Altek — Interim / Quarterly Report 2014

Nov 14, 2014

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS MARCH 31, 2014 AND 2013

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR14000007

To the Board of Directors and Stockholders of Altek Corporation

We have reviewed the accompanying consolidated balance sheets of Altek Corporation and subsidiaries as of March 31, 2014 and 2013, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-month periods ended March 31, 2014 and 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to issue a conclusion on these financial statements based on our reviews.

Except as discussed in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 36 “Review of Financial Statements” in the Republic of China. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As described in Note 4(3), except for the financial statements of major subsidiaries-Altek International Investment Co., Ltd. and its subsidiary-Altek (Kunshan) Co., Ltd., which were consolidated based on their reviewed financial statements, other insignificant subsidiaries were consolidated based on their unreviewed financial statements as of and for the three-month periods ended March 31, 2014 and 2013. As of March 31, 2014 and 2013, total assets of these insignificant subsidiaries amounted to $ 2,602,032 and $4,364,430, respectively, representing 16% and 26% of the consolidated total assets, respectively, and total liabilities of these insignificant subsidiaries amounted to $273,303 and $1,631,711, respectively, representing 5% and 26% of the consolidated total liabilities, respectively. Total comprehensive loss of these insignificant subsidiaries for the three-month periods ended March 31, 2014 and 2013 amounted to $70,773 and $80,508, respectively, representing 20% and 24% which expressed in absolute value of the consolidated comprehensive income, respectively. In addition, as described in Note 6(6) to the consolidated financial statements, the financial statements of investments accounted for under the equity method were not reviewed by independent accountants. Equity

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investments in these investee companies amounted to $320,273 and $353,425 as of March 31, 2014 and 2013, respectively, and the related investment loss amounted to $14,217 and $8,488 for the three-month periods then ended. These amounts were based solely on their unreviewed financial statements.

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain subsidiaries and investee companies been reviewed by independent accountants as described in the preceding paragraph, we are not aware of any material modifications that should be made to the consolidated financial statements referred to in the first paragraph in order for them to be in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and IAS 34 “Interim Financial Reporting”.

PricewaterhouseCoopers, Taiwan Hsinchu, Taiwan Republic of China

May 5, 2014

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The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of March 31, 2014 and 2013 are reviewed, not audited)

1100 1110 1150 1170 1200 1220 130X 1410 1470 11XX 1543 1550 1600 1780 1840 1900 15XX 1XXX	Assets	Notes	March31,2014 AMOUNT % $ 4,791,534 30 488,282 3 164,737 1 2,555,181 16 54,161 - 7,961 - 1,147,602 7 211,181 1 5,031 - 9,425,670 58 156,185 1 320,273 2 5,675,704 35 107,644 1 263,788 2 87,543 1 6,611,137 42 $ 16,036,807 100	December31,2013 AMOUNT % $ 4,619,412 29 442,167 3 101,802 1 2,319,220 15 58,198 - 5,887 - 1,342,629 9 177,712 1 11,829 - 9,078,856 58 156,108 1 329,654 2 5,656,784 36 110,413 1 298,633 2 88,012 - 6,639,604 42 $ 15,718,460 100	March31,2013	March31,2013
			AMOUNT $ 4,791,534 488,282 164,737 2,555,181 54,161 7,961 1,147,602 211,181 5,031 9,425,670 156,185 320,273 5,675,704 107,644 263,788 87,543 6,611,137 $ 16,036,807	AMOUNT $ 4,619,412 442,167 101,802 2,319,220 58,198 5,887 1,342,629 177,712 11,829 9,078,856 156,108 329,654 5,656,784 110,413 298,633 88,012 6,639,604 $ 15,718,460	AMOUNT $ 4,885,724 374,670 - 2,627,439 31,711 30,563 1,818,839 220,851 8,981 9,998,778 236,118 353,425 5,488,232 84,484 324,527 80,452 6,567,238 $ 16,566,016	%
	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Current income tax assets Inventories Prepayments Other current assets Current Assets Non-current assets Financial assets carried at cost - noncurrent Investments accounted for under the equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Non-current assets Total assets	6(1) 6(2) 6(4) 6(5) 6(3) 6(6) 6(7) 6(8) 6(23) 6(9)				30 2 - 16 - - 11 1 -
						60
						1 2 33 1 2 1
						40
						100

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of March 31, 2014 and 2013 are reviewed, not audited)

					March31,2014				December31,2013	December31,2013			March31,2013
	Liabilities and Equity	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(10)		$	1,200,000		7	$	1,000,000		6	$	250,000		2
2150	Notes payable	12(2)			-		-		-		-		40		-
2170	Accounts payable	12(2)			2,323,115	14			2,511,106	16			2,957,272	18
2180	Accounts payable - related	7
	parties				-		-		-		-		57		-
2200	Other payables	12(2)			570,557		4		637,671		4		1,053,415		6
2230	Current income tax liabilities				18,403		-		17,369		-		69,453		-
2250	Provisions for liabilities -	6(13)
	current				139,537		1		155,014		1		177,129		1
2300	Other current liabilities				758,659		5		602,568		4		744,879		4
21XX	Current Liabilities				5,010,271	31			4,923,728	31			5,252,245	31
	Non-current liabilities
2550	Provisions for liabilities -	6(13)
	noncurrent				109,814		1		120,417		1		128,479		1
2570	Deferred income tax liabilities	6(23)			756,182		5		746,845		5		771,053		5
2600	Other non-current liabilities	6(11)			19,680		-		27,562		-		27,562		-
25XX	Non-current liabilities				885,676		6		894,824		6		927,094		6
2XXX	Total Liabilities				5,895,947	37			5,818,552	37			6,179,339	37
	Equity attributable to owners of
	parent
	Share capital	6(14)
3110	Common stock				3,855,303	24			3,902,653	25			3,961,013	24
	Capital surplus	6(15)
3200	Capital surplus				2,010,033	13			2,028,690	13			2,381,885	15
	Retained earnings	6(16)
3310	Legal reserve				1,319,477		8		1,319,477		9		1,291,466		8
3320	Special reserve				339,267		2		339,267		2		142,456		1
3350	Unappropriated retained
	earnings				2,713,144	17			2,715,960	17			3,399,212	20
	Other equity interest
3400	Other equity interest	6(17)			171,331		1		27,904		- (		104,862)(		1)
3500	Treasury stocks	6(14)	(		274,323)(		2)(		440,573)(		3)(		695,083)(		4)
31XX	Equity attributable to
	owners of the parent				10,134,232	63			9,893,378	63			10,376,087	63
36XX	Non-controlling interest				6,628		-		6,530		-		10,590		-
3XXX	Total equity				10,140,860	63			9,899,908	63			10,386,677	63
	Significant contingent liabilities	9
	and unrecognised contract
	Significant events after the	11
	balance sheet date
	Total liabilities and equity			$	16,036,807	100		$	15,718,460	100		$	16,566,016	100

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 5, 2014.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amount) (UNAUDITED)

Items

Forthe three-monthperiods endedMarch31 2014 2013 Notes AMOUNT % AMOUNT % $ 3,804,257 100 $ 4,014,304 100 6(21)(22) and 7 ( 3,495,524) ( 92) ( 3,748,254) ( 93) 308,733 8 266,050 7 6(21)(22) ( 23,306) ( 1) ( 29,108) ( 1) ( 50,901) ( 1) ( 52,432) ( 1) ( 214,314) ( 6) ( 244,926) ( 6) ( 288,521) ( 8) ( 326,466) ( 8) 20,212 - ( 60,416) ( 1) 6(18) 82,412 2 22,156 - 6(19) 12,958 - 3,573 - 6(20) ( 3,383) - ( 2,555) - 6(6) ( 14,217) - ( 8,488) - 77,770 2 14,686 - 97,982 2 ( 45,730) ( 1) 6(23) ( 16,188) - - - $ 81,794 2 ($ 45,730) ( 1) $ 167,532 5 $ 273,207 7 7,322 - - - 5,271 - 11,054 - 6(23) ( 29,376) ( 1) ( 48,324) ( 1) $ 150,749 4 $ 235,937 6 $ 232,543 6 $ 190,207 5 $ 81,696 2 ($ 46,257) ( 1) 98 - 527 - $ 81,794 2 ($ 45,730) ( 1) $ 232,445 6 $ 189,680 5 98 - 527 - $ 232,543 6 $ 190,207 5 6(24) $ 0.22 ($ 0.12) 6(24) $ 0.22 ($ 0.12)

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General & administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit (loss) Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of loss of associates and joint ventures accounted for under the equity method 7000 Total non-operating revenue and expenses 7900 Profit (loss) before income tax 7950 Income tax expense 8200 Profit (loss) for the period Other comprehensive income 8310 Currency translation differences of foreign operations 8360 Actuarial gain on defined benefit plan 8370 Share of other comprehensive income of associates and joint ventures accounted for under the equity method 8399 Income tax relating to the components of other comprehensive income 8300 Total other comprehensive income for the period 8500 Total comprehensive income for the period Profit (loss) , attributable to: 8610 Owners of the parent 8620 Non-controlling interest Profit (loss) for the period Comprehensive income (loss) attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total comprehensive income for the period Basic earnings per share 9750 Total basic earnings (loss) per share Diluted earnings (loss) per share 9850 Total diluted earnings (loss) per share

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 5, 2014.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

For the three-month period ended	For the three-month period ended	Notes						Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent				Non-controlling interest	Totalequity
				Commonstock		Additional paid-incapital				RetainedEarnings		Currency translation differences of foreign operations	Treasury stocks	Total
								Legal reserve		Special reserve	Unappropriated retained earnings
		6(12)(15) 6(16)(23) 6(17) 6(12)(15) 6(14)(15) 6(16)(23) 6(17)	$ 3,961,013 - - - - $ 3,961,013 $ 3,902,653 2,650 ( 50,000 ) - - $ 3,855,303		$ 2,377,444 - 4,441 - - $ 2,381,885 $ 2,028,690 5,759 ( 24,416 ) - - $ 2,010,033			$ 1,291,466 - - - - $ 1,291,466 $ 1,319,477 - - - - $ 1,319,477		$ - 142,456 - - - $ 142,456 $ 339,267 - - - - $ 339,267	$ 3,621,302 ( 142,456 ) ( 33,377 ) ( 46,257 ) - $ 3,399,212 $ 2,715,960 - ( 91,834 ) 81,696 7,322 $ 2,713,144	($ 340,799 ) - - - 235,937 ($ 104,862) $ 27,904 - - - 143,427 $ 171,331	($ 768,094 ) - 73,011 - - ($ 695,083) ($ 440,573 ) - 166,250 - - ($ 274,323)	$10,142,332 - 44,075 ( 46,257 ) 235,937 $10,376,087 $ 9,893,378 8,409 - 81,696 150,749 $10,134,232		$ 10,063 - - 527 - $ 10,590 $ 6,530 - - 98 - $ 6,628	$10,152,395 - 44,075 ( 45,730 ) 235,937 $10,386,677 $ 9,899,908 8,409 - 81,794 150,749 $10,140,860
March 31, 2013 Balance at January 1, 2013 Special reserve Share-based payment transaction Loss for the period Other comprehensive income for the period Balance at March 31, 2013 For the three-month period ended
	March 31, 2014 Balance at January 1, 2014 Share-based payment transaction Disposal of treasury shares Profit for the period Other comprehensive income for the period Balance at March 31, 2014

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 5, 2014.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before income tax for the period Adjustments to reconcile profit (loss) before income tax to net cash (used in) provided by operating activities Income and expenses having no effect on cash flows Depreciation Amortisation Net gains on financial assets at fair value through profit or loss Interest expense Interest income Share-based payment compensation cost Adjustment due to change of investees' equity under the equity method Gain on disposal of property, plant and equipment Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss - current Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Net changes in liabilities relating to operating activities Accounts payable Accounts payable - related parties Other payables Provisions for liabilities Other current liabilities Other non-current liabilities Cash (used in) provided by operations Interest received Interest expense Income tax paid Net cash used in operating activities

For the three-month periods endedMarch31, Notes 2014 2013 $ 97,982 ($ 45,730 ) 6(7)(21) 92,542 73,100 6(21) 4,871 2,026 6(2)(19) ( 11,401 ) ( 4,447 ) 6(20) 3,383 2,555 6(18) ( 24,693 ) ( 16,372 ) 6(12) 2,290 6,241 14,217 8,488 6(19) ( 1,893 ) ( 248 ) ( 34,714 ) 58,059 ( 62,935 ) - ( 235,961 ) 256,256 5,393 ( 1,624 ) 195,027 ( 103,518 ) ( 33,393 ) 9,129 6,798 ( 4,590 ) ( 187,991 ) ( 187,681 ) - ( 40 ) ( 105,061 ) ( 103,027 ) ( 26,080 ) 10,617 156,091 42,634 346 ( 626) ( 145,182 ) 1,202 23,337 11,461 ( 3,335 ) ( 2,155 ) ( 2,422) ( 32,634) ( 127,602) ( 22,126)

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in intangible assets Decrease in deposits received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in deposits-in Employee stock options exercised Proceeds from employees' purchase of treasury stock Net cash provided by financing activities Effect of exchange rate Increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the three-month periods endedMarch31, Notes 2014 2013 6(26) ($ 24,137 ) ($ 248,536 ) 6(7)(19) 535 281 6(8) ( 3,369 ) ( 11,331 ) 740 320 ( 26,231 ) ( 259,266 ) 6(10) 200,000 250,000 ( 906 ) - 6,119 - - 37,834 205,213 287,834 120,742 180,482 172,122 186,924 6(1) 4,619,412 4,698,800 6(1) $ 4,791,534 $ 4,885,724

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated May 5, 2014.

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ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of New Taiwan dollars, unless stated otherwise)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the Tai-Tz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on May 5, 2014.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”) None.

• (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

• According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC in preparing the consolidated financial statements. The related new standards, interpretations and amendments are listed below:

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New Standards,Interpretations and Amendments

IASB Effective Date

Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1) Severe hyperinflation and removal of fixed dates for first-time adopters (amendment to IFRS 1) Government loans (amendment to IFRS 1) Disclosures－Transfers of financial assets (amendment to IFRS 7) Disclosures－Offsetting financial assets and financial liabilities (amendment to IFRS 7) IFRS 10, ‘Consolidated financial statements’ IFRS 11,‘Joint arrangements’ IFRS 12,‘Disclosure of interests in other entities’ IFRS 13, ‘Fair value measurement’ Presentation of items of other comprehensive income (amendment to IAS 1) Deferred tax: recovery of underlying assets (amendment to IAS 12) IAS 19 (revised), ‘Employee benefits’ IAS 27,‘Separate financial statements’ (as amended in 2011) IAS 28,‘Investments in associates and joint ventures’(as amended in 2011) Offsetting financial assets and financial liabilities (amendment to IAS 32) IFRIC 20, ‘Stripping costs in the production phase of a surface mine’ Improvements to IFRSs 2010 Improvements to IFRSs 2009－2011

July 1, 2010 July 1, 2011 January 1, 2013 July 1, 2011 January 1, 2013 January 1, 2013 (Investment entities: January 1, 2014) January 1, 2013 January 1, 2013 January 1, 2013 July 1, 2012 January 1, 2012 January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2014 January 1, 2013 January 1, 2011 January 1, 2013

Based on the Group’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the consolidated financial statements of the Group, except for the following: A. IAS 19 (revised), ‘Employee benefits’

The revised standard eliminates the corridor approach and requires actuarial gains and losses to be recognised immediately in other comprehensive income. Past service cost will be recognised immediately in the period incurred. Net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. The return of plan assets, excluding net interest expenses, is recognised in other comprehensive income. An entity is required to recognise termination benefits at the earlier of when the entity can no longer withdraw an offer of those benefits and when it recognises any related restructuring costs. Additional disclosures are required to present how defined benefit plans may affect the amount, timing and uncertainty of the entity’s future cash flows.

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• B. IAS 1, ‘Presentation of financial statements’

The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.

• C. IFRS 12, ‘Disclosure of interests in other entitles’

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. And, the Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

• D. IFRS 13, ‘Fair value measurement’

The standard defines fair value, sets out a framework for measuring fair value, and requires disclosures about fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group will disclose additional information about fair value measurements accordingly.

For the above items, the Group is assessing their impact on the consolidated financial statement and will disclose the affected amounts accordingly.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

version of IFRS as endorsed by the FSC:
New Standards,Interpretations and Amendments	IASB Effective Date
IFRS 9, ‘Financial instruments' IFRIC 14, 'Regulatory deferral accounts' Services related contributions from employees or third parties (admendments to IAS 19R) Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013	Not yet been decided January 1, 2016 July 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014

The Group is assessing the potential impact of the new standards, interpretations and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• A.The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

• B.The consolidated financial statements should be read with the annual consolidated financial statements for the year 2013.

(1) Compliance statement

• The consolidated financial statements of the Group have been prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and IAS 34, ‘Interim Financial Reporting’ as endorsed by the FSC.

• (2) Basis of preparation

• A.Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B.The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

Basis of preparation of consolidated financial statements is consistent with the annual consolidated financial statements for the year 2013.

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B.Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiaries	Main Business Activities		Ownership (%)		Note
			March31,2014	December31,2013	March31,2013
Altek Corporation " " " Altek International Investment Co., Ltd. " Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Altek Trading (Shanghai) Limited Note 2	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. Altek Optical (Cayman) Co., Ltd. Altek (Kunshan) Co., ltd. Altek EMS (Kunshan) Co., Ltd. Altek Imaging Technology (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Altek Semiconductor Corporation Beijing Altek Image Communication Technology Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Investments and general business operations Sales and design of optical instruments Investments Research design, manufacture and sales of car electronic components Design service Investments and general business operations Manufacture and sales of digital still camera and its accessories Manufacture and sales of related engineering services Manufacture and sales of optical components Manufacture and sales of digital camera parts Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Research design and sales of ASIC Sales of digital camera, handheld device and their related accessories Manufacture and sales of digital camera and its accessories and optical components	100% 100% 100% 97.96% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% 97.96% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% 88.75% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	Note 1

Note 1: Ownership increased due to subsidiary’s continued repurchase of shares of Altek Autotronics Corporation.

Note 2: Altek International Investment Co., Ltd.’s wholly- owned subsidiaries - Leading Tech. Co., Ltd. 、 Toptek Investment Cayman Co., Ltd. 、 Altek Imaging Technology (Cayman) Co., Ltd. 、 Altek Trading (Cayman)

Co., Ltd. 、 Altek Semiconductor (Cayman) Co., Ltd. 、 Altek Optical Technology (Cayman) Co., Ltd. which Altek International Investment Co., Ltd. invests other subsidiaries through.

Note 3: Except for the financial statements of major subsidiaries – Altek International Investment Co., Ltd. and its subsidiary – Altek (Kunshan) Co., Ltd., which were consolidated based on their reviewed financial

statements, other subsidiaries were consolidated based on their unreviewed financial statements as of and for the three-month periods ended March 31, 2014 and 2013.

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• C.Subsidiaries not included in the consolidated financial statements: None.

• D.Adjustments for subsidiaries with different balance sheet dates: None.

• E.Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

• (4) Employee befefits

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

• (5) Income tax

The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

• (1) Critical judgements in applying the Group’s accounting policies: None.

• (2) Critical accounting estimates and assumptions:

• A.Realisability of deferred tax assets

  • Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industry environment, and laws and regulations might cause material adjustments to deferred tax assets.

  • As of March 31, 2014, the Group recognised deferred tax assets amounting to $263,788.

• B.Evaluation of inventories

  • As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory comsumption, obsolete inventories or inventories without market selling value on balance sheet

~14~

date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of March 31, 2014, the carrying amount of inventories was $1,147,602.

• C.Calculation of accrued pension obligations

When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

As of March 31, 2014, the carrying amount of accrued pension obligations was $12,224.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash

Cash
Cash on hand Checking accounts and demand deposits Time deposits	March 31,2014 1,383 $ 329,500 4,460,651 4,791,534 $	December 31,2013 1,436 $ 142,138 4,475,838 4,619,412 $	March 31,2013
			1,393 $ 498,681 4,385,650
			4,885,724 $

A.The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

• B.The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

Items Current items: Financial assets held for trading Listed stocks Warrants Valuation adjustment Total	March 31,2014 411,426 $ 39,847 16,855 20,154 488,282 $	December 31,2013 427,458 $ - - 14,709 442,167 $	March 31,2013
			365,683 $ - - 8,987
			374,670 $

The Group recognised net gain of $11,401 and $4,447 on financial assets held for trading for the three-month periods ended March 31, 2014 and 2013, respectively.

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(3) Financial assets measured at cost

Financial assets measured at cost
Items		March31,2014	December	31,2013		March31,2013
Non-current items:
Unlisted stocks	$	245,337	$	245,260	$	300,901
Less: Accumulated impairment	(	89,152)	(	89,152)	(	64,783)
Total	$	156,185	$	156,108	$	236,118

A.As the Group’s investment in unlisted stocks are not traded in an active market, and no sufficient industry information of companies similar to these stocks financial information can be obtained, the fair value of the investment in unlisted stocks cannot be measured reliably. The Group classified those stocks as ‘financial assets measured at cost’.

• B.As of March 31, 2014, December 31, 2013 and March 31, 2013, no financial assets measured at cost held by the Group were pledged to others.

(4) Accounts receivable

Accounts receivable
			March 31,2014	December 31,2013			March 31,2013
Accounts receivable	$		3,207,856	$	2,971,895	$	3,280,114
Less: allowance for bad debts	(		652,675)	(	652,675)	(	652,675)
		$	2,555,181	$	2,319,220	$	2,627,439

A.The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s Credit Quality Control Policy:

Group 1 Group 2	March 31,2014 2,548,544 $ 4,232 2,552,776 $	December 31,2013 March 31,2013 2,285,513 $ 2,570,334 $ 8,536 50,889 2,294,049 $ 2,621,223 $	March 31,2013
			2,621,223 $

Note:

Group 1: Including domestic and foreign listed companies and their affiliated companies. Group 2: Others.

• B.The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days 31 to 90 days 91 to 180 days Over 181 days	March 31,2014 2,129 $ 256 20 - 2,405 $	December 31,2013 24,988 $ 119 64 - 25,171 $	March 31,2013
			4,070 $ 1,303 285 558
			6,216 $

The above ageing analysis was based on past due date.

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C.Movements on the Group’s provision for impairment of accounts receivable are as follows:

Individualprovision At January 1 / March 31 652,675 $ Individualprovision At January 1 / March 31 652,675 $		2014
		Group provision - $ 2013	Total
			652,675 $
		Group provision - $	Total
			652,675 $

Note: Impaired financial assets refer to the amount of the accounts receivable that the counterparty, Kodak US, has filed for bankruptcy protection. Thus, the Company recognises the uncollectible amount as related impairment.

D.The maximum exposure to credit risk at March 31, 2014, December 31, 2013 and March 31, 2013 was the carrying amount of each class of accounts receivable.

E.The Group does not hold any collateral as security.

(5) Inventories

nventories
Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total			March 31,2014
		Cost 635,895 $ 215,490 444,347 1,295,732 $	Allowance for valuation loss 87,578) ($ 31,665) ( 28,887) ( 148,130) ($ December 31,2013	Book value 548,317 $ 183,825 415,460 1,147,602 $
		Cost 630,832 $ 185,181 672,496 1,488,509 $		Book value 536,478 $ 155,169 650,982 1,342,629 $
		Cost 675,232 $ 563,619 764,144 2,002,995 $		Book value 560,469 $ 545,605 712,765 1,818,839 $

The cost of inventories recognised as expense for the three-month perpriods March 31, 2014 and 2013 was $3,495,524 and $3,748,254, respectively, including the amounts of $430 and $22,635,

~17~

respectively, that the Group wrote down from cost to net realizable value accounted for as ‘cost of goods sold’.

(6) Investments accounted for under the equity method

		March 31,2014	December	31,2013		March 31,2013
JinJing Optical Technology Co., Ltd.	$	57,415	$	59,418	$	57,310
Phoenix Optical (Shanghai) Co., Ltd.		286,445		293,823		319,702
		343,860		353,241		377,012
Less: accumulated impairment loss	(	23,587)	(	23,587)	(	23,587)
	$	320,273	$	329,654	$	353,425

• The financial information of the Group’s principal associates is summarized below:

March 31, 2014 December 31, 2013 March 31, 2013	Assets 1,313,317 $ 1,372,933 $ 1,435,587 $	Liabilities 353,529 $ 391,595 $ 400,524 $	Revenue Profit/(Loss) 231,607 $ 33,343) ($ 1,167,607 $ 98,396) ($ 238,633 $ 16,311) ($	% interest held
				note note note

Note: The shareholding ratio to the JinJing Optical Technology Co., Ltd. and Phoenix Optical (Shanghai) Co., Ltd. was 23.33% and 40%, respectively.

(Blank below)

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(7) Property, plant and equipment

At January 1, 2014 Cost Accumulated depreciation and impairment 2014 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At March 31, 2014 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,637,511 $ - 384,930) ( 1,042,216 $ 3,252,581 $ 1,042,216 $ 3,252,581 $ - - - - - - - 23,510) ( - 27,403 1,042,216 $ 3,256,474 $ 1,042,216 $ 3,668,429 $ - 411,955) ( 1,042,216 $ 3,256,474 $	Machinery	Test equipment
		2,297,655 $ 1,223,233) ( 1,074,422 $ 1,074,422 $ 3,355 53 - 38,170) ( 14,096 1,053,756 $ 2,331,130 $ 1,277,374) ( 1,053,756 $	211,774 $ 144,247) ( 67,527 $ 67,527 $ 1,327 48 1,200 7,436) ( 636 63,302 $ 215,649 $ 152,347) ( 63,302 $

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At January 1, 2013 Cost Accumulated depreciation and impairment 2013 Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At March 31, 2013 Cost Accumulated depreciation and impairment	Land Buildings 1,042,216 $ 3,441,708 $ - 280,986) ( 1,042,216 $ 3,160,722 $ 1,042,216 $ 3,160,722 $ - 15,365) ( - - - 13,053 - 22,433) ( - 57,832 1,042,216 $ 3,193,809 $ 1,042,216 $ 3,503,425 $ - 309,616) ( 1,042,216 $ 3,193,809 $	Machinery	Test equipment
		1,727,766 $ 1,053,271) ( 674,495 $ 674,495 $ 508 - - 23,217) ( 19,739 671,525 $ 1,778,348 $ 1,106,823) ( 671,525 $	193,969 $ 118,059) ( 75,910 $ 75,910 $ 1,944 6) ( 676 6,843) ( 1,347 73,028 $ 197,679 $ 124,651) ( 73,028 $

For the three-month periods ended March 31, 2014 and 2013, there was no capitalisation of borrowing interests attributable to the property, plant and equipment and the Group did not pledge it as collateral.

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(8) Intangible assets

Intangible assets
				2014			2013
At January 1
Cost			$	141,213		$		87,038
Accumulated amortisation and impairment			(	30,800)	(			13,959)
			$	110,413		$		73,079
Three-month period March 31
Opening net book amount			$	110,413		$		73,079
Additions				-				11,331
Amortisation charge			(	4,621)	(			1,788)
Net exchange differences				1,852				1,862
Closing net book amount			$	107,644		$		84,484
At March 31
Cost			$	129,757		$	100,491
Accumulated amortisation and impairment			(	22,113)	(			16,007)
			$	107,644		$		84,484
The Group has no intangible assets pledged to others.
Long-term prepaid rents ( shown as		‘Other non-current	assets’)
		March 31,2014	December 31,2013				March 31,	2013
Land-use right	$	39,971	$	39,700		$		39,359
The Group recognized amortization expenses for the			three-month periods		ended March			31, 2014
and 2013 amounting to $250 and $238, respectively.

(9) Long-term prepaid rents ( shown as ‘Other non-current assets’)

(10) Short-term borrowings

Short-term borrowings
Type ofborrowings Bank borrowings Unsecured borrowings Type of borrowings Bank borrowings Unsecured borrowings Type ofborrowings Bank borrowings Unsecured borrowings	March31,2014 1,200,000 $ December 31,2013 1,000,000 $ March31,2013 250,000 $	Interestraterange 1.17%~1.32% Interest rate range 1.17%~1.32% Interestraterange 1.30%	Collateral
			None Collateral
			None Collateral
			None

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(11) Pensions

• A.

• a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

• b) For the aforementioned pension plan, the Group recognised pension costs of $349 and $0 for the three-month periods ended March 31, 2014 and 2013, respectively.

Details of costs and expenses recognised in comprehensive income statements are as follows:

Selling expenses General and administrative expenses Research and development expenses		For the three-month period ended March 31,2014
		20 $ 39 290 349 $

• c) Expected contributions to the defined benefit pension plans of the Group within one year from March 31, 2014 amounts to $12.

B.

• a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. For the three-month periods ended March 31, 2014 and 2013, the Group had recognized pension costs of $8,781 and $8,723, respectively, under the above pension scheme.

~22~

  - b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $11,062 and $12,090 for the three-month periods ended March 31, 2014 and 2013, respectively.

• (12) Share-based payment

• A.As of March 31, 2014 and 2013, the Company’s share-based payment arrangements were as follows:

follows:
Type ofarrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Employee stock options " " " " Treasury stock transferred to employees at the seventh time Treasury stock transferred to employees at the eighth time	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 March 15, 2013 April 9, 2013	8,000 1,000 3,000 3,000 3,000 2,196 1,818	9.6 years 9.2 years 8.8 years 9.2 years 8.9 years - -	Note Note Note Note Note Vested immediately Vested immediately

Note: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.

B.Details of the share-based payment arrangements are as follows:

Options outstanding at beginning of the period Options exercised Options outstanding at end of the period Options exercisable at end of the period Approved and not yet issued options at the end of the period	For the three-month period March 31,2014	For the three-month period March 31,2014		For the three-month period March 31,2013	For the three-month period March 31,2013
	No. of options	Weighted-average exercise price (in dollars)		No. of options	Weighted-average exercise price (in dollars)
	15,708 265) ( 15,443 12,083 -	22.60 $ 23.09 22.60 22.20		16,008 - 16,008 10,208 -	24.00 $ - 24.00 23.20

~23~

• C.The weighted-average stock price of stock options at exercise dates for the three-month periods ended March 31, 2014 and 2013 was $29.56 and $17.72(in dollars), respectively.

• D.The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue date approved	Expirydate	March31,2014		December	31,2013	March31,2013
		No. of shares (in thousands) 6,977 506 2,410 2,550 3,000	Exercise price (in dollars) $ 23.20 19.40 18.30 24.10 23.90	No. of shares (in thousands) 7,177 506 2,425 2,600 3,000	Exercise price (in dollars) $ 23.20 19.40 18.30 24.10 23.90	No. of shares (in thousands) 7,277 506 2,425 2,800 3,000	Exercise price (in dollars) $ 24.60 20.60 19.40 25.60 25.40
June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012	December 31, 2017 December 31, 2017 December 31, 2017 December 31, 2020 December 31, 2020

• E.The fair value of stock options granted after January 1, 2008 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price (in dollars)	Exercise price (Note 1) (in dollars)	Expected price volatility	Expected option life	Expected dividends	Risk- free interest rate	Fair value per unit (in dollars)
Employee stock options " " " " Treasury stock transferred to employees at the seventh time Treasury stock transferred to employees at the eighth time	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 March 15, 2013 April 9,2013	$ 45.50 32.60 30.90 30.65 27.85 18.05 17.75	$ 23.20 19.40 18.30 24.10 23.90 17.23 17.23	24.45% 22.11% 22.63% 30.27% 33.54% - -	6 years 6 years 6 years 5 years 4.9 years - -	1.5% 1.5% 1.5% 1.4% 1.4% - -	2.40% 1.88% 0.96% 1.18% 1.08% - -	10.56 6.54 5.73 7.42 7.35 Note 2 Note 2

• Note 1: The exercise price of stock options was adjusted based on the cash dividends and stock dividends per share distributed.

• Note 2: Given that the exercise was close to the grant date, the fair value per unit was estimated using the intrinsic value method.

• F.Expenses incurred on share-based payment transactions are shown below:

Equity-settled	For the three-month period ended March 31,2014 2,290 $	For the three-month period ended March 31,2013
		6,241 $

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(13) Provisions

At January 1, 2014 Used (reversed) during the period Exchange differences At March 31, 2014 March 31,2014 Current 139,537 $ Non-current 109,814 $	Warranty 275,431 $ 26,366) ( 286 249,351 $ December 31,2013 March 31,2013 155,014 $ 177,129 $ 120,417 $ 128,479 $

The Group gives warranties on digital image technology application products sold. Provision for warranty is estimated based on historical warranty data of digital image technology application products.

(14) Share capital

• A.As of March 31, 2014, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 30,000 thousand shares reserved for stock options), and the paid-in capital was $3,855,303 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Employee stock options exercised (including treasury shares transferred to employees) At March 31	2014 377,015 265 377,280	2013
		373,001 2,196
		375,197

• B.Treasury shares

• a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

Shares held by	Reason for reacquisition		March 31, 2014 (in thousands of shares)	March 31, 2014 (in thousands of shares)
			Number of shares 8,250	Book Value
Altek Corporation				274,323 $

~25~

December 31, 2013

			December 31, 2013	December 31, 2013
Shares held by	Reason for reacquisition		(in thousands of shares)
			Number of shares Book Value 13,250 440,573 $ March 31, 2013 (in thousands of shares)
Altek Corporation Shares held by
			Number of shares 20,904	Book Value 695,083 $
Altek Corporation

• b)Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

• c)Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• d)Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

• e)The cancellation of treasury shares was approved by the Board of Directors’ resolution on August 5, 2013, amounting to $194,047 consisting of 5,836 thousand shares. The capital reduction date is on September 2, 2013, and the registration for cancellation of treasury shares had been completed.

• f)The cancellation of treasury shares was approved by the Board of Directors’ resolution on November 4, 2013, amounting to $166,250 consisting of 5,000 thousand shares. The capital reduction date is on February 11, 2014, and the registration for cancellation of treasury shares had been completed.

• C.For the three-month period ended March 31, 2014, the Company issued of 265 thousand shares for employee stock options excercised and the registration for issuance will be completed pursuant to the regulation.

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(15) Capital surplus

Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1, 2014 Employee stock options exercised Cancellation of treasury shares At March 31, 2014 At January 1, 2013 Employee stock options exercised At March 31, 2013		Sharepremium	Employee stock options	Employee stock options		Difference between proceeds from disposal of subsidiaryand book value	Total	Total
		1,903,779 $ 6,038 24,391) ( 1,885,426 $ Share premium	123,953 $ 279) ( 25) ( 123,649 $ Employee stock options			958 $ - - 958 $ Difference between proceeds from disposal of subsidiary and bookvalue	2,028,690 $ 5,759 24,416) ( 2,010,033 $ Total
								2,010,033 $
								Total
		2,267,949 $ - 2,267,949 $		109,495 $ 4,441 113,936 $		- $ - - $		2,377,444 $ 4,441
								2,381,885 $

(16) Retained earnings

		2014		2013
At January 1	$	4,374,704	$	4,912,768
Profit (loss) for the period		81,696	(	46,257)
Share-based payment transactions		-	(	33,377)
Actuarial gain on post employment benefit
obligations		7,322		-
Cancellation of treasury shares	(	91,834)		-
At March 31	$	4,371,888	$	4,833,134

A.According to the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Law, and remaining amount shall be

~27~

distributed in the following order:

• (a) allocating 10% to 20% as employees’ bonus;

• (b)allocating 2% as directors’ and supervisors’ remuneration; and

• (c)distributing the remaining amount as common stockholders’ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders’ meeting.

• B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders’ meeting.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve excess of 25% of the Company’s paid-in capital.

D.

• a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

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• E. The appropriation of 2013 losses had been resolved at the Board of Directors’ meeting on March 21, 2014. The appropriation of 2012 earnings had been resolved at the stockholders’ meeting on June 24, 2013. Details are summarized below:

Dividends per share Amount (in NT dollars) Legal reserve - $ - Special reserve 196,811) ( - Cash dividends - - 196,811) ($ 2013 losses	2012 earnings	2012 earnings
	Amount 28,011 $ 196,811 37,300 262,122 $	Dividends per share (in NT dollars)
		- - Around $0.1

As of May 5, 2014, the distribution proposal of 2013 has not yet been approved at the Stockholders’ meeting. The appropriation of 2012 earnings was the same as that approved by the Board of Directors on March 18, 2013. The 2012 directors’ and supervisors’ remuneration and employees’ cash bonus as appropriated during the stockholders’ meeting on June 24, 2013 were $1,106 and $8,292, respectively, and appropriated $335,701 (around $0.9 per share in dollars) of the additional paid-in capital to stockholders.

• F. The estimated amounts of employees’ bonus were $11,029 and $0 and the estimated amounts of directors’ and supervisors’ remuneration were $1,471 and $0 for the three-month periods ended March 31, 2014 and 2013, respectively, and were recognized as operating costs or operating expenses. Information on the appropriation of the Company‟s earnings as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(17) Other equity items

At January 1 Currency translation differences: Group Associates At March 31	2014 2013 27,904 $ 340,799) ($ 139,052 226,762 4,375 9,175 171,331 $ 104,862) ($

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(18) Other income

Other income
Rental revenue Interest income: Interest income from bank deposits Others Other income - others (Note) Total	For the three-month period ended March 31,2014 $ 4,560 24,672 21 53,159 $ 82,412	For the three-month period ended March 31,2013
		$ 5,137 16,347 25 647
		$ 22,156

Note: The Company allotted shares and warrants of Kodak US, due to property distribution plan of Kodak US. The Company booked other income for the three-month period ended March 31, 2014.

(19) Other gains and losses

31, 2014. Other gains and losses
	For the three-month period			For the three-month period
			ended March 31,2014		ended March 31,2013
Net gains on financial assets at fair
value through profit or loss		$	11,401	$	4,447
Net currency exchange gains (losses)			416	(	524)
Gain on disposal of property, plant and
equipment			1,893		248
Other expenses	(		752)	(	598)
Total	$		12,958	$	3,573
Finance costs
	For the three-month period			For the three-month period
			ended March 31,2014		ended March 31,2013
Interest expense:
Bank borrowings		$	3,383	$	2,555

(20) Finance costs

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(21) Expenses by nature

Expenses by nature
		For the three-month period		For the three-month period
			ended March 31,2014	ended March 31,2013
Employee expense		$	396,874	$	486,802
Depreciation charges on property,
plant and equipment			92,542		73,100
Amortisation charges on intangible
assets			4,871		2,026
Total		$	494,287	$	561,928
Employee expense
		For the three-month period		For the three-month period
			ended March 31,2014	ended March 31,2013
Wages and salaries		$	337,806	$	415,250
Employee stock options			2,290		6,241
Labor and health insurance fees			20,016		21,587
Pension costs			20,192		20,813
Other personnel expenses			16,570		22,911
Total		$	396,874	$	486,802
Income tax
A.Income tax expense
a) Components of income tax expense:
	For the three-month period			For the three-month period
			ended March 31,2014	ended March 31,2013
Current tax:
Current tax on profits for the
period	$		2,023	$	16,214
Adjustments in respect of prior
years	(		1,272)		-
Total current tax			751		16,214
Deferred tax:
Origination and reversal of
temporary differences			15,437	(	16,214)
Total deferred tax			15,437	(	16,214)
Income tax expense	$		16,188	$	-

(22) Employee expense

(23) Income tax

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b) The income tax charged to equity during the period is as follows:

For the three-month period For the three-month period ended March 31, 2014 ended March 31, 2013 Translation differences of foreign operations $ 29,376 $ 48,324

B.As of March 31, 2014, the Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority.

• C.Unappropriated retained earnings:

March 31, 2014 December 31, 2013 March 31, 2013 Earnings generated in and after 1998 $ 2,713,144 $ 2,715,960 $ 3,399,212

D.As of March 31, 2014, December 31, 2013 and March 31, 2013, the balance of the imputation tax credit account was $215,062, $221,518 and $224,628, respectively. The creditable tax rate was estimated to be 7.92% for 2013 and was 7.03% for 2012.

(24) Earnings (losses) per share

Earnings (losses) per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employee stock options Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For the three-monthperiod ended March 31,2014
	Amount aftertax 81,696 $ 81,696 $ - - 81,696 $	Weighted average number of ordinary shares outstanding (shareinthousands) 377,153 - 2,419 323 379,895	Earnings per share (indollars)
			0.22 $
			0.22 $

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For the three-month period ended March 31, 2013

Amount aftertax Basic losses per share Losses attributable to ordinary shareholders of the parent 46,257) ($ Diluted earnings per share Losses attributable to ordinary shareholders of the parent 46,257) ($ Assumed conversion of all dilutive potential ordinary shares Employees’ bonus - Losses attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 46,257) ($	Weighted average number of ordinary shares outstanding Losses per share (shareinthousands) (indollars) 373,513 0.12) ($ - 490 374,003 0.12) ($	Losses per share (indollars)

(25) Operating leases

The Group acquired a Taipei building for operating use at the end of 2000. However, since this building is still under a certain unexpired lease agreement, the Company continuously leases the building to the lessee. Contingent rents of $7,389 and $7,964 were recognised for these leases in profit or loss and for the three-month periods ended March 31, 2014 and 2013, respectively. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

		March	31,	2014		March	31,	2013
2013	$			-	$			10,173
2014				22,369				-
2015				14,912				-
	$			37,281	$			10,173

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(26) Non-cash transactions

Investing activies partially paid by cash:

Non-cash transactions Investing activies partially paid by cash:
Acquisitions of property, plant, and equipment Add:property and equipment and construction billings payable at beginning of period Less: property and equipment and construction billings payable at end of period Cash paid	For the three-month period ended March 31,2014	For the three-month period ended March 31,2013
	65,405 $ 8,848 50,116) ( 24,137 $	174,379 $ 83,597 9,440) ( 248,536 $

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties:

No significant related party transactions.

(2) Key management compensation

No significant related party transactions. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total		For the three-month period endedMarch31,2014		For the three-month period endedMarch31,2013
		5,145 $ 108 363 5,616 $		5,967 $ 135 1,255 7,357 $

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

For details on operating lease agreements, please refer to Note 6(25).

10. SIGNIFICANT DISASTER LOSS

None.

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11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

The Board of Directors on May 5, 2014 proposed to plan for capital reduction by cash of $1,182,474,960 (in dollars), and cancelling 118,247,496 shares, reducing 300 shares per thousand shares. The capital reduction ratio will be approximately 30%, and refund of $3 (in dollars) per share. The Company’s paid-in capital will be $2,759,108,250 (in dollars) with a par value of $10(in dollars) and the number of shares issued will be 275,910,825 shares. The above reduction proposal has not yet been approved at the 2014 shareholders’ meeting.

12. OTHERS

• (1) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

• A. Fair value information of financial instruments

The carrying amounts of financial instruments (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits (shown as non-current assets), short-term borrowings, notes payable, accounts payable, other payables, and guarantee deposits received (shown as non-current liabilities)) are approximate to their fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

• B.Financial risk management policies

• a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.

• b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units, as well as provides written principles for overall risk management and policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C.Significant financial risks and degrees of financial risks

• a) Market risk

Foreign exchange risk

• i.The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD. Foreign exchange risk arises

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from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

• ii.Management has set up a policy to require that group companies hedge their entire foreign exchange risk exposure with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

• iii.The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through transactions denominated in the relevant foreign currencies.

• iv.The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB			March31,	2014	2014	2014
	Foreign Currency Amount (In thousands)	Exchange Rate	Book Value	SensitivityAnalysis
			(NTD)	Extent of Variation	Effect on Profit or Loss	Effect on Other Comprehensive income
	USD 100,048 USD 83,496 USD 10,511 USD 114,178 USD 83,731	30.47 6.1521 30.47 30.47 6.1521	3,048,463 $ 2,544,123 320,273 $ 3,479,004 $ 2,551,284	1% 1% 1% 1% 1%	30,485 $ 25,441 - $ 34,790 $ 25,513	- $ - 3,203 $ - $ -

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December 31, 2013

		December 31,2013
(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount (In thousands)	Exchange Rate	Book Value (NTD)
	USD 88,682 USD 86,167 USD 11,060 USD 112,262 USD 87,480	29.805 6.097 29.805 29.805 6.097	2,643,167 $ 2,568,207 329,654 $ 3,345,969 $ 2,607,341

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB			March 31,2013	March 31,2013	March 31,2013	March 31,2013
	Foreign Currency Amount (Inthousands)	Exchange Rate	Book Value	SensitivityAnalysis
			(NTD)	Extent of Variation	Effect on Profit or Loss	Effect on Other comprehensive income
	USD 96,484 USD 101,627 USD 11,850 USD 118,632 USD 100,049	29.825 6.2689 29.825 29.825 6.2689	2,877,635 $ 3,031,025 353,425 $ 3,538,199 $ 2,983,961	1% 1% 1% 1% 1%	28,776 $ 30,310 - $ 35,382 $ 29,840	- $ - 3,534 $ - $ -

Interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

The Group is exposed mainly to floating interest rate borrowings; however, the Group raised short-term borrowings at fixed rates durning the three-month period ended March 31, 2014, and thus had no significant cash flow interest rate risk.

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Price risk

The Group is exposed to price risk because of investments held by the Group. The Group sets limits to control the transaction volume and stop-loss amount to reduce it’s market risk.

• b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings, the utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

• ii No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• iii.The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.

• iv.The credit quality information of financial assets that are neither past due nor impaired is provided in the statement in Note 6(4).

• c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, compliance with internal balance sheet ratio targets.

• ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• iii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

Non-derivative financial liabilities:
March 31, 2014 Short-term borrowings Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: December 31, 2013 Short-term borrowings Accounts payable Other payables Guarantee deposits received Non-derivative financial liabilities: March 31, 2013 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposits received	Less than 1year
	1,200,000 $ 2,323,115 570,557 - Less than 1year

(3) Fair value estimation

• A. The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the assets or liabilities that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at March 31, 2014, December 31, 2013, and March 31, 2013.

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March 31, 2014 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate December 31, 2013 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate March 31, 2013 Financial assets: Financial assets at fair value through profit or loss Beneficiary Certificate	Level 1 488,282 $ Level 1 442,167 $ Level 1 374,670 $	Level 2 - $ Level 2 - $ Level 2 - $	Level3 - $ Level3 - $ Level3 - $	Total
				488,282 $
				Total
				442,167 $
				Total
				374,670 $

• B. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments classified as financial assets at fair value through profit or loss or available-for-sale financial assets. (Blank below)

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13. SUPPLEMENTARY DISCLOSURES

The following information was expressed in thousand of New Taiwan dollars, unless stated otherwise. The foreign currency amounts of gain or loss was translated into New Taiwan dollars using the exchange rate of 1:30.2589, remaining foreign currency amounts was translated using the exchange rate of 1:30.47.

(1) Significant transactions information

The details are as follows:

A. Loans to others: None.

B. Provision of endorsements and guarantees to others: None.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) :

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of March	31,2014
				Number of shares 381,438 9,908,257 30 10,000,000 45,173 31,394 3,124 N/A 254,029	Book value 10,311 $ 22,527 23,954 93,450 45,972 16,855 99,733 5,943 4,010	Ownership (%) 14.98% 7.06% 4.84% 2% 0.11% N/A N/A (Note 1) N/A	Market value
Altek Corporation " " " " " Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd. Altek Investment Co., Ltd.	Gianta Co., Ltd. - Common stock Pac-line Opportunity Fund - Common stock Yung Li Investments Inc. - Common stock Hua-chuang Automobile Information Technical Center Co., Ltd. - Common stock EASTMAN KODAK COMPANY- Common Stock EASTMAN KODAK COMPANY- Warrant Money Market Fund Guangdong Kingding Optical Machine Co., Ltd. Money Market Fund	Director Supervisor None None None None None None None	Financial assets carried at cost - non-current " " " Financial asets at fair value through profit or loss-current " " Financial assets carried at cost - non-current Financial assets at fair value through profit or loss-current				$ 10,311 22,527 23,954 93,450 45,972 16,855 99,733 5,943 4,010

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Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of March	31,2014
				Number of shares 22,908,390 1,597,818	Book value $ 288,857 32,855	Ownership (%) N/A N/A	Market value $ 288,857 32,855
Altek Autotronics Corporation Altek Semiconductor Corporation	Money Market Fund Money Market Fund	None None	Financial assets at fair value through profit or loss-current "

Note 1: 8% of Guangdong kingding Optical Machine Co.,Ltd.’s capital contribution.

D. Aggregate purchases or sales of the same securities reaching NT$300 million or 20% of paid-in capital or more: None.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT100 million or 20% of paid-in capital or more:

Purchaser/Seller	Counterparty	Relationship with the counterparty		Transaction	Transaction	Percentage of total Credit Credit notes / accounts term Unitprice term Balance receivable(payable) Net 120 days Approximately the same price with third parties Note ($ 3,473,117) 100% " " " 3,473,117 99% Net 75 days " " ( 759,336) 97% " " " 759,336 51% Differences in transaction terms Notes / accounts compared to thirdpartytransactions receivable(payable)	Notes / accounts receivable(payable)	Notes / accounts receivable(payable)
			Purchases (sales) Amount Purchases $ 2,030,903 Sales ( 2,030,903) Purchases 2,165,527 Sales ( 2,165,527)		Percentages of total purchases(sales) 100% 93% 100% 65%			Percentage of total notes / accounts receivable(payable)
Altek Corporation Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	Altek International Investment Co., Ltd. Altek Corporation Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	Parent and affiliated company " " "						100% 99% 97% 51%

Note: The payment term with third parties was net 60~120 days, the collection term with third parties was net 45~90 days.

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H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Creditor	Counterparty	Relationship with the counterparty	Balance as at March 31,2014	Annual turnover rate 2.78	Amount Action taken $ - N/A Overdue receivables	Amount collected subsequent to the balance sheet date $ 315,602	Allowance for doubtful accounts
					Amount $ -
Altek International Investment Co., Ltd.	Altek Corporation	Parent company	$ 3,473,117				$ -

I. Derivative financial instruments undertaken for the three-month period ended March 31, 2014: None.

J. Significant inter-company transactions for the three-month period ended Mrch 31, 2014:

Company name Altek Corporation " Altek International Investment Co., Ltd. " " Altek (Kunshan) Co., Ltd.	Counterparty	Relationship (Note 1)			Transaction
			General ledger account Purchases Accounts payable Sales Accounts receivable Purchases Sales	Amount 2,030,903 $ 3,473,117 2,030,903 3,473,117 2,165,527 2,165,527	Transaction terms Net 120 days " " " Net 75 days "	Percentage of consolidated total operating revenues or total assets (Note 2)
	Altek International Investment Co., Ltd. " Altek Corporation " Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd.	(1) (1) (2) (2) (3) (3)				53% 22% 53% 22% 57% 57%

Note 1: Relationship between transaction and counterparty is classified into the following categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

Note 2: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

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(2) Information on investees (not including information on investments in Mainland China)

Investor	Investee	Location	Mainbusiness activities	Balance as at Balance as at March31,2014 December31,2013 $ 3,086,363 $ 3,086,363 2,869 2,869 50,000 50,000 177,500 177,500 112,122 112,122 106,645 106,645 200,000 200,000 Initial investment amount	Net profit (loss) of Investment income (loss) the investee for the recognised by the Company Number of Ownership three-month period for the three-month period Shares (%) Bookvalue endedMarch31,2014 endedMarch31,2014 94,333,839 100% $ 10,391,721 ($ 102,523) ($ 102,523) 1,000 100% 8,249 ( 174) ( 174) 5,000,000 100% 23,058 ( 20) ( 20) 21,300,000 97.96% 299,131 4,826 4,727 11,311,875 100% 54,748 2,035 2,035 3,500,000 23.33% 33,828 ( 6,625) ( 2,986) 20,000,000 100% 96,343 ( 45,877) ( 45,877) Shares held as at March 31,2014	Net profit (loss) of Investment income (loss) the investee for the recognised by the Company Number of Ownership three-month period for the three-month period Shares (%) Bookvalue endedMarch31,2014 endedMarch31,2014 94,333,839 100% $ 10,391,721 ($ 102,523) ($ 102,523) 1,000 100% 8,249 ( 174) ( 174) 5,000,000 100% 23,058 ( 20) ( 20) 21,300,000 97.96% 299,131 4,826 4,727 11,311,875 100% 54,748 2,035 2,035 3,500,000 23.33% 33,828 ( 6,625) ( 2,986) 20,000,000 100% 96,343 ( 45,877) ( 45,877) Shares held as at March 31,2014	Footnote
				Balance as at March31,2014 $ 3,086,363 2,869 50,000 177,500 112,122 106,645 200,000	Number of Shares 94,333,839 1,000 5,000,000 21,300,000 11,311,875 3,500,000 20,000,000	Ownership (%) 100% 100% 100% 97.96% 100% 23.33% 100%
Altek Corporation " " " Altek International Investment Co., Ltd. " Altek Semiconductor (Cayman) Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek Autotronics Corporation Altek Lab Inc. JinJing Optical Technology Co., ltd. Altek Semiconductor Corporation	British Virgin Islands Japan Republic of China Republic of China U.S.A. Samoa Republic of China	Investment and general business operations Sale and design of optical instruments Investment Research design, manufacture and sales of car electronic components Design service Investment and general business operations Research design and sales of ASIC				Note 1 Note 2

Note 1: Ownership (%) on Altek Autotronics Corporation held by Altek Corporation and Altek Investment Co., Ltd. are 88.75% and 9.21%, respectively. Note 2: Common stock of 9,311,875 shares and preferred stock of 2,000,000 shares.

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(3) Information on investments in Mainland China

A.The related information of investments in Mainland China are as follows:

Investee in Mainland China	Main business activities	Paid-in Capital	Investment Method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2014	Amount remitted fr Mainland China emitted back to Taiw monthperiod ended	Remitted back to Taiwan $ - - - - - - - om Taiwan to / Amount an for the three- March 31,2014	Accumulated amount Net profit of remittance from (loss) of Taiwan to Mainland the investee for the China as of three-month period March 31,2014 ended March 31,2014 $ 1,371,150 $ 1,116 276,759 ( 11,845) 88,363 ( 2) 258,995 2,475 106,645 ( 3,064) 270,086 ( 26,718) - 3,562	Ownership Investment income held by (loss) recognised by the Company the Company for the (direct or three-month period indirect) ended March 31,2014 100% $ 1,116 100% ( 11,845) 100% ( 2) 100% 2,475 23.33% ( 715) 40% ( 11,231) 100% 3,562	Book value of investments in Mainland China as of March 31,2014 $ 4,087,424 836,737 52,812 306,781 54,509 286,445 151	Accumulated amount of investment income remitted back to Taiwan as of March 31,2014
					Remitted to Mainland China $ - - - - - - -
Altek (Kunshan) Co., Ltd. (Note 2) Altek EMS (Kunshan) Co., Ltd. (Note 3) Altek Imaging Technology (Shanghai) Limited Altek Trading (Shanghai) Limited Kinko Optical (Suzhou) Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. Beijing Altek Image Communication Technology Co., Ltd.	Manufacture and sale of digital still cameras and its accessories Manufacture and sale of related engineering services Manufacture and sale of optical components Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Manufacture and sale of optical components Manufacturing and marketing of digital cameras and its key components, photo sensor and optoelectronic equipment Sales of digital camera, cell phone and related accessories and supporting products	$ 1,511,312 152,350 88,363 258,995 457,050 482,127 31,232	1 1 1 1 1 1 1	$ 1,371,150 276,759 88,363 258,995 106,645 270,086 -						$ - - - - - - -

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Investee in Mainland China	Main business activities	Paid-in Capital	Investment Method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2014	emitted back to Taiw monthperiod ended Amount remitted fr Mainland China	Remitted back to Taiwan $ - - an for the three- March 31,2014 om Taiwan to / Amount	Accumulated amount Net profit of remittance from (loss) of Taiwan to Mainland the investee for China as of the three-month period ended March 31,2014 March 31,2014 $ 420,486 ($ 2,533) 457,050 ( 22,642)	Ownership Investment income held by (loss) recognised the Company by the Company for (direct or the three-month period ended indirect) March 31,2014 100% ($ 2,533) 100% ( 22,642)	Book value of investments in Mainland China as of March 31,2014 $ 162,366 279,305	Accumulated amount of investment income remitted back to Taiwan as of March 31,2014
					Remitted to Mainland China $ - -
Altek Precision (Kunshan) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Design, manufacture and sales of digital camera parts Manufacture and sales of digital camera and its accessories and optical components	$ 420,486 457,050	1 1	$ 420,486 457,050						- -

Note 1: Indirect investment in PRC through existing companies located in the third area.

Note 2: Including retained earnings capitalized of US$4,600.

Note 3: Including retained earnings capitalized of US$3,600.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of March 31,2014	Investment amount approved by the Investment Commission of the Ministryof Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed bythe Investment Commission of MOEA(note)
Altek Corporation	$ 3,249,534	$ 4,355,808	$ -

Note: According to “REGULATIONS GOVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL COOPERATION IN MAINLAND CHINA” on August 29, 2008, Altek Corporation obtained the approval from the Industrial Development Bureau of Ministry of Economics Affairs issued to Headquarters, so there is no need to compute the ceiling amount of the Company.

B. Significant transactions with the direct and indirect investments in Mainland China :

The significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please reter to Note 13(1) G 、 H and J.

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14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The chief operating decision-maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Segment information

The Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

(3) Reconciliation for segment income (loss)

None.

(Blank below)

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