LTC - Annual Report 2012 | FinancialReports.eu

TSE : 2301 www.liteon.com

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Lite-On Technology Corporation 2012 Annual Report

TABLE OF CONTENTS

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Contact Information

Business Philosophy Members of Top Management Letter to Shareholders

Corporate Overview

Company Profile

Lite-on Corporate Values

Organization Chart

Corporate Governance

Management Framework

Board of Directors Responsibilities Audit Committee Responsibilities

Compensation Committee Responsibilities

Growth Strategy Committee Responsibilities Anti-Corruption

Corporate Risk Management

Information Regarding Board Members and Management Information Regarding Board Members

Information Regarding Management Team Statement of Internal Control System

Major Resolutions of the General Meeting and Board Meetings Functions of the Board

Capital and Shares

The Top-10 Shareholders and Information of Related Parties Change in the Proportion of Sharehoiding among the Directors, Supervisors, Managers, and Major Shareholders

Financial Information

Standalone Financial Statements of 2011 Consolidated Financial Statements of 2011

Lite-On Technology Corporation 2012 Annual Report

Spokesperson

Brownson Chu Vice President, Finance Tel: 886-2-8798-2888 e-mail:[email protected]

Acting Spokesperson

Julia Wang Director, Investor Relations / Public Relations Tel:886-2-8798-2888 e-mail:[email protected]

Global Headquarters

No. 392 Ruey Kuang Road, Neihu, Taipei 114, Taiwan, R.O.C. Tel:886-2-8798-2888

Taiwan Factory

No. 90, Chien-I Road, Chung Ho City, Taipei 235, Taiwan, R.O.C. Tel:886-2-2222-6181

Stock Affairs Department

1F, No. 392, Ruey Kuang Road, Neihu Taipei 114, Taiwan, R.O.C. Tel:886-2-8798-2301 www.liteon.com

CPA

Jr-Shian Ke and Ching-Fu Chang Deloitte & Touche 12F, No. 156, Sec. 3, Min-Sheng E. Road, Taipei 105, Taiwan, R.O.C. Tel:886-2-2545-9988 www.deloitte.com.tw

GDR Depositary Bank

Citibank, N.A. www.citibank.com/adr

Lite-On Technology Corporation website : www.liteon.com

Lite-On Technology Corporation 2012 Annual Report

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Raymond Soong

Warren Chen

David Lin

Vice Chairman of Lite-On Group

CEO of Lite-On Group

Chairman of Lite-On Group

Chairman of Lite-On Mobile, Lite-On Green Technologies Inc. and Lite-On Clean Energy Technology

CEO of Lite-On Technology

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Business Philosophy
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Members of Top Management

Paul Lo

Alexander Huang

CTO of Lite-On Group

CSO of Lite-On Group

CEO of Lite-On Automotive Corp.

President of Lite-On Technology Business Group

To become a Company of World Class Excellence Business Scale:US$ 10 billion

Vision

Leadership:Worldwide Absolute No. 1 Profitability:Top in the Industry Corporate Governance:Transparent, Independent and Fairness Corporate Citizenship:Globalization, Environmental

Short-term:Prime Leader in Optoelectronic Components Long-term:Global Leader in Sustainable Technology

Mission Strategy

Value Creation

Maximum Positive Cash Flow

Customer Satisfaction Excellence in Execution Innovation

Lite-on Value

Integrity

Lite-On Technology Corporation 2012 Annual Report

Letter to Shareholders

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Ladies and Gentlemen,

Looking back at 2012, we have witnessed great instability in the global socio-economic environment and a huge decline in market demand due to the debt crisis in Europe and the United States which subsequently slowed down the economic growth in Asia. Against all odds, Lite-On managed to continue its stellar operating performance achieving global consolidated revenue of NT$216.05 billion with a net operating profit of NT$10.89 billion (NT$7.53 billion after tax). This represents a 4% growth from last year. The annual earnings per share (EPS) reached NT$3.33, the equivalent of a 3% growth. At the same time, Lite-On has held firm onto its No.1 position on the Top 1,000 Taiwanese Manufacturers list in CommonWealth Magazine for the fourth consecutive year, a clear indication of Lite-On’s core competitiveness and our leading position in the global market.

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As a leading manufacturer of optoelectronics, Lite-On strives to increase its R&D capabilities and industrial design competency. LiteOn’s R&D expenses has risen by 12% over the last year, further strengthening its leading position and core competencies in the areas of advanced power solutions, optoelectronics and mechanical products. Lite-On’s industrial design performance also obtained 2nd place in the 2012 Red Dot Awards, the highest honor received by a Taiwanese company.

Development and Outlook

Operating Performance

Global demand for personal computers (PC) slowed down in 2012 leading to Lite-On’s rapid shift in its product portfolio strategy towards cloud-computing products including high-end servers, data center and networking, and mobile devices. With the steady increase in demand in the global market, we have not only achieved outstanding results in overall revenue but also saw steady increases in net profit and operating growth.

Among all core business groups, apart from the Power Supply business group that has shown continuous growth in power supplies for servers, data centers and networking, the steady growth in smart-phone and tablet PC markets also brought about the increase in demand for high-end camera modules and the expansion of the market share in the keyboard business. This growth momentum contributed to the 30% plus annual revenue growth of camera modules in the Opto-electronics business group and the 20% annual growth in the HIS (Human Input Solutions-PC keyboards and peripherals) business unit of the Mechanical Competence business group, both striking record highs in the company’s history. In terms of LEDs, we have fully recovered from the adverse impact on production caused by the floods in Thailand in Q2 of last year and the LED lighting units’ annual revenue tripled thanks to the increase in market demand, efficient production and expansion of globally branded customers’ orders. Leotek, Lite-On’s subsidiary, also became one of the top 3 LED street light providers in Taiwan by winning the contract for the government’s extensive energy-saving project--a total of 42,000 existing mercury lights across Taipei, New Taipei City, Tainan and Taitung City will be replaced by Leotek’s LED lights. Meanwhile, in view of the growing trend in mobile device use across the globe, Lite-On Mobile will continue to adjust itself and focus on account management, shipment of core units and creation of a profitable product portfolio for operational improvement and profit growth in 2013.

Honors and Recognitions

In addition to the concrete results in operations, Lite-On not only kept its No.1 position on CommonWealth Magazine’s list of Top 1000 Manufacturers for the fourth consecutive year but was also recognized as the runner-up for CommonWealth Magazine’s Benchmark Enterprise Award.

Lite-On has always been devoted to corporate social responsibility. This year, praises and recognitions from all sectors continued to pour in. For the second year in a row, Lite-On was selected as a leading member of the Dow Jones Sustainability Index (DJSI) in the Electronic Component and Equipment (ELQ) sector. In the financial media, we were honored by being listed on the “Excellence in Corporate Social Responsibility” list by CommonWealth Magazine for the sixth consecutive year as well as awarded first prize for the Global Views Magazine’s Overall Performance in Corporate Social Responsibility and Paragon Prize for Education sector. To strengthen our communication channels with all employees, shareholders and stakeholders and to further reinforce information disclosure transparency, Lite-On Technology's CSR report has been certified as GRIG3.1 Application Level A+ and AA 1000 Type 1 Moderate Assurance Level by SGS Taiwan, an impartial third party. Furthermore, we received once again the Taiwan Corporate Sustainability Report (CSR) Award conferred by the Taiwan Institute for Sustainable Energy (TISE). Every recognition has highlighted Lite-On’s determination and results in keeping corporate governance transparent and fulfilling its corporate social responsibility while improving operating performance and growth.

Global financial conditions and overall economic growth are still areas filled with uncertainty in year 2013. Lite-On will remain cautious yet optimistic in the face of all the challenges ahead. In the past few years, Lite-On has established Eastern and Southern operation centers in Changzhou and Guangzhou to improve operational efficiency by centralizing bases of operation and focusing on effective management of global supply chain resources. The results have been clear. With the increase of production by high-end facilities and efficient operations as well as the addition of automated manufacturing, our overall core competitiveness has certainly improved.

By foreseeing global industry trends, Lite-On has become a forerunner in cloud-computing applications such as high-end servers, IT infrastructure, smart phones, tablet personal computers, etc. With concrete results as a foundation, Lite-On will continue to strive for product portfolio optimization and product differentiation in the year 2013. We hope that our strategies will increase profit and guide us towards steady growth.

As Taiwan’s 1st LED manufacturer, Lite-On firmly believes that LED lighting products that can save energy and reduce carbon dioxide will continue to grow strongly in the long term. With our outstanding manufacturing technology and service, Lite-On has already become a major supplier of many renowned LED lighting providers. With orders from our international clients, we expect a fruitful 2013 for our LED lighting components.

In terms of long-term corporate developmental strategies, Lite-On has completed the acquisition of Liteon-IT in March of 2013 to keep up with the industry’s developmental trends and to integrate resources so as to continue enhancing operating performance and core competence. Through organizational integration, Lite-On will become a 100% share-holding parent company of Liteon-IT. After consolidation, Lite-On will further strengthen its leading position as the world’s largest Optical disk drive (ODD) manufacturer through sharing R&D and product manufacturing technology. In addition, Lite-On’s and Liteon-IT’s customers will be able to enjoy a comprehensive product line, key components and the most timely services. In this manner, global customers’ needs for supply chain consolidation can be satisfied. The adoption of solid state drives (SSD) by industries focusing on cloud-computing, mobile devices, car electronics and healthcare equipment will serve as a new wave of energy for growth that will benefit from consolidated crossmarketing. This will not only contribute to the company’s overall operational performance, profitability and corporate value but also will be a positive driving force for Lite-On’s corporate governance, its shareholders’ rights and its EPS.

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Lite-On Technology Corporation 2012 Annual Report

Corporate Overview

2.1 Company Profile

Established: 1975/6/2 Date of Listing: 1983/1/26 Company Code: 2301 Paid-in-Capital: NT$ 23.0 B (as of December 2012)

About Lite-On Technology

Driven by the strong belief that LED will change the way we live and enhance our life style, Lite-On Electronics was established in 1975 in a small apartment by the three original founders. There they created another garage legend. Lite-On was the first company to produce LEDs.

In the 30 years since its inception, it has gone through three major changes. In 1983, Lite-On had its IPO and was the first technology company to be listed on the Taiwan Exchange. In 2002, four public companies merged, including Lite-On Electronics, Lite-On Technology, Silitek and GVC, with the new entity becoming the Lite-On Technology that we know today. The merger of four public companies was considered revolutionary in the history of the Taiwan equities market. In 2006, Lite-On underwent re-organization to accommodate different strategies and goals for short term, mid-term and longer-term growth.

Over the past few years, Lite-On Technology has successfully created an enterprise image based on "Profitable Growth." Our chief business objective is no longer solely sales growth. Our company now endeavors to implement strategic improvement of products, and to focus on the development of core Opto-Electronic components, including Power Supply, Optoelectronics, Mechanical Competency, and Connected Devices & System Solution Business Groups. Lite-On products are widely used in the 4C industries, namely computers, communications, consumer electronics and car electronics. Our products are leaders in the global market including number one rankings for notebook adaptors, power supplies for desktop, NB wireless module, desktop keyboards and photo couplers, while products of Lite-On group such as disc drives, color image sensors and mobile phone keypad are worldwide No. 1.

From 2005, Lite-On Technology has repeatedly earned the Corporate Social Responsibility Award from Global Views Monthly, and the Corporate Social Responsibility Award from CommonWealth Magazine. The company's contributions to society are highly recognized. The Lite-On Award aims at training talents and boosting competitiveness of Chinese on the world stage. It has successfully created many design elite and received much positive feedback from industrial design professionals. Established in 1993, the Lite-On Cultural Foundation has been involved in community services, such as helping minority entities and providing counseling services to teenagers. "Joy, growth, health and balance" are the keywords for our staff. We hope to bring them job satisfaction, ongoing growth, mental and physical health and a balanced lifestyle. Our corporate culture emphasizes the same spirit of LOHAS which is highly valued in western society. This is the reason Lite-On Technology is looked upon as a LOHAS enterprise by outsiders.

2.2 Lite-On Corporate Values

Customer Satisfaction, Excellence in Execution, Innovation, and Integrity are the guiding principles, commitments, and beliefs of Lite-On Technology. These values are applied throughout the company’s daily business operations and management.

1. Customer Satisfaction

Customers are the ones who sign our paychecks. Identifying their needs and understanding their markets helps us create maximum value for them.

2. Excellence in Execution

First movers in the market always capture the value of future trends. Formulate strategies accordingly and execute effectively in advance of competitors.

3. Innovation

Innovation is fueled by daily renewal, and often ends because of complacency.

4. Integrity

Trust from shareholders, customers, employees and suppliers

Our business mergers have won favor from international investment firms. The company has transformed from a Taiwan optoelectronics leader into an international enterprise, with foreign investors holding around half of the shares. For five consecutive years 2003-2007, the company was listed in Business Week's Info Tech 100; while for three consecutive years 2005-2007, it was selected by Forbes as one the Asian Fab 50 companies. Not only does it possess business competency reaching to international standards, its creativity has been proved by the prestigious international awards it has won. From 2005-2013, it has received 44 international design prizes, comprising the German iF Award, the German red dot award and the U.S. IDEA Award. More than just an honoring of Lite-On Technology, these awards represent the glory of Chinese all over the world.

Lite-On Technology Corporation 2012 Annual Report

Corporate Governance

2.3 ORGINAZATION

Lite-On values the transparency of operation and corporate governance. We have defined the corporate governance framework and practices in accordance with the ROC Company Act, Securities and Exchange Act, and other relevant laws and regulations, in order to continue improving our management performance and protecting the interests and rights of investors and other stakeholders.

3.1 Management framework

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Shareholder’s Meeting
Audit Committee
Corporate
Board of Directors Internal Audit
Compensation Group Chairman
Committee Group Vice Chairman
Stock Affairs
Growth Strategic
Committee
Group CEO
GCEO Office
Lite-On Tech. Corp. CEO
Corp. Procurement
Committee
Strategic Business China Operation Center CEO Office Corp. Function
Advance Lighting Power SBG Manufacturing Operation Treasury / Controlling
Solution SBU Excellence / 6 Sigma &
Quality Mgt
Portable Image Optoelectronic Product IR / PR
Device SBU Solution Sub-SBG
Human Resources
Connected Devices &
LSE Corp. Corp. Information
System Solutions SBG
Mechanical Legal Technical Research
Logah Corp.
Competence SBG Development Center
LOJ Corp.
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Audit Committee
Shareholders’ meeting
Compensation Committee
Board of Directors
Growth Strategy Committee
Internal Audit
Management
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The following solid corporate governance actions were taken

Lite-On set up independent directors and established the “Audit Committee” in 2007, followed by the accomplishment of establishing “Compensation Committee” in 2008 and“Growth Strategy Committee” in 2010.
We emphasize that information disclosure shall comply with the principles of completeness, timeliness, fairness and transparency. In addition to disclosing the relevant financial information, financial statements, annual statements and important messages on the Taiwan Stock Exchange’s Market Observation Post System, we also make the relevant information available to domestic and foreign investors for reference on our corporate website (www.liteon.com).
We continue to pursue transparency, timeliness and fairness of financial information disclosure. In 2012, we have been ranked a grade of A in the Institute of Securities & Futures Markets Development’s Information Disclosure Assessment.

The Board of Directors, Audit Committee, Compensation Committee, and Growth Strategy Committee operate in accordance with the “Parliamentary Regulations for Board Meetings”, “Organizational rule for Audit Committee”, “Organizational rule for Compensation Committee”, and “Organizational rule for Growth Strategy Committee”. The committees' functions and responsibilities are specified respectively.

Lite-On Technology Corporation 2012 Annual Report

3.1.1 Board of Directors Responsibilities

3.1.3 Compensation Committee Responsibilities

The Board of Directors consists of 11 directors. All of the directors are selected by shareholders’ voting. Six of the directors represent institutional investors, namely, Lite-On Capital, Dorcas Investment Co., Ltd., Ta-Sung Investment and Yuan Pao Development & Investment Co., and 3 independent directors. The Board’s responsibilities include building up a good corporate governance system, supervising, appointing and directing the corporate management while strengthening the management functionalities and taking responsibilities for the Company’s entire operational status to maximize shareholders’ equity.

Board of Directors	Board of Directors
Chairman	Raymond Soong
Vice Chairman	David Lin
Director	Warren Chen, Representative of Lite-On Capital Inc.
Director	Joseph Lin, Representative of Dorcas Investment Co., Ltd.
Director	Rick Wu, Representative of Ta-Sung Investment Co., Ltd.
Director	Keh-Shew Lu, Representative of Ta-Sung Investment Co., Ltd.
Director	CH Chen, Representative of Yuan Pao Development & Investment Co., Ltd.
Director	David Lee, Representative of Yuan Pao Development & Investment Co., Ltd.
Independent Director	Kuo-Feng Wu
Independent Director	Harvey Chang
Independent Director	Edward Yang

In order to continue strengthening the corporate governance meeting international standards, Lite-On Technology established the Compensation Committee in 2009. The committee supervises and deliberates the Company’s overall compensation policy and plan, as well as makes resolutions with the authorization given from the Board of Directors. As the first one to establish the compensation committee and possessing a highly-authorized compensation committee system, we become a benchmark company with respect to corporate governance among domestic enterprises.

The Compensation Committee’s supervision extends to the compensation of directors, all high-rank management, and employee compensation policy system as well as incentive and bonus plans. The Compensation Committee consists of 4 members, including 3 independent directors and 1 director to maintain the independence, professionalism and fairness of the committee avoiding potential risks from conflict of interest between the committee members and the Company. The committee shall regularly review the Company’s compensation policy and plan to ensure recruiting, encouraging and retaining of professional human resources for the Company. The committee shall annually deliberate and resolves the performance appraisal and compensation of directors, presidents, vice presidents and CEO, as well as employee bonus. The committee shall hold the meeting semiannually in accordance with the compensation committee organizational rules, and a total of 3 meetings were held in 2012.

3.1.4 Growth Strategy Committee Responsibilities

The Board members’ background information, academic degree, concurrent posts assumed in any other companies and meeting attendance rate have been disclosed in the Company’s annual report which can be accessed on the Taiwan Stock Exchange’s Market Observation Post System (MOPS) and the Company’s corporate website (www.liteon.com). According to Board of Directors Meeting norms, the Board of Directors shall hold a meeting each quarter, and a total of 7 meetings were held in 2012.

In order to enhance and accelerate the growth strategy of Lite-On Technology and the Group, the Growth Strategy Committee was established in 2010. The Committee is authorized by Board of Directors to direct and review the Company and the Group’s overall growth strategies, and to preview the important investment projects, and periodically reports the resolutions to the Board of Directors. The Committee’s instructions and assistance extend to Lite-On Technology and its subsidiaries and business units designated by Lite-On Technology. The Committee consists of at least 5 directors from LiteOn. The convener and members shall be nominated by the Board of Directors. The committee called 1 meeting in 2012.

3.1.2 Audit Committee Responsibilities

Audit Committee consists of all independent directors, namely three members. It is responsible for helping the Board of Directors review the Company’s financial statements, internal control system, audit and accounting policies and procedures, important assets transactions, employment of CPA, and appointment and dismissal of executive officers dedicated to finance, accounting and internal audit, to ensure that the Company’s operation complies with the relevant governmental laws and regulations. The committee shall call a meeting each quarter in accordance with the organizational rule, and a total of 7 meetings were called in 2012.

Lite-On Technology Corporation 2012 Annual Report

3.2 Anti-Corruption

Lite-On Technology commits that it will comply with the legal and ethical standards of the countries where it carries out business to maintain its goodwill and to engage in business activities. We will not permit any violations of the ethical or legal standards in the process of pursuing sales, profit or performance. Meanwhile, we will also declare the operating procedures of our routine business activities that involve potential anti-corruption risk in a timely manner, in the hopes of preventing anticorruption events from arising through timely propagandizing.

In addition to the “Integrity”, one of Lite-On's four major values, we also drafted “Ethical Code of Conduct for Employees” to help the employees deal with any special circumstances and problems that may occur in the course of their routine activities. Meanwhile, this Code is also included in the orientation training programs to ensure maintenance of our goodwill and legal and ethical standards. The “Ethical Code of Conduct for Employees” contains the following ethical requirements:

1. Gifts and Hospitality:

1.1 The Company’s employees shall not give or accept any gifts intended to improperly influence normal business or decisions. The Company’s employees must immediately notify their supervisors, or return any tangible gifts upon receiving. However, this shall not apply if the gift refers to a small gift usually exchanged in business conduct.
1.2 Customers and the Company’s employees may engage in reasonable social activities within the course of the business contact as long as such activities are clearly for business purposes and are held respectably. However, any excessively generous treatment shall be subjected to supervisor’s prior approval and reported to supervisor afterwards. While dining is a necessary accompaniment of meetings between the employees and suppliers or customers, treatment should be appropriate with reciprocity.
1.3 The Company’s employees should avoid any improper conduct, and in no event should give or accept kickbacks in any form. While engaged in private shopping, the Company’s employees and their family members should not accept discounts from suppliers given due to their relationship with his company, unless such discounts are given to all employees of the Company.
2.1 Payments to suppliers: Payments may only be made for goods provided by the supplier confirmed by the Company’s competent purchasing unit to comply with standards.
2.2 Payments to civil service personnel: Payments prohibited by laws of the country in question may not be paid to any government officials or personnel of the country. Legitimate payments given to government officials must comply with all procedures specifically required by the Company.
2.3 Payments to consultants, distributors or agents: All payments made to consultants, distributors, or agents must be commensurate with the value of the services they provide.
2.4 Payments to customers: Payments may not be directly or indirectly given to the employees of the Company’s customers or future customers with the intent of inducing them to take improper actions.
2.5 Payments to other persons: Payments may be made to persons who are not civil servants or customers in accordance with the procedures prescribed by the Company if the payments are not for ordinary commercial purposes as defined by the laws of the country where the payments take place.
2.6 Payments made in a country where the payee does not reside: When it is requested that an expense or salary payment be made to an account in a country where the payee does not reside or do business (this may be referred to as “distributed expenses”), doing so is acceptable as long as this does not violate relevant laws, and the entire transaction does not violate the Company’s ethical standards.
2.7 Forged record-keeping: When part of a payment is intentionally or knowingly used for some purpose not stated on the transaction certificate, the payment may not be approved, processed or accepted. When there is no disbursement explanation in the Company’s account books, all “kickback funds” or similar funds or account transfers are strictly forbidden.

Following elements of company’s code of conduct is included in the employee training of EICC (Electronic Industry Code of Conduct):

Business Ethics and Integrity,

2. Principles governing on-the-job payments:

No Improper Advantage
Disclosure of Information

Any employees who discover an abnormality affecting the Company’s assets or monies that may disrupt payments must immediately notify their supervisors. If the abnormalities involve a supplier, they shall notify the purchasing manager. No bribes of any kind may be given to any person. There are no exceptions to this requirement. The so-called bribes refer to payments given to certain persons to induce them to violate their employers’ regulations or national laws.

Intellectual Property
Fair Business, Advertising and Competition
Protection of Identity
Employee personal data protection
Procurement policy of Conflict mineral (Metal)-free
Eradication of attack and retaliation

Lite-On Technology Corporation 2012 Annual Report

3.3 Corporate Risk Management

Lite-On continuously strives to create economic, social and environmental sustainability values for the customers, shareholders, employees and the community. In the process of achieving this goal, Lite-On Technology has implemented the well established risk management framework, promoting it actively at each level. Therefore we continue trying our best to effectively minimize the risks through the management of risk transfer, risk avoidance and risk reduction. Therefore, this is one of the main reasons that Lite-On is able to continue profitable growth and achieving outstanding business performance.

Risk Management Organizational Framework

Lite-On follows the existing organizational management system and internal control cycle and uses the most cost-effective methods to actively control and deal with the considerable risks in the process of operations.

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Board of Directors
(Audit Committee)
Audit Dept.
CEO
Functional Department.
Manufacturing
Operation Excellence TRDC IT Legal Affairs
Investor Relations / Public
Relations HR Finance / Accounting
Business Group
Power SBG Connected Devices and System Solution SBG
Optoelectronics Product Solution SUB-SBG Mechanical Competence SBG
Advance Lighting Solution SBU Portable Image Device SBU
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Risk Management Cycle

Lite-On developed a clear and comprehensive framework for categories of risk to ensure that the risk identification process may cover different categories of risk. There’re three major categories, namely, “external risk”, “operational risk” and “information disclosure risk”.

“External risk” means that the risk resulting from external factors, such as low sales of products, competitiveness of enterprises, shrinking market demand, change of consumers’ preference, revolution of technology, new superior product, international incidents, economic recession, illegal merge and acquisition, changes in foreign exchange laws and regulations, party alternation in power, blackmail, climate change, pollution and natural calamity, et al.. “Operational risk” means that the risks are related to operations of functional organizations, such as failure to deliver goods timely, defects in products, insolvable technical issues, overestimated procurement costs, excess inventories, defective production design, failure in factory premises, labor accidents, fire, labor-management dispute, damage or loss of data, incorrect electronic information and error in financial information, et al.. ”Information disclosure risk” means the risk resulting from the disclosure required by the corporate operation, such as improper pricing, media exposure of confidential information, inaccurate financial forecast, multiple adjustments on financial forecast, failure to provide quarterly/annual report as scheduled, failure to disclose information, and correction of errors etc…

We evaluate and distinguish the risks into high, mid and low levels, by category so that appropriate actions such as transferring, accepting, reducing and avoiding are taken. Moreover, we adopted the risk management mechanism to prepare ourselves to consecutively control or improve the factors of risks through Plan, Do, Check, and Actions (PDCA) management cycle to minimize occurrence of risk and damage probability or level.

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Audit Department
- Conduct independent audit on
risk management activity Board of Directors
- Report the audit result to the (Audit Committee)
Audit Committee - Ensure establishment of adequate risk management system and culture
- Risk management policy making and resource allocation
Supervision & Control
Identification
Continuous
Improvement
Communication Evaluation
Measurement
Functional Department. Management (CEO)
Business Unit - Execute the risk management policy authorized by the
- Self-evaluation and control of risk management activity Board of Directors
- Refinement and improvement of management actions - Management activities of various functional departments
and business units
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3.4 Information Regarding Board Members and Management

3.4.1 . The profiles of the directors and the independent directors

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2013/04/24
Title Name Date of Tenure Date of Proportion of Proportion of Proportion of Proportion of Other
appointment (year) initial shareholding shareholding shareholding shareholding positions
(office) appointment at the time of at present by spouse under the title of the
appointment and underage of a third party company
children or other
companies
Quantity % Quantity % Quantity % Quantity %
Chairman Raymond Soong 2010.6.15 3 1992.05.20 76,583,640 3.38% 77,738,111 3.37% 14,670,821 0.64% 0 0% Note 1
Honorary DBA, National / Chiao Tung University / Director, representative of Silitek Plating Limited,
Important experience (education)
Silitech Plating (ShenZhen) Co., Ltd.,and Silitech Surface Treatment (Shenzhen) Co., Ltd.
Vice David Lin 2010.6.15 3 1992.05.19 7,650,217 0.34% 8,783,494 0.38% 511,629 0.02% 3,300,000 0.14% Note 2
Chairman Trust
Tulane University MBA / Director, representative of Lite-On, Inc. (USA), Lite-On Technology USA, Inc.,
Important experience (education)
Lite-On Trading USA, Inc., Lite-On Service USA, Inc. and Lite-on (Guangzhou) Infotech Inc.
Director Lite-On Capital Inc.Representative: 2010.6.15 3 2001.04.191998.05.19 14,597,6190 0.65%0% 14,817,6728,053,859 0.64%0.35% 652,0750 0.03%0% 00 0%0% Note 3
Warren Chen
Bachelor, Dept. Chemical Engineering University of Chinese Culture,
Important experience (education)
Manufacturing Supervisor, Texas Instrument Inc.
Director Dorcas Investment Co., Ltd. 2001.04.19 5,842,215 0.26% 5,930,283 0.26% 0 0% 0 0%
2010.6.15 3 Note 4
Representative: Joseph Lin 2007.06.21 0 0 290,789 0.01% 0 0% 0 0%
MBA, University of South California / Bachelor, Dept of Mechanical Engineering, UCLA
Important experience (education)
Director, EzNoBo Corporation / CEO, Dorcas Investment Co., Ltd.
Director Ta-Sung Investment Co., Ltd. 2010.6.15 3 1998.05.19 45,473,955 2.01% 46,159,459 2.00% 0 0% 0 0% Note 5
Representative: Keh-Shew Lu 2002.09.01 0 0% 0 0% 0 0% 0 0%
Bachelor, EE, National Cheng Kung University / Master, EE, Texas Institute of Technology
Important experience (education)
PhD, EE, Texas Institute of Technology / Asian Regional President, Senior VP, Texas Instruments Director, VArmour Corp. Ltd.
Director Ta-Sung Investment Co., Ltd. 2010.6.15 3 1998.05.19 45,473,955 2.01% 46,159,459 2.00% 0 0% 0 0% Note 6
Representative: Rick Wu 2001.04.19 0 0% 978,337 0.04% 50,340 0% 0 0%
Bachelor, Dept. of Commerce, Tamkang University; / VP, Office of Group President, Lite-On Technology Corporation
Important experience (education)
Director, Silitech Technology Corporation Supervisor, Leotek Corp., Co-tech Copper Foil Corporation and Lite-On IT Corporation.
Yuan Pao Development & 2004.06.15 35,985,057 1.59% 36,527,518 1.58% 0 0% 0 0%
Director Investment Co. Ltd. 2010.6.15 3 Note 7
2004.06.15 0 0% 0 0% 0 0% 0 0%
Representative : CH Chen
Important experience (education) Bachelor, Dept of Mechanical Engineering, National Taiwan University
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Lite-On Technology Corporation 2012 Annual Report

Title	Name	Date of appointment (offce)	Tenure (year)	Date of initial appointment	Proportion of shareholding at the time of appointment	Proportion of shareholding at the time of appointment	Proportion of shareholding at present	Proportion of shareholding at present	Proportion of shareholding by spouse and underage children	Proportion of shareholding by spouse and underage children	Proportion of shareholding under the title of a third party	Proportion of shareholding under the title of a third party	Other positions of the company or other companies
					Quantity	%	Quantity	%	Quantity	%	Quantity	%
Director	Yuan Pao Development & Investment Co. Ltd. Representative : David Lee	2010.6.15	3	2004.06.15 2003.06.17	35,985,057 0	1.59% 0%	36,527,518 0	1.58% 0%	0 0	0% 0%	0 0	0% 0%	Note 8
Important e	xperience (education)	Graduate Insti Director, repre	tute of A sentative	ccounting, Nati of ADDtek Cor	onal Cheng C poration	hi Univ	ersity; Direct	or, Dyn	acard Co.,Lt	d.
Independent Director	Kuo-Feng Wu	2010.6.15	3	2007.6.21	0	0%	0	0%	0	0%	0	0%	Note 9
Important e	xperience (education)	Bachelor, Dept Director, Taipei Supervisor, Dar Vice Chairman, Convener, Acc Supervisor, Tyn	of Econ CPA Ass fon Corp Financi ounting solar Co	omics, National ociation / Exec oration al Accounting St Practice Commit rporation. / Cha	Chung Hsing utive Director, andards Com tee, Taiwan A irman, Intern	Univer ROC mittee ccoun ational	sity, / Chairm CPA / Indep , Accounting ting Associat affairs comm	an, KP endent Resea ion. ittee of	MG; / Senior Supervisor, rch and Dev ROCCPA	CPA, Wistron elopme	KPMG Corporation nt Foundatio	, n,
Independent Director	Harvey Chang	2010.6.15	3	2007.6.21	0	0%	0	0%	0	0%	0	0%	Note 10
Important e	xperience (education)	MBA, The Wha President and Chairman, Chin President, Gra Manger, Banki	rton Sch CEO, Tai a Secur nd Catha ng Dept,	ool, Pennsylvan wan Mobile; / S ities Investment y Securities; / Morgan Bank T	ia State Univ enior VP and Trust Corp. / Manager, Trus aipei Branch;	ersity; / CFO, T Presid t Dept, / Asso	Bachelor, D SMC; ent, China D Internationa ciate Manger	ept of evelop l Dept, , Multin	Geology, Nati ment Trust C Chiao Tung ational Corp	onal Ta o. Ltd. ; Bank; oration	iwan Univers Dept, Citiba	ity; nk Taip	ei.
Independent Director	Edward Yang	2010.6.15	3	2007.6.21	0	0%	0	0%	0	0%	0	0%	Note 11
Important e	xperience (education)	Stanford Execu Master of EE, Independent D Independent D Commissioner, Commissioner, Commissioner, VP and CTO, P VP and CTO, C President, Sing Managing Dire Managing Dire Director, U-Sys	tive Pro Oregon S irector, F irector, S Advanc Researc Advisor ersonal orporate apore N ctor, Mon ctor, Info tem Inc.	gram (SEP), Sta tate University, ocal Tech. ilicon Storage T ed Research Ad h & Developme y Committee of System Product System Produ etwork and Tele te Jade Scienc rmation Service	nford Univers USA; Bachel echnolgy visory Comm nt Advisory c Engineer Dep Division, HP ct Division, H communicati e and Techno Association o	ity, USA or of EE ittee, IT ommitt artmen Corpo P Corp ons Bu logy As f R.O.	; , National C RI ee, Institute f t, San Jose ration; oration; siness Unit, sociation: M C.	heng K or Infor State U HP Cor anagin	ung Universit mation Indus niversity. poration; g Director, C	y; try hina Ins	titute of Engi	neering	;

Note: Mr. David Lin assumed the position under his own title after the election dated June 15 2010.

Note 1:

Chairman , LITEON LI SHIN TECHNOLOGY (GANZHOU) LTD, Logah Technology Co., Ltd., Logah Electronics (Su Zhou) Co., Ltd., Logah Technology (HK) Co., Ltd., DIODES,INC, DYNA International Holding Co. Ltd., DYNA International Co. Ltd., Lite-On Semiconductor(HK)LTD., Lite-On Semiconductor (Wuxi) Co., Ltd., Lite-On Microelectronics (Wuxi) Co., Ltd., G-Pro Electronics (SH) Co., Ltd.

Chairman, representative of Lite-On Semiconductor Corp., Lite-On Electronics H.K. Ltd., Lite-On Electronics Co., Ltd. (HK), Lite-On Capital Inc., Lite-On Electronics (Tianjin) Co., Ltd., Lite-On Electronics (DG) Co., Ltd., Lite-On Technology (Guangzhou) Limited, Dong Guan G-Tech Computer Co., Ltd., Dong Guan G-Com Computer Co., Ltd., WUXI CHINA BRIDGE EXPRESS TRADING CO LTD, Visionpak (Guangzhou) Ltd., LITE-ON IT CORPORTION, LITEON OPTO TECHNOLOGY (GUANGZHOU) LTD., LiteON Auto Electric Technology (Guangzhou) Ltd., LITEON-IT OPTO TECH (BH) CO., LTD., Silitech Technology Corp., Lite-On Automotive Corp., Li Shin International Enterprise Corp., Lite-on Technology (Xianning) Co. Ltd., Leotek Electronics Corp. and DIODES, INC.

Director, Lite-On Singapore Pte. Ltd., LET (HK) LIMITED, Lite-On IT Singapore Pte. Ltd., EAGLE ROCK INVESTMENT LTD., LI SHIN INTERNATIONAL ENTERPRISE CORP., HUIZHOU LI SHIN ELECTRONIC LIMITED, HUIZHOU FU TAI

ELECTRONIC LIMITED, Lite-on Power Technology (Changzhou) Co., Ltd., Suzhou Fordgood Electronic Co., Ltd., LI SHIN TECHNOLOGY (HUIZHOU) LIMITED, FORDGOOD ELECTRONIC LTD., Lite-On Mobile Oyj., Lite-On Mobile Pte. Ltd., Actron Technology Corporation, Ta-Rong Investment Co. Ltd., Yuan Pao Development & Investment Co. Ltd., MingShing Investment Co. Ltd., Dun Yuan Investment Co. Ltd., Ta-Sung Investment Co., Ltd., On-Bright Electronics Incorporated.

Director, representative of Lite-On Technology (Europe)B.V., Lite-On Electronics (Europe) Ltd., Maxi Switch S. A. DE C.V., Lite-On, Inc. (USA), Lite-On Technology USA, Inc., Lite-On Trading USA, Inc., Lite-On Service USA, Inc., Lite-On Electronics Co., Ltd.(Thailand), LTC Group Ltd. (BVI), Lite-On International Holding Co., Ltd.(BVI), Lite-On Overseas Trading Co. Ltd., Titanic Capital Services Ltd., LTC International Ltd., Lite-On China Holding Co. Ltd.(BVI), I-Solutions Ltd., Lite-On Communication (Guangzhou) Company Limited, Lite-on Electronics and Wireless (Guangzhou) Ltd., Silitek Electronics (DG) Co., Ltd., Lite-On Electronics (Guangzhou) Limited, LITE-ON TECHNOLOGY (JIANGSU) CO.,LTD., Lite-On Technology (Changzhou) CO LTD, LITE-ON OPTO TECHNOLOGY (CHANGZHOU) CO LTD., Yet Foundate Ltd., Lite-on Computer Technology (DG), Dong Guan G-pro Computer Co., Ltd., China Bridge Co., Ltd., Lite-On Electronics (Chang Zhou) Co LTD., LITE-ON INTEGRATED SERVICES INC., Lite-on (Guangzhou) Infotech Inc. , LiteOn (Guangzhou) Precision Tooling Ltd., Lite-On Digital Electronics (DG) Co., Ltd. Lite-on Technology (GZ) Investment Company Limited, Lite-on Power Technology (Dong Guan) Co., Ltd., Dong Guan Lite-on Computer Co., Ltd., LITEON IT International (HK) LIMITED, High Yield Group Co. Ltd., Lite-On Sales & Distribution Inc., Lite-On Americas Inc., Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corp. Ltd., Silitech Technology Corp. Sdn. Bhd., Silitech Technology (Europe) Ltd., Silitech (Hong Kong) Holding Ltd., Silitech Technology(Su Zhou) Ltd., Xurong Electronics (Shenzhen) Co., Ltd., Major Suit (HK) Co. Ltd., Silitech International (India) Private Ltd., Lite-On Automotive International(Cayman) Co., Ltd., Lite-On (Guangzhou) Automotive Electronics Limited, Lite-On Automotive Electronics(Europe) BV., Lite-On Automotive (Wuxi) Co., Ltd, Lite-On Automotive Holdings (Hong Kong) Ltd., LiteOn Automotive North America Inc., Lite-on Technology (YingTan) LTD., Leotek Electronics Holding Limited, Leotek Electronics (Mauritius) Corporation, Logah Technology Corp., LITE-ON GREEN TECHNOLOGIES INC., LITE-ON CLEAN ENERGY TECHNOLOGY CORP., Lite-on Green Technology B.V., Lite-on Green Technologies (HK) Limited, Lite-on Green Energy (HK) Limited, Lite-on Green Energy (Singapore), Lite-on Green Energy B.V., LITE-ON GREEN TECH. (NJ) LTD., LITE-ON GREEN TECHNOLOGIES, Lite-on Green Technologies Australia Pty Ltd., Lite-on Green Energy S.R.L., Romeo Tetti PV1 S.R.L., Co-tech Copper Foil Corporation and Dunhung Technology Corp.

Note 2:

Chairman, Lite-On (Finland) Oyj and Lite-On Mobile Oyj.

Chairman, representative of LITE-ON GREEN TECHNOLOGIES INC., LITE-ON CLEAN ENERGY TECHNOLOGY CORP., LITE-ON GREEN TECH. (NJ) LTD.

Director, Lite-On Mobile Pte. Ltd..

Director, representative of Maxi Switch S. A. DE C.V., Lite-On Capital Inc., Ze Poly Pte. Ltd., LITE-ON IT CORPORTION, Silitech Technology Corp., Silitech International (India) Private Ltd., Lite-On Automotive Corp., Lite-On Automotive International(Cayman)Co., Ltd., Lite-On (Guangzhou) Automotive Electronics Limited, Lite-On Automotive Electronics (Europe) BV, Lite-On Automotive (Wuxi) Co., Ltd., Lite-On Automotive Holdings (Hong Kong) Ltd., Lite-On Automotive North America Inc., Leotek Electronics Corp., Lite-on Green Technology B.V., Lite-on Green Technologies (HK) Limited, Lite-on Green Energy (HK) Limited, Lite-on Green Energy (Singapore) Pte.Ltd., Lite-on Green Energy B.V., LITE-ON GREEN TECHNOLOGIES, Lite-on Green Technologies Australia Pty Ltd., Lite-on Green Energy S.R.L. and Romeo Tetti PV1 S.R.L..

Lite-On Technology Corporation 2012 Annual Report

Note 3:

Chairman, Lite-on Young Fast Pte. Ltd.

Chairman, representative of Lite-On Integrated Service Inc. and Lite-on (Guangzhou) Infotech Inc.

Director, Lite-On IT Singapore Pte. Ltd., Lite-on Li Shin Technology (Ganzhou) Co., Ltd., Lite-On (Finland) Oyj, Lite-On Mobile Oyj, Lite-On Mobile Pte. Ltd., Lite-On Singapore Pte. Ltd., Silitech International (India) Private Ltd.

Director, representative of Lite-On Semiconductor Corp., Lite-On Electronics (Europe) Ltd., Lite-On Electronics H.K. Ltd., Lite-On Electronics Co., Ltd. (HK), Lite-On Technology USA, Inc., Lite-On Electronics Co., Ltd. (Thailand), LiteOn Capital Inc., LTC Group Ltd. (BVI), Lite-On International Holding Co., Ltd. (BVI), Lite-On Overseas Trading Co., Ltd., Titanic Capital Services Ltd., LTC International Ltd., Lite-On China Holding Co., Ltd. (BVI), I-Solutions Ltd., Lite-On Electronics (Tianjin) Co., Ltd, Lite-On Electronics (DG) Co., Ltd., Lite-On Technology (Guangzhou) Limited Dong Guan G-Tech Computer Co., Ltd. Dong Guan G-Com Computer Co., Ltd., Lite-On Communication (Guangzhou) Company Limited Lite-on Electronics and Wireless (Guangzhou) Ltd., Silitek Electronics (DG) Co., Ltd., Lite-On Electronics (Guangzhou) Limited, LITE-ON TECHNOLOGY (JIANGSU) CO.,LTD, Lite-On Technology (Changzhou) CO LTD, LITEON OPTO TECHNOLOGY (CHANGZHOU) CO LTD, Yet Foundate Ltd., Dong Guan G-pro Computer Co., Ltd., China Bridge Co., Ltd., WUXI CHINA BRIDGE EXPRESS TRADING CO LTD., Lite-On Electronics (Chang Zhou) Co LTD. LiteOn (Guangzhou) Precision Tooling Ltd., Lite-On Digital Electronics (DG) Co., Ltd., Lite-on Technology (GZ) Investment Company Limited, Visionpak (Guangzhou) Ltd., Lite-on Power Technology (Dong Guan) Co., Ltd., Dong Guan Liteon Computer Co., Ltd., LITE-ON IT CORPORTION, LET (HK) LIMITED, LITE-ON IT International (HK) LIMITED, High Yield Group Co., Ltd, Lite-On Information Technology B.V., Lite-On Information Technology GmbH, LITEON OPTO TECHNOLOGY (GUANGZHOU) LTD. LiteON Auto Electric Technology (Guangzhou) Ltd. LITEON-IT OPTO TECH (BH) CO., LTD., Philips & Lite-On Digital Solutions Corporation Silitech Technology Corp., Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corp. Ltd., Silitech Technology Corp. Sdn. Bhd., Silitech Technology (Eurpore) Ltd., Silitech (Hong Kong) Holding Ltd., Silitech Technology(Su Zhou) Ltd., Xurong Electroinc (Shenzhen) Co., Ltd., Major Suit (HK) Co. Ltd., SuZhou Xulong Mold Producing Co., Ltd., Silitech Surface Treatment (Shenzhen) Co., Ltd., Lite-On Automotive Corp., Li Shin International Enterprise Corp., Leotek Electronics Corp., Leotek Electronics (Mauritius) Corporation, Logah Technology Corp., Lite-On Japan Ltd., LITE-ON CLEAN ENERGY TECHNOLOGY CORP., LITE-ON GREEN TECH. (NJ) LTD., Lite-on Green Technologies Australia Pty Ltd., Lite-on Green Energy S.R.L., Romeo Tetti PV1 S.R.L.

Note 7:

Chairman, On-Bright Electronics (Shanghai), On-Bright Electronics (Guangzhou), and Co-Tech Copper Foil Corporation. Chairman, representative of Lite-On Semiconductor (Philippines), On-Bright Electronics Incorporated Co., Ltd., Taiwan On-Bright Electronics., Ltd., SyncMOS Technologies International, Inc, and Dunhong Technology Corporation. Vice Chairman, DIODES, INC. and Lite-On Semiconductor Corporation

Director, Smart Power Holding Group Co. Ltd., G-Pro Electronics (SH) Corp., Ltd., DYNA International Holding Co., Ltd., DYNA International Co., Ltd., Lite-On Semiconductor (Wuxi) Co., Ltd., Lite-On Microelectronics(Wuxi) Co., Ltd, Lite-On semiconductor (HK) Ltd, On-Bright Electronics (Hong Kong) Co., Ltd, ZePoly Pte Ltd., On-Brilliant(Hong Kong) Co., Ltd., and Kwong Lung Enterprise Co, Ltd..

Director, representative of Dynacard Corporation Ltd., Actron Technology Corporation Ltd., Honghua Venture Capital Ltd., and DIODES, Inc.

Note 8:

Director, Lite-On Semiconductor (HK) Ltd., On-Bright Electronics (Hong Kong) Co., Ltd., On-Bright Electronics (Shanghai).and On-Bright Electronics (Guangzhou).

Director, representative of DYNA International Holding Co., Ltd., DYNA International Co., Ltd., Smart Power Holding Group Co., Ltd., and Lu Zhu Development Co., Ltd..

Supervisor, SyncMOS Technologies International Inc., and On-Bright Electronics Co., Ltd. Supervisor, representative of Dunhong Technology Co. Ltd.

Note 9:

Independent Director, Wistron Corp.

Director of Finance and Economics Research and Education Foundation. Independent supervisor, Advantech Corp. Ltd.

Note 10:

Chairman, TVBS, Via On Demand and IC Broadcasting Co., Director, CX Technology Corp.

Supervisor, representative of Lite-On Green Technologies Inc.,

Note 11:

Note 4:

Director of Essence Technology Solution Inc.

Independent director, Pericom Semiconductor. Partner of iD Ventures America.LLC Director, Sifotonics Technologies, GTV fund and Applied BioCode

Note 5:

Chairman of LedEngin Inc.. Director of Lorenz Co., Ltd. Director, representative of Nuvoton Technology Corporation President and CEO of Diodes Incorporated

Note 6:

Supervisor of Lite-On Automotive Corp. Supervisor, representative of Lite-On Semiconductor Corp.

Lite-On Technology Corporation 2012 Annual Report

2. Independent Status of the Directors

Qualifcation Name	With at least 5 years of working experience and the following professional designations	With at least 5 years of working experience and the following professional designations	With at least 5 years of working experience and the following professional designations	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Eligibility of independent status (Note 2)	Also a director to other companies (number of frms)
	A lecturer of private or public institutions of higher education specialized in business, legal affairs, fnance, accounting, or the expertise required by the business of the Company	A judge, district attorney, lawyer, certifed public accountant, or professional or technician who has passed relevant national examination and properly licensed.	Work experience in business, legal affairs, fnance, accounting, or in an area required by the business of the Company	1	2	3	4	5	6	7	8	9	10
Raymond Soong	No	No	Yes	-	-	-	-	V	-	V	V	V	V	0
David Lin	No	No	Yes	-	-	-	V	V	-	V	V	V	V	0
Representative of Lite-On Capital Inc.: Warren Chen	No	No	Yes	-	-	-	V	V	-	V	V	V	-	0
Representative of Dorcas Investment Co., Ltd.: Joseph Lin	No	No	Yes	V	V	V	V	V	V	V	V	V	-	0
Representative of Ta-Sung Investment Co., Ltd.: Keh-Shew Lu	No	No	Yes	V	-	V	V	V	-	V	V	V	-	0
Representative of Ta-Sung Investment Co., Ltd.: Rick Wu	No	No	Yes	V	-	V	V	V	-	V	V	V	-	0
Representative of Yuan Pao Development & Investment Co., Ltd.: CH Chen	No	No	Yes	-	-	V	V	V	-	V	V	V	-	0
Representative of Yuan Pao Development & Investment Co., Ltd.: David Lee	No	No	Yes	-	-	V	V	V	-	V	V	V	-	0
Kuo-Feng Wu	No	Yes	Yes	V	V	V	V	V	V	V	V	V	V	1
Harvey Chang	No	No	Yes	V	V	V	V	V	V	V	V	V	V	0
Edward Yang	No	No	Yes	V	V	V	V	V	V	V	V	V	V	0

Note : The directors and the supervisors meeting the following conditions in the period of two years before the appointment and during the term of office. Select the appropriate box by putting a “•”.

(1) Not an employee of the Company or the affiliates of the Company.

(2) Not a director or supervisor of the Company or the affiliates of the Company (except of the Company or the parent of the Company, or an independent director of the companies where the Company directly or indirectly holding more than 50% of the shares bearing voting rights).

(3) The person, the spouse, and underage children, who hold more than 1% of the shares or hold more than 1% of the shares under the title of a third party, or who is among the top-10 natural person shareholders.

(4) Not a spouse, a kindred within the 2nd tier under the Civil Code, or a next of kin to a kindred within the 5th tier under the Civil Code of the aforementioned people stated in (1) through (3).

(5) Not a director, supervisor, or employee of an institutional shareholder that directly hold more than 5% of the outstanding shares of the Company, or a director, supervisor, or employee of the top-5 institutional shareholders of the Company.

(6) Not a director (trustee), supervisor(monitor), or manager of specific company or institution that has financial or business transactions with the Company, or a shareholder holding more than 5% of the shares of such company or institution.

(7) Not a professional, sole proprietor, partner, company or the owner, partner, director (trustee), supervisor(monitor), manager of the group enterprise that provide business, legal, financial , or accounting services or consultation to the Company, or a spouse to the aforementioned people.

(8) Not a spouse to or kindred within the 2nd tier under the Civil Code to another director.

(9) None of the provisions in Article 30 of the Company Law is applicable.

(10) Not being elected as the government, institution of their representative as stated in Article 27 of the Company Law.

Lite-On Technology Corporation 2012 Annual Report

3.4.2 . Profiles of the Management Team

Date: 2013/04/21

											Date: 2013/04/21	Date: 2013/04/21	Date: 2013/04/21
Title（Note 1）	Name	Date of appointment (offce)	Proportion of shareholding		Proportion of shareholding by spouse and underage children		Proportion of shareholding under the title of a third party		Major Background Information (note 2)	Other positions of other companies	Manager who is the spouse or kin within the 2nd tier of the Civil Code
											Title	Name	Relationship
			shares %		shares %		shares %
Group CEO/ Lite-On Technology CEO/ Core Business Investment CEO	Warren Chen	2002.11.04	8,053,859	0.35%	652,075	0.03%	0	0%	Dept of Chemical Engineering/University of Chinese Culture, Manager of Manufacturing Dept, Texas Instruments.	Refer to profle of director for detail	None	None	None
Deputy Group CEO	KC Teng (Retired on 2013/02/08)	2002.11.04	4,132,529	0.18%	55,034	0.00%	0	0%	Dept of Economics/Catholic Fujen University, Planning Manager, Leading Enterprise	Note 3	None	None	None
Group Chief Technology Offcer	Paul Lo	2002.11.04	1,967,541	0.09%	1,089	0.00%	0	0%	School of Electrical Engineering/University of Waterloo, Manager, Texas Instruments.	Note 4	None	None	None
Group Chief Strategy Offcer and Business Group President	Alexander Huang	2010.06.01	24,000	0.00%	365	0.00%	0	0%	Dept of Information Engineering (previously Computer Dept), Microsoft Greater China Regional President, President of Microsoft Taiwan.	None	None	None	None
Business Group President	Shilung Chiang	2002.11.04	740,866	0.03%	0	0.00%	0	0%	MBA, University of Pittsburgh; President, Computer Business Division, Digital Corporation.	Lite-On Singapore Pte. Ltd., Silitek Electronics (Guangzhou) Co., Ltd. representative to directors.	None	None	None
Business Group President	Peter Chiu	2002.11.04	600,560	0.03%	0	0.00%	0	0%	Master of Finance, National Taiwan University; Master of Production System Engineering and Management Study, Taipei Technology University; Vice President, First International Computers.	Director, representative of Dragon Jet Corporation Ltd. & Silitech Technology Corp.	None	None	None
Director of CEO Offce and CIO	DI Wang	2002.11.04	1,172,408	0.05%	16,800	0.00%	0	0%	PhD, Northeastern University/Mathematics; VP in Sales Engineering, Potrans Electrical Corp.	Director, representative of Lite-On Integrated Service Inc.	None	None	None
VP	Weber Su	2002.11.04	152,765	0.01%	0	0.00%	0	0%	MBA, National Taiwan University; Philips Taiwan-Monitor Group Industrial Manager	None	None	None	None
Senior VP	Albert Chang	2002.11.04	625,349	0.03%	137,392	0.01%	0	0%	Master of Industrial Management, National Cheng Kung University; ABIT U.S. Branch President	Note 5	None	None	None
Business Group President	Rex Chuang	2002.11.04	1,328,627	0.06%	422,952	0.02%	0	0%	Electronic Engineering, Hsin Pu Industrial Vocational School VP of production, Lite-On Electronics Corp.,	Director, representative of Lite-On Electronics Co., Ltd.(Thailand) & Leotek Electronics Corp.	None	None	None
VP	Sonny Chao	2002.11.04	940,614	0.04%	2,537	0.00%	0	0%	School of Industrial Engineering, Polytechnic Institute of N.Y.; Philips Taiwan Global Marketing & Sales Sr. Program Manager	Note 6	None	None	None
Business Unit General Manager	TC Huang	2002.11.04	1,003,760	0.04%	2,877	0.00%	0	0%	University of Leicester/Business Administration； Manager , Yu long Corporation	None	None	None	None
Business Group President	Johnson Sun	2002.11.04	1,590,149	0.07%	20,755	0.00%	0	0%	Dept of Electrical Engineering, Feng Chia University; Safety Engineer, Sony Corporation.	Director, Lippo Electronics (Su Zhou) Co., Ltd.	None	None	None
VP	Henry Chen	2003.11.01	100,284	0.00%	0	0.00%	0	0%	Graduate Institute of Electrical Engineering, Tatung University; Project Manager, Mustek Systems.	None	None	None	None
VP	Wing Eng	2002.11.04	1,919,034	0.08%	0	0.00%	0	0%	Master of Electrical Engineering, Stanford University; Director of Design Dept, AT&T Bell Lab.	None	None	None	None
VP	Tom Tang	2002.11.04	432,858	0.02%	1,665	0.00%	0	0%	Department of Electical Engineers, Chung Yung Christian University. Vice President, Pacifc Image Electronic Co., Ltd.	None	None	None	None
VP	HY Lee	2002.11.04	634,738	0.03%	25,502	0.00%	0	0%	Master of Industrial Engineering, National Ching Hua University; Asst VP, Universal Microelectronics	None	None	None	None
Business Unit General Manager	Andrew Hou(Resigned on 2012/12/31)	2007.10.01	490,185	0.02%	0	0.00%	0	0%	Computer Science, Syracuse University. President, Clientron Corp.	None	None	None	None
VP	CH Lei	2009.02.02	122,054	0.01%	0	0.00%	0	0%	Dept of Physics, Christian Chung Yuan University; Asst VP, Hon Hai Precision Industrial Corp.	None	None	None	None
Business Unit General Manager	Jason Tzeng	2009.02.01	300,151	0.01%	0	0.00%	0	0%	Computer, Monmouth University; Procurement/OEM Manager, Philips;	None	None	None	None

Lite-On Technology Corporation 2012 Annual Report

Title（Note 1）	Name	Date of appointment (offce)	Proportion of shareholding	Proportion of shareholding	Proportion of shareholding by spouse and underage children	Proportion of shareholding by spouse and underage children	Proportion of shareholding under the title of a third party	Proportion of shareholding under the title of a third party	Major Background Information (note 2)	Other positions of other companies	Manager who is the spouse or kin within the 2nd tier of the Civil Code	Manager who is the spouse or kin within the 2nd tier of the Civil Code	Manager who is the spouse or kin within the 2nd tier of the Civil Code
											Title	Name	Relationship
			shares	%	shares	%	shares	%
VP	Rex Wu ( Resigned on 2012/06/01 )	2010.03.01	1,040,932	0.05%	0	0.00%	0	0%	PhD, Electronic Engineering, National Chiao Tung University. R&D Assistant President, Upti-UPS Corp.	None	None	None	None
VP	Lobo Wang ( Resigned on 2013/03/17)	2011.02.14	15,000	0.00%	0	0.00%	0	0%	PhD of Business Administration, Inter American University; Vice President, Eaton Electrical.	None	None	None	None
Business Unit General Manager	Charlie Wang	2012.01.02	785	0.00%	0	0.00%	0	0%	MBA, National Cheng Chi University; VP of Lite-On Technology	President, Leotek Electronics Corp.	None	None	None
VP	KA Chang ( Resigned on 2013/02/26)	2012.05.02	0	0.00%	0	0.00%	0	0%	Dept of Electrical Engineering, Chung Yung Christian University. VP of Compal Corporation	None	None	None	None
VP	Victor Hsu	2012.11.27	0	0.00%	0	0.00%	0	0%	University of Illinois at Urbana-Champaign/MBA; Group CFO of Samson Holding Ltd.	Director, representative of Dragon Jet Corp. Ltd.; Supervisor, Leotek Electronics Corp.	None	None	None
VP	Joseph SK Chen	2013.01.02	6,393	0.00%	23,485	0.00%	0	0%	Department of Electronics, Taipei Tech College. VP of CPBU, Sysgration Corporation Ltd.	None	None	None	None
VP	Mike MH Wu	2013.02.25	0	0.00%	0	0.00%	0	0%	Department of Industrial Engineering, National Tsing Hua University. COO of Lite-On Mobile	None	None	None	None
Chief Finance and Accounting Offcer	Brownson Chu	2004.10.22	527,248	0.02%	580	0.00%	0	0%	Dept of Accounting, Feng Chia University; Asst VP, Finance Dept, Lite-On IT Corporation	Note 7	None	None	None
Chief Audit Offcer	James Ho	2002.11.04	1,004,950	0.04%	0	0.00%	0	0%	Santa Clara University/MBA, Asia Source In(USA)	None	None	None	None

Note 1:

Management information shall include CEO, Vice CEO, General Manager and Supervisor of each department. For those managers with equivalent position to CEO, Vice CEO, or General Managers should be all disclosed.

Note 2 :

Experience relate to current position. If the person had worked in the company’s appointed auditing firm or affiliates during the reporting period, please specify the job field and job title in above form.

Note 3:

Director, representative of Lite-On Technology (Europe) B.V., Lite-On Electronics Co., Ltd. Lite-on Green Energy. B.V., Dong Guan G-pro Computer Co., Ltd., China Bridge (China) Co., Ltd., China Bridge Express (Wuxi) Co., Ltd., Wuxi LiteOn Tech. Co., Lite-On Electronics Tianjin Co., Ltd., Lite-On Electronics (DG) Co., Ltd., Lite-On Computer Tech (DG), LiteOn Tech. (Guang-Zhou) Co., Ltd., Lite-on Technology (Guangzhou) Investment Co., Ltd., Dong Guan G-Tech Computers Co., Ltd., Silitek Elec. (DG) Co., Ltd., Silitek Elec. (GuangZhou) Co., Ltd., Dong Guan G-Com Computers Co., Ltd., Lite-On Communications (GZ) Co., Ltd., Lite-on Electronics and Wireless (Guangzhou) Ltd., Lite-on Technology (JiangSu) Co., Ltd., Lite-On Technology (Xianing) Co., Ltd., Lite-On Technology (Changzhou) Co., Ltd., Lite-On Opto Technology (Changzhou) Co., Ltd., Lite-On (Guang Zhou) Precision Tooling Co., Ltd., Lite-On Digital Electronics (DG) Co., Ltd., Director of Lite-on Li Shin Technology (Ganzhou) Co., Ltd., Epicrystal (Hong Kong) Co., Limited and LiteStar JV Holding (BVI) Co., Ltd.

Note 5:

Director, representative of Li Shin International Enterprise Corp., Lite-On Technology (Xianing) Co., Ltd. and Lite-On Technology (Ying Tan)Co., Ltd. Director of LI SHIN INTERNATIONAL ENTERPRISE CORP., Huizhou Li Shin Electronic Co., Ltd., Huizhou Fu Tai Electronic Co., Ltd., Huizhou Li Shin Electronic Co., Ltd., Huizhou Fu Tai Electronic Co., Ltd., Li Shin Technology (Huizhou) Ltd., Lite-on Li Shin Technology (Guangzhou) Co., Ltd. and Epicrystal (Hong Kong) Co., Limited. Chairman of Lippo Electronics (Su Zhou) Co., Ltd. LiteStar JV Holding (BVI) Co., Ltd. Logah Electronics (Su Zhou) Co., Ltd., LTC Group Ltd. (BVI), Titanic Capital Services Ltd., LTC International Ltd.,Lite-On China Holding Co. Ltd.(BVI), I-Solutions Ltd., and Yet Foundate Ltd representative of Lite-On, Inc. (USA), Lite-On Technology USA, Inc., Lite-On Trading USA, Inc., Lite-On Service USA, Inc.,

Note 6:

Director, representative of Lite-On Inc. (USA), Lite-On Technology USA, Inc., Lite-On Trading USA, Inc., and Lite-On Service USA, Inc.

Note 7:

Director, representative of G&W Technology (BVI) Limited, G&W Technology Ltd., DragonJet Corporation, Shanghai DigiVision Corporation. Supervisor, representative of Lite-On Integrated Service Inc., Li Shin International Enterprise Ltd. Supervisor, Lite-On Automotive , Lite-On Green Technologies Corp. and Lite-On Clean Energy Corp.

Note 4:

Director, representative of Lite-On Automotive Corp., Lite-On Automotive International(Cayman)Co., Ltd., Lite-On Automotive Electronics (Guang Zhou) Co., Ltd., Lite-On Automotive Electronics(Europe) BV, Lite-On Automotive (Wuxi) Co., Ltd., LiteOn Automotive North America Inc., Lite-On Automotive Holdings (Hong Kong) Ltd, Pac-Link Opportunity Venture Capital Co. Lite-On Automotive Service USA, Inc.

Lite-On Technology Corporation 2012 Annual Report

3.5. Statements of Internal Control

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3.6. Major Resolutions of the General Meeting and Board Meetings

3.6.1 Major Resolutions of the General Meeting

The Company held a regular session of the General Meeting of 2011 on June 19th 2012 at the International Conference Center of Lite-On Technology Building located at No. 392, Rai Guang Road, 1/F, Neihu, Taipei. Major resolutions and the status of execution are shown below:

i. Adoption of 2011 Financial Statements
ii. Adoption of the Proposal for Appropriation of 2011 Earnings
iii. Proposal for dividends and employee bonuses payable in newly-issued shares of common stock
iv. Amendment to “Articles of Incorporation”
v. Amendment to “Rules for Election of Directors”
vi. Amendment to “Procedures for Acquisition and Disposal of Assets”

vii. Amendment to “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees”

All above resolutions have exceeded legal requirement of the voting numbers and been approved in the AGM.

3.6.2 Major Resolutions of the Board Meetings

F o l l o w i n g a re t h e i m p o r t a n t re s o l u t i o n s f ro m t h e b o a rd d u r i n g 2 0 1 2 / 0 1 / 0 1 - 2 0 1 3 / 0 4 / 3 0 .

1. BOD resolutions on 2012/02/13

Announced organization adjustment of management team
Disposal of investment in Wistron Corp.

2. BOD resolutions on 2012/03/26

Lite-On Technology Corp. 2011 annual standalone financial reports and consolidated financial reports
Merge one of the Subsidiaries in China.
Announced the date of Annual Shareholders’ Meeting.

3. BOD resolutions on 2012/04/25

Lite-On Technology Corp. announced Y2012 first quarter financial reports
Announced the dividend distribution from year 2011
Issuance of new share for capital increase from year 2011 operation and distribution of employee bonus.

4. BOD resolution on 2012/06/06

Approved subsidiary Perlos (Guangzhou) Electronic Components Co. Ltd to purchase manufacturing facilities.

Lite-On Technology Corporation 2012 Annual Report

5. BOD resolutions on 2012/07/12

3.7 Functions of the Board

Announced the procedure for issuance of new share for capital increase from Year 2012 operation and
distribution of employee bonus.

6. BOD resolutions on 2012/08/30

1. The Board and the Functional Committees

Lite-On Technology Corp. announced Y2012 first half financial reports and consolidated financial reports.

7. BOD resolutions on 2012/10/24

Lite-On Technology announced Y2012 third quarter financial reports.
To strengthen the LED value chain in Lite-On Technology, announced to acquire 100% outstanding shares of
subsidiary Leotek through 100% owned subsidiary Lite-On Capital Inc.

8. BOD resolutions on 2013/01/30

Announced the Tender Offer to acquire 100% of Lite-On IT outstanding stake through 100% owned subsidiary
Bao Yuan Corporation.
The 100% owned subsidiary Bao Yuan Corporation announced the Tender Offer to acquire Lite-On IT
outstanding shares.
For the fund requirement of the acquisition, Lite-On Technology would loan to 100% owned subsidiary Bao Yuan
Corporation.
For the fund requirement of the acquisition, Lite-On Technology would offer guarantee and endorsement to Bao
Yuan Corporation’s syndication loan.

9. BOD resolutions on 2013/02/04

Adjust the structure of the acquisition to Lite-On IT.

10. BOD resolutions on 2013/03/20

	Vice chairman Director Chairman The Board Independent Director David Lin Dorcas Investment Co., Ltd. Lite-On Capital Inc. Ta-Sung Investment Co., Ltd. Ta-Sung Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Kuo-Feng Wu, Harvey Chang, Edward Yang Representative: Joseph Lin Representative: Warren Chen Representative: Keh-Shew Lu Representative: Rick Wu Representative: CH Chen Representative: David Lee Raymond Soong	Vice chairman Director Chairman The Board Independent Director David Lin Dorcas Investment Co., Ltd. Lite-On Capital Inc. Ta-Sung Investment Co., Ltd. Ta-Sung Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Kuo-Feng Wu, Harvey Chang, Edward Yang Representative: Joseph Lin Representative: Warren Chen Representative: Keh-Shew Lu Representative: Rick Wu Representative: CH Chen Representative: David Lee Raymond Soong	Vice chairman Director Chairman The Board Independent Director David Lin Dorcas Investment Co., Ltd. Lite-On Capital Inc. Ta-Sung Investment Co., Ltd. Ta-Sung Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Yuan Pao Development & Investment Co., Ltd. Kuo-Feng Wu, Harvey Chang, Edward Yang Representative: Joseph Lin Representative: Warren Chen Representative: Keh-Shew Lu Representative: Rick Wu Representative: CH Chen Representative: David Lee Raymond Soong


	Audit Committee Since: 2007/06/21	Compensation Committee Since: 2008/08/27	Growth Strategy Committee Since: 2010/09/01

Chair Person : Kuo-Feng Wu Members : Harvey Chang, Edward Yang



	Audit Committee Since: 2007/06/21	Compensation Committee Since: 2008/08/27	Growth Strategy Committee Since: 2010/09/01

Chair Person : Kuo-Feng Wu Members : Harvey Chang, Edward Yang		Chair Person : Harvey Chang Members : Kuo-Feng Wu, Edward Yang, Ken-Shew Lu	Chair Person : Edward Yang Members : Raymond Soong, David Lin Warren Chen, Ken-Shew Lu

Lite-On Technology to perform short-form merger with 100% owned subsidiary Bao Yuan Corporation.
Approved the request from100% owned subsidiary, Lite-On Technology (Chang Zhou) Co., Ltd., to purchase
manufacturing facilities in accordance with its sustainable growth strategy.

11. BOD resolutions on 2013/03/29

Lite-On Technology Corp. announced Y2012 financial reports and consolidated financial reports.
Lite-On Technology Corp. announced Y2012 consolidated financial reports.
Announced the dividend distribution from year 2012
Issuance of new share for capital increase from year 2012 operation and distribution of employee bonus.
BOD resolute the schedule and agenda of year 2012shareholders' meeting.
BOD approved the subsidiary Guangzhou Lite-On Mobile Electronic Components Co., Ltd. to increase capital
expenditure on manufacturing facilities.
Announced to acquire the remaining outstanding shares of Lite-On IT.
Approved the donation to Lite-On Cultural Foundation

Lite-On Technology Corporation 2012 Annual Report

2. Board Meetings Attendance

The Board held 12 meetings (A) in the recent period of time (from January 1st, 2012 to April 24th, 2013) with the attendance of the directors specified as below:

Title	Name	Attend ( sit in ) in person (B)	Attend by proxy	Attendance rate (%) [ A/B ]
Chairman	Raymond Soong	11	0	92%
Vice Chairman	David Lin	11	1	92%
Director	Dorcas Investment Co., Ltd. Representative:Joseph Lin	9	3	75%
Director	Lite-On Capital Inc. Representative:Warren Chen	12	0	100%
Director	Ta-Sung Investment Co., Ltd. Representative:Keh-Shew Lu	4	8	33%
Director	Ta-Sung Investment Co., Ltd. Representative: Rick Wu	12	0	100%
Director	Yuan Pao Development & Investment Co., Ltd. Representative: CH Chen	9	3	75%
Director	Yuan Pao Development & Investment Co., Ltd. Representative: David Lee	12	0	100%
Independent Director	Kuo-Feng Wu	12	0	100%
Independent Director	Harvey Chang	12	0	100%
Independent Director	Edward Yang	11	1	92%

E. In the 8th session of the 25th Board Meeting, Director Mr. David Lin and Mr. Warren Chen avoided the discussion and did not vote the motion to offer guarantee and endorsement to Bao Yuan Corporation for the Lite-On IT acquisition.

F. In the 8th session of the 26th Board Meeting, Director Mr. Raymond Soong, Mr. David Lin and Mr. Warren Chen avoided the discussion and did not vote the motion to Lite-On IT acquisition.

G. In the 8th session of the 28th Board Meeting, Director Mr. Raymond Soong, Mr. David Lin, Mr. Warren Chen and Mr. CH Chen avoided the discussion and did not vote the motion of donation to Lite-On Cultural Foundation..

H. In the 8th session of the 28th Board Meeting, independent directors Mr. Kuo-Feng Wu, Harvey Chang and Edward Yang avoided the discussion and did not vote the motion of the nomination to independent director candidates for 2013 AGM election.

For strengthening and accelerating the growth strategy of the Company and the whole business group, the Company has established the Growth Strategy Committee in 2010 and established the regulation for the organization of the committee. The independent director, Mr. Edward Yang, has been assigned to be the first convener of the Growth Strategy Committee.

3. Audit Committee Attendance

Important Notice:

Minutes of Board meetings where Article 14-3 of the Securities and Exchange Act is applicable and contained information on the objection or qualified opinions of the independent directors on record or in writing: none.
The avoidance of the conflict of interest by the directors on relevant motions: seven occasions,
A. In the 8th session of the 18th Board Meeting, the independent director. Mr. Kuo-Feng Wu avoided the discussion and did not vote on the motion of Disposal of Wistron Corp.’s stakes.
B. In the 8th session of the 25th Board Meeting, Director Mr. David Lin and Mr. Warren Chen avoided the discussion and did not vote the motion of the tender offer to Lite-On IT.

The Audit Committee held 12 meetings (A) in the recent period of time (from January 1st 2012 to April 24th 2013) with the attendance of the independence directors specified below:

Title	Name	Attend ( sit in ) in person (B)	Attend by proxy	Attendance rate (%) [ A/B ]
Independent Director	Kuo-Feng Wu	12	0	100%
Independent Director	Harvey Chang	12	0	100%
Independent Director	Edward Yang	11	1	92%

C. In the 8th session of the 25th Board Meeting, Director Mr. David Lin and Mr. Warren Chen avoided the discussion and did not vote the motion of the syndication loan for the Lite-On IT acquisition.
D. In the 8th session of the 25th Board Meeting, Director Mr. David Lin and Mr. Warren Chen avoided the discussion and did not vote the motion of the loan to Bao Yuan Corporation for the Lite-On IT acquisition.

34 35

Lite-On Technology Corporation 2012 Annual Report

4. The status of operation of the Audit Committee or the supervisors and the Board of Directors

(1) The operation of the Audit Committee

The Audit Committee has held 12 sessions (A) in the most recent year (from January 1 2011 to April 30 2012) and with the presence of the independent director as shown below:

Title	Name	Attend (sit in) in person (B)	Attend by proxy	Attendance rate (%) 【B/A】(note)
Independent Director	Kuo-Feng Wu	12	0	100%
Independent Director	Harvey Chang	11	1	92%
Independent Director	Edward Yang	11	1	92%

Important Notice:

Issues stated in Article 14-5 of the Securities and Exchange Act of the ROC and other issues not passed by the Audit Committee but resolved by more than two-thirds of the directors: none.
The act of the avoidance of the conflict of interest by the independent director: none.

prescribed by the committee and the findings.

(7) The certified public accountants reported to the Audit Committee on the planning, implementation, and result of the semi-annual and the annual external audits.
(8) The certified public accountants reported to the Audit Committee on newly established statement of financial accounting standards and related laws on securities and exchange any time as needed. Note:
If a specific independent director resigned before the end of the fiscal year, specify the date of resignation in the relevant field. The attendance (sit in) rate of such director or supervisor in Board meetings shall be based on the actual attendance to meetings during his term of office.
If there is a newly elected independent director who filled in the vacancy of the relieved independent director, specify the names of and differentiate the old and new independent director, the date of office of the new independent director or the date of renewal. The attendance (sit in) rate of such independent director in Board meetings shall be based on the actual attendance to meetings during his term of office.

(2) The participation of the supervisors in the Board

The Company has established the Audit Committee on June 21 2007 to perform the functions of the supervisors as required by law.

The communications between the independent director and the Chief Audit Officer and the certified public accountants:
(1) The Chief Audit Officer reported to the Audit Committee on the establishment of and amendment to the internal control system.
(2) The Chief Audit Officer reported to the Audit Committee on the conduct of internal audits and the findings.
(3) The Chief Audit Officer reported to the Audit Committee on the annual audit plan and the implementation of the plan.
(4) The Chief Audit Officer reported to the Audit Committee on the findings of each audit and the tracking of corrective actions and preventive actions.
(5) The Chief Audit Officer provided information on the addition or amendment of laws governing securities and exchange to the Audit Committee.
(6) The Chief Audit Officer presented to the Audit Committee the report on the conduct of special audits

36 37

Lite-On Technology Corporation 2012 Annual Report

Capital and Shares

4.1.1 The Top-10 Shareholders and Information of Related Parties

Name ( note 1)	Shareholding by self	Shareholding by self	Shareholding by spouse and underage children	Shareholding by spouse and underage children	Shareholding under the title of a third party	Shareholding under the title of a third party	Specify the names and relations of the top-10 shareholders who are related- parties as stated in SFAS No. 6, or spouse or kindred within the 2nd tier under the Civil Code (note 3)	Specify the names and relations of the top-10 shareholders who are related- parties as stated in SFAS No. 6, or spouse or kindred within the 2nd tier under the Civil Code (note 3)
	Quantity of shares	Proportion of shareholding	Quantity of shares	Proportion of shareholding	Quantity of shares	Proportion of shareholding	Title (or name)	Relation
Raymond Soong	77,738,111	3.37%	14,670,821	0.64%	0	0%	Ta-Rong/Ta-Sung /Yuan Pao Investment Co., Ltd)	Director
Ta-Rong Investment Co., Ltd.	67,978,071	2.95%	0	0%	0	0%	Raymond Soong	Director
Ta-Rong Investment Co., Ltd. Representative: Shu-Yan Tsai	48,728	0.00%	0	0%	0	0%	Ta-Sung/ Yuan Pao Development and Investment Co., Ltd.	Director
Labor Insurance Bureau	56,536,834	2.45%	0	0%	0	0%	None	None
Capital Asset Management investment account under the custody of Citibank Taiwan	46,939,412	2.04%	0	0%	0	0%	None	None
Ta-Sung Investment Co., Ltd.	46,159,459	2.00%	0	0%	0	0%	Raymond Soong and Shu-Yan Tsai	Director
Ta-Sung Investment Co., Ltd. Representative: Keh-Shew Lu	0	0%	0	0%	0	0%	None	None
Ta-Sung Investment Co., Ltd. Representative: Rick Wu	978,337	0.04%	50,340	0.00%	0	0%	None	None
Vanguard Asset Management investment account under the custody of Citibank Taiwan	42,982,476	1.86%	0	0%	0	0%	None	None
Labor Pension Fund	37,617,177	1.63%	0	0%	0	0%	None	None
Singapore Government investment account under the custody of Citibank Taiwan	37,510,975	1.63%	0	0%	0	0%	None	None
Yuan Pao Development & Investment Co. Ltd.	36,527,518	1.58%	0	0%	0	0%	Raymond Soong and Shu-Yan Tsai	Director
Yuan Pao Development & Investment Co. Ltd. Representative : CH Chen	0	0%	0	0%	0	0%	None	None
Yuan Pao Development & Investment Co. Ltd. Representative : David Lee	31,285	0.00%	0	0%	0	0%	None	None
Saudi Arabian Monetary Fund under the custody of JPMorgan	34,870,435	1.51%	0	0%	0	0%	None	None

Lite-On Technology Corporation 2012 Annual Report

4.1.2 The Structure of Shareholders

2013/04/21	2013/04/21	2013/04/21	2013/04/21	2013/04/21	2013/04/21	2013/04/21
	Governmental Organizations	Financial Institutions	Other Institutional Investors	Individuals	Foreign Institutional Shareholders and Individuals	Total
Numbers of Shareholders	11	17	332	151,295	829	152,484
Holding Shares	937	118,584,497	538,459,699	495,287,964	1,152,828,757	2,305,161,854
Holding Stake	0.00%	5.14%	23.36%	21.49%	50.01%	100%

4.2 Change in the Proportion of Shareholding among the Directors, Supervisors, Managers, and Major Shareholders

Title (note 1)	Name	2012	2012	Current period to April 21	Current period to April 21
		Change in numberof shareholdings	Change in number of shares pledged under lien	Change in numberof shareholdings	Change in number of shares pledged under lien
Chairman	Raymond Soong	386,756	0	0	0
Vice Chairman	David Lin	34,743	0	0	0
Director	Dorcas Investment Co., Ltd	73,719	0	0	0
	Representative: Warren Chen	587,332	0	0	0
Director	Dorcas Investment Co., Ltd	29,503	0	0	0
	Representative:Joseph Lin	1,446	0	0	0
Director	Ta0Sung Investment Co., Ltd.	229,649	0	0	0
	Representative: Keh Shew Lu	0	0	0	0
Director	Ta Sung Investment Co., Ltd.	229,649	0	0	0
	Representative: Rick Wu	4,867	0	0	0
Director	Yuan Pao Development & Investment Co., Ltd.:	181,728	0	0	0
	Representative: CH Chen	0	0	0	0
Director	Yuan Pao Development & Investment Co., Ltd.:	181,728	0	0	0
	Representative: David Lee	155	0	0	0
Independent Director	Kuo0Feng Wu	0	0	0	0
Independent Director	Harvey Chang	0	0	0	0
Independent Director	Edward Yang	0	0	0	0
Group CEO/ Core Business Investment CEO	Warren Chen	587,332	0	0	0
Group Deputy CEO	KC Teng (Retired on 2013/02/08)	204,589	0	(20,000)	0
Group Chief Technology Offcer	Paul Lo	9,878	0	(18,000)	0
Group Chief Strategy Offcer and Business Group President	Alexander Huang	49,000	0	(25,000)	0
Business Group president	Shilung Chiang	(225,966)	0	(140,000)	0
Business Group President	Peter Chiu	(296,515)	0	0	0
Director of CEO Offce and CIO	DI Wang	(162,615)	0	0	0
VP	Weber Su	(673,793)	0	(90,000)	0

Lite-On Technology Corporation 2012 Annual Report

Financial Information

Title (note 1)	Name	2012	2012	Current period to April 21	Current period to April 21
		Change in numberof shareholdings	Change in number of shares pledged under lien	Change in numberof shareholdings	Change in number of shares pledged under lien
Senior VP	Albert Chang	(107,671)	0	231,966	0
Business Group President	Rex Chuang	(209,908)	0	240,000	0
Business Unit General Manager	Sonny Chao	(88,749)	0	(155,000)	0
Business Unit General Manager	TC Huang	165,690	0	(300,000)	0
Business Group President	Johnson Sun	62,891	0	(362,000)	0
VP	Henry Chen	(108,895)	0	(116,000)	0
VP	WingEng	64,273	0	0	0
VP	Tom Tang	(19,300)	0	(150,000)	0
VP	HY Lee	(121,171)	0	(100,000)	0
Business Unit General Manager	Andrew Hou (Resigned on 2012/12/31)	18,359	0	0	0
VP	CH Lei	2,079	0	(96,000)	0
Business Unit General Manager	Jason Tzeng	(83,353)	0	(300,000)	0
VP	Rex Wu (Resigned on 2012/06/01)	(55,000)	0	0	0
VP	KA Chang (Resigned on 2013/02/26)	0	0	0	0
VP	Lobo Wang (Resigned on 2013/02/26)	15,000	0	0	0
VP	CharleyWang	3	0	0	0
VP	Victor Hsu (Assumed on 2012/11/27)	0	0	0	0
VP	Joseph SK Chen (Assumed on 2013/01/02)	0	0	0	0
VP	Mike MH Wu (Assumed on 2013/02/25)	0	0	0	0
Chief Financial and Accounting Offcer	Brownson Chu	(46,432)	0	(260,000)	0
Chief Auditing Offcer	James Ho	(212,926)	0	(90,000)	0

5.1 Standalone Financial Statements of 2011

Lite-On Technology Corporation Financial Statements for the Years Ended December 31, 2012 and 2011 and Independent Auditors’ Report

Information on shares pledged under lien: None

Lite-On Technology Corporation 2012 Annual Report

We have also audited the consolidated financial statements of Lite-On Technology Corporation and subsidiaries as of and for the years ended December 31, 2012 and 2011 and have issued a modified unqualified opinion thereon in our report dated March 29, 2013.

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Lite-On Technology Corporation

We have audited the accompanying balance sheets of Lite-On Technology Corporation as of December 31, 2012 and 2011, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits. However, as disclosed in Note 9 to the financial statements, we did not audit the financial statements of some equity-method investees as of and for the years ended December 31, 2012 and 2011. The carrying values of these investments included in the accompanying balance sheets were 2.21% (NT$2,461,820 thousand) and 2.07% (NT$2,344,663 thousand) of the Corporation’s total assets as of December 31, 2012 and 2011, respectively. Also, the equity amounting to NT$92,500 thousand and NT$57,475 thousand in the investees’ net earnings were 1.22% and 0.76%, respectively, of the Corporation’s income before income tax in 2012 and 2011, respectively. The financial statements of the foregoing investees were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts pertaining to these investments, is based solely on the reports of the other auditors.

March 29, 2013

==> picture [304 x 93] intentionally omitted <==

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Lite-On Technology Corporation as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China.

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, 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. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

44 45

Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION

BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash (Note 4) Accounts receivable, net (Notes 2 and 5) Accounts receivable from related parties (Notes 2 and 22) Other receivables from related parties (Notes 2 and 22) Other financial assets - current Inventories, net (Notes 2 and 6) Prepayments Deferred income tax assets - current (Notes 2 and 19) Total current assets LONG-TERM INVESTMENTS (Notes 2, 7, 8, 9 and 27) Available-for-sale financial assets - noncurrent Financial assets carried at cost Investments accounted for by the equity method Total long-term investments PROPERTIES (Notes 2 and 10) Cost Land Buildings Machinery and equipment Molding equipment Transportation equipment Office equipment Leased assets Miscellaneous equipment Total cost Less: Accumulated depreciation Accumulated impairment Add: Prepayments for equipment Properties, net INTANGIBLE ASSETS (Notes 2 and 11) Patents, net Goodwill, net Other intangible assets Total intangible assets OTHER ASSETS Refundable deposits Deferred charges, net (Note 2) Others (Notes 2 and 16) Total other assets TOTAL		2012 Amount % $ 10,324,378 9 14,980,406 14 3,241,115 3 309,504 1 160,143 - 2,214,716 2 270,930 - 295,529 - 31,796,721 29 584,637 1 75,443 - 73,059,529 65 73,719,609 66 2,280,117 2 3,674,272 3 1,067,375 1 386,930 1 1,137 - 497,190 1 5,515 - 1,387,599 1 9,300,135 9 4,106,332 4 15,029 - 5,178,774 5 13,633 - 5,192,407 5 10,175 - 544,918 - 10,239 - 565,332 - 84,129 - 149,459 - 29,057 - 262,645 - $ 111,536,714 100		2011 Amount % LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES $ 9,750,349 9 Short-term loans (Note 13) 13,894,932 12 Notes payable 5,121,231 5 Accounts payable 853,564 1 Accounts payable to related parties (Note 22) 180,982 - Income tax payable (Notes 2 and 19) 4,474,796 4 Accrued expenses 202,556 - Other payable to related parties (Note 22) 306,618 - Advance receipts Current portion of long-term bank loans (Note 14) 34,785,028 31 Obligations under capital leases - current (Note 15) Product warranty reserve (Note 2) Other current liabilities 1,720,240 2 535,630 - Total current liabilities 70,169,806 62 LONG-TERM LIABILITIES 72,425,676 64 Long-term bank loans, net of current portion (Note 14) Derivative financial liability for hedging - noncurrent (Notes 2 and 27) Obligations under capital leases - noncurrent (Note 15) 2,280,117 2 Total long-term liabilities 3,674,272 3 1,481,551 1 RESERVE FOR LAND VALUE INCREMENT TAX (Note 2) 388,170 - 1,137 - OTHER LIABILITIES 480,810 1 Guarantee deposits received 5,515 - Deferred income tax liabilities - noncurrent (Notes 2 and 19) 1,532,392 2 Deferred credits - gain on intercompany transactions (Note 2) 9,843,964 9 4,455,576 4 Total other liabilities 15,029 - 5,373,359 5 Total liabilities 9,105 - SHAREHOLDERS’ EQUITY 5,382,464 5 Capital stock - NT$10.00 par value Authorized 3,500,000 thousand shares; issued and outstanding 2,295,315 thousand shares in 2012 and 2,309,980 thousand shares in 2011 14,698 - Advance receipts for common stock 544,918 - Total capital stock 51,193 - Capital surplus Additional paid-in capital from insurance in excess of par value 610,809 - Bond conversion Treasury stock transactions Long-term stock investments 86,371 - Merger 175,175 - Employee stock options 19,834 - Total capital surplus Retained earnings 281,380 - Legal reserve Unappropriated earnings Total retained earnings Other items of shareholders’ equity Cumulative translation adjustments Net loss not recognized as pension cost Unrealized valuation loss on financial instruments Unrealized loss on cash flow hedging Treasury stock - 27,979 thousand shares in 2012 and 58,405 thousand shares in 2011 Total other items of shareholders’ equity Total shareholders’ equity $ 113,485,357 100 TOTAL		2012 Amount % $ 2,787,840 2 500 - 1,457,394 1 15,591,993 14 409,454 - 2,912,628 3 449,867 - 562,187 1 3,125,000 3 453 - 175,712 - 721,094 1 28,194,122 25 12,575,000 11 101,563 - - - 12,676,563 11 230,216 - 16,531 - 273,208 - 366,048 1 655,787 1 41,756,688 37 22,953,154 21 6,840 - 22,959,994 21 8,551,730 8 7,540,388 7 370,703 - 915,676 1 10,120,217 9 6,112 - 27,504,826 25 7,847,905 7 13,253,899 12 21,101,804 19 126,009 - (29,536 ) - (677,435 ) (1 ) (101,563 ) - (1,104,073) (1) (1,786,598) (2) 69,780,026 63 $ 111,536,714 100		2011
								Amount % $ 1,050,000 1 1,962 - 6,656,629 6 14,560,064 13 441,682 - 2,789,675 2 663,986 1 560,101 1 - - 504 - 181,346 - 946,473 1 27,852,422 25 15,700,000 14 165,225 - 322 - 15,865,547 14 230,216 - 18,101 - 358,451 - 233,398 - 609,950 - 44,558,135 39 23,099,801 20 - - 23,099,801 20 8,533,185 8 7,641,499 7 416,974 - 907,070 1 10,255,921 9 4,602 - 27,759,251 25 7,125,313 6 11,729,938 11 18,855,251 17 1,625,560 1 (17,182 ) - (372,591 ) - (165,225 ) - (1,857,643) (2) (787,081) (1) 68,927,222 61 $ 113,485,357 100

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated March 29, 2013)

Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUES Sales (Notes 2 and 22) Less: Sales returns Sales allowances Net sales OPERATING COSTS(Notes 6, 20 and 22) UNREALIZED INTERCOMPANY GAINS (Note 2) REALIZED INTERCOMPANY GAINS (Note 2) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 20 and 22) Selling and marketing General and administrative Research and development Total operating expenses OPERATING INCOME NONOPERATING INCOME AND GAINS Interest income Investment income recognized under the equity method, net (Notes 2 and 9) Dividend income Gain on disposal of properties Gain on disposal of investments, net Other income (Note 22) Total nonoperating income and gains NONOPERATING EXPENSES AND LOSSES Interest expense (Notes 2 and 27) Loss on disposal of properties Foreign exchange loss, net (Note 2) Impairment loss (Notes 2, 7, 8 and 12) Other expenses (Note 20) Total nonoperating expenses and losses		2012 Amount % $ 78,151,418 102 313,787 - 1,093,294 2 76,744,337 100 69,655,336 91 - - 89,525 - 7,178,526 9 1,415,782 2 2,489,921 3 1,520,360 2 5,426,063 7 1,752,463 2 83,130 - 5,551,497 7 21,459 - 16,848 - 442,276 1 948,584 1 7,063,794 9 337,129 - 242 - 11,068 - 652,857 1 225,930 - 1,227,226 1		2011
				Amount % $ 95,781,443 101 562,429 - 617,095 1 94,601,919 100 87,712,980 93 288 - - - 6,888,651 7 1,731,425 2 2,278,928 2 1,422,138 2 5,432,491 6 1,456,160 1 52,069 - 5,508,630 6 135,113 - 4,443 - 309,135 1 990,812 1 7,000,202 8 291,441 - 219 - 50,191 - 278,888 - 300,450 1 921,189 1 (Continued)

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

INCOME BEFORE INCOME TAX INCOME TAX (Notes 2 and 19) NET INCOME EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 21) Basic Diluted		2012 Amount % $ 7,589,031 10 54,171 - $ 7,534,860 10 2012 Pretax After-tax $ 3.35 $ 3.33 $ 3.30 $ 3.28		2011
				Amount % $ 7,535,173 8 309,248 - $ 7,225,925 8 2011
				Pretax After-tax $ 3.34 $ 3.21 $ 3.28 $ 3.15

Pro forma information on the assumption that shares of Lite-On Technology Corp. held by its direct and indirect subsidiaries were not treated as treasury stock:

p subsidiaries were not treated as treasury stock:		gy	.	y	y
NET INCOME EARNINGS PER SHARE (NEW TAIWAN DOLLARS) Basic Diluted		2012 Pretax After-tax 7,644,884 $ 7,590,713 $ 3.33 $ 3.31 $ 3.29 $ 3.26		2011
	$	Pretax 7,644,884 $ 3.33 $ 3.29	$	Pretax 7,605,456 $ 3.33 $ 3.27	After-tax $ 7,296,208 $ 3.20 $ 3.14

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated March 29, 2013)

(Concluded)

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Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars; Except Cash Dividends Per Share)

BALANCE, JANUARY 1, 2011 Appropriation of prior year’s earnings Legal reserve Cash dividends - 28.7% Stock dividends - 0.5% Bonus to employees - stock Cash dividends received by subsidiaries Adjustment arising from changes in equity in investments due to subsidiaries’ distribution of bonus to employees Adjustment arising from changes in unrealized loss on subsidiaries' financial assets Adjustment arising from changes in capital surplus from long-term equity investments Unrealized loss on cash flow hedging Net income in 2011 Unrealized valuation loss on available-for-sale financial assets Change in translation adjustments Change in net loss not recognized as pension cost BALANCE, DECEMBER 31, 2011 Appropriation of prior year’s earnings Legal reserve Cash dividends - 22.7% Stock dividends - 0.5% Retirement of treasury stock Issuance of stock on the exercise of employee stock options Bonus to employees - stock Cash dividends received by subsidiaries Adjustment arising from changes in equity in investments due to subsidiaries’ distribution of bonus to employees Adjustment arising from changes in unrealized loss on subsidiaries' financial assets Adjustment arising from changes in capital surplus from long-term equity investments Unrealized gain on cash flow hedging Net income in 2012 Change in net loss not recognized as pension cost Unrealized valuation loss on available-for sale financial assets Change in translation adjustments BALANCE, DECEMBER 31, 2012		Issued and Outstanding Capital Stock (Note 17) Shares (Thousands) Amount 2,284,794 $ 22,847,940 - - - - 11,271 112,711 13,915 139,150 - - - - - - - - - - - - - - - - - - 2,309,980 23,099,801 - - - 11,397 113,972 (30,565 ) (305,650 ) 82 816 4,421 44,215 - - - - - - - - - - - - - - - - - - 2,295,315 $ 22,953,154	Share Subscriptions Received in Advance $ - - - - - - - - - - - - - - - - - - - 6,840 - - - - - - - - - - $ 6,840			Capital Surplus(Notes 2 and	Capital Surplus(Notes 2 and	17)			Retained Earnings (Notes 2a	nd 17) Total $ 18,211,674 - (6,469,637 ) (112,711 ) - - - - - - 7,225,925 - - - 18,855,251 - (5,174,335 ) (113,972 ) - - - - - - - - 7,534,860 - - - $ 21,101,804	Cumulative Translation Adjustments (Note 2) $ 489,217 - - - - - - - - - - - 1,136,343 - 1,625,560 - - - - - - - - - - - - - - (1,499,551) $ 126,009	Unrealized Valuation Gain Net Loss not (Loss) on Recognized as Financial Pension Cost Instrument (Note 2) (Notes 2 and 17) $ (22,338 ) $ 1,429,993 - - - - - - - - - - - - - (666,937 ) - - - - - - - (1,135,647 ) - - 5,156 - (17,182 ) (372,591 ) - - - - - - - - - - - - - - - - - (280,660 ) - - - - - - (12,354 ) - - (24,184 ) - - $ (29,536) $ (677,435)	Unrealized Loss on Cash Flows Hedging Treasury Stock (Note 2) (Notes 2 and 18) $ (159,166 ) $ (1,857,643 ) - - - - - - - - - - - - - - - - (6,059 ) - - - - - - - - - (165,225 ) (1,857,643 ) - - - - - - - 753,570 - - - - - - - - - - - - 63,662 - - - - - - - - - $ (101,563) $ (1,104,073)	Total Shareholders' Equity $ 68,346,563 - (6,469,637 ) - 471,855 70,283 (2,152 ) (666,937 ) (48,471 ) (6,059 ) 7,225,925 (1,135,647 ) 1,136,343 5,156 68,927,222 - (5,174,335 ) - - 27,245 156,080 55,853 1,828 (280,660 ) 4,360 63,662 7,534,860 (12,354 ) (24,184 ) (1,499,551) $ 69,780,026
				i	From Share Issuance n Excess of Par Value $ 8,200,480 - - - 332,705 - - - - - - - - - 8,533,185 - - - (112,909 ) 19,589 111,865 - - - - - - - - - $ 8,551,730	Bond Treasury Stock Conversion Transactions $ 7,641,499 $ 346,691 - - - - - - - - - 70,283 - - - - - - - - - - - - - - - - 7,641,499 416,974 - - - - - - (101,111 ) (98,196 ) - - - - - 55,853 - - - - - (3,928 ) - - - - - - - - - - $ 7,540,388 $ 370,703	Long-term Stock Investments $ 959,438 - - - - - (2,152 ) - (50,216 ) - - - - - 907,070 - - - - - - - 1,828 - 6,778 - - - - - $ 915,676	Employee Stock Merger Options $ 10,255,921 $ 2,857 - - - - - - - - - - - - - - - 1,745 - - - - - - - - - - 10,255,921 4,602 - - - - - - (135,704 ) - - - - - - - - - - - - 1,510 - - - - - - - - - - $ 10,120,217 $ 6,112	Total $ 27,406,886 - - - 332,705 70,283 (2,152 ) - (48,471 ) - - - - - 27,759,251 - - - (447,920 ) 19,589 111,865 55,853 1,828 - 4,360 - - - - - $ 27,504,826
		Shares (Thousands) 2,284,794 - - 11,271 13,915 - - - - - - - - - 2,309,980 - 11,397 (30,565 ) 82 4,421 - - - - - - - - - 2,295,315									Unappropriated Legal Reserve Earnings $ 6,226,667 $ 11,985,007 898,646 (898,646 ) - (6,469,637 ) - (112,711 ) - - - - - - - - - - - - - 7,225,925 - - - - - - 7,125,313 11,729,938 722,592 (722,592 ) - (5,174,335 ) - (113,972 ) - - - - - - - - - - - - - - - - - 7,534,860 - - - - - - $ 7,847,905 $ 13,253,899

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated March 29, 2013)

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Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation Amortization Allowance (reversal of allowance) for doubtful accounts Gain on sale of investments, net Impairment loss on financial and fixed assets Gain on disposal of properties, net Investment income recognized under the equity method, net Cash dividends received from equity-method investees Product warranty reserve Prepaid pension cost Deferred income taxes Deferred credits - gain on intercompany transactions Net changes in operating assets and liabilities: Accounts receivable Accounts receivable from related parties Other receivable from related parties Inventories Other financial assets - current Prepayments Notes payable Accounts payable Accounts payables to related parties Other payable to related parties Income tax payable Accrued expenses Advance receipts Other current liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds of the disposal of available-for-sale financial assets Acquisition of investments under the equity method Proceeds of the disposal of investments under the equity method Acquisition of properties Increase in deferred charges Decrease in refundable deposits Proceeds of the disposal of financial assets carried at cost Proceeds of the disposal of properties Net cash provided by (used in) investing activities	2012 $ 7,534,860 298,525 129,951 (6,160) (442,276) 652,857 (16,606) (5,551,497) 1,349,833 (5,634) (9,223) 36,580 (89,525) (1,079,314) 1,438,016 986,160 2,195,550 20,839 (68,374) (1,462) (5,199,235) 1,031,929 (214,119) (125,949) 279,033 2,086 (59,592) 3,087,253 1,215,604 (358,390) 288,587 (191,282) (58,792) 2,242 - - 897,969	2011 $ 7,225,925 452,173 132,003 30,642 (309,135) 278,888 (4,224) (5,508,630) 3,036,523 (69,991) (15,045) 76,772 288 1,639,311 2,544,118 1,138,585 2,209,386 31,141 568,515 1,962 (606,144) (3,522,615) (80,311) (152,016) 456,857 (69,551) (813,962) 8,671,465 96,896 (1,139,824) 216,594 (291,031) (123,187) 1,452 98,703 9,844 (1,130,553) (Continued)

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid Increase in short-term loans Proceeds of the exercise of employee stock options Increase (decrease) in guarantee deposits received Decrease in obligations under capital leases Increase in long-term bank loans Net cash used in financing activities NET INCREASE IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding capitalized interests) Income tax paid NONCASH INVESTING AND FINANCING ACTIVITIES Current portion of long-term debts CASH PAID FOR THE ACQUISITION OF PROPERTIES Increase in properties Decrease in payable for properties The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 29, 2013)	2012 $ (5,174,335) 1,737,840 27,245 (1,570) (373) - (3,411,193) 574,029 9,750,349 $ 10,324,378 $ 335,080 $ 143,539 $ 3,125,453 $ 121,536 69,746 $ 191,282	2011 $ (6,469,637) 986,149 - 3,842 (1,188) 1,366,666 (4,114,168) 3,426,744 6,323,605 $ 9,750,349 $ 312,741 $ 384,492 $ 504 $ 219,963 71,068 $ 291,031 (Concluded)

Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION

NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

Lite-On Technology Corporation (the “Corporation”) was established in March 1989 and its shares are traded on the Taiwan Stock Exchange. The Corporation manufactures and markets (1) computer software, hardware, peripherals and components and (2) multifunction and all-in-one printers, cameras and Internet systems and image-processing equipment.

The Corporation merged with Lite-On Electronics, Inc., Silitek Corp. and GVC Corp., with the Corporation as the survivor entity. The merger took effect on November 4, 2002, and the Corporation thus assumed all rights and obligations of the three merged companies on that date. The Corporation merged with its subsidiary, Lite-On Enclosure Inc. (LOEI), with the Corporation as the survivor entity. The merger took effect on April 1, 2004, and the Corporation thus assumed all of LOEI’s rights and obligations on that date.

As of December 31, 2012 and 2011, the Corporation had 1,965 and 1,898 employees, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting and accounting principles generally accepted in the Republic of China. Under these guidelines and principles, the Corporation is required to make certain estimates and assumptions. Actual results could differ from these estimates.

For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

The Corporation’s significant accounting policies are summarized as follows.

Current and Noncurrent Assets and Liabilities

Current assets include cash, financial assets held for trading and other assets to be converted to cash or consumed or used up within 12 months. All other assets such as property, plant and equipment and intangible assets are classified as noncurrent. Current liabilities include financial liabilities resulting from trading or to be repaid or settled within 12 months. All other assets and liabilities are classified as noncurrent.

Revenue Recognition/Accounts Receivable/Allowance for Doubtful Accounts

Sales revenues are recognized when titles to products and material risks of ownerships are transferred to clients, primarily upon shipment, because the earnings process is mostly completed and the profit has been realized or is realizable. On unprocessed materials delivered to subcontractors for further processing, the Corporation does not recognize sales because this delivery does not involve a transfer of the risks and rewards of materials ownership.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Corporation and the customers for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Royalties are recognized when:

a. It is probable that the economic benefits of a transaction will flow to the Corporation; and b. The revenue can be measured reliably.

Royalties are recognized on an accrual basis in accordance with the substance of the contract.

If a contract meets the recognition criteria for sales of goods and the following conditions, royalties are recognized at the time of sale:

a. The amount of the royalties is fixed or the royalties are nonrefundable;
b. The contract is noncancelable;
c. The contract permits the licensee to exploit the assigned rights freely; and
d. The licensor has no remaining obligations to perform.

Allowance for doubtful accounts is provided on the basis of a periodic review of the collectability of receivables based on aging analysis, credit ratings and economic conditions.

As discussed in Note 3 to the financial statements, on January 1, 2011, the Corporation adopted the third-time revised Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” One of the main revisions is that the impairment of receivables originated by the Corporation should be covered by SFAS No. 34. Accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include:

a. Significant financial difficulty of the debtor; or
b. Accounts receivable becoming overdue; or
c. It becoming probable that the debtor will enter into bankruptcy or undergo financial reorganization.

Accounts receivable that are assessed as not impaired individually are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of accounts receivable could include the Corporation’s past experience of collecting payments and an increase in the number of delayed payments, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collaterals and guarantees, discounted at the receivable’s original effective interest rate.

The carrying amount of the accounts receivable is reduced through the use of an allowance account. When accounts receivable are considered uncollectible, they are written off against the allowance account. Recoveries of amounts previously written off are credited to the allowance account. Changes in the carrying amount of the allowance account are recognized as bad debt in profit or loss.

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Lite-On Technology Corporation 2012 Annual Report

Inventories

Inventories consist of materials and supplies, work in process, finished goods and merchandise. Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

Long-term Equity Investments

The difference between the cost of the investment and the Corporation’s equity in the investee’s net assets when an investment is acquired or when the equity method is first adopted, investment premiums, representing goodwill, are no longer being amortized, but the Corporation needs to make asset impairment tests regularly or if there are indications that goodwill is probably impaired. If the net fair value of an asset exceeds its investment cost, the excess is used to reduce the fair value of each of the noncurrent assets acquired (exclude non-equity-method financial assets, assets for disposal, deferred tax assets and prepaid pension costs or other pension payments), with any remaining excess recognized as extraordinary gain.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. When the assets are subsequently measured at fair value, the changes in fair value are excluded from earnings and reported as a separate component of shareholders’ equity. The accumulated gains or losses are recognized as earnings when the financial asset is derecognized from the balance sheet. A regular purchase or sale of financial assets is recognized and derecognized using trade date accounting.

The fair value of stocks listed on the Taiwan Stock Exchange or traded over the counter on the GreTai Securities Market (“GreTai”) are their closing prices on the balance sheet date. For open-end funds, fair values are their net asset values on the balance sheet date. For bonds, fair values are the reference prices on GreTai on the balance sheet date. Fair values of financial instruments with no active market are estimated through valuation techniques incorporating estimates and assumptions that are consistent with those used by other market participants.

Cash dividends are recognized as investment income on the ex-dividend date but are accounted for as reductions of the original cost of investment if these dividends are declared on the investees’ earnings before investment acquisition. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. After the receipt of stock dividends, the cost per share is recalculated on the basis of the new number of total shares held. For bond securities, the difference between the initially recognized carrying values and maturity values is amortized using the effective interest method. If the difference between the results of using the straight-line method and those of the effective interest method is not material, the straight-line method can be used for amortization, with the amortized interest recognized in profit or loss.

An impairment loss is recognized on the balance sheet date if there are objective evidences that a financial asset is impaired, and this impairment loss is charged to the net income of the current period. An impairment loss on an equity instrument classified as available for sale can be reversed to the extent of the original carrying value and recognized as an adjustment adjustments to shareholders’ equity. If the fair value of a debt instrument classified as available-for-sale subsequently increases as a result of an event which occurred after the impairment loss was recognized, the decrease in impairment loss is recognized as income.

Financial Assets Carried at Cost

The accounting treatment for cash dividends and stock dividends arising from financial assets carried at cost is the same as that for cash and stock dividends arising from available-for-sale financial assets.

If an investee issues additional shares and the Corporation acquires these shares at a percentage different from its current equity in the investee, the resulting increase in the Corporation’s equity in its investee’s net assets is credited to capital surplus. Any decrease in the Corporation’s equity in the investee’s net assets is debited to capital surplus. If capital surplus is not enough for debiting purposes, the difference is debited to unappropriated earnings. The equity in the net income or net loss of investees that also have investments in the Corporation (reciprocal holdings) is computed using the treasury stock method. Upon the disposal of equity-method investments, the Corporation’s shares in the capital surplus recognized by the investee, if any, will be included in current income in proportion to the investments sold. However, capital surplus from an investee’s property disposal is transferred to retained earnings in proportion to the value of the investments sold. The Corporation accounts for its stock held by subsidiaries as treasury stock. Dividends that the Corporation distributes to its subsidiaries are debited to investment income and are credited to capital surplus - treasury stock transactions.

Profits from downstream transactions with an equity-method investee are eliminated in proportion to the Corporation’s percentage of ownership in the investee; however, if the Corporation has control over the investee, all the profits are eliminated. Profits from upstream transactions with an equity-method investee are eliminated in proportion to the Corporation’s percentage of ownership in the investee. The deferred profits are realized through the subsequent sale of the related products to third parties.

Stock dividends received are recorded only as an increase in the number of shares held but not recognized as investment income. Cost or carrying value per share is recomputed on the basis of total shares after stock dividends are received.

For all stock investments, costs of investments sold are determined using the weighted moving-average method.

Properties

Properties are stated at cost less accumulated depreciation and accumulated impairment. Major renewals and betterments are capitalized; maintenance and repairs are charged to current expense.

Assets held under capital leases are initially recognized as assets of the Corporation at the lower of their fair value at the inception of the lease or the present value of the minimum lease payments; the corresponding liability is included in the balance sheet as obligations under capital leases. The interest included in lease payments is expensed when paid.

Depreciation is computed using the straight-line method over useful lives estimated as follows: buildings, 5 to 60 years; machinery and equipment, 2 to 10 years; molding equipment, 2 to 10 years; transportation equipment, 3 to 10 years; office equipment, 2 to 10 years; leased assets, 3 to 5 years; and miscellaneous equipment, 2 to 10 years. Properties still being used by the Corporation beyond their service lives are depreciated over their newly estimated service lives.

Upon revaluation of properties, the resulting revaluation increment is recognized as part of the cost of the properties, and a reserve for land value increment tax is included in long-term liabilities, with the difference between revaluation increment and the land value increment tax credited to capital surplus.

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Lite-On Technology Corporation 2012 Annual Report

Upon sale or other disposal of properties, the related cost and accumulated depreciation are removed from the accounts, and the resulting gain or loss is credited or charged to nonoperating income or expense.

Intangible Assets

Intangible assets acquired are initially recorded at cost and are amortized on a straight-line basis over their estimated useful lives. Patents and client relationship (classified under other intangible assets) are amortized over six years and four years, respectively.

Goodwill arising from a merger is amortized over five years using the straight line method. Effective January 1, 2006, based on the newly revised Statement of Financial Accounting Standards (SFAS) No. 5 - “Long-Term Investments under the Equity Method,” goodwill is no longer amortized.

Idle Assets

From January 1, 2006, idle assets reclassified into other assets are stated at the lower of carrying value or net realizable value and depreciated using the straight line method.

Deferred Charges

Deferred charges, consisting of computer software costs, royalty expenditures and office decoration expenditures are amortized using the straight-line method over periods ranging from two to fourteen years.

Asset Impairment

An impairment loss should be recognized if the carrying amount of properties, patents, goodwill, other intangible assets, idle assets, deferred charges and investments accounted for by the equity method exceeds, as of the balance sheet date, their recoverable amount, and this impairment loss should be charged to current income even if the asset is carried at a revalued amount. An impairment loss recognized in prior years could be reversed if there is a subsequent recovery in the estimates used to determine recoverable amount since the last impairment loss was recognized. However, an impairment loss is reversed only to the extent that it does not increase the asset carrying amount that would have been determined had no impairment loss on the asset been recognized in prior years. However, reversal of impairment loss on goodwill is prohibited.

For long-term equity investments on which the Corporation has significant influence but over which it has no control, the carrying amount (including goodwill) of each investment is compared with its own recoverable amount for the purpose of impairment testing.

Product Warranty Reserve

The estimate of the related cost is based on historical experience about product service life and warranty period.

Pension Costs

Under the defined benefit pension plan, net pension costs are recognized on the basis of actuarial calculations, and, under the defined contribution pension plan, the Corporation makes monthly contributions to employees’ individual pension accounts throughout the employees’ service periods.

If the defined benefit pension plan is curtailed or settled, the resulting gains or losses should be recognized as part of the net pension cost for the period.

Treasury Stock

The Corporation accounts for the cost of purchasing its outstanding stock as a deduction to arrive at shareholders’ equity.

Upon disposal of the treasury stock, the sales proceeds in excess of the cost are accounted for as capital surplus - treasury stock. If the sales proceeds are less than the cost, the difference is accounted for as a reduction in the remaining balance of capital surplus - treasury stock of the same type. If the remaining balance of capital surplus - treasury stock is insufficient to cover the difference, the remainder is recorded as a reduction of retained earnings.

If treasury stock is retired, the weighted-average cost of the retired treasury stock is written off to offset the par value and the capital surplus premium, if any, of the stock retired. If the weighted-average cost written off exceeds the sum of both the par value and the capital surplus premium, the difference is accounted for as a reduction in capital surplus - treasury stock of the same type, or a reduction in retained earnings for any deficiency where capital surplus - treasury stock of the same type is insufficient to cover the difference. If the weighted-average cost written off is less than the sum of both the par value and premium, if any, of the stock retired, the difference is accounted for as an increase in capital surplus - treasury stock of the same type.

Effective January 1, 2002, the Corporation adopted the Statement of Financial Accounting Standards No. 30 - “Accounting for Treasury Stocks,” which requires that the shares of the Corporation held by subsidiaries should be reclassified from investments by those subsidiaries to treasury stocks. The reclassification amounts were based on the carrying value of the subsidiaries’ investments in the Corporation as of January 1, 2002.

Stock-based Compensation

Employee stock option plans with a grant or amendment date on or after January 1, 2004 are accounted for under the interpretations issued by the Accounting Research and Development Foundation. The Corporation uses the intrinsic value method, under which compensation cost is recognized on a straight-line basis over the vesting period.

Income Tax

The Corporation applies the inter-period allocation method to income tax. Deferred tax assets are recognized for the tax effects of deductible temporary differences and investment tax credits and deferred tax liabilities are recognized for the tax effects of taxable temporary differences. Valuation allowance is provided for deferred income tax assets that are not certain to be realized. Deferred income tax assets or liabilities are classified as current or noncurrent in accordance with the nature of related assets or liabilities for financial reporting. But, if a deferred asset or liability cannot be related to an asset or liability in the financial statements, it is classified as current or noncurrent depending on the expected realization date of the temporary difference.

Tax credits for certain purchases of equipment or technique, research and development, and personnel training, can be deducted from the current year’s tax expense.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income taxes (10%) on undistributed earnings are recorded as expense in the year the shareholders resolve to retain the earnings.

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Translation of Foreign-currency Financial Statements and Foreign-currency Transactions

Nonderivative foreign-currency transactions are recorded in New Taiwan dollars at the spot rates of exchange in effect when the transactions occur. Gain or losses (measured from the transaction date or most recent intervening balance sheet date, whichever is later) realized upon the settlement of foreign-currency transaction at the prevailing exchange rates are credited or charged to income statement in the year in which the transaction is settled. For monetary transactions, on the balance sheet date, assets and liabilities are translated at the prevailing rate, and gain or loss is credited or charged to current income.

At the balance sheet date, foreign-currency monetary assets and liabilities are revalued using prevailing exchange rates, and the exchange differences are recognized in profit or loss.

At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities that are measured at fair value are revalued using prevailing exchange rates, with the exchange differences treated as follows:

a. Recognized in shareholders’ equity if the changes in fair value are recognized in shareholders’ equity;
b. Recognized in profit and loss if the changes in fair value is recognized in profit or loss.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

If the functional currency of an equity-method investee is a foreign currency, translation adjustments will result from the translation of the investee’s financial statements into the reporting currency of the Corporation. These adjustments are accumulated and reported as a separate component of shareholders’ equity.

Hedging Derivative Financial Instruments

Hedging derivative financial instruments are measured at fair value. The changes in fair values of these instruments are debited or charged to either shareholders’ equity or current income depending on the type of the hedged items.

Reclassifications

Certain accounts in the financial statements as of and for the year ended December 31, 2011 have been reclassified to conform to the presentation of the financial statements as of and for the year ended December 31, 2012.

3. ACCOUNTING CHANGES

Financial Instruments

On January 1, 2011, the Corporation adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” The main revisions include (1) finance lease receivables are now covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts is amended; (3) loans and receivables originated by the Corporation are now covered by SFAS No. 34; (4) additional guidelines on impairment testing of financial assets carried at amortized cost when a debtor has financial difficulties and the terms of obligations have been modified; and (5) accounting treatment by a debtor for modifications in the terms of obligations. This accounting change had no significant effect on the Corporation.

Operating Segments

On January 1, 2011, the Corporation adopted the newly issued SFAS No. 41 - “Operating Segments.” The statement requires that segment information be disclosed on the basis of the information about the components of the Corporation that management uses to make operating decisions. SFAS No. 41 requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Corporation's chief operating decision maker in order to allocate resources to the segments and assess their performance. This statement supersedes SFAS No. 20 - “Segment Reporting.” For this accounting change, the Corporation has restated segment information, as shown in the note of consolidated financial statements.

4. CASH

Hedge Accounting

Hedge accounting recognizes the offsetting effects on profit or loss of changes in the fair values of the hedging instrument and the hedged item as follows:

a. Fair value hedge: The gain or loss from remeasuring the hedging instrument at fair value and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss.
b. Cash flow hedge: The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in shareholders’ equity. The amount recognized in shareholders’ equity is recognized in profit or loss in the same year or years during which the hedged forecast transaction or an asset or liability arising from the hedged forecast transaction affects profit or loss. However, if all or a portion of a loss recognized in shareholders’ equity is not expected to be recovered in the future, the amount that is not expected to be recovered is reclassified into profit or loss.
c. Hedge of a net investment in a foreign operation: The portion of the gain or loss on hedging instruments that is determined to be an effective hedge is recognized in shareholders’ equity but is recognized as gain or loss on foreign operation disposal.

The Corporation uses hedging to stabilize net interest income or expense and control risks due to market value changes. Cash flow hedge is used to reduce interest rate risk, while fair value hedge is used to reduce the net present value risk of the hedged item.

Cash on hand Demand deposits Time deposits		December 31	December 31
		2012 $ 887 2,222,756 8,100,735 $ 10,324,378	2011 $ 850 2,740,724 7,008,775 $ 9,750,349

As of December 31, 2012 and 2011, the bank deposits overseas were as follows:

Czech Republic - Prague (CZK35,557 thousand in 2012 and CZK54,254 thousand in 2011) Germany - Nuremburg (EUR77 thousand) Poland - Warsaw (PLN15 thousand in 2012 and PLN1,017 thousand in 2011)		December	31
		2012 $ 54,577 2,945 141 $ 57,663	2011 $ 82,564 3,028 9,062 $ 94,654

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Lite-On Technology Corporation 2012 Annual Report

6. INVENTORIES, NET

5. ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET
Accounts receivable Less: Allowance for doubtful accounts		December 31
		2012 $ 15,011,296 30,890 $ 14,980,406	2011 $ 13,924,347 29,415 $ 13,894,932

INVENTORIES, NET
Merchandise Materials and supplies Work in process Finished goods		December 31
		2012 $ 2,214,716 - - - $ 2,214,716	2011 $ 2,451,313 284,584 175,470 1,563,429 $ 4,474,796

Movements of the allowance for doubtful accounts were as follows:

Balance, beginning of year Allowance (reversal of allowance) for doubtful accounts Amounts written off Reclassified Balance, end of year	Years Ended	December 31
	2012	2011 Accounts Receivable Overdue Receivable $ 43,699 $ 63,061 13,214 17,428 - (58,938) (27,498) 27,498 $ 29,415 $ 49,049
	Accounts Receivable Overdue Receivable $ 29,415 $ 49,049 (16,640) 10,480 - - 18,115 (18,115) $ 30,890 $ 41,414

Overdue receivables were classified under other assets (please refer to Note 12 - other assets).

Based on factoring agreements, losses from commercial disputes (such as sales returns and discounts) should be borne by the Corporation and losses from credit risk should be borne by the banks.

The factored accounts receivable that had not matured as of December 31, 2011 were as follows: (December 31, 2012: None)

Factor December 31, 2011 Taishin International Bank	Receivables Sold Amounts Collected Advances Received at Year-end Interest Rates on Advances Received (%) Credit Line US$ 1,766 US$ 1,766 $ - Note $ 160,000

As of December 31, 2012 and 2011, the allowances for inventory devaluation were $162,691 thousand and $292,818 thousand, respectively.

The costs of inventories recognized as operating costs were $69,655,336 thousand in 2012 and $87,712,980 thousand in 2011. The foregoing amounts included (a) a loss of $3,128 thousand on physical inventory; a reversal of the inventory write-down of $130,127 thousand; and a loss of $196,256 thousand on inventory scrap for 2012; and (b) a loss of $2,028 thousand on physical inventory; a reversal of the inventory write-down of $21,628 thousand; and a loss of $101,447 thousand on inventory scraps for 2011. Previous write-downs had been reversed as a result of increased selling prices in certain markets.

7. AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT

Listed stocks (domestic) Listed stocks (overseas)		December 31	December 31
		2012 $ 583,655 982 $ 584,637	2011 $ 1,708,728 11,512 $ 1,720,240

Some of the Corporation’s available-for-sale financial assets in 2012 were impaired. Thus, an impairment loss was recognized as follows:

Solen AG (formerly: Payom Solen AG) HannStar Display Corporation	2012 $ 124,078 67,432 $ 191,510

Note: Based on interest rate agreed upon on advances received.

The above credit lines may be used on a revolving basis.

As of December 31, 2012, the factored accounts receivable outstanding in 2011 had been collected. The Corporation’s factored accounts receivable amounted to US$1,766 thousand in 2011.

8. FINANCIAL ASSETS CARRIED AT COST - NONCURRENT

FINANCIAL ASSETS CARRIED AT COST - NONCURRENT
Emerging market stocks Domestic and overseas unquoted stocks		December 31
		2012 $ 56,434 19,009 $ 75,443	2011 $ 56,434 479,196 $ 535,630

The above stocks and funds had no quoted price in an active market or had fair values that could not be reliably measured; thus, these investments were measured at cost.

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Lite-On Technology Corporation 2012 Annual Report

Some of the Corporation’s financial assets carried at cost - noncurrent in 2012 and 2011 were impaired. Thus, impairment losses were recognized as follows:

Auria Solar, Inc.	2012 $ 460,187	2011 $ 278,888

9. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

Long-term stock investments equity method Listed Lite-On IT Corp. Silitech Technology Corp. Lite-On Semiconductor Corp. Lite-On Japan Ltd. Logah Technology Co., Ltd. Unlisted Lite-On International Holding Co., Ltd. Lite-On Electronics H.K. Ltd. Lite-On Capital Inc. Lite-On Technology (Europe) B.V. Lite-On Singapore Pte. Ltd. Li Shin International Enterprise Corp. Lite-On Technology USA, Inc. Lite-On Automotive Co., Ltd. Dragonjet Corporation Lite-On Electronics (Thailand) Co., Ltd. LTC Group Ltd. (BVI) Lite-On Overseas Trading Co., Ltd. Lite-On Electronics (Europe) Ltd. Lite-On Integrated Services Inc.		December 31	December 31	December 31
		2012 Carrying % of Value Ownership $ 9,917,978 42.33 2,049,195 32.37 1,326,311 18.37 334,420 49.49 328,600 18.97 13,956,504 16,472,684 100.00 11,529,646 100.00 9,034,706 100.00 6,280,740 54.00 5,759,827 100.00 4,194,182 100.00 1,669,922 100.00 1,267,570 84.89 1,000,448 29.74 980,718 100.00 578,424 100.00 225,470 100.00 64,329 100.00 44,359 100.00 59,103,025 $ 73,059,529		2011
				Carrying % of Value Ownership $ 9,833,559 42.70 2,269,003 34.90 1,385,354 18.37 371,076 49.49 377,976 18.97 14,236,968 15,035,730 100.00 11,371,558 100.00 9,548,254 100.00 6,643,131 54.00 3,355,561 100.00 4,282,845 100.00 1,877,497 100.00 1,228,795 84.89 965,810 29.74 954,613 100.00 374,337 100.00 191,515 100.00 59,856 100.00 43,336 100.00 55,932,838 $ 70,169,806

The fair values of the listed domestic and overseas equity-method investments, calculated at their closing prices as of December 31, 2012 and 2011, were as follows:

Lite-On IT Corp. Silitech Technology Corp. Lite-On Semiconductor Corp. Logah Technology Co., Ltd. Lite-On Japan Ltd.	December 31
	2012 2011 $ 9,686,175 $ 9,618,737 2,986,880 4,331,825 1,257,064 983,612 221,353 220,284 294,337 295,804

The combined equities of the Corporation and its subsidiaries were more than 20% of the outstanding common stocks of Lite-On Semiconductor Corp. and Logah Technology Co., Ltd. as of December 31, 2012 and 2011. Thus, these investees were accounted for by the equity method.

The Corporation’s independent auditors did not audit the financial statements as of and for the years ended December 31, 2012 and 2011 of Lite-On Electronic (Thailand) Co., Ltd.; Lite-On Electronics (Europe) Ltd.; G&W Technology (BVI) Ltd.; G&W Technology Limited; Fordgood Electronic Ltd.; Philips & Lite-On Digital Solutions Netherlands B.V.; Philips & Lite-On Digital Solutions USA Inc.; Philips & Lite-On Digital Solutions Germany GmbH; Lite-On Information Technology B.V.; Lite-On Information Technology GmbH; Silitech Technology (Europe) Ltd.; Diodes, Inc.; Dynacard Co., Ltd.; Lite-On Automotive Electronics (Europe) B.V.; Lite-On Automotive North America Inc. and Corporation’s independent auditors did not audit the financial statements for the year ended December 31, 2012 of Lite-Space Technology Company Limited. The financial statements of foreign investees accounted for by the equity method were audited by other auditors.

The Corporation included all of its direct and indirect subsidiaries in the consolidated financial statements as of and for the years ended December 31, 2012 and 2011.

10. PROPERTIES

Accumulated depreciation consisted of the following:

Buildings Machinery and equipment Molding equipment Transportation equipment Office equipment Leased assets Miscellaneous equipment		December 31	December 31
		2012 $ 1,058,046 1,039,340 372,371 942 382,391 4,851 1,248,391 $ 4,106,332	2011 $ 972,770 1,408,955 369,369 804 352,395 3,670 1,347,613 $ 4,455,576

Depreciation expenses for properties were $298,481 thousand in 2012 and $452,029 thousand in 2011.

11. INTANGIBLE ASSETS

The Corporation completed the purchase of some assets of the IrDA Department of Avago Technologies Limited. Based on Statement of Financial Accounting Standards (SFAS) No. 25 - “Business Combinations” and SFAS No. 37 - “Intangible Assets,” goodwill is recognized as the sum of the acquisition cost plus other direct transaction costs minus the fair value of the identifiable net assets acquired. The calculation of goodwill generated as of December 31, 2009 is as follows:

Acquisition costs Fair value of identifiable assets acquired Inventories Properties Patents Client relationship (recognized as other intangible assets) Goodwill	$ 59,278 46,700 27,134 163,819	$ 708,863 296,931 $ 411,932

Lite-On Technology Corporation 2012 Annual Report

As of the end of 2012 and 2011, the amounts amortized for patents, which have an estimated service life of six years, were $16,959 thousand and $12,436 thousand, respectively, and those for client relationships, which have an estimated service life of four years, were $153,580 thousand and $112,626 thousand, respectively.

The amortization period for goodwill resulting from the Corporation’s acquisition of Lite-On Enclosure Inc. in 2004 was approximately five years. However, under the Guidelines Governing the Preparation of Financial Reports, effective January 1, 2006, goodwill need no longer be amortized. As of December 31, 2012 and 2011, goodwill had a carrying value of $132,986 thousand.

12. OTHER ASSETS

a. Idle assets, net

	December 31	December 31	December 31
	2012 $ 119,196 7,731 2,965 2,744 132,636 99,759 32,877 $ - 2012 $ 31,717 1,160 $ 32,877 December		2011 $ 6,170 - 47 113,064 119,281 87,564 31,717 $ - 2011 $ 31,717 - $ 31,717 31
	2012 $ 41,414 41,414 $ - December		2011 $ 49,049 49,049 $ - 31
2012 $ 2,787,840		2011 $ 1,050,000

13. SHORT-TERM BANK LOANS

14. LONG-TERM BANK LOANS

LONG-TERM BANK LOANS
Syndicated loan with Citi Bank: The credit line is $15 billion, consisting of: (a) $12 billion, which is a refinancing of existing credit lines to improve financial structure and which should be used as a medium-term loan but may not be used on a revolving basis; and (b) $3 billion, which is for supporting operations and may be used on a revolving basis. As of December 31, 2012 and 2011, the Corporation had used the credit line (a) $12 billion in 2012 and 2011 and (b) $0.5 billion in 2012 and 2011. The principal of this syndicated loan should be repaid in five semiannual installments from September 23, 2013. Taiwan Cooperative Bank: The credit line is $1.7 billion. As of December 31, 2012 and 2011, the Corporation had completely used the credit line; repayment period from April 29, 2011 to April 29, 2015; principal repayable quarterly from July 29, 2013 in eight equal installments. Taipei Fubon Commercial Bank: The credit line is $1 billion. As of December 31, 2012 and 2011, the Corporation had completely used the credit line; repayable semiannually in three installments from October 19, 2011 to September 5, 2014. Chang Hwa Bank: The credit line is $2 billion. As of December 31, 2012 and 2011, the Corporation had used $0.5 billion of the credit line; contract valid from October 19, 2011 to October 19, 2016. Less: Current portion of long-term bank loans		December 31
		2012 $ 12,500,000 1,700,000 1,000,000 500,000 3,125,000 $ 12,575,000	2011 $ 12,500,000 1,700,000 1,000,000 500,000 - $ 15,700,000

As of December 31, 2012 and 2011, the Corporation had four long-term bank loans with contract terms between September 23, 2008 and October 19, 2016. The floating interest rates are (1.518% to 1.694% and 1.48% to 1.661% as of December 31, 2012 and 2011, respectively) payable monthly or quarterly. These loans should be repaid in three, five or eight installments or at lump sum on loan maturity.

On September 23, 2008, the Corporation signed the contract for a five-year syndicated loan with Citibank and 14 other financial institutions, and on May 16, 2011, the loan agreement was amended for the extension of loan validity from five to seven years. Thus, the end of the syndicated loan contract was changed from September 23, 2008 to September 22, 2015. The credit line is $15 billion, consisting of:

a. $12 billion, which is a refinancing of existing credit lines to improve financial structure, which should be used as a medium-term loan and may not be used on a revolving basis; and
b. $3 billion, which is for supporting operations and may be used on a revolving basis.

The principal of this syndicated loan should be repaid in five semiannual installments from September 23, 2013, and the quarterly interest rate is set by adding 55 points to the 90-day Taiwan subprime commercial paper interest rate.

Under the syndicated loan agreement, the Corporation should show in its most recent semiannual or annual consolidated financial statements that it is maintaining certain financial ratios. As of December 31, 2012 and 2011, the Corporation was in compliance with all the financial ratio requirements.

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Lite-On Technology Corporation 2012 Annual Report

15. OBLIGATIONS UNDER CAPITAL LEASES

Due Within Due After One Year One Year December 31, 2012 Obligations under capital leases $ 453 $ - December 31, 2011 Obligations under capital leases $ 504 $ 322	Total $ 453 $ 826

The Corporation is under three- to five-year capital lease agreements on machinery and equipment from September 1, 2009 to June 1, 2013, with 15.6% interest rate and monthly payments of $42 thousand to $120 thousand. The ownership of the leased assets will be transferred to the Corporation at the end of the lease term.

As of December 31, 2012, future lease payables were as follows:

Period 2013 Less: Unrealized interest	Amount $ 504 51 $ 453

16. PENSION PLAN

The pension plan under the Labor Pension Act (LPA) is a defined contribution plan. Based on the LPA, the rate of the Corporation’s monthly contributions to employees’ individual pension accounts is at 6% of monthly salaries and wages. Related pension costs were $95,195 thousand for 2012 and $88,480 thousand for 2011.

b. Reconciliation of the fund status of the plan and prepaid pension cost:

Benefit obligation Vested benefit obligation Non-vested benefit obligation Accumulated benefit obligation Additional benefits based on future salaries Projected benefit obligation Fair value of plan assets Funded status Unrecognized net transition obligation Unrecognized net loss (gain) Prepaid pension cost Vested benefit c. Actuarial assumptions: Discount rate used in determining present values Future salary increase rate Expected rate of return on plan assets d. Contributions to the fund e. Payments from the fund		December 31	December 31
		2012 $ (235,711) (407,220) (642,931) (246,235) (889,166) 851,708 (37,458) 3 66,512 $ 29,057 $ 269,135 December	2011 $ (156,684) (390,490) (547,174) (219,159) (766,333) 845,567 79,234 1,300 (60,700) $ 19,834 $ 185,757 31
		2012 1.3% 3.0% 1.3% $ 15,349 $ 17,594	2011 1.6% 3.0% 1.6% $ 15,373 $ 8,520

17. SHAREHOLDERS’ EQUITY

The Corporation has another pension plan for all regular employees, which provides benefits based on length of service and average basic pay for the six months before retirement. The Corporation contributes monthly an amount equal to 2% of salaries and wages to a pension fund, which is administered by the Corporation’s employees’ pension fund committee and deposited in the committee’s name in a trust corporation. The account balances were $851,708 thousand and $845,567 thousand as of December 31, 2012 and 2011, respectively.

Other information on the defined benefit plan is summarized as follows:

a. Components of net periodic pension costs:

Service cost Interest cost Expected return on plan assets Pension gain amortization Unrecognized net transition obligation amortization	2012 $ 6,221 12,261 (13,653) - 1,297 $ 6,126	2011 $ 5,862 13,653 (16,736) (3,748) 1,297 $ 328

On September 25, 1996, the Corporation issued 4,900 thousand units of global depositary receipts (GDRs) on the London Stock Exchange. These GDRs represented 49,000 thousand common shares of the Corporation.

On April 3, 1995, GVC Corp. issued 5,000 units of GDRs on the London Stock Exchange. These GDRs represented 25,000 thousand common shares of GVC Corp., which were assumed by the Corporation as a result of a merger, with the Corporation as survivor entity. As of November 4, 2002, the outstanding GDRs were 7,627 thousand units, or 38,136 thousand common shares of GVC Corp. For merger purposes, these GDRs were exchanged for the Corporation’s 1,478 thousand marketable equity securities, which represented the Corporation’s 14,781 thousand common shares.

As of December 31, 2012, the Corporation had 5,201 thousand units of outstanding GDRs, representing 52,006 thousand common shares. The rights and obligations of GDR holders are the same as those of common shareholders, except for voting rights. As of December 31, 2012, the Corporation had 984 thousand units of unredeemed GDRs.

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Lite-On Technology Corporation 2012 Annual Report

Stock-based Compensation Plans

In December 2007, there was a grant of 30,000 options to qualified employees of the Corporation and its subsidiaries. Each option entitles the holder to subscribe for one thousand common shares of the Corporation when the options become exercisable. The options granted are valid for six years and exercisable at certain percentages after the second, third and fourth years from the grant date. The options were granted at an exercise price equal to the closing price of the Corporation’s common shares listed on the Taiwan Stock Exchange on the grant date. For distributing cash dividends, stock dividends, and capital reduction (except the reduction for treasury stock retirement), the exercise price and the number of options are adjusted accordingly.

Other information on the employee stock option plans is as follows:

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||||||
|---|---|---|---|---|
|2012|2011|
|Weighted-|Weighted-|
|average|average|
|Exercise|Exercise|
|Number of|Price|Number of|Price|
|Options|(NT$)|Options|(NT$)|
|Balance, beginning of year|19,819|$38.0|20,655|$41.4|
|Options forfeited|(1,329)|35.5-38.0|(836)|38.0-41.4|
|Options exercised|(766)|35.5-38.0|-|38.0-41.4|
|Balance, end of year|17,724|35.5|19,819|38.0|
|Weighted-average fair value of options|
|granted (in thousands)|$ 16.964|$ 16.964|

----- End of picture text -----

The weighted-average remaining lives of the outstanding and exercisable options as of December 31, 2012 and 2011 were one years and two years, respectively.

Compensation cost recognized under the intrinsic value method was $0 for 2012 and 2011. Had the Corporation recognized compensation cost based on the fair value method using the binomial option pricing model, the assumptions and pro forma results of the Corporation for 2012 and 2011 would have been as follows:

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----- Start of picture text -----

||||
|---|---|---|
|2012|2011|
|Assumptions:|
|Risk-free interest rate|2.5101%|2.5101%|
|Expected life|1 years|2 years|
|Expected volatility|40.07%|40.07%|
|Expected dividend yield|7.07%|7.07%|
|Net income|
|As reported|$7,534,860 thousand|$7,225,925 thousand|
|Pro forma|$7,534,860 thousand|$7,194,117 thousand|
|Basic after income tax earnings per share (NT$)|
|As reported|$3.33|$3.21|
|Pro forma|$3.33|$3.19|
|Diluted after income tax earnings per share (NT$)|
|As reported|$3.28|$3.15|
|Pro forma|$3.28|$3.13|

----- End of picture text -----

Capital Surplus

The capital surplus from shares issued in excess of par (additional paid-in capital from issuance of common shares, conversion of bonds and treasury stock transactions) and donations may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Corporation’s paid-in capital and once a year).

The capital surplus from long-term investments, employee stock options and conversion options may not be used for any purpose.

Appropriation of Earnings and Dividend Policy

To ensure the meeting of cash needs for the Corporation’s present and future expansion plans and to meet shareholders’ cash flow requirements, the Corporation prefers to distribute more stock dividends. In principle, cash dividends are limited to 10% of total dividends distributed.

The Corporation’s Articles of Incorporation provide that, of the annual net income, less any deficit and 10% legal reserve as well as special reserve equal to the debit balances of the shareholders’ equity accounts, plus the unappropriated earnings of prior years, a portion may be retained on the basis of operating requirements. The remainder should be distributed as follows:

a. Bonus to employees: At least 1%.
b. Bonus to directors: 1.5% or less
c. Others, as dividends.

If the bonus to employees is in the form of shares, it may be distributed to the employees’ subsidiaries. The requirements and the method of distribution of these share bonuses are based on resolutions passed by the board of directors.

The bonus to employees and the remuneration to directors recognized were estimated on the basis of net income at 14.18% and 0.82% for 2012, and 13.8% and 0.9% for 2011, respectively. Material differences between these estimates and the amounts proposed by the Board of Directors in the following year are adjusted in the year of the proposal. If the actual amounts subsequently resolved by shareholders differ from the proposed amounts, the differences are recorded in the year of the shareholders’ resolution as a change in accounting estimate. If stock bonuses are resolved to be distributed to employees, the number of shares is determined by dividing the amount of bonuses by the closing price (after considering the effect of cash and stock dividends) of the shares on the day preceding the shareholders’ meeting.

These appropriations should be resolved by the shareholders in the following year and given effect to in the financial statements of that year.

On June 19, 2012 and June 22, 2011, the shareholders resolved the appropriation of the earnings of 2011 and 2010, respectively, and dividend per share as follows:

==> picture [478 x 87] intentionally omitted <==

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||||||||||
|---|---|---|---|---|---|---|---|---|
|Dividend Per Share|
|Appropriation of Earnings|(Dollars)|
|2011|2010|2011|2010|
|Legal reserve|$|722,592|$|898,646|$|-|$|-|
|Stock dividends|113,972|112,711|0.05|0.05|
|Cash dividends|5,174,335|6,469,637|2.27|2.87|

----- End of picture text -----

Lite-On Technology Corporation 2012 Annual Report

The sharing with employees of profits of $819,420 thousand in cash and $156,080 thousand in stock as well as the remuneration to directors of $61,420 thousand for 2011 was approved in the shareholders’ meeting on June 19, 2012. The amount of the stock bonus to employees of 4,421 thousand shares was determined at the closing price of the Corporation’s common shares (after considering the effect of dividends) of the day immediately preceding the shareholders’ meeting. The resolved amounts of the profit sharing to employees and bonus to directors were consistent with the resolutions of meeting of the Board of Directors held on April 25, 2012 and the same amounts were charged against the earnings of 2011.

Under the Company Law, appropriation of earnings to legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. Legal reserve may be used to offset deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Unrealized Gain or Loss on Financial Instruments

In 2012 and 2011, movements of unrealized gain or loss on financial instruments were as follows:

The appropriation of the earnings for 2011 was approved by the Financial Supervisory Commission, Executive Yuan, ROC. The board of directors approved August 13, 2012 as the date of distributing stock dividends and cash dividends.

The appropriation of the 2012 earnings at the Board of Directors’ meeting on March 29, 2013. The proposed appropriations and dividends per share were as follows:

ppp g proposed appropriations and dividends per share were as follows:	g	, .
Legal reserve Special capital reserve Cash dividends Stock dividends	Appropriation of Earnings 2012 $ 753,486 689,913 5,400,265 114,899	Dividend Per Share (Dollars)
		2012 $2.35 0.05

The Board of Directors also proposed the appropriation from the 2012 earnings of bonus to employees of $897,799 thousand in cash and $171,010 thousand in stock as well as the remuneration to directors of $61,420 thousand. There was no significant difference between these proposed amounts and the amounts charged against the earnings of 2012.

The appropriations of earnings, profit sharing to employees and bonus to directors for 2012 are to be presented resolved in the shareholders’ meeting to be held on June 29, 2013 (expected). Related information may be accessed through the Market Observation Post System through the Web site of the Taiwan Stock Exchange.

Under the regulations of the Securities and Futures Bureau, the Corporation’s should appropriate a special reserve equivalent to the debit balances, as of the balance sheet date, in the shareholders’ equity account, except for treasury stock and deficit. The special reserve will be distributable when the debit balances in the shareholders’ equity are reversed.

Under the regulations of the Securities and Futures Bureau and the Financial Supervisory Commission under the Executive Yuan of the ROC, the companies listed on the Taiwan Stock Exchange Corporation (TSEC) and the GreTai Securities Market (GTSM) should have a special reserve in which an amount equal to the book value in excess of the market value of treasury shares held by subsidiaries should be transferred from unappropriated earnings at the percentage of subsidiary ownership by the Corporation. If the value of the treasury stock rises, TSEC/GTSM companies can reverse the special reserve to as much as the reversal of valuation on the basis of the Corporation’s proportionate share (please refer to Note 18).

Under the Integrated Income Tax System, which took effect on January 1, 1998, ROC resident shareholders are allowed a tax credit for the income tax paid by the Corporation on earnings generated since January 1, 1998. An imputation credit account (ICA) is maintained by the Corporation for such income tax and the tax credit allocated to each shareholder. The maximum credit available for allocation to each shareholder cannot exceed the ICA balance on the dividend distribution date.

Recognized in
Shareholders’
Equity
Equity-method
Investments
Recognized in
Shareholders’
Equity
2012
Balance, beginning of year
$ (38,540)
$ (334,051)

Increase (decrease) in 2012
271,510
(280,660)
Transferred to profit or loss

(295,694)

-

Balance, end of year
$ (62,724)
$ (614,711)

2011
Balance, beginning of year
$ 1,097,107
$ 332,886

Decrease in 2011
(1,041,168)
(666,937)

Transferred to profit or loss

(94,479)

-

Balance, end of year
$ (38,540)
$ (334,051)

Total
$ (372,591)
(9,150)
(295,694)
$ (677,435)
$ 1,429,993
(1,708,105)
(94,479)
$ (372,591)

18. TREASURY STOCK (COMMON STOCK)

Unit: In Thousand Shares

TREASURY STOCK (COMMON STOCK)		Unit: In Thousand Share
Beginning Reason for Repurchase of Year 2012 Corporation’s shares held by direct and indirect subsidiaries reclassified from long-term stock investments to treasury stock 27,840 For transfer to employees 30,565 58,405 2011 Corporation’s shares held by direct and indirect subsidiaries reclassified from long-term stock investments to treasury stock 27,701 For transfer to employees 30,565 58,266		Changes in Fiscal Year Increase Decrease End of Year 139 - 27,979 - 30,565 - 139 30,565 27,979 139 - 27,840 - - 30,565 139 - 58,405
		Increase 139 - 139 139 - 139

Lite-On Technology Corporation 2012 Annual Report

c. Deferred income tax assets and liabilities consisted of:

At the end of 2012 and 2011, the Corporation transferred $1,104,073 thousand in available-for-sale financial assets of direct and indirect subsidiaries to treasury stock proportionate to its ownership. The carrying value and market value of this treasury stock were $1,094,958 thousand each in 2012 and $1,013,359 thousand each in 2011.

In their meeting on August 27, 2008, the Corporation’s Board of Directors approved a plan to repurchase up to 30,000 thousand shares listed on the Taiwan Stock Exchange (TSE) between September 28, 2008 and October 27, 2008, with the buyback price ranging from NT$20.48 to NT$43.60. On October 28, 2008, the Corporation’s Board of Directors approved the repurchase of up to 40,000 thousand shares listed on the TSE between October 29, 2008 and December 28, 2008, with the buyback price ranging from NT$13.00 to NT$37.10. The Corporation bought back a total of 30,565 thousand shares during the repurchase periods and retired all these shares in January 2012.

Under the Securities and Exchange Law, the maximum number of treasury stock purchased should not exceed 10% of the Corporation’s total outstanding shares, and the aggregate purchase cost should not exceed the sum of retained earnings, additional paid-in capital in excess of par value and realized capital surplus. The treasury stock cannot be pledged or exercise shareholders’ rights. Treasury stock should be reissued within three years from the reacquisition date. Shares not transferred within the time limit will be deemed unissued, and the Corporation should register with the authorities the change in the number of shares.

Under the Securities and Exchange Law, the Corporation should neither pledge treasury stock nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote. However, subsidiaries holding treasury shares retain shareholders’ rights, except the rights to participate in share issuance for cash and to vote.

19. INCOME TAX

a. Reconciliation of income tax expense based on income before income tax at the statutory rate and income tax expense was as follows:

p income tax expense was as follows:		y
Income tax expense on income before income tax using the statutory rate of 17% Deduct tax effects of: Permanent differences Temporary differences Income tax (10%) on unappropriated earnings Investment tax credits used Income tax expense - current The details of income tax expense are shown below: Income tax expense - current Deferred income tax Prior year’s adjustment Income tax expense	2012 $ 1,290,135 (749,390) (224,764) 121,503 (201,643) $ 235,841 2012 $ 235,841 36,580 (218,250) $ 54,171	2011 $ 1,280,979 (670,931) (106,169) 150,546 (359,972) $ 294,453 2011 $ 294,453 76,772 (61,977) $ 309,248

b. The details of income tax expense are shown below:

Current Deferred income tax assets Investment tax credits Unrealized sales profit Unrealized loss and expense Accrued warranty expense Allowance for loss on inventories Excess allowance for doubtful accounts Deferred income tax liabilities Exchange gains, net Deferred income tax assets, net Noncurrent Deferred income tax assets Accumulated equity in the net loss of foreign investees Impairment loss on financial and fixed assets Excess provisions for pension costs Cumulative translation adjustments Investment tax credit Valuation allowance Deferred income tax liabilities Accumulated equity in the net gain of foreign investees Unrealized amortization of goodwill Deferred income tax liabilities, net		December 31	December 31
		2012 $ 153,267 62,339 60,894 29,871 27,657 - 334,028 (38,499) $ 295,529 $ 416,641 298,231 26,157 17,013 - 758,042 (301,920) 456,112 (693,593) (35,737) $ (273,208)	2011 $ 139,326 39,678 71,627 30,829 49,779 3,623 334,862 (28,244) $ 306,618 $ 377,871 219,802 28,715 - 205,669 832,057 (377,871) 454,186 (776,900) (35,737) $ (358,451)

Income tax payables as of December 31, 2012 and 2011 were net of prepayments of $15,801 thousand and $142,729 thousand, respectively.

The tax authorities have examined the income tax returns of the Corporation through 2010. The Corporation disagreed with the tax authorities’ assessment of its 2008 to 2010 tax returns and applied for a reexamination. The Corporation has made a provision for the income tax assessed.

d. The information on investment tax credit is as follows:

Legislation Deduction Item Statute for Upgrading Research and development cost and professional training expenses Industries Research and development cost and professional training expenses	Tax Credit Amount Unused Tax Credits Ending Balance Expiry Year $ 159,247 $ - 2012 195,663 153,267 2013 $ 354,910 $ 153,267

Lite-On Technology Corporation 2012 Annual Report

e. Integrated income tax information is as follows:

December 31 2012 2011 Balance of the imputation credit account $ 494,075 $ 514,845 The estimated and actual creditable tax ratios for the distribution of the earnings of 2012 and 2011, respectively, were 4.94% and 5.43%, respectively. The unappropriated earnings as of December 31, 2012 and 2011 did not include earnings generated up to the end of 1997. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSE 2012 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 145,684 $ 2,860,581 $ 3,006,265 Insurance 10,555 165,237 175,792 Pension 8,916 92,405 101,321 Others 2,770 39,831 42,601 167,925 3,158,054 3,325,979 Depreciation 64,952 233,529 298,481 Amortization 20,090 109,861 129,951 $ 252,967 $ 3,501,444 $ 3,754,411 2011 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 120,564 $ 2,740,263 $ 2,860,827 Insurance 8,248 128,550 136,798 Pension 5,475 83,333 88,808 Others 2,935 48,676 51,611 137,222 3,000,822 3,138,044 Depreciation 165,803 286,226 452,029 Amortization 20,980 111,023 132,003 $ 324,005 $ 3,398,071 $ 3,722,076	December 31 2012 2011 Balance of the imputation credit account $ 494,075 $ 514,845 The estimated and actual creditable tax ratios for the distribution of the earnings of 2012 and 2011, respectively, were 4.94% and 5.43%, respectively. The unappropriated earnings as of December 31, 2012 and 2011 did not include earnings generated up to the end of 1997. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSE 2012 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 145,684 $ 2,860,581 $ 3,006,265 Insurance 10,555 165,237 175,792 Pension 8,916 92,405 101,321 Others 2,770 39,831 42,601 167,925 3,158,054 3,325,979 Depreciation 64,952 233,529 298,481 Amortization 20,090 109,861 129,951 $ 252,967 $ 3,501,444 $ 3,754,411 2011 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 120,564 $ 2,740,263 $ 2,860,827 Insurance 8,248 128,550 136,798 Pension 5,475 83,333 88,808 Others 2,935 48,676 51,611 137,222 3,000,822 3,138,044 Depreciation 165,803 286,226 452,029 Amortization 20,980 111,023 132,003 $ 324,005 $ 3,398,071 $ 3,722,076	December 31 2012 2011 Balance of the imputation credit account $ 494,075 $ 514,845 The estimated and actual creditable tax ratios for the distribution of the earnings of 2012 and 2011, respectively, were 4.94% and 5.43%, respectively. The unappropriated earnings as of December 31, 2012 and 2011 did not include earnings generated up to the end of 1997. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSE 2012 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 145,684 $ 2,860,581 $ 3,006,265 Insurance 10,555 165,237 175,792 Pension 8,916 92,405 101,321 Others 2,770 39,831 42,601 167,925 3,158,054 3,325,979 Depreciation 64,952 233,529 298,481 Amortization 20,090 109,861 129,951 $ 252,967 $ 3,501,444 $ 3,754,411 2011 Included in Included in Operating Cost of Sales Expenses Total Employment Salary $ 120,564 $ 2,740,263 $ 2,860,827 Insurance 8,248 128,550 136,798 Pension 5,475 83,333 88,808 Others 2,935 48,676 51,611 137,222 3,000,822 3,138,044 Depreciation 165,803 286,226 452,029 Amortization 20,980 111,023 132,003 $ 324,005 $ 3,398,071 $ 3,722,076			December 31	December 31
		Included in Cost of Sales $ 145,684 10,555 8,916 2,770 167,925 64,952 20,090 $ 252,967		Included in Operating Expenses $ 2,860,581 165,237 92,405 39,831 3,158,054 233,529 109,861 $ 3,501,444 2011		Total $ 3,006,265 175,792 101,321 42,601 3,325,979 298,481 129,951 $ 3,754,411
		Included in Cost of Sales $ 120,564 8,248 5,475 2,935 137,222 165,803 20,980 $ 324,005		Included in Operating Expenses $ 2,740,263 128,550 83,333 48,676 3,000,822 286,226 111,023 $ 3,398,071		Total $ 2,860,827 136,798 88,808 51,611 3,138,044 452,029 132,003 $ 3,722,076

The estimated and actual creditable tax ratios for the distribution of the earnings of 2012 and 2011, respectively, were 4.94% and 5.43%, respectively.

The unappropriated earnings as of December 31, 2012 and 2011 did not include earnings generated up to the end of 1997.

20. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSE

Expenses of $44 thousand in 2012 and $144 thousand in 2011 for the depreciation of idle assets (included in nonoperating expenses and losses - other expenses) were not included in the above depreciation expenses.

21. EARNINGS PER SHARE

The numerators and denominators used in computing earnings per share (EPS) were as follows:

2012 Basic EPS Net income Effect of dilutive potential common stock Bonus to employees Common stock-based compensation Diluted EPS The net income of common shareholders plus the effect of potential dilutive common stock Pro forma information on the assumption that the Corporation shares held by its direct and indirect subsidiaries were not treated as treasury shares Basic EPS Net income Effect of dilutive potential common stock Bonus to employees Common stock-based compensation Diluted EPS The net income of common shareholders plus the effect of potential dilutive common stock 2011 Basic EPS Net income Effect of dilutive potential common stock Bonus to employees Common stock-based compensation Diluted EPS The net income of common shareholders plus the effect of potential dilutive common stock Pro forma information on the assumption that the Corporation shares held by its direct and indirect subsidiaries were not treated as treasury shares Basic EPS Net income Effect of dilutive potential common stock Bonus to employees Common stock-based compensation Diluted EPS The net income of common shareholders plus the effect of potential dilutive common stock		Shares Amounts (Numerator) (Denominator) Pretax After-tax (Thousands) $ 7,589,031 $ 7,534,860 2,264,519 - - 34,171 - - - $ 7,589,031 $ 7,534,860 2,298,690 $ 7,644,884 $ 7,590,713 2,292,498 - - 34,171 - - - $ 7,644,884 $ 7,590,713 2,326,669 $ 7,535,173 $ 7,225,925 2,254,414 - - 41,042 - - - $ 7,535,173 $ 7,225,925 2,295,456 $ 7,605,456 $ 7,296,208 2,282,254 - - 41,042 - - - $ 7,605,456 $ 7,296,208 2,323,296		Earnings Per Share (Dollars)
		Pretax $ 7,589,031 - - $ 7,589,031 $ 7,644,884 - - $ 7,644,884 $ 7,535,173 - - $ 7,535,173 $ 7,605,456 - - $ 7,605,456		Pretax After-tax $ 3.35 $ 3.33 $ 3.30 $ 3.28 $ 3.33 $ 3.31 $ 3.29 $ 3.26 $ 3.34 $ 3.21 $ 3.28 $ 3.15 $ 3.33 $ 3.20 $ 3.27 $ 3.14

Lite-On Technology Corporation 2012 Annual Report

If the Corporation presumes that the employees’ bonus will be partly settled in shares, these potential shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of bonus to employees by the closing price (after consideration of the dilutive effect of dividends) of the common shares on the balance sheet date. The dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the number of employee bonus shares is are resolved in the shareholders’ meeting in the following year.

At the end of 2012 and 2011, the stock-based compensation exercise price was greater than the average price of the shares, the number of common shares outstanding decreased and earnings per share increased, and these developments had an anti-dilutive effect; thus, these shares were not included in the calculation of diluted EPS.

The average number of shares outstanding for EPS calculation was adjusted retroactively for the issuance of stock dividends. Thus, in 2011, basic and diluted EPS before tax decreased from NT$3.36 to NT$3.34 and from NT$3.30 to NT$3.28, respectively, and basic and diluted EPS after tax decreased from NT$3.22 to NT$3.21 and from NT$3.16 to NT $3.15, respectively.

22. RELATED-PARTY TRANSACTIONS

Significant transactions with related parties are summarized below and in the accompanying Tables 1 and 2:

a. The prices of the Corporation’s sales to Lite-On Trading USA, Inc., Lite-On Japan Ltd., Lite-On Japan (H.K.) Limited and WuXi China Bridge Express Co., Ltd. in 2012 and 2011, and sales to Lite-On Electronics (Europe) Ltd. and Lite-On, Inc. in 2011 were all calculated at cost plus an agreed-upon percentage of gross profit. Except for these sales, the sales terms between the Corporation and its related parties were normal.
b. The costs of the Corporation’s purchases from Yet Foundate Ltd., Lite-On Overseas Trading Co., Ltd., Li Shin International Enterprise Corp., Lite-On Semiconductor Corp. and Lite-On Singapore Pte. Ltd. in 2012 and 2011 and purchases from Lite-On Electronics (Thailand) Co., Ltd. in 2011 were all based on cost plus an agreed-upon percentage of gross profit. Except for these purchases, the purchase terms between the Corporation and its related parties were normal.
c. The Corporation signed a renewable annual processing agreement with Lite-On Electronics Co., Ltd. (LOEC). The Corporation will pay LOEC processing fees based on the agreement. The Corporation paid fees of $242,708 thousand in 2012 and $1,709,419 thousand in 2011.
d. The Corporation signed patent authorization and administrative service agreements with Lite-On Singapore Pte. Ltd. On these agreements, the Corporation earned fees of $1,788,641 thousand in 2012 and $1,568,593 thousand in 2011. The Corporation also signed administrative service agreements with I-Solutions Ltd., on which the Corporation earned fees (included in sales revenue) of $45,370 thousand in 2012 and $210,201 thousand in 2011.

f. Compensation of directors, supervisors and management personnel:

Bonus Salaries Incentives Special compensation		Years Ended December 31	Years Ended December 31
		2012 $ 376,784 67,323 37,470 3,135 $ 484,712	2011 $ 349,252 52,064 32,686 3,630 $ 437,632

23. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

On September 8, 2010, INPRO II Licensing Sarl (INPRO) filed a lawsuit with the Superior Court of California in the County of San Francisco and charged the Corporation with breach of contract. INPRO alleged that the Corporation incurred a debt on patent rights obtained from Hitachi Limited. INPRO also claimed it had assumed Hitachi’s rights to payments for patent use. The Corporation dismissed INPRO’s claims and filed a lawsuit against INPRO, alleging that the Corporation had no patent obligations. As of March 29, 2013, the date the board of directors approved the accompanying financial statements and authorized the issue of these statements, this case was still under litigation. Thus, the Corporation could not determine the possible results and impact of this case.

24. SIGNIFICANT SUBSEQUENT EVENTS

Considering the industry development trend and future strategic direction as well as the need to continue improving operating efficiency and core competencies, the Corporation’s board of directors passed a resolution on January 30, 2013 to merge with Lite-On IT Corporation (“Lite-On IT”). The Corporation launched a tender offer through a wholly owned subsidiary in Taiwan, Baoyuan Corp. (“Baoyuan”), to acquire all, or a major part of, the outstanding common shares of Lite-On IT. The public tender offer period was from January 31, 2013 to March 15, 2013, and price per share was fixed at NT$32.75. After completion of the public tender offer, the Corporation had a short- form merger with Baoyuan. The Corporation was the survivor entity. The board of directors resolved March 25, 2013 as the merger effective date. After that, the Corporation will issue redeemable preferred shares as consideration to exchange back all of remainder shares of Lite-On IT held by minority shareholders. Lite-On IT will become the Corporation’s wholly-owned subsidiary.

25. OTHERS

The significant financial assets and liabilities denominated in foreign currencies were as follows:

(In Thousands of New Taiwan Dollars, Except Exchange Rate)

e. Operating lease contracts with related parties were based on market prices and made under normal terms in 2012 and 2011.

	(In Thousands of New Taiwan Dollars, Except Exchange Rate)	(In Thousands of New Taiwan Dollars, Except Exchange Rate)
Financial assets Monetary items USD CZK	December 31
	2012 Foreign Currencies Exchange Rate $ 717,972 29.0400 35,557 1.5349	2011
		Foreign Currencies Exchange Rate $ 764,240 30.2680 54,254 1.5218 (Continued)

78 79

Lite-On Technology Corporation 2012 Annual Report

JPY HKD EUR SGD Nonmonetary items EUR Investments accounted for by the equity method HKD JPY USD EUR Financial liabilities Monetary items USD CZK HKD JPY EUR Nonmonetary items USD	December 31	December 31
	2012 Foreign Currencies Exchange Rate $ 5,990 0.3364 1,422 3.7464 352 38.4780 113 23.7449 717 38.4780 2,850,596 3.7464 994,115 0.3364 841,835 29.0400 142,470 38.4780 741,693 29.0400 39,749 1.5349 4,219 3.7464 1,650 0.3364 497 38.4780 3,497 29.0400	2011
		Foreign Currencies Exchange Rate $ 43,929 0.3903 43,104 3.8956 370 39.1668 191 23.2920 294 39.1668 2,802,429 3.8956 950,745 0.3903 710,981 30.2680 150,487 39.1668 772,733 30.2680 51,313 1.5218 50,715 3.8956 23,380 0.3903 265 39.1668 5,459 30.2680 (Concluded)

26. ADDITIONAL DISCLOSURES

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Corporation and its investees:
1) Financing provided: Note 2 to the financial statements
2) Endorsement/guarantee provided: Note 2 to the financial statements
3) Marketable securities held: Note 2 to the financial statements
4) Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% of the capital stock: Note 2 to the financial statements
5) Acquisition of individual real estates at costs of at least $100 million or 20% of the capital stock: None
6) Disposition of individual real estates at least $100 million or 20% of the capital stock: None
7) Total purchase from or sale to related parties amounting to at least $100 million or 20% of the capital stock: Note 2 to the financial statements
8) Receivables from related parties amounting to at least $100 million or 20% of the capital stock: Note 2 to the financial statements
9) Names, locations, and related information of investees on which the Corporation exercises significant influence: Note 2 to the financial statements
10) Derivative financial transactions: Note 27 to the financial statements
b. Investment in Mainland China:
1) Investment in Mainland China: Note 2 to the financial statements
2) Significant direct or indirect transactions with the investee, prices, payment terms, and unrealized gain or loss: Note 2 to the financial statements

27. FINANCIAL INSTRUMENTS

a. Fair values of financial instruments were as follows:

	December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Price Techniques $ 584,637 $ - - - - 3,125,453 - 12,575,000 - 101,563 - - - 340 - 3,874 - 3,208		2011
Carrying Amount $ 584,637 75,443 3,125,453 12,575,000 101,563 - 340 3,874 3,208		Carrying Amount $ 1,720,240 535,630 504 15,700,322 165,225 6,531 - 10,380 -	Fair Value
			Quoted Estimate Based on Valuation Market Price Techniques $ 1,720,240 $ - - - - 504 - 15,700,322 - 165,225 - 6,531 - - - 10,380 - - (Continued)

Lite-On Technology Corporation 2012 Annual Report

	December 31	December 31		December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Price Techniques $ - $ 80 - 1,049 - - - 357 - 81 - 305 - 705 - - - 7,280 - 243			2012 Fair Value Quoted Estimate Based on Valuation Market Price Techniques $ - $ 3,225 - 15,348 - 1,213 - 323 - 2,444 - - - - - 49 - 3,544		2011
Carrying Amount $ 80 1,049 - 357 81 305 705 - 7,280 243		Carrying Amount $ - 5,320 84 2,793 - 255 - 292 29,874 56,859	Carrying Amount $ 3,225 15,348 1,213 323 2,444 - - 49 3,544		Carrying Amount $ 7,809 5,429 268 - - 9,430 9,417 362 -	Fair Value
						Quoted Estimate Based on Valuation Market Price Techniques $ - $ 7,809 - 5,429 - 268 - - - - - 9,430 - 9,417 - 362 - - (Continued)

Lite-On Technology Corporation 2012 Annual Report

	December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Price Techniques $ - $ - - 1,752 - - - - - - - 2,842		2011
Carrying Amount $ - 1,752 - - - 2,842		Carrying Amount $ 173 - 1,597 133 6,852 -	Fair Value
			Quoted Estimate Based on Valuation Market Price Techniques $ - $ 173 - - - 1,597 - 133 - 6,852 - - (Concluded)

b. Methods and assumptions used in the determination of fair values of financial instruments.
1) The carrying amounts of the following short-term financial instruments approximate their fair values because of their short maturities: Cash, notes receivable, accounts receivable, accounts receivable from related parties, other receivables from related parties, other financial assets - current, short-term loans, notes and accounts payable, accrued expenses, accounts payable to related parties, and other payable to related parties.
- 3) Fair values of the available-for-sale assets are based on their quoted prices in an active market. Fair values of derivatives are based on their quoted prices in an active market. For those derivatives with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions similar to those generally used by other market participants to price financial instruments.
- 4) Financial assets carried at cost have no fair values because these are investments in unlisted stocks with no quoted market prices and determining their fair value entails an unreasonably high cost.
- 5) Fair value of other long-term debts (including long-term debts within one-year maturity) was based on the present value of expected cash flows. The interest rates for long-term debts of the Corporation are all floating, and their fair values approximate their carrying amounts.
c. As of December 31, 2012 and 2011, (a) on instruments exposed to fair value risk from interest rate fluctuation, financial assets amounted to $8,100,735 thousand and $7,008,775 thousand, respectively, and financial liabilities amounted to $2,788,293 thousand and $826 thousand, respectively; and (b) on instruments exposed to cash flow risk from interest rate fluctuation, financial assets amounted to $2,222,756 thousand and $2,740,724 thousand, respectively, and financial liabilities amounted to $15,700,000 thousand and $16,750,000 thousand, respectively.
d. The Corporation recognized the increase of $271,510 thousand and the decrease of $1,041,168 thousand in shareholders’ equity for the changes in fair value of available-for-sale financial assets in 2012 and 2011, respectively.
e. Financial risks
- 1) Market risk. The Corporation has foreign-currency risk arising from purchases or sales. The Corporation utilizes spot contracts to avoid foreign currency risk. The Corporation had loans in foreign currencies to hedge the exchange rate fluctuations on its long term investment in foreign currencies; thus, the exchange rate risk can be hedged naturally. The available-for-sale financial assets held by the Corporation are listed stocks. Thus, price fluctuations in the open market would result in changes in fair values of these stocks.
- 2) Credit risk. Credit risk represents the potential loss that would be incurred by the Corporation and subsidiaries if counter-parties or other parties breach the contracts. Thus, contracts with positive fair values on the balance sheet date are evaluated for credit risk. In addition, since the counter-parties to derivative financial transactions are reputable financial institutions, management believes its exposure to default by counter-parties is low.
- 3) Liquidity risk. For long-term equity-method investments and financial assets carried at cost, the Corporation keeps cash reserves, which are available on a short term. Additionally, the contracted forward rate is decided on the contract starting dates. Thus, the cash flow risk on forward contracts is low.
- 4) Cash flow hedge. The Corporation’s liabilities with floating interest rate might be affected by changes in the market rate. Thus, future cash flows on those liabilities might fluctuate, exposing the Corporation to cash flow risk. To hedge against this risk, the Corporation entered into an interest rate swap contract with a bank to change the rate on its liabilities from floating to fixed. Thus, the cash flow hedge is deemed sufficient. As December 31, 2012 and 2011, the unrealized losses recognized in shareholders’ equity were $101,563 thousand and $165,225 thousand, respectively. Other information on the cash flow hedge transactions is summarized below.
2) The carrying amounts of the refundable deposits and guarantee deposits received approximate their fair values because the amount to be received in the future approximates book value.

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Lite-On Technology Corporation 2012 Annual Report

Nominal Float Fixed Settlement Financial Instruments Date Principal Rate Rate Date Due Date Lite-On Technology Corp. Interest rate swap December 31, 2012 $ 6,000,000 Note 1.895% Quarterly 2015.9.23 December 31, 2011 6,000,000 Note 1.895% Quarterly 2015.9.23

Note: Based on the average rate for 90-day notes in Taiwan’s secondary market.

	Designated	Hedging Instruments	Expected Expected Period of
	Financial	FairValue	Period of Realizing
	Instruments	December 31	Cash Gains or
Hedged Items Long-term bank loans	Designated Interest rate swap	2012 2011 $ (101,563) $ (165,225)	Flows Losses 2008-2015 2008-2015

28. SEGMENT INFORMATION

The Corporation’s operating segment disclosure, which is required under Statement of Financial Accounting Standards No. 41 - “Operating Segments,” is presented in the consolidated financial statements as of and for the years ended December 31, 2012 and 2011.

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Lite-On Technology Corporation 2012 Annual Report

TABLE 1

LITE-ON TECHNOLOGY CORPORATION

RELATED-PARTY TRANSACTIONS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

Nature of Relationship Related Party (Note 1) December 31, 2012 Lite-On Overseas Trading Co., Ltd. a Lite-On Trading USA, Inc. b Lite-On Japan (H.K.) Ltd. b Wu Xi China Bridge Express Co., Ltd. b Lite-On Singapore Pte. Ltd. a Titanic Capital Services Ltd. b GVC Subic Corporation b Guangzhou Lite-On Mobile Electronic Components Co., Ltd. b Other related parties (Note 3) December 31, 2011 Lite-On Overseas Trading Co., Ltd. a Lite-On Trading USA, Inc. b Lite-On Singapore Pte. Ltd. a Lite-On Japan (H.K.) Ltd. b GVC Subic Corporation b Lite-On Electronics Co., Ltd. b Titanic Capital Services Ltd. b Lite-On Automotive Corp. a Other related parties (Note 4) Note 1: a. Equity-method investee. b. An equity-method investee of a subsidiary.		Receivable from Related Parties	Receivable from Related Parties	Receivable from Related Parties	Total $ 1,962,616 641,377 316,111 149,175 191,180 116,991 65,173 16,609 91,387 $ 3,550,619 $ 2,131,641 1,760,171 998,685 427,704 67,929 - - 170,338 418,327 $ 5,974,795		Payable to Related Parties	Payable to Related Parties	Payable to Related Parties
		Accounts Receivable % Amount (Note 2) $ 1,954,239 55 641,377 18 315,591 9 149,175 4 122,109 4 - - - - - - 58,624 2 $ 3,241,115 92 $ 2,057,966 35 1,742,029 29 614,824 10 427,157 7 - - - - - - - - 279,255 5 $ 5,121,231 86		Other Receivable % Amount (Note 2) $ 8,377 - - - 520 - - - 69,071 2 116,991 3 65,173 2 16,609 - 32,763 1 $ 309,504 8 $ 73,675 1 18,142 - 383,861 6 547 - 67,929 1 - - - - 170,338 3 139,072 3 $ 853,564 14			Accounts Payable % Amount (Note 2) $ 6,917,926 43 - - - - - - 8,598,202 54 - - - - - - 75,865 - $ 15,591,993 97 $ 8,074,219 53 - - 5,789,882 38 - - - - - - - - - - 695,963 5 $ 14,560,064 96		Other Payable % Amount (Note 2) $ 5,513 - - - 481 - - - 23,964 - 387,426 3 - - - - 32,483 - $ 449,867 3 $ 20,221 - 44 - 20,171 - 960 - - - 173,489 1 403,810 3 - - 45,291 - $ 663,986 4	Total $ 6,923,439 - 481 - 8,622,166 387,426 - - 108,348 $ 16,041,860 $ 8,094,440 44 5,810,053 960 - 173,489 403,810 - 741,254 $ 15,224,050

Note 2: Percentage to account balance.

Note 3: Other related parties are:

a. Equity-method investee: Lite-On Electronics (Europe) Ltd., Lite-On Electronics H.K. Ltd., Lite-On Integrated Service Inc., Lite-On Semiconductor Corp., Lite-On Capital Inc., Lite-On IT Corp., Silitech Technology Corporation, Li Shin International Enterprise Corp., Lite-On Japan Ltd., Lite-On Automotive Corp. and Logah Technology Corp.

(Continued)

Lite-On Technology Corporation 2012 Annual Report

b. An equity-method investee of a subsidiary: I-Solutions Ltd., Lite-On Inc., Lite-On Service USA, Inc., Philips & Lite-On Digital Solutions Corporation, Lite-On Computer Tech (Dongguang) Co., Ltd, Lite-On Japan (s) Pte. Ltd.,, Huizhou Fu Tai Electronic Co., Ltd., Leotek Electronics Corporation, Lite-On Digital Electronics (Dongguang) Co., Ltd., Lite-On Green Technologies, Inc., Lite-On Clean Energy Technology Corp., LET (HK) LIMITED, Lite-On Technology (ChangZhou) Co., Ltd., Yet Foundate Ltd., Lite-On Mobile Pte. Ltd., Lite-On Mobile India Private Limited., Jhen Vei (Wujian) Electronic Co., Ltd., Lite-On Technology Opto (ChangZhou) Co., Ltd., Silitech (Hong Kong) Holding Ltd. and Lite-On Automotive Electronics (Guang Zhou) Co., Ltd.
c. Its chairman is a relative of the Corporation’s chairman: Silport Travel Service Co., Ltd.

Note 4: Other related parties are:

a. Equity-method investee: Lite-On Electronics (Europe) Ltd., Lite-On Electronics H.K. Ltd., Lite-On Electronics (Thailand) Co., Ltd., Lite-On Integrated Service Inc., Lite-On Semiconductor Corp., Lite-On Capital Inc., Lite-On IT Corp., Silitech Technology Corporation, Li Shin International Enterprise Corp., Lite-On Japan Ltd. and Logah Technology Corp.
b. An equity-method investee of a subsidiary: I-Solutions Ltd., Lite-On Inc., Lite-On Service USA, Inc., Silitech (Hong Kong) Holding Ltd., Philips & Lite-On Digital Solutions Corporation, Lite-On Computer Tech (Dongguang) Co., Ltd., Li Shin International Enterprise Corp., Lite-On Japan (s) Pte. Ltd., Huizhou Fu Tai Electronic Co., Ltd., Leotek Electronics Corporation, Lite-On Digital Electronics (Dongguang) Co., Ltd., Lite-On Mobile Oyj (formerly Perlos Oyj), Lite-On Green Technologies, Inc., Lite-On Clean Energy Technology Corp., Guangzhou Lite-On Mobile Electronic Components Co., Ltd., Jhen Vei (Shenzhen) Electronic Co., Ltd., Lite-On Technology (ChangZhou) Co., Ltd., LET (HK) LIMITED, Wu Xi China Bridge Express Co., Ltd., Lite-On Technology Opto (ChangZhou) Co., Ltd., Yet Foundate Ltd. and Lite-On Mobile Pte. Ltd.
c. Its chairman is a relative of the Corporation’s chairman: Silport Travel Service Co., Ltd.

(Concluded)

Lite-On Technology Corporation 2012 Annual Report

TABLE 2

LITE-ON TECHNOLOGY CORPORATION

RELATED-PARTY TRANSACTIONS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

Nature of Related Party (Note 1) 2012 Lite-On Trading USA Inc. b Lite-On Singapore Pte. Ltd. a Lite-On Japan (H.K.) Ltd. b Lite-On Japan Ltd. a Lite-On IT Corp. a Philips & Lite-On Digital Solutions Corporation b Lite-On Automotive Corp. a Lite-On Clean Energy Technology Corp. b Lite-On Mobile Pte. Ltd. b Lite-On Technology (Chang Zhou) Co., Ltd. b Lite-On Intergated Service Inc. a Lite-On Capital Inc. a Silitech Technology Corporation a Silport Travel Service Co., Ltd. c Lite-On Electronics Co., Ltd. b Lite-On Inc. b Li Shin International Enterprise Corp. a Lite-On Overseas Trading Co., Ltd. a Guangzhou Lite-On Mobile Electronic Components Co., Ltd. b Lite-On Power Technology (Dongguan) Co., Ltd. b Lite-On Electronics (Europe) Ltd. a Other related parties (Note 7) 2011 Lite-On Trading USA Inc. b Lite-On Singapore Pte. Ltd. a Lite-On Japan (H.K.) Ltd. b Wu Xi China Bridge Express Co., Ltd. b Lite-On Japan Ltd. a Lite-On Technology (Chang Zhou) Co., Ltd. b Philips & Lite-On Digital Solutions Corporation b Lite-On IT Corp. a Lite-On Clean Energy Technology Corp. b Lite-On Automotive Corp. a Lite-On Mobile Oyj (formerly: Perlos Oyj) a Silitech Technology Corporation a Lite-On Electronics Co., Ltd. b Lite-On Electronics (Thailand) Co., Ltd. a Lite-On Electronics (Guangzhou) Co., Ltd. (formerly: Silitek Electronics (Guangzhou) Co., Ltd.) b Li Shin International Enterprise Corp. a Lite-On Overseas Trading Co., Ltd. a Guangzhou Lite-On Mobile Electronic Components Co., Ltd. b Lite-On Mobile Pte. Ltd. b Other related parties (Note 8)		Sales (Note 2) % Amount (Note 3) $ 3,535,817 5 2,311,874 3 1,960,767 3 151,762 - 8,757 - 5,973 - 1,055 - 817 - 323 - 54 - 52 - 37 - 34 - - - - - - - - - - - - - - - - - 357,470 - $ 8,334,792 11 $ 7,846,319 8 2,450,155 3 1,585,739 2 852,363 1 644,995 - 32,269 - 5,194 - 3,870 - 1,172 - 785 - - - 32 - - - - - - - - - - - - - 280 - 251,442 - $ 13,674,615 14		Purchases (Note 2) % Amount (Note 3) $ - - 23,480,964 34 - - - - - - - - - - - - - - 332,092 - - - - - - - - - - - - - 133,037 - 42,260,265 61 - - - - - - 76,366 - $ 66,282,724 95 $ - - 15,511,557 18 217 - 1,138 - 165 - 4,854,762 6 84 - - - 297 - - - - - - - - 5,881 - - - 1,162,681 1 49,697,753 57 - - - - 1,051,427 1 $ 72,285,962 83	Rental Revenue (Note 6) $ - - - - 12,054 18,542 4,578 2,220 1,305 - 88 231 - 57 - - - - - - - 2,537 $ 41,612 $ - - - - - - 18,542 12,054 3,118 3,250 - - - - - - - - 1,099 2,922 $ 40,985	Other Revenue (Note 5) $ 688 - 183 334 48,104 5,533 3,197 3,041 11,536 - 12 6,575 15,434 - - 577 396 - 25,763 - - 11,431 $ 132,804 $ 11,862 275 - - 594 - 5,007 47,550 2,498 4,411 7,526 18,718 - - - 998 18 20,264 26,057 15,935 $ 161,713	Rental Expense $ - - - 389 - - - - - - - - - - - - 3,984 - - - - - $ 4,373 $ - - - - - - - - - - - - - - - 3,984 - - - - $ 3,984	Other Expense (Note 4) $ - 3 - 27,006 - - - - - 61 32,026 - - 86,007 242,708 50,894 1,884 - 7 - 23,396 15,998 $ 479,990 $ - - - - 33,953 83 - - - - - - 1,709,419 - - 3,886 47 - - 234,975 $ 1,982,363			Property Transaction	Property Transaction
										Book Value $ - - - - - - - - - - - - - - - - - - - 11,700 - - $ 11,700 $ - - - - - - - - 272 - - - - - 1,529 - 4,255 - - - $ 6,056	Proceeds $ - - - - - - - - - - - - - - - - - - - 315,253 - - $ 315,253 $ - - - - - - - - 272 - - - - - 1,529 - 4,255 - - - $ 6,056	Disposal Gain (Loss) $ - - - - - - - - - - - - - - - - - - - 303,553 - - $ 303,533 $ - - - - - - - - - - - - - - - - - - - - $ -	Cost $ - - - - - - - - - 1,594 - - - - - - - - - - - - $ 1,594 $ - - - - - 3,829 - - - - - - - 2,145 - - - - - - $ 5,974 (Continued)

Lite-On Technology Corporation 2012 Annual Report

Note 1: a. Equity-method investee.
b. An investee of a subsidiary.
c. Its chairman is a relative of corporation’s chairman: Silport Travel Service Co., Ltd.

Note 2: Except for certain transactions described in Note 22, these sales and purchases were conducted under normal terms.

Note 3: Percentage to account balance.

Note 4: Mainly included reprocessing, promotional, commission and warranty fees and repair expenses.

Note 5: Mainly included directors’ rewards, consultation fees and guarantee service income.

Note 6: It is under sales revenue.

Note 7: Other related parties are:

a. Equity-method investee: Lite-On Electronics H.K. Ltd., Lite-On Semiconductor Corp. and Logah Technology Corp.
b. An equity-method investee of a subsidiary: Lite-On Service USA, Inc., Lite-On Green Technologies, Inc., Yet Foundate Ltd., Jhen Vei Electronic (Shenzhen) Co., Ltd., Leotek Electronics Corporation, Lite-On Young Fast Pte. Ltd., I-Solutions Ltd., Wu Xi China Bridge Express Co., Ltd., Lite-On Automotive Electronics (Guang Zhou) Co., Ltd., Lite-On Mobile Oyj (formerly: Perlos Oyj), Lite-On Mobile India Private Limited. and LET (HK) LIMITED.
c. The Corporation is the majority contributor: Lite-On Cultural Foundation.
d. The subsidiary is the chairman: Actron Technology Corp.

Note 8: Other related parties are:

a. Equity-method investee: Lite-On Electronics (Europe) Ltd., Lite-On Electronics H.K. Ltd., Lite-On Integrated Service Inc., Lite-On Capital Inc., Lite-On Semiconductor Corp. and Logah Technology Corp.
b. An equity-method investee of a subsidiary: Lite-On Inc., Lite-On Service USA, Inc., Lite-On Green Technologies, Inc., Jhen Vei Electronic (Wujian) Co., Ltd., Jhen Vei Electronic Co., Ltd., Yet Foundate Ltd., Jhen Vei Electronic (Shenzhen) Co., Ltd., Huizhou Fu Tai Electronic Co., Ltd., Leotek Electronics Corporation, Lite-On Technology Opto (Chang Zhou) Co., Ltd., Lite-On Young Fast Pte. Ltd. and I-Solutions Ltd.
c. Its chairman is a relative of the Corporation’s chairman: Silport Travel Service Co., Ltd.
d. The Corporation is the majority contributor: Lite-On Cultural Foundation.
e. The subsidiary is the chairman: Actron Technology Corp.

(Concluded)

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Lite-On Technology Corporation 2012 Annual Report

5.2 Consolidated Financial Statements of 2011

Lite-On Technology Corporation and Subsidiaries Consolidated Financial Statements for the Years Ended December 31, 2012 and 2011 and Independent Auditors’ Report

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lite-On Technology Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended, in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.

March 29, 2013

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Lite-On Technology Corporation

We have audited the accompanying balance sheets of Lite-On Technology Corporation (“Parent Company”) and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Parent Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. However, as disclosed in Note 2 to the financial statements, we did not audit the financial statements as of and for the years ended December 31, 2012 and 2011 of some consolidated subsidiaries. The assets of these subsidiaries were 3.42% (NT$6,681,382 thousand) and 3.67% (NT$7,488,587 thousand) of the consolidated total assets as of December 31, 2012 and 2011, respectively. The sales of these subsidiaries were 5.23% (NT$11,292,480 thousand) and 5.96% (NT$13,750,342) of the consolidated total sales in 2012 and 2011, respectively. These subsidiaries’ financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these subsidiaries, as well as the subsidiaries’ information disclosed in Note 2 to the financial statements, is based solely on the reports of the other auditors.

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Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements shall prevail.

Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS CURRENT ASSETS Cash (Notes 4) Financial assets at fair value through profit or loss - current (Notes 2, 5 and 30) Available-for-sale financial assets - current (Notes 2, 6 and 30) Notes receivable (Note 2) Accounts receivable, net (Notes 2 and 7) Accounts receivable from related parties (Notes 2 and 25) Other receivables from related parties (Note 25) Other financial assets - current Inventories, net (Notes 2 and 8) Construction in progress in excess of progressive billings (Notes 2 and 9) Prepayments Deferred income tax assets - current (Notes 2 and 22) Other current assets Total current assets LONG-TERM INVESTMENTS (Notes 2, 10, 11,12 and 30) Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Investments accounted for by the equity method Prepayments for investments Total long-term investments PROPERTIES (Notes 2 and 13) Cost Land Buildings Machinery and equipment Transportation equipment Office equipment Leased assets Miscellaneous equipment Total cost Less: Accumulated depreciation Accumulated impairment Add: Construction in progress and prepayments for equipment Properties, net INTANGIBLE ASSETS (Notes 2 and 14) Patents, net Goodwill, net Land use rights Other intangible assets Total intangible assets OTHER ASSETS Assets leased to others, net (Notes 2 and 15) Idle assets, net (Notes 2 and 15) Refundable deposits Deferred charges, net (Note 2) Restricted assets - noncurrent (Note 26) Total other assets TOTAL The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 29, 2013)		2012 Amount % $ 60,590,077 31 13,023 - 10 - 119,941 - 44,025,784 23 83,421 - 2,231 - 2,321,847 1 20,566,117 10 72,527 - 3,863,172 2 1,110,308 1 340,170 - 133,108,628 68 1,032,235 - 1,122,230 1 3,554,690 2 13,155 - 5,722,310 3 2,693,413 1 20,872,077 11 40,739,682 21 97,204 - 2,578,640 1 1,347,828 1 3,042,252 2 71,371,096 37 34,266,654 18 938,543 1 36,165,899 18 1,309,891 1 37,475,790 19 10,175 - 14,267,414 7 572,519 - 1,245,850 1 16,095,958 8 111,394 - 203,233 - 311,277 1 2,067,016 1 102,560 - 2,795,480 2 $ 195,198,166 100		2011 Amount % LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES $ 56,515,383 28 Short-term loans (Note 16) 111,584 - Financial liabilities at fair value through profit or loss - current (Notes 2, 5 and 30) 9 - Notes payable 82,039 - Accounts payable 45,469,494 22 Accounts payable to related parties (Note 25) 1,099 - Income tax payable (Notes 2 and 22) 955 - Accrued expenses 1,575,370 1 Other payable to related parties (Note 25) 27,659,384 14 Advance receipts 38,294 - Current portion of long-term bank loans (Notes 17 and 30) 4,024,067 2 Obligations under capital leases - current (Notes 18 and 30) 951,668 - Product warranty reserve (Note 2) 355,282 - Other current liabilities 136,784,628 67 Total current liabilities LONG-TERM LIABILITIES, NET OF CURRENT PORTION 2,783,354 1 Long-term bank loans (Notes 17 and 30) 1,487,972 1 Hedging derivative liabilities - noncurrent (Notes 2 and 30) 3,590,108 2 Obligations under capital leases - noncurrent (Notes 18 and 30) 74,843 - Total long-term liabilities 7,936,277 4 RESERVE FOR LAND VALUE INCREMENT TAX (Note 2) OTHER LIABILITIES 2,746,331 1 Accrued pension costs (Notes 2 and 19) 19,560,099 9 Guarantee deposits received 40,574,926 20 Deferred income tax liabilities - noncurrent (Notes 2 and 22) 107,323 - 2,724,727 1 Total other liabilities 1,399,977 1 3,256,612 2 Total liabilities 70,369,995 34 32,273,396 16 SHAREHOLDERS' EQUITY OF PARENT COMPANY 790,279 - Authorized 3,500,000 thousand shares; issued and outstanding 2,295,315 thousand shares 37,306,320 18 in 2012; 2,309,980 thousand shares in 2011 2,679,675 2 Advance receipts for common stock Total capital stock 39,985,995 20 Capital surplus Additional paid-in capital from share issuance in excess of par value Bond conversion 14,698 - Treasury stock transactions 14,261,731 7 Long-term stock investments 620,210 - Merger 1,511,460 1 Employee stock options Total capital surplus 16,408,099 8 Retained earnings Legal reserve Unappropriated earnings 113,843 - Total retained earnings 135,538 - Other equity 314,903 - Cumulative translation adjustments 2,273,596 1 Net loss not recognized as pension cost 108,107 - Unrealized loss on financial instruments Unrealized loss on cash flow hedging 2,945,987 1 Treasury stock - 2012: 27,979 thousand shares; 2011: 58,405 thousand shares Total other equity Total shareholders' equity of parent company MINORITY INTEREST Total shareholders’ equity $ 204,060,986 100 TOTAL		2012 Amount % $ 7,010,394 4 35,239 - 240,009 - 51,989,611 27 137,923 - 2,042,444 1 10,563,304 5 20,173 - 826,441 1 4,411,168 2 62,381 - 820,311 - 5,581,677 3 83,741,075 43 19,956,634 10 101,563 - 232,299 - 20,290,496 10 239,693 - 175,583 - 89,068 - 843,248 1 1,107,899 1 105,379,163 54 22,953,154 12 6,840 - 22,959,994 12 8,551,730 4 7,540,388 4 370,703 - 915,676 1 10,120,217 5 6,112 - 27,504,826 14 7,847,905 4 13,253,899 7 21,101,804 11 126,009 - (29,536 ) - (677,435 ) - (101,563 ) - (1,104,073) (1) (1,786,598) (1) 69,780,026 36 20,038,977 10 89,819,003 46 $ 195,198,166 100		2011
								Amount % $ 4,737,488 2 42,274 - 498,568 - 61,055,907 30 317,508 - 2,165,581 1 11,139,255 5 43,058 - 1,154,214 1 1,173,473 1 84,360 - 1,028,614 1 6,549,962 3 89,990,262 44 23,294,964 12 165,225 - 316,466 - 23,776,655 12 239,693 - 143,168 - 85,224 - 747,622 - 976,014 - 114,982,624 56 23,099,801 11 - - 23,099,801 11 8,533,185 4 7,641,499 4 416,974 - 907,070 1 10,255,921 5 4,602 - 27,759,251 14 7,125,313 3 11,729,938 6 18,855,251 9 1,625,560 1 (17,182 ) - (372,591 ) - (165,225 ) - (1,857,643) (1) (787,081) - 68,927,222 34 20,151,140 10 89,078,362 44 $ 204,060,986 100

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Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SALES (Notes 2 and 25) LESS: SALES RETURNS SALES ALLOWANCES NET SALES OTHER OPERATING REVENUE Total operating revenue OPERATING COSTS Cost of goods sold (Notes 8, 23 and 25) Other operating cost Total operating costs GROSS PROFIT REALIZED INTERCOMPANY GAINS (Note 2) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 23 and 25) Selling and marketing General and administrative Research and development Total operating expenses OPERATING INCOME NONOPERATING INCOME AND GAINS Interest income Investment income recognized under the equity method (Notes 2 and 12) Dividend income Exchange gain, net (Note 2) Gain on disposal of investments, net Valuation gain on financial assets (Notes 2 and 5) Other income (Note 23) Total nonoperating income and gains		2012 Amount % $ 218,947,484 101 845,582 - 2,428,040 1 215,673,862 100 373,148 - 216,047,010 100 185,147,993 86 271,320 - 185,419,313 86 30,627,697 14 - - 30,627,697 14 8,173,096 4 5,850,375 3 5,712,229 2 19,735,700 9 10,891,997 5 1,064,375 1 15,217 - 57,166 - 8,177 - 585,557 - 300,844 - 1,911,477 1 3,942,813 2		2011
				Amount % $ 233,539,401 101 1,158,034 - 2,258,602 1 230,122,765 100 397,328 - 230,520,093 100 196,187,219 85 285,319 - 196,472,538 85 34,047,555 15 122 - 34,047,677 15 9,767,614 5 6,962,214 3 5,097,613 2 21,827,441 10 12,220,236 5 578,494 1 - - 151,166 - 76,970 - 436,695 - 485,231 - 2,192,341 1 3,920,897 2 (Continued)

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NONOPERATING EXPENSES AND LOSSES Interest expense (Notes 2 and 30) Investment loss recognized under the equity method, net (Notes 2 and 12) Loss on disposal of properties Impairment loss (Notes 2, 10, 11, 13, 14 and 15) Valuation loss on financial liabilities (Notes 2 and 5) Other expenses (Notes 23 and 27) Total nonoperating expenses and losses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 2 and 22) CONSOLIDATED NET INCOME ATTRIBUTED TO: Shareholders of parent company Minority interest EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 24) Basic Diluted		2012 Amount % $ 554,850 - - - 157,087 - 750,433 1 227,641 - 1,173,411 1 2,863,422 2 11,971,388 5 2,451,510 1 $ 9,519,878 4 $ 7,534,860 3 1,985,018 1 $ 9,519,878 4 2012 Pretax After-tax $ 3.35 $ 3.33 $ 3.30 $ 3.28		2011
				Amount % $ 589,603 - 150,230 - 73,770 - 1,138,364 1 511,008 - 1,204,706 1 3,667,681 2 12,473,452 5 2,751,677 1 $ 9,721,775 4 $ 7,225,925 3 2,495,850 1 $ 9,721,775 4 2011
				Pretax After-tax $ 3.34 $ 3.21 $ 3.28 $ 3.15 (Continued)

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Lite-On Technology Corporation 2012 Annual Report

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Pro forma information on the assumption that shares of the Parent Company’s held by its direct and indirect subsidiaries were not treated as treasury stock:

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||||||
|---|---|---|---|---|
|2012|2011|
|Pretax|After-tax|Pretax|After-tax|
|CONSOLIDATED NET INCOME|$ 7,644,884|$ 7,590,713|$ 7,605,456|$ 7,296,208|
|EARNINGS PER SHARE (NEW|
|TAIWAN DOLLARS)|
|Basic|$3.33|$3.31|$3.33|$3.20|
|Diluted|$3.29|$3.26|$3.27|$3.14|

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|---|---|
|The accompanying notes are an integral part of the consolidated financial statements.|
|(With Deloitte & Touche audit report dated March 29, 2013)|(Concluded)|

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars; Except Cash Dividends Per Share)

Issued and Outstanding Capital Sto	Issued and Outstanding Capital Sto			Capital Surplus (Notes 2an	Capital Surplus (Notes 2an	d 20)		Retained Earnings (Notes 2a
		P	Additional aid-in Capital from Share Issuance in Excess of Par Value $ 8,200,480 - - - 332,705 - - - - - - - - - - 8,533,185 - - - - (112,909 ) 19,589 111,865 - - - - - - - - - - $ 8,551,730	Bond Treasury Stock Conversion Transactions $ 7,641,499 $ 346,691 - - - - - - - - - 70,283 - - - - - - - - - - - - - - - - - - 7,641,499 416,974 - - - - - - - - (101,111 ) (98,196 ) - - - - - 55,853 - - - - - (3,928 ) - - - - - - - - - - - - $ 7,540,388 $ 370,703	Long-term Stock Investments $ 959,438 - - - - - (2,152 ) - (50,216 ) - - - - - - 907,070 - - - - - - - - 1,828 - 6,778 - - - - - - $ 915,676	Merger $ 10,255,921 - - - - - - - - - - - - - - 10,255,921 - - - - (135,704 ) - - - - - - - - - - - - $ 10,120,217	Employee Stock Options $ 2,857 - - - - - - - 1,745 - - - - - - 4,602 - - - - - - - - - - 1,510 - - - - - - $ 6,112
Shares (Thousands) 2,284,794 - 11,271 - 13,915 - - - - - - - - - - 2,309,980 - - - 11,397 (30,565 ) 82 4,421 - - - - - - - - - - 2,295,315	Amount $ 22,847,940 - 112,711 - 139,150 - - - - - - - - - - 23,099,801 - - - 113,972 (305,650 ) 816 44,215 - - - - - - - - - - $ 22,953,154
								Unappropriated Legal Reserve Earnings $ 6,226,667 $ 11,985,007 898,646 (898,646 ) - (6,469,637 ) - (112,711 ) - - - - - - - - - - - - - 7,225,925 - - - - - - - - 7,125,313 11,729,938 - - 722,592 (722,592 ) - (5,174,335 ) - (113,972 ) - - - - - - - - - - - - - - - - - 7,534,860 - - - - - - - - $ 7,847,905 $ 13,253,899

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 29, 2013)

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation Amortization Allowance for doubtful accounts Valuation loss (gain) on financial instruments, net Gain on disposal of investments, net Loss on disposal of properties Impairment loss on financial and fixed assets Investment loss (income) recognized under the equity method, net Cash dividends received from equity-method investees Product warranty reserve Accrued pension costs Deferred income taxes Deferred credits - gain on intercompany transactions Net changes in operating assets and liabilities Financial instruments at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable from related parties Other receivable from related parties Inventories Construction in progress in excess of progressive billings Prepayments Other financial assets - current Other current assets Notes payable Accounts payable Accounts payable to related parties Other payable to related parties Income taxes payable Accrued expenses Advance receipts Progressive billings in excess of construction in progress Other current liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of properties Proceeds of the disposal of properties Proceeds of the disposal of available-for-sale financial assets Increase in deferred charges	2012 $ 9,519,878 5,850,237 1,359,208 61,009 (73,203) (585,557) 157,087 750,433 (15,217) 36,353 (193,307) 32,415 53,806 - 164,729 (37,902) 378,375 (82,322) (1,276) 5,177,333 (34,233) 100,913 (776,468) 15,112 (258,559) (6,401,572) (179,585) (22,885) (93,146) (269,916) (312,777) - (1,324,354) 12,994,609 (4,755,634) 1,548,111 1,534,799 (564,802)	2011 $ 9,721,775 5,693,294 1,294,722 47,043 25,777 (314,471) 73,770 1,138,364 150,230 64,048 (13,947) (10,702) (385,319) (122) 295,102 (23,506) (4,463,979) 140,305 2,170 (1,065,792) (26,318) (683,221) 275,209 (66,237) 97,908 5,166,360 (5,651) 12,744 (290,775) 178,803 21,191 (44,599) (367,232) 16,636,944 (8,930,917) 452,473 113,514 (908,668) (Continued)

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

2012
Acquisition of financial assets carried at cost
$ (194,781)

Acquisition of investments under the equity method
(155,134)
Decrease in restricted assets
5,547
Increase in prepayments for investments
(4,610)
Decrease in refundable deposits
3,626
Increase in land use rights
(2,965)
Proceeds of the disposal of financial assets carried at cost
-
Proceeds of the capital reduction on financial assets carried at cost
-
Acquisition of available-for-sale financial assets

-

Net cash used in investing activities

(2,585,843)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid
(5,174,335)
Decrease in minority interest
(2,581,635)
Increase in short-term loans
2,377,875
Increase in long-term bank loans
244,262
Decrease in obligations under capital lease
(106,146)
Proceeds of the exercise of employee stock options
27,245
Increase (decrease) in guarantee deposits

3,844

Net cash used in financing activities

(5,208,890)

EFFECTS OF EXCHANGE RATE CHANGES

(1,125,182)

NET INCREASE IN CASH
4,074,694
CASH, BEGINNING OF YEAR

56,515,383

CASH, END OF YEAR
$ 60,590,077

SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid
$ 536,643

Income tax paid
$ 2,520,841

NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term bank loans
$ 4,411,168

Current portion of capital lease obligations
$ 62,381

CASH PAID FOR THE ACQUISITION OF PROPERTIES
Increase in properties
$ 5,186,681

Decrease (increase) in payable for properties

(431,047)

$ 4,755,634

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 29, 2013)

2011
$ (147,142)
(926,819)
5,877
(74,843)
89,782
(69,701)
307,875
31,680

(6,783)
(10,063,672)
(6,469,637)
(643,351)
1,258,851
4,659,212
(77,421)
-

(15,642)

(1,287,988)

788,777
6,074,061

50,441,322
$ 56,515,383
$ 462,085
$ 2,770,890
$ 1,173,473
$ 84,360
$ 8,699,632

231,285
$ 8,930,917
(Concluded)

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

Lite-On Technology Corporation (the “Parent Company”) was established in March 1989. Its shares are traded on the Taiwan Stock Exchange. The Parent Company manufactures and markets (1) computer software, hardware, peripherals and components and (2) multifunction and all-in-one printers, cameras, internet systems and image-processing equipment.

The Parent Company merged with Lite-On Electronics, Inc., Silitek Corp. and GVC Corp., with the Parent Company as the survivor entity. The merger took effect on November 4, 2002, and the Parent Company thus assumed all rights and obligations of the three merged companies on that date. The Parent Company merged with its subsidiary, Lite-On Enclosure Inc. (LOEI), with the Parent Company as the survivor entity. The merger took effect on April 1, 2004, and the Parent Company thus assumed all of LOEI’s rights and obligations of on that date.

As of December 31, 2012 and 2011, the Parent Company and subsidiaries (also collectively referred to as the “Group”) had 77,497 and 90,201 employees, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China (ROC). The preparation of financial statements in conformity with the foregoing guidelines and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. Actual results may differ from those estimates.

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

The Parent Company and its subsidiaries’ significant accounting policies are summarized as follows:

Basis for Consolidation

As required by the revised ROC Statement of Financial Accounting Standards No. 7 - “Consolidated Financial Statements,” starting from January 2005, consolidated financial statements should include the accounts of the Parent Company and its direct and indirect subsidiaries and other investees over which the Group has controlling influence. All significant intercompany accounts and transactions have been excluded from the consolidation.

Please see Table 3 (attached) for the intercompany relationships and percentages of ownership.

We did not audit the financial statements as of and for the years ended December 31, 2012 and 2011 of Lite-On Electronics (Thailand) Co., Ltd., Lite-On Electronics (Europe) Ltd., G&W Technology (BVI) Ltd., G&W Technology Limited, Fordgood Electronic Ltd., Philips & Lite-On Digital Solutions Netherlands B.V., Philips & Lite-On Digital Solutions USA Inc., Philips & Lite-On Digital Solutions Germany GmbH., Lite-On Information Technology B.V., Lite-On Information Technology GmbH, Silitech Technology (Europe) Ltd., Lite-On Automotive Electronics (Europe) B.V. and Lite-On Automotive North America Inc. The financial statements of these subsidiaries were audited by other auditors.

Minority interests, which were presented separately in the consolidated financial statements, were at these percentages: (a) as of December 31, 2012 - 57.35% in Lite-On IT Corporation; 67.02% in Silitech Technology Corp. Ltd.; 15.11% in Lite-On Automotive Co., Ltd.; 34.77% in Lite-On Japan Ltd.; 60.37% in Logah Technology Co., Ltd.; and (b) as of December 31, 2011 - 56.97% in Lite-On IT Corporation; 64.48% in Silitech Technology Corp. Ltd.; 15.11% in Lite-On Automotive Co., Ltd.; 34.77% in Lite-On Japan Ltd.; 60.37% in Logah Technology Co., Ltd.; and 26.60% in Leotek Electronics Corporation.

The financial statements of consolidated subsidiaries are translated into New Taiwan dollars at the following exchange rates: Assets and liabilities - year-end rates; shareholders’ equity - historical rates; and income and expenses - average rate during the year.

Current and Noncurrent Assets and Liabilities

Current assets include cash, financial assets held for trading and other assets to be converted to cash or to be consumed or used up within 12 months. All other assets such as property, plant and equipment and intangible assets are classified as noncurrent. Current liabilities include financial liabilities resulting from trading or to be repaid or settled within 12 months. All other assets and liabilities are classified as noncurrent.

Financial Assets/Liabilities at Fair Value through Profit or Loss

Financial instruments at fair value through profit or loss (FVTPL) include financial assets or liabilities for trading and financial assets and liabilities that were designated at the time of initial recognition as assets or liabilities to be measured at fair value, with changes in fair value to be recognized under earnings. Derivatives are initially recognized at fair value, with transaction costs expensed as incurred. After initial recognition, the derivatives are remeasured at fair value, and the changes in fair value are recognized in current earnings. Cash dividends received are recognized under current earnings. Regular purchase or sale of financial assets is recognized and derecognized using trade date accounting.

Derivatives that do not meet the criteria for hedge accounting are classified as financial assets or liabilities held for trading. If the fair value of a derivative is a positive amount, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability.

Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts

Sales revenues are recognized when titles to products and material risks of ownerships are transferred to clients, primarily upon shipment, when the earnings process is mostly completed and the profit has been realized or is realizable. On unprocessed materials delivered to subcontractors for further processing, the Group does not recognize sales because this delivery does not involve a transfer of the risks and rewards of materials ownership.

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Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Group and the customers for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Royalties are recognized when:

a. It is probable that the economic benefits of a transaction will flow to the Group; and b. The revenue can be measured reliably.

Royalties are recognized on an accrual basis in accordance with the substance of the contract.

If a contract meets the recognition criteria for sales of goods and the following conditions, royalties are recognized at the time of sale:

a. The amount of the royalties is fixed or the royalties are nonrefundable;
b. The contract is noncancelable;
c. The contract permits the licensee to exploit the assigned rights freely; and

Construction Contracts

Revenues on and costs of long-term construction contracts are recognized by the percentage-of-completion method, while revenues and costs of short-term construction contracts are recognized by the full-completion method. Under the percentage-of-completion method, the stage of completion of each contract is measured at the ratio of cumulative construction costs to total estimated contract costs.

Construction revenues and costs for the current year is the excess of cumulative construction revenue and costs, determined using the percentage-of-completion method, in excess of the cumulative construction revenue and costs recognized in prior years. Any estimated loss on a construction contract is recognized currently; any subsequent adjustment of this loss is recognized as income or loss in the year of adjustment.

Construction in progress is carried at cost plus estimated construction profit or less estimated losses. Installment payments or collections received from construction projects are credited to progressive billings. Upon completion of each project, these progressive billings are offset against construction in progress.

Construction expenses incurred under the full-completion method are included in construction in progress, while collections received from construction projects are credited to progressive billings. Upon completion of each project, the construction in progress and progressive billings are recognized as construction revenues and costs, respectively.

d. The licensor has no remaining obligations to perform.

Allowance for doubtful accounts is provided on the basis of a periodic review of the collectability of receivables based on aging analysis, credit ratings and economic conditions.

At year-end, the balances of construction in progress and progressive billings from construction of each project are netted out, and the result is classified as current asset or current liability.

Inventories

As discussed in Note 3 to the financial statements, on January 1, 2011, the Group adopted the third-time revised Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” One of the main revisions is that the impairment of receivables originated by the Group should be covered by SFAS No. 34. Accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include:

Inventories consist of materials and supplies, work-in-process, finished goods, merchandise, goods in transit and power generation facility held for sale. Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

Available-for-sale Financial Assets

a. Significant financial difficulty of the debtor;
b. Accounts receivable becoming overdue; or
c. It becoming probable that the debtor will enter into bankruptcy or undergo financial reorganization.

Accounts receivable that are assessed as not impaired individually are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of accounts receivable could include the Group’s past experience of collecting payments and an increase in the number of delayed payments, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

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effective interest method is not material, the straight-line method can be used for amortization and subsequent differences are recognized as gain or loss.

An impairment loss is recognized on the balance sheet date if there are objective evidences that a financial asset is impaired, and this impairment loss is charged to the net income of the current period. An impairment loss for an equity instrument classified as available-for-sale can be reversed to the extent of the original carrying value and recognized as an adjustment adjustments to shareholders’ equity. If the reversible amount of a debt instrument is clearly attributable to an event occurring after the impairment loss was recognized, this amount is recognized as income.

Properties and Leased Assets

Properties and leased assets are stated at cost less accumulated depreciation. Major additions, renewals and betterments are capitalized, while maintenance and repairs are charged to current expense.

Assets held under capital leases are initially recognized as assets of the Group at the lower of their fair value at the inception of the lease or the present value of the minimum lease payments; the corresponding liability is included in the balance sheet as obligations under capital leases. The interest included in lease payments is expensed when paid.

Financial Assets Carried at Cost

Investments with no quoted market prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks, are carried at their original cost. The costs of stocks sold are determined using the weighted-average method. If there is objective evidence of investment impairment, a loss is recognized, but a reversal of this impairment loss is not allowed. The accounting treatment for cash dividends and stock dividends arising from financial assets carried at cost is the same as that for cash and stock dividends arising from available-for-sale financial assets.

Long-term Equity Investments

The difference between the cost of the investment and the Group equity in the investee’s net assets when an investment is acquired or when the equity method is first adopted, is amortized over five years. However, effective January 1, 2006, under the revised Statement of Financial Accounting Standards No. 5 - “Long-term Investments under the Equity Method,” investment premiums, representing goodwill, are no longer being amortized, but the Corporation needs to make asset impairment tests regularly or if there are indications that goodwill is probably impaired. If the net fair value of an asset exceeds its investment cost, the excess is used to reduce the fair value of each of the noncurrent assets acquired (exclude non-equity-method financial assets, assets for disposal, deferred tax assets and prepaid pension costs or other pension payments), with any remaining excess recognized as extraordinary gain.

If an investee issues additional shares and the Group acquires these shares at a percentage different from its current equity in the investee, the resulting increase in the Corporation’s equity in its investee’s net assets is credited to capital surplus. Any decrease in the Group equity in the investee’s net assets is debited to capital surplus. If capital surplus is not enough for debiting purposes, the difference is debited to unappropriated earnings. The equity in the net income or net loss of investees that also have investments in the Corporation (reciprocal holdings) is computed using the treasury stock method. Upon the disposal of equity-method investments, the Corporation’s shares in the capital surplus recognized by the investee, if any, will be included in current income in proportion to the investments sold. However, capital surplus from an investee’s property disposal is transferred to retained earnings in proportion to the value of the investments sold. The Corporation accounts for its stock held by subsidiaries as treasury stock. Dividends that the Corporation distributes to its subsidiaries are debited to investment income and are credited to capital surplus - treasury stock transactions.

Profits from downstream transactions with an equity-method investee are eliminated in proportion to the Corporation’s percentage of ownership in the investee; however, if the Group has control over the investee, all the profits are eliminated. Profits from upstream transactions with an equity-method investee are eliminated in proportion to the Group’s percentage of ownership in the investee. The deferred profits are realized through the subsequent sale of the related products to third parties.

For all stock investments, costs of investments sold are determined using the weighted moving-average method.

Depreciation is computed using the straight-line method over useful lives estimated as follows: buildings, 5 to 60 years; machinery and equipment, 2 to 10 years; molding equipment, 2 to 10 years; transportation equipment, 3 to 10 years; office equipment, 2 to 10 years; miscellaneous equipment, 2 to 10 years; and leased assets, 3 to 40 years. Properties that - have reached their residual value but are still in use are depreciated over their newly estimated service lives.

Upon sale or other disposal of properties and leased assets, the related cost and accumulated depreciation are removed from the accounts, and the resulting gain or loss is credited or charged to nonoperating income or expense.

Intangible Assets

Intangible assets acquired are initially recorded at cost and are amortized on a straight-line basis over their estimated useful lives. Patents, client relationships and patent rights (classified under other intangible assets) are amortized over 6 years, 4 years and 12 years, respectively.

Goodwill arising from a merger or the difference between the cost of the investment and the Group’s equity in the investees’ net assets is amortized over five years using the straight line method. Effective January 1, 2006, based on the newly revised Statement of Financial Accounting Standards (SFAS) No. 5 - “Long-Term Investments under the Equity Method,” goodwill is no longer amortized and is instead assessed for impairment at least annually.

Land Use Rights

Land use rights are amortized over 50 years.

Idle Assets

The idle fixed assets reclassified to other assets are stated at the lower of carrying value or net realizable value and depreciated using the straight line method from January 1, 2006.

Deferred Charges

Deferred charges, consisting of computer software costs, royalty expenditures, issuance costs of bonds and office decoration expenditures are amortized using the straight-line method over 2 to 17 years.

Asset Impairment

An impairment loss should be recognized if the carrying amount of properties, goodwill, leased assets, idle assets, deferred expenses, equity-method investments and noncurrent assets classified as held for sale exceeds, as of the balance sheet date, their recoverable amount, and this impairment loss should be charged

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to current income even if the asset is carried at a revalued amount. An impairment loss recognized in prior years can be reversed if there is a subsequent recovery in the estimates used to determine recoverable amount since the last impairment loss was recognized. However, an impairment loss is reversed only to the extent that it does not increase the asset carrying amount that would have been determined had no impairment loss on the asset been recognized in prior years. In addition, reversal of impairment loss on goodwill is not allowed.

Effective January 1, 2002, the Parent Company adopted Statement of Financial Accounting Standards (SFAS) No. 30 - “Accounting for Treasury Stocks.” SFAS No. 30 requires that the shares of the Parent Company held by subsidiaries should be reclassified from investments in those subsidiaries to treasury stock. The reclassification amount was based on the carrying value of the subsidiaries’ investments in the Parent Company as of January 1, 2002.

Stock-based Compensation

Product Warranty Reserve

The estimate of the related cost is based on historical experience about product service life and warranty period.

Pension Costs

The Parent Company and subsidiaries have two types of pension plans: Defined benefit and defined contribution.

Defined benefit pension costs of the Parent Company and its subsidiaries - Lite-On IT Corp., Silitech Technology Corp., Li Shin International Enterprise Corp., Logah Technology Co., Ltd., Lite-On Automotive Corp., Leotek Electronics Corp. and Philips & Lite-On Digital Solutions Corporation - are recognized on the basis of actuarial valuations. Contributions made under a defined contribution plan are recognized as pension cost during the period in which employees render services.

The prior service costs should be amortized on a straight-line basis over the average period from the plan effective or amendment date until the benefits become vested. When the benefits are already vested right after the introduction of, or changes to, a defined benefit plan, the Parent Company should recognize the prior service cost as expense immediately.

Curtailment or settlement gains or losses on the defined benefit plan are recognized as part of the net periodic pension cost for the year.

Some consolidated subsidiaries, which are mainly in investments, have either very few or even no staff. These subsidiaries have no pension plans and thus do not contribute to pension funds and recognize pension costs. Except for these companies, the consolidated subsidiaries all contribute to pension funds and recognize pension costs based on local government regulations.

Treasury Stock

The Parent Company accounts for the cost of reacquiring its outstanding stock as a deduction to arrive at shareholders’ equity.

Upon disposal of the treasury stock, the sales proceeds in excess of the cost are accounted for as capital surplus - treasury stock. If the sales proceeds are less than the cost, the difference is accounted for as a reduction in the remaining balance of capital surplus - treasury stock. If the remaining balance of capital surplus - treasury stock is insufficient to cover the difference, the remainder is recorded as a reduction of retained earnings.

If treasury stock is retired, the weighted-average cost of the retired treasury stock is written off to offset the par value and the capital surplus premium, if any, of the stock retired. If the weighted-average cost written off exceeds the sum of both the par value and the capital surplus premium, the difference is accounted for as either a reduction of capital surplus - treasury stock or a reduction of retained earnings for any deficiency where capital surplus - treasury stock is insufficient to cover the difference. If the weighted-average cost written off is less than the sum of the par value and premium, if any, of the stock retired, the difference is accounted for as an increase in capital surplus - treasury stock of the same type.

Employee stock option plans had a grant or amendment date on or after January 1, 2004. Because the Parent Company did not grant new options after 2008, the accounting treatment for employee stock options is still based on the interpretations issued by the Accounting Research and Development Foundation. The Group uses the intrinsic value method, under which compensation cost is recognized on a straight-line basis over the vesting year.

Income Tax

The inter-period allocation method is applied to income tax. Deferred tax assets are recognized for the tax effects of deductible temporary differences, loss carryforwards, investment tax credits, and deferred tax liabilities are recognized for the tax effects of taxable temporary differences. Valuation allowance is provided for deferred income tax assets that are not certain to be realized. Deferred income tax assets or liabilities are classified as current or noncurrent in accordance with the nature of related assets or liabilities for financial reporting. But, if a deferred asset or liability cannot be related to an asset or liability in the financial statements, it is classified as current or noncurrent depending on the expected reversal date of the temporary difference.

Tax credits for certain purchases of equipment or technique, research and development, personnel training, and stock investments can be deducted from the current year’s tax expense.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income taxes (10%) on undistributed earnings are recorded as expense in the year the shareholders resolve to retain the earnings.

Translation of Foreign-currency Financial Statements and Foreign-currency Transactions

The ROC Statement of Financial Accounting Standards No. 14 - “The Effects of Changes in Foreign Exchange Rates” applies to foreign subsidiaries that use their local currencies as their functional currencies. The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following exchange rates: Assets and liabilities - year-end rates; shareholders’ equity - historical rates; and income and expenses - average rate during the year. The resulting translation adjustments are recorded as a separate component of shareholders’ equity.

Foreign-currency transactions (except derivative transactions) are recorded in New Taiwan dollars at the spot rates of exchange in effect when the transactions occur.

At the balance sheet date, foreign-currency monetary assets and liabilities are revalued using prevailing exchange rates, and the exchange differences are recognized in profit or loss.

a. Recognized in shareholders’ equity if the changes in fair value are recognized in shareholders’ equity; b. Recognized in profit and loss if the changes in fair value are recognized in profit or loss.

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Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

Hedging Derivative Financial Instruments

Hedging derivative financial instruments are measured at fair value. The changes in fair values of these instruments are debited or charged to either shareholders equity or current income depending on the hedged items.

Hedge Accounting

Operating Segments

On January 1, 2011, the Parent Company and its subsidiaries adopted the newly issued SFAS No. 41 - “Operating Segments.” The statement requires that segment information be disclosed on the basis of information about the components of the Group that management uses to make operating decisions. SFAS No. 41 requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Parent Company and its subsidiaries’ chief operating decision maker in order to allocate resources to the segments and assess their performance. This statement supersedes SFAS No. 20 - “Segment Reporting,” and the Parent Company and its subsidiaries conformed to the disclosure requirement under SFAS No. 41 and provided the operating segment disclosure in the consolidated financial statements accordingly.

Hedge accounting recognizes the offsetting effects on profit or loss of changes in the fair values of the hedging instrument and the hedged item as follows:

4. CASH

a. Fair value hedge: The gain or loss from remeasuring the hedging instrument at fair value and the gain or loss on the hedged item attributable to the hedged risk are recognized in profit or loss.
b. Cash flow hedge: The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in shareholders’ equity. The amount recognized in shareholders’ equity is recognized in profit or loss in the same year or years during which the hedged forecast transaction or an asset or liability arising from the hedged forecast transaction affects profit or loss. However, if all or a portion of a loss recognized in shareholders’ equity is not expected to be recovered in the future, the amount that is not expected to be recovered is reclassified into profit or loss.
c. Hedge of a net investment in a foreign operation: The portion of the gain or loss on hedging instruments that is determined to be an effective hedge is recognized in shareholders’ equity but is recognized as gain or loss on foreign operation disposal.

The Parent Company and its subsidiaries use hedging to stabilize net interest income or expense and control market value risk. Cash flow hedge is used to reduce interest rate risk, while fair value hedge is used to reduce net present value risk of the hedged item.

Reclassifications

Certain accounts in the financial statements as of and for the years ended December 31, 2011 have been reclassified to conform to the presentation of the financial statements as of and for the years ended December 31, 2012.

3. ACCOUNTING CHANGES

Financial Instruments

On January 1, 2011, the Parent Company and its subsidiaries adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 34 - “Financial Instruments: Recognition and Measurement.” The main revisions include (1) finance lease receivables are now covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts is amended; (3) loans and receivables originated by the Parent Company and its subsidiaries are now covered by SFAS No. 34; (4) additional guidelines on impairment testing of financial assets carried at amortized cost when a debtor has financial difficulties and the terms of obligations have been modified; and (5) accounting treatment by a debtor for modifications in the terms of obligations. This accounting change had no significant effect on the Parent Company and its subsidiaries.

CASH
December 31 2012 2011 Cash on hand $ 10,300 $ 10,415 Checking deposits 1,783,160 2,768,789 Demand deposits 21,017,052 22,226,441 Time deposits 37,779,565 31,509,738 $ 60,590,077 $ 56,515,383 As of December 31, 2012 and 2011, the bank deposits overseas of the Parent Company were as follows: December 31 2012 2011 Czech - Prague (CZK35,557 thousand in 2012 and CZK54,254 thousand in 2011) $ 54,577 $ 82,564 Germany - Nuremburg (EUR77 thousand) 2,945 3,028 Poland - Warsaw (PLN15 thousand in 2012 and PLN1,017 thousand in 2011) 141 9,062 $ 57,663 $ 94,654 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT December 31 2012 2011 Financial assets held for trading Forward exchange contracts $ 12,360 $ 45,295 Currency swap contracts 663 66,289 $ 13,023 $ 111,584 Financial liabilities held for trading Currency swap contracts $ 21,333 $ 23,922 Forward exchange contracts 13,857 8,573 Interest rate swap contracts 49 362 Options - put - 9,417 $ 35,239 $ 42,274	December 31
			2011 $ 82,564 3,028 9,062 $ 94,654 31
		2012 $ 12,360 663 $ 13,023 $ 21,333 13,857 49 - $ 35,239	2011 $ 45,295 66,289 $ 111,584 $ 23,922 8,573 362 9,417 $ 42,274

5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

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The subsidiaries’ significant outstanding forward exchange contracts, currency swap contracts, interest rate swap contracts and options as of December 31, 2012 and 2011 were as follows:

swap contracts and options as of December 31, 2012 and 2011 were as follows:
Currency
Maturity
Amount (Thousands)
December 31, 2012
Lite-On IT Corp.
Currency swap contracts
USD/NTD
January 7, 2013-
January 28, 2013
USD127,000/NTD3,696,738
Forward exchange contracts
EUR/USD
January 3, 2013-
January 17, 2013
EUR 9,000/USD11,800
Lite-On Automotive Corp.
Forward exchange contracts
USD/JPY
February 20, 2013
USD755/JPY60,000
Leotek Electronic Corp.
Currency swap contracts
USD/NTD
January 25, 2013
USD 1,300/TWD37,805
Forward exchange contracts
USD/NTD
January 25, 2013
USD 2,000/TWD58,600
Lite-On Automotive International
(Cayman) Co., Ltd.
Forward exchange contracts
USD/CNY
March 5, 2013
USD 4,000/CNY25,108
Lite-On Mobile Oyj (formerly:
Perlos Oyj)
Currency swap contracts
USD/EUR
January 7, 2013
USD16,500/EUR12,577
Currency swap contracts
JPY/USD
January 17, 2013
JPY50,000/USD597
Currency swap contracts
JPY/EUR
January 7, 2013
JPY50,000/EUR464
Currency swap contracts
CNY/USD
January 28, 2013
CNY10,000/USD1,604
Forward exchange contracts
USD/EUR
January 7, 2013
USD1,700/EUR1,283
Forward exchange contracts
USD/INR
January 17, 2013
USD6,000/INR327,252
Forward exchange contracts
USD/CNY
February 6, 2013
USD9,000/CNY56,489
Guangzhou Lite-On Mobile Electronic
Components Co., Ltd.
Forward exchange contracts
USD/CNY
January 18, 2013
USD3,000/CNY18,842
Lite-On Mobile India Private Limited.
Forward exchange contracts
USD/INR
January 25, 2013
USD1,000/INR 57,350
Lite-On Singapore Pte. Ltd.
Forward exchange contracts
EUR/USD
January 4, 2013
EUR2,400/USD 3,133
Silitech Technology Corp.
Currency swap contracts
USD/NTD
January 14, 2013
USD24,000/NTD697,200
Forward exchange contracts
USD/MYR
January 7, 2013 -
March 19, 2013
USD1,730/MYR5,299

Amount
(Thousands)
Maturity
Interest Rate
Paid
Interest
Rates
Received
Settlement
Term
December 31, 2012
Lite-On Japan Ltd.
Interest rate swap
contracts
JPY 25,000
February 4, 2008 -
January 31, 2013
1.48%
Note
Quarterly
Currency
Maturity
Amount (Thousands)
December 31, 2011
Lite-On IT Corp.
Currency swap contracts
USD/NTD
January 5, 2012 -
January 13, 2012
USD79,000/NTD2,382,530
Forward exchange contracts
EUR/USD
January 11, 2012 -
February 8, 2012
EUR15,200/USD19,844
Leotek Electronic Corp.
Forward exchange contracts
USD/NTD
January 30, 2012
USD2,000/NTD60,320
Lite-On Automotive International
(Cayman) Co., Ltd.
Forward exchange contracts
USD/NTD
January 17, 2012
USD900/NTD27,241
Lite-On Automotive Electronics
(Guang Zhou) Co., Ltd.
Forward exchange contracts
USD/CNY
January 9, 2012
USD400/CNY2,542
Forward exchange contracts
EUR/CNY
January 9, 2012
EUR696/CNY5,932
Lite-On Mobile Oyj (formerly:
Perlos Oyj)
Currency swap contracts
EUR/USD
January 11, 2012
EUR2,000/USD2,678
Currency swap contracts
JPY/EUR
January 11, 2012
JPY140,000/EUR1,374
Currency swap contracts
USD/EUR
January 11, 2012
USD12,650/EUR9,449
Currency swap contracts
JPY/USD
January 6, 2012
JPY495,660/USD6,378
Currency swap contracts
SEK/EUR
January 18, 2012
SEK5,000/EUR540
Currency swap contracts
HUF/EUR
January 18, 2012
HUF250,000/EUR809
Forward exchange contracts
USD/BRL
January 23, 2012
USD1,500/BRL2,710
Forward exchange contracts
USD/INR
January 17, 2012
USD17,000/INR898,855
Forward exchange contracts
EUR/CNY
February 21, 2012
EUR3,000/CNY25,696
Forward exchange contracts
USD/CNY
February 7, 2012
USD20,000/CNY127,104
Forward exchange contracts
JPY/USD
January 6, 2012
JPY200,000/USD2,566
Forward exchange contracts
USD/EUR
January 9, 2012
USD700/EUR511
(Continued)

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6. AVAILABLE-FOR-SALE FINANCIAL ASSETS - CURRENT

Guangzhou Lite-On Mobile Electronic
Components Co., Ltd.
Forward exchange contracts
Lite-On Japan Ltd.
Call option
Put option
Currency swap contracts
Lite-On Singapore Pte. Ltd.
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts
Silitech Technology Corp.
Forward exchange contracts
Currency swap contracts
Logah Technology Co., Ltd.
Forward exchange contracts
Amount
(Thousands)
December 31, 2011
Lite-On Japan Ltd.
Interest rate swap
contracts
JPY125,000

Currency
Maturity
Amount (Thousands)
USD/CNY
January 17, 2012
USD2,000/CNY12,688
JPY/USD
March 5, 2012
JPY33,900/USD300
JPY/USD
March 5, 2012
JPY94,050/USD900
JPY/USD
March 5, 2012
JPY33,990/USD300
EUR/USD
January 5, 2012
EUR2,400/USD3,221
HUF/USD
January 5, 2012
HUF384,000/USD1,691
JPY/USD
January 5, 2012
JPY55,000/USD707
USD/MYR
January 9, 2012 -
February 24, 2012
USD700/MYR2,220
USD/NTD
January 9, 2012
USD28,000/NTD844,960
USD/NTD
February 6, 2012 -
February 24, 2012
USD4,200/NTD126,834
(Concluded)
Maturity
Interest Rate
Paid
Interest
Rates
Received
Settlement
Term
February 4, 2008 -
January 31, 2013
1.48%
Note
Quarterly

Note: Based on the Taipei interbank offered rate (Tibor) for three month plus a margin of 0.35%.

The subsidiaries entered into derivative contracts in 2012 and 2011 to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the subsidiaries did not meet the criteria for hedge accounting. Thus, the derivative contracts classified as financial assets or financial liabilities at fair value through profit or loss. The financial risk management objectives of the subsidiaries were to minimize risks due to changes in fair value or cash flows.

AVAILABLE-FOR-SALE FINANCIAL ASSETS - CURRENT	AVAILABLE-FOR-SALE FINANCIAL ASSETS - CURRENT
December 31 2012 2011 Listed stocks (domestic) $ 10 $ 9 ACCOUNTS RECEIVABLE, NET December 31 2012 2011 Accounts receivable $ 45,123,260 $ 46,111,378 Less: Allowance for doubtful accounts 323,320 270,049 Allowance for sales returns and discounts 774,156 371,835 $ 44,025,784 $ 45,469,494 Movements of the allowances for doubtful accounts were as follows: Years Ended December 31 2012 2011 Accounts Receivable Overdue Receivable Accounts Receivable Overdue Receivable Balance, beginning of year $ 270,049 $ 187,491 $ 416,384 $ 64,204 Allowance for doubtful accounts 50,833 10,176 29,615 17,428 Reclassified 18,115 (18,115) (164,797) 164,797 Amounts written off (10,940) - (8,577) (58,938) Effect of exchange rate changes (4,737) (25,793) (2,576) - $ 323,320 $ 153,759 $ 270,049 $ 187,491 Overdue receivables were classified under other assets; an allowance for doubtful accounts fully covered these receivables (please refer to Note 15). The unexpired factored accounts receivable of the Parent Company and its subsidiaries as of December 31, 2012 and 2011 were as follows: The Parent Company(2012: None) Factor Receivables Sold Amounts Collected Advances Received at Year-end Interest Rates for Advances Received (%) Credit Line December 31, 2011 Taishin International Bank USD 1,766 USD 1,766 $ - Note $ 160,000				December			31
				2012 $ 10 December			2011 $ 9 31
		2012 $ 45,123,260 $ 323,320 774,156 $ 44,025,784 $ Ended December 31	$			$	2011 46,111,378 270,049 371,835 45,469,494
			$			$
	2012				2011

7. ACCOUNTS RECEIVABLE, NET

Overdue receivables were classified under other assets; an allowance for doubtful accounts fully covered these receivables (please refer to Note 15).

The unexpired factored accounts receivable of the Parent Company and its subsidiaries as of December 31, 2012 and 2011 were as follows:

On derivative financial instruments, there were a net gain of $73,203 thousand in 2012 and a net loss of $25,777 thousand in 2011.

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- Philips & Lite On Digital Solutions Corp.

Factor
December 31, 2012
Taishin International Bank
December 31, 2011
Taishin International Bank
Silitech Technology Corp.
Factor
December 31, 2012
City Bank
December 31, 2011
City Bank

Receivables
Sold
Amounts
Collected
Advances
Received at
Year-end
Interest Rates
for Advances
Received (%)
Credit Line
USD
7,244
USD
7,311
USD
-
0.17-0.19
USD
8,500
USD 17,539
USD 17,097
USD
-
0.17-0.19
USD
8,500
Receivables
Sold
Amounts
Collected
Advances
Received at
Year-end
Interest Rates
for Advances
Received (%)
Credit Line
EUR
976
EUR
4,774
EUR
-
1.47-1.81
USD 30,000
USD 13,166
USD 17,368
USD
-
1.78-1.85
EUR 22,770
EUR 26,297
EUR
3,798
1.63-2.08
USD 30,000
USD 31,179
USD 36,219
USD
4,202
0.90-1.87
USD 30,000
CNY
-
CNY
3,967
CNY
-
4.59
USD
9,000

Note: According to advance received at the agreed-upon interest rate.

The above credit lines may be used on a revolving basis. As of December 31, 2012, the amount of factored accounts receivable of the Parent Company and its subsidiaries remaining in 2011 had been collected.

Factored accounts receivable of the Parent Company and its subsidiaries amounted to USD20,410 thousand and EUR976 thousand in 2012; and USD50,484 thousand and EUR22,770 thousand in 2011.

The Parent Company and its subsidiaries (Philips & Lite-On Digital Solutions Corp. and Silitech Technology Corp.) signed accounts receivable factoring contracts with banks. Under these contracts, the risks on the accounts receivable were transferred to the banks.

8. INVENTORIES, NET

INVENTORIES, NET
Materials and supplies Work in process Finished goods Merchandise Goods in transit Power generation facility held for sale		December 31
		2012 $ 4,458,816 2,616,363 10,135,010 1,520,250 1,835,678 - $ 20,566,117	2011 $ 6,295,461 3,174,499 11,253,071 3,623,498 1,651,845 1,661,010 $ 27,659,384

As of December 31, 2012 and 2011, the allowances for inventory devaluation were $1,487,365 thousand and $1,961,678 thousand, respectively. The costs of inventories recognized as cost of sales were $185,147,993 thousand in 2012 and $196,187,219 thousand in 2011, respectively.

Reversal of write-downs of inventories amounting to $474,313 thousand and the write-down of inventories to net realizable value amounting to 484,988 thousand were included in the cost of sales for 2012 and 2011, respectively.

9. CONSTRUCTION IN PROGRESS IN EXCESS OF PROGRESSIVE BILLINGS

Item Contract Cost Cost Incurred to Date Estimated Costs to Complete Construction Construction in Progress Progressive Billings Percentage of Completion (%) Estimated Completion Year Gross Profit to Be Recognized December 31, 2012 Solar Power project $593,697 $514,691 $ 42,033 $547,916 $475,389 80-100 2013 $ 33,225 December 31, 2011 Solar Power project $609,049 $479,217 $ 80,835 $525,796 $487,502 80-100 2012 $ 46,579 AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT December 31 2012 2011 Domestic quoted stocks $ 903,036 $ 1,898,092 Mutual funds 93,242 739,971 Overseas quoted stocks 35,957 145,291 $ 1,032,235 $ 2,783,354	Item Contract Cost Cost Incurred to Date Estimated Costs to Complete Construction Construction in Progress Progressive Billings Percentage of Completion (%) Estimated Completion Year Gross Profit to Be Recognized December 31, 2012 Solar Power project $593,697 $514,691 $ 42,033 $547,916 $475,389 80-100 2013 $ 33,225 December 31, 2011 Solar Power project $609,049 $479,217 $ 80,835 $525,796 $487,502 80-100 2012 $ 46,579 AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT December 31 2012 2011 Domestic quoted stocks $ 903,036 $ 1,898,092 Mutual funds 93,242 739,971 Overseas quoted stocks 35,957 145,291 $ 1,032,235 $ 2,783,354	Item Contract Cost Cost Incurred to Date Estimated Costs to Complete Construction Construction in Progress Progressive Billings Percentage of Completion (%) Estimated Completion Year Gross Profit to Be Recognized December 31, 2012 Solar Power project $593,697 $514,691 $ 42,033 $547,916 $475,389 80-100 2013 $ 33,225 December 31, 2011 Solar Power project $609,049 $479,217 $ 80,835 $525,796 $487,502 80-100 2012 $ 46,579 AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT December 31 2012 2011 Domestic quoted stocks $ 903,036 $ 1,898,092 Mutual funds 93,242 739,971 Overseas quoted stocks 35,957 145,291 $ 1,032,235 $ 2,783,354	Item Contract Cost Cost Incurred to Date Estimated Costs to Complete Construction Construction in Progress Progressive Billings Percentage of Completion (%) Estimated Completion Year Gross Profit to Be Recognized December 31, 2012 Solar Power project $593,697 $514,691 $ 42,033 $547,916 $475,389 80-100 2013 $ 33,225 December 31, 2011 Solar Power project $609,049 $479,217 $ 80,835 $525,796 $487,502 80-100 2012 $ 46,579 AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT December 31 2012 2011 Domestic quoted stocks $ 903,036 $ 1,898,092 Mutual funds 93,242 739,971 Overseas quoted stocks 35,957 145,291 $ 1,032,235 $ 2,783,354
		2012 $ 903,036 93,242 35,957 $ 1,032,235	2011 $ 1,898,092 739,971 145,291 $ 2,783,354

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - NONCURRENT

Some of the Group’s available-for-sale financial assets in 2012 were impaired. Thus, impairment losses were recognized as follows:

Solen AG (formerly Payom Solar AG) Hannstar Display Corp.	December 31 2012 $ 124,078 67,432 $ 191,510

11. FINANCIAL ASSETS CARRIED AT COST - NONCURRENT

FINANCIAL ASSETS CARRIED AT COST - NONCURRENT
Domestic and overseas unquoted common stocks Emerging market stocks		December 31
		2012 $ 811,573 310,657 $ 1,122,230	2011 $ 1,050,019 437,953 $ 1,487,972

The above stocks and funds had no quoted price in an active market or reliable fair values; thus, these investments were measured at cost.

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Lite-On Technology Corporation 2012 Annual Report

Some of the Group’s financial assets carried at cost - noncurrent in 2012 and 2011 were impaired. Thus, impairment losses were recognized as follows:

impairment losses were recognized as follows:		. ,	. ,
Auria Solar, Inc. Compound Solar Technology Co., Ltd		December 31
		2012 $ 460,187 10,000 $ 470,187	2011 $ 278,888 - $ 278,888

No independent auditors audited the financial statements as of and for the years ended December 31, 2012 and 2011 of Canfield Ltd. (“Canfield”), an equity-method investee of Li Shin, and Lite-Space Technology Company Limited of Lite-On IT Corp. as of and for the years ended December 31, 2011. Management believed that had these investees’ financial statements been audited, no significant adjustments would have been required for the consolidated financial statements.

The Parent Company’s auditors did not audit the financial statements of LiteStar JV Holding (BVI) Co., Ltd., Epricrystal (Changzhou) Co., Ltd., Kompaktsolar GmbH, equity-method investees of Lite-On Semiconductor Corp.- Diodes, Inc. and Dynacard Co., Ltd. as of and for the years ended December 31, 2012 and 2011 and Lite-Space Technology Company Limited as of and for the year ended December 31, 2012. The financial statements of these investees accounted for by the equity method had been audited by other auditors.

12. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

Long-term stock investments Equity method Listed Lite-On Semiconductor Corp. Jhen Vei Electronics Co., Ltd. Unlisted Dragonjet Corporation LiteStar JV Holding (BVI) Co., Ltd. Epricrystal (Changzhou) Co., Ltd. Lite-Space Technology Company Limited Kompaktsolar GmbH Canfield Ltd.		December 31	December 31	December 31
		2012 % of Carrying Owner- Value ship $ 1,505,228 20.45 88,055 17.12 1,593,283 1,000,448 29.74 697,387 26.72 137,021 4.71 108,355 39.23 14,303 51.00 3,893 33.33 1,961,407 $ 3,554,690		2011
				% of Carrying Owner- Value ship $ 1,571,097 20.45 117,285 17.12 1,688,382 965,811 29.74 765,534 30.00 125,756 5.00 26,208 27.00 14,274 51.00 4,143 33.33 1,901,726 $ 3,590,108

Although Li Shin International Enterprise Corp. (“Li Shin”) held less than 20% of the total voting shares of Jhen Vei Electronics Co., Ltd. (“Jhen Vei”), Li Shin’s holding was still significantly higher than that of any other shareholder and was thus deemed to have significant influence over Jhen Vei’s. As a result, Li Shin used the equity method to account for its investment in Jhen Vei.

Lite-On Electronic (Tianjin) Co., Ltd., a subsidiary of the Parent company, held less than 20% of the equity interest in Epricrystal (Changzhou) Co., Ltd. (“Epricrystal”), but an equity-method investee of the Parent company, LiteStar JV Holding (BVI) Co., Ltd., owned more than 20% interest of Epricrystal, enabling the Group to exercise significant influence. Thus, the Group accounted for this investment by the equity method.

In January 2011, Lite-On Green Technologies B.V. (LOGTBV), a subsidiary of the Parent company, signed a joint venture contract with Kompakt Betriebs and Verwaltungs GmbH, and formed the company named Kompaktsolar GmbH (“Kompak”). Under the contract, LOGTBV had no controlling interest over the financial, operating and personnel hiring policy decisions but owned 51%. Thus, the Group accounted for this investment by the equity method. LOGTBV was not included in the accompanying consolidated financial statements but the proportional consolidation method was applied to this investee.

The book values of the long-term equity-method investees whose financial statements had been audited by other auditors were $1,717,272 thousand and $1,660,650 thousand as of December 31, 2012 and 2011, respectively; the net investment results recognized were losses of $21,358 thousand and $14,520 thousand as of December 31, 2012 and 2011, respectively.

13. PROPERTIES

Accumulated depreciation consisted of the following:

Buildings Machinery and equipment Transportation equipment Office equipment Leased equipment Miscellaneous equipment		December 31	December 31
		2012 $ 6,077,868 22,975,196 72,274 1,914,199 994,150 2,232,967 $ 34,266,654	2011 $ 5,497,911 19,943,057 75,512 1,957,342 1,249,636 3,549,938 $ 32,273,396

Depreciation expenses were $5,838,778 thousand in 2012 and $5,688,711 thousand in 2011.

Some of the Group’s properties in 2012 and 2011 were impaired. Thus, impairment losses (reversal of impairment losses) were recognized as follows:

.
impairment losses) were recognized as follows:

Guangzhou Lite-On Mobile Electronic Components Co., Ltd.
Lite-On Mobile Indústria e Comércio de Plásticos Ltda.
Lite-On Green Technologies S.R.L.
Lite-On Mobile India Private Limited.
Beijing Lite-On Mobile Electronic and Telecommunication
Components Co., Ltd.
Remeo Tetti PV1 S.R.L.
Lite-On Young Fast (Huizhou) Co., Ltd.
Lite-On Technology (Europe)B.V.
Shenzhen Lite-On Mobile Precision Molds Co., Ltd.

December 31

2012
2011
$ 64,258
$ 55,812
31,466
-
18,407
-
8,146
16,310
4,472
16,757
2,328
-
2,142
-
258
-
127
1,460
(Continued)

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Lite-On Technology Corporation 2012 Annual Report

b. Goodwill

Perlos Precision Plastics Molding Limited Liability Company Perlos Mexico Holding Corp. Perlos Mexico, S.A. de C.V Lite-On Electronic (Tianjin) Co., Ltd. Lite-On Automotive Corp.		December 31	December 31
		2012 $ (34,774) - - - - $ 96,830	2011 $ - 172,161 85,928 32,430 (2,417) $ 378,441 (Concluded)

The amortization period for goodwill resulting from the Parent Company’s acquisition of Lite-On Enclosure Inc. in 2004 was approximately five years. However, under the Guidelines Governing the Preparation of Financial Reports, effective January 1, 2006, goodwill need no longer be amortized. As of December 31, 2012 and 2011, the carrying value of goodwill was $132,986 thousand.

Except for the goodwill generated through the acquisition of Lite-On Enclosure Inc. by the Parent Company for $132,986 thousand, the Parent Company’s purchase of some assets of IrDA Department of Avago Technologies Limited for $411,932 thousand, and the goodwill carrying value of $2,806,508 thousand recognized by Lite-On IT Corp., resulted in differences between the acquisition costs of the Parent Company’s investments in the subsidiaries and the acquisition costs of the subsidiaries’ investments in other companies; the Company’s proportionate share in the investees’ equity are listed as follows:

14. INTANGIBLE ASSETS

a. Patents and other intangible assets

The Parent Company completed the purchase of some assets of the IrDA Department of Avago Technologies Limited. Based on Statement of Financial Accounting Standards (SFAS) No. 25 - “Business Combinations” and SFAS No. 37 - “Intangible Assets,” goodwill is recognized as the sum of the acquisition cost plus other direct transaction costs minus the fair value of the identifiable net assets acquired. The calculation of goodwill generated as of December 31, 2009 was as follows:

Acquisition costs Fair value of identifiable assets acquired Inventories Properties Patents Client relationships (recognized as other intangible assets) Goodwill	$ 59,278 46,700 27,134 163,819	$ 708,863 296,931 $ 411,932

As of the end of 2012 and 2011, the amounts of accumulated amortization of patents, which have an estimated service life of six years, were $16,959 thousand and $12,436 thousand, respectively, and those for client relationships, which have an estimated service life of four years, were $153,580 thousand and $112,626 thousand, respectively.

On April 10, 2006, Lite-On IT Corporation (LOITC) and Qisda Corp. (“Qisda”) signed a contract, under which LOITC will obtain Qisda’s subcontract and manufacturing business on optical storage devices, including related authorization on product manufacturing, technology, technology acquisition, patent rights, etc. for $1,226,855 thousand plus 13% equity in LOITC. This acquisition was in line with LOITC’s long-term strategic relationship with Qisda to expand production scale and promote market share.

p py pp follows:		qy	qy
Lite-On Mobile Oyj (formerly Perlos Oyj) Li Shin International Enterprise Corp. Lite-On Automotive Corp. Leotek Electronics Corp. Others		December 31
		2012 $ 8,601,849 1,708,258 303,073 220,170 82,638 $ 10,915,988	2011 $ 8,612,047 1,708,258 303,073 219,424 67,503 $ 10,910,305

From January 1, 2006, based on the revised of the Statement of Financial Accounting Standards No. 5 - “Long-term Investments under the Equity Method,” goodwill should no longer be amortized but should be tested for impairment at regular intervals every year. For this test, the recoverable amount should be evaluated by the value in use of the tangible and intangible assets of the Parent Company and the subsidiaries’ optical storage devices, and the projected cash flows during the period of the expected use of these devices should be considered. Some factors to consider in assessing value in use are past operating performance, future profit situation under normal operations, operating strategies, industrial development goals on CD-ROM drives, market prospects, etc. Net cash input and the number of residual assets should be estimated, and the value in use of these assets should be calculated net of their weighted average capital cost.

As of December 31, 2011, Lite-On IT Corp. had recognized an impairment loss of $453,533 thousand on its subsidiary, Philips & Lite-On Digital Solutions Germany GmbH, because the recoverable amount of goodwill was estimated to be less than its carrying amount. No other investment impairment loss was recognized by the Group as of December 31, 2012.

In their special meeting on November 15, 2007, however, LOITC’s shareholders approved the board of directors’ proposal of August 27, 2007 to cancel the plan to use LOITC’s shares to make the payment and to negotiate instead with Qisda for a new payment mode (i.e., wholly pay in cash) and schedule. LOITC thus paid cash for its acquisition at these amounts: $2,695,878 thousand, recorded under intangible assets - patent rights; and $2,806,508 thousand, recorded under goodwill.

As of December 31, 2012 and 2011, the accumulated amortization for patent rights amounted to $1,460,267 thousand and $1,235,611 thousand, respectively.

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15. OTHER ASSETS

a. Leased assets, net (operating lease)

Leotek Electronics Corp. and Li Shin International Enterprise leased out their land, buildings and office equipment as follows:

Cost Land Buildings Less: Accumulated depreciation Idle assets, net Cost Land Buildings Machinery and equipment Molding equipment Office equipment Miscellaneous equipment Less: Accumulated impairment losses Accumulated depreciation The change in accumulated impairment losses was as follows: Balance, beginning of year Impairment losses(reversal of impairment losses) Disposals Cumulative translation adjustment Balance, end of year Overdue receivables Overdue receivables Less: Allowance for doubtful accounts		December 31	December 31
		2012 2011 $ 37,767 $ 37,767 91,248 92,853 129,015 130,620 17,621 16,777 $ 111,394 $ 113,843 December 31
		2012 2011 $ 4,117 $ - 136,232 142,682 370,982 312,531 119,196 - 15,116 12,695 23,786 134,702 669,429 602,610 149,476 160,967 316,720 306,105 $ 203,233 $ 135,538 2012 2011 $ 160,967 $ 203,227 (8,094) 27,502 - (69,762) (3,397) - $ 149,476 $ 160,967 December 31
		2012 $ 153,759 153,759 $ -	2011 $ 187,491 187,491 $ -

b. Idle assets, net
c. Overdue receivables

16. SHORT-TERM LOANS

SHORT-TERM LOANS
December 31 2012 2011 Unsecured bank loans - interest: 0.76%-1.86% in 2012 and 0.86%-8.24% in 2011 $ 7,010,394 $ 4,737,488 LONG-TERM BANK LOANS (INCLUDING CURRENT PORTION) December 31 2012 2011 Parent Company $ 15,700,000 $ 15,700,000 Lite-On Mobile Pte. Ltd. 6,969,605 6,053,601 Silitech Technology Corp. 1,005,000 1,809,000 Lite-On Japan Ltd. 489,890 602,923 Silitech Technology (Su Zhou) Co., Ltd. 203,307 302,913 24,367,802 24,468,437 Less: Current portion of long-term bank loans 4,411,168 1,173,473 $ 19,956,634 $ 23,294,964		December 31
		2012 $ 15,700,000 6,969,605 1,005,000 489,890 203,307 24,367,802 4,411,168 $ 19,956,634	2011 $ 15,700,000 6,053,601 1,809,000 602,923 302,913 24,468,437 1,173,473 $ 23,294,964

17. LONG-TERM BANK LOANS (INCLUDING CURRENT PORTION)

a. As of December 31, 2012 and 2011 the Parent Company had four long-term bank loans with contract terms between September 23, 2008 and October 19, 2016. The floating interest rate (1.518% to1.694% and 1.48% to 1.661% as of December 31, 2012 and 2011, respectively) payable monthly or quarterly. These loans should be repaid in three, five or eight installments or at lump sum on loan maturity.

On September 23, 2008, the Parent Company signed the contract for a five-year syndicated loan with Citibank and 14 other financial institutions, and on May 16, 2011 changed the contract period to seven years from 2008. The repayment period is between September 23, 2008 and September 22, 2015. The credit line is NT$15 billion, consisting of:

1) NT$12 billion, which is a refinancing of existing credit lines to improve financial structure and which should be used as a medium-term loan but may not be used on a revolving basis; and
2) NT$3 billion, which is for supporting operations and may be used on a revolving basis.

The principal of this syndication loan should be repaid in five semiannual installments from September 23, 2013, and the interest rate is the 90-day Taiwan subprime commercial paper interest rate plus 55 points.

Under the syndicated loan agreement, the Parent Company should maintain certain financial ratios based on the most recent semiannual or annual consolidated financial statements. As of December 31, 2012 and 2011, the Parent Company was in compliance with all of the loan covenants.

b. Lite-On Mobile Pte. Ltd. had a syndicated loan with Citibank, with a contract term from April 29, 2011 to April 29, 2016. The floating interest rates were 0.908% to 1.0968% and 1.625% to 2.2% as of December 31, 2012 and 2011, respectively; principal repayable from April 29, 2014 in five semiannual installments.

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This contract is a five-year syndicated loan of US$200 million and was signed with Citibank and 14 other financial institutions (the endorsements and guarantees were provided by the Parent Company). As of December 31, 2012 and 2011, Lite-On Mobile Pte. Ltd. had used all of the credit line of the syndicated loan.

c. Silitech Technology Co., Ltd. entered into a NT$3 billion syndicated loan with Taiwan Landbank, with a contract term from March 16, 2009 to March 16, 2014. This loan was obtained for the purpose of supporting operations and consummating the acquisition. As of December 31, 2012 and 2011, Silitech Technology Corporation had used NT$2.01 billion of the credit line of the syndicated loan, with interest rates of 1.7061% and 1.6712%, respectively, and principal repayable from December 16, 2011 in 10 quarterly installments.
d. As of December 31, 2012, Lite-On Japan Ltd. had 23 long-term bank loans, with contract terms from January 18, 2007 to February 29, 2016, with interest rate of 1.06% to 1.75% and principal repayable on specified due dates.
As of December 31, 2011, Lite-On Japan Ltd. had 18 long-term bank loans, with contract terms from January 18, 2007 to February 29, 2016, with interest rate of 1.16% to 1.75% and principal repayable on specified due dates.
c. Lite-On Mobile Sweden AB leased machinery and equipment under capital leases valid from January 1, 2009 to January 15, 2013. The terms of these leases were between two and four years, with 3.63% to 7.66% interest rate.
d. The Parent Company leased machinery and equipment under capital leases valid from September 1, 2009 to June 1, 2013. The terms of these leases were between 3 and 5 years, with 15.6% interest rate. The payments of these leases were between $42 thousand and $120 thousand. The ownership of the leased assets will be transferred to the Parent Company at the end of the lease term.
e. Beijing Lite-On Mobile Electronic and Telecommunication Components Co., Ltd. leased buildings under capital leases valid from January 1, 2003 to December 31, 2012. Thesane leases were for 10 years, with 4.24% interest rate.
f. Lite-On Mobile India Private Limited leased machinery and equipment under capital leases valid from September 15, 2009 to April 18, 2013. The terms of these leases were between three and five years, with 10.24% interest rate. In September 2012, Lite-On Mobile India Private Limited fully repaid this loan before the end of the mature date.

19. PENSION PLAN

e. Silitech Technology (Su Zhou) Co., Ltd. entered into a US$10 million long-term bank loan with Taipei Fubon Bank, with contract term from August 27, 2010 to August 27, 2013. The floating interest rates were 1.0615% and 1.26806% as of December 31, 2012 and 2011, respectively; principal is amortized semiannually and repaid at US$3,000 thousand for each of the first two installments and at US$4,000 thousand on the third repayment. As of December 31, 2012 and 2011, Silitech Technology (Su Zhou) Co., Ltd. had used all of the credit line of the loan.

18. OBLIGATIONS UNDER CAPITAL LEASES

OBLIGATIONS UNDER CAPITAL LEASES
Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Lite-On Mobile Oyj (formerly Perlos Oyj) Lite-On Mobile Sweden AB Parent Company Beijing Lite-On Mobile Electronic and Telecommunication Components Co., Ltd. Lite-On Mobile India Private Limited. Less: Current portion of long-term capital lease liabilities		December 31
		2012 $ 291,839 1,470 918 453 - - 294,680 62,381 $ 232,299	2011 $ 355,986 2,048 1,612 826 40,064 290 400,826 84,360 $ 316,466

a. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. leased buildings, machinery and equipment under capital leases valid from January 1, 2007 to December 31, 2016. The terms of these leases were between 3 and 10 years, with 7.11% interest rate. The building, machinery and equipment can be bought at a bargain purchase price at the end of the lease term.

The Parent Company, Lite-On IT Corp., Silitech Technology Corp., Lite-On Automotive Corp., Li Shin International Enterprise Corp., Logah Technology Co., Ltd., Leotek Electronics Corp. and Philips & Lite-On Digital Solutions Corp. have pension plans for all regular employees, which provide benefits based on length of service and average basic pay for the six months before retirement.

The Parent Company, Lite-On IT Corp., Silitech Technology Corp., Lite-On Automotive Corp., Li Shin International Enterprise Corp., Logah Technology Co., Ltd., Leotek Electronics Corp. and Philips & Lite-On Digital Solutions Corp. contribute monthly an amount equal to 2%, 3%, 2.5%, 2%, 2%, 4%, 2% and 3%, respectively, of salaries and wages to a pension fund, which is administered by the employees’ pension fund committees and deposited in the Bank of Taiwan in the committee’s name.

Other information on the defined benefit plan is summarized as follows:

a. Components of net pension costs:

Components of net pension costs:
Service cost Interest cost Expected return on plan assets Amortization of unrecognized net loss (gain) Curtailment gain Amortization of unrecognized net transition obligation Net pension costs		December	31
		2012 $ 19,313 20,449 (18,982) 1,183 (18,118) 1,297 $ 5,142	2011 $ 17,819 23,019 (21,700) (9,622) - 1,297 $ 10,813

b. Lite-On Mobile Oyj (formerly Perlos Oyj) leased machinery and equipment under capital leases valid from July 1, 2009 to September 30, 2015. The terms of these leases were between three and four years, with 5.00% interest rate.

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b. Reconciliation of the fund status of the plan and accrued pension cost:

Benefit obligation Vested benefit obligation Non-vested benefit obligation Accumulated benefit obligation Additional benefits based on future salaries Projected benefit obligation Fair value of plan assets Funded status Unrecognized net transition obligation (asset) Unrecognized net loss (gain) Contribution of accrued pension cost Additional liability Accrued pension cost c. Actuarial assumptions: Discount rate used in determining present values Future salary increase rate Expected rate of return on plan assets d. Contributions to the fund e. Payments from the fund		December 31	December 31
		2012 2011 $ (357,487) $ (220,277) (618,678) (593,708) (976,165) (813,985) (385,889) (354,444) (1,362,054) (1,168,429) 1,092,620 1,087,028 (269,434) (81,401) 6,723 (613) 123,073 (28,120) (18,616) (24,335) (17,329) (8,699) $ (175,583) $ (143,168) December 31
		2012 1.30%-3.56% 2.00%-5.00% 1.30%-3.69% $ 21,506 $ 20,374	2011 1.60%-5.25% 2.00%-3.50% 1.60%-2.25% $ 22,298 $ 22,699

Based on the Labor Pension Act (the “Act”), the rate of monthly contributions by the Parent Company and subsidiaries - Lite-On IT Corp., Silitech Technology Corp., Lite-On Automotive Corp., Li Shin International Enterprise Corp., Logah Technology Co., Ltd., Leotek Electronics Corp., Lite-On Integrated Services Inc. and Philips & Lite-On Digital Solutions Corp. - to employees’ individual pension accounts is at 6% of monthly wages and salaries. For these contributions, the Parent Company and subsidiaries recognized pension costs of $180,706 thousand in 2012 and $166,422 thousand in 2011.

Some consolidated entities, which are mainly in investments, have either very few or even no staff. These companies have no pension plans and thus do not contribute to pension funds and do not recognize pension costs.

Except for these companies, the remaining companies all contribute to pension funds and recognize pension costs based on local government regulations. The pension expenses recognized were $444,244 thousand in 2012 and $361,783 thousand for 2011.

On April 3, 1995, GVC Corp. issued 5,000 units of GDRs on the London Stock Exchange. These GDRs represented 25,000 thousand common shares of GVC Corp., which were assumed by the Corporation as a result of a merger, with the Parent Company as the survivor entity. As of November 4, 2002, the outstanding GDRs were 7,627 thousand units, or 38,136 thousand common shares of GVC Corp. For merger purposes, these GDRs were exchanged for the Parent Company’s 1,478 thousand marketable equity securities, which represented the Parent Company’s 14,781 thousand common shares.

As of December 31, 2012, the outstanding marketable equity securities were 5,201 thousand units, representing 52,006 thousand common shares of the Parent Company. The rights and obligation of security holders are the same as those of common shareholders, except for voting rights. As of December 31, 2012, the unredeemed GDRs amounted to 984 thousand units.

Employee Stock Option Plans

In December 2007, there was a grant of 30,000 options to qualified employees of the Parent Company and its subsidiaries. Each option entitles the holder to subscribe for one thousand common shares of the Parent Company when exercisable. The options granted are valid for 6 years and exercisable at certain percentages after the second, the third, and the fourth anniversary year from the grant date. The options were granted at an exercise price equal to the closing price of the Parent Company’s common shares listed on the Taiwan Stock Exchange on the grant date. For distributing cash dividends and stock dividends and for capital reduction (besides writing off treasury stocks), the exercise price and the number of options are adjusted accordingly.

Other information on the employee stock option plans is as follows:

Balance, beginning of year Options forfeited Options exercised Balance, end of year Weighted-average fair value of options granted (in thousands)	2012 Number of Options Weighted- average Exercise Price (NT$) 19,819 $38.0 (1,329) 35.5-38.0 (766) 35.5-38.0 17,724 35.5 $ 16.964	2011
		Number of Options Weighted- average Exercise Price (NT$) 20,655 $41.4 (836) 38.0-41.4 - 38.0-41.4 19,819 38.0 $ 16.964

The weighted-average remaining lives of the outstanding and exercisable options as of December 31, 2012 and 2011 were one and two years, respectively.

20. SHAREHOLDERS’ EQUITY

On September 25, 1996, the Parent Company issued 4,900 thousand units of global depositary receipts (GDRs) on the London Stock Exchange. These GDRs represented 49,000 thousand common shares of the Parent Company.

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Compensation cost recognized under the intrinsic value method was $0 thousand for the years ended December 31, 2012 and 2011, respectively. Had the Parent Company recognized compensation cost based on the fair value method using the binomial option pricing model, the assumptions and pro forma result of the Parent Company for 2012 and 2011 would have been as follows:

Assumptions Risk-free interest rate Expected life Expected volatility Expected dividend yield Net income As reported Pro forma Basic after income tax earnings per share (New Taiwan dollars) As reported Pro forma Diluted after income tax earnings per share (New Taiwan dollars) As reported Pro forma	Years Ended December 31
	2012 2011 2.5101% 2.5101% 1 year 2 year 40.07% 40.07% 7.07% 7.07% $ 7,534,860 thousand $ 7,225,925 thousand $ 7,534,860 thousand $ 7,194,117 thousand $3.33 $3.21 $3.33 $3.19 $3.28 $3.15 $3.28 $3.13

Capital Surplus

Under the Company Law, capital surplus from long-term investments under the equity method may not be used for any purpose. However, capital surplus may be used to offset a deficit. In addition, the capital surplus from shares issued in excess of par (additional paid-in capital from issuance of common shares, conversion of bonds, capital surplus from merger, and treasury stock transactions) can be capitalized, which however is limited to a certain percentage of the Parent Company’s paid-in capital.

The capital surplus from long-term investments, employee stock options and conversion options may not be used for any purpose.

Appropriation of Earnings and Dividend Policy

To ensure the availability of cash for the Parent Company’s present and future expansion plans and to meet shareholders’ cash flow requirements, the Parent Company prefers to distribute more stock dividends. In principle, cash dividends are limited to 10% of total dividends distributed.

The Parent Company’s Articles of Incorporation provide that the annual net income, less any deficit, and 10% legal reserve as well as special reserve equal to the debit balances of the shareholders’ equity accounts, together with the distributable unappropriated earnings of prior years, can be retained partially on the basis of operating requirements. The remainder should be distributed as follows:

The bonus to employees and the remuneration to directors recognized were estimated on the basis of net income at 14.18% and 0.82%, respectively, for 2012, and 13.8% and 0.9%, respectively, for 2011. Material differences between these estimates and the amounts proposed by the Board of Directors in the following year are adjusted in the year of the proposal. If the actual amounts subsequently resolved by shareholders differ from the proposed amounts, the differences are recorded in the year of the shareholders’ resolution as a change in accounting estimate. If stock bonuses are resolved to be distributed to employees, the number of shares is determined by dividing the amount of bonuses by the closing price (after considering the effect of cash and stock dividends) of the shares on the day preceding the shareholders’ meeting.

These appropriations should be resolved by the shareholders in the following year and given effect to in the financial statements of that year.

On June 19, 2012 and June 22, 2011, the shareholders of the Parent Company resolved the appropriation of earnings and dividend per share in 2011 and 2010, respectively, as follows:

Legal reserve Stock dividends Cash dividends	Appropriation of Earnings 2011 2010 $ 722,592 $ 898,646 113,972 112,711 5,174,335 6,469,637	Dividend Per Share (Dollars)
		2011 2010 $ $ - 0.05 0.05 2.27 2.87

The sharing with employees of profits of $819,420 thousand in cash and $156,080 thousand in stock as well as the remuneration to directors of $61,420 thousand for 2011 was approved in the shareholders’ meeting of Parent Company on June 19, 2012. The amount of the stock bonus to employees of 4,421 thousand shares was determined at the closing price of the Parent Company’s common shares (after considering the effect of dividends) of the day immediately preceding the shareholders’ meeting. The resolved amounts of the profit sharing to employees and bonus to directors were consistent with the resolutions of meeting of the Board of Directors of Parent Company held on April 25, 2012 and same amount had been charged against earnings of 2011.

The appropriation of the 2012 earnings was proposed in the meeting of the Parent Company’s Board of Directors held on March 29, 2013. The appropriations and dividends per share were as follows:

Legal reserve Special capital reserve Cash dividends Stock dividends	Appropriation of Earnings 2012 $ 753,486 689,913 5,400,265 114,899	Dividend Per Share (Dollars)
		2012 $2.35 0.05

a. Bonus to employees: At least 1%.
b. Bonus to directors: 1.5% or less
c. Others, as dividends.

The Parent Company’s Board of Directors also resolved to appropriate profit sharing to employees of $897,799 thousand in cash and $171,010 in stock as well as the remuneration to directors of $61,420 for 2012. There was no significant difference between the Board’s proposed amounts and the amounts charged against the 2012 earnings.

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The proposed appropriation of earnings, profit sharing to employees and bonus to directors for 2012 will be presented to the shareholders at their meeting on June 19, 2013 (expected). Related information may be accessed through the Market Observation Post System through the Web site of the Taiwan Stock Exchange.

Under the regulations of the Securities and Futures Bureau, the Parent Company should appropriate a special reserve equivalent to the debit balances, as of the balance sheet date, in the shareholders’ equity account, except for treasury stock and deficit. The special reserve will be distributable when the debit balances in the shareholders’ equity are reversed.

Under the regulations of the Securities and Futures Bureau and the Financial Supervisory Commission under the Executive Yuan of the ROC, the companies listed on the Taiwan Stock Exchange Corporation (TSEC) and the GreTai Securities Market (GTSM) should have a special reserve to which an amount equal to the book value in excess of the market value of treasury shares held by subsidiaries should be transferred from unappropriated earnings at the proportion owned by the Parent Company. This special reserve may be reversed to the extent of the decrease in the net debit balance. If the market value of the stock rises thereafter, the TSEC/GTSM listed companies can reverse the special reserve to as much as the amount of reversal of valuation on the basis of the proportionate share (please refer to Note 21).

Under the Integrated Income Tax System, which took effect on January 1, 1998, ROC resident shareholders are allowed a tax credit for the income tax paid by the Parent Company on earnings generated since January 1, 1998. An imputation credit account (ICA) is maintained by the Parent Company for such income tax and the tax credit allocated to each shareholder. The maximum credit available for allocation to each shareholder cannot exceed the ICA balance on the dividend distribution date.

In 2012 and 2011, the movements of unrealized gain or loss on the Parent Company’s financial instruments were as follows:

Recognized in
Shareholders’
Equity
Equity-method
Investments
Recognized in
Shareholders’
Equity
Year ended December 31, 2012
Balance, beginning of year
$ (38,540)
$ (334,051)

Increase (decrease) in 2012
271,510
(280,660)
Transferred to profit or loss

(295,694)

-

Balance, end of year
$ (62,724)
$ (614,711)

Year ended December 31, 2011
Balance, beginning of year
$ 1,097,107
$ 332,886

Decrease in 2011
(1,041,168)
(666,937)

Transferred to profit or loss

(94,479)

-

Balance, end of year
$ (38,540)
$ (334,051)

Total
$ (372,591)
(9,150)
(295,694)
$ (677,435)
$ 1,429,993
(1,708,105)
(94,479)
$ (372,591)

21. TREASURY STOCK (COMMON STOCK)

TREASURY STOCK (COMMON STOCK)
Reason for Repurchase 2012 Parent Company’s shares held by direct and indirect subsidiaries reclassified from long-term stock investments to treasury stock For transfer to employees 2011 Parent Company’s shares held by direct and indirect subsidiaries reclassified from long-term stock investments to treasury stock For transfer to employees		Unit: In Thousand Shares Changes in Fiscal Year
	Beginning of Year 27,840 30,565 58,405 27,701 30,565 58,266	Increase Decrease 139 - - 30,565 139 30,565 139 - - - 139 -	End of Year 27,979 - 27,979 27,840 30,565 58,405

At the end of 2012 and 2011, the Parent Company transferred $1,104,073 thousand from available-for-sale financial assets of direct and indirect subsidiaries to treasury stock proportionate to its ownership. Both the carrying value and market value of this treasury stock were $1,094,958 thousand in 2012 and $1,013,359 thousand in 2011.

In their meeting on August 27, 2008, the Parent Company’s Board of Directors approved a plan to repurchase up to 30,000 thousand shares listed on the Taiwan Stock Exchange (TSE) between September 28, 2008 and October 27, 2008, with the buyback price ranging from NT$20.48 to NT$43.60. On October 28, 2008, the Parent Company’s Board of Directors approved the repurchase of up to 40,000 thousand shares listed on the TSE between October 29, 2008 and December 28, 2008, with the buyback price ranging from NT$13.00 to NT$37.10. The Parent Company bought back a total of 30,565 thousand shares during the repurchase periods and retired all these shares in January 2012.

Under the Securities and Exchange Law, the maximum number of treasury stock purchased should not exceed 10% of the Parent Company’s total outstanding shares, and the aggregate purchase cost should not exceed the sum of retained earnings, additional paid-in capital in excess of par value and realized capital surplus. The treasury stock cannot be pledged or exercise shareholders’ rights. Treasury stock should be reissued within three years from the reacquisition date. Shares not transferred within the time limit will be deemed unissued, and the Parent Company should register with the authorities the change in the number of shares.

Under the Securities and Exchange Law, the Parent Company shall neither pledge treasury stock nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote. The subsidiaries holding treasury stock, however, retain shareholders’ rights, except the rights to participate in any share issuance for cash and to vote.

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22. INCOME TAX

a. Reconciliation of income tax expense based on income before income tax at the statutory rate and income tax expense was as follows:

Income tax expense on income before income tax using the statutory rate Deduct tax effects of: Permanent differences Temporary differences Unappropriated earnings tax rate (10%) Less: Investment tax credits Loss carryforwards (used) Income tax expense - current The components of income tax expense are shown below: Income tax expense - current Deferred income tax Prior year’s adjustment Income tax expense	2012 $ 3,384,882 (690,992) (53,806) 225,469 (237,316) 80,625 $ 2,708,862 2012 $ 2,708,862 53,806 (311,158) $ 2,451,510	2011 $ 3,853,554 (803,087) 385,319 190,647 (384,806) (4,486) $ 3,237,141 2011 $ 3,237,141 (385,319) (100,145) $ 2,751,677

b. The components of income tax expense are shown below:
c. The components of deferred income tax assets and liabilities were as follows:

Current Deferred income tax assets Unrealized sales return and allowance Allowance for loss on inventories Investment tax credits Accrued warranty expense Unrealized sales profit Loss carryforwards Foreign exchange loss, net Excess allowance for doubtful accounts Unrealized loss on financial instruments Others Valuation allowance Deferred income tax liabilities Unrealized gain on financial instruments Deferred income tax assets, net		December 31	December 31
		2012 $ 165,334 161,854 153,535 127,404 106,797 103,388 36,740 19,156 1,483 296,616 1,172,307 (58,638) 1,113,669 (3,361) $ 1,110,308	2011 $ 76,462 210,972 180,021 159,255 58,556 29,796 55,422 12,800 - 203,945 987,229 (35,561) 951,668 - $ 951,668 (Continued)

Noncurrent Deferred income tax assets Accumulated equity in the net loss of investees Impairment loss on financial and fixed assets Loss carryforwards Excess provisions for pension costs Excess allowance for doubtful accounts Cumulative translation adjustments Investment tax credit Unrealized loss on financial instruments Others Valuation allowance Deferred income tax liabilities Accumulated equity in the net gain of foreign investees Unrealized amortization of goodwill Others Deferred income tax liabilities, net		December 31	December 31
		2012 $ 879,975 572,053 391,063 83,136 42,552 9,208 1,598 - 1,061 1,980,646 (914,937) 1,065,709 (1,587,279) (301,814) (19,864) (1,908,957) $ (843,248)	2011 $ 543,620 446,181 472,889 57,151 53,200 - 288,362 82,294 120,882 2,064,579 (1,152,680) 911,899 (1,315,078) (254,411) (90,032) (1,659,521) $ (747,622)

The income tax rate used by the Parent Company and its subsidiaries in recognizing deferred income tax was 17% in 2012 and 2011. The income tax rate of other subsidiaries used in recognizing deferred income tax was based on legal tax rate.

Income tax returns through 2010 have been examined by the tax authorities. The Parent Company disagreed with the tax authorities’ assessment of its 2007 to 2010 tax returns and had applied for a reexamination. Nevertheless, the Parent Company made a provision for the income tax assessed.

d. The information on investment tax credit is as follows:

Legislation Deduction Item Statute for Upgrading Research and development cost and professional training expenses Industries Research and development cost and professional training expenses	Unused Tax Credits Tax Credit Ending Expiry Amount Balance Year $ 159,247 $ - 2012 195,663 153,267 2013 $ 354,910 $ 153,267

The integrated income tax information is as follows:

Balance of the imputation credit account The Parent Company		December 31	December 31
		2012 $ 494,075	2011 $ 514,845

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The estimated and actual creditable tax ratios of the Parent Company for the distribution of earnings of 2012 and 2011, respectively, were 4.94% and 5.43%, respectively.

The unappropriated earnings as of December 31, 2012 and 2011 did not include earnings generated up to December 31, 1997.

23. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSE

Employment Salary Insurance Pension Others Depreciation Amortization			2012	Total $ 18,511,378 1,511,776 630,092 1,625,010 22,278,256 5,838,778 1,359,208 $ 29,476,242			2011
		Included in Cost of Sales $ 10,152,943 853,144 285,939 1,004,334 12,296,360 5,119,985 645,394 $ 18,061,739	Included in Operating Expenses $ 8,358,435 658,632 344,153 620,676 9,981,896 718,793 713,814 $ 11,414,503			Included in Cost of Sales $ 10,354,612 788,835 239,968 1,111,337 12,494,752 4,828,167 490,755 $ 17,813,674	Included in Operating Expenses $ 9,546,449 660,775 299,050 615,041 11,121,315 860,544 803,967 $ 12,785,826	Total $ 19,901,061 1,449,610 539,018 1,726,378 23,616,067 5,688,711 1,294,722 $ 30,599,500

Depreciation expenses for idle assets and assets leased to others of $11,459 thousand and $4,583 thousand, respectively, (included in nonoperating expenses - other expenses), were not included in the above depreciation expenses as of the years ended December 31, 2012 and 2011.

24. EARNINGS PER SHARE

The numerators and denominators used in computing earnings per share (EPS) were as follows:

2012 Basic consolidated EPS Consolidated net income The effect of potential common stock with dilutive effect Bonus to employees Common stock-based compensation Diluted consolidated EPS Net income of common shareholders plus the effect of potential common stock Pro forma information on the assumption that the Parent Company’s shares held by its direct and indirect subsidiaries were not treated as treasury stocks Basic consolidated EPS Consolidated net income Effect of potential common stock with dilutive effect Bonus to employees Common stock-based compensation Diluted consolidated EPS Net income of common shareholders plus the effect of potential common stock		Shares Amounts (Numerator) (Denominator) Pretax After-tax (Thousands) $ 7,589,031 $ 7,534,860 2,264,519 - - 34,171 - - - $ 7,589,031 $ 7,534,860 2,298,690 $ 7,644,884 $ 7,590,713 2,292,498 - - 34,171 - - - $ 7,644,884 $ 7,590,713 2,326,669		Earnings Per Share (Dollars)
		Pretax $ 7,589,031 - - $ 7,589,031 $ 7,644,884 - - $ 7,644,884		Pretax After-tax $ 3.35 $ 3.33 $ 3.30 $ 3.28 $ 3.33 $ 3.31 $ 3.29 $ 3.26 (Continued)

2011 Basic consolidated EPS Consolidated net income The effect of potential common stock with dilutive effect Bonus to employees Common stock-based compensation Diluted consolidated EPS Net income of common shareholders plus the effect of potential common stock Pro forma information on the assumption that the Parent Company’s shares held by its direct and indirect subsidiaries were not treated as treasury stocks Basic consolidated EPS Consolidated net income Effect of potential common stock with dilutive effect Bonus to employees Common stock-based compensation Diluted consolidated EPS Net income of common shareholders plus the effect of potential common stock		Shares Amounts (Numerator) (Denominator) Pretax After-tax (Thousands) $ 7,535,173 $ 7,225,925 2,254,414 - - 41,042 - - - $ 7,535,173 $ 7,225,925 2,295,456 $ 7,605,456 $ 7,296,208 2,282,254 - - 41,042 - - - $ 7,605,456 $ 7,296,208 2,323,296		Earnings Per Share (Dollars)
		Pretax $ 7,535,173 - - $ 7,535,173 $ 7,605,456 - - $ 7,605,456		Pretax After-tax $ 3.34 $ 3.21 $ 3.28 $ 3.15 $ 3.33 $ 3.20 $ 3.27 $ 3.14 (Concluded)

If the Parent Company presumes that the partial amount of the bonus to employees will be settled in shares, these potential shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of bonus to employees by the closing price (after consideration of the dilutive effect of dividends) of the common shares on the balance sheet date. The dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the shares for employee bonuses are resolved in the shareholders’ meeting in the following year.

25. RELATED-PARTY TRANSACTIONS

Significant transactions with related parties are summarized below and in the accompanying Tables 1 and 2:

a. The price of the Parent Company’s and subsidiaries’ sales to Lite-On Semiconductor Corp. in 2012 and 2011 was calculated at cost plus specific profit. Except for these sales, the sales terms between the Parent Company and its related parties were normal.

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b. The cost of the Parent Company’s and subsidiaries’ purchases from Lite-On Semiconductor Corp. in 2012 and 2011 was based on cost plus specific profit. Except for these purchases, the purchase terms between the Parent Company and its related parties were normal.
c. Operating lease contracts with related parties were based on market prices and made under normal terms in 2012 and 2011.
d. Compensation of directors, supervisors and management personnel:

Bonus Salaries Incentives Special compensation		Years Ended December 31	Years Ended December 31
		2012 $ 490,746 172,346 61,996 6,599 $ 731,687	2011 $ 480,391 200,610 68,715 7,393 $ 757,109

26. MORTGAGED OR PLEDGED ASSETS - NONCURRENT

MORTGAGED OR PLEDGED ASSETS - NONCURRENT
Mortgaged or pledged assets - noncurrent Time deposits Demand deposits		December 31
		2012 $ 90,880 11,680 $ 102,560	2011 $ 94,607 13,500 $ 108,107

Mortgaged or pledged assets - noncurrent included the guarantee deposits of Lite-On IT Corporation, Logah Electronics (Su Zhou) Co., Ltd. and Lippo Electronics (Su Zhou) Co., Ltd. provided to a supplier and the export customs agency for shipment clearance in advance of customs duty payments.

c. In October 2009, CMP Consulting Service, Inc. and KI, Inc. filed an antitrust group lawsuit against Lite-On IT and its subsidiaries - Philips & Lite-On Digital Solutions Corporation, Philips & Lite-On Digital Solutions USA, Inc. and other companies with related businesses - with a court in California. Also in October 2009, Aaron Deshaw also filed an antitrust lawsuit against Lite-On IT and the foregoing subsidiaries with a court in Oregon. In 2010, Aaron Wagner, The Stereo Shop, David Carney, Jr. Tina Corse, Cynthia R. Rall and Richard R. Rall also filed an antitrust group lawsuit against Lite-On IT and its subsidiaries - Philips & Lite-On Digital Solutions Corporation, Philips & Lite-On Digital Solutions USA, Inc. and other companies with related businesses. Lite-On IT assigned lawyers to deal with these lawsuits. In 2012, although the outcome of the proceedings had not been determined, Lite-On IT accrued a reasonable amount in case of a loss on this lawsuit. Lite-On IT will continue to recognize the losses based upon reasonable estimation of the lawsuit quarterly until the settlement of this lawsuit.
d. In April 2010, petitioner Carlos Fogelman filed a motion for authorization to institute class action antitrust proceedings against Lite-On IT and the foregoing subsidiaries before the Superior Court of Quebec in the district of Montreal. In June 2010, the Fanshawe College of Applied Arts and Technology filed a statement of claim in Ontario. In September 2010, Neil Godfrey filed a statement of claim with the Superior Court of British Columbia. All plaintiffs filed the antitrust group lawsuit against Lite-On IT Corporation and its subsidiaries - Philips & Lite-On Digital Solutions USA, Inc. and other companies with related businesses. Lite-On IT assigned lawyers as its representative in these lawsuits. These cases were still in the preliminary, stage, and Lite-On IT could not estimate the outcome of the case or amount of possible loss as of March 29, 2013, the date the board of directors approved the accompanying financial statements and authorized the issue of these statements.
e. In April 2011, Orinda Intellectual Properties USA Holding Group, Inc. instituted class action proceedings against Lite-On IT Corp., Lite-On Americans, Inc. and other companies with related businesses, with the United States District Court for the Northern District of California, alleging infringement of a single patent on Blue-ray discs. On September 9, 2011, FastVDO, LLC filed a complaint with the U.S. District Court for the District of Delaware against Lite-On Sales & Distribution Inc. and other companies with related business, alleging that the defendants infringed its patent. Lite-On IT assigned lawyers as its representative in these lawsuits. In October 2012, FastVDO, LLC negotiated a settlement agreement, under which claims and counterclaims were dismissed without prejudice. The judge entered the dismissal order (“Stipulated Motion for Dismissal without Prejudice Order”). However, the other cases were still in the preliminary stage, and Lite-On IT could not estimate the outcome of the case or amount of possible loss as of March 29, 2013, the date the board of directors approved the accompanying financial statements and authorized the issue of these statements.

27. SIGNIFICANT COMMITMENTS AND CONTINGENT LIABILITIES

a. On September 8, 2010, INPRO II Licensing Sarl (INPRO) filed a lawsuit with the Superior Court of California in the County of San Francisco and charged the Parent Company with breach of contract. INPRO alleged that the Parent Company incurred a debt on patent rights obtained from Hitachi Limited. INPRO also claimed it had assumed Hitachi’s rights to payments for patent use. The Parent Company dismissed INPRO’s claims and filed a lawsuit against INPRO, alleging that the Parent Company had no patent obligations. As of March 29, 2013, the date the board of directors approved the financial statements and authorized the issue of these statements, this case was still under litigation. Thus, the Parent Company could not determine the possible results and impact of this case.
f. The European Commission issued a Statement of Objection to some CD-ROM factories to make antitrust investigations in the third quarter of 2012. When Lite-On IT Corp. (“Lite-On IT”) received in July 2012 the investigation notice from the European Commission, it stated that it would cooperate with the European Commission in the investigation. Lite-On IT has assigned lawyers to deal with the lawsuits. As of March 29, 2013, the date the board of directors approved the accompanying financial statements and authorized the issue of these statements, these cases were still in the preliminary stage, and Lite-On IT could not estimate the outcome of the case or amount of possible loss.
b. In October 2009, the U.S. Department of Justice (DOJ) announced that it would make antitrust investigations of CD-ROM factories. Lite-On IT Corp. (“Lite-On IT”) received an investigation notice from the DOJ. Lite-ON IT stated it would cooperate with the DOJ in the investigation. This case was still in the preliminary stage, and Lite-On IT could not estimate the outcome of the case or range of possible loss as of March 29, 2013, the date the board of directors approved the accompanying financial statements and authorized the issue of these statements.

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28. SIGNIFICANT SUBSEQUENT EVENTS

Considering the industry development trend and future strategic direction as well as the need to continue improving operating efficiency and core competencies, the Parent Company’s board of directors passed a resolution on January 30, 2013 to merge with Lite-On IT Corporation (“Lite-On IT”). The Parent Company launched a tender offer through a wholly owned subsidiary in Taiwan, Baoyuan Corp. (“Baoyuan”), to acquire all, or a major part of, the outstanding common shares of Lite-On IT. The public tender offer period was from January 31, 2013 to March 15, 2013, and price per share was fixed at NT$32.75. After completion of the public tender offer, the Parent Company had a short-form merger with Baoyuan. The Parent Company was the survivor entity. The board of directors resolved March 25, 2013 as the merger effective date. After that, the Parent Company will issue redeemable preferred shares as consideration to exchange back all of remainder shares of Lite-On IT held by minority shareholders. Lite-On IT will become the Parent Company’s wholly-owned subsidiary.

29. ADDITIONAL DISCLOSURES

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Parent Company and its investees:
1) Financing provided: Note 2 to the financial statements
2) Endorsement/guarantee provided: Note 2 to the financial statements
3) Marketable securities held: Note 2 to the financial statements
4) Marketable securities acquired and disposed of at costs or prices of at least $100 million or 20% of the capital stock: Note 2 to the financial statements
5) Acquisition of individual real estates at costs of at least $100 million or 20% of the capital stock: Note 2 to the financial statements
6) Disposition of individual real estates at least $100 million or 20% of the capital stock: Note 2 to the financial statements
7) Total purchase from or sale to related parties amounting to at least $100 million or 20% of the capital stock: Note 2 to the financial statements
8) Receivables from related parties amounting to at least $100 million or 20% of the capital stock: Note 2 to the financial statements
9) Names, locations, and related information of investees on which the Parent Company exercises significant influence: Note 2 to the financial statements
10) Derivative financial transactions: Note 30 to the financial statements
b. Investment in Mainland China
1) Investment in Mainland China: Note 2 to the financial statements
c. Significant direct or indirect transactions with the investee, prices, payment terms, and unrealized gain or loss: Note 2 to the financial statements.

30. FINANCIAL INSTRUMENTS

a. Fair values of financial instruments were as follows:

	December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Techniques $ 10 $ - 1,032,235 - - - - 4,411,168 - 62,381 - 19,956,634 - 232,299 - 101,563 - - - 340 - 3,874 - 3,208 - 80		2011
Carrying Amount $ 10 1,032,235 1,122,230 4,411,168 62,381 19,956,634 232,299 101,563 - 340 3,874 3,208 80		Carrying Amount $ 9 2,783,354 1,487,972 1,173,473 84,360 23,294,964 316,466 165,225 6,531 - 10,380 - -	Fair Value
			Quoted Estimate Based on Valuation Market Techniques $ 9 $ - 2,783,354 - - - - 1,173,473 - 84,360 - 23,294,964 - 316,466 - 165,225 - 6,531 - - - 10,380 - - - - (Continued)

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	December 31	December 31		December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Techniques $ - $ 1,049 - - - 305 - 705 - - - 357 - 81 - 243 - 3,225 - 15,348			2012 Fair Value Quoted Estimate Based on Valuation Market Techniques $ - $ 323 - 2,444 - 1,213 - - - 2,842 - - 1,752		2011
Carrying Amount $ 1,049 - 305 705 - 357 81 243 3,225 15,348		Carrying Amount $ 5,320 292 255 - 84 2,793 - 56,859 7,809 5,429	Carrying Amount $ 323 2,444 1,213 - 2,842 - 1,752		Carrying Amount $ - - 268 6,852 - 173 -	Fair Value
						Quoted Estimate Based on Valuation Market Techniques $ - $ - - - - 268 - 6,852 - - - 173 - - (Continued)

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	December 31	December 31
	2012 Fair Value Quoted Estimate Based on Valuation Market Techniques $ - $ 3,544 - - - - - - - - - 49		2011
Carrying Amount $ 3,544 - - - - 49		Carrying Amount $ - 1,597 133 9,430 9,417 362	Fair Value
			Quoted Estimate Based on Valuation Market Techniques $ - $ - - 1,597 - 133 - 9,430 - 9,417 - 362 (Concluded)

b. Methods and assumptions used in the determination of fair values of financial instruments
1) The carrying amounts of the following short-term financial instruments approximate their fair values because of their short maturities: Cash and cash equivalents, notes receivable, accounts receivable, accounts receivables from related parties, other receivable from related parties, other financial assets - current, short-term loans, notes and accounts payable, accrued expenses, accounts payables to related parties, other payable to related parties.
2) The carrying amounts of the refundable deposits and guarantee deposits received approximate their fair values due to the amount which will be received in the future approaches to the book value.
3) Fair values of the available-for-sale assets are based on their quoted prices in an active market. Fair values of derivatives are based on their quoted prices in an active market. For those derivatives with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions consistent with those generally used by other market participants to price financial instruments.
4) Financial assets carried at cost have no fair values because these are investments in unlisted stocks with no quoted market prices and determining their fair value entails an unreasonably high cost.
5) Fair value of long-term loans (included current portion of long-term debts) is estimated using the present value of future cash flows. The rate for long-term debts with interests of our company are all floating rate, its book value is the fair market value.
6) The fair value of finance lease receivables is estimated using the present value of future cash flows discounted by prevailing interest rates after taking into account risk premiums.
c. As of December 31, 2012 and 2011, financial assets exposed to fair value risk from interest rate fluctuation amounted to $37,870,445 thousand and $31,604,345 thousand, respectively, and financial liabilities amounted to $3,196,765 thousand and $400,826 thousand, respectively; financial assets exposed to cash flow risk from interest rate fluctuation amounted to $21,028,732 thousand and $22,239,941 thousand, respectively, and financial liabilities exposed to cash flow risk from interest rate fluctuation amounted to $28,476,111 thousand and $29,205,925 thousand, respectively.
d. The Parent Company recognized the increase of $271,510 thousand and decrease of $1,041,168 thousand in shareholders’ equity for the changes in fair value of available-for-sale financial assets on December 31, 2012 and 2011, respectively.
e. Financial risks
1) Market risk. The derivative financial instruments categorized as financial assets at fair value through profit or loss are mainly used to hedge exchange rate fluctuations of non-functional foreign currency-dominated stocks and sales. The market risk is not significant due to the gain or loss on derivatives will offset by the gain or loss on the exchange rate fluctuations of hedged items. The available-for-sale financial assets held by the cooperation and its subsidiaries are listed stocks. Thus, price fluctuations in the open market would result in changes in fair values of these stocks.
2) Credit risk. Credit risk represents the potential loss that would be incurred by the Parent Company and its subsidiaries if the counter-parties or other parties breach the financial instrument contracts. Thus, contracts with positive fair values on the balance sheet date are evaluated for credit risk. In addition, since the counter-parties to derivative financial transactions are reputable financial institutions, management believes its exposure to default by counter-parties is low.
3) Liquidity risk. For long-term equity-method investments and financial assets carried at cost, the Parent Company and its subsidiaries keep liquidity reserves, which are available on a short term. Additionally, the contracted forward rate is decided on the contract starting dates. Thus, the cash flow risk on forward contracts is low.
4) Cash flow hedge. The Parent Company’s liabilities with floating interest rate might be affected by changes in the market rate. Thus, future cash flows on those liabilities might fluctuate, exposing the Parent Company to cash flow risk. To hedge against this risk, the Parent Company entered into an interest rate swap contract with a bank to change the rate on its liabilities from floating to fixed. The cash flow hedge operating are deemed sufficient. As December 31, 2012 and 2011, the unrealized losses recognized in shareholders’ equity were amounted to $101,563 thousand and $165,225 thousand, respectively. Other information on the cash flow hedge transactions is summarized below.

	Financial Instruments Lite-On Technology Corp. Interest rate swap Interest rate swap	Nominal Float Fixed Settlement Date Principal Rate Rate Date Due Date December 31, 2012 $ 6,000,000 Note 1.895% Quarterly 2015.9.23 December 31, 2011 6,000,000 Note 1.895% Quarterly 2015.9.23

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Note: Based on the average rate for 90-day notes in Taiwan’s secondary market.

b. Geographic information

Hedged Items Medium- and long-term loans	Designated Hedging Instruments Expected Expected Period of FairValue Period of Realizing Financial Instruments December 31 Cash Gains or Designated 2012 2011 Flows Losses Interest rate swap $ (101,563) $ (165,225) 2008-2015 2008-2015
	Financial Instruments Designated Interest rate swap

31. SEGMENT INFORMATION

Segment information is provided to the Group’s chief operating decision maker for allocating resources to the segments and assessing their performance. The information focuses on every type of products sold or services provided. The Group’s segment information disclosed in accordance with Statement of Financial Accounting Standards No. 41 - “Operating Segments” is as follows:

Geographic information
Asia United States Europe Others		Sales to Other Than Consolidated Entities 2012 2011 $ 156,544,176 $ 154,903,644 23,806,841 27,978,551 20,539,434 27,332,288 15,156,559 20,305,610 $ 216,047,010 $ 230,520,093		Non-current Assets
		2012 $ 156,544,176 23,806,841 20,539,434 15,156,559 $ 216,047,010		2012 $ 53,541,586 467, 530 2,252,862 105,250 $ 56,367,228	2011 $ 57,368,325 751,759 1,106,351 113,646 $ 59,340,081

The geographic information is presented by billing regions. Noncurrent assets include properties, intangible assets and other assets.

c. Production information

a. Optoelectronics and Network: Designs and mass-manufactures of phone camera modules;
b. System Integration: Provides well-recognized integrated system solutions for the consumer electronics markets;
c. Optical Storage: Manufactures and sells CD-ROM, CD-RW, and DVD-ROM as well as more advanced products.

The Group also had other operating segments that did not exceed the quantitative threshold. These segments mainly engage in the LED Transit Modules, Automotive Electronics, and renewable energy and efficiency related technologies and products.

The Group uses net profit as the measurement for segment profit and the basis of performance assessment. There was no material inconsistency between the accounting policies of the operating segment and the accounting policies described in Note 2.

The Group’s operating segment information is as follows:

a. Industry financial information

The Group mainly engages in manufacturing optoelectronics and network, system integration, optical storage, LED transit modules, automotive electronics, renewable energy and efficiency-related technologies and products, etc.

d. Major customers representing at least 10% of gross sales

Customer A	Years Ended	December 31
	2012 Amount % $ 26,355,806 12	2011
		Amount % $ 29,256,995 13

32. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

(In Thousands of New Taiwan Dollars, Except Exchange Rate)

Industry financial information	(In Thousands of New Taiwan Dollars, Except Exchange Rate)	(In Thousands of New Taiwan Dollars, Except Exchange Rate)
Foundry IT Products Photoelectric Others Elimination Total 2012 Sales from external customers $ 68,369,257 $ 84,671,825 $ 50,462,897 $ 12,543,031 $ - $ 216,047,010 Sales among segments 1,395,417 2,251,655 8,276 275,674 (3,931,022 ) - Operating profit (loss) 2,988,461 6,210,560 2,672,385 (2,351,528 ) - 9,519,878 Segment assets 58,826,223 48,517,842 40,218,184 49,513,970 (1,878,053 ) 195,198,166 2011 Sales from external customers 69,193,782 87,760,960 61,258,454 12,306,897 - 230,520,093 Sales among segments 1,341,163 2,282,747 21,786 332,880 (3,978,576 ) - Operating profit (loss) 4,103,787 5,422,044 2,827,458 (2,631,514 ) - 9,721,775 Segment assets 66,613,079 45,686,717 45,015,821 49,143,635 (2,398,266 ) 204,060,986 Financial assets Monetary items CNY JPY USD THB HKD EUR	December 31
	2012 Foreign Currencies Exchange Rate $ 7,207,969 4.6722 2,007,618 0.3364 1,726,192 29.0400 370,358 0.9506 190,306 3.7464 51,370 38.4780	2011
		Foreign Currencies Exchange Rate $ 6,197,811 4.8044 3,201,028 0.3903 2,406,629 30.2680 509,548 0.9609 214,211 3.8956 129,898 39.1668 (Continued)

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Nonmonetary items CNY JPY USD HKD EUR Investments accounted for by the equity method CNY USD EUR Financial liabilities Monetary items CNY JPY USD THB HKD EUR Nonmonetary items JPY USD EUR	December 31	December 31
	2012 Foreign Currencies Exchange Rate $ 6,725 4.6722 4,554 0.3364 40,332 29.0400 5,900 3.7464 960 38.4780 29,327 4.6722 24,015 29.0400 372 38.4780 3,768,259 4.6722 1,075,705 0.3364 2,107,333 29.0400 193,477 0.9506 20,200 3.7464 70,961 38.4780 146 0.3364 3,512 29.0400 - 38.4780	2011
		Foreign Currencies Exchange Rate $ 5,661 4.8044 55,944 0.3903 141,784 30.2680 54,050 3.8956 17,490 39.1668 26,175 4.8044 25,292 30.2680 370 39.1668 3,861,125 4.8044 1,948,319 0.3903 8,689,211 30.2680 143,239 0.9609 130,549 3.8956 174,281 39.1668 51,531 0.3903 12,907 30.2680 131 39.1668 (Concluded)

33. PRE-DISCLOSURE OF THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

According to the Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Corporation is required to disclose a plan for the adoption of the International Financial Reporting Standards (IFRSs) in the consolidated financial statements, as follows:

Contents of Plan 2) Set up a work plan for IFRS adoption. 3) Complete the identification of GAAP differences and impact of IFRS adoption. 4) Complete the identification of consolidated entities under the IFRSs. 5) Complete the assessment of the applicability of the IFRS 1 - “First-time Adoption of International Financial Reporting Standards” (IFRS 1). 6) Complete the evaluation, configuration and testing of the IT systems. 7) Complete the modification of the relevant internal controls. 8) Determine the IFRS accounting policies to be applied. 9) Determine how to apply IFRS 1. 10) Complete the preparation of the opening date balance sheet under IFRSs. 11) Prepare quarterly comparative financial information under IFRSs for 2012. 12) Complete the modification of the relevant internal controls (including the financial reporting procedure and related information technology).	Responsible Department Finance Finance Finance Finance Finance, system integration, human resource, operation, sales and internal audit Finance, system integration, human resource, operation, sales and internal audit Finance Finance Finance Finance Finance, system integration, human resource, operation, sales and internal audit	Status of Execution
		Completed Completed Completed Completed Completed Completed Completed Completed Completed For quarterly In progress

(Concluded)

a. On May 14, 2009, the FSC announced the road map of IFRSs adoption for ROC companies. Starting from 2013, companies with shares listed on the Taiwan Stock Exchange (TSE) or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare for the consolidated financial statements in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the IFRSs, International Accounting Standards (IASs), interpretations and related guidance translated by Accounting Research and Development Foundation (ARDF) and issued by the FSC. Following this road map, the Parent Company and its subsidiaries established a task force to monitor and execute the IFRSs adoption plan. The important plan items, responsible divisions and plan progress are listed as follows:

Contents of Plan

Responsible Department Status of Execution

1) Establish the IFRSs task force. Finance, system integration, Completed human resource, operation, sales and internal audit

(Continued)

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b. As of December 31, 2012, based on the Group’s assessment, the significant differences between the Group’s current accounting policies under R.O.C. GAAP and the ones under IFRSs are stated as follows:

1) Reconciliation of consolidated balance sheet as of January 1, 2012:

Item Cash Accounts receivable, net Accounts receivable - related parties, net Other financial assets - current Prepayments Deferred income tax assets - current Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Investments accounted for by the equity method Properties Intangible assets Assets leased to others, net Idle assets, net Deferred expense, net Deferred income tax assets Long-term prepayments Other Total Accrued expenses Other current liabilities Obligations under capital leases - noncurrent Reserve for land value increment tax Accrued pension liabilities Deferred income tax liabilities Deferred credits Other Total liabilities Capital surplus Unappropriated earnings Net loss not recognized as pension cost Unrealized loss on financial instruments Treasury stock Other Noncontrolling interests Total shareholders’ equity Total	ROC GAAP Amount $ 56,515,383 45,469,494 1,099 1,575,370 4,024,067 951,668 2,783,354 1,487,972 3,590,108 39,985,995 16,408,099 113,843 135,538 2,273,596 - - 28,745,400 $ 204,060,986 $ 11,139,255 6,549,962 316,466 239,693 143,168 747,622 84,143 95,762,315 114,982,624 27,759,251 11,729,938 (17,182) (372,591) (1,857,643) 31,685,449 20,151,140 89,078,362 $ 204,060,986	Effect of Transition to IFRSs $ (3,633,137) 372,114 62,555 3,633,137 647,799 (951,668) 1,487,972 (1,487,972) (159,579) (1,099,418) (98,305) (113,843) (135,538) (2,273,596) 725,254 3,172,954 - $ 148,729 $ 242,660 434,669 4,441 (239,693) 81,378 (713) (84,143) - 438,599 (907,070) 662,992 17,182 230,587 (230,587) - (62,974) (289,870) $ 148,729	IFRSs Amount Note $ 52,882,246 a) 45,841,608 b) 63,654 b) 5,208,507 a) 4,671,866 h), i), j) and n) - c) 4,271,326 f) - f) 3,430,529 l) and p) 38,886,577 e), h), j) and m) 16,309,794 h), i) and m) - e) - e) - h) 725,254 c), d), n), o) and p) 3,172,954 h), i), j), m) and n) 28,745,400 $ 204,209,715 $ 11,381,915 o) 6,984,631 b) 320,907 m) - g) 224,546 n) 746,909 d), g) and n) - l) 95,762,315 115,421,223 26,852,181 p) and q) 12,392,930 m), n), o), p), q) and r) - r) (142,004) k) (2,088,230) k) 31,685,449 20,088,166 n) and o) 88,788,492 $ 204,209,715

2) Reconciliation of the consolidated balance sheet as of December 31, 2012

Item Cash and cash equivalents Accounts receivable, net Other financial assets - current Prepayments Deferred income tax assets - current Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Investments accounted for by the equity method Properties Intangible assets Leased assets, net Idle assets, net Deferred expenses, net Deferred income tax assets Long-term prepayments Other Total Accrued expenses Other current liabilities Obligations under capital leases - noncurrent Reserve for land value increment tax Accrued pension liabilities Deferred income tax liabilities Other Total liabilities Capital surplus Unappropriated earnings Foreign currency translation reserve Net loss not recognized as pension cost Unrealized loss on financial instruments Treasury stock Other Noncontrolling interests Total shareholders’ equity Total	ROC GAAP Amount $ 60,590,077 44,025,784 2,321,847 3,863,172 1,110,308 1,032,235 1,122,230 3,554,690 37,475,790 16,095,958 111,394 203,233 2,067,016 - - 21,624,432 $ 195,198,166 $ 10,563,304 5,581,677 232,299 239,693 175,583 843,248 87,743,359 105,379,163 27,504,826 13,253,899 126,009 (29,536) (677,435) (1,104,073) 30,706,336 20,038,977 89,819,003 $ 195,198,166	Effect of Transition to IFRSs $ (9,365,207) 774,156 9,365,207 555,946 (1,110,308) 1,122,230 (1,122,230) (45,908) 221,951 (62,383) (111,394) (203,233) (2,067,016) 1,515,761 1,674,608 - $ 1,142,180 $ 248,578 772,145 417 (239,693) 131,476 626,949 - 1,539,872 (766,840) 415,818 1,760 29,536 230,587 (230,587) - (77,966) (397,692) $ 1,142,180	IFRSs Amount Note $ 51,224,870 a) 44,799,940 b) 11,687,054 a) 4,419,118 h), i) and j) - c) and n) 2,154,465 f) - f) 3,508,782 p) 37,697,741 e), h), j) and m) 16,033,575 h), i), m) and n) - e) - e) - h) 1,515,761 c), d), n), o) and p) 1,674,608 h), i), j) and n) 21,624,432 $ 196,340,346 $ 10,811,882 n) and o) 6,353,822 b) and n) 232,716 m) - g) 307,059 n) 1,470,197 d), g) and n) 87,743,359 106,919,035 26,737,986 p), q) and s) 13,669,717 m), n), o), p), q), r) and s) 127,769 m), n), o) and p) - r) (446,848) k) (1,334,660) k) 30,706,336 19,961,011 m), n), o) and p) 89,421,311 $ 196,340,346

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3) Reconciliation of the consolidated statement of comprehensive income for the year ended December 31, 2012

Item Net sales Cost of sales Gross profit Operating expenses Operating income Nonoperating gains and loss Gain on disposal of investments, net Investment income recognized under the equity method, net Other Total nonoperating expenses and losses Income before income tax Income tax Consolidated net income Exchange differences on translating foreign operations Actuarial loss from defined benefit pension Unrealized gain on financial instruments Cash flow hedges Total comprehensive income for the period	ROC GAAP Amount $ 216,047,010 (185,419,313) 30,627,697 (19,735,700) 10,891,997 585,557 15,217 478,617 1,079,391 11,971,388 (2,451,510) $ 9,519,878	Effect of Transition to IFRSs $ - (69,700) (69,700) 70,453 753 (132,093) 2,501 3,113 (126,479) (125,726) (2,687) $ (128,413)	IFRSs Amount Note $ 216,047,010 l) (185,489,013) l), n), o) and t) 30,557,997 (19,665,247) m), n) o) and t) 10,892,750 453,464 q) and s) 17,718 p) 481,730 952,912 11,845,662 (2,454,197) n), o) and p) 9,391,465 (1,497,791) (76,037) n) (304,844) 63,662 $ 7,576,455

4) Exemptions from IFRS 1

IFRS 1 - “First-time Adoption of International Financial Reporting Standards” establishes the procedures for the preparation of consolidated financial statements by the Group as a first-time user of IFRSs. Under IFRS 1, the Group is required to determine the accounting policies under IFRSs and retrospectively apply those accounting policies in its opening balance sheet at the date of transition to IFRSs (January 1, 2012; the transition date) and to make selections from among optional exemptions and mandatory exceptions provided under IFRS 1. The main optional exemptions the Group adopted are summarized as follows:

Business combinations

The Group elected not to apply IFRS 3 - “Business Combinations” to business combinations made before the date of transition to IFRSs. Thus the carrying amount of goodwill arising from past business combinations in the opening IFRS consolidated balance sheet is its carrying amount based on ROC GAAP as of December 31, 2011.

This exemption applies to the Group’s past investments in its associates.

Share-based payment transactions

The Group elected to use the exemption from the retrospective application of IFRS 2 - “Share-based Payment” on all equity instruments that were granted and vested before the date of transition to IFRSs.

Cost recognition

The Group elected to measure properties and intangible properties at cost, not at market price, at the date of transition to IFRS.

Employee benefits

The Group elected to recognize all cumulative actuarial gains and losses relating to employee benefits in retained earnings at the date of transition to IFRSs.

The effects of applying the foregoing optional exemptions on the Group are stated under the following section “5. Notes to the reconciliation of the significant differences.”

5) Significant differences between ROC GAAP and IFRSs

As of December 31, 2012, based on the Group’s assessment, the significant differences between the Group’s current accounting policies under ROC GAAP and the ones under IFRSs are stated as follows:

a) Bank deposits with original maturity more than three months

Under ROC GAAP, the term “cash and cash equivalents” used in the financial statements includes cash on hand, demand deposits, check deposits, time deposits that are cancelable but without any loss of principal and negotiable certificates of deposit that are readily salable without any loss of principal. However, under IFRSs, cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. An investment normally qualifies as a cash equivalent only when it has a short maturity of three months or less from the date of acquisition. Thus, some certificates of deposit the Group held that had maturities of more than three months from the date of investment have been reclassified to other financial assets.

As of December 31, 2012 and January 1, 2012, the amounts reclassified to other financial assets - current were $9,365,207 thousand and $3,633,137 thousand, respectively.

b) Allowance for sales returns and discounts

Under ROC GAAP, provisions for estimated sales returns and discounts are recognized as a reduction of revenue in the period the related revenue is recognized on the basis of historical experience. Allowance for sales returns and discounts is recorded as a deduction from accounts receivable. Under IFRSs, the allowance for sales returns and discounts is a present obligation arising from past events and with uncertain timing of settlement and is thus reclassified to provisions (classified under other current liabilities).

As of December 31, 2012 and January 1, 2012, the amounts reclassified from allowance for sales returns and discounts to provisions were $774,156 thousand and $434,669 thousand, respectively.

c) Classifications of deferred income tax asset/liability and valuation allowance

Under ROC GAAP, valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. Under IFRSs, deferred tax assets are only recognized to the extent that it is probable that there will be sufficient taxable profits against which the deductible temporary differences can be used; thus, a valuation allowance account is not needed.

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In addition, under ROC GAAP, a deferred tax asset and liability is classified as current or noncurrent in accordance with the related asset or liability for financial reporting. However, if a deferred income tax asset or liability does not relate to an asset or liability in the financial statements, it is classified as current or noncurrent on the basis of the expected length of time before it is realized or settled. Under IFRSs, a deferred tax asset and liability is classified as noncurrent asset or liability.

As of December 31, 2012 and January 1, 2012, the amounts reclassified from deferred income tax assets - current to deferred income tax assets - noncurrent were $1,112,774 thousand and $951,668 thousand, respectively.

d) Offsetting between deferred tax assets/liabilities

Under ROC GAAP, deferred current tax assets - current should be offset against deferred tax liability - current under the same taxable entity. The same rule applies to deferred tax asset/liability - noncurrent. Under IFRSs, an entity is eligible to offset tax assets against tax liabilities generated from the same taxable entity only (a) if the entity has a legally enforceable right to make this offset and (b) the deferred tax assets and liabilities relate to income taxes levied by the same tax authorities on either the same taxable entity or different taxable entities that intend either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities simultaneously.

As of December 31, 2012 and January 1, 2012, the offset amounts of the Group’s deferred tax assets and deferred tax liabilities were $387,146 thousand and $240,519 thousand, respectively.

e) Classification of leased assets and idle assets

Under ROC GAAP, leased assets and idle assets are classified under other assets and idle assets. Under IFRSs, the aforementioned items are classified as properties in accordance with their nature. Leased assets are mainly dormitories leased to employees and factories leased to suppliers. Based on IAS 40 - “Investment Property,” the dormitories leased to employees and factories leased to suppliers are not considered investment properties since they cannot be sold separately and comprise only an insignificant portion of the plant.

As of December 31, 2012 and January 1, 2012, the amounts reclassified from leased assets and idle assets to properties were $314,627 thousand and $249,381 thousand, respectively.

f) Financial assets carried at cost

Under Regulations Governing the Preparation of Financial Reports by Securities Issuers, the non-publicly traded stocks or stocks that are not traded in the Emerging Stock Market and pertaining to an investment in which the investor has no significant influence on the investee should be measured as financial assets carried at cost.

Under IFRSs, the financial instruments designated as at fair value through other comprehensive income and financial assets carried at cost should be classified as at fair value through profit or loss.

As of December 31, 2012 and January 1, 2012, the Group’s financial assets carried at cost reclassified to available for sale financial assets amounted to $1,122,230 thousand and $1,487,972 thousand, respectively.

g) Reserve for land value increment tax

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, land revaluation surplus is classified as reserve for land value increment tax and recorded under other liabilities. Under IFRSs, the Group reclassified land value increment tax to deferred income tax liabilities. As of December 31, 2012 and January 1, 2012, the amount reclassified from land value increment tax to deferred income tax liabilities was $239,693 thousand.

h) Classification of deferred expenses

Under ROC GAAP, deferred expenses are recorded under other assets. Under IFRSs, the Group reclassified deferred expenses to prepaid expenses, properties, intangible assets, and long-term prepaid expenses in accordance with their nature.

As of December 31, 2012, the Group had reclassified deferred expenses of $17,618 thousand, $1,189,471 thousand, $516,087 thousand, and $343,840 thousand to prepaid expenses; properties; intangible assets; and long-term prepaid expenses, respectively.

As of January 1, 2012, the Group’s deferred expenses of $12,858 thousand, $1,296,031 thousand, $598,025 thousand, and $366,682 thousand had been reclassified to prepaid expenses; properties; intangible assets; and long-term prepaid expenses, respectively.

i) Land use rights

Under ROC GAAP, land use rights are classified as intangible asset. Under IFRSs, based on their nature, a land use right is classified as prepayment in accordance with International Accounting Standard (IAS) No. 17 - “Leases.”

As of December 31, 2012, the Group’s land use rights reclassified to prepayments and long-term prepayments amounted to $464,918 thousand and $107,601 thousand, respectively.

As of January 1, 2012, the Group’s land use rights reclassified to prepayments and long-term prepayments amounted to $585,852 thousand and $110,569 thousand, respectively.

j) Classification of the prepayments for equipment

Under ROC GAAP, the prepayments for equipment are usually recorded under fixed assets. Under IFRSs, prepayments for equipment are usually recorded under prepayments or long-term prepayments.

As of December 31, 2012, on the basis of the nature of the prepayments for equipment, the Group reclassified prepayments for equipment to prepayments and long-term prepayments of $73,410 thousand and $1,236,480 thousand, respectively.

As of January 1, 2012, on the basis of the nature of the prepayments for equipment, the Group reclassified prepayments for equipment to prepayments and long-term prepayments of $48,426 thousand and $2,631,249 thousand, respectively.

k) Treasury stock

Under ROC GAAP on the accounting for treasury stocks, effective January 1, 2002, the Group accounted for its shares held by its subsidiary as treasury stock when it recognized the investment income at the market price. The difference in carrying value and market value of this treasury stock was recorded as unrealized loss on available-for-sale financial assets. Under IFRSs, treasury shares are recognized immediately at the time when treasury shares are acquired by subsidiaries.

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o) Employee benefits - short-term accumulated compensated absences

As of December 31, 2012 and January 1, 2012, the Group’s unrealized loss of $230,587 thousand on available-for-sale financial assets was reclassified to treasury stock.

l) Investments in associates - unrealized profits from downstream transactions

Under ROC GAAP, unrealized profits from downstream transactions are adjusted in proportion to unrealized gross profit and deferred credits. Under IFRSs, unrealized profits from downstream transactions are recorded under investments in associates.

As of January 1, 2012, the Group’s deferred credits reclassified to investments accounted for by the equity method amounted to $84,143 thousand, respectively.

m) Capitalization of lease payments

Under ROC GAAP, lease payments are recorded as rental expense in the period the lessee actually uses the item leased. Under IFRSs, they should be capitalized as part of asset acquisition cost.

As of December 31, 2012, the IFRS-based adjustment resulted in increases in properties by $27,744 thousand and unappropriated earnings by $15,138 thousand.

As of January 1, 2012, the IFRS-based adjustment resulted in increases in properties by $34,845 thousand and unappropriated earnings by $33,084 thousand.

The depreciation expense for the years ended December 31, 2012 was adjusted for an increase of $1,745 thousand (recorded as operating expenses).

Under ROC GAAP, there are no specific requirements for recognizing accumulated compensated absences at the end of reporting periods. Companies usually recognize the related costs when the employees actually go on leave. Under IFRSs, the expected cost of short-term accumulated compensated absences should be recognized as the employees render services that increase their entitlement to these compensated absences.

As of December 31, 2012, the IFRS-based evaluation adjustment resulted in an increase of accrued expenses by $248,303 thousand. This adjustment also resulted in decreases in unappropriated earnings by $187,443 thousand and noncontrolling interests by $50,875 thousand.

The evaluation adjustments as of January 1, 2012, resulted in increases in deferred income tax assets by $6,471 thousand and accrued expenses by $256,609 thousand. Other results were decreases of $179,786 thousand in unappropriated earnings and $70,352 thousand in noncontrolling interests.

For the year ended December 31, 2012, the salary expenses were adjusted for an increase of $9,073 thousand (resulting in a decrease of $14,820 thousand in cost of sales and an increase of $23,893 thousand in operating expenses). The income tax was also adjusted for an increase of $1,277 thousand.

p) Investments accounted for using the equity method

The Group has evaluated significant differences between current accounting policies and IFRSs for the Group’s associates and joint ventures accounted for by the equity method. The significant difference is mainly due to the adjustment to employee benefits and leases.

n) Employee benefits

The Group had previously applied actuarial valuation to its defined benefit obligations and recognized the related pension cost and retirement benefit obligation in conformity with ROC GAAP. Under IFRSs, the group should carry out actuarial valuation on defined benefit obligations in accordance with IAS No. 19 - “Employee Benefits.” The Group has opted to recognize actuarial gains and losses as other comprehensive income immediately in full in the period in which they occur. The subsequent reclassification to earnings is not permitted.

At the transition date, the Group performed the actuarial valuation under IAS No. 19 - “Employee Benefits” and recognized the valuation difference directly as retained earnings under IFRS 1. As of December 31, 2012, the IFRS-based adjustments resulted in (a) increases in deferred income tax assets by $13,245 thousand and accrued pension liabilities by $131,476 thousand; and (b) decreases in long-term prepayments by $15,413 thousand; unappropriated earnings by $79,141 thousand and noncontrolling interests by $42,876 thousand.

As of January 1, 2012, the IFRS-based adjustments resulted in (a) increases in deferred income tax assets by $7,624 thousand; long-term prepayments by $46,252 thousand; and accrued pension liabilities by $81,378 thousand; and (b) a decrease in unappropriated earnings by $3,104 thousand.

For the year ended December 31, 2012, IFRS adoption resulted in a decrease of $11,571 thousand ($9,730 thousand recorded as cost of sales and $1,841 thousand recorded as operating expenses) in salary expenses and an increase of $1,434 thousand in income tax.

As of December 31, 2012, the adoption of IFRS resulted in an increase of $175,012 thousand in unappropriated earnings. Another result was decreases of $49,346 thousand in investments accounted for by the equity method and $255,568 thousand in capital surplus.

As of January 1, 2012, the differences mentioned above resulted in an increase in unappropriated earnings by $91,583 thousand. In addition, the adjustment resulted in decreases of $75,436 thousand in investments accounted for by the equity method and of $168,671 thousand in capital surplus.

For the year ended December 31, 2012, the IFRS-based adjustments resulted in increases of $2,501 thousand in investment income recognized under the equity method. The income tax was adjusted for a decrease of $24 thousand.

q. Accounting treatment of the Parent Company for increases in carrying values of equity-method investments due to not subscribing proportionally to the additional shares issued by the investees and relevant adjustment of capital surplus - long-term equity investment.

Under ROC GAAP, if an investee issues new shares and an investor does not buy new shares proportionately, the investor’s ownership percentage and its interest in net assets of the investment will change. The resulting difference should be used to adjust the capital surplus and long-term equity investment accounts.

Under IFRSs, any equity changes in the invested associates without the loss of significant influence on the associates will be recognized as a deemed acquisition or a deemed disposal of the shares in the invested associates. Any equity changes in the invested subsidiaries without losing significant control over the subsidiaries will be deemed equity transactions. In addition, in accordance with the “Q&A on the Adoption of IFRSs” issued by the Taiwan Stock

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Exchange, capital surplus not covered by the IFRSs, the ROC Company Law and the relevant legal interpretations of the Ministry of Economic Affairs, ROC should be adjusted accordingly at the date of transition to IFRSs.

As of December 31, 2012, the foregoing adjustments resulted in a decrease of $651,137 thousand in the Parent Company’s capital surplus - long term investments and an increase of $651,137 thousand in unappropriated earnings.

As of January 1, 2012, the foregoing adjustments resulted in a decrease of $738,398 thousand in the Parent Company’s capital surplus - long term investments and an increase of $738,398 thousand in unappropriated earnings.

In addition, gain on disposal of investments was adjusted for an increase of $14,100 thousand for the years ended December 31, 2012.

r) Employee benefits - minimum pension liability to be recognized

Under ROC GAAP, the minimum pension liability should be should be recognized as such in the balance sheet; if the accrued pension liability is lower than this minimum, any shortfall should be recorded.

Under the IFRSs, there is no requirement for recognizing minimum pension liability.

As of December 31, 2012, net loss not recognized as pension cost was adjusted for an increase of $29,536 thousand and unappropriated earnings for a decrease of $29,536 thousand.

As of January 1, 2012, net loss not recognized as pension cost was adjusted for an increase of $17,182 thousand and unappropriated earnings for a decrease of $17,182 thousand.

s) Disposal of partial shares without losing significant influence on the investee

Under ROC GAAP, if the stock ownership percentage changes during the year, the investor company should recognize investment gains or losses in proportion to the actual stock ownership percentage on the disposition date.

Under IFRSs, disposal of the shares of subsidiaries without losing significant control over the subsidiaries is deemed an equity transaction.

As of December 31, 2012, the IFRS-based adjustments resulted in an increase of $146,193 thousand in the Parent Company’s capital surplus - long term investments under the equity method and a decrease of $146,193 thousand in the gain on disposal of investments.

t) The reclassification of line items in the consolidated statement of comprehensive income

Under IFRSs, based on the nature of operating transactions, a repair and warranty expense of $94,250 was reclassified to cost of sales.

c. The Group’s foregoing assessment is based on the 2010 version of IFRSs translated by the ARDF and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers issued by FSC on December 22, 2011. However, the assessment result may change as FSC may issue new rules governing the adoption of IFRSs and as other laws and regulations may be amended to comply with the adoption of IFRSs. Actual results may differ from these assessments.

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TABLE 1

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

RELATED-PARTY TRANSACTIONS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

Nature of Relationship Related Party (Notes 1 and 5) December 31, 2012 Lite-On Semiconductor Corp. a Silpert Travel Service Co., Ltd. d Chi Mei Mold Co., Ltd. c Lite-Space Technology Company Limited b Other related parties (Note 3) December 31, 2011 Co Tech Copper Foil Corp. e Lite-On Semiconductor Corp. a Chi Mei Mold Co., Ltd. c Silpert Travel Service Co., Ltd. d Other related parties (Note 4)		Receivable from Related Parties	Receivable from Related Parties	Receivable from Related Parties	Total $ 84,837 236 - - 579 $ 85,652 $ 746 1,308 - - - $ 2,054		Payable to Related Parties	Payable to Related Parties	Payable to Related Parties
		Accounts Receivable % Amount (Note 2) $ 82,892 97 - - - - - - 529 1 $ 83,421 98 $ 746 36 353 17 - - - - - - $ 1,099 53		Other Receivable % Amount (Note 2) $ 1,945 2 236 - - - - - 50 - $ 2,231 2 $ - - 955 47 - - - - - - $ 955 47			Accounts Payable % Amount (Note 2) $ 98,061 62 - - 20,176 13 14,516 9 5,170 3 $ 137,923 87 $ - - 266,987 74 44,348 12 - - 6,173 2 $ 317,508 88		Other Payable % Amount (Note 2) $ 38 - 7,006 5 13,129 8 - - - - $ 20,173 13 $ - - - - 37,654 10 5,404 2 - - $ 43,058 12	Total $ 98,099 7,006 33,305 14,516 5,170 $ 158,096 $ - 266,987 82,002 5,404 6,173 $ 360,566

Note 1: a. Equity-method investee. b. An investee of an equity-method subsidiary.

c. An investee of an equity-method subsidiary is its chairman.

d. Its chairman is a relative of the Parent Company’s chairman.

e. The Parent Company’s chairman is its director

Note 2: Percentage of specific account balance.

Note 3: Other Related Parties including:

a. An investee of an equity-method subsidiary: Jhen Vei Electronic (Shenzhen) Co., Ltd. and Jhen Vei Electronic (Wujian) Co., Ltd. b. The Parent Company’s chairman is its director: Co Tech Copper Foil Corp.

Note 4: An investee of an equity-method subsidiary: Jhen Vei Electronic (Shenzhen) Co., Ltd.

Note 5: Significant intercompany transactions have already been eliminated.

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TABLE 2

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

RELATED-PARTY TRANSACTIONS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

Nature of Relationship Related Party (Notes 1 and 7) 2012 Lite-On Semiconductor Corp. a Lite-On Cultural Foundation d Chi Mei Machinery Corp. b Silpert Travel Service Co., Ltd. c Actron Technology Corp. e Lite-Space Technology Company Limited. f Other related parties (Note 5) 2011 Lite-On Semiconductor Corp. a Lite-On Cultural Foundation d Chi Mei Machinery Corp. b Silpert Travel Service Co., Ltd. c Actron Technology Corp. e Other related parties (Note 6)		Sales (Note 2) % Amount (Note 3) $ 259,521 - 91 - - - - - - - - - 3,024 - $ 262,636 - $ 65,356 - 115 - - - - - - - 3,025 - $ 68,496 -		Purchases (Note 2) % Amount (Note 3) $ 2,806,542 2 - - 38,208 - - - - - 244,302 - 4,569 - $ 3,093,621 2 $ 2,776,066 1 - - 75,060 - - - - - 45,425 - $ 2,896,551 1	Rental Revenue $ - 344 - 57 - - - $ 401 $ - 344 - 57 - - $ 401	Other Revenue $ 3,598 46 920 - 540 - - $ 5,104 $ 3,508 47 914 - 563 - $ 5,032	Rental Expense $ - - - - - - - $ - $ - - - - - - $ -	Other Expense (Note 4) $ - 1,413 12,073 109,951 - - - $ 123,437 $ - 7,466 28,568 106,642 - - $ 142,676			Property Transaction	Property Transaction
										Book Value $ - - - - - - - $ - $ - - - - - - $ -	Proceeds $ - - - - - - - $ - $ - - - - - - $ -	Disposal Gain (Loss) $ - - - - - - - $ - $ - - - - - - $ -	Cost $ - - - - - - - $ - $ - - - - - - $ -

Note 1: a. Equity-method investee.

b. An investee of an equity-method subsidiary is its chairman.
c. Its chairman is a relative of the Parent Company’s chairman.

d. The Parent Company is its main contributor.

e. The Parent Company’s chairman is its director.

f. An investee of an equity-method subsidiary.

Note 2: Except for transactions disclosed in Note 25, the sales prices and payment terms to related parties were not significantly different from those of sales to third parties.

Note 3: Percentage of specific account balance.

Note 4: Mainly included travel fees and repair expenses.

Note 5: Other related parties including:

a. An investee of an equity-method subsidiary: Jhen Vei Electronic (Shenzhen) Co., Ltd.
b. The Parent Company’s chairman is its director: Co Tech Copper Foil Corp.

(Continued)

Note 6: Other related parties including:

a. An investee of an equity-method subsidiary: Jhen Vei Electronic Co., Ltd., Jhen Vei Electronic (Wujian) Co., Ltd. and Jhen Vei Electronic (Shenzhen) Co., Ltd. b. The Parent Company’s chairman is its director: Co Tech Copper Foil Corp.

Note 7: Significant intercompany transactions between the entities of consolidation have already been eliminated

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TABLE 3

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND PERCENTAGES OF OWNERSHIP YEARS ENDED DECEMBER 31, 2012 AND 2011

December 31, 2012

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LTC Group Ltd. LTC International Ltd. Lite-on Green Technoligies (HK)Limited ��
100%
Titanic Capital Services Ltd.
100%
��
42.56% 0.32% 100%
��
100% 100% 100%
High Yield Group Co., Ltd. ��
��
100% 100%
��
Lite-on IT Singapore Pte. Ltd.
��
100% 100%
Lite-On Sales & Distribution Inc. ��
��
100% 100%
��
��
100% 100%
Automotive Playback Modules Hungary Electronical
Lite-On Americas Inc. Mechanical Manufacturing and Trading Limited Liability
Company
49% 100%
�� Philips & Lite-On Digital Solutions
�� USA Inc.
100%
Philips & Lite-On Digital Solutions
Netherlands B.V.
100%
Philips & Lite-On Digital Solutions
Germany GmbH
100% 100%
Lite-On Electronics (Thailand) Co., Philips & Lite-On Digital Solutions
Ltd. Korea Ltd.
100%
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Lite-On Technology Corporation 2012 Annual Report

==> picture [912 x 636] intentionally omitted <==

----- Start of picture text -----

100% 100% 50% 100%
Lite-On International Holding Co.,
�� Ltd Lite-On China Holding Co., Ltd. G&W Technology (BVI) Limited G&W Technology Limited
100% 100%
Lite-On Electronics Co., Ltd. ��
��
100% 100%
��
��
��
100% 100%
I-Solutions Limited ��
��
100% 100%
��
��
��
67.03%
��
��
100% 32.97%
��
��
100% 100%
��
��
100% 100%
��
��
100%
��
��
100% 100%
Fordgood Electronic Ltd. ��
��
48.13% 100%
Ze Poly Pte. Ltd. Ze Poly Tomsk Ltd.
100% 100%
Lite-On Electronics H.K. Ltd. ��
��
100%
��
��
100%
��
��
100%
��
��
100%
��
��
100%
�� 20.71%
��
100%
��
��
79.29%
��
��
100% 100%
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100% 100%
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100% 100%
Lite-On Singapore Pte. Ltd. ��
��
100%
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Lite-On Technology Corporation 2012 Annual Report

==> picture [851 x 647] intentionally omitted <==

----- Start of picture text -----

100% 100%
�� Lite-On Technology USA Inc. Lite-On Trading USA, Inc.
100%
Lite-On Service USA, Inc.
100%
Lite-On, Inc.
100%
Maxi Switch S.A. de C.V
100%
Lite-On Electronics (Europe) Ltd.
100%
Lite-On Overseas Trading Co., Ltd.
100%
Lite-On Automotive Electronics
(Europe) BV
100%
Lite-On Automotive North America
Inc.
84.89% 100% 100% 100%
Lite-On Automotive International Lite-On Automotive Holdings ��
��
(Cayman) Co., Ltd (Hong Kong) Ltd. ��
100%
��
��
100% 100%
��
Silitech (Hong Kong) Holding Ltd.
��
32.37% 100% 100% 100%
Silitech Technology Corporation
�� Silitech (BVI) Holding Ltd. Silitech (Bermuda) Holding Ltd.
Sdn. Bhd.
100%
0.61% Silitech Technology (Europe) Limited
100% 100% 100% 100% 100%
Silitech Technology Corporation ��
�� Lite-On Japan(s) Pte. Ltd. Lite-On Japan (Thailand) Co., Ltd.
Limited ��
100% 100%
Silitech International (India) Private
7.87% L&K Industries Philippines, Inc.
Ltd.
100% 100% 60%
��
Lite-On Japan (H.K.) Ltd. NL (Shanghai) Co., Ltd.
��
49.49% 100% 100%
Lite-On Japan Ltd. LOJ Korea Co., Ltd. Major Suit (HK) Co. Ltd.
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Lite-On Technology Corporation 2012 Annual Report

==> picture [1023 x 592] intentionally omitted <==

----- Start of picture text -----

100% 20.66% 100% 100% 100%
��
�� Logah Technology Co., Ltd. Logah Technology (HK) Co., Ltd.
��
18.97% 100%
��
100%
��
��
��
100% 100%
Li Shin International Enterprise ��
Corp. ��
100% 100%
��
Eagle Rock Investment Ltd.
��
100%
��
��
54% 100% 100% 100%
Lite-On Mobile Oyj
Lite-On Technology (Europe) B.V. Lite-On (Finland) Oy Lite-On Mobile Sweden AB
(Formerly: Perlos Oyi)
100% 100% 100%
Lite-On Mobile Indústria e Comércio de
�� Lite-On Mobile Pte. Ltd.
Plásticos Ltda.
46%
100%
Guangzhou Lite-On Mobile Engineering
Plastics Co., Ltd.
100% 100%
Guangzhou Lite-on Mobile Electronic Yantai Lite-On Mobile Electronic
Components Co. Ltd. Components Co., Ltd.
100% 11% 89%
Beijing Lite-On Mobile Electronic and Zhuhai Lite-On Mobile Technology
Telecommunications Components Co., Ltd. Co., Ltd.
100%
Shenzhen Lite-On Mobile Precision
Molds Co., Ltd.
100%
Perlos Precision Plastics Moulding
Limited Liability Company
100%
Lite-On Mobile India Private Limited.
65% 100%
Lite-On Young Fast (Huizhou) Co.,
Lite-on Young Fast Pte. Ltd.
Ltd.
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Lite-On Technology Corporation 2012 Annual Report

December 31, 2011

==> picture [731 x 636] intentionally omitted <==

----- Start of picture text -----

100% 73.40% 100%
�� Leotek Electronics USA Corportaion
100% 100%
�� Lite-On Green Energy Kaiserslauter
�� GmbH
100% 100% 100%
Lite-on Green Energy (Singapore) Lite-on Green Energy B.V. Romeo Tetti PV1 S.R.L.
Pte. Ltd.
100% 100% 100%
�� Lite-On Green Technologies B.V Lite-on Green Technologies S.R.L.
100% 100%
Lite-on Green Technoligies Australia
Lite-on Green Energy (HK) Limited
Pty Ltd.
100% 100% 100% 100%
Lite-on Green Technoligies (HK) ��
LTC Group Ltd. LTC International Ltd.
Limited ��
100%
Titanic Capital Services Ltd.
100%
��
42.70% 0.33% 100%
��
100% 100% 100%
��
High Yield Group Co., Ltd.
��
100% 100%
��
Lite-on IT Singapore Pte. Ltd.
��
100% 100%
��
Lite-On Sales & Distribution Inc.
��
100% 100%
��
��
100% 100%
Automotive Playback Modules Hungary Electronical
Lite-On Americas Inc. Mechanical Manufacturing and Trading Limited Liability
Company
49% 100%
�� Philips & Lite-On Digital Solutions
�� USA Inc.
100%
Philips & Lite-On Digital Solutions
Netherlands B.V.
100%
Philips & Lite-On Digital Solutions
Germany GmbH
100% 100%
Lite-On Electronics (Thailand) Co., Philips & Lite-On Digital Solutions
Ltd. Korea Ltd.
100%
��
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Lite-On Technology Corporation 2012 Annual Report

==> picture [900 x 621] intentionally omitted <==

----- Start of picture text -----

100% 100% 50% 100%
Lite-On International Holding Co.,
�� Ltd Lite-On China Holding Co., Ltd. G&W Technology (BVI) Limited G&W Technology Limited
100% 100%
��
Lite-On Electronics Co., Ltd.
��
100% 100%
��
��
��
100% 100%
I-Solutions Limited ��
��
100%
��
100%
��
��
100%
��
��
100% 100%
��
��
100% 100%
��
��
100% 100%
��
Fordgood Electronic Ltd. ��
48.13% 100%
Ze Poly Pte. Ltd. Ze Poly Tomsk Ltd.
100% 100%
Lite-On Electronics H.K. Ltd. ��
��
100%
��
��
100%
��
��
100%
��
��
100%
��100%
��
100%
�� 20.71%
��
100%
��
��
79.29%
��
��
100% 100%
��
��
��
100% 100%
Lite On Power Technology (Chang Lite-On Electronics (Chang Zhou)
Zhou) Co., Ltd. ( Formerly : Li Shin Co., Ltd. ( Formerly : Wuxi Lite-On
Enterprise ( su zhou ). Co., ) Tech. Co., )
100% 100%
Lite-On Technology (Ying Tan)
Lite-On Singapore Pte Ltd.
Co., Ltd.
100%
Lite-On Technology (Xianing)
Co., Ltd.
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Lite-On Technology Corporation 2012 Annual Report

==> picture [1020 x 663] intentionally omitted <==

----- Start of picture text -----

100% 100%
��
Lite-On Technology USA Inc. Lite-On Trading USA, Inc.
100%
Lite-On Service USA, Inc.
100%
Lite-On, Inc.
100%
Maxi Switch S.A. de C.V
100%
Lite-On Electronics (Europe) Ltd.
100%
Lite-On Overseas Trading Co., Ltd.
100%
Lite-On Automotive Electronics
(Europe) BV
100%
Lite-On Automotive North America
Inc.
84.89% 100% 100% 100%
Lite-On Automotive International Lite-On Automotive Holdings ��
��
(Cayman) Co., Ltd (Hong Kong) Ltd. ��
100%
��
��
100% 100%
Silitech (Hong Kong) Holding Ltd. Silitech Technology (SuZhou) Co., Ltd.
34.90% 100% 100% 100%
Silitech Technology Corporation
�� Silitech (BVI) Holding Ltd. Silitech (Bermuda) Holding Ltd.
Sdn. Bhd.
100%
0.62% Silitech Technology (Europe) Limited
100% 100% 100% 100% 100%
Silitech Technology Corporation
Lite-On Capital Inc. Lite-On Japan(s) Pte. Ltd. Lite-On Japan (Thailand) Co., Ltd. Xurong Electroinc (Shenzhen) Co., Ltd.
Limited
100% 100% 55.00% 100%
Silitech International (India) Private
L&K Industries Philippines, Inc. Silitek Plating Limited Silitech Plating (ShenZhen) Co., Ltd.
Ltd.
7.87%
100% 100% 60%
��
Lite-On Japan (H.K.) Pte. Ltd. NL (Shanghai) Co., Ltd.
��
49.49% 100% 100% 100%
��
Lite-On Japan Ltd. LOJ Korea Co., Ltd. Major Suit (HK) Co. Ltd.
��
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Lite-On Technology Corporation 2012 Annual Report

==> picture [1049 x 616] intentionally omitted <==

----- Start of picture text -----

100% 20.66% 100% 100% 100%
Lite-On Technology Corporation
Li Shin International Enterprise Corp. Logah Technology Corp. Logah Technology Co., Ltd. Logah Technology (HK) Co., Ltd. Logah Electronics (Su Zhou) Co., Ltd.
18.97% 100%
Lippo Electronics (Su Zhou) Co., Ltd.
100%
Suzhou Fordgood Electronic Co., Ltd.
100% 100%
Li Shin International Enterprise Corp. Huizhou Li Shin Electronic Co., Ltd.
100% 100%
Eagle Rock Investment Ltd. Huizhou Fu Tai Electronic Co., Ltd.
100%
Li Shin Technology (Huizhou) Ltd.
54% 100% 100% 100%
Lite-On Mobile Oyj
Lite-On Technology (Europe) B.V. Lite-On (Finland) Oy Perlos Mexico Holding Corp.
(Formerly: Perlos Oyj)
100% 100%
Lite-On Capital Inc. Lite-On Mobile Sweden AB
46% 100% 99%
Lite-On Mobile Pte. Ltd. Perlos Mexico, S. A. de C.V
100%
Lite-On Mobile Industriae Comercio de
Plasticos Ltda.
100%
Guangzhou Lite-On Mobile Engineering
Plastics Co., Ltd.
100% 100%
Guangzhou Lite-On Mobile Electronic Yantai Lite-On Mobile Electronic
Components Co., Ltd. Compoents Co., Ltd.
100% 100%
Beijing Lite-On Mobile Electronic and Zhuhai Lite-On Mobile
Telecommunications Components Co., Ltd. Technology Co., Ltd.
100%
Shenzhen Lite-On Mobile Precision Molds
Co., Ltd.
100%
Perlos Precision plastics Moulding Limited
Liability Company
100%
Lite-On Mobile India Private Limited
100% 100%
Lite-On Young Fast (Huizhou)
Lite-On Young Fast Pte. Ltd.
Co., Ltd.
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Lite-On Technology Corporation 2012 Annual Report

WWW.LITEON.COM

==> picture [596 x 80] intentionally omitted <==

AI assistant

LTC — Annual Report 2012

51997_rns_2013-07-11_efe51966-c186-46ec-aa17-b846c6d58d23.pdf

Contact Information

Corporate Overview

Corporate Governance

Capital and Shares

Financial Information

Spokesperson

Acting Spokesperson

Global Headquarters

Taiwan Factory

Stock Affairs Department

CPA

GDR Depositary Bank

Raymond Soong

Warren Chen

David Lin

Members of Top Management

Paul Lo

Alexander Huang

Letter to Shareholders

Ladies and Gentlemen,

Development and Outlook

Operating Performance

Honors and Recognitions

2.1 Company Profile

About Lite-On Technology

2.2 Lite-On Corporate Values

1. Customer Satisfaction

2. Excellence in Execution

3. Innovation

4. Integrity

Corporate Governance

2.3 ORGINAZATION

3.1 Management framework

3.1.1 Board of Directors Responsibilities

3.1.3 Compensation Committee Responsibilities

3.1.4 Growth Strategy Committee Responsibilities

3.1.2 Audit Committee Responsibilities

3.2 Anti-Corruption

1. Gifts and Hospitality:

2. Principles governing on-the-job payments:

3.3 Corporate Risk Management

Risk Management Organizational Framework

Risk Management Cycle

3.4 Information Regarding Board Members and Management

3.4.1 . The profiles of the directors and the independent directors

Note: Mr. David Lin assumed the position under his own title after the election dated June 15 2010.

Note 1:

Note 2:

Note 3:

Chairman, Lite-on Young Fast Pte. Ltd.

Chairman, representative of Lite-On Integrated Service Inc. and Lite-on (Guangzhou) Infotech Inc.

Note 7:

Note 8:

Note 9:

Note 10:

Note 11:

Note 4:

Note 5:

Note 6:

2. Independent Status of the Directors

3.4.2 . Profiles of the Management Team

Note 1:

Note 2 :

Note 3:

Note 5:

Note 6:

Note 7:

Note 4:

3.5. Statements of Internal Control

3.6. Major Resolutions of the General Meeting and Board Meetings

3.6.1 Major Resolutions of the General Meeting

3.6.2 Major Resolutions of the Board Meetings

1. BOD resolutions on 2012/02/13

2. BOD resolutions on 2012/03/26

3. BOD resolutions on 2012/04/25

4. BOD resolution on 2012/06/06

5. BOD resolutions on 2012/07/12

LTC Annual Report 2012