segment2) Principles for measuring operating segments’ profit or loss, assets and liabilitiesSignificant accounting policies used for each operating segments are consistent with the policiesstated in Note 2 to the financial statements.The measure of the operating segments’ profit or loss is the operating profit or loss under thedepartment manager’s control, and this measure is used as the basis for management’s segmentassessment. The measure of operating liabilities is the Group’s capital budget and capital demand,which are not allocated by individual operating segment. Thus, the operating liabilities are not thebasis of segment performance evaluation consideration.- 42 -

. Segment revenues and resultsThe analysis of the Group’s operating revenue and results by reportable segment was as follows:Segment RevenueSegment ProfitSix Months Ended June 30 Six Months Ended June 302011 2010 2011 2010Resistors business segment $ 1,341,552 $ 1,701,906From outside customers $ 5,096,707 $ 5,076,960From intersegment sales 5,460,266 4,065,530Capacitors business segment 342,615 820,686From outside customers 5,420,792 5,890,337From intersegment sales 9,090,754 8,370,092Ferrite business segment 382,241 272,597From outside customers 1,462,473 1,218,304From intersegment sales 403,006 445,969Other electronic components segment 54,293 199,173From outside customers 1,379,033 1,295,250From intersegment sales 274,254 196,937Elimination (15,228,280) (13,078,528)$ 13,359,005 $ 13,480,851 2,120,701 2,994,362Administrative expense (448,183) (489,507)Operating income 1,672,518 2,504,855Interest income 73,908 33,968Investment gain recognized under theequity method, net 25,557 73,591Dividend income 19,335 26,153Gain (loss) on sale of investments 82 (1,328)Valuation gain on financialinstruments 64,553 212,634Interest expense (119,003) (121,522)Gain (loss) on disposal of property,plant and equipment, net (451) 1,950Exchange loss, net (73,913) (142,980)Miscellaneous income, net 10,145 13,059Profit before income tax $ 1,672,731 $ 2,600,380c. Segment assetsJune 302011 2010Resistors business segment $ 11,806,491 $ 9,590,726Capacitors business segment 11,605,826 11,942,698Ferrite business segment 2,337,205 2,210,118Other electronic components business segment 49,522 121,778Other shared assets 25,968,361 24,569,444Total of consolidated assets $ 51,767,405 $ 48,434,764- 43 -

TABLE 1YAGEO CORPORATION AND SUBSIDIARIESFINANCING PROVIDEDSIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)No. Financing Name Counter-party Financial Statement AccountFinancing Limitfor EachBorrowingCompany(Note 1)Maximum Balancefor the YearEnding BalanceInterest RateNature ofFinancing(Note 3)TransactionAmountFinancing ReasonsAllowance forBad DebtItemCollateralValueTotal MaximumAmount ofFinancing Allowedfor Financier(Note 2)0 Yageo Corporation Yageo Holding (Bermuda) Ltd. Loans receivable from relatedparties1 Yageo Holding (Bermuda) Ltd. Hsu Tai International (H.K.) Loans receivable from relatedpartiesHsu Tai International (H.K.) Loans receivable from relatedpartiesYageo (H.K.) LimitedLoans receivable from relatedpartiesYageo JapanLoans receivable from relatedpartiesYageo AmericaLoans receivable from relatedpartiesFerroxcube Holding (Samoa) Ltd. Loans receivable from relatedpartiesVitrohm HoldingLoans receivable from relatedpartiesYageo Europe Holding B.V. Loans receivable from relatedpartiesYageo Europe Holding B.V. Loans receivable from relatedpartiesYageo Europe Holding B.V. Loans to subsidiaries consideredas a component of investmentFerroxcube International Holding B.V. Loans receivable from relatedpartiesFerroxcube International Holding B.V. Loans receivable from relatedpartiesFerroxcube International Holding B.V. Loans to subsidiaries consideredas a component of investment$ 13,150,017 US$ 13,000 US$ 13,000 1.5 2 $ - For revolving fund $ - None $ - $ 13,150,017US$ 935,059 US$ 8,659 US$ 8,659 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 HK$ 14,926 HK$ 14,926 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 US$ 85,000 US$ 85,000 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 JPY 36,906 JPY 36,906 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 US$ 9,742 US$ 9,742 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 US$ 3,423 US$ 3,423 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 EUR 3,105 EUR 3,105 2 - For revolving fund - None - US$ 935,059US$ 935,059 US$ 10,238 US$ 10,238 2.0 2 - For revolving fund - None - US$ 935,059US$ 935,059 EUR 6,439 EUR 6,439 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 EUR 177,656 EUR 177,656 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 US$ 2,290 US$ 2,290 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 EUR 23,128 EUR 23,128 - 2 - For revolving fund - None - US$ 935,059US$ 935,059 EUR 20,688 EUR 20,688 - 2 - For revolving fund - None - US$ 935,0592 Ferroxcube Holding (Samoa) Ltd. Ferroxcube Electronic (Dongguan)Co., Ltd.Loans receivable from relatedpartiesRMB 170,435 US$ 4,300 US$ 4,300 - 2 - For revolving fund - None - RMB 170,4353 Yageo (Hong Kong) Limited Yageo Electronics (China) Co., Ltd. Loans receivable from relatedpartiesYageo Trade Co., Ltd. (Suzhou) Loans receivable from relatedparties4 Yageo Trade Co., Ltd. (Suzhou) Yageo Electronics (China) Co., Ltd. Loans receivable from relatedpartiesHK$ 3,196,297 US$ 80,000 US$ 80,000 - 2 - For revolving fund - None - HK$ 3,196,297HK$ 3,196,297 US$ 5,000 US$ 5,000 - 2 - For revolving fund - None - HK$ 3,196,297RMB 84,148 RMB 25,000 RMB 25,000 - 2 - For revolving fund - None - RMB 84,1485 Compostar Technology (Cayman),Ltd.Yageo Holding (Bermuda) Ltd.Loans receivable from relatedpartiesUS$ 7,536 US$ 2,509 US$ 2,213 - 2 - For revolving fund - None - US$ 7,536Note 1:For the Corporation to the business relationship, financing limited for each borrowing company is limited to the amounting of business operation (base on the previous year’s actual sales and purchase amount when the loan contract award). The financing limited to the counterparty which has the short-term loan necessary islimited to 40% of its net worth presented in the latest financial statements audit or review by auditor. According to the financing procedure for Corporation’s oversea investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd., Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited,Yageo Trade Co., Ltd. (Suzhou) and Compostar Technology (Cayman), Ltd. are limited to 100% of each net worth presented in the latest financial statements audit or review by auditor.Note 2: For the Corporation, the financing amount to each counterparty is limited to 40% of its net worth presented in the latest financial statements audit or review by auditor. According to the financing procedures for Corporation’s oversea investees, maximum financing amount that can be made by Yageo Holding (Bermuda) Ltd.,Ferroxcube Holding (Samoa) Ltd., Yageo (Hong Kong) Limited, Yageo Trade Co., Ltd. (Suzhou) and Compostar Technology (Cayman), Ltd. are limited to 100% of each net worth presented in the latest financial statements audit or review by auditor.Note 3:Reasons for financing are as follows:1. Business relationship.2. For financing.(Continued)- 44 -

Note 4:Note 5:The currency rate on June 30, 2011, state on Taiwanese dollars to HKD, USD, JPY, EUR and RMB are 1:3.701, 1:28.802, 1:0.3584, 1:41.7226 and 1:4.4558, respectively; state on U.S. dollars to HKD, JPY, EUR, and RMB are 1:0.1285, 1:0.0124, 1:1.4486 and 1:0.1547, respectively.Maximum balance for the year and ending balance are the financing limit that the board of directors approved. The ending balance of financing limit and actual using amount are the same, except the listed below:The actual using amount that Yageo Corporation. loan to Yageo Holding (Bermuda) Ltd is US$4,000 thousand. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Yageo (Hong Kong) Limited is US$74,700 thousand. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Ferroxcube Holding(Samoa) Ltd. is US$0. The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Yageo Europe Holding B.V. is US$8,505 thousand, EUR4,039 thousand and EUR174,955 thousand; The actual using amount that Yageo Holding (Bermuda) Ltd. loan to Ferroxcube International Holding B.V. is US$1,290 thousand,EUR22,628 thousand and EUR20,688 thousand. The actual using amount that Yageo (Hong Kong) Limited loan to Yageo Electronics (China) Co., Ltd. is US$71,000 thousand. The actual using amount that Yageo Trade Co., Ltd. loan to Yageo Electronics (China) Co., Ltd. is RMB12,700 thousand.Note 6:The aforestated financing transactions were fully offset at the time the consolidated financial statements were prepared.(Concluded)- 45 -

TABLE 2YAGEO CORPORATION AND SUBSIDIARIESENDORSEMENT/GUARANTEE PROVIDEDSIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)No.Endorsement/GuaranteeProviderNameCounter-partyNature ofRelationshipLimits on EachCounter-party’sEndorsement/Guarantee Amounts(Note 1)MaximumBalance for the YearEnding BalanceValue of CollateralsProperty, Plant, orEquipmentRatio of AccumulatedAmount of Collateralto Net Equity of theLatest FinancialStatementMaximumCollateral/GuaranteeAmounts Allowable(Note 2)0 Yageo Corporation Yageo Holding (Bermuda) (YageoHolding (Bermuda) Ltd.guaranteed the loans of YageoElectronics (China) Co., Ltd.,Yageo Electronics (Dongguan)Co., Ltd., and FerroxcubeElectronics (Dongguan) Co., Ltd.)(Note 3)Subsidiary $ 32,875,043 $ 288,020(US$ 10,000)Yageo Holding (Bermuda) Ltd. Subsidiary 32,875,043 1,086,549(US$32,050,EUR2,000 and80,000)$ 288,020(US$ 10,000)1,086,549(US$32,050,EUR2,000 and80,000)$ - 0.88 $ 49,312,564- 3.31 49,312,564Kuo Shin Investment Limited Subsidiary 32,875,043 150,000 - - - 49,312,564Note 1: For the Corporation, endorsement or guarantee to each counterparty is limited to 100% of its net worth presented in the latest financial statements. According to the endorsement/guarantee procedure for Corporation’s overseas investees,endorsement/guarantee made by Yageo Holding (Bermuda) for each party is limited to 100% of its net worth presented in the latest financial statements.Note 2: Maximum endorsement/guarantee allowed for the Corporation is 150% of its net worth presented in the latest financial statements. According to the endorsement/guarantee procedure for Corporation’s overseas investees, maximumendorsement/guarantee that can be made by Yageo Holding (Bermuda) is limited to 150% of its net worth presented in the latest financial statements.Note 3: The endorsement/guarantee limit to each counterparty and endorsement/guarantee limit of the Company are US$935,059 thousand and US$1,402,588 thousand, respectively.Note 4: The endorsement/guarantee was based on the currency rate at the end of June 2011.Stated one Taiwanese dollars to USD and EUR are 1:28.802 and 1:41.7226, respectively.- 46 -

TABLE 3YAGEO CORPORATION AND SUBSIDIARIESLONG-TERM AND SHORT-TERM INVESTMENTSJUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Holding Company NameType and Issuer/Name of SecuritiesRelationship with theHolding CompanyFinancial Statement AccountShares or Units(All CommonShares UnlessStated Otherwise)(Thousands)Carrying ValueJune 30, 2011Percentage ofOwnership (%)Market Value orNet Asset Value(Note 1)NoteYageo CorporationStockGTCL Equity-method investee Equity-method investments 164,648 $ 564,331 20.3 $ 270,276Chilisin Electronics Corp. Equity-method investee Equity-method investments 26,775 520,537 17.5 589,041Ralec Electronic Corp. Equity-method investee Equity-method investments 7,457 384,475 12.3 417,576Teapo Electronics Corp. Equity-method investee Equity-method investments 32,585 369,255 17.0 224,185Yageo Holding (Bermuda) Ltd. Subsidiary Equity-method investments 90,000 26,931,580 100.0 26,931,580Ko-Shin Investment Ltd. Subsidiary Equity-method investments 151,700 1,375,398 100.0 1,375,398Ferroxcube Holding (Samoa) Ltd. Subsidiary Equity-method investments 1,000 759,427 100.0 759,427Compostar Technolofy (Cayman) Subsidiary Equity-method investments 50,000 217,043 100.0 217,043Strong Components Co., Ltd. Equity-method investee Equity-method investments 6,530 96,373 31.4 96,373Ferroxcube Taiwan, Ltd. Subsidiary Equity-method investments 372 16,859 100.0 16,859Phycomp Malaysia Subsidiary Equity-method investments 8,628 1,250 100.0 1,250Yageo Europe Holding B.V. Subsidiary Other liabilities 747 (2,990,977) 100.0 (3,121,632)Yageo America Subsidiary Other liabilities 1 (300,028) 100.0 (300,028)TA-I Technology Co., Ltd. - Available-for-sale financial21,210 680,922 9.9 638,424 Note 2assetsSHS KOA Corp. - Available-for-sale financial1,250 288,523 3.4 421,433 Note 2assetsLuminous Town Electric Co., Ltd. - Financial assets carried at cost 10,129 100,870 15.8 114,394Linko International Golf & Country Club - Financial assets carried at cost - 482 0.1 656Limited companyYageo Corporation (South Asia) Subsidiary Equity-method investments - 98,419 100.0 98,419BondChilisin - 3rd Equity-method investee Available-for-sale financialassets3 289,149 - 148,138 Note 2Ko-Shin Investment Ltd.StockTA-I Technology Co., Ltd. - Available-for-sale financial12,527 510,755 5.8 377,066 Note 2assetsChilisin Electronics Corp. Equity-method investee Equity-method investments 5,632 150,517 3.7 123,908GTCL Equity-method investee Equity-method investments 36,779 125,324 4.5 60,374Ralec Electronic Corp. Equity-method investee Equity-method investments 2,216 82,526 3.6 124,070Teapo Electronics Corp. Equity-method investee Equity-method investments 7,692 71,959 4.0 52,923Parawin Venture Capital Corp. Member of the board of directors Financial assets carried at cost 10,000 76,628 10.0 69,364(Continued)- 47 -

Holding Company NameType and Issuer/Name of SecuritiesRelationship with theHolding CompanyFinancial Statement AccountShares or Units(All CommonShares UnlessStated Otherwise)(Thousands)Carrying ValueJune 30, 2011Percentage ofOwnership (%)Market Value orNet Asset Value(Note 1)NoteHsin Bung International Co., Ltd. - Financial assets carried at cost 2,761 $ 33,622 16.6 $ 60,888Jihsun Securities Investment Trust Co.,- Financial assets carried at cost 1,560 12,000 4.0 35,484Ltd.FundFSITC Taiwan Money Market Fund - Available-for-sale financialassetsBondTa Chong subordinated debt - Bond investments with noactive marketChilisin - 3rd Equity-method investee Available-for-sale financialassets136 2,000 - 2,001- 50,000 - 50,0002 231,266 - 122,651 Note 2Yageo Holding (Bermuda) StockLtd. Yageo (Hong Kong) Limited Subsidiary Equity-method investments 1,030,499 US$ 410,719 100.0 US$ 410,719GCD Equity-method investee Equity-method investments 3,438 - 27.2 -SHS KOA Corp. - Available-for-sale financialassets1,926 US$ 17,831 5.3 US$ 22,551 Note 2Limited companyKo-E Holding (Cayman) Subsidiary Equity-method investments - US$ 10,920 77.2 US$ 10,920Belkin International Equity-method investee Equity-method investments - US$ 2,505 46.0 US$ 2,547Rextron International Subsidiary Equity-method investments - US$ 3,405 100.0 US$ 3,405Vitrohm Holding Subsidiary Equity-method investments - US$ 7,988 100.0 US$ 7,988Yageo Korea Subsidiary Equity-method investments - US$ 1,474 100.0 US$ 1,474Yageo USA (HK) Subsidiary Equity-method investments - US$ 11,245 100.0 US$ 11,245Hsu Tai International (H.K.) Subsidiary Equity-method investments - US$ 727 100.0 US$ 727Yageo Japan Subsidiary Equity-method investments - US$ 56 100.0 US$ 56Hsu Tai International Stock(H.K.) SHS KOA Corp. - Available-for-sale financialassets872 HK$ 68,769 2.4 HK$ 79,420 Note 2Rextron InternationalStockSHS KOA Corp. - Available-for-sale financialassets286 US$ 2,718 0.8 US$ 3,347 Note 2Yageo (Hong Kong) Limited companyLimited Yageo Electronics (China) Co., Ltd. Subsidiary Equity-method investments - HK$ 2,206,532 100.0 HK$ 2,206,532Yageo Electronics (Dongguan) Subsidiary Equity-method investments - HK$ 822,418 100.0 HK$ 822,418Yageo Trade Co., Ltd. (Suzhou) Subsidiary Equity-method investments - HK$ 63,473 100.0 HK$ 63,473Yageo Components (Suzhou) Co., Ltd. Subsidiary Equity-method investments - HK$ 92,421 100.0 HK$ 92,421Yageo Trade (Suzhou) Co., Ltd. Subsidiary Equity-method investments - HK$ 4,951 100.0 HK$ 4,951Compostar Technology (Suzhou) Co.,Ltd.Subsidiary Equity-method investments - HK$ 17,721 100.0 HK$ 17,721(Continued)- 48 -

Holding Company NameType and Issuer/Name of SecuritiesRelationship with theHolding CompanyFinancial Statement AccountShares or Units(All CommonShares UnlessStated Otherwise)(Thousands)Carrying ValueJune 30, 2011Percentage ofOwnership (%)Market Value orNet Asset Value(Note 1)NoteCompostar Technology (Dongguan) Co.,Ltd.Guo Chuang Electronics (Dongguan)Co., Ltd.Subsidiary Equity-method investments - HK$ 9,576 35.0 HK$ 9,576Equity-method investeeEquity-method investmentsFerroxcube Holding Stock(Samoa) Ltd. Ferroxcube Electronics (H.K.) Limited Subsidiary Equity-method investments 165,777 US$ 21,054 100.0 US$ 21,054Compostar Technology Stock(Cayman) Compostar Component (HK) Subsidiary Equity-method investments 10,991 US$ 1,761 100.0 US$ 1,761Ko-E Holding (Cayman)StockKo-E Corp. Subsidiary Equity-method investments 4,500 US$ 1,936 100.0 US$ 1,936Limited companyKo-E (H.K.) Limited Subsidiary Equity-method investments - US$ 10,276 100.0 US$ 10,276Ko-E (H.K.) LimitedKo-E Corp. (Shenzhen)Limited companyKo-E Technology (Shenzhen) Co., Ltd. Subsidiary Equity-method investments - HK$ 55,134 100.0 HK$ 55,134HK Wahyi Electronic Limited - Financial assets carried at cost - HK$ 10,888 17.0 HK$ 10,888SEMR China Technology Co., Ltd. - Financial assets carried at cost - HK$ 2,789 17.0 HK$ 2,789Limited companyXiamen Holder Electronic Co., Ltd. - Financial assets carried at cost - RMB 9,624 17.0 RMB 2,694Yageo Europe Holding Limited companyB.V. SHS KOA Corp. - Available-for-sale financial1,280 EUR 6,107 3.5 EUR 10,344 Note 2assetsFerroxcube International Holding B.V. - Equity-method investments 39 EUR 22,340 100.0 EUR 22,376Ferroxcube InternationalHolding B.V.Limited companyFeroxcube Electronic (Dongguan) Co.,Ltd.- Equity-method investments - EUR 18,785 100.0 EUR 18,785Note 1: The listed common stocks and bonds are valued by their closing price at the end of June 2011. The bonds which do not have quoted market is valued by the evaluated information of issuing housing.shared ratio of the latest financial statements acquired.The unlisted stock is valued by theNote 2: The carrying value is the holding cost unadjusted by market value.Note 3: The investments’ long-term equity investment and subsidiaries’ equity were fully offset in the consolidated financial statements.(Concluded)- 49 -

TABLE 4YAGEO CORPORATION AND SUBSIDIARIESMARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALSIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Company Name Securities Type and Name Financial Statement Account Counter-partyNature ofRelationshipBeginning Balance Acquisition DisposalShares/UnitsShares/UnitsShares/UnitsAmountAmountAmount Carrying Value(Thousands)(Thousands)(Thousands)Gain (Loss) onDisposalAdjustmentAmountEnding BalanceShares/UnitsAmount(Thousands)Yageo CorporationOpen-end mutual fundsYuanta Wan Tai Money Market FundAvailable-for-sale financial assets- current- - - $ - 34,394 $ 500,000 34,394 $ 500,082 $ 500,000 $ 82 $ - - $ -- 50 -

TABLE 5YAGEO CORPORATION AND SUBSIDIARIESTOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE CAPITAL STOCKSIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Company Name Related Party Nature of RelationshipPurchase/SaleAmountTransaction Details% toTotalNotes/Accounts (Payable) orAbnormal TransactionReceivable% toPayment Terms Unit Price Payment Terms Ending BalanceTotalNoteYageo Corporation Yageo Electronics (Dongguan) A subsidiary of Yageo Holding(Bermuda) Ltd.’s subsidiaryYageo Electronics (China) Co., Ltd.A subsidiary of Yageo Holding(Bermuda) Ltd.’s subsidiarySale $ (1,500,258) (25) Offset account T/T 90 days $ - - $ - -Purchase 157,727 5 Offset account T/T 90 days - (982,109) (21)Sale (1,160,296) (19) T/T 90 days - - 750,251 12Purchase 205,474 7 T/T 90 days (1,735,101) (38)Ko-E (H.K.) LimitedA subsidiary of Yageo Holding Sale (379,588) (7) T/T 60 days - - 233,247 4(Bermuda) Ltd.’s subsidiaryYageo Europe B.V. Subsidiary Sale (364,618) (6) T/T 45 days - - 152,178 2Yageo Corporation (South Asia) Subsidiary Sale (294,154) (5) T/T 90 days - - 246,782 4Yageo USA (H.K.) LimitedSubsidiary of Yageo Holding(Bermuda) Ltd.Sale (227,970) (4) Offset account T/T 90 day - - 3,762,516 62Yageo USA (H.K.) Limited Yageo Trade Co., Ltd. (Suzhou) Affiliate Sale HK$ (291,812) (19) T/T 90 days - - HK$ 181,764 17Ko-E (H.K.) Limited Affiliate Sale HK$ (157,872) (11) T/T 90 days - - HK$ 204,595 19Belkin International Affiliate Purchase HK$ 32,805 2 T/T 60 days - - HK$ (23,691) (2)Ferroxcube Holding (Samoa) Ltd. Ferroxcube H.K. Ltd. Affiliate Sale RMB (75,965) (85) T/T 60 days - - RMB 24,314 84Yageo Trade Co., Ltd. (Suzhou) Ko-E Technology (Shenzhen) Co., Ltd. A subsidiary of Yageo Holding(Bermuda) Ltd.’s subsidiarySale RMB (161,057) (65) T/T 65 days - - RMB 175,748 70Ko-E (H.K.) Limited Chilisin International Ltd. Affiliate Purchase HK$ 30,702 6 T/T 65 days - - HK$ (18,091) (4)Yageo Electronics (China) Co., Ltd. Ko-E (H.K.) Limited A subsidiary of Yageo Holding Sale RMB (54,605) (5) T/T 65 days - - RMB 50,121 7(Bermuda) Ltd.’s subsidiaryYageo Europe B.V. Affiliate Sale RMB (27,924) (2) T/T 90 days - - RMB 12,940 2Note: Except for transactions with Belkin International and Chilisin International Ltd., all the other transactions were fully offset at the time the consolidated financial statements were prepared.- 51 -

TABLE 6YAGEO CORPORATION AND SUBSIDIARIESRECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF CAPITAL STOCKJUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Company Name Related Party Nature of Relationship Ending Balance Turnover RateAmountOverdueAction TakenAmounts Received inSubsequent PeriodAllowance forBad DebtsYageo Corporation Yageo USA (H.K.) Limited Yageo Holding (Bermuda) Ltd.’s subsidiary $ 3,762,516 3.53 (Note 2) $ - - $ 895,118 $ -Yageo Electronics (China) Co., Ltd.Yageo Holding (Bermuda) Ltd.’s indirect750,251 3.78 - - 466,732 -subsidiaryYageo Corporation (South Asia) Subsidiary 246,782 4.04 (Note 2) - - 83,899 -Ko-E (H.K.) Limited)Yageo Holding (Bermuda) Ltd.’s indirect233,247 3.57 - - 146,307 -subsidiaryYageo Europe B.V. Subsidiary 152,178 10.24 (Note 2) - - 84,875 -Yageo Holding (Bamuda) Ltd. Subsidiary 123,941 - (Note 3) - - 8,121 -Yageo Holding (Bermuda) Ltd. Hsu Tai International (H.K.) Subsidiary US$ 10,577 - (Note 4) - - - -Yageo (Hong Kong) Limited Subsidiary US$ 74,700 - (Note 4) - - US$ 17,000 -Yageo America Subsidiary of Yageo Corporation US$ 9,742 - (Note 4) - - - -Vitrohm Holding Subsidiary US$ 4,544 - (Note 5) - - US$ 4,544 -Yageo Europe Holding B.V. Subsidiary of Yageo Corporation US$ 267,796 - (Note 4) - - US$ 154 -(Note 1)Ferroxcube International Holding B.V. Affiliate US$ 64,039(Note 1)- (Note 4) - - - -Yageo Electronics (China) Co., Ltd. Yageo Corporation Parent company RMB 389,403 3.37 (Note 2) - - RMB 126,031 -Ko-E (H.K.) Limited) Subsidiary of Yageo Holding (Bermuda) Ltd. RMB 50,121 2.93 - - RMB 2,846 -Yageo Trade Co., Ltd. (Suzhou) Ko-E Technology (Shenzhen) Co., Ltd. Subsidiary of Yageo Holding (Bermuda) Ltd. RMB 175,748 2.30 - - RMB 17,406 -Yageo Electronics (Dongguan) Yageo Corporation Parent company RMB 220,411 7.66 (Note 2) - - RMB 120,614 -Yageo USA (H.K.) Limited Yageo Trade Co., Ltd. (Suzhou) Affiliate HK$ 181,764 3.65 - - HK$ 54,388 -Ko-E (H.K.) Limited Affiliate HK$ 204,595 1.79 - - HK$ 46,597 -Ferroxcube H.K. Ltd. Ferroxcube International Holding B.V. Affiliate HK$ 163,805 - (Note 6) - - - -Ferroxcube Holding (Samoa) Ltd. Feroxcube Electronic (Dongguan) Co., Ltd. Affiliate US$ 4,300 - (Note 4) - - - -Ferroxcube H.K. Ltd. Affiliate RMB 24,314 5.08 - - RMB 14,218 -Yageo (H.K.) Limited Yageo Electronics (China) Co., Ltd. Subsidiary US$ 71,000 - (Note 4) - - US$ 17,000 -Yageo Trade Co., Ltd. (Suzhou) Subsidiary US$ 5,000 - (Note 4) - - - -Note 1:Note 2:Note 3:Note 4:Note 5:Note 6:Note 7:Loans to subsidiaries considered a component of investment.The turnover rate was calculated by using purchase/sales price before offsetting in the consolidation financial statement.Considered financing, and other receivable.Considered financing.Considered financing along with interest receivable.Considered receivables of selling Feroxcube Electronic (Dongguan) Co., Ltd. to Ferroxcube International Holding B.V.The aforestated receivables were fully offset at the time the consolidated financial statements were prepared.- 52 -

TABLE 7YAGEO CORPORATION AND SUBSIDIARIESNAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE CORPORATION EXERCISES SIGNIFICANT INFLUENCESIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Investor Investee Location Main Businesses and ProductsInvestment Amount Balance as of June 30, 2011Shares Percentage ofJune 30, 2011 June 30, 2010(Thousands) OwnershipCarrying ValueNet Income (Loss)of the InvesteeInvestment Gain(Loss)NotesYageo Corporation GTCL Singapore Holding company $ 400,313 $ 400,313 164,648 20.3 $ 564,331 $ (34,265) $ (6,822) Equity-method investeeChilisin Electronics Corp. Hsinchu Capacitor manufacture and492,955 492,955 26,775 17.5 520,537 101,035 17,641 Equity-method investeemarketingRalec Electronic Corp. Kaohsiung Resistor manufacture and376,858 376,858 7,457 12.3 384,475 182,887 22,442 Equity-method investeemarketingTeapo Electronics Corp. New Taipei City Capacitor manufacture and1,195,547 1,195,547 32,585 17.0 369,255 (42,743) (6,021) Equity-method investeemarketingYageo Holding (Bermuda) Ltd. Bermuda Investment US$ 462,747 US$ 462,747 90,000 100.0 26,931,580 558,107 558,107 SubsidiaryKo-Shin Investment Ltd. Taipei Investment 2,236,059 2,236,059 151,700 100.0 1,375,398 (24,455) (2,380)Ferroxcube Holding (Samoa) West Samoa Investment US$ 25,433 US$ 25,433 1,000 100.0 759,427 - - SubsidiaryLtd.Compostar Technology Cayman Island Investment 235,778 235,778 50,000 100.0 217,043 (3,178) (3,178) Subsidiary(Cayman) Ltd.Strong Components Co., Ltd. Kaohsiung Electronic componentmanufacture and marketing79,384 79,384 6,530 31.4 96,373 (18,699) (5,876) SubsidiaryFerroxcube Taiwan, Ltd. Hsinchu Ferrite core manufacture and16,175 16,175 372 100.0 16,859 (843) 2,886 Equity-method investeemarketingPhycomp Malaysia Malaysia Electronic componentMYR 759 MYR 759 8,628 100.0 1,250 - - Subsidiarymanufacture and marketingYageo Europe Holding B.V. Netherlands Holding company US$ 147,757 US$ 147,757 747 100.0 (2,990,977) 497,737 497,737Yageo America America Electronic componentUS$ 2,347 US$ 2,347 1 100.0 (300,028) (12,340) (12,340) Subsidiarymanufacture and marketingYageo Corporation (South Asia) SingaporeElectronic componentmanufacture and marketingSGD 780 SGD 780 - 100.0 98,419 (3,759) (3,759) SubsidiaryChilisin Electronics Corp. Hsinchu Capacitor manufacture andmarketing116,807 116,807 5,632 3.7 150,517 101,035 3,711 Equity-method investeeKo-Shin Investment Ltd. GTCL Singapore Holding company 125,963 125,963 36,779 4.5 125,324 (34,265) (1,524) Equity-method investeeRalec Electronic Corp. Kaohsiung Resistor manufacture and62,907 62,907 2,216 3.6 82,526 182,887 6,668 Equity-method investeemarketingTeapo Electronics Corp. New Taipei City Capacitor manufacture andmarketing129,692 129,692 7,692 4.0 71,959 (42,743) (952) Equity-method investeeYageo Holding (Bermuda) Yageo (H.K.) Limited Hong Kong Investment HK$ 1,688,970 HK$ 1,688,970 1,030,499 100.0 US$ 410,719 US$ 14,201 US$ 14,201 SubsidiaryLtd. Ko-E Holding (Cayman) Cayman Islands Holding company US$ 4,500 US$ 4,500 - 77.2 US$ 10,920 US$ 982 US$ 758 SubsidiaryBelkin International Samoa Investment US$ 1,104 US$ 1,104 - 46.0 US$ 2,505 US$ (330) US$ (138) Equity-method investeeVitrohm Holding Germany Investment EUR 15,849 EUR 15,849 - 100.0 US$ 7,988 US$ 2,341 US$ 2,341 SubsidiaryYageo Korea Korea Resistor marketing US$ 236 US$ 236 - 100.0 US$ 1,474 US$ (24) US$ (24) SubsidiaryGCD B.V.I. Investment US$ 3,551 US$ 3,551 3,438 27.2 US$ - US$ (6) US$ (2) Equity-method investeeYageo USA (H.K.) Limited Hong Kong Passive Component marketing HK$ 8,000 HK$ 8,000 - 100.0 US$ 11,245 US$ 2,968 US$ 2,968 SubsidiaryHsu Tai International (H.K.) Hong Kong Investment US$ 2,400 US$ 2,400 - 100.0 US$ 727 US$ 93 US$ 93 SubsidiaryYageo Japan Japan Resistor manufacture and US$ 339 US$ 339 - 100.0 US$ 56 US$ 37 US$ 37 SubsidiarymarketingRextron International B.V.I. Investment US$ 3,643 US$ 3,643 - 100.0 US$ 3,405 US$ 31 US$ 31 SubsidiaryYageo (Hong Kong) LimitedYageo Electronics (China) Co.,Ltd.ChinaPassive Component sales andmarketingYageo Electronics (Dongguan) China Passive Component sales andmarketingHK$ 1,701,350 HK$ 1,701,350 - 100.0 HK$ 2,206,532 HK$ 134,950 HK$ 134,950 SubsidiaryHK$ 555,010 HK$ 555,010 - 100.0 HK$ 822,418 HK$ (16,884) HK$ (16,884) Subsidiary(Continued)- 53 -

Investor Investee Location Main Businesses and ProductsInvestment Amount Balance as of June 30, 2011Shares Percentage ofJune 30, 2011 June 30, 2010(Thousands) OwnershipCarrying ValueNet Income (Loss)of the InvesteeInvestment Gain(Loss)NotesCompostar Technology (Suzhou) ChinaPassive Component sales and HK$ 40,582 HK$ 40,582 - 100.0 HK$ 63,473 HK$ 2,785 HK$ 2,785 SubsidiaryCo., Ltd.marketingYageo Trade (Su Zhou) Co., Ltd. China Passive Component marketing HK$ 38,799 HK$ 38,799 - 100.0 HK$ 92,421 HK$ (8,780) HK$ (8,780) SubsidiaryCompostar Technology (SuZhou) Co., Ltd.Compostar Technology(Dongguan) Co., Ltd.Guo Chuang Electronics(Dongguan) Co., Ltd.ChinaChinaChinaResistor and capacitormanufacture and marketingResistor and capacitormanufacture and marketingPassive Component manufactureand marketingHK$ 13,703 HK$ 13,703 - 100.0 HK$ 4,951 HK$ (1,557) HK$ (1,557) SubsidiaryHK$ 17,259 - - 100.0 HK$ 17,721 HK$ 106 HK$ 106 SubsidiaryHK$ 6,458 HK$ 6,458 - 35.0 HK$ 9,576 HK$ 272 HK$ 95 Equity-method investeeFerroxcube Holding (Samoa)Ltd.Ferroxcube Electronics (H.K.)LimitedHong Kong Investment HK$ 161,184 HK$ 161,184 165,777 100.0 US$ 21,054 - - SubsidiaryYageo Europe Holding B.V.Ferroxcube International HoldingB.V.Netherlands Holding company EUR 3,683 EUR 3,683 39 100.0 EUR 23,340 EUR 8,932 EUR 8,932 SubsidiaryFerroxcube InternationalHolding B.V.Compostar Technology(Cayman), Ltd.Feroxcube Electronic(Dongguan) Co., Ltd.Compostar Technology (HongKong) Co., Ltd.China Core manufacture and marketing EUR 14,972 EUR 14,972 - 100.0 EUR 18,785 EUR 1,170 EUR 1,170 SubsidiaryHong Kong Investment US$ 5,036 US$ 5,036 10,991 100.0 US$ 1,761 - - SubsidiaryKo-E Holding (Cayman) Ko-E Corp. New Taipei City Electronic components marketing US$ 1,393 US$ 1,393 4,500 100.0 US$ 1,936 US$ 42 US$ 42 SubsidiaryKo-E (H.K.) Limited) Hong Kong Electronic components marketing US$ 4,662 US$ 4,662 - 100.0 US$ 10,276 US$ 947 US$ 947 SubsidiaryKo-E (H.K.) Limited)Ko-E Technology (Shenzhen)Co., Ltd.China Electronic components marketing US$ 4,661 US$ 4,661 - 100.0 HK$ 55,134 HK$ 5,964 HK$ 5,964 SubsidiaryNote: The carrying value of long-term equity investments, recognized investment gain (loss) and investees’ profit (loss) of the Corporation and subsidiaries were fully offset at the time the consolidated financial statements were prepared.(Concluded)- 54 -

TABLE 8YAGEO CORPORATION AND SUBSIDIARIESINVESTMENT IN MAINLAND CHINASIX MONTHS ENDED JUNE 30, 2011(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)InvesteeCompany NameMain Businesses and ProductsTotal Amount ofPaid-in CapitalInvestment Type(e.g., Direct orIndirect)AccumulatedOutflow ofInvestment fromTaiwan as ofJanuary 1, 2011OutflowInvestment FlowsInflowAccumulatedOutflow ofInvestment fromTaiwan as ofJune 30, 2011% Ownershipof Direct orIndirectInvestmentInvestment Gain(Loss)Carrying Value as ofJune 30, 2011Accumulated InwardRemittance ofEarnings as ofJune 30, 2011Yageo Electronics (Dongguan)Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 38,931($ 1,121,291)Indirect: Through acompany registered ina third regionUS$ 33,931($ 977,281)$ - $ - US$ 33,931($ 977,281)100% (HK$ 16,884)($ 63,364)HK$ 822,418($ 3,043,769)$ -Yageo Electronics (China) Co.,Ltd.Manufacture and marketing ofpassive componentsUS$ 155,977($ 4,492,450)Indirect: Through acompany registered ina third regionUS$ 155,977($ 4,492,450)- - US$ 155,977($ 4,492,450)100% HK$ 134,950($ 506,454)HK$ 2,206,532($ 8,166,375)US$ 7,751($ 223,244)Feroxcube Electronic (Dongguan)Co., Ltd.Manufacture and marketing ofFerriteUS$ 21,133($ 608,673)Indirect: Through acompany registered ina third regionUS$ 21,133($ 608,673)- - US$ 21,133($ 608,673)100% EUR 1,170($ 47,952)EUR 18,785($ 783,759)-Guo Chuang Electronics(Dongguan) Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 1,709($ 49,223)Indirect: Through acompany registered ina third regionUS$ 789($ 22,725)- - US$ 789($ 22,725)35% HK$ 95($ 357)HK$ 9,576($ 35,441)-Compostar Technology (Suzhou)Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 5,000($ 144,010)Indirect: Through acompany registered ina third regionUS$ 5,000($ 144,010)- - US$ 5,000($ 144,010)100% HK$ 2,785($ 10,452)HK$ 63,473($ 234,914)-Ko-E Technology (Shenzhen) Co.,Ltd.Manufacture and marketing ofElectronic componentsUS$ 3,500($ 100,807)Indirect: Through acompany registered ina third regionUS$ 3,150($ 90,726)- - US$ 3,150($ 90,726)77.2% HK$ 4,604($ 17,278)HK$ 42,563($ 157,526)-Guo Ray Electronics Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 1,000($ 28,802)Indirect: Through acompany registered ina third regionUS$ 460($ 13,249)- - US$ 460($ 13,249)46% US$ (26)($ 759)US$ 699($ 20,133)-Chen-Xin Electronic (Chiao-Tao)Co., Ltd.Production of passive components HK$ 1,000($ 3,701)Indirect: Through acompany registered ina third regionUS$ 59($ 1,699)- - US$ 59($ 1,699)46% US$ (119)($ 447)US$ 910($ 26,210)-Chen Xin (Dongguan) Production of passive components US$ 1,000($ 28,802)Indirect: Through acompany registered ina third regionUS$ 230($ 6,624)- - US$ 230($ 6,624)46% US$ (41)($ 154)US$ 480($ 13,825)-Yageo Trade (Su Zhou) Co., Ltd. Marketing of passive components US$ 5,000($ 144,010)Indirect: Through acompany registered ina third regionUS$ 5,000($ 144,010)- - US$ 5,000($ 144,010)100% HK$ (8,780)($ 32,950)HK$ 92,421($ 342,050)-Compostar Technology(Dongguan) Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 1,502($ 43,261)Indirect: Through acompany registered ina third regionUS$ 1,502($ 43,261)- - US$ 1,502($ 43,261)100% HK$ 106($ 398)HK$ 17,721($ 65,585)-Compostar Technology (Su Zhou)Co., Ltd.Manufacture and marketing ofpassive componentsUS$ 5,036($ 145,047)Indirect: Through acompany registered ina third regionUS$ 5,036($ 145,047)- - US$ 5,036($ 145,047)100% HK$ (1,557)($ 5,843)HK$ 4,951($ 18,324)-(Continued)- 55 -

Accumulated Investment in Mainland China as ofJune 30, 2011Investment Amounts Authorized by InvestmentCommission, MOEAUpper Limit on InvestmentUS$ 33,931($ 977,281)US$ 155,977($ 4,492,450)US$ 21,133($ 608,673)US$ 789($ 22,725)US$ 5,000($ 144,010)US$ 3,150($ 90,726)US$ 460($ 13,249)US$ 59($ 1,699)US$ 230($ 6,624)US$ 5,000($ 144,010)US$ 1,502($ 43,261)US$ 5,036($ 145,047)US$ 47,590 (Note 2)US$ 192,977 (Note 2)US$ 26,660US$ 2,926US$ 5,000US$ 3,150 Note 1US$ 736US$ 59 $32,967,859 × 60% = $19,780,715US$ 560US$ 5,000US$ 1,164US$ 5,150Note 1:Note 2:Note 3:Based on “Audit procedure of mainland china investment” on August 29, 2008, there is 60% cap on the amount of the Group’s investment.The transfer amount of capital surplus to earning approved by MOEA of Yageo Electronics (Dongguan) and Yageo Electronics (China) Co., Ltd. are US$6,740 thousand and US$37,000 thousand.Those subsidiaries hold the shares up to 50% by indirect method, their’s profits and losses and ending balances were fully offset.(Concluded)- 56 -

TABLE 9YAGEO CORPORATION AND SUBSIDIARIESINTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONSSIX MONTHS ENDED JUNE 30, 2011 AND 2010(In New Taiwan Dollars, Unless Stated Otherwise; All Amounts in Thousands)Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms% toTotal Sales orAssets2011 0 Yageo Corporation Yageo Holding (Bermuda) Ltd. 1. Accounts and notes receivable from $ 115,712 Financing -related partiesYageo Holding (Bermuda) Ltd. 1. Accounts and notes receivable from8,229 Prepaid -related partiesYageo Holding (Bermuda) Ltd. 1. Interest revenue 714 Financing -Yageo Components (Su Zhou) Co., Ltd. 1. Sales 26,310 T/T 90 days -Yageo Components (Su Zhou) Co., Ltd. 1. Accounts and notes receivable from18,128 T/T 90 days -related partiesYageo USA (H.K.) Limited 1. Sales 227,970 Offset account T/T 90 days 2Yageo USA (H.K.) Limited 1. Accounts and notes receivable from 3,762,516 Offset account T/T 90 days 7related partiesKo-E (H.K.) Limited 1. Sales 379,588 T/T 60 days 3Ko-E (H.K.) Limited 1. Rental revenue 864 T/T 60 days -Ko-E (H.K.) Limited 1. Service income 12,032 T/T 60 days -Ko-E (H.K.) Limited 1. Accounts and notes receivable from233,247 T/T 60 days -related partiesKo-E Corp. 1. Rental revenue 207 T/T 30 days -Ko-E Corp. 1. Accounts and notes receivable from28 T/T 30 days -related partiesYageo America 1. Accounts and notes receivable from30,088 Offset account T/T 120 days -related partiesYageo Corporation (South Asia) 1. Sales 294,154 T/T 90 days 2Yageo Corporation (South Asia) 1. Accounts and notes receivable from246,782 T/T 90 days -related partiesYageo Electronics (China) Co., Ltd. 1. Sales 1,160,296 T/T 90 days 9Yageo Electronics (China) Co., Ltd. 1. Accounts and notes receivable from750,251 T/T 90 days 1related partiesYageo Electronics (Dongguan) Co., Ltd. 1. Sales 1,500,258 Offset account T/T 90 days 11Yageo Trade (Su Zhou) Co., Ltd. 1. Sales 24,406 T/T 90 days -Yageo Trade (Su Zhou) Co., Ltd. 1. Accounts and notes receivable from13,040 T/T 90 days -related partiesVitrohm Portuguesa 1. Sales 5,827 T/T 90 days -Vitrohm Portuguesa 1. Accounts and notes receivable from2,039 T/T 90 days -related partiesYageo Europe B.V. 1. Sales 364,618 T/T 45 days 3Yageo Europe B.V. 1. Accounts and notes receivable fromrelated parties152,178 T/T 45 days -(Continued)- 57 -

Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms% toTotal Sales orAssetsYageo Japan 1. Sales $ 382 T/T 90 days -Yageo Japan 1. Accounts and notes receivable from99 T/T 90 days -related partiesYageo Korea 1. Accounts and notes receivable fromrelated parties422 Prepaid -1 Yageo Holding (Bermuda) Ltd. Ferroxcube 3. Loans receivable from related parties 1,844,411 Financing 4Yageo Europe Holding B.V. 3. Loans receivable from related parties 7,713,056 Financing 15Yageo America 3. Loans receivable from related parties 280,589 Financing 1Yageo Hong Kong 1. Loans receivable from related parties 2,151,509 Financing 4Hsu Tai International (H.K.) 1. Loans receivable from related parties 304,638 Financing 1Yageo Japan 1. Loans receivable from related parties 13,227 Financing -Vitrohm Holding 1. Loans receivable and interestreceivable from related parties130,851 Financing -2 Yageo Hong Kong Yageo Electronics (China) Co., Ltd. 1. Loans receivable from related parties 2,044,942 Financing 4Yageo Trade (Su Zhou) Co., Ltd. 1. Loans receivable from related parties 144,010 Financing -3 Yageo Electronics (China) Co., Ltd. Ko-E (H.K.) Limited 3. Sales 243,810 T/T 65 days 2Ko-E (H.K.) Limited 3. Accounts and notes receivable from223,329 T/T 65 days -related partiesYageo Trade (Su Zhou) Co., Ltd. 3. Sales 680 T/T 90 days -Yageo Europe B.V. 3. Sales 124,682 T/T 90 days 1Yageo Europe B.V. 3. Accounts and notes receivable from57,660 T/T 90 days -related partiesYageo Corporation 2. Sales 205,474 T/T 90 days 2Yageo Corporation 2. Accounts and notes receivable fromrelated parties1,735,101 T/T 90 days 34 Yageo USA (H.K.) Limited Yageo Trade (Su Zhou) Co., Ltd. 3. Sales 1,095,142 T/T 60 days 8Yageo Trade (Su Zhou) Co., Ltd. 3. Accounts and notes receivable from672,709 T/T 60 days 1related partiesKo-E (H.K.) Limited 3. Service income 31,481 T/T 90 days -Ko-E (H.K.) Limited 3. Sales 592,477 T/T 90 days 4Ko-E (H.K.) Limited 3. Accounts and notes receivable fromrelated parties757,205 T/T 90 days 15 Yageo Electronics (Dongguan) Co., Ltd. Yageo Corporation 2. Sales 157,727 T/T 90 days 1Yageo Corporation 2. Accounts and notes receivable from982,109 T/T 90 days 2related parties6 Ferroxcube Holding (Samoa) Ltd. Ferroxcube (Dongguan) Co., Ltd. 3. Loans receivable from related parties 123,849 Financing -Ferroxcube H.K. Ltd. 3. Sales 339,182 T/T 60 days 3Ferroxcube H.K. Ltd. 3. Accounts and notes receivable fromrelated parties108,338 T/T 60 days -7 Ferroxcube Taiwan, Ltd. Ferroxcube H.K. Ltd. 3. Commission income 4,933 T/T 60 days -(Continued)- 58 -

Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms8 Compostar Technology (Cayman) Yageo Holding (Bermuda) Ltd. 3. Loans receivable from related parties $ 63,739 Financing -Yageo Hong Kong 3. Accounts and notes receivable from63,946 Sale of long-term investment -related partiesCompostar Technology (Su Zhou) Co., Ltd. 3. Accounts and notes receivable fromrelated parties37,256 Prepaid -% toTotal Sales orAssets9 Compostar Technology (HK) Yageo Hong Kong 3. Accounts and notes receivable fromrelated parties50,715 Sale of long-term investment -10 Yageo Trade (Su Zhou) Co., Ltd. Yageo Electronics (China) Co., Ltd. 3. Sales 435 T/T 90 days -Yageo Electronics (China) Co., Ltd. 3. Accounts and notes receivable from56,589 Financing -related partiesKo-E Corp. (Shenzhen) 3. Sales 719,119 T/T 65 days 5Ko-E Corp. (Shenzhen) 3. Accounts and notes receivable fromrelated parties783,098 T/T 65 days 211 Yageo Components (Su Zhou) Co., Ltd. Yageo Europe B.V. 3. Sales 15,977 T/T 90 days -Yageo Europe B.V. 3. Accounts and notes receivable from5,739 T/T 90 days -related partiesYageo Corporation 2. Sales 45,433 T/T 90 days -Yageo Corporation 2. Accounts and notes receivable fromrelated parties36,032 T/T 90 days -12 Yageo Korea Yageo Corporation 2. Commission income 13,899 T/T 30 days -Yageo Corporation 2. Accounts and notes receivable from13,726 T/T 30 days -related parties13 Yageo Japan Yageo Holding (Bermuda) Ltd. 2. Commission income 16,232 T/T 30 days -Yageo Holding (Bermuda) Ltd. 2. Accounts and notes receivable from2,951 T/T 30 days -related parties14 Vitrohm Holding GmbH Yageo USA (H.K.) Limited 3. Sales 1,767 T/T 90 days -Yageo USA (H.K.) Limited 3. Accounts and notes receivable from979 T/T 90 days -related parties15 Ko-E Corp. (Cayman) Ko-E (H.K.) Limited) 1. Accounts and notes receivable fromrelated parties16 Ko-E (H.K.) Limited Yageo USA (H.K.) Limited 3. Accounts and notes receivable fromrelated partiesKo-E Corp. (Shenzhen) 1. Accounts and notes receivable fromrelated parties17 Ko-E Corp. (Shenzhen) Ko-E (H.K.) Limited 2. Accounts and notes receivable fromrelated partiesKo-E Corp. (Cayman) 2. Accounts and notes receivable fromrelated parties45,062 Prepaid -1,521 Prepaid -7,058 Prepaid -4,073 Prepaid -2,370 Prepaid -(Continued)- 59 -

Year No. Company Name Related PartyNature of Relationship(Note)18 Ferroxcube H.K. Ltd. Ferroxcube 3. Accounts and notes receivable fromrelated partiesTransaction Details% toTotal Sales orAssets$ 606,242 Sale of long-term investment 1Financial Statement Account Amount Payment Terms19 Yageo America Yageo Corporation 2. Commission income 19,727 T/T 90 days -2010 0 Yageo Corporation Yageo Holding (Bermuda) Ltd. 1. Accounts and notes receivable from8,535 Prepaid -related partiesYageo Holding (Bermuda) Ltd. 1. Loans receivable and interest161,632 Financing -receivable from related partiesYageo Holding (Bermuda) Ltd. 1. Interest revenue 242 Financing -Yageo Components (Su Zhou) Co., Ltd. 1. Sales 22,820 T/T 90 days -Yageo Components (Su Zhou) Co., Ltd. 1. Accounts and notes receivable from16,034 T/T 90 days -related partiesYageo USA (H.K.) Limited 1. Sales 112,730 Offset account T/T 90 days 1Yageo USA (H.K.) Limited 1. Accounts and notes receivable from 2,416,387 Offset account T/T 90 days 5related partiesKo-E (H.K.) Limited 1. Sales 568,329 T/T 60 days 4Ko-E (H.K.) Limited 1. Rental revenue 828 T/T 30 days -Ko-E (H.K.) Limited 1. Service income 18,052 T/T 60 days -Ko-E (H.K.) Limited 1. Accounts and notes receivable from342,473 T/T 60 days 1related partiesKo-E Corp. 1. Rental revenue 216 T/T 30 days -Yageo America 1. Accounts and notes receivable from42,794 Offset account T/T 120 days -related partiesYageo Corporation (South Asia) 1. Sales 369,864 T/T 90 days 3Yageo Corporation (South Asia) 1. Accounts and notes receivable from349,475 T/T 90 days 1related partiesYageo Electronics (China) Co., Ltd. 1. Sales 1,087,183 T/T 90 days 8Yageo Electronics (China) Co., Ltd. 1. Accounts and notes receivable from509,000 T/T 90 days 1related partiesYageo Electronics (Dongguan) Co., Ltd. 1. Sales 1,015,775 Offset account T/T 90 days 8Yageo Trade (Su Zhou) Co., Ltd. 1. Sales 29,631 T/T 90 days -Yageo Trade (Su Zhou) Co., Ltd. 1. Accounts and notes receivable from16,759 T/T 90 days -related partiesVitrohm Portuguesa 1. Sales 6,640 T/T 90 days -Vitrohm Portuguesa 1. Accounts and notes receivable from4,191 T/T 90 days -related partiesYageo Europe B.V. 1. Sales 346,173 T/T 45 days 3Yageo Europe B.V. 1. Accounts and notes receivable fromrelated parties179,622 T/T 45 days -1 Yageo Holding (Bermuda) Ltd. Ferroxcube 3. Loans receivable from related parties 1,845,567 Financing 4Yageo Europe Holding B.V. 3. Loans receivable from related parties 7,833,787 Financing 16Ferroxcube Holding (Samoa) Ltd. 3. Loans receivable from related parties 110,486 Financing -Yageo America 3. Loans receivable from related parties 314,457 Financing 1Yageo Hong Kong 1. Loans receivable from related parties 1,894,719 Financing 4Yageo USA (H.K.) Limited 1. Loans receivable from related parties 96,834 Financing -Hsu Tai International (H.K.) 1. Loans receivable from related parties 347,100 Financing 1(Continued)- 60 -

Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms% toTotal Sales orAssetsYageo Japan 1. Loans receivable from related parties $ 13,461 Financing -Vitrohm Holding 1. Loan receivable and interest receivable 153,362 Financing -from affiliates and related parties2 Yageo Hong Kong Yageo Electronics (China) Co., Ltd. 1. Loans receivable from related parties 1,775,290 Financing 4Yageo Trade (Su Zhou) Co., Ltd. 1. Loans receivable from related parties 161,390 Financing -3 Yageo Electronics (China) Co., Ltd. Ko-E Corp. (Shenzhen) 3. Sales 406 T/T 65 days -Ko-E Corp. (Shenzhen) 3. Accounts and notes receivable from139 T/T 65 days -related partiesKo-E (H.K.) Limited 3. Sales 246,235 T/T 65 days 2Ko-E (H.K.) Limited 3. Accounts and notes receivable from187,978 T/T 65 days -related partiesYageo Trade (Su Zhou) Co., Ltd. 3. Sales 14,986 T/T 90 days -Yageo Europe B.V. 3. Sales 153,806 T/T 90 days 1Yageo Europe B.V. 3. Accounts and notes receivable from67,864 T/T 90 days -related partiesYageo Corporation 2. Sales 462,887 T/T 90 days 3Yageo Corporation 2. Accounts and notes receivable fromrelated parties1,308,967 T/T 90 days 34 Yageo USA (H.K.) Limited Yageo Trade (Su Zhou) Co., Ltd. 3. Sales 650,328 T/T 60 days 5Yageo Trade (Su Zhou) Co., Ltd. 3. Accounts and notes receivable from435,903 T/T 60 days 1related partiesKo-E (H.K.) Limited 3. Service income 37,415 T/T 90 days -Ko-E (H.K.) Limited 3. Sales 608,924 T/T 90 days 5Ko-E (H.K.) Limited 3. Accounts and notes receivable from565,971 T/T 90 days 1related partiesYageo Electronics (China) Co., Ltd. 3. Sales 101,942 T/T 90 days 1Yageo Electronics (China) Co., Ltd. 3. Accounts and notes receivable fromrelated parties26,133 T/T 90 days -5 Yageo Electronics (Dongguan) Co., Ltd. Yageo Electronics (China) Co., Ltd. 3. Accounts and notes receivable from421 T/T 60 days -related partiesYageo Corporation 2. Sales 238,406 T/T 90 days 2Yageo Corporation 2. Accounts and notes receivable fromrelated parties989,815 T/T 90 days 26 Ferroxcube Holding (Samoa) Ltd. Ferroxcube (Dongguan) Co., Ltd. 3. Loans receivable from related parties 138,975 Financing -Ferroxcube H.K. Ltd. 3. Sales 393,787 T/T 60 days 3Ferroxcube H.K. Ltd. 3. Accounts and notes receivable fromrelated parties250,700 T/T 60 days 17 Ferroxcube Taiwan, Ltd. Ferroxcube H.K. Ltd. 3. Commission income 8,891 T/T 60 days -(Continued)- 61 -

Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms% toTotal Sales orAssets8 Compostar Technology (Suzhou) Co., Ltd. Yageo Trade (Su Zhou) Co., Ltd. 3. Sales $ 178 T/T 90 days -9 Compostar Technology (Cayman), Ltd. Compostar Technology (Suzhou) Co., Ltd. 3. Accounts and notes receivable fromrelated partiesYageo Corporation 2. Accounts and notes receivable fromrelated parties41,563 - -79,236 - -10 Yageo Trade (Su Zhou) Co., Ltd. Yageo Electronics (China) Co., Ltd. 3. Sales 9,682 T/T 90 days -Yageo Electronics (China) Co., Ltd. 3. Accounts and notes receivable from8,442 T/T 90 days -related partiesKo-E Corp. (Shenzhen) 3. Sales 510,216 T/T 65 days 4Ko-E Corp. (Shenzhen) 3. Accounts and notes receivable fromrelated parties446,980 T/T 65 days 111 Yageo Components (Su Zhou) Co., Ltd. Yageo Europe B.V. 3. Sales 15,902 T/T 90 days -Yageo Europe B.V. 3. Accounts and notes receivable from5,018 T/T 90 days -related partiesYageo Corporation 2. Sales 53,550 T/T 90 days -Yageo Corporation 2. Accounts and notes receivable fromrelated parties41,140 T/T 90 days -12 Yageo Korea Yageo Corporation 2. Commission income 19,828 T/T 30 days -Yageo Corporation 2. Accounts and notes receivable from3,248 T/T 30 days -related parties13 Yageo Japan Yageo Holding (Bermuda) Ltd. 2. Commission income 16,758 T/T 30 days -Yageo Holding (Bermuda) Ltd. 2. Accounts and notes receivable from2,374 T/T 30 days -related parties14 Vitrohm Holding GmbH Yageo USA (H.K.) Limited 3. Sales 836 T/T 90 days -Yageo USA (H.K.) Limited 3. Accounts and notes receivable from548 T/T 90 days -related partiesYageo Corporation 2. Sales 227 T/T 90 days -15 Ko-E Corp. (Cayman) Ko-E (H.K.) Limited 1. Accounts and notes receivable fromrelated parties16 Ko-E Limited Ko-E Corp. (Cayman) 2. Accounts and notes receivable fromrelated partiesKo-E Corp. (Shenzhen) 3. Accounts and notes receivable fromrelated parties17 Ko-E (H.K.) Limited Yageo USA (H.K.) Limited 3. Accounts and notes receivable fromrelated partiesKo-E Corp. (Shenzhen) 1. Accounts and notes receivable fromrelated parties39,972 T/T 180 days -392 Prepaid -300 Prepaid -1,704 Prepaid -14,582 Prepaid -(Continued)- 62 -

Year No. Company Name Related PartyNature of Relationship(Note)Transaction DetailsFinancial Statement Account Amount Payment Terms% toTotal Sales orAssets18 Ko-E Corp. (Shenzhen) Ko-E (H.K.) Limited 2. Accounts and notes receivable fromrelated parties19 Ferroxcube H.K. Ltd. Ferroxcube 3. Accounts and notes receivable fromrelated parties$ 971 Prepaid -679,201 Sold of long-term investment 120 Yageo America Yageo Corporation 2. Commission income 16,426 T/T 90 days -Note 1The flow of related-party transactions is as follows:1. From the parent company to its subsidiary.2. From a subsidiary to its parent company.3. Between subsidiaries.Note 2: The forestated intercompany transactions were fully offset at the time the consolidated financial statements were prepared.(Concluded)- 63 -

TABLE 10YAGEO CORPORATION AND SUBSIDIARIESTHE GROUP’S ORGANIZATION CHARTJUNE 30, 2011Yageo CorporationYageoAmericaCorporation100% 100%CompostarTechnology(Cayman),Ltd.100%Ko-ShinInvestmentLtd.100%YageoHolding(Bermuda)Ltd.100%YageoCorporation(South Asia)Pte. Ltd.100%PhycompMalaysiaSDN. BHD.100%FerroxcubeTaiwan Ltd.100%FerroxcubeHolding(Samoa) Ltd.100%Yageo Europe100%Compostar(Hong Kong)Limited100%Yageo USA(H.K.)Limited100%Yageo Japan100%Yageo Korea100%Yageo(Hong Kong)Limited100%VitrohmHoldingGmbH77%Ko-E Holding(CaymanIsland) Ltd.100%RextronInternational100%Hsu TaiInternational(H.K)100%FerroxcubeTechnologyCo., Ltd.(H.K)100%Ferroxcube100%100%VitrohmPortuguesaFerroxcube(Dongguan)Co., Ltd.100%CompostarTechnology(Dongguan)Co., Ltd.100%CompostarTechnology(Su Zhou)Co., Ltd.100%Yageo Trade(Su Zhou)Co., Ltd.100%YageoElectronics(Dongguan)Co., Ltd.100%YageoElectronics(China) Co.,Ltd.100%YageoComponents(Su Zhou)Co., Ltd.100%Ko-E Corp.100%Ko-E (H.K.)Limited100%Ko-ETechnology(Shenzhen)Co., Ltd.- 64 -